<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 20, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
WERNER HOLDING CO. (DE), INC.
AND OTHER REGISTRANTS*
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 6719 25-1581345
------------------------------ ------------------------------ ------------------------------
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I R S EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
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1105 NORTH MARKET STREET
SUITE 1300
WILMINGTON, DELAWARE 19899
(302) 478-5732
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ERIC J. WERNER, ESQ.
93 WERNER ROAD
GREENVILLE, PENNSYLVANIA 16125
(724) 588-8600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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<S> <C>
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With copies to:
E. MICHAEL GREANEY, Esq. RICHARD M. RUSSO, ESQ.
Gibson, Dunn & Crutcher LLP Gibson, Dunn & Crutcher LLP
200 Park Avenue 1801 California Street, Suite 4100
New York, New York 10166 Denver, Colorado 80202
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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. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OLD NOTES OFFERING AGGREGATE OLD NOTES AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
10% Senior Series A Subordinated Notes due 2007... $135,000,000 100% $135,000,000 $39,825
Guarantees of the Notes........................... $135,000,000 (2) (2) (2)
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(1) Estimated pursuant to Rule 457(f) solely for the purposes of calculating the
registration fee.
(2) No separate consideration will be received for the Guarantees.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, 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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STATE OR OTHER JURISDICTION
EXACT NAME OF REGISTRANT OF PRIMARY STANDARD INDUSTRIAL I.R.S. EMPLOYER
AS SPECIFIED IN ITS CHARTER INCORPORATION OR ORGANIZATION CLASSIFICATION CODE NUMBERS IDENTIFICATION NUMBER
- -------------------------------------- ----------------------------- ---------------------------- ----------------------
<S> <C> <C> <C>
Werner Holding Co. (PA), Inc.......... Pennsylvania 6719 25-0906895
Werner Co............................. Pennsylvania 3449 25-1754435
Gold Medal Ladder Company............. Pennsylvania 6719 25-1112588
Kentucky Ladder Company............... Pennsylvania 2499 25-1595338
Florida Ladder Company................ Florida 6719 59-0605366
Werner Management Co.................. Pennsylvania 8741 25-1754434
Werner Financial Inc.................. Delaware 6719 51-0372598
R.D. Arizona Ladder Corp.............. Arizona 5084 25-1619259
WIP Technologies, Inc................. Delaware 6794 51-0372599
Ardee Investment Co., Inc............. Delaware 6719 51-0310986
Olympus Properties, Inc............... Illinois 6519 52-1584865
Phoenix Management Services, Inc...... Pennsylvania 7322 25-1619261
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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 FEBRUARY , 1998
PROSPECTUS
OFFER FOR ALL OUTSTANDING 10% SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
10% SERIES A SENIOR SUBORDINATED NOTES DUE 2007 OF
WERNER HOLDING CO. (DE), INC. WERNER LOGO
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON , 1998, UNLESS EXTENDED
------------------------
Werner Holding Co. (DE), Inc. (the "Issuer"), hereby offers to exchange an
aggregate principal amount of up to $135,000,000 of its 10% Series A Senior
Subordinated Notes due 2007 (the "New Notes") for a like principal amount of its
10% Senior Subordinated Notes due 2007 (the "Old Notes") outstanding on the date
hereof upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
"Exchange Offer"). The New Notes and the Old Notes are collectively hereinafter
referred to as the "Notes." The terms of the New Notes are identical in all
material respects to those of the Old Notes, except for certain transfer
restrictions and registration rights relating to the Old Notes. The New Notes
will be issued pursuant to, and entitled to the benefits of, the Indenture (as
defined) governing the Old Notes.
The New Notes will be unsecured and will be subordinated to all existing and
future Senior Indebtedness (as defined) of the Issuer. The New Notes will also
be guaranteed (the "Guarantees") fully, unconditionally and jointly and
severally by the Issuer's parent, Werner Holding Co. (PA), Inc., and
substantially all of the Issuer's subsidiaries (collectively, the "Guarantors").
The Guarantees will be unsecured and will be subordinated to all existing and
future Senior Indebtedness of the Guarantors. The New Notes and the Guarantees
will rank pari passu with all future Pari Passu Indebtedness (as defined) of the
Company and the Guarantors, respectively, and will rank senior to all other
subordinated indebtedness of the Company and the Guarantors, respectively. The
Indenture permits the Company and the Guarantors, respectively, to incur
additional indebtedness, including Senior Indebtedness under the Issuer's $320.0
million Senior Credit Facility (as defined), subject to certain limitations. See
"Description of the New Notes." As of December 31, 1997, the aggregate amount of
the Issuer's Senior Indebtedness was $186.5 million (exclusive of unused
commitments), and the Issuer had no Pari Passu Indebtedness outstanding other
than the Notes. As of December 31, 1997, the aggregate amount of the Guarantors'
Senior Indebtedness was $191.5 million (exclusive of unused commitments), and
the Guarantors had no Pari Passu Indebtedness outstanding other than the
Guarantees.
The New Notes will bear interest from and including the date of consummation of
the Exchange Offer. Interest on the New Notes will be payable semi-annually on
May 15 and November 15 of each year, commencing May 15, 1998. Additionally,
interest on the New Notes will accrue from the last interest payment date on
which interest was paid on the Old Notes surrendered in exchange therefor or, if
no interest has been paid on the Old Notes, from the date of original issue of
the Old Notes.
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Issuer contained in the Registration Rights Agreement dated
November 14, 1997 (the "Registration Rights Agreement"), among the Issuer, the
Guarantors and the Initial Purchasers (as defined), with respect to the initial
sale of the Old Notes. The Company will not receive any proceeds from the
Exchange Offer. The Issuer will pay all the expenses incident to the Exchange
Offer. Tenders of Old Notes pursuant to the Exchange Offer may be withdrawn at
any time prior to the Expiration Date (as defined) for the Exchange Offer. In
the event the Issuer terminates the Exchange Offer and does not accept for
exchange any Old Notes with respect to the Exchange Offer, the Issuer will
promptly return such Old Notes to the holders thereof. See "The Exchange Offer."
Each 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 delivery of a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"). This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Issuer has agreed that, for a period
of 90 days after the Expiration Date, it will make this Prospectus available to
any broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
Prior to the Exchange Offer, there has been no public market for the Old Notes.
If a market for the New Notes should develop, such New Notes could trade at a
discount from their principal amount. The Issuer currently does not intend to
list the New Notes on any securities exchange or to seek approval for quotation
through any automated quotation system and no active public market for the New
Notes is currently anticipated. There can be no assurance that an active public
market for the New Notes will develop.
The Exchange Offer is not conditioned upon any minimum principal amount of Old
Notes being tendered for exchange pursuant to the Exchange Offer.
SEE "RISK FACTORS" COMMENCING ON PAGE 14 FOR A DISCUSSION OF CERTAIN FACTORS
THAT HOLDERS OF OLD NOTES SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1998.
<PAGE> 3
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE ISSUER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE NEW NOTES OR OLD NOTES BY ANY PERSON
IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE EXCHANGE
PROPOSED TO BE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1998, ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THE DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS.
AVAILABLE INFORMATION
The Issuer is not currently subject to the periodic reporting and other
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Pursuant to the Indenture, the Issuer has agreed to file
with the Securities and Exchange Commission (the "Commission") and provide to
the holders of the Notes annual reports and the information, documents and other
reports that are specified in Sections 13 and 15(d) of the Exchange Act.
The Issuer has filed with the Commission a Registration Statement (which
term includes any amendments thereto) on Form S-4 under the Securities Act with
respect to the New Notes offered by this Prospectus. This Prospectus does not
contain all information set forth in the Registration Statement and the exhibits
thereto, to which reference is hereby made. Statements made in this Prospectus
as to the contents of any contract, agreement, or other document are not
necessarily complete. With respect to each such contract, agreement, or other
document filed as an exhibit to the Registration Statement, reference is made to
such exhibit for a more complete description of the matter involved.
FORWARD LOOKING INFORMATION
THIS PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS. THOSE
STATEMENTS INCLUDE, AMONG OTHER THINGS, THE DISCUSSIONS OF THE COMPANY'S (AS
DEFINED) BUSINESS STRATEGY AND EXPECTATIONS CONCERNING THE COMPANY'S POSITION IN
THE INDUSTRY AND MARKET SHARE, FUTURE OPERATIONS, MARGINS, PROFITABILITY,
LIQUIDITY AND CAPITAL RESOURCES, AS WELL AS STATEMENTS CONCERNING THE
DEVELOPMENT OF NEW PRODUCTS AND THE ACHIEVEMENT OF COST SAVINGS. ALL OF THESE
FORWARD-LOOKING STATEMENTS ARE BASED ON ESTIMATES AND ASSUMPTIONS MADE BY
MANAGEMENT OF THE COMPANY THAT, ALTHOUGH BELIEVED TO BE REASONABLE, ARE
INHERENTLY UNCERTAIN. THEREFORE, UNDUE RELIANCE SHOULD NOT BE PLACED UPON SUCH
STATEMENTS AND ESTIMATES. NO ASSURANCE CAN BE GIVEN THAT ANY OF SUCH STATEMENTS
OR ESTIMATES WILL BE REALIZED AND IT IS LIKELY THAT ACTUAL RESULTS WILL DIFFER
MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. FACTORS
THAT MAY CAUSE SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE
IDENTIFIED IN THE RISK FACTORS DISCUSSED BELOW. IN LIGHT OF THESE AND OTHER
UNCERTAINTIES, THE INCLUSION OF A FORWARD-LOOKING STATEMENT HEREIN SHOULD NOT BE
REGARDED AS A REPRESENTATION BY THE COMPANY THAT THE COMPANY'S PLANS AND
OBJECTIVES WILL BE ACHIEVED.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES
WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY
REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A
FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER CHAPTER 421-B IS
TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN
EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT
THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS
OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT
IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,
CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS
PARAGRAPH.
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SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and Consolidated Financial
Statements (including the notes thereto) appearing elsewhere in this Prospectus.
The consummation of the Old Notes Offering (as defined) occurred simultaneously
with, and was conditioned upon, the consummation of the Recapitalization (as
defined). As used herein and except as the context otherwise may require, the
"Issuer" means Werner Holding Co. (DE), Inc., "Holding" means Werner Holding Co.
(PA), Inc. and the "Company" or "Werner" means, collectively, Holding, the
Issuer and all of their consolidated subsidiaries. Holding has no substantial
operations or assets other than its investment in the Issuer. Unless otherwise
noted, all market share and industry data presented in this Prospectus is based
on Company research, estimates or studies commissioned by the Company and
conducted by third parties every three years, and as such, the most recent
market share and industry data relates to the year ended 1996.
THE COMPANY
OVERVIEW
Werner is the nation's largest manufacturer and marketer of ladders and
other climbing products. Management estimates that in 1996 the Company had
approximately 36% of the estimated $820 million domestic market for climbing
products. Werner's climbing products include aluminum, fiberglass and wood
ladders, scaffolding, stages and planks. The Company markets its broad line of
innovative products across all major price points under the Werner name, which
management believes to be the most widely-recognized climbing products brand
name by both professional and consumer end-users of climbing products. The
Company sells its products through a variety of distribution channels, such as
home improvement retailers, hardware dealers, professional supply houses and
specialty wholesale distributors. Werner is committed to providing the highest
level of customer service and is a primary supplier of ladders to most of the
largest United States home improvement retailers, including power retailers
(e.g. The Home Depot and Lowe's), and to most of the major hardware
co-operatives, including ACE Hardware, Hardware Wholesalers, Inc. ("HWI") and
TruServ. In addition to climbing products, the Company manufactures and sells
aluminum extruded products and more complex fabricated components to a number of
industries, including the automotive, electronics, and architectural and
construction industries. The Company's net sales have increased at a five-year
compound annual growth rate ("CAGR") of 11.9%, from 237.1 million in fiscal 1992
to $416.3 million in fiscal 1997. For the fiscal year ended December 31, 1997,
the Company had Adjusted EBITDA (as described on page 12, note (a)) of $58.3
million.
COMPETITIVE STRENGTHS
Recognized Industry Leader. In 1996, Werner generated approximately three
times the revenue of its largest competitor in the domestic climbing products
market and increased its market share from approximately 32% in 1993 to
approximately 36% in 1996. Management believes that the Company's combination of
(i) market leadership, (ii) breadth of product line, (iii) nationwide production
and distribution, (iv) reputation for high quality and (v) superior customer
service have enabled the Company to attract and retain many of the largest
distributors across the United States as its customers. Management believes that
these factors also enable the Company to serve its customer base on a broad
geographic basis and benefit from economies of scale in manufacturing,
purchasing and distribution. Werner serves all segments of the climbing products
market.
Strong Brand Name. The Werner brand name has nearly a 50-year history, and
management believes Werner is the most recognized name by both professional and
consumer end-users of climbing products. The Company has established its leading
brand name primarily by providing high-quality products and strong customer
service. Werner has successfully leveraged the strength of its brand name to
expand its product offerings, particularly in the fiberglass ladder category,
and to expand its
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market coverage by partnering with the leading home improvement retailers,
hardware dealers and professional supply houses to distribute Werner products.
High-Quality, Innovative Product Line. Management believes that the
Company's products are regarded as the most innovative and highest quality in
the industry. The Company has consistently introduced improvements to the ladder
market, from the early development of the ALFLO(R) Twist-Proof(R) rung-to-side
rail technology, which significantly increased the structural integrity of
lightweight aluminum ladders, to the more recent introduction of premium quality
and visually-appealing fiberglass ladders. Management believes that Werner has
successfully generated incremental new sales and encouraged end-users to
purchase ladders at higher price points by continually introducing innovative,
new products. Management estimates that new or substantially improved products
introduced since 1990 accounted for approximately 48% of the Company's climbing
products sales in 1997.
Superior Customer Service. The Company's strategically located
manufacturing and distribution facilities, coupled with a broad offering of
high-quality products, allow the Company to provide its customers throughout the
United States with one-stop shopping on a cost-effective and timely basis.
Werner's strong relationships with its customers are supported by innovative
sales and marketing programs tailored to serve specific channels of
distribution. The Company has found that by educating and working closely with
its customers it has been able to increase their effectiveness in selling the
Company's products. To this end, the Company has developed innovative marketing
and category management services for its climbing products customers, which
include (i) product mix optimization, (ii) effective point-of-purchase
merchandising and signage, (iii) training programs, (iv) aggressive application
of electronic commerce and (v) customer inventory management programs.
Management believes that these services allow the Company to assist its
customers in maximizing sales. The Company's superior customer service has been
consistently recognized in awards granted to Werner by its customers and
industry organizations.
Loyal and Diverse Customer Relationships. The Company has a broad and well
established customer base of more than 17,000 customers across all major
climbing products distribution channels. Its customer network encompasses
relationships with the major home improvement retailers, hardware dealers,
professional supply houses and wholesale distributors. Werner is a primary
supplier of ladders to most of the largest United States home improvement
retailers, including power retailers, (e.g. The Home Depot and Lowe's), and to
most of the largest hardware co-operatives, including ACE Hardware, HWI and
TruServ. Werner is also a primary supplier to most of the major paint retailers,
such as Sherwin Williams and ICI. Werner attributes its ability to establish
such relationships with its customers primarily to the Company's broad offering
of high-quality products and high level of customer service. These factors have
resulted in a loyal customer base, characterized by low turnover. The Company
has had relationships with many of its major customers for over 20 years.
Vertically Integrated, Cost-Efficient Manufacturing. Werner operates
vertically integrated manufacturing facilities, which allow the Company to
cost-efficiently manufacture consistent, premium quality products as well as to
respond quickly to customer requirements. The Company believes it is the most
vertically integrated company in the climbing products industry. In the last
five years, Werner has invested more than $45 million in its facilities to
increase quality and capacity and to reduce total product and distribution
costs.
Experienced and Committed Management Team. Werner has assembled a strong
and experienced management team at both the corporate and operating levels. The
top fifteen members of Werner's senior management team have an average of over
20 years of experience with the Company. Certain senior managers of the Company
own approximately 13% of the outstanding shares of Holding with an opportunity
to own up to approximately 22% of the shares of Holding through participation in
employee incentive plans.
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BUSINESS STRATEGY
The Company intends to enhance its market leadership position and maximize
profitability and cash flow by implementing the following business strategies:
Increase Penetration of the Domestic Climbing Products Market. The Company
believes it is well positioned to continue to increase its share of the domestic
climbing products market and intends to leverage its strong brand name, broad
product line and established distribution network to increase sales through
existing customers and to develop new customer relationships. The Company also
believes that its strong strategic relationships with leading climbing products
distributors in each channel will facilitate continued market share gains as
such customers further consolidate and expand their channels. Furthermore,
management believes that as distributors continue to consolidate their vendor
bases, the Company's broad product line and ability to supply distributors
throughout the United States provide significant opportunities for domestic
growth. The Company plans to further extend its domestic market coverage by
entering new product categories within the climbing products industry in which
it does not significantly participate at this time, such as domestic platform
ladders and step stools.
Achieve Cost Reductions. Management has identified a number of cost
reduction opportunities from which the Company expects to realize up to
approximately $20 million in annual savings over the next five years, at an
estimated cost of up to approximately $49 million. These include: (i) adding
aluminum remelting capability to certain of the Company's manufacturing sites,
(ii) modernizing a number of extrusion presses, (iii) consolidating warehouses,
and (iv) constructing a new extension ladder production line. Management
believes that these capital investments will significantly enhance the Company's
vertically integrated manufacturing capabilities, thus allowing Werner to reduce
costs, improve productivity and achieve greater economies of scale.
Continue New Product Development. Werner has invested significant resources
in research and development and intends to continue to introduce new products
while focusing on higher margin products. For example, in the third quarter of
1997, the Company introduced the Penguin(TM), an attractive, lightweight,
consumer-oriented platform ladder for household chores. Werner's commitment to
product development includes the application of further advancements in
fiberglass pultrusion technology to climbing products as well as the
introduction of new products for the stage and scaffold markets. Management
believes that Werner's cost-efficient production capability, well recognized
brand name and loyal, diverse customer relationships will enable the Company to
continue to successfully introduce new products and to increase per capita
ladder ownership.
Pursue Complementary Acquisitions and International Expansion. Werner
intends to pursue acquisitions which complement its existing manufacturing and
distribution capabilities, provide opportunities to add capacity, expand product
offerings and achieve further economies of scale. Management believes that the
international climbing products market offers significant growth opportunities
for the Company. Compared to the United States market, the international
climbing products market is highly fragmented and regionally-focused, with
smaller companies offering narrower product lines and limited marketing and
customer service support. Furthermore, management believes that as the major
United States hardware and home improvement chains expand internationally, there
will be a growing need for high-quality, dependable suppliers such as Werner to
establish a direct presence overseas.
THE TRANSACTIONS
On October 8, 1997, Holding entered into a Recapitalization Agreement,
which was amended and restated on October 27, 1997 (the "Recapitalization
Agreement"), with certain affiliates of INVESTCORP S.A. ("Investcorp") and
certain other international investors organized by Investcorp (such affiliates
and investors, the "Investors"). On November 24, 1997 (the "Recapitalization
Closing Date"), pursuant to the Recapitalization Agreement, Holding reclassified
all of the outstanding shares of its Class A Common Stock, par value $1.00 per
share ("Pre-Recapitalization Class A Stock"), and its Class B Common Stock, par
value $1.00 per share ("Pre-Recapitalization Class B Stock"). The Pre-
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<PAGE> 7
Recapitalization Class A Stock was reclassified into shares of Class A Common
Stock, par value $0.01 per share ("Class A Stock"), and Class A-I Common Stock,
par value $0.01 per share ("Class A-I Stock"), and the Pre-Recapitalization
Class B Stock was reclassified into shares of Class B Common Stock, par value
$0.01 per share ("Class B Stock"), and Class B-I Common Stock, par value $0.01
per share ("Class B-I Stock"). On the Recapitalization Closing Date, Holding
redeemed all outstanding shares of Class A-I Stock and Class B-I Stock,
representing approximately 85% of the then outstanding shares of Holding, in
exchange for (i) $2,421.29 per share (the "Cash Redemption Price"), with an
aggregate Cash Redemption Price of approximately $330.7 million and (ii) the
right to receive, upon certain conditions, an additional, one-time, lump sum
payment (the "Market Participation Right"). Simultaneously therewith, the
Investors purchased from Holding for approximately $122.7 million (the "Cash
Equity Investment") shares representing approximately 67% of the shares of
Holding outstanding immediately after the Recapitalization. The foregoing
transactions are collectively referred to herein as the "Recapitalization." The
Class A Stock and the Class B Stock were retained by the pre-Recapitalization
shareholders. Following the Recapitalization, the pre-Recapitalization
shareholders continue to own approximately 33% of the outstanding equity of
Holding, with a value of $59.3 million based on the price paid by the Investors.
Included in this group are certain management shareholders, who continue to
manage and operate the business, and who continue to own approximately 13% of
Holding's capital stock. See "The Transactions -- The Recapitalization."
Financing for the Recapitalization, together with the repayment of certain
existing indebtedness of the Company, was funded by (i) the Cash Equity
Investment, (ii) the offering of $135.0 million principal amount of privately
placed Notes (the "Old Notes") and (iii) 186.5 million of borrowings under a
$320.0 million senior credit facility (the "Senior Credit Facility"). See "The
Transactions -- The Recapitalization" and "The Senior Credit Facility." The
offering of the Old Notes (the "Old Notes Offering") and the Senior Credit
Facility are collectively referred to herein as the "Recapitalization Financing"
and, together with the Recapitalization, the "Transactions."
RISK FACTORS
Holders of Old Notes should consider carefully all of the information set
forth in this Prospectus and, in particular, the information set forth under
"Risk Factors", beginning on page 14.
------------------------
The Issuer is a Delaware corporation. Its principal offices are located at
1105 North Market Street, Suite 1300, Wilmington, Delaware 19899, and its
telephone number is (302) 478-5732. Holding's principal offices are located at
93 Werner Road, Greenville, Pennsylvania 16125 and its telephone number is (724)
588-2550.
THE EXCHANGE OFFER
Issuer........................ Werner Holding Co. (DE), Inc.
Securities Offered............ Up to $135,000,000 in aggregate principal
amount of 10% Series A Senior Subordinated
Notes due 2007 of the Issuer (the "New Notes").
The terms of the New Notes and Old Notes are
identical in all material respects, except for
certain transfer restrictions and registration
rights relating to the Old Notes.
The Exchange Offer............ The New Notes are being offered in exchange for
a like principal amount of Old Notes. Old Notes
may be exchanged only in integral multiples of
$1,000. The issuance of the New Notes is
intended to satisfy obligations of the Company
contained in the Registration Rights Agreement
(as defined).
6
<PAGE> 8
Expiration Date; Withdrawal of
Tender...................... The Exchange Offer will expire at 5:00 p.m.,
New York City time, on , 1998, or
such later date and time to which it is
extended by the Company. The tender of Old
Notes pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration
Date. Any Old Notes not accepted for exchange
for any reason will be returned without expense
to the tendering holder thereof as promptly as
practicable after the expiration or termination
of the Exchange Offer.
Certain Conditions to the
Exchange Offer.............. The Issuer's obligation to accept for exchange,
or to issue New Notes in exchange for, any Old
Notes is subject to certain customary
conditions relating to compliance with any
applicable law, order of any governmental
agency or any applicable interpretation by any
staff of the Commission, which may be waived by
the Issuer in its reasonable discretion. The
Issuer currently expects that each of the
conditions will be satisfied and that no
waivers will be necessary. See "The Exchange
Offer -- Certain Conditions to the Exchange
Offer.
Procedures to Tendering
Old Notes................... Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof,
in accordance with the instructions contained
herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile, together with such Old Notes and any
other required documentation, to the Exchange
Agent (as defined) at the address set forth
herein. See "The Exchange Offer -- Procedures
for Tendering Old Notes."
Use of Proceeds............... There will be no use of proceeds to the Company
from the exchange of Notes pursuant to the
Exchange Offer.
Exchange Agent................ IBJ Schroder Bank & Trust Company is serving as
the Exchange Agent in connection with the
Exchange Offer.
Federal Income Tax
Consequences................ The exchange of Notes pursuant to the Exchange
Offer will not be a taxable event for federal
income tax purposes. See "Certain Federal
Income Tax Consequences."
CONSEQUENCES OF EXCHANGING OLD NOTES PURSUANT TO THE EXCHANGE OFFER
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, holders of Old Notes (other than any
holder who is an "affiliate" of the Company within the meaning of Rule 405 under
the Securities Act) who exchange their Old Notes for New Notes pursuant to the
Exchange Offer generally may offer such New Notes for resale, resell such New
Notes, and otherwise transfer such New Notes without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
such New Notes are acquired in the ordinary course of the holder's business and
such holders have no arrangement with any person to participate in a
distribution of such New Notes. 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." In addition, to
comply with the securities laws of certain jurisdictions, if applicable, the New
Notes may not be offered or sold unless they have been registered or qualified
for sale in such jurisdiction or an exemption from registration or qualification
is
7
<PAGE> 9
available and is complied with. The Issuer has agreed, pursuant to the
Registration Rights Agreement and subject to certain specified limitations
therein, to register or qualify the New Notes for offer or sale under the
securities or blue sky laws of such jurisdictions as any holder of the Notes
reasonably requests in writing. If a holder of Old Notes does not exchange such
Old Notes for New Notes pursuant to the Exchange Offer, such Old Notes will
continue to be subject to the restrictions on transfer contained in the legend
thereon. In general, the Old Notes may not be offered or sold, unless registered
under the Securities Act, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable state securities
laws. See "The Exchange Offer -- Consequences of Failure to Exchange; Resales of
New Notes."
The Old Notes are currently eligible for trading in the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") market. Following
commencement of the Exchange Offer but prior to its consummation, the Old Notes
may continue to be traded in the PORTAL market. Following consummation of the
Exchange Offer, the New Notes will not be eligible for PORTAL trading.
THE NEW NOTES
The terms of the New Notes are identical in all material respect to the Old
Notes, except for certain transfer restrictions and registration rights relating
to the Old Notes. For purposes of this Prospectus, the term "Notes" shall refer
collectively to the New Notes and the Old Notes.
Issuer........................ Werner Holding Co. (DE), Inc.
Securities Offered............ $135,000,000 in aggregate principal amount of
10% Series A Senior Subordinated Notes due 2007
of the Issuer.
Maturity Date................. November 15, 2007.
Interest Payment Dates........ May 15 and November 15 of each year, commencing
on May 15, 1998.
Note Guarantees............... The Issuer's payment obligations under the
Notes are jointly and severally guaranteed on a
senior subordinated basis by Holding and each
of the Issuer's Restricted Subsidiaries other
than any Foreign Subsidiary (as defined) or
Insurance Subsidiary (as defined) (the
"Subsidiary Guarantors" and, together with
Holding, the "Guarantors"). The Note Guarantees
are subordinated in right of payment to all
existing and future Senior Debt of the
Guarantors, including the guarantees of Senior
Debt issued by the Guarantors under the Senior
Credit Facility. See "Description of the New
Notes -- Note Guarantees."
Optional Redemption........... Except as described below, the Notes are not
redeemable at the Issuer's option prior to
November 15, 2002. Thereafter, the Notes will
be subject to redemption at any time at the
option of the Issuer, in whole or in part, upon
not less than 30 nor more than 60 days' notice,
at the redemption prices set forth herein, plus
accrued and unpaid interest and Liquidated
Damages thereon, if any, to the applicable
redemption date. In addition, at any time and
from time to time, prior to November 15, 2000,
the Issuer may redeem up to 35% of the original
aggregate principal amount of Notes at a
redemption price of 110% of the principal
amount thereof, plus accrued and unpaid
interest and Liquidated Damages thereon, if
any, to the redemption date, with the net cash
proceeds of a public offering of common stock
of the Issuer or Holding; provided that at
least 65% of the original aggregate principal
amount of Notes remains outstanding immediately
after the occurrence of such redemption; and
provided further that such redemption shall
occur within
8
<PAGE> 10
60 days of the date of the closing of such
public offering. See "Description of the New
Notes -- Optional Redemption."
Change of Control............. Upon the occurrence of a Change of Control, (i)
the Issuer will have the option, at any time on
or prior to November 15, 2002, to redeem the
Notes in whole, but not in part, at a
redemption price equal to 100% of the principal
amount of the Notes plus the Applicable Premium
as of, and accrued but unpaid interest and
Liquidated Damages thereon, if any, to, the
date of redemption, and (ii) if the Issuer does
not so redeem the Notes, or if a Change of
Control occurs after November 15, 2002, each
holder of Notes will have the right to require
the Issuer to repurchase all or any part of
such holder's Notes at a price equal to 101% of
the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of
purchase. See "Description of the New Notes --
Optional Redemption" and "Description of the
New Notes -- Repurchase at the Option of
Holders -- Change of Control."
Ranking....................... The Notes are general unsecured obligations of
the Issuer that are subordinated to all Senior
Debt (as defined) of the Issuer. The Note
Guarantees are general unsecured obligations of
the Guarantors that are subordinated to all
Senior Debt of the Guarantors. At December 31,
1997, (i) the outstanding Senior Debt of the
Issuer was $186.5 million, all of which was
Secured Debt (as defined), (ii) the Issuer had
no Pari Passu Indebtedness outstanding and no
indebtedness that would be subordinate or
junior in right of payment to the Notes, (iii)
the outstanding Senior Debt of the Guarantors
was $191.5 million, all of which was Secured
Debt, and (iv) the Guarantors had no Pari Passu
Indebtedness and no indebtedness that would be
subordinate or junior in right of payment to
the Note Guarantees. See "Description of the
New Notes -- Subordination."
Restrictive Covenants......... The Indenture contains certain covenants that,
among other things, limit the ability of the
Issuer and/or its Restricted Subsidiaries to
(i) incur additional indebtedness, (ii) pay
dividends or make certain other restricted
payments, (iii) make investments, (iv) enter
into transactions with affiliates, (v) make
certain asset dispositions and (vi) merge or
consolidate with, or transfer substantially all
of its assets to, another person. The Indenture
also limits the ability of the Issuer to create
restrictions on the ability of Restricted
Subsidiaries to pay dividends or make any other
distributions. In addition, the Issuer is
obligated, under certain circumstances, to
offer to repurchase the Notes with the net cash
proceeds of certain sales or other dispositions
of assets. However, all of these limitations
and prohibitions are subject to a number of
important qualifications. See "Description of
the New Notes."
Absence of a Public Market for
the New Notes................. The New Notes are new securities and there is
currently no established market for the New
Notes. Accordingly, there can be no assurance
as to the development or liquidity of any
market for the New Notes. The Company does not
intend to apply for listing of the New Notes on
a securities exchange.
9
<PAGE> 11
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The following summary historical and pro forma financial information is
that of Werner Holding Co. (PA), Inc., the Issuer's parent company. Holding is a
guarantor of the debt of the Issuer and has no substantial operations or assets
other than its investment in the Issuer. As a result, the consolidated financial
condition and results of operations of Holding are substantially the same as
those of the Issuer. The summary historical financial information for each of
the years in the two-year period ended December 31, 1994 and the balance sheet
information at December 31, 1995 have been derived from the audited historical
consolidated financial statements of the Company. The summary historical
financial information for each of the years in the three-year period ended
December 31, 1997 and the pro forma financial information for the year ended
December 31, 1997 have been derived from, and should be read in conjunction
with, the audited Consolidated Financial Statements (including the notes
thereto) appearing elsewhere in this Prospectus. The unaudited pro forma
operating data reflects the Transactions as if they had occurred on January 1,
1997. The pro forma financial information does not purport to represent what the
Company's results of operations would actually have been had the Transactions in
fact occurred on the assumed date or to project the Company's results of
operations for any future date or period. The following table should also be
read in conjunction with "Selected Consolidated Historical Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
10
<PAGE> 12
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31
------------------------------------------------------
1993 1994 1995 1996 1997
------ ------ ------ ------ ------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.............................. $277.9 $328.8 $336.0 $366.9 $416.3
Cost of sales.......................... 208.4 241.4 248.9 265.0 300.1
------ ------ ------ ------ ------
Gross profit........................... 69.5 87.4 87.1 101.9 116.2
General and administrative expense..... 18.3 22.1 25.0 27.0 31.2
Selling and distribution expense....... 33.8 37.9 47.1 47.9 48.9
Recapitalization expense............... -- -- -- -- 22.7
Non-cash compensation charge........... -- -- -- -- 78.5
------ ------ ------ ------ ------
Operating profit (loss)................ 17.4 27.4 15.0 27.0 (65.1)
MIICA investment gains (losses)........ 4.2 (4.0) 1.3 9.5 (14.6)
Interest expense....................... 6.6 5.5 7.2 7.5 9.0
Net income (loss)...................... 4.6 11.3 6.3 19.4 (90.5)
OTHER FINANCIAL DATA:
Adjusted EBITDA(a)..................... $ 32.8 $ 41.8 $ 37.3 $ 50.2 $ 58.3
Cash flows provided by (used in)
operating activities................ 17.5 18.3 (1.4) 19.5 17.2
Depreciation and amortization.......... 6.9 7.4 8.0 9.2 11.5
Net cash interest expense(b)........... 6.6 5.0 6.9 7.5 8.7
Capital expenditures................... 3.5 8.1 12.5 13.0 11.7
Dividends declared per share........... -- 14.75 10.20 11.25 10.50
Ratio of earnings to fixed
charges(c).......................... 3.0x 3.7x 2.2x 3.9x --
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and equivalents................... $ 7.9 $ 0.1 $ 0.6 $ 1.0 $ 3.1
Insurance fund investments............. 43.8 46.1 68.2 80.9 58.6
Working capital........................ 48.1 42.5 59.4 49.2 30.1
Total assets........................... 183.7 199.8 234.6 261.2 288.2
Reserve for losses and loss adjustment
expenses............................ 33.7 36.7 41.5 45.3 49.6
Total debt (including current
maturities)......................... 73.1 60.4 83.5 83.4 322.5
Common shareholders' equity
(deficit)(d)........................ 41.3 49.8 62.1 75.1 (153.7)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997
------------
<S> <C>
PRO FORMA OPERATING DATA:
Net sales.................................................................... $416.3
Adjusted EBITDA(a)........................................................... 58.3
Interest expense............................................................. 31.9
Net cash interest expense(b)................................................. 29.2
Ratio of Adjusted EBITDA to net cash interest expense........................ 2.0x
Ratio of earnings to fixed charges(c)........................................ --
</TABLE>
See Notes to Summary Historical and Pro Forma Financial Information
11
<PAGE> 13
NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN MILLIONS)
(a) EBITDA represents earnings before interest, income taxes and depreciation
and amortization and excludes historical MIICA investment gains or losses
and the following items for the year ended December 31, 1997 directly
related to the Recapitalization: (1) non-recurring non-cash compensation
charge (and a corresponding credit to shareholders' equity) of $78.5
associated with (a) the accelerated vesting, as a result of the
Recapitalization, of outstanding restricted Pre-Recapitalization Class B
Stock previously granted to certain key management employees and (b) the
accelerated vesting, as a result of the Recapitalization, of outstanding
restricted Pre-Recapitalization Class B Stock previously granted to a former
key management employee resulting from a change in the terms of such stock
upon his separation from the Company; (2) Recapitalization expense of $22.7;
(3) amortization of prepaid management fee resulting from an agreement
signed in connection with the recapitalization of $0.1 for the historical
year ended December 31, 1997 and $1.0 for the pro forma year ended December
31, 1997; and (4) amortization of deferred management transaction bonuses of
$0.7.
The following table presents a reconciliation of EBITDA (as described
above) to Adjusted EBITDA:
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
----- ----- ----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
EBITDA (as described above)................ $26.0 $36.0 $25.9 $36.6 $46.5
Reduction in management compensation(i).... 2.4 1.6 3.5 2.8 4.3
Non-recurring expenses(ii)................. -- -- 2.7 4.6 0.9
MIICA investment income(iii)............... 3.4 3.0 3.4 4.6 4.6
Non-recurring private company
expenses(iv)............................. 1.0 1.2 1.8 1.6 2.0
----- ----- ----- ----- -----
Adjusted EBITDA............................ $32.8 $41.8 $37.3 $50.2 $58.3
===== ===== ===== ===== =====
</TABLE>
(i) The reduction in management compensation relates to agreed upon
reductions to certain benefits paid to family members employed by the
Company. Such benefits have not continued subsequent to the
Recapitalization.
(ii) Non-recurring expenses consist of the following: (i) $1.8, $3.8 and
$0.7 in 1995, 1996, and 1997 respectively, relating to the costs of
temporary warehousing space that was not utilized (and is no longer
being maintained) and costs of start-up and incremental inventory
carrying costs associated with the modernization of the Company's
Greenville remelt operation (which are no longer being incurred); and
(ii) $0.9, $0.8 and $0.2 in 1995, 1996, and 1997 respectively, relating
to the closing of certain wood ladder production facilities and related
warehouse facilities.
(iii) For purposes of computing Adjusted EBITDA, the Company has assumed a
7.7% return on the investment portfolio of MIICA. Such 7.7% return
represents the five-year average return on investment assets for
commercial casualty lines as reported by "Best's Aggregates &
Averages," 1997 Edition. The balance of the investment portfolio used
in computing the 7.7% return is the lesser of the December 31, 1997
investment balance of $58.6 and the investment balance as of the
beginning of the respective period. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
(iv) Private company expenses consist of items that have not continued
following the Recapitalization. These expenses include family-related
charitable contributions and research and development grants to
educational institutions.
EBITDA and Adjusted EBITDA are presented because they are commonly used
by certain investors to analyze and compare operating performance and
to determine a company's ability to service and/or incur debt. However,
EBITDA and Adjusted EBITDA should not be considered in isolation or as
a substitute for net income, cash flows or other income or cash flows
data prepared in accordance with generally accepted accounting
principles or as a measure of a
12
<PAGE> 14
NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION -- CONTINUED
company's profitability or liquidity. In addition, EBITDA and Adjusted
EBITDA, as described above, may not be comparable to such measurements
as used by other companies.
(b) Net cash interest expense is defined as interest expense less amortization
of deferred financing cost and original issue discount.
(c) For purposes of the computation, the ratio of earnings to fixed charges has
been calculated by dividing (i) income before income taxes and extraordinary
charge plus fixed charges by (ii) fixed charges. Fixed charges are equal to
interest expense plus the portion of the rent expense estimated to represent
interest. The ratio of earnings to fixed charges is not meaningful for
periods that result in a deficit. For the historical and pro forma year
ended December 31, 1997, the deficiency of earnings to fixed charges was
$89.9 and $109.5, respectively.
(d) The shareholders' deficit at December 31, 1997 was the result of the
Recapitalization and the recording of related expenses, net of income tax
benefits. In connection with the Recapitalization, the Investors made an
equity investment of approximately $122.7, representing approximately 67% of
the outstanding capital stock and voting power of the Company.
13
<PAGE> 15
RISK FACTORS
Prospective purchasers of the Notes should consider carefully the following
risk factors, as well as the other information set forth elsewhere in this
Prospectus. This Prospectus contains, in addition to historical information,
certain forward-looking statements that are subject to risks and other
uncertainties. The Company's actual results may differ materially from those
anticipated in these forward-looking statements. Factors that might cause such a
difference include those discussed below, as well as general economic and
business conditions, competition and other factors discussed elsewhere in this
Prospectus. All forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by the
cautionary statements set forth herein.
SUBSTANTIAL LEVERAGE; DEBT SERVICE OBLIGATIONS; LIQUIDITY
In connection with the Transactions, the Company incurred a significant
amount of indebtedness, the effect of which was to increase the Company's
indebtedness from December 31, 1996 by $239.1 million. At December 31, 1997, the
Company had $322.5 million of consolidated indebtedness, of which $191.5 million
was Senior Debt.
The Company's ability to make scheduled payments of principal of, or to pay
the interest, if any, on, or to refinance its indebtedness (including the
Notes), or to fund planned capital expenditures or finance acquisitions will
depend on its future financial and operating performance, which to a certain
extent is subject to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond its control. Based on the current
and anticipated level of operations, management believes that cash flows from
operations and available cash, together with available borrowings under the
Senior Credit Facility, will be adequate to meet the Company's anticipated
future requirements for working capital, budgeted capital expenditures,
acquisition financing and scheduled payments of principal and interest on its
indebtedness, including the Notes, for the foreseeable future. The Company,
however, may need to refinance all or a portion of the principal of the Notes on
or prior to maturity. There can be no assurance that the Company's business will
generate sufficient cash flows from operations or that future borrowings will be
available under the Senior Credit Facility in an amount sufficient to enable the
Company to service its indebtedness, including the Notes, or make anticipated
capital expenditures and to fund future acquisitions. In addition, there can be
no assurance that the Company will be able to effect any refinancing on
commercially reasonable terms, or at all. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
The degree to which the Company is leveraged could have important
consequences to holders of the Notes, including the following: (i) the Company's
ability to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes may be impaired; (ii) a
substantial portion of the Company's cash flow from operations is required to be
dedicated to the payment of interest on the Notes and the Company's other
existing indebtedness, thereby reducing the funds available to the Company for
other purposes; (iii) the agreements governing the Company's long-term
indebtedness contain certain restrictive financial and operating covenants; (iv)
certain indebtedness under the Senior Credit Facility is at variable rates of
interest, which could cause the Company to be vulnerable to increases in
interest rates; (v) all of the indebtedness outstanding under the Senior Credit
Facility is secured by substantially all of the assets of the Company and will
become due prior to the time the principal on the Notes will become due; (vi)
the Company is substantially more leveraged than certain of its competitors,
which might place the Company at a competitive disadvantage; (vii) the Company
may be hindered in its ability to adjust rapidly to changing market conditions;
and (viii) the Company's substantial degree of leverage could make it more
vulnerable in the event of a downturn in general economic conditions or in its
business. In addition, the degree to which the Company is leveraged could
prevent it from repurchasing all of the Notes tendered to it upon the occurrence
of a Change of Control. See "Description of the New Notes -- Change of Control,"
"The Senior Credit Facility" and "-- Potential Inability to Fund a Change of
Control Offer."
14
<PAGE> 16
SUBORDINATION OF NEW NOTES; ASSET ENCUMBRANCE
The New Notes will be general unsecured obligations of the Issuer that will
be subordinated to all Senior Debt of the Issuer. The Note Guarantees will be
general unsecured obligations of the Guarantors that will be subordinated to all
Senior Debt of the Guarantors. At December 31, 1997, (i) the outstanding Senior
Debt of the Issuer was $186.5 million, all of which was Secured Debt, (ii) the
Issuer had no Pari Passu Indebtedness outstanding and no indebtedness that would
be subordinate or junior in right of payment to the Notes, (iii) the outstanding
Senior Debt of the Guarantors was $191.5 million, all of which was Secured Debt,
and (iv) the Guarantors had no Pari Passu Indebtedness and no indebtedness that
was subordinate or junior in right of payment to the Note Guarantees. Although
the Indenture contains limitations on the amount of additional indebtedness
which the Issuer and the Subsidiary Guarantors may incur, under certain
circumstances the amount of such Indebtedness could be substantial and such
Indebtedness may be Senior Debt. See "Description of the New Notes." The
Indenture provides that the Issuer and the Restricted Subsidiaries may not incur
or otherwise become liable for any indebtedness that is subordinate or junior in
right of payment to any Senior Debt and senior in any respect in right of
payment to the Notes.
The Issuer may not pay principal of, premium on, or interest or Liquidated
Damages on, the Notes, make any deposit pursuant to defeasance provisions or
repurchase or redeem or otherwise retire any Notes (i) if any Designated Senior
Debt (as defined) is not paid when due or any other default on Designated Senior
Debt occurs and the maturity of such Designated Senior Debt is accelerated in
accordance with its terms or (ii) if any other default on Designated Senior Debt
occurs that permits the holders of such Designated Senior Debt to accelerate the
maturity of such Senior Debt in accordance with its terms and the Trustee
received notice of such default, unless, in either case, the default has been
cured or waived, any such acceleration has been rescinded or such Senior Debt
has been paid in full or, in the case of any non-payment default, 179 days have
passed since the default notice was given. Upon any payment or distribution to
creditors of the Issuer in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Issuer or its property, the
holders of Senior Debt will be entitled to receive payment in full in cash or
Cash Equivalents (as defined) before the holders of the Notes will be entitled
to receive any payment (other than in the form of Permitted Junior Securities
(as defined)). See "Description of the New Notes -- Subordination."
Substantially similar provisions are applicable to the Note Guarantees. The New
Notes and the Note Guarantees will also be unsecured and thus, in effect, will
rank junior to any Secured Debt of the Issuer or the Guarantors. The
indebtedness outstanding under the Senior Credit Facility is secured by liens on
substantially all of the assets of the Company.
In addition, under certain circumstances, the Note Guarantee provided by
any Guarantor could be set aside under fraudulent conveyance or similar laws.
See "-- Fraudulent Conveyance; Preferential Transfer." In any such case, the
Notes would be effectively subordinated to all liabilities of such Guarantor,
including trade debt.
RESTRICTIVE LOAN COVENANTS
The Senior Credit Facility includes certain covenants that, among other
things, restrict: (i) the making of investments, loans and advances and the
paying of dividends and other restricted payments; (ii) the incurrence of
additional indebtedness; (iii) the granting of liens, other than liens created
pursuant to the Senior Credit Facility and certain permitted liens; (iv)
mergers, consolidations, and sales of all or a substantial part of the Company's
business or property; (v) the sale of assets; and (vi) the making of capital
expenditures. The Senior Credit Facility also requires the Company to maintain
certain financial ratios, including interest coverage and leverage ratios. All
of these restrictive covenants may restrict the Company's ability to expand or
to pursue its business strategies. The ability of the Company to comply with
these and other provisions of the Senior Credit Facility may be affected by
changes in economic or business conditions, results of operations or other
events beyond the Company's control. The breach of any of these covenants could
result in a default under the Senior Credit Facility, in which case, depending
on the actions taken by the lenders thereunder or their successors or assignees,
such
15
<PAGE> 17
lenders could elect to declare all amounts borrowed under the Senior Credit
Facility, together with accrued interest, to be due and payable, and the Company
could be prohibited from making payments with respect to the Notes until the
default is cured or all Senior Debt is paid or satisfied in full. If the Company
were unable to repay such borrowings, such lenders could proceed against their
collateral. If the indebtedness under the Senior Credit Facility were to be
accelerated, there can be no assurance that the assets of the Company would be
sufficient to repay in full such indebtedness and the other indebtedness of the
Company, including the Notes. See "The Senior Credit Facility," "Description of
the New Notes -- Subordination."
OPERATION THROUGH SUBSIDIARIES
The Issuer conducts substantially all of its operations through its
subsidiaries. As a result, the Issuer is required to rely upon repayment from
its subsidiaries for the funds necessary to meet its obligations, including the
payment of interest on and principal of the Notes. The ability of the
subsidiaries to make such payments will be subject to, among other things,
applicable state laws and, in particular, the Issuer's ability to receive
dividends or loans from Manufacturers Indemnity and Insurance Company of
America, a Colorado corporation and an indirect wholly owned captive insurance
subsidiary of the Issuer ("MIICA"), is strictly limited by applicable insurance
company laws and regulations. Claims of creditors of the Issuer's subsidiaries
will generally have priority as to the assets of such subsidiaries over claims
of the Issuer.
Although the Note Guarantees provide the holders of the Notes with a direct
claim against the assets of the Subsidiary Guarantors, enforcement of the Note
Guarantees against any Subsidiary Guarantor may be subject to legal challenge in
a bankruptcy or reorganization case or a lawsuit by or on behalf of creditors of
such Subsidiary Guarantor and would be subject to certain defenses available to
guarantors generally. See "-- Fraudulent Conveyance; Preferential Transfer."
Although the Indenture contains waivers of most guarantor defenses, certain of
those waivers may not be enforced by a court in a particular case. To the extent
that the Note Guarantees are not enforceable, the Notes would be effectively
subordinated to all liabilities of the Subsidiary Guarantors, including trade
payables of such Subsidiary Guarantors, whether or not such liabilities
constitute Senior Debt under the Indenture. In addition, the payment of
dividends to the Issuer by its subsidiaries is contingent upon the earnings of
those subsidiaries and subject to various business considerations and, for
certain subsidiaries, the Indenture will permit restrictive loan covenants to be
contained in the instruments governing the indebtedness of such subsidiaries,
including the covenants which restrict in certain circumstances the payment of
dividends and distributions and the transfer of assets to the Issuer. See "The
Senior Credit Facility," and "Description of the New Notes -- Certain
Covenants -- Dividend and Other Payment Restrictions Affecting Subsidiaries."
The Company is currently undertaking a review of the desirability of
operating through all the Issuer's direct and indirect subsidiaries, including
the Subsidiary Guarantors. In the event certain of the Issuer's subsidiaries are
deemed no longer necessary, it is expected that such subsidiaries will be
consolidated into the Issuer or one of its remaining subsidiaries. Such
consolidation will have no impact however upon holders of the Notes or the
consolidated results of operations of the Company.
CONTROL OF WERNER
Approximately 67% of the outstanding shares of voting capital stock of
Holding are held by a subsidiary of Investcorp and affiliates of Investcorp
which have entered into revocable management services or similar agreements with
an affiliate of Investcorp, pursuant to which such affiliate has the authority
to direct the voting of such shares for as long as such agreements are in
effect. Accordingly, Investcorp and its affiliates control Holding and have the
power to elect the majority of its directors, to appoint new management and to
approve any action requiring the approval of the holders of its capital stock
voting as a single class, including adoption of most amendments to Holding's
articles of incorporation and approval of mergers or sales of substantially all
of Werner's assets. The directors so elected will have the authority to effect
decisions affecting the capital structure of both Holding and the Issuer,
16
<PAGE> 18
including the issuance of additional capital stock, the implementation of stock
repurchase programs and the declaration of dividends.
DEPENDENCE ON KEY CUSTOMERS
The Company's 10 largest customers accounted for 48.1% of the Company's
1997 net sales. The Company's largest customer, The Home Depot, accounted for
18.0% of the Company's 1997 net sales. The Company does not have contractual
agreements with most of these key climbing products customers for the supply of
products. The loss of certain of these key customers or a significant decrease
in the volume of products supplied to any of such customers could have a
material adverse effect on the Company. See "Business -- Marketing and
Distribution."
ANTICIPATED COST SAVINGS
Management has identified a number of cost reduction opportunities from
which the Company expects to realize up to approximately $20 million in annual
savings over the next five years, at an estimated cost of up to approximately
$49 million. These include: (i) adding aluminum remelting capability to certain
of the Company's manufacturing sites, (ii) modernizing a number of extrusion
presses, (iii) consolidating warehouses and production facilities and (iv)
constructing a new extension ladder production line. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- General," "Business -- Overview" and "Business -- Business
Strategy -- Achieve Cost Reductions."
These cost savings and capital expenditure estimates were prepared solely
by members of the management of the Company. The estimates necessarily reflect
numerous assumptions as to future sales levels and other operating results, the
availability of funds for capital expenditures as well as general industry and
business conditions and other matters, many of which are beyond the control of
the Company. All of these forward-looking statements are based on estimates and
assumptions made by management of the Company, which although believed to be
reasonable, are inherently uncertain and difficult to predict. There can be no
assurance that the savings anticipated in these forward-looking statements will
be achieved despite incurring the planned capital expenditures. In addition,
there can be no assurance that unforeseen costs and expenses or other factors
will not offset the estimated cost savings or other components or the Company's
plan in whole or in part.
COMPETITION
The Company competes in the climbing product market with a number of
national and regional manufacturers. The Company competes in the extruded
products market with several integrated primary aluminum producers and various
independent producers of aluminum extruded products. Some of the Company's
competitors in the climbing products and the extruded products markets have
greater financial resources and are less leveraged than the Company. Some of the
Company's extruded products competitors are larger than the Company. The Company
competes on the basis of, among other things, competitive prices, prompt
availability, product differentiation, quality products and services, and a
broad product offering. See "Business -- Competition."
LEGAL PROCEEDINGS
The Company is involved from time to time in various legal proceedings and
claims incident to the normal conduct of its business. Although it is impossible
to predict the outcome of any pending legal proceeding, the Company believes
that such legal proceedings and claims, individually and in the aggregate, are
either without merit, are covered by insurance or are adequately reserved for,
and will not have a material adverse effect on its financial condition or
results of operations.
Due to the nature of the Company's products, the Company is subject to
product liability claims involving personal injuries allegedly related to the
Company's products. The Company insures itself through its captive insurance
subsidiary, MIICA, and, to a certain extent, through reinsurance arrange-
17
<PAGE> 19
ments. The Company believes that its insurance is generally adequate to cover
product liability claims. Nevertheless, currently pending claims and any future
claims are subject to the uncertainties related to litigation and the ultimate
outcome of any such proceedings or claims cannot be predicted. Due to
uncertainty with respect to the nature and extent of manufacturer's and
distributors' liability for personal injuries, there is also no assurance that
the product liability insurance of the Company is or will be adequate to cover
such claims. In addition, there can be no assurance that MIICA will be solvent
when required to make payments on claims. Furthermore, there can be no assurance
that insurance will remain available or, if available, that it will not be
prohibitively expensive. The loss of insurance coverage could have a material
adverse effect on the Company's results of operations and financial condition.
SENSITIVITY TO ECONOMIC CYCLES AND WEATHER CONDITIONS
A significant percentage of the Company's sales of climbing products is
attributable to new residential and nonresidential constructions, which are
affected by such cyclical factors as interest rates, inflation, consumer
spending habits and employment. Similarly, a significant percentage of the
Company's sales of extruded products is attributable to the new and used
automobile and automobile parts markets, which are also affected by such
cyclical factors. Sales of climbing equipment are also sensitive to prevailing
weather conditions. Unusually severe weather can reduce or defer sales of
climbing products by delaying elective home maintenance and discouraging
do-it-yourself projects, which account for a growing portion of the Company's
sales.
AVAILABILITY AND PRICING OF RAW MATERIALS
The Company purchases aluminum, glass and other raw materials from various
suppliers. While all such materials are available from numerous independent
suppliers, commodity raw materials are subject to price fluctuations. There have
been historical periods of rapid and significant movements in the price of
aluminum, both upward and downward. Historically, the Company has entered into
futures contracts with respect to its purchases of aluminum to minimize or hedge
commodity price fluctuations. However, the Company's results of operations and
financial condition have in the past been, and may again in the future be,
adversely affected by increases in raw material or component costs or their lack
of availability. See "Business -- Industry" and "Business -- Raw Materials and
Suppliers."
ENVIRONMENTAL REGULATION
The Company's operations are subject to a wide variety of federal, state
and local laws and regulations governing, among other things, emissions to air,
discharge to waters, the generation, handling, storage, transportation,
treatment and disposal of hazardous substances and other materials, and employee
health and safety matters. Also, as an owner and/or operator of real property or
a generator of hazardous substances, the Company may be subject to environmental
cleanup liability, regardless of fault, pursuant to the Comprehensive
Environmental Response Compensation and Liability Act or analogous state laws.
The Company believes that its operations and facilities have been and are being
operated in compliance in all material respects with applicable environmental
and health and safety laws and regulations, many of which provide for
substantial fines and criminal sanctions for violations. However, the operation
of manufacturing plants entails risks of financial exposure for environmental
noncompliance and cleanup liabilities. There can be no assurance that the
Company will not incur costs in the future for cleanup and other remedial
activities that will have a material adverse effect on the Company. In addition,
potentially significant expenditures could be required in order to comply with
evolving environmental and health and safety laws, regulations or requirements
that may be adopted or imposed in the future. See "Business -- Environmental
Matters."
MIICA INVESTMENT PORTFOLIO
The Company, through MIICA, maintains an investment portfolio to provide
reserves to cover its estimated exposure. Over half of MIICA's investment
portfolio consists of cash, cash equivalents and investment grade securities
with fixed maturities. The market value of MIICA's investments varies depending
on economic and market conditions. Absent other factors, the market values of
fixed maturity securities are likely to decline as interest rates rise.
Approximately 14% of the portfolio is invested in
18
<PAGE> 20
publicly traded "small cap" stocks and other non-investment grade securities,
the value of which may fluctuate more rapidly than other types of investments.
In the fiscal year ended December 31, 1997, MIICA realized an investment loss of
$14.6 million due primarily to losses on trading securities sold and a write
down for the other than temporary decline in market value of certain investments
held. MIICA may, from time to time, for business or regulatory reasons, be
required to sell certain of its investments at a time when their market value is
less than the cost of such investments. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
POTENTIAL INABILITY TO FUND A CHANGE OF CONTROL OFFER
A Change of Control could require the Issuer to refinance substantial
amounts of indebtedness. Upon the occurrence of a Change of Control each holder
of Notes would have the right to require the Issuer to repurchase all or a
portion of such holder's Notes at a price equal to 101% of the aggregate
principal amount of the Notes, together with accrued and unpaid interest, and
Liquidated Damages if any, to the date of repurchase. However, the Senior Credit
Facility prohibits the purchase of the Notes by the Issuer in the event of a
Change of Control, unless and until such time as the indebtedness under the
Senior Credit Facility is repaid in full. The Issuer's failure to purchase the
Notes would result in a default under the Indenture and the Senior Credit
Facility, which, in turn, could result in amounts outstanding under the Senior
Credit Facility being declared due and payable. Any such declaration could have
adverse consequences to the Company and the holders of the Notes. In the event
of a Change of Control, there can be no assurance that the Issuer would have
sufficient assets to satisfy all of its obligations under the Senior Credit
Facility and the Notes. See "The Transactions," "The Senior Credit Facility" and
"Description of the New Notes -- Repurchase at the Option of Holders -- Change
of Control."
DEPENDENCE ON KEY PERSONNEL
The Company believes that its success is largely dependent upon the
abilities and experience of its senior management team. The loss of the services
of one or more of these senior executives without a suitable replacement could
have a material adverse effect on the Company's business and future operations.
The Company does not maintain key man life insurance with respect to any of its
executive officers. The Company has employment agreements with certain of its
executives. See "Management -- Employment Arrangements Following Consummation of
the Recapitalization."
FRAUDULENT CONVEYANCE; PREFERENTIAL TRANSFER
If the court in a lawsuit brought by an unpaid creditor or representative
of creditors, such as a trustee in bankruptcy, were to find under relevant
federal and state fraudulent conveyance statutes that the Issuer or any
Guarantor did not receive fair consideration or reasonably equivalent value for
incurring the indebtedness represented by the Notes or its Note Guarantee, and
that, at the time of such incurrence, the Issuer or such Guarantor (i) was
insolvent, (ii) was rendered insolvent by reason of such incurrence, (iii) was
engaged in a business or transaction for which the assets remaining with the
Issuer or such Guarantor constituted unreasonably small capital or (iv) intended
to incur, or believed that it would incur, debts beyond its ability to pay such
debts as they matured, such court, subject to applicable statutes of limitation,
could avoid the Issuer's obligations under the Notes or the Guarantor's
obligations under the Note Guarantees, subordinate the Notes or the Note
Guarantees to other indebtedness of the Issuer or the Guarantors or take other
action detrimental to the holders of the Notes.
The measure of insolvency for these purposes will vary depending upon the
law of the jurisdiction being applied. Generally, however, a company will be
considered insolvent for these purposes if the sum of that company's debts is
greater than all of that company's assets at a fair valuation, or if the present
fair salable value of that 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 matured. Moreover, regardless of solvency, a court could avoid an
incurrence of indebtedness, including the Notes, if it determined that such
transaction was made with intent to hinder, delay or defraud creditors, or a
court could subordinate
19
<PAGE> 21
the indebtedness, including the Notes, to the claims of all existing and future
creditors on similar grounds. Based upon financial and other information
currently available to it, management believes the Issuer was solvent at the
time of the Transactions and continues to be solvent. However, there can be no
assurance as to what standard a court would apply in order to determine whether
the Issuer or the Guarantors were "insolvent" upon consummation of the sale of
the Notes and the Note Guarantees.
Additionally, under federal bankruptcy or applicable state insolvency law,
if certain bankruptcy or insolvency proceedings were initiated by or against the
Issuer or any Guarantor within 90 days after any payment by the Issuer or any
Guarantor with respect to the Notes or the Note Guarantees or the incurrence of
any future Note Guarantee or if the Issuer or any Guarantor anticipated becoming
insolvent at the time of such payment or incurrence, all or a portion of such
payment or such future Note Guarantee could be avoided as a preferential
transfer and the recipient of such payment could be required to return such
payment.
LACK OF PUBLIC MARKET
The Notes are new securities for which there currently is no market.
Although the Initial Purchasers (as defined) have informed the Issuer that they
currently intend to make a market in the Notes, they are not obligated to do so
and any such market making may be discontinued at any time without notice. In
addition, such market making activity may be limited during the pendency of this
Exchange Offer. Accordingly, there can be no assurance as to the development or
liquidity of any market for the Notes. The Old Notes are eligible for trading by
qualified buyers in the PORTAL market. Following consummation of the Exchange
Offer, the New Notes will not be eligible for PORTAL trading. The Issuer does
not intend to apply for listing of the Notes on any securities exchange or for
quotation through The Nasdaq National Market.
This Exchange Offer is not conditioned upon any minimum or maximum
aggregate principal amount of Notes being tendered for exchange. No assurance
can be given as to the liquidity of the trading market for the Exchange Notes,
or, in the case of non-tendering holders of Notes, the trading market for the
Notes following the Exchange Offer.
The liquidity of, and trading market for, the Notes also may be adversely
affected by general declines in the market for similar securities. Such a
decline may adversely affect such liquidity and trading markets independent of
the financial performance of, and prospects for, the Company.
IMPACT OF THE YEAR 2000
Based on recent assessments, the Company has determined that it will be
required to modify certain portions of its software so that its computer systems
will function properly with respect to dates in the Year 2000 and thereafter.
The Company presently believes that with modifications to existing software and
conversions to new software, the Year 2000 issue will not pose significant
operational problems for its computer systems. However, if such modifications
are not made, or are not timely completed, the Year 2000 issue could have a
material adverse impact on the operations of the Company.
The Company has also initiated communications with its significant
suppliers and customers regarding the Year 2000 issue. However, there can be no
guarantee that the systems of these other companies will be timely converted and
the failure of the Company's significant suppliers and customers to make
necessary Year 2000 modifications could have a material adverse impact on the
Company's results and operations.
The Company will primarily utilize internal resources to reprogram, or
replace, and test the software for Year 2000 modifications. The Company
anticipates completing the Year 2000 project by December 31, 1998, which is
prior to any impact of the Year 2000 on its operating systems. The Company
estimates the cost of the project to be approximately $1 million.
The costs of the project and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best estimates
which were derived utilizing numerous
20
<PAGE> 22
assumptions of future events. However, there can be no guarantee that these
estimates and the timetable will be achieved and actual results could differ
materially from those anticipated. See "Management's Discussion and Analysis of
Financial Condition and Results of Operation -- Impact of the Year 2000".
THE TRANSACTIONS
On October 8, 1997, Holding entered into the Recapitalization Agreement,
which was amended and restated on October 27, 1997, with the Investors. On
November 24, 1997, pursuant to the Recapitalization Agreement, Holding redeemed
approximately $330.7 million of its outstanding equity and the Investors
invested approximately $122.7 million in new equity of Holding. The remainder of
the funds used to redeem the then current shareholders' equity interests were
provided by the Old Notes Offering and the Senior Credit Facility.
THE RECAPITALIZATION
Pursuant to the closing of the Recapitalization, Holding filed Restated
Articles of Incorporation of Holding (the "Restated Articles") with the
Department of State of the Commonwealth of Pennsylvania. The Restated Articles
reclassified all of Holding's capital stock as follows: (i) each share of Pre-
Recapitalization Class A Stock held by shareholders who were not active in the
management of the Company at the time of the Transactions ("Non-Management
Shareholders") were reclassified into the right to retain 0.1376 of a fully paid
and non-assessable share of Class A Stock and the right to receive 0.8624 of a
fully paid and non-assessable share of Class A-I Stock and each share of
Pre-Recapitalization Class B Stock held by Non-Management Shareholders was
reclassified into the right to retain 0.1376 of a fully paid and non-assessable
share of Class B Stock and the right to receive 0.8624 of a fully paid and
non-assessable share of Class B-I Stock; (ii) each share of Class A Stock and
Class B Stock held by shareholders who were active in the management of the
Company at the time of the Transactions ("Management Shareholders") was
reclassified into the fractions of fully paid and non-assessable shares of Class
A Stock and Class A-I Stock, and Class B Stock and Class B-I Stock,
respectively, as set forth in the Recapitalization Agreement; and (iii) Class C
Common Stock, Class D Common Stock, Class E Common Stock and Common Stock was
newly authorized for issuance.
On the Recapitalization Closing Date, (i) the Class A-I Stock and the Class
B-I Stock was redeemed at the cash redemption price of $2,421.29 per share, plus
the Market Participation Right; (ii) the pre-Recapitalization shareholders
retained the outstanding shares of Class A Stock and Class B Stock; and (iii)
the Investors purchased approximately $122.7 million of Holding's Class C Common
Stock, Class D Common Stock and Class E Common Stock. Following the
Recapitalization, the pre-Recapitalization shareholders, including the
Management Shareholders, continue to own approximately 33% of the outstanding
voting equity of Holding and the Management Shareholders, who continue to manage
and operate the business, continue to own approximately 13% of Holding's voting
capital stock. Immediately following the Recapitalization, the Investors owned
approximately 67% of the outstanding voting equity of Holding.
Market Participation Right. If, prior to the tenth anniversary of the
Closing Date (i) there is an initial underwritten public offering of at least
10% of the common equity of Holding, or the Investors sell a majority of their
shares of Holding (which sale may or may not result in a Change of Control under
the terms of the Notes), and (ii) at the time of such initial public offering or
sale of shares, Holding's equity value equals or exceeds certain target values
that imply significant annual compound rates of return (between 20% and 40%) to
the post-Recapitalization shareholders, then those persons who have the Market
Participation Right shall be entitled to receive an aggregate amount equal to up
to 5% of Holding's equity value (the "Payment"). The Payment will be payable in
cash, provided that Holding, in its discretion, may make up to half of the
Payment in notes or similar obligations with market terms which Holding's Board
of Directors in good faith believes are of equivalent value.
21
<PAGE> 23
CAPITAL STOCK FOLLOWING THE RECAPITALIZATION
The following table sets forth the authorized and outstanding shares of
capital stock of Holding following the consummation of the Recapitalization:
<TABLE>
<CAPTION>
SHARES OUTSTANDING
AS OF THE RECAPITALIZATION
TITLE AUTHORIZED SHARES CLOSING DATE
- -------------------------------------------------- ----------------- ---------------------------
<S> <C> <C>
Class A Common Stock, par value $0.01 per share... 5,000 2,058.6786
Class A-I Common Stock, par value $0.01 per
share........................................... 13,000 --
Class B Common Stock, par value $0.01 per share... 25,000 22,438.0969
Class B-I Common Stock, par value $0.01 per
share........................................... 140,000 --
Class C Common Stock, par value $0.01 per share... 45,000 4,681.7850
Class D Common Stock, par value $0.01 per share... 1,000 1,000.0000
Class E Common Stock, par value $0.01 per share... 50,000 45,000.0000
Common Stock, par value $0.01 per share........... 131,000 --
------- ------
Total........................................... 410,000 75,178.5605
------- ------
</TABLE>
Holders of the Class A Common Stock and Class B Common Stock are entitled
to one vote per share and holders of the Class D Common Stock are entitled to
50.6818 votes per share on all matters as to which shareholders may be entitled
to vote pursuant to the Pennsylvania Business Corporation Law of 1988. Class C
Common Stock and Class E Common Stock have no voting rights. Upon the occurrence
of a sale of 100% of the outstanding equity securities of Holding, a sale of
substantially all the assets of the Company or a public offering of any equity
securities of Holding, each outstanding share of Class A Common Stock, Class B
Common Stock, Class C Common Stock, Class D Common Stock and Class E Common
Stock will convert into one share of Common Stock of Holding. When issued,
Common Stock of Holding will have one vote per share.
THE SENIOR CREDIT FACILITY
As part of the Transactions, the Issuer entered into the Senior Credit
Facility with Bankers Trust Company ("BT"), as administrative agent and
co-arranger, Merrill Lynch Capital Corporation, as syndication agent and
co-arranger, The Chase Manhattan Bank, as documentation agent, Goldman Sachs
Credit Partners L.P. as co-agent, and the several lenders parties thereto. The
Senior Credit Facility consists of two term loan facilities in an aggregate
principal amount of $145.0 million (the "Term Loan Facilities"), a revolving
credit facility in an aggregate principal amount of up to $100.0 million (the
"Revolving Facility"), and a revolving credit facility which is subject to a
borrowing base amount not to exceed 80% of eligible receivables in an aggregate
principal amount of up to $75.0 million (the "Receivables Facility"). See "The
Senior Credit Facility."
USE OF PROCEEDS
There will be no proceeds to the Company from the Exchange of Notes
pursuant to the Exchange Offer.
22
<PAGE> 24
CAPITALIZATION
The following table sets forth the unaudited consolidated cash and
equivalents and the capitalization of the Company at December 31, 1997. This
table should be read in conjunction with "Summary Historical and Pro Forma
Financial Information," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
(including the notes thereto) appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------
(DOLLARS IN MILLIONS)
<S> <C>
Cash and equivalents (excluding MIICA)................................... $ 3.1
=======
Short-term debt:
Receivables Facility(a)................................................ $ 41.5
Long-term debt (including current portion):
Senior Credit Facility:
Revolving Facility(b)............................................... --
Term Loan Facilities................................................ 145.0
Variable Rate Industrial Building Revenue Bonds due 2015............... 5.0
10% Senior Subordinated Notes due 2007, net of unamortized discount.... 131.0
-------
Total debt.......................................................... 322.5
Total shareholders' (deficit)(c).................................... (153.7)
-------
Total capitalization................................................ $ 168.8
=======
</TABLE>
(a) Permits maximum borrowings of 80% of eligible receivables as defined in the
Senior Credit Facility agreement, up to an aggregate amount of $75.0.
(b) Permits maximum borrowings of $100.0.
(c) The shareholders' deficit at December 31, 1997 was the result of the
Recapitalization and the recording of related expenses, net of income tax
benefits. In connection with the Recapitalization, the Investors made an
equity investment of approximately $122.7 representing approximately 67% of
the outstanding capital stock and voting power of the Company.
23
<PAGE> 25
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
The following unaudited pro forma condensed consolidated statement of
operations (the "Unaudited Pro Forma Condensed Consolidated Statement of
Operations") is that of Werner Holding Co. (PA), Inc., the Issuer's parent
company. Holding is a guarantor of the debt of the Issuer and has no substantial
operations or assets other than its investment in the Issuer. As a result, the
consolidated financial condition and results of operations of Holding are
substantially the same as those of the Issuer.
The Unaudited Pro Forma Condensed Consolidated Statement of Operations has
been prepared by applying pro forma adjustments to the Consolidated Statement of
Operations of the Company included elsewhere in this Prospectus. The Unaudited
Pro Forma Statement of Operations for the year ended December 31, 1997 gives pro
forma effect to the Transactions as if they were consummated as of January 1,
1997 and excludes certain nonrecurring items directly attributable to the
Transactions. The adjustments are described in the accompanying notes. The
Unaudited Pro Forma Condensed Consolidated Statement of Operations should not be
considered indicative of actual results that would have been achieved had the
Transactions been consummated on the date or for the period indicated and does
not purport to indicate results of operations as of any future date or for any
future period. The Unaudited Pro Forma Condensed Consolidated Statement of
Operations should be read in conjunction with the Consolidated Financial
Statements (including the notes thereto) appearing elsewhere in this Prospectus.
24
<PAGE> 26
WERNER HOLDING CO. (PA), INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
TRANSACTION
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
Net sales............................................... $416.3 $ 416.3
Cost of sales........................................... 300.1 300.1
------- ------- -------
Gross profit............................................ 116.2 116.2
General and administrative expense...................... 31.2 $ (3.4)(a) 27.8
Selling and distribution expense........................ 48.9 48.9
Recapitalization expense................................ 22.7 22.7
Non-cash compensation charge............................ 78.5 78.5
------- ------- -------
Operating loss.......................................... (65.1) 3.4 (61.7)
Other expense, net...................................... (15.7) (15.7)
------- ------- -------
Loss before interest and taxes.......................... (80.8) 3.4 (77.4)
Interest expense........................................ 9.0 22.9(b) 31.9
------- ------- -------
Loss before income taxes................................ (89.8) (19.5) (109.3)
Provision (benefit) for income taxes.................... 0.7 (7.4)(c) (6.7)
------- ------- -------
Net loss................................................ $(90.5) (12.1) $(102.6)
======= ======= =======
EBITDA(d)............................................... $ 46.5 $ 4.3 $ 50.8
======= ======= =======
Adjusted EBITDA(e)...................................... $ 58.3 $ -- $ 58.3
======= ======= =======
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations.
25
<PAGE> 27
WERNER HOLDING CO. (PA), INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(DOLLARS IN MILLIONS)
The Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the year ended December 31, 1997 reflects the Transactions as if they had
occurred on January 1, 1997 and exclude non-recurring items directly
attributable to the Transactions. The pro forma adjustments are based on
available information and certain assumptions that management believes are
reasonable.
<TABLE>
<CAPTION>
FISCAL
YEAR ENDED
DECEMBER
31,
1997
-----------
<S> <C>
(a) Reflects the following:
Reduction of management compensation as a result of agreements signed in
connection with the Transactions....................................... $(4.3)
Amortization of prepaid management fees ($1.0 less $0.1 which is included
in historical operating results)....................................... 0.9
-----------
$(3.4)
==========
(b) Reflects the following:
Elimination of historical net interest expense including amortization of
debt issuance costs on retired debt.................................... $(9.0)
Interest relating to $5.0 of Industrial Revenue Bonds.................... 0.2
Interest resulting from borrowings under the $100.0 Revolving Facility
under the Senior Credit Facility at an interest rate of LIBOR +2.25%
(8.15%)(1)............................................................. --
Interest resulting from borrowings under the Receivables Facility at an
assumed interest rate of LIBOR +1.50% (7.40%)(2)....................... 3.1
Interest resulting from $90.0 Tranche B term loan under the Senior Credit
Facility at an assumed interest rate of LIBOR +2.50% (8.40%)........... 7.6
Interest resulting from $55.0 Tranche C term loan under the Senior Credit
Facility at an assumed interest rate of LIBOR +2.75% (8.65%)........... 4.8
Interest resulting from $135.0 of debt issued under the Notes, at an
interest rate of 10.00%................................................ 13.5
Amortization of debt issuance costs and original issue discount of $19.3
associated with the Senior Credit Facility and the Notes over the
respective term of indebtedness........................................ 2.7
-----------
$22.9
==========
A 25 basis point increase or decrease in the assumed average interest rate on the variable
rate debt issued in connection with the Recapitalization Financing would change the pro forma
annual interest expense by approximately $0.5 and the pro forma annual net income by
approximately $0.3. Additionally, a 25 basis point increase or decrease in the assumed return
on MIICA investments would change the annual pro forma Adjusted EBITDA by approximately $0.1.
</TABLE>
- ---------------
(1) No amounts were borrowed under the Revolving Facility in 1997 except for
amounts issued under the letter of credit subfacility.
(2) Interest calculated using the $41.5 outstanding balance established in
connection with the Recapitalization. The Company intends to refinance the
Receivables Facility with an accounts receivables securitization facility
with an interest rate that is expected to be less than that of the
Receivables Facility in 1998.
26
<PAGE> 28
WERNER HOLDING CO. (PA), INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED -- (CONTINUED)
STATEMENT OF OPERATIONS
(DOLLARS IN MILLIONS)
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
<TABLE>
<S> <C>
(c) Reflects the tax effect of items (a) and (b) above at an assumed effective tax rate of
38.0%.
(d) EBITDA represents earnings before interest, income taxes, depreciation, and amortization
and MIICA investment losses of $14.6 for the historical and pro forma year ended December
31, 1997, reflects reductions in management compensation resulting from agreements signed
in connection with the Recapitalization of $4.3 for the pro forma year ended December 31,
1997 and excludes the following items directly related to the Recapitalization:
(1) Non-recurring non-cash compensation charge (and a corresponding credit to
shareholders' equity) of $78.5 for the historical and pro forma year ended December
31, 1997 associated with (a) the accelerated vesting, as a result of the
Recapitalization, of outstanding restricted Pre-Recapitalization Class B Stock
previously granted to certain key management employees, and (b) the accelerated
vesting, as a result of the Recapitalization, of outstanding restricted Pre-
Recapitalization Class B Stock previously granted to a former key management employee
resulting from a change in the terms of such stock upon his separation from the
Company.
(2) Recapitalization expenses of $22.7 for the historical and pro forma year ended
December 31, 1997.
(3) Amortization of prepaid management fees resulting from an agreement signed in
connection with the Recapitalization of $0.1 for the historical year ended December
31, 1997 and $1.0 for the pro forma year ended December 31, 1997.
(4) Amortization of deferred management transaction bonuses of $0.7 for the historical
and pro forma year ended December 31, 1997.
EBITDA and Adjusted EBITDA are presented because they are commonly used by certain
investors to analyze and compare operating performance and to determine a company's
ability to service and/or incur debt. However, EBITDA should not be considered in
isolation or as a substitute for net income, cash flows or other income or cash flow data
prepared in accordance with generally accepted accounting principles or as a measure of a
company's profitability or liquidity. In addition, EBITDA, as described above, and
Adjusted EBITDA, as described above, may not be comparable to such measurements as used
by other companies.
(e) The following table reconciles EBITDA (excluding MIICA investment income (loss)) to
Adjusted EBITDA. See Note (a) to the Notes to Summary Historical and Pro Forma Financial
Information.
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
FISCAL YEAR ENDED
DECEMBER 31, 1997
-----------------
<S> <C>
EBITDA (as described in (d) above)................................... $50.8
Adjustments to EBITDA
Non-recurring expenses......................................... 0.9
MIICA investment income........................................ 4.6
Non-recurring private company expenses......................... 2.0
Total adjustments............................................ 7.5
Adjusted EBITDA...................................................... $58.3
</TABLE>
- ---------------
The above table does not reflect the adjustment for reduction in management
compensation reflected in the adjustments to Adjusted EBITDA set forth in
"Summary Historical and Pro Forma Financial Information" and "Selected
Consolidated Historical Financial Data" because such amounts have been reflected
in the pro forma adjustments described above. See note (a). Such adjustment has
been reflected in determining pro forma EBITDA.
27
<PAGE> 29
WERNER HOLDING CO. (PA), INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED -- (CONTINUED)
STATEMENT OF OPERATIONS
(DOLLARS IN MILLIONS)
The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 31, 1997 includes the following nonrecurring items that are
directly attributable to the Recapitalization and were charged to historical
results of operations for the year ended December 31, 1997:
(1) Recapitalization expenses of $22.7 including investment banker fees,
transaction fees, legal and accounting fees, transaction bonuses paid to
certain employees and shareholders and other miscellaneous transaction
related expenses.
(2) Non-recurring non-cash compensation charge (and a corresponding credit to
shareholders' equity) of $78.5 for the historical and pro forma year ended
December 31, 1997 associated with (a) the accelerated vesting, as a result
of the Recapitalization, of outstanding restricted Pre-Recapitalization
Class B Stock previously granted to certain key management employees, and
(b) the accelerated vesting, as a result of the Recapitalization, of
outstanding restricted Pre-Recapitalization Class B Stock previously granted
to a former key management employee resulting from a change in the terms of
such stock upon his separation from the Company.
28
<PAGE> 30
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The following selected consolidated historical financial data is that of
Werner Holding Co. (PA), Inc., the Issuer's parent company. Holding is a
guarantor of the debt of the Issuer and has no substantial operations or assets
other than its investment in the Issuer. As a result, the consolidated financial
condition and results of operations of Holding are substantially the same as
those of the Issuer. The selected consolidated historical financial data for
each of the years in the two-year period ended December 31, 1994 and the balance
sheet information at December 31, 1995 have been derived from the audited
historical consolidated financial statements of the Company. The selected
consolidated historical and pro forma financial data for each of the years in
the three-year period ended December 31, 1997 have been derived from, and should
be read in conjunction with, the audited Consolidated Financial Statements
(including the notes thereto) appearing elsewhere in this Prospectus. The
unaudited pro forma operating data reflects the Transactions as if they had
occurred on January 1, 1997 and excludes certain nonrecurring items directly
attributable to the Transactions. The pro forma financial information does not
purport to represent what the Company's results of operations would actually
have been had the Transactions in fact occurred on the assumed date or to
project the Company's results of operations for any future date or period. The
following table should also be read in conjunction with "Unaudited Pro Forma
Condensed Consolidated Statement of Operations" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31
--------------------------------------------------
1993 1994 1995 1996 1997
------ ------ ------ ------ ------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales................................... $277.9 $328.8 $336.0 $366.9 $416.3
Cost of sales............................... 208.4 241.4 248.9 265.0 300.1
------ ------ ------ ------ ------
Gross profit............................. 69.5 87.4 87.1 101.9 116.2
General and administrative expenses......... 18.3 22.1 25.0 27.0 31.2
Selling and distribution expenses........... 33.8 37.9 47.1 47.9 48.9
Recapitalization expense.................... -- -- -- -- 22.7
Non-cash compensation charge................ -- -- -- -- 78.5
------ ------ ------ ------ ------
Operating profit (loss)..................... 17.4 27.4 15.0 27.0 (65.1)
MIICA investment gains (losses)............. 4.2 (4.0) 1.3 9.5 (14.6)
Other income (expense), net................. 1.7 1.2 2.9 0.4 (1.1)
------ ------ ------ ------ ------
Income (loss) before interest and taxes..... 23.3 24.6 19.2 36.9 (80.8)
Interest expense............................ 6.6 5.5 7.2 7.5 9.0
------ ------ ------ ------ ------
Income (loss) before provision for income
taxes.................................... 16.7 19.1 12.0 29.4 (89.8)
Income taxes................................ 5.7 7.8 5.1 10.0 0.7
------ ------ ------ ------ ------
Income (loss) before discontinued operations
and extraordinary charge................. 11.0 11.3 6.9 19.4 (90.5)
------ ------ ------ ------ ------
Loss from discontinued operations(a)........ 6.4 -- -- -- --
------ ------ ------ ------ ------
Income (loss) before extraordinary charge... 4.6 11.3 6.9 19.4 (90.5)
Extraordinary charge(b)..................... -- -- 0.6 -- --
------ ------ ------ ------ ------
Net income (loss)........................... $ 4.6 $ 11.3 $ 6.3 $ 19.4 $(90.5)
====== ====== ====== ====== ======
OTHER FINANCIAL DATA:
Adjusted EBITDA(c).......................... $ 32.8 $ 41.8 $ 37.3 $ 50.2 $ 58.3
Cash flows provided by (used in) operating
activities............................... 17.5 18.3 (1.4) 19.5 17.2
Depreciation and amortization............... 6.9 7.4 8.0 9.2 11.5
Net cash interest expense(d)................ 6.6 5.0 6.9 7.5 8.7
Capital expenditures........................ 3.5 8.1 12.5 13.0 11.7
Dividends declared per share................ -- 14.75 10.20 11.25 10.50
Ratio of earnings to fixed charges(e)....... 3.0x 3.7x 2.2x 3.9x --
</TABLE>
29
<PAGE> 31
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31
--------------------------------------------------
1993 1994 1995 1996 1997
------ ------ ------ ------ ------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and equivalents........................ $ 7.9 $ 0.1 $ 0.6 $ 1.0 $ 3.1
Insurance fund investments.................. 43.8 46.1 68.2 80.9 58.6
Working capital............................. 48.1 42.5 59.4 49.2 30.1
Total assets................................ 183.7 199.8 234.6 261.2 288.2
Reserve for losses and loss adjustment
expenses................................. 33.7 36.7 41.5 45.3 49.6
Total debt (including current maturities)... 73.1 60.4 83.5 83.4 322.5
Common shareholders' equity (deficit)(f).... 41.3 49.8 62.1 75.1 (153.7)
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
DECEMBER 31, 1997
-----------------
<S> <C>
PRO FORMA OPERATING DATA:
Net sales................................................................ $ 416.3
Adjusted EBITDA(c)....................................................... 58.3
Interest expense......................................................... 31.9
Net cash interest expense(d)............................................. 29.2
Ratio of Adjusted EBITDA to net cash interest expense.................... 2.0x
Ratio of earnings to fixed charges(e).................................... --
</TABLE>
See Notes to Selected Consolidated Historical Financial Data
30
<PAGE> 32
NOTES TO SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
(DOLLARS IN MILLIONS)
(a) Represents losses incurred by the Company in connection with exiting its
architectural building products business.
(b) Reflects expenses incurred in regard to the early extinguishment of debt,
net of income tax benefits of $0.4.
(c) EBITDA represents earning before interest, income taxes and depreciation and
amortization and excludes historical MIICA investment gains or losses and
the following items for the year ended December 31, 1997 directly related to
the Recapitalization: (1) Non-recurring non-cash compensation charge (and a
corresponding credit to shareholders' equity) of $78.5 associated with (a)
the accelerated vesting, as a result of the Recapitalization, of outstanding
restricted Pre-Recapitalization Class B Stock previously granted to certain
key management employees and (b) the accelerated vesting, as a result of
the, Recapitalization, of outstanding restricted Pre-Recapitalization Class
B Stock previously granted to a former key management employee resulting
from a change in the terms of such stock upon his separation from the
Company; (2) Recapitalization expense of $22.7; (3) Amortization of prepaid
management fees resulting from an agreement signed in connection with the
Recapitalization of $0.1 for the historical year ended December 31, 1997 and
$1.0 for the pro forma year ended December 31, 1997; and (4) amortization of
deferred management transaction bonuses of $0.7.
The following table presents a reconciliation of EBITDA to Adjusted EBITDA:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------
1993 1994 1995 1996 1997
----- ----- ----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
EBITDA (as described in (c) above)......... $26.0 $36.0 $25.9 $36.6 $46.5
Reduction in management compensation(i).... 2.4 1.6 3.5 2.8 4.3
Non-recurring expenses(ii)................. -- -- 2.7 4.6 0.9
MIICA investment income(iii)............... 3.4 3.0 3.4 4.6 4.6
Non-recurring private company
expenses(iv)............................. 1.0 1.2 1.8 1.6 2.0
----- ----- ----- ----- -----
Adjusted EBITDA............................ $32.8 $41.8 $37.3 $50.2 $58.3
===== ===== ===== ===== =====
</TABLE>
-------------------
<TABLE>
<S> <C>
(i) The reduction in management compensation relates to agreed upon reductions to
certain benefits paid to family members employed by the Company. Such benefits have
not continued subsequent to the Recapitalization.
(ii) Non-recurring expenses consist of the following: (i) $1.8, $3.8 and $0.7 in 1995,
1996 and 1997, respectively, relating to costs of temporary warehousing space that
was not utilized (and is no longer being maintained) and costs of start-up and
incremental inventory carrying costs associated with the modernization of the
Company's Greenville remelt operation (which are no longer being incurred); and (ii)
$0.9, $0.8 and $0.2 in 1995, 1996 and 1997, respectively, relating to the closing of
certain wood ladder production facilities and temporary warehouse facilities.
(iii) For purposes of computing Adjusted EBITDA, the Company has assumed a 7.7% return on
the investment portfolio of MIICA. Such 7.7% return represents the five-year average
return on investment assets for commercial casualty lines as reported by "Best's
Aggregates & Averages", 1997 Edition. The balance of the investment portfolio used
in computing the 7.7% return is the lesser of the December 31, 1997 investment
balance of $58.6 and the investment balance as of the beginning of the respective
period. See "Management's Discussion and Analysis of Financial Condition and Results
of Operations."
</TABLE>
31
<PAGE> 33
<TABLE>
<S> <C>
(iv) Private company expenses consist of items that have not continued following the
Recapitalization. These expenses include family-related charitable contributions and
research and development grants to educational institutions.
</TABLE>
EBITDA and Adjusted EBITDA are presented because they are commonly used by
certain investors to analyze and compare operating performance and to
determine a company's ability to service and/or incur debt. However, EBITDA
and Adjusted EBITDA should not be considered in isolation or as a substitute
for net income, cash flows or other income or cash flow data prepared in
accordance with generally accepted accounting principles or as a measure of
a company's profitability or liquidity. In addition, EBITDA and Adjusted
EBITDA, as described above, may not be comparable to such measurements as
used by other companies.
(d) Net cash interest expense is defined as interest expense less amortization
of deferred financing costs and original issue discount.
(e) For purposes of the computation, the ratio of earnings to fixed charges has
been calculated by dividing (i) income before income taxes and extraordinary
charge plus fixed charges by (ii) fixed charges. Fixed charges are equal to
interest expense plus the portion of the rent expense estimated to represent
interest. The ratio of earnings to fixed charges is not meaningful for
periods that result in a deficit. For the historical and pro forma year
ended December 31, 1997, the deficiency of earnings to fixed charges was
$89.9 and $109.5, respectively.
(f) The shareholders' deficit at December 31, 1997 was the result of the
Recapitalization and the recording of related expenses, net of income tax
benefits. In connection with the Recapitalization, the Investors made an
equity investment of approximately $122.7, representing approximately 67% of
the outstanding capital stock and voting power of the Company.
32
<PAGE> 34
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the "Selected
Consolidated Historical Financial Data," "Unaudited Pro Forma Condensed
Consolidated Statement of Operations" and the Consolidated Financial Statements
of the Company and the notes thereto included elsewhere in this Prospectus. This
Prospectus contains, in addition to historical information, forward-looking
statements that are subject to risks and other uncertainties. The Company's
actual results may differ materially from those anticipated in these
forward-looking statements.
GENERAL
Werner is the nation's largest manufacturer and marketer of ladders and
other climbing products. The Company also manufactures and sells aluminum
extruded products and more complex fabricated components. The Company's net
sales have increased at a five-year CAGR of 11.9% during the period from fiscal
1992 to fiscal 1997. For the year ended December 31, 1997, the Company had net
sales of $416.3 million and Adjusted EBITDA of $58.3 million.
Ladders and Other Climbing Products. Net sales of climbing products have
accounted for approximately 75% of the Company's consolidated net sales over the
past five years. Net sales of the Company's climbing products have increased at
a CAGR of 14.4% during the period from fiscal 1992 to fiscal 1997. The Company
has grown its climbing products sales primarily by (i) increasing sales to
leading home improvement retailers, hardware cooperatives and professional
distributors, (ii) increasing its sales of fiberglass climbing products, and
(iii) selling more higher grade and higher value products.
Aluminum Extruded Products. Net sales for the Company's aluminum extruded
products business have increased at a CAGR of 5.9% during the period from fiscal
1992 to fiscal 1997. In 1995, the Company began to shift its extruded products
focus away from lower margin lineal extruded products to higher margin precision
extrusions and highly engineered fabricated components. This strategic
repositioning of the extruded business included reducing sales to less
profitable customers and directing selling efforts toward a design intensive
business in which the Company has experienced lead time for new business of six
months to several years. Accordingly, sales of extruded products were adversely
affected in 1995 and 1996, and management does not expect to realize the full
benefit of the Company's strategic shift until 1998.
MIICA. The Company operates MIICA, a Colorado domiciled captive insurance
company. MIICA provides product liability, workers' compensation and
environmental insurance to the Company's other subsidiaries. MIICA's function is
to provide Werner access to cost-effective product liability insurance,
regardless of the climate of the commercial markets. The Company is currently
undertaking an evaluation of the cost and efficiency of providing such insurance
through MIICA, which may lead to the Company pursuing alternate or modified
arrangements for obtaining such insurance.
MIICA maintains an investment portfolio which consists of investments in
debt and equity securities, real estate and other investments. Historically,
MIICA has not held any material assets other than its insurance fund. In recent
years, the insurance fund was comprised of "small cap" stocks and other
non-investment grade securities of higher risk which resulted in volatile
investment income (loss). MIICA had the following investment income (loss),
which is included in other income (expense) in the Company's Consolidated
Financial Statements included elsewhere herein:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
DECEMBER 31
- ------------------------
1995 1996 1997
- ---- ---- ------
(DOLLARS IN MILLIONS)
<S> <C> <C>
$1.3 $9.5 $(14.6)
</TABLE>
Since late 1996, MIICA has been realigning its portfolio to a more
traditional mix of investments. MIICA plans to continue this process and expects
the realignment to be substantially complete by the
33
<PAGE> 35
end of 1998. Although the Company does not expect future investment income to be
as volatile as in years past, no assurances can be made that MIICA's portfolio
will not experience large losses or gains. See "Risk Factors -- MIICA
Portfolio." For purposes of this discussion the amounts indicated in the table
above have been excluded from the calculation of EBITDA. In deriving Adjusted
EBITDA, the Company has assumed a 7.7% return on the investment portfolio of
MIICA. The 7.7% represents the five-year average return on investment assets for
commercial casualty lines as reported by "Best's Aggregates & Averages," 1997
Edition. The balance of the investment portfolio used in computing the 7.7%
return is the lesser of the December 31, 1997 investment balance of $58.6
million or the investment balance as of the beginning of the respective period.
At December 31, 1997, MIICA had outstanding approximately $12.5 million of
irrevocable letters of credit which are collateralized by certain assets of
MIICA.
MIICA, which is not a Guarantor of the Notes, had shareholder's equity of
$17.5 million at December 31, 1997. The Company's ability to receive dividends
or loans from MIICA is strictly limited by applicable insurance company laws and
regulations. Accordingly, although the Company believes MIICA has been useful in
meeting its insurance needs, MIICA's assets are available as credit support for
the Notes only to the extent that dividends are permitted to be paid by
applicable laws and regulations. For further information regarding MIICA, see
Note M to the Consolidated Financial Statements of the Company.
Certain expenses. Included in the results of operations of the Company for
the years ended December 31, 1995, 1996 and 1997 are aggregate expenses of $4.5
million, $6.2 million, and $104.1 million, respectively, consisting of the
following:
(i) $1.8 million, $3.8 million and $0.7 million in 1995, 1996 and
1997, respectively, relating to costs of temporary warehousing space that
was not utilized (and is no longer being maintained) and costs of start-up
and incremental inventory carrying costs associated with the modernization
of the Company's Greenville remelt operation (which are no longer being
incurred); and $0.9 million, $0.8 million and $0.2 million in 1995, 1996
and 1997, respectively, relating to the closing of certain wood ladder
production facilities and temporary warehousing facilities.
(ii) $1.8 million, $1.6 million and $2.0 million in 1995, 1996 and
1997, respectively, of private company expenses such as family-related
charitable contributions and research and development grants to educational
institutions which have not continued following the Recapitalization. See
Note (c) to Notes to Selected Consolidated Historical Financial Data.
(iii) Non-recurring non-cash compensation charge (and a corresponding
credit to shareholders' equity) of $78.5 million for the historical and pro
forma year ended December 31, 1997 associated with (a) the accelerated
vesting, as a result of the Recapitalization, of outstanding restricted
Pre-Recapitalization Class B Stock previously granted to certain key
management employees, and (b) the accelerated vesting, as a result of the
Recapitalization, of outstanding restricted Pre-Recapitalization Class B
Stock previously granted to a former key management employee resulting from
a change in the terms of such stock upon his separation from the Company.
(iv) Recapitalization expense of $22.7 million in 1997.
The Transactions. As part of the Recapitalization, the Investors made an
equity investment of approximately $122.7 million and existing shareholders
retained capital stock valued at $59.3 million based on the price paid by the
Investors. In addition, pursuant to the Recapitalization Financing, the Company
completed the Old Notes Offering and entered into the Senior Credit Facility.
The Recapitalization has been accounted for as such and, accordingly, has had
and will have no impact on the historical basis of assets and liabilities. As a
result of the Transactions, the Company incurred approximately $51.8 million in
fees and expenses and other costs.
34
<PAGE> 36
RESULTS OF OPERATIONS
The table below sets forth the Company's results of operations for the
periods indicated:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995 1996 1997
---------------- ---------------- ----------------
<CAPTION>
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Net sales:
Climbing products.................... $248.0 73.8% $277.3 75.6% $314.2 75.5%
Extruded products.................... 88.0 26.2 89.6 24.4 102.1 24.5
------ ------ ------ ------ ------ ------
Total net sales........................ 336.0 100.0 366.9 100.0 416.3 100.0
Gross profit........................... 87.1 25.9 101.9 27.8 116.2 27.9
General and administrative expense..... 25.0 7.4 27.0 7.4 31.2 7.5
Selling and distribution expense....... 47.1 14.0 47.9 13.1 48.9 11.7
Recapitalization expense............... -- -- -- -- 22.7 5.5
Non-cash compensation charge........... -- -- -- -- 78.5 18.9
Other income (expense), net............ 4.2 1.2 9.9 2.7 (15.7) (3.8)
Interest expense....................... 7.2 2.1 7.5 2.0 9.0 2.2
Income taxes........................... 5.1 1.5 10.0 2.7 0.7 --
Extraordinary charge................... 0.6 0.2 -- -- -- --
------ ------ ------ ------ ------ ------
Net income (loss)...................... $ 6.3 1.9% $ 19.4 5.3% $(90.5) (21.7)%
====== ====== ====== ====== ====== ======
</TABLE>
YEAR ENDED DECEMBER 31, 1997 AS COMPARED TO YEAR ENDED DECEMBER 31, 1996
Net Sales. Net sales increased $49.4 million, or 13.5%, to $416.3 million
for the year ended December 31, 1997 from $366.9 million for the year ended
December 31, 1996.
Net sales of climbing products increased $36.9 million, or 13.3%, to $314.2
million for the year ended December 31, 1997 from $277.3 million for the year
ended December 31, 1996. The increase in net sales of climbing products was
primarily due to significant growth in the volume of fiberglass and aluminum
step and extension ladders sold, particularly to power retailers.
Net sales of extruded products increased $12.5 million, or 14.0%, to $102.1
million for the year ended December 31, 1997 from $89.6 million for the year
ended December 31, 1996. This increase was primarily due to an increase in sales
volume. Sales volume in the year ended December 31, 1996 was adversely impacted
by the Company's strategic repositioning plan initiated in 1995.
Gross Profit. Gross profit increased $14.3 million, or 14.0%, to $116.2
million for the year ended December 31, 1997 from $101.9 million for the year
ended December 31, 1996. This increase was primarily due to increased sales
volume, as described above, partially offset by the higher cost of wood raw
materials. Gross profit margin for the year ended December 31, 1997 and 1996 was
27.9% and 27.8%, respectively.
General and Administrative Expense. General and administrative expense
increased $4.2 million, or 15.6%, to $31.2 million for the year ended December
31, 1997 from $27.0 million for the year ended December 31, 1996. This increase
was primarily due to $2.2 million in special non-recurring retirement bonuses.
Selling and Distribution Expense. Selling and distribution expense
increased $1.0 million, or 2.1%, to $48.9 million for the year ended December
31, 1997 from $47.9 million for the year ended December 31, 1996. This increase
was primarily the result of increased sales volume. For the year ended December
31, 1997, selling and distribution expense as a percentage of net sales
decreased to 11.7% from 13.1% for the year ended December 31, 1996. This
decrease was primarily due to reduced
35
<PAGE> 37
costs resulting from the closing of the Youngstown, OH warehouse as well as
lower commissions paid to the Company's manufacturers' representatives resulting
from a change in the Company's commission plan in the third quarter of 1997.
Non-Cash Compensation Charge. The non-recurring non-cash compensation
charge (and a corresponding credit to shareholders' equity) of $78.5 million
represents (a) the accelerated vesting, as a result of the Recapitalization, of
outstanding restricted Pre-Recapitalization Class B Stock previously granted to
certain key management employees and (b) the accelerated vesting, as a result of
the Recapitalization, of outstanding restricted Pre-Recapitalization Class B
Stock previously granted to a former key management employee resulting from a
change in terms of such stock upon his separation from the Company.
Recapitalization Expense. Recapitalization expense relates to fees and
expenses incurred in connection with the Recapitalization.
Other Income (Expense), Net. Other income (expense), net decreased $25.6
million, or 258.6%, to ($15.7) million for the year ended December 31, 1997 from
$9.9 million for the year ended December 31, 1996. This decrease was primarily
due to $14.6 million of investment losses incurred by MIICA during the year
ended December 31, 1997 as compared to MIICA investment income of $9.5 million
for the year ended December 31, 1996. The losses for the year ended December 31,
1997 were a result of losses on trading securities sold by MIICA and a
write-down for the other than temporary decline in market value of certain
investments held by MIICA.
Interest Expense. Interest expense increased $1.5 million, or 20.0%, to
$9.0 million for the year ended December 31, 1997 from $7.5 million for the year
ended December 31, 1996. The increase was primarily due to the debt incurred as
a result of the Transactions.
Income Taxes. Income taxes decreased $9.3 million, or 93.0%, to $0.7
million for the year ended December 31, 1997 from $10.0 million for the year
ended December 31, 1996. This decrease was primarily due to lower taxable income
for the year ended December 31, 1997 as compared to the year ended December 31,
1996 due to charges associated with the Transactions and increased interest
expense. Additionally, during the year ended December 31, 1997 the Company
recorded a non-cash compensation charge of $78.5 million which was not
deductible for income tax purposes.
Net Income. Excluding the investment loss of $14.6 million attributable to
MIICA, the non-cash compensation charge of $78.5 million and the
Recapitalization expense of $22.7 million discussed above, net income increased
$2.9 million or 22.0% to $16.1 million for the year ended December 31, 1997 from
$13.2 million for the year ended December 31, 1996. This increase was primarily
due to the increase in sales and gross profit described above.
YEAR ENDED DECEMBER 31, 1996 AS COMPARED TO YEAR ENDED DECEMBER 31, 1995
Net Sales. Net sales increased $30.9 million, or 9.2%, to $366.9 million
for 1996 from $336.0 million for 1995.
Net sales of climbing products increased $29.3 million, or 11.8%, to $277.3
million in 1996 from $248.0 million in 1995. This increase was primarily due to
increased sales volume in both fiberglass and aluminum climbing products, which
was achieved through the ongoing successful growth of the Company's customer
base, new product development and increased marketing efforts. During 1996, the
Company became the sole supplier to a major hardware cooperative. In addition,
the Company benefited from the full year effect of price increases of aluminum,
fiberglass and wood climbing products implemented in the second quarter of 1995
in response to increases in underlying raw material costs. Overall, average unit
sales prices for climbing products increased 4.3% over 1995.
Net sales of extruded products increased $1.6 million, or 1.8%, to $89.6
million for 1996 from $88.0 million for 1995.
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Gross Profit. Gross profit increased $14.8 million, or 17.0%, to $101.9
million for 1996 from $87.1 million for 1995. This increase was primarily due to
the factors described above as well as a more favorable sales mix toward higher
margin products. Gross profit margin was 27.8% for 1996 and 25.9% for 1995.
General and Administrative Expense. General and administrative expense
increased $2.0 million, or 8.0%, to $27.0 million for 1996 from $25.0 million
for 1995. This increase was primarily due to the additional overhead required
for the growth in net sales described above.
Selling and Distribution Expense. Selling and distribution expense
increased $0.8 million, or 1.7%, to $47.9 million for 1996 from $47.1 million
for 1995. This increase was primarily the result of the factors described above.
In 1996, selling and distribution expense as a percentage of net sales decreased
to 13.1% from 14.0% for 1995. This decrease was due to a decrease in the
warehouse and distribution expenses in the Greenville, PA and Chicago, IL
distribution centers.
Other Income (Expense), Net. Other income (expense), net increased $5.7
million, or 135.7%, to $9.9 million for 1996 from $4.2 million for 1995. This
increase was primarily due to MIICA investment income of $9.5 million for 1996,
resulting in part from gains on securities sold, compared to $1.3 million of
MIICA investment income for 1995, partially offset by an increase in
miscellaneous income in 1995.
Interest Expense. Interest expense increased $0.3 million, or 4.2%, to
$7.5 million for 1996 from $7.2 million for 1995.
Income Taxes. Income taxes increased $4.9 million, or 96.1%, to $10.0
million for 1996 from $5.1 million for 1995. This increase was primarily due to
a $17.4 million increase in pre-tax income from 1995 to 1996, slightly offset by
a decrease in the effective tax rate from 42.8% for 1995 to 34.0% for 1996, due
primarily to lower state income taxes.
Net Income. Excluding the investment income attributable to MIICA, net
income increased $7.2 million, or 120.0%, to $13.2 million for 1996 from $6.0
million for 1995. This increase was primarily due to the reasons described
above.
LIQUIDITY AND CAPITAL RESOURCES
The Company incurred a significant amount of indebtedness in connection
with the Transactions. At December 31, 1997, the Company had approximately
$322.5 million of consolidated indebtedness, including $131.0 million of
indebtedness, net of the original issue discount, pursuant to the Notes, and
$186.5 million of borrowings under the Senior Credit Facility. The Senior Credit
Facility provides for $145.0 million of Term Loan Facilities, a $100.0 million
Revolving Facility and a $75.0 million Receivables Facility.
Prior to the Recapitalization, the Company historically met its working
capital needs and capital expenditure requirements primarily through a
combination of operating cash flow and borrowing under its then-existing credit
facility and the issuance of notes. Following the Transactions, the Company
satisfies its debt service requirements and meets its operating, working capital
and capital expenditure needs through a combination of operating cash flow and
funds available under the Receivables Facility. See "The Transactions" and "The
Senior Credit Facility."
In connection with the Transactions, the Company refinanced all of its
existing debt except for the Variable Rate Demand Industrial Building Revenue
Bonds due 2015 (the "IRBs") with the proceeds from the Notes, the Term Loan
Facility and the Receivables Facility. As of December 31, 1997, the IRBs had an
outstanding principal balance of $5.0 million.
Net cash flows from operating activities decreased $2.3 million to $17.2
million for the year ended December 31, 1997 from $19.5 million for the year
ended December 31, 1996. This is primarily attributable to the increase in
operating profit (exclusive of the non-cash compensation charge and
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Recapitalization expenses in 1997) from 1996 to 1997, which was more than offset
by the increase in operating working capital (receivables, inventory, accounts
payable and accrued expenses) of $14.8 million and the 1997 payment of
supplemental retirement bonuses of $2.2 million. Operating working capital
generally increased as a result of the growth in sales. Net cash from operating
activities increased by $20.9 million from cash used of $1.4 million in 1995 to
cash provided of $19.5 million in 1996. This is primarily the result of
increased operating profits combined with reduced operating working capital of
$7.9 million. Inventory was reduced in 1996 due to a reduction of the previous
year's buildup of extrusion log inventory during the Greenville remelt
modernization project, and accounts receivable and accounts payable increased by
comparable amounts due to the growth in sales. Cash flow used in investing
activities decreased $12.2 million to $3.6 million in 1997 from $15.8 million in
1996. This decrease was due primarily to an increase in sales of debt and equity
securities at MIICA in connection with its process of realigning its investment
portfolio, as well as the Company's sale of real estate and a reduction in
capital expenditures.
The Company's ability to make scheduled payments of principal, or to pay
the interest, if any, on, or to refinance, its indebtedness (including the
Notes), or to fund planned capital expenditures or finance acquisitions, will
depend on its future financial and operating performance, which to a certain
extent is subject to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond its control. Based on the current
and anticipated level of operations, management believes that cash flow from
operations and available cash, together with available borrowings under the
Senior Credit Facility, will be adequate to meet the Company's anticipated
future requirements for working capital, budgeted capital expenditures, and
scheduled payments of principal and interest on its indebtedness, including the
Notes, for the foreseeable future. The Company, however, may need to refinance
all or a portion of the principal of the Notes on or prior to maturity. There
can be no assurance that the Company's business will generate sufficient cash
flows from operations or that future borrowings will be available under the
Senior Credit Facility in an amount sufficient to enable the Company to service
its indebtedness, including the Notes, or make anticipated capital expenditures
and fund potential future acquisitions.
In addition, there can be no assurance that the Company will be able to
effect any refinancing on commercially reasonable terms, or at all.
CAPITAL EXPENDITURES
The Company's capital expenditures were $12.5 million, $13.0 million and
$11.7 million, in 1995, 1996 and 1997, respectively. Approximately $3 million to
$5 million of the amount expended in each of such years has been for the renewal
and replacement of existing facilities and equipment; thus in an economic
downturn, the Company believes it will be able to adjust the amount spent on
capital expenditures without compromising the base need of its operations. The
Company expects to spend approximately $18 million to $20 million in 1998 for
various capital projects, including quality enhancement, cost improvement,
efficiency improvement, increased capacity and normal maintenance projects.
SEASONALITY, WORKING CAPITAL AND CYCLICALITY
Sales of certain products of the Company are subject to seasonal variation.
Demand for the Company's ladder products is affected by residential housing
starts and existing home sales, commercial construction activity, and overall
home improvement expenditures. Due to seasonal factors associated with the
construction industry, sales of products and working capital are typically
higher during the second and third quarters than at other times of the year. The
Company expects to use the Senior Credit Facility to meet any seasonal
variations in its working capital requirements. The residential and commercial
construction markets are sensitive to cyclical changes in the economy.
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RAW MATERIAL COSTS AND INFLATION
The rate of inflation over recent years has been relatively low and has not
had a significant effect on the Company's results of operations. The Company
purchases aluminum, glass and other raw materials from various suppliers. While
all such materials are available from numerous independent suppliers, commodity
raw materials are subject to price fluctuations. There have been historical
periods of rapid and significant movements in the price of aluminum, both upward
and downward. Historically, the Company has entered into futures contracts with
respect to its purchases of aluminum to minimize or hedge commodity price
fluctuations. Additionally, the Company has been successful in passing the
majority of these increases on to its customers after a period of 60 to 90 days.
IMPACT OF THE YEAR 2000
Based on recent assessments, the Company has determined that it will be
required to modify certain portions of its software so that its computer systems
will function properly with respect to dates in the Year 2000 and thereafter.
The Company presently believes that with modifications to existing software and
conversions to new software, the Year 2000 issue will not pose significant
operational problems for its computer systems. However, if such modifications
are not made, or are not timely completed, the Year 2000 issue could have a
material adverse impact on the operations of the Company.
The Company has also initiated communications with its significant
suppliers and customers regarding the Year 2000 issue. However, there can be no
guarantee that the systems of these other companies will be timely converted and
the failure of the Company's significant suppliers and customers to make
necessary Year 2000 modifications could have a material adverse impact on the
Company's results and operations.
The Company will primarily utilize internal resources to reprogram, or
replace, and test the software for Year 2000 modifications. The Company
anticipates completing the Year 2000 project by December 31, 1998, which is
prior to any impact of the Year 2000 on its operating systems. The Company
estimates the cost of the project to be approximately $1 million.
The costs of the project and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best estimates
which were derived utilizing numerous assumptions of future events. However,
there can be no guarantee that these estimates and the timetable will be
achieved and actual results could differ materially from those anticipated.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Exchange Offer is designed to provide holders of Old Notes with an
opportunity to acquire New Notes which, unlike the Old Notes, will be freely
tradable at all times, subject to any restrictions on transfer imposed by state
"blue sky" laws and provided that (i) the holder is not an affiliate of the
Company within the meaning of the Securities Act, and (ii) the holder represents
that the New Notes are being acquired in the ordinary course of such holder's
business and the holder is not engaged in, and does not intend to engage in, a
distribution of the New Notes. The outstanding Old Notes in the aggregate
principal amount of $135.0 million were originally issued and sold on November
24, 1997 (the "Original Issue Date") in order to provide financing in connection
with the Recapitalization. The original sale of Old Notes to Chase Securities
Inc., Donaldson, Lufkin & Jenrette Securities Corporation and Goldman, Sachs &
Co. (the "Initial Purchasers") was not registered under the Securities Act in
reliance upon the exemption provided by Section 4(2) of the Securities Act and
the concurrent resale of the Old Notes to investors was not registered under the
Securities Act in reliance upon the exemptions provided by Rule 144A and
Regulation S promulgated under the Securities Act. The Old Notes may not be
reoffered, resold or transferred other than pursuant to a registration statement
filed pursuant to the
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<PAGE> 41
Securities Act or unless an exemption from the registration requirements of the
Securities Act is available. Pursuant to Rule 144, Old Notes may generally be
resold (a) commencing one year after the Original Issue Date, in an amount up
to, for any three-month period, the greater of 1% of the Old Notes then
outstanding or the average weekly trading volume of the Old Notes during the
four calendar weeks immediately preceding the filing of the required notice of
sale with the Commission and (b) commencing two years after the Original Issue
Date, in any amount and otherwise without restriction by a holder who is not,
and has not been for the preceding 90 days, an affiliate of the Company. The Old
Notes are eligible for trading in the PORTAL Market, and may be resold to
certain Qualified Institutional Buyers pursuant to Rule 144A and to certain
non-U.S. persons pursuant to Regulation S. Certain other exemptions may also be
available under other provisions of the federal securities laws for the resale
of the Old Notes.
In connection with the original issue and sale of the Old Notes, the Issuer
and the Guarantors entered into a Registration Rights Agreement, pursuant to
which they agreed to file with the Commission a registration statement covering
the exchange by the Issuer of the New Notes for the Old Notes (the "Exchange
Offer Registration Statement"). The Registration Rights Agreement provides that
(i) the Issuer and the Guarantors will file the Exchange Offer Registration
Statement with the Commission on or prior to 90 days after the Original Issue
Date, (ii) the Issuer and the Guarantors will use their respective best efforts
to have the Exchange Offer Registration Statement declared effective by the
Commission on or prior to 180 days after the Original Issue Date, (iii) unless
the Exchange Offer would not be permitted by applicable law or Commission
policy, the Issuer and the Guarantors will commence the Exchange Offer and use
their respective best efforts to issue on or prior to 30 business days after the
date on which the Exchange Offer Registration Statement is declared effective by
the Commission, New Notes in exchange for all Old Notes tendered prior thereto
in the Exchange Offer, and (iv) if obligated to file a shelf registration
statement covering the Old Notes (a "Shelf Registration Statement"), the Issuer
will file the Shelf Registration Statement with the Commission on or prior to 90
days after such filing obligation arises and use its best efforts to cause the
Shelf Registration Statement to be declared effective by the Commission on or
prior to 135 days after such obligation arises and cause such Shelf Registration
Statement to remain effective and usable for a period of two years following the
initial effectiveness thereof. If (a) the Issuer and the Guarantors fail to file
any of the registration statements required by the Registration Rights Agreement
on or before the date specified for such filing, (b) any of such registration
statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness, (c) the Issuer fails to consummate the offer
within 30 business days after the date on which the Exchange Offer Registration
Statement is declared effective, or (d) the Shelf Registration Statement or the
Exchange Offer Registration Statement is declared effective but thereafter
ceases to be effective or usable in connection with resales of Transfer
Restricted Securities (as defined below) during the periods specified in the
Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a "Registration Default"), the Issuer and the Guarantors will
pay liquidated damages ("Liquidated Damages") to each holder of Transfer
Restricted Securities (as defined), with respect to the first 90-day period
immediately following the occurrence of such Registration Default in an amount
equal to $.05 per week per $1,000 principal amount of Transfer Restrictive
Securities held by such person. The amount of the Liquidated Damages will
increase by an additional $.05 per week per $1,000 principal amount of Transfer
Restricted Securities with respect to each subsequent 90-day period until all
Registration Defaults have been cured up to a maximum amount of Liquidated
Damages of $.20 per week per $1,000 principal amount of Transfer Restricted
Securities (regardless of whether one or more than one Registration Default is
outstanding). Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease. For purposes of the foregoing, "Transfer
Restricted Securities" means each Old Note until (i) the date on which such Old
Note has been exchanged by a person other than a broker-dealer for a New Note in
the Exchange Offer, (ii) the date on which such Old Note has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement, (iii) the date on which such Old Note is distributed to
the public pursuant to Rule 144 under the Securities Act, or (iv) following the
exchange by a broker-dealer in the Exchange Offer of an Old Note for a New Note,
the date on which such New Note is sold to
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a purchaser who receives from such broker-dealer on or prior to the date of such
sale a copy of a prospectus meeting the requirements of the Securities Act in
connection with resales of securities received by the broker-dealer in any such
exchange.
The staff of the Commission has issued certain interpretive letters that
concluded, in circumstances similar to those contemplated by the Exchange Offer,
that new debt securities issued in a registered exchange for outstanding debt
securities, which new securities are intended to be substantially identical to
the securities for which they are exchanged, may be offered for resale, resold
and otherwise transferred by a holder thereof (other than (i) a broker-dealer
who purchases such securities from the issuer to resell pursuant to Rule 144A or
any other available exemption under the Securities Act or (ii) a person who is
an affiliate of the issuer within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that the new securities are acquired in the
ordinary course of such holder's business and such holder has no arrangement
with any person to participate in the distribution of the new securities.
However, a broker-dealer who holds outstanding debt securities that were
acquired for its own account as a result of market-making or other trading
activities may be deemed to be an "underwriter" within the meaning of the
Securities Act and must, therefore, deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of the new
securities received by the broker-dealer in any such exchange. See
" -- Consequences of Failure to Exchange; Resales of New Notes." The Company has
not requested or obtained an interpretive letter from the Commission staff with
respect to this Exchange Offer, and the Company and the holders are not entitled
to rely on interpretive advice provided by the staff to other persons, which
advice was based on the facts and conditions represented in such letters.
However, the Exchange Offer is being conducted in a manner intended to be
consistent with the facts and conditions represented in such letters. If any
holder has any arrangement or understanding with respect to the distribution of
the New Notes to be acquired pursuant to the Exchange Offer, such holder (i)
could not rely on the applicable interpretations of the staff of the Commission
and (ii) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any resale transaction. In addition,
each broker-dealer that receives New Notes for its own account in exchange for
the Old Notes, where such Old Notes were acquired by such broker-dealers 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." By delivering the Letter of Transmittal, a
holder tendering Old Notes for exchange will represent and warrant to the
Company that the holder is acquiring the New Notes in the ordinary course of its
business and that the holder is not engaged in, and does not intend to engage
in, a distribution of the New Notes. Any holder using the Exchange Offer to
participate in a distribution of the New Notes to be acquired in the Exchange
Offer must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction. Holders
who do not exchange their Old Notes pursuant to this Exchange Offer will
continue to hold Old Notes that are subject to restrictions on transfer.
It is expected that the New Notes will be freely transferable by the
holders thereof, subject to the limitations described in the immediately
preceding paragraph and in " -- Consequences of Failure to Exchange; Resales of
New Notes." Sales of New Notes acquired in the Exchange Offer by holders who are
"affiliates" of the Company within the meaning of the Securities Act will be
subject to certain limitation on resale under Rule 144 of the Securities Act.
Such persons will only be entitled to sell New Notes in compliance with the
volume limitations set forth in Rule 144, and sales of New Notes by affiliates
will be subject to certain Rule 144 requirements as to the manner of sale,
notice and the availability of current public information regarding the Company.
The foregoing is a summary only of Rule 144 as it may apply to affiliates of the
Company. Any such persons must consult their own legal counsel for advice as to
any restrictions that might apply to the resale of their New Notes.
The New Notes otherwise will be substantially identical in all material
respects (including interest rate, maturity, security and restrictive covenants)
to the Old Notes for which they may be exchanged pursuant to this Exchange
Offer. See "Description of the New Notes."
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TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Issuer will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on , 1998; provided, however, that if the Issuer has
extended the period of time for which the Exchange Offer is open, the term
"Expiration Date" means the latest time and date to which the Exchange Offer is
extended.
As of the date of this Prospectus, $135.0 million aggregate principal
amount of the Old Notes are outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about , 1998, to
all holders of Old Notes known to the Issuer. The Issuer's obligation to accept
Old Notes for exchange pursuant to the Exchange Offer is subject to certain
conditions as set forth under " -- Certain Conditions to the Exchange Offer"
below.
The Issuer expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Old Notes, by giving notice of such
extension to the holders thereof. During any such extension, all Old Notes
previously tendered will remain subject to the Exchange Offer and may be
accepted for exchange by the Issuer. Any Old Notes not accepted for exchange for
any reason will be returned without expense to the tendering holder thereof as
promptly as practicable after the expiration or termination of the Exchange
Offer.
The Issuer expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified below under " -- Certain Conditions to the Exchange Offer." The Issuer
will give notice of any extension, amendment, non-acceptance or termination to
the holders of the Old Notes as promptly as practicable, such notice in the case
of any extension to be issued no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Issuer of Old Notes by a holder thereof as set forth
below and the acceptance thereof by the Issuer will constitute a binding
agreement between the tendering holder and the Issuer upon the terms and subject
to the conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal. Except as set forth below, a holder who wishes to tender Old Notes
for exchange pursuant to the Exchange Offer must transmit a properly completed
and duly executed Letter of Transmittal, including all other documents required
by such Letter of Transmittal, to IBJ Schroder Bank & Trust Company (the
"Exchange Agent") at one of the addresses set forth below under "Exchange Agent"
on or prior to the Expiration Date. In addition, either (i) certificates for
such Old Notes must be received by the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Old Notes, if such procedure is available,
into the Exchange Agent's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the holder must comply with the guaranteed delivery
procedures described below. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF
TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE ISSUER. THE ISSUER IS NOT ASKING
NOTEHOLDERS FOR A PROXY AND NOTEHOLDERS ARE REQUESTED NOT TO SEND THE ISSUER A
PROXY.
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Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered holder of the Old Notes who
has not completed the box entitled "Special Issuance Instruction" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution (as defined below). 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 guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (collectively, "Eligible
Institutions"). If Old Notes are registered in the name of a person other than a
signer of the Letter of Transmittal, the Old Notes surrendered for exchange must
be endorsed by, or be accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by the Issuer in its
sole discretion, duly executed by the registered holder with the signature
thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Issuer in its sole discretion, which determination shall be final and
binding. The Issuer reserves the absolute right to reject any and all tenders of
any particular Old Notes not properly tendered or to not accept any particular
Old Notes which acceptance might, in the judgment of the Issuer or its counsel,
be unlawful. The Issuer also reserves the absolute right to waive any defects or
irregularities or conditions of the Exchange Offer as to any particular Old
Notes either before or after the Expiration Date (including the right to waive
the ineligibility of any holder who seeks to tender Old Notes in the Exchange
Offer). The interpretation of the terms and conditions of the Exchange Offer as
to any particular Old Notes either before or after the Expiration Date
(including the Letter of Transmittal and the instructions thereto) by the Issuer
shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes for exchange must be
cured within such reasonable period of time as the Issuer shall determine.
Neither the Issuer, the Exchange Agent nor any other person shall be under any
duty to give notification of any defect or irregularity with respect to any
tender of Old Notes for exchange, nor shall any of them incur any liability for
failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than
the registered holder or holders of Old Notes, such Old Notes must be endorsed
or accompanied by appropriate powers of attorney, in either case signed exactly
as the name or names of the registered holder or holders that appear on the Old
Notes.
If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Issuer, proper evidence satisfactory to the Issuer of their authority to so
act must be submitted.
By tendering, each broker-dealer holder will represent to the Issuer that,
among other things, the New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the holder and any
beneficial holder, that neither the holder nor any such beneficial holder has an
arrangement or understanding with any person to participate in the distribution
of such New Notes and that neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of the Issuer. If
the holder is not a broker-dealer, the holder must represent that it is not
engaged in nor does it intend to engage in a distribution of the New Notes.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Issuer will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Old Notes. See " -- Certain Conditions to the Exchange Offer" below. For
purposes of the Exchange Offer, the Issuer shall be deemed to have accepted
properly tendered
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Old Notes for exchange when, as and if the Issuer has given oral and written
notice thereof to the Exchange Agent.
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Notes are submitted for a greater principal amount than the
holder desires to exchange, such unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering holder thereof (or, in the case of Old
Notes tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, such non-exchanged Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration of the Exchange Offer.
BOOK-ENTRY TRANSFER
Any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof
with any required signature guarantees and any other required documents must, in
any case, be transmitted to and received by the Exchange Agent at one of the
addresses set forth below under "Exchange Agent" on or prior to the Expiration
Date or the guaranteed delivery procedures described below must be complied
with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent received from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Issuer (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within five New York
Stock Exchange ("NYSE") trading days after the date of execution of the Notice
of Guaranteed Delivery, the certificates for all physically tendered Old Notes,
in proper form for transfer, or a Book-Entry Confirmation, as the case may be,
and any other documents required by the Letter of Transmittal will be deposited
by the Eligible Institution with the Exchange Agent and (iii) the certificates
for all physically tendered Old Notes, in proper form for transfer, or a
Book-Entry Confirmation, as the case may be, and all other documents required by
the Letter of Transmittal are received by the Exchange Agent within five NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date. For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under
"Exchange Agent." Any such notice of withdrawal must specify the
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<PAGE> 46
name of the person having tendered the Old Notes to be withdrawn, identify the
Old Notes to be withdrawn (including the principal amount of such Old Notes),
and (where certificates for Old Notes have been transmitted) specify the name in
which such Old Notes are registered, if different from that of the withdrawing
holder. If certificates for Old Notes have been delivered or otherwise
identified to the Exchange Agent, then, prior to the release of such
certificates the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution. If Old Notes have been tendered pursuant to the procedure
for book-entry transfer described above, any notice of withdrawal must specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Old Notes and otherwise comply with the procedures
of such facility. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Issuer,
whose determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Notes that have been tendered for
exchange but that are not exchanged for any reason will be returned to the
holder thereof without cost to such holder (or, in the case of Old Notes
tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described above, such Old Notes will be credited to an account maintained with
such Book-Entry Transfer Facility for the Old Notes) 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 under "--Procedures for Tendering Old Notes" above at any
time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Issuer shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Old Notes and may terminate or amend the Exchange Offer if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, the Issuer determines that the Exchange Offer violates
applicable law, any applicable interpretation of the staff of the Commission or
any order of any governmental agency or court of competent jurisdiction.
The foregoing conditions are for the sole benefit of the Issuer and may be
asserted by the Issuer regardless of the circumstances giving rise to any such
condition or may be waived by the Issuer in whole or in part at any time and
from time to time in its reasonable discretion. The failure by the Issuer at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Issuer will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939 (the
"TIA"). In any such event, the Issuer is required to use every reasonable effort
to obtain the withdrawal of any stop order at the earliest possible time.
EXCHANGE AGENT
IBJ Schroder Bank & Trust Company has been appointed as the Exchange Agent
for the Exchange Offer. All executed Letters of Transmittal should be directed
to the Exchange Agent at one of the addresses set forth below. Questions and
requests for assistance, requests for additional copies of this Prospectus or of
the Letter of Transmittal and requests for Notices of Guaranteed Delivery should
be directed to the Exchange Agent addressed as follows:
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<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY HAND DELIVERY OR OVERNIGHT COURIER:
IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company
P.O. Box 84 1 State Street
Bowling Green Station New York, New York 10004
New York, New York 10224-0084 Attention: Securities Processing Window
Attention: Reorganization Subcellar One (SC1)
Operations Department
</TABLE>
Facsimile Transmission:
(212) 858-2611
Confirm by Telephone:
(212) 858-2103
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY.
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
The Company will pay the reasonable and customary expenses to be incurred
in connection with the Exchange Offer, which includes fees and expenses of the
Trustee, accounting, legal, printing and related fees and expenses.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
which is the principal amount less the unamortized original issue discount as
reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized. The
expenses of the Exchange Offer will be capitalized for accounting purposes.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
the Issuer to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES OF NEW NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to the exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. Old Notes not exchanged pursuant to
the Exchange Offer will continue to accrue interest at 10% per annum and will
otherwise remain outstanding in accordance with their terms. In general, the Old
Notes may not be offered or sold unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Issuer does not
currently anticipate that it will register the Old Notes under the Securities
Act. However, (i) if any Initial Purchaser so requests with respect to Old Notes
not eligible to be exchanged for New Notes in the Exchange Offer and held by it
following consummation of the
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Exchange Offer or (ii) if any holder of Old Notes is not eligible to participate
in the Exchange Offer or, in the case of any holder of Old Notes that
participates in the Exchange Offer, does not receive freely tradable New Notes
in exchange for Old Notes, the Issuer is obligated under the Registration Rights
Agreement to exchange such holder's Old Notes for private notes with terms
identical to the New Notes (other than transfer restrictions) or to file a
registration statement on the appropriate form under the Securities Act relating
to the Old Notes held by such persons.
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, New Notes issued pursuant to the
Exchange Offer may be offered for resale, resold or otherwise transferred by
holders thereof (other than (i) any such holder which is an "affiliate" of the
Issuer within the meaning of Rule 405 under the Securities Act or (ii) any
broker-dealer that purchases Notes from the Issuer to resell pursuant to Rule
144A or any other available exemption) 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 holders' business and such
holders have no arrangement or understanding with any person to participate in
the distribution of such New Notes. If any holder has any arrangement or
understanding with respect to the distribution of the New Notes to be acquired
pursuant to the Exchange Offer, such holder (i) could not rely on the applicable
interpretations of the staff of the Commission and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. A broker-dealer who holds Old
Notes that were acquired for its own account as a result of market-making or
other trading activities may be deemed to be an "underwriter" within the meaning
of the Securities Act and must, therefore, deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of New Notes.
Each such broker-dealer who 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
in the Letter of Transmittal that it will deliver a prospectus in connection
with any resale of such New Notes. See "Plan of Distribution." While the Issuer
has an obligation under the Registration Rights Agreement to update this
Prospectus by amendment or supplement for a period of 90 days following
consummation of the Exchange Offer, the Issuer has no obligation thereafter to
update the Prospectus and, therefore, holders required to deliver a prospectus
may not thereafter be able to resell because they may be unable to comply with
the prospectus delivery requirements described above.
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the New Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and is complied with. The Issuer has
agreed, pursuant to the Registration Rights Agreement and subject to certain
specified limitations therein, to register or qualify the New Notes for offer or
sale under the securities or blue sky laws of such jurisdictions as any holder
of the Notes reasonably requests in writing.
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BUSINESS
OVERVIEW
Werner is the nation's largest manufacturer and marketer of ladders and
other climbing products. Management estimates that in 1996 the Company had
approximately 36% of the estimated $820 million domestic market for climbing
products. See "-- Industry." Werner's climbing products include aluminum,
fiberglass and wood ladders, scaffolding, stages and planks. The Company markets
its broad line of innovative products across all major price points under the
Werner name, which management believes to be the most widely-recognized climbing
products brand name by both professional and consumer end-users of climbing
products. The Company sells its products through a variety of distribution
channels, such as home improvement retailers, hardware dealers, professional
supply houses and specialty wholesale distributors. Werner is committed to
providing the highest level of customer service and is a primary supplier of
ladders to most of the largest United States home improvement retailers,
including power retailers (e.g. The Home Depot and Lowe's), and to most of the
major hardware co-operatives, including ACE Hardware, HWI and TruServ. In
addition to climbing products, the Company manufactures and sells aluminum
extruded products and more complex fabricated components to a number of
industries, including the automotive, electronics, and architectural and
construction industries. The Company's net sales have increased at a five-year
CAGR of 11.9%, from $237.1 million in fiscal 1992 to $416.3 million in fiscal
1997. For the year ended December 31, 1997, the Company had Adjusted EBITDA, as
defined herein, of $58.3 million.
COMPETITIVE STRENGTHS
Recognized Industry Leader. In 1996, Werner generated approximately three
times the revenue of its largest competitor in the domestic climbing products
market and increased its market share from approximately 32% in 1993 to
approximately 36% in 1996. Management believes that the Company's combination of
(i) market leadership, (ii) breadth of product line, (iii) nationwide production
and distribution, (iv) reputation for high quality and (v) superior customer
service have enabled the Company to attract and retain many of the largest
distributors across the United States as its customers. Management believes that
these factors also enable the Company to serve its customer base on a broad
geographic basis and benefit from economies of scale in manufacturing,
purchasing and distribution. Werner serves all segments of the climbing products
market.
Strong Brand Name. The Werner brand name has nearly a 50-year history, and
management believes Werner is the most recognized name by both professional and
consumer end-users of climbing products. The Company has established its leading
brand name primarily by providing high-quality products and strong customer
service. Werner has successfully leveraged the strength of its brand name to
expand its product offerings, particularly in the fiberglass ladder category,
and to expand its market coverage by partnering with the leading home
improvement retailers, hardware dealers and professional supply houses to
distribute Werner products.
High-Quality, Innovative Product Line. Management believes that the
Company's products are regarded as the most innovative and highest quality in
the industry. The Company has consistently introduced improvements to the ladder
market, from the early development of the ALFLO(R) Twist-Proof(R) rung-to-side
rail technology, which significantly increased the structural integrity of
lightweight aluminum ladders, to the more recent introduction of premium quality
and visually-appealing fiberglass ladders. Management believes that Werner has
successfully generated incremental new sales and encouraged end-users to
purchase ladders at higher price points by continually introducing innovative,
new products. Management estimates that new or substantially improved products
introduced since 1990 accounted for approximately 48% of the Company's climbing
products sales in 1997.
Superior Customer Service. The Company's strategically located
manufacturing and distribution facilities, coupled with a broad offering of
high-quality products, allow the Company to provide its customers throughout the
United States with one-stop shopping on a cost-effective and timely basis.
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Werner's strong relationships with its customers are supported by innovative
sales and marketing programs tailored to serve specific channels of
distribution. The Company has found that by educating and working closely with
its customers it has been able to increase their effectiveness in selling the
Company's products. To this end, the Company has developed innovative marketing
and category management services for its climbing products, customers which
include (i) product mix optimization, (ii) effective point-of-purchase
merchandising and signage, (iii) training programs, (iv) aggressive application
of electronic commerce and (v) customer inventory management programs.
Management believes that these services allow the Company to assist its
customers in maximizing sales. The Company's superior customer service has been
consistently recognized in awards granted to Werner by its customers and
industry organizations.
Loyal and Diverse Customer Relationships. The Company has a broad and well
established customer base of more than 17,000 customers across all major
climbing products distribution channels. Its customer network encompasses
relationships with the major home improvement retailers, hardware dealers,
professional supply houses and wholesale distributors. Werner is a primary
supplier of ladders to most of the largest United States home improvement
retailers, including power retailers (e.g. The Home Depot and Lowe's), and to
most of the largest hardware co-operatives, including ACE Hardware, HWI and
TruServ. Werner is also a primary supplier to most of the major paint retailers,
such as Sherwin Williams and ICI. Werner attributes its ability to establish
such relationships with its customers primarily to the Company's broad offering
of high-quality products and high level of customer service. These factors have
resulted in a loyal customer base, characterized by low turnover. The Company
has had relationships with many of its major customers for over 20 years.
Vertically Integrated, Cost-Efficient Manufacturing. Werner operates
vertically integrated manufacturing facilities, which allow the Company to
cost-efficiently manufacture consistent, premium quality products as well as to
respond quickly to customer requirements. The Company believes it is the most
vertically integrated company in the climbing products industry. In the last
five years, Werner has invested more than $45 million in its facilities to
increase quality and capacity and to reduce total product and distribution
costs.
Experienced and Committed Management Team. Werner has assembled a strong
and experienced management team at both the corporate and operating levels. The
top fifteen members of Werner's senior management team have an average of over
20 years of experience with the Company. Following the Recapitalization, certain
senior managers of the Company owned approximately 13% of the outstanding shares
of Holding with an opportunity to own up to approximately 22% of the shares of
Holding through participation in employee incentive plans.
BUSINESS STRATEGY
The Company intends to enhance its market leadership position and maximize
profitability and cash flow by implementing the following business strategies:
Increase Penetration of the Domestic Climbing Products Market. The Company
believes it is well positioned to continue to increase its share of the domestic
climbing products market and intends to leverage its strong brand name, broad
product line and established distribution network to increase sales through
existing customers and to develop new customer relationships. The Company also
believes that its strong strategic relationships with leading climbing products
distributors in each channel will facilitate continued market share gains as
such customers further consolidate and expand their channels. Furthermore,
management believes that as distributors continue to consolidate their vendor
bases, the Company's broad product line and ability to supply distributors
throughout the United States provide significant opportunities for domestic
growth. The Company plans to further extend its domestic market coverage by
entering new product categories within the climbing products industry in which
it does not significantly participate at this time, such as domestic platform
ladders and step stools.
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Achieve Cost Reductions. Management has identified a number of cost
reduction opportunities from which the Company expects to realize up to
approximately $20 million in annual savings over the next five years, at an
estimated cost of up to approximately $49 million. These include: (i) adding
aluminum remelting capability to certain of the Company's manufacturing sites,
(ii) modernizing a number of extrusion presses, (iii) consolidating warehouses,
and (iv) constructing a new extension ladder production line. Management
believes that these capital investments will significantly enhance the Company's
vertically integrated manufacturing capabilities, thus allowing Werner to reduce
costs, improve productivity and achieve greater economies of scale.
Continue New Product Development. Werner has invested significant
resources in research and development and intends to continue to introduce new
products while focusing on higher margin products. For example, in the third
quarter of 1997, the Company introduced the Penguin(TM), an attractive,
lightweight, consumer-oriented platform ladder for household chores. Werner's
commitment to product development includes the application of further
advancements in fiberglass pultrusion technology to climbing products as well as
the introduction of new products for the stage and scaffold markets. Management
believes that Werner's cost-efficient production capability, well recognized
brand name and loyal, diverse customer relationships will enable the Company to
continue to successfully introduce new products and to increase per capita
ladder ownership.
Pursue Complementary Acquisitions and International Expansion. Werner
intends to pursue acquisitions which complement its existing manufacturing and
distribution capabilities, provide opportunities to add capacity, expand product
offerings and achieve further economies of scale. Management believes that the
international climbing products market offers significant growth opportunities
for the Company. Compared to the United States market, the international
climbing products market is highly fragmented and regionally-focused, with
smaller companies offering narrower product lines and limited marketing and
customer service support. Furthermore, management believes that as the major
United States hardware and home improvement chains expand internationally, there
will be a growing need for high-quality, dependable suppliers such as Werner to
establish a direct presence overseas.
COMPANY HISTORY
R.D. Werner founded the predecessor to the Company in 1922 as a floor
covering accessories converter and wholesaler. During the post-war period, the
Company began to pursue higher value-added applications of extrusion technology
by manufacturing semi-fabricated components and finished products rather than
low margin commodity products. Werner entered the climbing products market in
1950, and invented the ALFLO(R) Twist-Proof(R) rung-to-side rail connection,
which solved many of the safety and structural problems of aluminum extension
ladders. The Werner brand name has nearly a 50 year history and management
believes Werner is the most recognized name by users of climbing products.
INDUSTRY
Ladders and Other Climbing Products
The estimated $820 million United States climbing equipment market
encompasses aluminum, fiberglass and wood step and extension ladders, domestic
platform ladders and rolling steel warehouse ladders, aluminum scaffolding,
aluminum boards and planks, aluminum stages and certain related accessories.
Revenues in the United States climbing products industry have grown at a CAGR of
8.3% to approximately $820 million in 1996 from approximately $645 million in
1993.
The climbing products market is comprised of two partially-overlapping
end-user segments: consumers and professionals. The consumer segment primarily
consists of sales through home improvement, hardware, and paint stores to
do-it-yourself users, homeowners, renters and light commercial users. The
professional segment includes sales to independent contractors, builders,
painters, plumb-
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ers and electricians, as well as to institutional customers such as utilities,
municipalities and large corporations.
The United States climbing products industry consists of approximately 15
manufacturers, ranging from small, local producers to large manufacturers with
nationwide distribution capability, such as the Company. Sales of the four
largest climbing products manufacturers (Werner, Louisville Ladder, Keller
Ladders, Inc., and Cuprum, S.A. de C.V.) accounted for an estimated 63% of the
$820 million United States climbing products market in 1996. Werner estimates
that its share of the total climbing products market has grown to approximately
36% in 1996 from approximately 32% in 1993.
Relative to smaller, local or regional competitors, national manufacturers
such as Werner benefit from several strategic advantages, including purchasing
power, the ability to service national customer accounts on a cost-effective and
timely basis and the ability to balance production among manufacturing
facilities. In addition, national manufacturers such as the Company are less
sensitive to regional cyclical economic downturns.
Climbing products sales growth has been influenced by a number of trends,
all of which the Company expects to continue into the foreseeable future. These
trends include the consolidation of distribution channels, the continued growth
of the home improvement and new housing markets, and the development of
international markets.
Consolidating Distribution Channels. Beginning in the mid-1980s, climbing
products distribution channels consolidated as large home improvement retailers,
hardware co-operatives and wholesalers, professional supply houses and specialty
wholesale distributors increased market share at the expense of smaller
competitors. Industry analysts expect this consolidation to continue. Sales to
both the consumer and professional market segments through the power retailers
have grown faster than through other distribution channels because power
retailers have been increasing market share and enlarging the overall market for
climbing products by offering more products to the general public.
Continued Strong Home Improvement and New Housing Markets
Growth. Management expects home improvement, professional repair and
remodeling, and new housing starts to grow significantly over the next several
years. As climbing products are used in virtually all forms of construction, the
Company expects sales of its products to increase in proportion to these trends.
International Markets Growth. The Company believes that many international
markets for climbing products are approximately 20 years behind the United
States market in terms of the development of distribution channels and product
offerings. Management believes that as the major United States hardware and home
improvement chains expand internationally, there will be a growing need for
high-quality, dependable suppliers such as Werner to establish a direct presence
overseas.
Aluminum Extruded Products
Aluminum extrusion is an approximately $5 billion market in the United
States. Extrusion is a demanding manufacturing process in which hot metal is
pressed through a die to form a long length of a specific shape, known as a
lineal. A lineal can be further fabricated and finished into highly-engineered
products based on customers' design specifications. Extruded products are used
by many industries, such as transportation (e.g., truck trailer bodies and
automotive components), building products (e.g., windows, doors, hurricane
shutters, stadium seats and curtain walls), consumer durables (e.g., hardware
levels and appliances) and electrical components (e.g., buss bars, connectors
and heat sinks).
The aluminum extruded products industry is broadly segmented into two
markets: lineal extruded products and fabricated components. See
"-- Manufacturing." The lineal segment is highly competitive and
volume-oriented, with the exception of several applications which require unique
capabilities which command higher margins. Except for these more profitable
niches, the large integrated aluminum producers tend to lead the lineal products
segment of the market because they offer the most competitive prices. In
contrast, the fabricated products segment is design and engineering-intensive
and
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requires sophisticated metallurgy, process control, and fabrication expertise.
Customers select component fabricators based on service, manufacturing
flexibility and timely production.
PRODUCTS
Ladders and Other Climbing Products
Werner manufactures approximately 1,500 stock keeping units of fiberglass,
aluminum, and wood climbing products and accessories. The Company produces five
principal categories of climbing equipment: (i) single and twin stepladders;
(ii) extension, straight, and multipurpose ladders; (iii) attic ladders; (iv)
stages, planks, work platforms, and scaffolds; and (v) assorted ladder
accessories.
The majority of the Company's climbing products sales are of either
aluminum or fiberglass ladders. The Company has been a leader in the climbing
products industry through the development of both proprietary aluminum extrusion
and fiberglass pultrusion technology. In the 1950s, Werner introduced aluminum
extension ladders featuring its ALFLO(R)Twist-Proof(R) rung-to-side rail
connection. In recent years, the Company has been a leader in developing
fiberglass ladder products. The Company has addressed the specific needs of the
telephone utility and industrial markets by providing electrically-and
thermally-nonconductive, weather-resistant climbing products. In addition, the
Company has broadened its product applications by introducing colorful,
attractive fiberglass climbing products to the consumer markets. The Company
entered the market for wood climbing products largely to address its customers'
requests for it to become a full-line provider of climbing products. The
Company's strategy with respect to its wood ladders is to migrate the end-user
from wood to fiberglass or aluminum climbing products while simultaneously
improving its gross margin for wood products by increasing cost-efficiency.
Through the introduction of a color-coded duty rating system correlated to
load capacity, the Company has simplified the end-user's purchasing decision and
differentiated Werner ladders from those of other suppliers. The Company's Type
III duty-rated ladders are economical, lightweight and dependable products for
most household applications. Werner's Type II duty-rated ladders are general
purpose, commercial grade climbing products for the handyman, painter or
mechanic. Werner's Type I duty-rated ladders are strong, stable industrial grade
climbing products designed for heavy do-it-yourself users and for uses in light
construction, maintenance or industrial applications. Finally, Type IA duty-
rated products are designed for extra heavy use by professional industrial,
construction, and maintenance purposes.
The Company also manufactures and sells a line of climbing products under
the All American brand name.
Aluminum Extruded Products
The Company is a manufacturer of lineal extruded products and
highly-engineered fabricated parts. The Company targets customers who require
special metallurgy, tight tolerances, unusual shapes, painting, finishing and
fabrication requirements. Werner has implemented sophisticated quality systems,
and has been awarded ISO-9002 and QS-9000 certifications by Underwriters
Laboratories, which are internationally-recognized as the highest levels of
quality certification in the industrial and automotive industries and are
required by the "Big Three" United States automakers.
End-uses of the Company's lineal extrusions include electronic equipment,
architectural products, hardware, industrial equipment and lighting products.
The Company's customers use lineal extrusions in a broad range of products
including garage door openers, bicycle frames, pneumatic cylinders, material
handling systems, electrical connectors, curtain walls and office partitions.
Werner has technical and process capabilities required to serve the precision
lineal market and believes that there are few other domestic manufacturers which
are able to compete in this market. Werner's metallurgical technology, die
design expertise and exacting control of all aspects of the extrusion process
have contributed to the Company's success in meeting the exacting specifications
demanded in this segment. Management
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believes the Company's presses and proprietary die technology offer product
features and higher production speed unavailable from most other United States
competitors. Since 1995, the Company has attempted to shift its focus away from
lower margin lineal products toward higher margin precision extrusions and
fabricated components. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
The automotive market is currently the Company's primary market for
fabricated parts. The Company is a supplier to General Motors Corporation, Ford
Motor Corporation, and Chrysler Corporation. The Company has been a vendor to
various divisions of General Motors for approximately 35 years, has served Ford
for about 10 years, and has supplied Chrysler for approximately seven years.
Werner Financial
Werner Financial Inc. consists of, among other things, a claims management
entity, Phoenix Management Services, Inc. ("Phoenix"), and a captive property
and casualty insurance subsidiary, MIICA. Phoenix utilizes its expertise in
ladder and climbing products related liability claims as a cost-efficient
alternative to purchasing external claims management. MIICA is a licensed
insurance company domiciled in Colorado and is engaged in providing product
liability, workers' compensation and environmental insurance to Werner. Under
this structure, Werner pays premiums to MIICA for coverage, which in turn pays
premiums to a reinsurer for coverage above a threshold, in most cases $1 million
per occurrence. The Company is currently undertaking an evaluation of the cost
and efficiency of providing such insurance through MIICA which may lead to the
Company pursuing alternate or modified arrangements for obtaining such
insurance.
MARKETING AND DISTRIBUTION
Ladders and Other Climbing Products
The Company categorizes its end-users into two major segments:
professionals and consumers. The consumer segment primarily consists of sales
through home improvement, hardware and paint stores to do-it-yourself users,
homeowners and light commercial users. The professional segment includes
independent contractors, builders, painters, plumbers and electricians, as well
as institutional customers such as utilities, municipalities and large
corporations. Professional users tend to purchase products through professional
supply houses and specialty wholesale distributors.
The Company's climbing products are sold primarily through approximately 50
independent, commissioned manufacturers' representative organizations, which
sell to three major distribution channels: (i) retail, (ii) hardware and (iii)
professional. These independent representative organizations have an average
tenure of approximately 16 years with Werner, cover a broad range of trade
fields, and possess extensive product knowledge and customer relationships. The
Company estimates that commissions from selling Werner products are the primary
source of revenue for approximately two-thirds of its representative groups.
Given its long-term relationships with, and economic importance to, its
independent representative network, Werner has historically experienced low
turnover and significant loyalty from these organizations.
The 50 independent manufacturers' representative organizations are directed
by an experienced in-house sales team of national and regional sales managers.
This sales team is composed of three national sales managers, one for each major
distribution channel, and five regionally-focused sales managers. In addition,
the Company's sales and marketing network is further supported by field
merchandisers who visit select customers on a regular basis to assist them with
product merchandising, point-of-purchase signage and sales techniques.
Aluminum Extruded Products
The Company's extruded products sales organization currently numbers
approximately 40 people, including Company salespeople and staffing provided by
15 independent manufacturers' representative
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organizations. The majority of the Company's extruded products sales are in the
eastern and mid-western United States. As part of its strategic repositioning
towards complex fabricated components, the Company is adding new representation
to build additional business in the western United States. In addition, in 1996
Werner hired a new, highly experienced marketing manager and additional
dedicated market research resources to support new market development. The
Company operates on a "make-to-order" basis with each customer. Werner is
typically the key supplier for a particular part or product and has enjoyed
long-term relationships with its customers.
MANUFACTURING
Climbing and extruded products are manufactured using common equipment and
facilities and similar production processes, which enable the Company to
leverage core technical competencies and balance seasonal demand. The Company is
a manufacturer of aluminum, fiberglass and wood climbing products, with
vertically-integrated manufacturing facilities located in four states. The
Company believes that its ability to satisfy many of its own manufacturing
needs, including aluminum extrusions and fiberglass pultrusions, provides it
with an enhanced ability to serve its customers, significant manufacturing
flexibility and a reliable supply of low-cost components. The Company also
operates an aluminum remelt facility at its Greenville facility, providing the
Company with significant cost savings.
The first step in the production of aluminum and fiberglass ladders is the
extrusion or pultrusion of side rails and steps. The Company produces aluminum
extrusion products to meet virtually all its manufacturing needs. Werner's
aluminum raw material conversion process begins with the creation of proprietary
aluminum alloys by melting together in a reverbatory furnace commercially pure
aluminum ingot, select internal aluminum process scrap and other raw materials
to create alloys. In the extrusion process, aluminum billets are hydraulically
pressed through tooling dies to form the shapes necessary to build ladders and
other products.
The Company manufactures fiberglass reinforced plastic ladder siderails
using a proprietary pultrusion process. Pultrusion is a process of carefully
positioning arrays of fiberglass rovings, structural mat and surface veil,
injecting them with a liquid resin and then pulling this combination through a
temperature-controlled die. Fiberglass pultrusions can be made in numerous
colors, are electrically- and thermally-nonconductive and have excellent
structural and weathering properties. Werner's pultrusion equipment is now
designed in-house specifically for ladder rail production, which management
believes offers improved quality, higher throughput and lower costs than
competing processes or equipment.
Extrusion is a demanding manufacturing process in which hot metal is
pressed through a die to form a long length of a specific shape, known as a
lineal. A lineal can be further fabricated and finished into highly-engineered
products based on customers' design specifications. Extruded products are used
by many industries, such as transportation (truck trailer bodies and automotive
components), building products (windows, doors, stadium seats and curtain wall),
consumer durables (hardware levels and appliances) and electrical components
(connectors and heat sinks).
COMPETITION
The climbing products industry has experienced significant consolidation
over the last 10 to 15 years. The number of competitors has decreased from
roughly 65 in 1965 to approximately 15 today, with fewer than five providing a
broad product line throughout the United States. Management believes that the
Company's climbing products revenues were more than three times those of its
largest competitor in 1996. The Company competes on the basis of the variety and
quality of its products in addition to its high level of customer service.
In its extruded products business, the Company competes with integrated
primary aluminum producers, large independent producers and small independent
producers. The primary producers participate primarily in the high volume
commodity portion of the lineal segment and offer only modest levels of customer
service. The large independent extruders compete regionally or nationally, and
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typically serve several niche markets. There are many small independent
extruders located throughout the United States. Most compete regionally and are
known for one or two specialty niche products.
PATENTS, TRADEMARKS AND LICENSES
The Company has over 50 patents worldwide. The Company believes that its
patents are important to its business operations but does not believe that the
expiration or loss of any of its patents would have a material adverse effect on
the Company.
The Company owns a number of trademarks, including Ladder Power(R),
Certified Werner Ladder Sales Expert(R) and Pro-Master Fiberglass Ladders(R).
The Company believes that its trademarks and its licenses are important to its
business operations, but does not believe that the expiration or loss of any
trademark or license would have a material adverse effect on the Company.
RAW MATERIALS AND SUPPLIERS
The Company is a major consumer of aluminum and has implemented various
hedging strategies to mitigate the impact of raw material price fluctuations.
The Company has contracts to provide most of its estimated aluminum requirements
with six principal suppliers. These contracts include stipulated prices with
provisions for price adjustments based on market prices. Five of these contracts
will be renegotiable in 1998 and one will be renegotiable in 1999.
The Company has contracts to purchase the basic materials required for
fiberglass pultrusion with its principal suppliers, which contracts are
typically one to three years in length.
BACKLOG
Due to the Company's ability to quickly meet production orders and its
production forecasting systems, the Company has no significant backlog in
climbing products. Most extruded products are produced on a make-to-order basis.
EMPLOYEES
The Company had approximately 2,700 employees as of December 31, 1997.
Approximately 1,400 hourly employees are covered by six collective bargaining
agreements, five which expire in 2000 and one of which expires in 2002. The
Company will renegotiate and renew union contracts as they expire. Management
does not anticipate any material labor disruptions as a result of the renewal of
any union contracts. The Company believes that its labor relations are good at
all of its facilities.
ENVIRONMENTAL MATTERS
The Company's operations are subject to federal, state and local laws and
regulations governing, among other things, emissions to air, discharge to
waters, the generation, handling, storage, transportation, treatment and
disposal of hazardous substances and other materials and employee health and
safety matters. The primary environmental, health and safety laws affecting the
Company are the Federal Clean Air Act, the Water Pollution Control Act, the
Resource Conservation and Recovery Act and the Occupational, Safety and Health
Act, and their respective state counterparts. The Company believes that its
business, operations and facilities have been and are being operated in
compliance in all material respects with applicable environmental and health and
safety laws and regulations, many of which provide for substantial fines and
criminal sanctions for violations. See "Risk Factors -- Environmental
Regulation."
PROPERTIES
The Company believes its manufacturing, warehouse and office facilities are
suitable, adequate and have sufficient manufacturing capacity for its current
requirements. The Company also believes that
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its facilities are being utilized consistent with the Company's plans and do not
have substantial excess capacity. The Company's principal facilities consist of
the following:
<TABLE>
<CAPTION>
OWNED/ APPROX.
LOCATION PRINCIPAL USE LEASE EXPIRATION SQUARE FOOTAGE
- ---------------------------- ------------------------------------ ---------------- --------------
<S> <C> <C> <C>
Greenville, PA.............. Office, Manufacturing, Distribution Owned 640,000
Franklin Park, IL........... Manufacturing, Distribution Owned 672,000
Anniston, AL................ Manufacturing, Distribution Owned 410,000
Carrolton, KY............... Wood Manufacturing, Distribution Owned(1) 200,000
Union City, CA.............. Warehouse 10/31/00 38,600
Bell, CA.................... Warehouse 4/30/01 39,100
Phoenix, AZ................. Warehouse 9/30/00 18,500
Dallas, TX.................. Warehouse 6/30/99 16,480
Houston, TX................. Warehouse 2/28/01 40,000
Jefferson, LA............... Warehouse 4/30/00 7,800
Greensboro, NC.............. Warehouse 4/30/98(2) 20,800
Maryland Hgts., MO.......... Warehouse 9/30/00 8,700
Bensenville, IL............. Warehouse 10/31/98(3) 95,000
Minneapolis, MN............. Warehouse 8/31/00 11,900
</TABLE>
- ---------------
(1) Subject to Variable Rate Industrial Building Revenue Bonds due 2015 issued
by the County of Carroll, Kentucky.
(2) A renewal option of two three-year terms exists for the Greensboro lease.
(3) Extension of the Bensenville lease is currently being negotiated.
LEGAL PROCEEDINGS
The Company is involved from time to time in various legal proceedings and
claims incident to the normal conduct of its business. Although it is impossible
to predict the outcome of any pending legal proceeding, the Company believes
that such legal proceedings and claims, individually and in the aggregate, are
either without merit, covered by insurance or adequately reserved for, and will
not have a material adverse effect on its financial condition or results of
operations. See "Risk Factors -- Legal Proceedings."
OPERATION THROUGH SUBSIDIARIES
The Company conducts substantially all its operations through the Issuer's
direct and indirect subsidiaries. The Company is currently undertaking a review
of the desirability of operating through all of the Issuer's subsidiaries,
including the Subsidiary Guarantors. In the event certain of the Issuer's
subsidiaries are deemed no longer necessary, it is expected that such
subsidiaries will be consolidated into the Issuer or one of its remaining
subsidiaries. Such consolidation will have no impact however upon the holders of
the Notes or the consolidated results of operations of the Company.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age and principal position of each
of the directors of Holding and the executive officers of the Company.
Each director of Holding will hold office until the next annual meeting of
shareholders of Holding or until his successor has been elected and qualified.
Officers of the Company are appointed by the Board of Directors of Holding and
serve at the discretion of the Board of Directors, subject to any applicable
employment agreements.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ------------------------------------------ --- ------------------------------------------
<S> <C> <C>
Donald M. Werner.......................... 64 Chairman, President, Chief Executive
Officer, and Director
Howard L. Solot........................... 60 Vice Chairman, Chief Operating Officer,
Executive Vice President and Director
Donald W. Resnick......................... 56 Chief Financial Officer and Treasurer
Michael E. Werner......................... 38 President, Werner Ladder Co.
Michael D. Isacco......................... 60 Vice President, Manufacturing
Eric J. Werner............................ 35 Chief Administrative Officer, Secretary
and General Counsel
Savio W. Tung............................. 46 Director
Charles J. Philippin...................... 47 Director
Christopher J. Stadler.................... 33 Director
</TABLE>
Donald M. Werner has served as President and Chief Executive Officer of
Holding since May, 1997. From 1995 to 1997, Mr. Werner was President of Werner
Ladder Co. Prior to 1995, Mr. Werner served in various positions with the
Company including Sales Manager, Vice President -- Marketing and Senior Vice
President -- Corporate Sales and Marketing. Mr. Werner also holds various
director and officerships at subsidiaries of Holding. Prior to commencing his 39
year career with the Company, Mr. Werner was an aircraft structural design
engineer for Grumman Aircraft Co. Mr. Werner is Chairman of the American
Hardware Manufacturers Association and serves on the boards of directors of the
Scaffolding Industry Association and the Hardware Group Association. Mr. Werner
is the father of Eric J. Werner, the uncle of Michael E. Werner and the cousin
of Howard L. Solot.
Howard L. Solot has served as Executive Vice President and Chief Operating
Officer of Holding since 1995. He joined the Company in 1959 and has held
various planning, systems, engineering and manufacturing related positions,
including Plant Manager, Division General Manager, Vice President -- Engineering
and Corporate Planning and Senior Vice President -- Manufacturing. Mr. Solot
also holds various director and officerships at subsidiaries of Holding. Mr.
Solot is a member of the board of directors of the Aluminum Extruders Council.
Mr. Solot is the cousin of Donald M. Werner.
Donald W. Resnick joined the Company as Chief Financial Officer of Holding
in 1996. He has also served as President of Werner Financial Inc. and of MIICA
since December 1996. Mr. Resnick also holds various officerships at subsidiaries
of Holding. Prior to joining the Company, Mr. Resnick served as President and
Chief Operating Officer of Ameriquest Technologies, Inc. Prior to that, he was
with Digital Equipment Corporation for twelve years, where he served as
International Chief Financial Officer for eight years.
Michael E. Werner has served as President of the Company's Werner Ladder
Co. business unit since 1997. Mr. Werner joined the Company in 1988 and has held
several positions including Vice President -- National Accounts and Vice
President -- Sales & Marketing. Mr. Werner also holds various officerships at
subsidiaries of Holding. Prior to joining the Company, Mr. Werner served as Vice
President for Mergers, Acquisitions and Investments at Pacific Holding Co. and,
prior to that, as an
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associate in the Mergers & Acquisitions Department of Goldman, Sachs & Co. Mr.
Werner is the nephew of Donald M. Werner and the cousin of Eric J. Werner.
Michael D. Isacco has served as Vice President, Manufacturing of the
Company since April 1995. Mr. Isacco joined the Company in 1981 as Engineering
Administrator and has held a variety of positions with the Company, including
Manager of Engineering Administration and Greenville Division Plant Manager.
Prior to joining the Company, Mr. Isacco spent twenty years in various positions
with the United States Army, retiring in 1979 with the rank of Lieutenant
Colonel.
Eric J. Werner joined the Company in 1988 as Secretary and Corporate
Counsel. He has served as Chief Administrative Officer of the Company since 1995
and General Counsel of the Company since 1993. Prior to joining the Company, Mr.
Werner was an associate at the law firm of O'Connor, Broude, Snyder and Aronson.
Mr. Werner also holds various officerships at subsidiaries of Holding. Mr.
Werner also serves as a director of FNB Corporation. Mr. Werner is the son of
Donald M. Werner and the cousin of Michael E. Werner.
Savio W. Tung has served as a director of Holding since November 1997. He
has been an executive of Investcorp, its predecessor or one or more of its
wholly-owned subsidiaries since September 1984. Mr. Tung is a director of CSK
Auto Corporation, Saks Holdings, Inc. and Star Markets Holdings, Inc.
Charles J. Philippin has served as a director of Holding since November,
1997. He has been an executive of Investcorp or one or more of its wholly-owned
subsidiaries since July 1994. Prior to joining Investcorp, Mr. Philippin was a
partner of Coopers & Lybrand L.L.P. Mr. Philippin is a director of Saks
Holdings, Inc., CSK Auto Corporation, The William Carter Company and Falcon
Building Products, Inc.
Christopher J. Stadler has served as a director of Holding since November
1997. He has been an executive of Investcorp or one or more of its wholly-owned
subsidiaries since April 1, 1996. Prior to joining Investcorp, Mr. Stadler was a
Director with CS First Boston Corporation. Mr. Stadler is a director of CSK
Corporation, The William Carter Company and Falcon Building Products, Inc.
DIRECTOR COMPENSATION
Holding does not pay any additional remuneration to its employees or to
executives of Investcorp for serving as directors. The Company does reimburse
directors for any expenses incurred in attending meetings. See " -- Executive
Compensation."
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all cash compensation earned in fiscal 1997
by the Company's Chief Executive Officer, each of the other four most highly
compensated executive officers whose remuneration exceeded $100,000 and two
other individuals who served as executive officers during 1997 (collectively,
the "Named Executive Officers"). The current compensation arrangements for each
of these officers are described in " -- Employment Arrangements" below.
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<PAGE> 60
<TABLE>
<CAPTION>
ANNUAL COMPENSATION ($)
----------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY BONUS COMPENSATION COMPENSATION(A)
- ------------------------------------- ----- -------- -------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
Donald M. Werner(1).................. 1997 414,923 297,920 97,533 2,000,000
President, Chief Executive Officer
Howard L. Solot(2)................... 1997 413,058 297,920 59,755 2,000,000
Chief Operating Officer,
Executive Vice President
Donald W. Resnick(3)................. 1997 243,654 95,264 65,680 857,500
Chief Financial Officer, Treasurer
Michael E. Werner(4)................. 1997 222,942 134,952 176,349 --
President of Werner Ladder Co.
Eric J. Werner(5).................... 1997 214,961 84,448 23,938 --
Chief Administrative Officer,
Secretary,
General Counsel
Richard L. Werner(6)................. 1997 159,231 171,139 366,174 2,000,000
Chairman, President and Chief
Executive Officer
Robert I. Werner(7).................. 1997 170,769 80,660 434,375 2,000,000
Vice Chairman, Senior Vice
President,
Technology and Quality
</TABLE>
- ---------------
(a) See the following section "Compensation Relating to the Recapitalization"
for a detailed explanation of amounts in this column.
(1) Prior to April 1997, Donald M. Werner was the President of Werner Ladder Co.
The amount shown for Mr. Werner under Other Annual Compensation reflects
payments of $67,972 in respect of life insurance premiums paid by the
Company, $4,750 in respect of matching contributions made under the 401(k)
Plan, $9,302 in respect of accruals under the Retiree Health Plan, $2,625 of
imputed income arising from the personal use of a Company provided
automobile, $6,798 for financial planning services, and $6,086 of imputed
interest. The amount shown for Mr. Werner under All Other Compensation
reflects payments of $2,000,000 relating to the acceleration of additional
supplemental pension and consulting payments as a result of the
Recapitalization.
(2) The amount shown for Mr. Solot under Other Annual Compensation reflects
payments of $32,795 in respect of life insurance premiums paid by the
Company, $4,750 in respect of matching contributions made under the 401(k)
Plan, $5,850 in respect of accruals under the Retiree Health Plan, $7,030 of
imputed income arising from the personal use of a Company provided
automobile, and $9,330 for financial planning services. The amount shown for
Mr. Solot under All Other Compensation reflects payments of $2,000,000
relating to the acceleration of additional supplemental pension and
consulting payments as a result of the Recapitalization.
(3) The amount shown for Mr. Resnick under Other Annual Compensation reflects
payments of $45,505 in respect of life insurance premiums paid by the
Company, $4,750 in respect of matching contributions made under the 401(k)
Plan, $4,050 in respect of accruals under the Retiree Health Plan, $1,115 of
imputed income arising from the personal use of a Company provided
automobile, and $10,260 of moving expense. The amount shown for Mr. Resnick
under All Other Compensation reflects incentive payments relating to the
Recapitalization.
(4) The amount shown for Michael E. Werner under Other Annual Compensation
reflects payments of $8,044 in respect of life insurance premiums paid by
the Company, $3,062 in respect of matching contributions made under the
401(k) Plan, $594 in respect of accruals under the Retiree Health Plan,
$3,889 of imputed income arising from the personal use of a Company provided
automobile, $50,391 of moving expense, $107,119 of special pay and $3,250 of
financial planning services.
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(5) The amount shown for Eric J. Werner under Other Annual Compensation reflects
payments of $6,935 in respect of life insurance premiums paid by the
Company, $4,750 in respect of matching contributions made under the 401(k)
Plan, $594 in respect of accruals under the Retiree Health Plan, $4,766 of
imputed income arising from the personal use of a Company provided
automobile, and $6,893 of financial planning services.
(6) Richard L. Werner retired as the Company's Chairman and Chief Executive
Officer in May 1997. The amount shown for Mr. Werner under Other Annual
Compensation reflects payments of $49,065 in respect of life insurance
premiums paid by the Company, $4,750 in respect of matching contributions
made under the Company's Employee Savings Plan (the "401(k) Plan"), $6,615
in respect of accruals by the Company under its Officers'/Directors' Health
and Dental Insurance Continuation Plan (the "Retiree Health Plan"), and
$3,834 of interest income, $23,759 of financial planning services and
$278,151 of pension payment. The amount shown for Mr. Werner under All Other
Compensation reflects payments of $2,000,000 relating to additional
supplemental pension and consulting payments including amounts which were
accelerated as a result of the Recapitalization.
(7) Robert I. Werner retired as the Company's Senior Vice President, Technology
and Quality in May 1997. The amount shown for Mr. Werner under Other Annual
Compensation reflects payments of $46,655 in respect of life insurance
premiums paid by the Company, $4,750 in respect of matching contributions
made under the 401(k) Plan, $5,355 in respect of accruals under the Retiree
Health Plan, and $13,723 of imputed interest, $6,838 of financial planning
services and $357,054 of pension payment. The amount shown for Mr. Werner
under All Other Compensation reflects payments of $2,000,000 relating to
additional supplemental pension and consulting payments including amounts
which were accelerated as a result of the Recapitalization.
COMPENSATION RELATED TO THE RECAPITALIZATION
Consulting Agreements
As part of the Company's succession plan, the Company Board determined in
December 1996 to provide each of Richard L. Werner, Robert I. Werner, Donald M.
Werner and Howard L. Solot a Consulting Agreement and an additional supplemental
pension to be entered into or paid (as the case may be) at the time that each of
the foregoing retires from the Company subject to certain acceleration
provisions. Accordingly, in April 1997, each of Richard L. Werner and Robert I.
Werner entered into a four-year Consulting Agreement providing for consulting
fees of $250,000 per annum and received an additional supplemental pension of $1
million. Pursuant to the December 1996 awards, a change of control of Holding
results in the acceleration of such payments. The Recapitalization constituted a
change of control for purposes of the Consulting Agreements, and, as a result,
all remaining amounts under the Consulting Agreements were accelerated and paid
to each of Richard L. Werner and Robert I. Werner on the Recapitalization
Closing Date. In addition, pursuant to the December 1996 awards, each of Donald
M. Werner and Howard L. Solot became entitled to receive, at the time of the
Transactions, all amounts that they would have received had they retired as of
such time, pursuant to the terms of additional supplemental pensions and the
acceleration of their Consulting Agreements. Such amounts totaling $2 million
each were paid by Holding on the Recapitalization Closing Date. See "-- Pension
Plans."
Employee Protection Agreements
In connection with the Transactions, Holding entered into Employee
Protection Agreements with approximately 50 employees, including the Company's
senior management. The Employee Protection Agreements provide for payments
ranging from 50% to 150% of a year's salary to be paid to each covered employee
(i) who remains employed on the first anniversary of a change in control of
Holding or (ii) prior to such anniversary (A) whose employment is terminated by
Holding other than for cause or (B) who suffers a "material employment change"
(as defined in the Employee Protection Agreements). It is estimated that
payments to be made under the Employment Protection Agreements will total
approximately $6.6 million. In addition, certain employees who are not Werner
family members, includ-
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ing certain executive officers of the Company, have been provided incentive
bonuses in their Employee Protection Agreements relating to a change of control
of Holding. The Recapitalization constituted a change of control for purposes of
the Employee Protection Agreements. The Company paid such incentive payments on
the Recapitalization Closing Date in the amount of $1,133,500.
Restricted Stock Plan
In 1992 and 1993, pursuant to the terms of the Company's Restricted Stock
Plan, the Company awarded the following shares of restricted
pre-Recapitalization Class B Stock, (the "Restricted Shares") to the following
persons and in the following amounts: Richard L. Werner (5,600 shares), Robert
I. Werner (5,600 shares), Donald M. Werner (5,600 shares), Howard L. Solot
(5,600 shares), Marc L. Werner (1,750 shares), Craig R. Werner (1,750 shares),
Michael E. Werner (1,750 shares), Eric J. Werner (1,750 shares), Bruce D. Werner
(1,750 shares), and Michael J. Solot (1,750 shares). The Restricted Shares were
awarded in consideration of each executive's continued employment by the Company
and therefore would have vested on a delayed basis following the date of grant.
In the absence of a change of control, the Restricted Shares held by Michael J.
Solot would have vested on December 17, 2000, and the Restricted Shares held by
the other executives (other than Robert Werner and Richard L. Werner, whose
shares automatically vested upon their retirement in May 1997) would have vested
on March 14, 1999 or, if earlier, upon the occurrence of a change of control of
Holding. The Recapitalization constituted a change of control for purposes of
the Restricted Stock Plan and, accordingly, all outstanding Restricted Shares
became fully vested upon the Recapitalization Closing Date. Consequently, a
non-cash compensation charge of $78.5 million was taken by the Company in 1997.
Employment Arrangements
Pursuant to the Recapitalization Agreement, Holding entered into employment
agreements with each of Donald M. Werner, Howard L. Solot, Michael E. Werner,
Eric J. Werner and three other senior managers of the Company (the "Employment
Agreements"). Each of the Employment Agreements is for a term of three years,
commencing on the Recapitalization Closing Date. In addition to such executive's
salary, the Employment Agreements also provide for an annual bonus payment if
mutually agreed-upon performance goals are met or exceeded and an additional
cash bonus payable at the discretion of the Company Board. Under the Employment
Agreements, Holding may only terminate such executives' employment, without
obligation for severance, for cause. If an executive's employment is terminated
without cause or if an executive terminates his employment for good reason, the
Company must (i) pay such executive a lump sum equal to 12 months' base salary,
and the most recent annual bonus paid (or earned but not yet paid) prior to
termination of employment, and (ii) continue such executive's employee benefits
for 12 months. The Employment Agreements define "cause" as conviction of
embezzlement or other felony involving fraud with respect to performance of
duties and, subject to notice and opportunity to cure, willful engagement in
gross misconduct concerning duties. "Good reason" is defined as a reduction in
salary, bonus opportunities or employee benefits from the level in effect as of
the Recapitalization, adverse changes in duties and forced relocation.
Management Stock Incentive Plan
Pursuant to the Recapitalization Agreement, Holding adopted a stock
incentive plan, pursuant to which options to purchase Class C Common Stock may
be granted to employees and directors of the Company. While no options have yet
been issued pursuant to such plan, the Company anticipates that options
representing approximately 7% of the outstanding post-Recapitalization common
stock will be issued in the near future. Certain members of senior management,
including the Named Executive Officers, are expected to be granted a significant
portion of these options. The exercise price for options that are to be granted
will be equal to the Cash Redemption Price. An award granted under the plan to
an employee may include a provision terminating the award upon termination of
employment under certain circumstances or accelerating the receipt of benefits
upon the occurrence of specified events, including, at the discretion of the
Compensation Committee, any change of control of Holding. Each
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option will be subject to certain vesting provisions. To the extent not earlier
vested or terminated, all options will vest on the seventh anniversary of the
date of grant and will expire 30 days thereafter if not exercised. Upon the
termination of an optionee's employment with the Company, Holding will have
certain rights to repurchase, and the optionee shall have certain rights to
require an affiliate of Investcorp to repurchase (subject to the right, granted
to Holding, to repurchase such shares instead of the Investcorp affiliate), the
Class C Common Stock purchased by the optionee pursuant to the exercise of his
option(s).
Stock Loan Plan
Pursuant to the Recapitalization Agreement, Holding adopted, as of the
consummation of the Transactions, a Stock Loan Plan in order to make loans to
certain members of management entering into certain stock purchase agreements
between management participants and the Investors (the "Loan Participants") in
amounts that do not exceed the sum of (i) 50% of the purchase price of the
shares of Class C Common Stock purchased by the Loan Participant and (ii) the
amount of the retention bonus to be paid by Holding to the Loan Participant
pursuant to the respective Employee Protection Agreement. Loans made pursuant to
the Stock Loan Plan will mature in seven years, and will bear interest at the
same rate as the Revolving Facility of the Senior Credit Facility. Holding will
negotiate with each Loan Participant the amount of principal to be paid from
such Loan Participant's annual bonus. The Stock Loan Plan will require each Loan
Participant to enter into a pledge agreement and to execute a secured promissory
note. Shares with an aggregate fair market value of at least $2 million will be
made available for purchase pursuant to the Stock Loan Plan and management stock
purchase agreements.
Pension Plans
The Company's salaried employees receive an annual lifetime pension (up to
$160,000, as adjusted) benefit based on years of service and salary under the
Werner Holding Co. (DE), Inc. Salaried Employees' Pension Plan, a funded,
tax-qualified defined benefit plan covering all salaried employees (the
"Retirement Plan"). Certain Named Executive Officers also receive pension
benefits under the Werner Holding Co. (DE), Inc. Supplemental Pension Plan A
and/or the Werner Holding Co. (DE), Inc. Supplemental Pension Plan B. The
following tables show the estimated aggregate annual benefits payable at age 65
to Named Executive Officers retiring at age 65 with the indicated average
compensation and years of credited service from both the Retirement Plan and the
applicable Supplemental Pension Plans. These benefits are in addition to the $1
million supplemental pensions paid in May 1997 to Richard L. Werner and Robert
I. Werner, and paid on the Recapitalization Closing Date to Donald M. Werner and
Howard L. Solot. See "-- Compensation Related to the
Recapitalization -- Consulting Agreements."
A. PENSION PLAN TABLE: ANNUAL BENEFITS PAYABLE AT AGE 65
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------------------------------------------------------
REMUNERATION 5 10 15 20 25 30 35 40 45
- ------------ ------- ------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$100,000 $ 6,416 $12,832 $ 19,248 $ 25,664 $ 32,080 $ 38,496 $ 45,645 $ 52,792 $ 59,941
200,000 13,564 27,129 40,693 54,258 67,822 81,387 95,684 109,980 124,278
300,000 20,713 41,426 62,139 82,852 103,565 124,278 145,724 167,169 188,615
400,000 27,862 55,723 83,585 111,446 139,308 167,169 195,764 224,357 252,951
500,000 35,010 70,020 105,030 140,040 175,050 210,060 245,803 281,545 317,288
</TABLE>
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<PAGE> 64
B. PENSION PLAN TABLE: ANNUAL BENEFITS PAYABLE AT AGE 65
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------------------------------------------------------
REMUNERATION 5 10 15 20 25 30 35 40 45
- ------------ ------- ------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$300,000 $ 0 $14,297 $ 21,446 $ 28,594 $ 35,743 $ 42,891 $ 50,040 $ 57,188 $ 64,337
400,000 0 19,063 28,594 38,126 47,657 57,188 66,720 76,251 85,782
500,000 0 23,828 35,743 47,657 59,571 71,485 83,399 95,314 107,228
600,000 0 28,594 42,891 57,188 71,485 85,782 100,079 114,376 128,673
700,000 0 33,360 50,040 66,720 83,400 100,079 116,759 133,439 150,119
800,000 0 38,125 57,188 76,251 95,314 114,376 133,439 152,502 171,565
900,000 0 42,891 64,337 85,782 107,228 128,673 150,119 171,565 193,010
</TABLE>
The benefits listed in the tables are not subject to any deduction for
Social Security. The benefits listed in Table A are computed on the basis of the
average salary of the employee (excluding bonuses) for the three consecutive
full calendar years out of the last 10 years prior to retirement that provide
the highest average. The benefits listed in Table B are computed on the basis of
the average salary of the employee (including bonuses) for the three consecutive
full calendar years out of the last 10 years prior to retirement that provide
the highest average.
Supplemental Pension Plans A and B are unfunded, non-qualified plans which
provide lifetime annual pension benefits to certain stated executives in excess
of benefits payable under the Retirement Plan, due to Retirement Plan
limitations imposed by Employee Retirement Income Saving Act (ERISA), plus
additional other benefits. Supplemental Pension Plan A covers all members of the
Company's Management Committee and Supplemental Pension Plan B covers all the
elected corporate officers. Supplemental Pension Plan benefits are a function of
service and final average compensation. Executives must have spent at least ten
years as either an elected salaried corporate officer or a member of the
Management Committee of the Company which includes all of the named executive
officers to be eligible. Eligibility for supplemental plans is conditioned upon
participants' compliance with a non-competition agreement.
The compensation used for pension formula purposes is annual base pay alone
for the qualified Retirement Plan (subject to IRS limits, currently at $160,000
per year) and both base pay and annual bonus (without regard to any limits) for
the nonqualified Supplemental Plans. The base salaries and bonuses of each of
the named executive officers for 1997 are set forth in the Summary Compensation
Table.
An amendment to Supplemental Pension Plan B provides to Richard L. Werner,
Robert I. Werner, Donald M. Werner and Howard L. Solot a minimum of supplemental
pension equal to the amount necessary to bring the total Retirement Plan pension
and the pension otherwise payable under the Supplemental Pension Plans, up to a
combined minimum pension of 1.25% of average annual compensation for all years
of service, up to a lump sum equivalent maximum for this additional benefit
(based on a 7.5% discount rate) of $1 million. Richard L. Werner and Robert I.
Werner were paid this $1 million lump sum additional benefit upon their
retirement in May 1997. The obligations of the Company to Donald M. Werner and
Howard L. Solot under this amendment were accelerated at the Recapitalization
Closing Date, and Donald M. Werner and Howard L. Solot each received $1 million
from the Company. See "-- Compensation Related to the
Recapitalization -- Consulting Agreements."
The respective years of credited service for the Named Executive Officers
as of December 31, 1997 are: Richard L. Werner, 44; Robert I. Werner, 44; Donald
M. Werner, 39; Howard L. Solot, 38; Michael E. Werner, 9; Eric J. Werner, 9; and
Donald W. Resnick, 2.
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COMMITTEES OF THE BOARD OF DIRECTORS;
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the consummation of the Transactions, the Salary Administration
Committee of Werner Co., a subsidiary of the Issuer, determined the annual
salary budget for each department, which was then allocated by the department
head. The full board of directors of Werner Co. determined the compensation for
senior non-Werner family management. During 1997, this board consisted of
Richard L. Werner, Robert I. Werner, Donald M. Werner, Howard L. Solot, Craig R.
Werner, Michael E. Werner, Eric J. Werner, Bruce D. Werner and Michael J. Solot.
The full board of directors of Werner Management Co. determined the compensation
for Werner family executive officers. During 1997, the board consisted of
Richard L. Werner, Robert I. Werner, Donald M. Werner and Howard L. Solot.
None of the executive officers of the Company served on the board of
directors or on the compensation committee of any other entity, any of whose
officers served either on any of the boards of directors or the Salary
Administration Committee of the Company.
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<PAGE> 66
PRINCIPAL SHAREHOLDERS
The Class A Stock, Class B Stock and Class D Common Stock are the only
classes of Holding's capital stock that have the power to vote. The Class A
Stock and Class B Stock each possesses the right to one vote per share. The
Class D Common Stock possesses the right to 50.6818 votes per share.
The following table sets forth certain information regarding the beneficial
ownership of the capital stock of Holding. The table sets forth for such periods
(i) each person known by the Company to be the beneficial owner of more than 5%
of each class of voting stock of Holding, (ii) each person who is a director of
Holding or Named Executive Officer of the Company who is expected to
beneficially own shares of voting stock of Holding and (iii) all directors of
Holding and executive officers of the Company as a group. Unless otherwise
indicated, each of the shareholders shown in the table below has sole voting and
investment power with respect to the shares beneficially owned.
Investcorp and its affiliates beneficially own approximately 67% of the
outstanding voting stock of Holding and the pre-Recapitalization existing
shareholders, including certain members of management, now own approximately 33%
of the outstanding voting stock of Holding. In addition, the Investors own 4,682
shares of Class C Common Stock and 45,000 shares of Class E Common Stock. See
"Certain Transactions -- Agreements with Certain Shareholders" and "The
Transactions."
<TABLE>
<CAPTION>
NUMBER
OF %
SHARES(1) OF CLASS
---------- --------
<S> <C> <C>
CLASS A VOTING STOCK
Noel Berk-Rauch....................................................... 142 6.9
Shirley W. Rauch Trust(2)............................................. 130 6.4
Stanley S. Rauch Trust(3)............................................. 130 6.4
Howard L. Solot(4).................................................... 361 17.5
Donald M. Werner...................................................... 388 18.8
Richard L. Werner Revocable Trust(5).................................. 331 16.1
Ronald E. Werner(6)................................................... 240 11.7
All directors and executive officers as a group, including certain of
the above named persons............................................. 884 42.9
CLASS B VOTING STOCK
Howard L. Solot(7).................................................... 1,415 6.3
Bruce D. Werner Trust(8).............................................. 1,399 6.2
Craig R. Werner Trust(9).............................................. 1,508 6.7
Michael E. Werner Revocable Trust(10)................................. 1,496 6.7
Donald M. Werner(11).................................................. 769 3.5
Eric J. Werner(12).................................................... 1,384 6.2
Ronald E. Werner(13).................................................. 1,746 7.8
All directors and executive officers as a group, including certain of
the above named persons............................................. 5,064 22.6
CLASS D VOTING STOCK
INVESTCORP S.A.(14)(15)............................................... 1,000 100.0
SIPCO Limited(16)..................................................... 1,000 100.0
CIP Limited(17)(18)................................................... 920 92.0
Ballet Limited(17)(18)................................................ 92 9.2
Denary Limited(17)(18)................................................ 92 9.2
Gleam Limited(17)(18)................................................. 92 9.2
Highlands Limited(17)(18)............................................. 92 9.2
Noble Limited(17)(18)................................................. 92 9.2
Outrigger Limited(17)(18)............................................. 92 9.2
Quill Limited(17)(18)................................................. 92 9.2
Radial Limited(17)(18)................................................ 92 9.2
Shoreline Limited(17)(18)............................................. 92 9.2
Zinnia Limited(17)(18)................................................ 92 9.2
INVESTCORP Investment Equity Limited(15).............................. 80 8.0
</TABLE>
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<PAGE> 67
- ---------------
(1) As used in the table above, a beneficial owner of a security includes any
person who, directly or indirectly, through contract, arrangement,
understanding, relationship, or otherwise has or shares (i) the power to
vote, or direct the voting of, such security or (ii) investment power which
includes the power to dispose, or to direct the disposition of, such
security. In addition, a person is deemed to be the beneficial owner of a
security if that person has the right to acquire beneficial ownership of
such security within 60 days.
(2) Includes 64.87 shares of Class A Stock held in the name of Stanley S. Rauch
Trust, the beneficial ownership of which are disclaimed by Shirley W.
Rauch.
(3) Includes 64.87 shares of Class A Stock held in the name of Shirley W. Rauch
Trust, the beneficial ownership of which are disclaimed by Stanley S.
Rauch.
(4) Includes 36.47 shares of Class A Stock held in the name of Mr. Solot's
spouse, Janet F. Solot, the beneficial ownership of which are disclaimed by
Mr. Solot.
(5) Includes 27.93 shares of Class A Stock held in the name of the Lois S.
Werner Revocable Trust, the beneficial ownership of which are disclaimed by
Mr. Werner.
(6) Includes 238.85 shares of Class A Stock held in the name of the Florence J.
Werner Irrevocable Trust of which Ronald E. Werner is the trustee. Mr.
Werner disclaims the beneficial ownership of such shares.
(7) Includes 212.17 shares of Class B Stock held in the name of Mr. Solot's
spouse, Janet F. Solot, the beneficial ownership of which are disclaimed by
Mr. Solot.
(8) Includes 17.30 shares of Class B Stock held as joint tenant with Tammy H.
Werner and 391.01 shares of Class B Stock held in the name of the Bruce D.
Werner Family Limited Partnership.
(9) Includes 532.16 shares of Class B Stock owned by the Craig R. Werner Family
Limited Partnership.
(10) Includes 179.98 shares of Class B Stock held in the name of the Laura W.
Werner Revocable Trust, 102.92 shares of Class B Stock held in the name of
the Jonathan C. Werner Gift Trust, 57.65 shares of Class B Stock held in
the name of the Margot A. Werner Gift Trust and 102.92 shares of Class B
Stock held in the name of the Stephanie N. Werner Gift Trust. Mr. Werner
disclaims the beneficial ownership of all the above shares.
(11) Includes 22 shares of Class B Stock owned with Barbara Werner as joint
tenants and 88 shares of Class B Stock held in the name of Barbara Werner,
the beneficial ownership of which are disclaimed by Mr. Werner.
(12) Includes 29.48 shares of Class B Stock owned with Melanie R. Werner as
joint tenants, 274.56 shares of Class B Stock held in the name of Melanie
R. Werner, Custodian for Isabelle N. Werner and 274.56 shares of Class B
Stock held in the name of Melanie R. Werner, Custodian for Sophia K.
Werner. Mr. Werner disclaims beneficial ownership of all the above shares
except for such shares held as joint tenant with Melanie R. Werner.
(13) Includes 1,035.74 shares of Class B Stock held in the name of the Robert I.
Werner Irrevocable Trust and 200.17 shares of Class B Stock held in the
name of the Florence J. Werner Irrevocable Trust. Mr. Werner disclaims the
beneficial ownership of all of these shares.
(14) Investcorp does not directly own any stock in Holding. The number of shares
shown as owned by Investcorp includes all of the shares owned by INVESTCORP
Investment Equity Limited (see (15) below). Investcorp owns no stock in
Ballet Limited, Denary Limited, Gleam Limited, Highlands Limited, Noble
Limited, Outrigger Limited, Quill Limited, Radial Limited, Shoreline
Limited, Zinnia Limited, or in the beneficial owners of these entities (see
(18) below). Investcorp may be deemed to share beneficial ownership of the
shares of voting stock held by these entities because the entities have
entered into revocable management services or similar agreements with an
affiliate of Investcorp, pursuant to which each such entities has granted
such affiliate the authority to direct the voting and disposition of the
Holding voting stock owned by such entity for so long as such agreement is
in effect. Investcorp is a Luxembourg corporation with its address at 37
rue Notre-Dame, Luxembourg.
(15) INVESTCORP Investment Equity Limited is a Cayman Islands corporation, and a
wholly-owned subsidiary of Investcorp, with its address at P.O. Box 1111,
West Wind Building, George Town, Grand Cayman, Cayman Islands.
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<PAGE> 68
(16) SIPCO Limited may be deemed to control Investcorp through its ownership of
a majority of a company's stock that indirectly owns a majority of
Investcorp's shares. SIPCO Limited's address is P.O. Box 1111, West Wind
Building, George Town, Grand Cayman, Cayman Islands.
(17) CIP Limited ("CIP") owns no stock in Holding. CIP indirectly owns less than
0.1% of the stock in each of Ballet Limited, Denary Limited, Gleam Limited,
Highlands Limited, Noble Limited, Outrigger Limited, Quill Limited, Radial
Limited, Shoreline Limited and Zinnia Limited (see (18) below). CIP may be
deemed to share beneficial ownership of the shares of voting stock of
Holding held by such entities because CIP acts as a director of such
entities and the ultimate beneficial shareholders of each of those entities
have granted to CIP revocable proxies in companies that own those entities'
stock. None of the ultimate beneficial owners of such entities beneficially
owns individually more than 5% of Holding's voting stock.
(18) Each of CIP Limited, Ballet Limited, Denary Limited, Gleam Limited,
Highlands Limited, Noble Limited, Outrigger Limited, Quill Limited, Radial
Limited, Shoreline Limited and Zinnia Limited is a Cayman Islands
corporation with its address at P.O. Box 2197, West Wind Building, George
Town, Grand Cayman, Cayman Islands.
Right of First Offer; Tag-Along Rights
Pursuant to the Restated Articles, prior to an initial public offering of
the capital stock of Holding, any holder of Class A Stock or Class B Stock that
intends to sell any shares of such stock will be required to furnish notice to
Holding of such holder's intent to sell such shares. Following the receipt of
such notice, Holding will have the option to purchase such stock on the same
terms as the proposed sale. In addition, if any holder of Class D Common Stock
proposes to transfer shares of such stock, holders of the other classes of
Holding capital stock will have certain tag-along rights with respect thereto.
Any shares for which any holders elect to exercise such tag-along rights but
whose shares are not sold in connection therewith will have such shares redeemed
by Holding, to the extent it is legally permitted to do so.
CERTAIN TRANSACTIONS
AGREEMENTS WITH CERTAIN SHAREHOLDERS
Consulting and Financial Services Agreements
Financing for the Recapitalization was provided in part by $122.7 million
of capital provided by the Investors.
In connection with the Transactions, the Company paid Investcorp
International, Inc. ("III"), an affiliate of Investcorp, advisory fees
aggregating $6.0 million, and Invifin S.A., an affiliate of Investcorp, fees
aggregating $6.0 million for providing a standby commitment to fund the amount
of the Notes and the Senior Credit Facility. In connection with the closing of
the Transactions, the Company entered into an agreement for management advisory
and consulting services for a five-year term with III, pursuant to which the
Company prepaid III $5.0 million upon closing.
Shareholder Rights Agreement
On the Recapitalization Closing Date, Holding executed the Shareholder
Rights Agreement with each of the Management Shareholders and each holder of
Class D Common Stock ("Class D Investors"). The Shareholder Rights Agreement
contains the following provisions: (i) the right, following an initial public
offering of Holding's capital stock, in favor of the Class D Investors to
require the Management Shareholders to sell their remaining equity interests in
Holding if the Class D Investors decide to sell as a group 85% or more of their
remaining equity interests in the Company and the Class D Investors hold at that
time (prior to giving effect to the proposed sale) more than 80% of the shares
of Class D Common Stock purchased by the Investors in the Recapitalization, (ii)
the right in favor of all holders of Holding's capital stock, during the period
beginning immediately after the Closing Date and continuing until, but ending
prior to, an initial public offering, to participate on a pro rata basis in
equity
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<PAGE> 69
financings by the Company (other than issuances of equity securities in
connection with stock incentive or compensation plans approved by Holding's
Board of Directors or in connection with business acquisitions by Holding) if
the securities to be issued by the Company are not being issued at fair market
value as determined in good faith by Holding's Board of Directors, (iii) certain
demand and piggy-back registration rights in favor of the Class D Investors and
certain piggy-back registration rights in favor of all other shareholders of
Holding, (iv) the obligation of the Management Shareholders to enter into
certain customary "lock-up" agreements with underwriters in future public
offerings, and (v) an agreement by the Class D Investors and the Management
Shareholders to vote their respective shares such that (a) at least a majority
of Holding's Board will consist of persons designated by the Class D Investors,
(b) the Chief Executive Officer of Holding shall be a director and (c) depending
on the size of the board, the Management Shareholders shall be entitled to
designate a minimum of one director and up to that number of directors equal to
one third of the authorized number of directors (rounded to the nearest whole
number) minus one.
THE SENIOR CREDIT FACILITY
General. As part of the Transactions, the Issuer entered into the Senior
Credit Facility with BT, as administrative agent and co-arranger, Merrill Lynch
Capital Corporation, as syndication agent and co-arranger, The Chase Manhattan
Bank, as documentation agent, Goldman Sachs Credit Partners L.P., as co-agent,
and the several lenders parties thereto. The Senior Credit Facility consists of
Term Loan Facilities in an aggregate principal amount of $145.0 million, the
Revolving Facility in an aggregate principal amount of up to $100.0 million and
the Receivables Facility in an aggregate principal amount of up to $75.0 million
(together with the Term Loan Facilities and the Revolving Facility, the
"Loans"). The following is a summary description of the principal terms of the
Senior Credit Facility and is subject to, and qualified in its entirety by
reference to the definitive agreement.
All obligations of the Issuer are unconditionally and irrevocably
guaranteed jointly and severally by Holding and each of the Issuer's present
subsidiaries other than MIICA and its subsidiaries and certain other nonmaterial
subsidiaries ("Loan Guarantors"). Indebtedness under the Senior Credit Facility
is secured by a first priority security interest in (i) all of the capital stock
of the Issuer and certain of its subsidiaries, (ii) substantially all of the
inventory and equipment, and certain real property of the Issuer and the Loan
Guarantors and (iii) substantially all other tangible and intangible assets of
the Issuer and the Loan Guarantors.
Term Loan Facilities. The Term Loan Facilities consist of two tranches of
term loans in an aggregate principal amount of $145.0 million. The Tranche B
term loans are in an aggregate principal amount of $90.0 million, and the
Tranche C term loans are in an aggregate principal amount of $55.0 million. The
loans under the Term Loan Facilities were made in a single drawing on the
Recapitalization Closing Date. The Tranche B term loans will mature on the
seventh anniversary of the Recapitalization Closing Date, and the Tranche C term
loans will mature on the eighth anniversary of the Recapitalization Closing
Date. Installments of the Tranche B term loans will be due in aggregate
principal amounts of $0.9 million per annum for the first five years after the
Recapitalization Closing Date, $30.0 million for the sixth year after the
Recapitalization Closing Date, and $55.5 million for the seventh year after the
Recapitalization Closing Date. Installments of the Tranche C term loans will be
due in aggregate principal amounts of $0.55 million for the first seven years
after the Recapitalization Closing Date and $51.15 million for the eighth year
after the Recapitalization Closing Date.
Revolving Credit Facility. The Revolving Facility consists of a revolving
credit facility in an aggregate principal amount of $100.0 million. The Issuer
is entitled to draw amounts under the Revolving Facility for general corporate
purposes and working capital requirements. The Revolving Facility includes
sub-limits for letters of credit and swing line loans ("Swing Line Loans")
available on same-day notice. The Revolving Facility will mature on the sixth
anniversary of the Recapitalization Closing Date.
Receivables Facility. The Receivables Facility consists of a revolving
credit facility in an aggregate principal amount of $75.0 million, which is
subject to a borrowing base limit not to exceed 80% of eligible
68
<PAGE> 70
accounts receivable. The Issuer will be entitled to draw amounts under the
Receivables Facility for general corporate purposes and to meet working capital
requirements. The Receivables Facility will mature on the sixth anniversary of
the Recapitalization Closing Date. The Company is currently evaluating a
refinancing of the Receivables Facility with an accounts receivable
securitization facility. Although the Company does not yet have a commitment for
such accounts receivables securitization facility, the Company believes that the
refinancing of the Receivables Facility will be consummated during 1998,
although there can be no assurance that such a refinancing will occur on terms
favorable to the Company or at all.
Availability. The availability of the Senior Credit Facility is subject to
various conditions precedent typical of bank facilities of this type including,
among other things, the absence of any material adverse condition or material
adverse change in or affecting the business, property, assets, nature of assets,
liabilities or condition of the Company. The full amount of the Term Loan
Facilities was drawn in a single drawing on the Recapitalization Closing Date.
The Revolving Credit Facility and the Receivables Facility may be borrowed,
repaid and reborrowed on and after the Recapitalization Closing Date.
Utilization under the Receivables Facility will be limited to a borrowing base
equal to 80% of eligible accounts receivables.
Interest Rates. Interest will accrue quarterly on the Loans with reference
to the base rate (the "Base Rate") plus the applicable interest margin. The
Issuer may elect that all or a portion of the Loans other than the Swing Line
Loans bear interest at the eurodollar rate (the "Eurodollar Rate") plus the
applicable interest margin. The Base Rate is defined as the higher of (i) the
certificate of deposit rate as published by the Federal Reserve Bank of New
York, plus 1/2% and (ii) the prime commercial lending rate of BT. The
Eurodollar Rate is defined as the rate at which eurodollar deposits for one,
two, three or six months or (if and when available to all of the relevant
lenders) nine or 12 months are offered to BT in the interbank eurodollar market.
The applicable interest margin for Tranche B term loans is 1.50% for Base Rate
loans and 2.50% for Eurodollar Rate loans. The applicable interest margin for
Tranche C term loans is 1.75% for Base Rate loans and 2.75% for Eurodollar Rate
loans. The applicable interest margin for the Revolving Facility is 1.25% for
Base Rate loans and 2.25% for Eurodollar Rate loans. The applicable interest
margin for Receivables Facility loans is 0.50% for Base Rate loans and 1.50% for
Eurodollar Rate loans. If the Receivables Facility has not been replaced within
six months of the consummation of the Transactions, the applicable margin under
the Receivables Facility will be increased to 1.25% for Base Rate Loans and to
2.25% for Eurodollar Rate Loans. The Company believes that the Receivables
Facility will be refinanced with an accounts receivables securitization facility
shortly after the consummation of the Transactions. The interest margins for the
Loans are subject to reduction based on the Company's ability to meet certain
financial tests.
Mandatory and Optional Prepayment. The Term Loan Facilities shall be
prepaid, subject to certain conditions and exceptions, with (i) 100% of the net
proceeds of any incurrence of indebtedness, subject to certain exceptions, by
Holding or its subsidiaries, (ii) after the repayment of the Notes in connection
with the exercise by the Issuer of certain redemption options available to it in
connection with a public offering described under "Description of the New
Notes," 50% of the net proceeds of issuances of equity after the
Recapitalization Closing Date by Holding or any of its subsidiaries, (iii) 100%
of the net proceeds of certain asset dispositions, (iv) 50% of the excess cash
flow (as such term will be defined in the Senior Credit Facility) of Holding and
its subsidiaries on a consolidated basis and (v) 100% of net proceeds from any
insurance recovery events, subject to certain re-investment rights. The
foregoing mandatory prepayments will first be applied pro rata to reduce
outstanding Tranche B and Tranche C term loans. Prepayments in excess of the
amount of outstanding term loans will be applied to reduce commitments under the
Revolving Facility, and subsequently to reduce any commitments under the
Receivables Facility. The Senior Credit Facility provides that the Issuer may
prepay loans in whole or in part without penalty, subject to minimum prepayments
and reimbursement of the lenders' breakage and redeployment costs in the case of
prepayment of Eurodollar Rate Loans.
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<PAGE> 71
Fees. The Issuer is required to pay the lenders, on a quarterly basis, a
commitment fee of 0.50% per annum on the unutilized commitments on the Term Loan
Facilities, the Revolving Facility and the Receivables Facility. The Issuer is
also required to pay (a) a per annum letter of credit fee, on a quarterly basis,
equal to the applicable interest margin for Revolving Facility maintained as
Eurodollar Rate loans; (b) a fronting bank fee, on a quarterly basis, equal to
0.25% per annum of the aggregate face amount of outstanding letters of credit
under the Revolving Facility; and (c) agent, arrangement and other similar fees.
These fees are subject to reduction based on the Company's ability to meet
certain financial tests.
Covenants. The Senior Credit Facility contains certain covenants and other
requirements of the Issuer and its subsidiaries. The affirmative covenants
provide for, among other things, mandatory reporting by the Company of financial
and other information to the agent and notice by the Issuer to the agent upon
the occurrence of certain events. The affirmative covenants also include
standard covenants requiring the Company to operate its business in an orderly
manner and consistent with past practice.
The Senior Credit Facility also contains certain negative covenants and
restrictions on actions by the Company including, without limitation,
restrictions on indebtedness, liens, guarantee obligations, mergers, asset
dispositions not in the ordinary course of business, investments, loans,
advances and acquisitions, dividends and other restricted junior payments
transactions with affiliates, change in business conducted and prepayment and
amendments of subordinated indebtedness. The Senior Credit Facility requires the
Company to meet certain financial covenants including interest coverage ratios
and maximum leverage ratios.
Events of Default. The Senior Credit Facility specifies certain customary
events of default including, without limitation, non-payment of principal,
interest or fees, violation of covenants, inaccuracy of representations and
warranties in any material respect, cross default to certain other indebtedness
and agreements, bankruptcy and insolvency events, material judgments and
liabilities, ERISA violations and change of control transactions.
DESCRIPTION OF THE NEW NOTES
GENERAL
The New Notes will be issued pursuant to an indenture (the "Indenture") by
and among the Issuer, the Guarantors and IBJ Schroder Bank & Trust Company, as
trustee (the "Trustee"). The terms of the New Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The New Notes are
subject to all such terms, and Holders of New Notes are referred to the
Indenture and the Trust Indenture Act for a statement thereof. The following
summary of the material provisions of the Indenture does not purport to be
complete and is qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below. Copies of the
Indenture and Registration Rights Agreement are available as set forth below
under "-- Additional Information." The definitions of certain terms used in the
following summary are set forth below under "-- Certain Definitions."
The Indenture provides for the issuance of up to $135.0 million aggregate
principal amount of additional Notes having identical terms and conditions to
the New Notes offered hereby (the "Additional Notes"), subject to compliance
with the covenants contained in the Indenture. Any Additional Notes will be part
of the same issue as the New Notes offered hereby and will vote on all matters
with the New Notes offered hereby. For purposes of this "Description of the New
Notes," reference to the New Notes does not include Additional Notes.
All of the Issuer's Subsidiaries are Restricted Subsidiaries. However,
under certain circumstances, the Issuer will be able to designate current or
future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries and
Holding are not subject to many of the restrictive covenants set forth in the
Indenture.
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PRINCIPAL AND MATURITY OF AND INTEREST ON THE NEW NOTES
The New Notes will be general unsecured senior subordinated obligations of
the Issuer, in an aggregate principal amount of $135.0 million and will mature
on November 15, 2007. Interest on the New Notes will accrue at the rate of 10%
per annum and will be payable, in cash, semi-annually in arrears on May 15 and
November 15, commencing on May 15, 1998, to Holders of record on the immediately
preceding May 1 and November 1. Interest on the New Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of original issuance. Interest will be computed on the basis
of a 360-day year comprised of twelve 30-day months. Principal, premium, if any,
interest and Liquidated Damages (as defined under "-- Registration Rights;
Liquidated Damages"), if any, on the New Notes will be payable at the office or
agency of the Issuer maintained for such purpose within the City and State of
New York or, at the option of the Issuer, payment of interest and Liquidated
Damages, if any, may be made by check mailed to the Holders of the New Notes at
their respective addresses set forth in the register of Holders of New Notes;
provided that all payments of principal, premium, if any, interest and
Liquidated Damages, if any, with respect to any New Notes the Holders of which
have given wire transfer instructions to the Issuer will be required to be made
by wire transfer of immediately available funds to the accounts specified by the
Holders thereof. Until otherwise designated by the Issuer, the Issuer's office
or agency in New York is the office of the Trustee maintained for such purpose.
The New Notes will be issued in denominations of $1,000 and integral multiples
thereof.
SUBORDINATION
The indebtedness evidenced by the New Notes will be unsecured, will be
subordinated in right of payment, as set forth in the Indenture, to all existing
and future Senior Debt of the Issuer, will rank pari passu in right of payment
with all existing and future Pari Passu Indebtedness of the Issuer and will be
senior in right of payment to all existing and future Subordinated Debt of the
Issuer. The New Notes will also be effectively subordinated to any Secured Debt
of the Issuer and its subsidiaries to the extent of the value of the assets
securing such Indebtedness. However, payment from the money or the proceeds of
Government Notes held in any defeasance trust described under "-- Legal
Defeasance and Covenant Defeasance" below is not subordinated to any Senior Debt
or subject to the restrictions described herein, so long as the payments into
the defeasance trust were not prohibited pursuant to the subordination
provisions hereinafter described at the time when so paid.
The indebtedness evidenced by a Note Guarantee will be unsecured debt of
the Guarantor issuing such Note Guarantee. The payment of a Note Guarantee will
be subordinate in right of payment, as set forth in the Indenture, to all
existing and future Senior Debt of such Guarantor, will rank pari passu in right
of payment with the existing and future Pari Passu Indebtedness of such
Guarantor and will be senior in right of payment to all existing and future
Subordinated Debt of such Guarantor. Each Note Guarantee will also be
effectively subordinated to any Secured Debt of the applicable Guarantor to the
extent of the value of the assets securing such indebtedness.
The New Notes will be general unsecured obligations of the Issuer that will
be subordinated to all Senior Debt of the Issuer. The Note Guarantees will be
general unsecured obligations of the Guarantors that will be subordinated to all
Senior Debt of the Guarantors. At December 31, 1997, (i) the outstanding Senior
Debt of the Issuer was $186.5 million, all of which was Secured Debt, (ii) the
Issuer had no Pari Passu Indebtedness outstanding and no indebtedness that would
be subordinate or junior in right of payment to the New Notes, (iii) the
outstanding Senior Debt of the Subsidiary Guarantors was $191.5 million, all of
which was Secured Debt, and (iv) the Subsidiary Guarantors had no Pari Passu
Indebtedness and no indebtedness that would be subordinate or junior in right of
payment to the Subsidiary Guarantees. Although the Indenture contains
limitations on the amount of additional indebtedness which the Issuer and the
Subsidiary Guarantors may incur, under certain circumstances the amount of such
Indebtedness could be substantial and such Indebtedness may be Senior Debt. The
Indenture provides that the Issuer and the Restricted Subsidiaries may not incur
or otherwise become
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liable for any indebtedness that is subordinate or junior in right of payment to
any Senior Debt and senior in any respect in right of payment to the New Notes.
Only Indebtedness of the Issuer or a Guarantor that is Senior Debt will
rank senior to the New Notes or the relevant Note Guarantee in accordance with
the provisions of the Indenture. The New Notes and each New Note Guarantee in
all respects rank pari passu with all other Pari Passu Indebtedness of the
Issuer or the relevant Guarantor, respectively. The Issuer and each Guarantor
have agreed in the Indenture that they will not incur, directly or indirectly,
any Indebtedness which is subordinate or junior in ranking in any respect to
Senior Debt unless such Indebtedness is pari passu with or is expressly
subordinated in right of payment to the Notes or the Note Guarantees. Unsecured
Indebtedness is not deemed to be subordinate or junior to secured indebtedness
merely because it is unsecured.
Upon any payment or distribution to creditors of the Issuer in a
liquidation or dissolution of the Issuer or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Issuer or its
property, an assignment for the benefit of creditors or any marshaling of the
Issuer's assets and liabilities, the holders of Senior Debt will be entitled to
receive payment in full, in cash or Cash Equivalents, of all Obligations due in
respect of such Senior Debt (including interest after the commencement of any
such proceeding at the rate specified in the applicable Senior Debt, whether or
not allowed or allowable in such proceeding) before the Holders of New Notes
will be entitled to receive any payment with respect to the New Notes, and until
all Obligations with respect to Senior Debt are paid in full, in cash or Cash
Equivalents, any payment or distribution to which the Holders of New Notes would
be entitled shall be made to the holders of Senior Debt (except that Holders of
New Notes may receive and retain (i) Permitted Junior Securities and (ii)
payments made from the trust described under "-- Legal Defeasance and Covenant
Defeasance" so long as, on the date or dates the respective amounts were paid
into the trust, such payments were made with respect to the New Notes without
violating the subordination provisions described herein). The term "payment"
means, with respect to the New Notes, any payment, whether in cash or other
assets or property, of interest, principal (including redemption price and
purchase price), premium, Liquidated Damages or any other amount on, of or in
respect of the New Notes, any other acquisition of New Notes and any deposit
into the trust described under "-- Legal Defeasance and Covenant Defeasance"
below. The verb "pay" has a correlative meaning.
The Issuer also may not make any payment or distribution upon or in respect
of the New Notes (except from the trust described under "-- Legal Defeasance and
Covenant Defeasance") if (i) a default in the payment of any Obligations with
respect to Designated Senior Debt occurs and is continuing (a "payment default")
or any other default on Designated Senior Debt occurs and the maturity of such
Designated Senior Debt is accelerated in accordance with its terms or (ii) a
default, other than a payment default, occurs and is continuing with respect to
Designated Senior Debt that permits holders of the Designated Senior Debt as to
which such default relates to accelerate its maturity (a "non-payment default")
and, in the case of this clause (ii) only, the Trustee receives a notice of such
default (a "Payment Blockage Notice") from a Representative for, or the holders
of a majority of the outstanding principal amount of, any issue of Designated
Senior Debt. Payments on the New Notes may and shall be resumed (a) in the case
of a payment default, upon the date on which such default is cured or waived
and, in the case of Designated Senior Debt that has been accelerated, such
acceleration has been rescinded, and (b) in case of a non-payment default, the
earlier of the date on which such non-payment default is cured or waived or 179
days after the date on which the applicable Payment Blockage Notice is received,
unless the maturity of any Designated Senior Debt has been accelerated. No new
period of payment blockage may be commenced on account of any non-payment
default unless and until 360 days have elapsed since the initial effectiveness
of the immediately prior Payment Blockage Notice. No non-payment default that
existed or was continuing on the date of delivery of any Payment Blockage Notice
to the Trustee (it being acknowledged that (x) any action of the Issuer or any
of its Subsidiaries occurring subsequent to delivery of a Payment Blockage
Notice that would give rise to any event of default pursuant to any provision
under which an event of default previously existed (or was continuing
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at the time of delivery of such Payment Blockage Notice) shall constitute a new
event of default for this purpose and (y) any breach of a financial covenant
giving rise to a non-payment default for a period ending subsequent to the date
of delivery of respective Payment Blockage Notice shall constitute a new event
of default for this purpose) shall be, or be made, the basis for a subsequent
Payment Blockage Notice unless such default shall have been cured or waived for
a period of not less than 90 days.
The Indenture further requires the Issuer to promptly notify holders of
Designated Senior Debt if payment of the New Notes, once issued, is accelerated
because of an Event of Default. The Issuer may not pay any such accelerated New
Notes until five Business Days after such holders receive notice of such
acceleration and, thereafter, may make such payment only if otherwise
permissible under the subordination provisions of the Indenture.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, Holders of New Notes may recover less ratably
than other creditors of the Issuer including holders of Senior Debt and trade
creditors. The Indenture limits, subject to certain financial tests and
exceptions, the amount of additional Indebtedness, including Senior Debt, that
the Issuer and its Subsidiaries can incur. See "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock."
NOTE GUARANTEES
The Issuer's payment obligations under each of the Notes will be jointly
and severally guaranteed by the Guarantors. The Note Guarantees of each
Guarantor will be subordinated to the prior payment in full of all Senior Debt
of such Guarantor on substantially the same terms as the Notes are subordinated
to Senior Debt of the Issuer. The obligations of each Guarantor under its Note
Guarantees will be limited so as not to constitute a fraudulent conveyance under
applicable law.
The Indenture provides that no Guarantor may consolidate with or merge with
or into (whether or not such Guarantor is the surviving Person) another Person
(other than the Issuer or another Guarantor) unless (i) subject to the
provisions of the following paragraph, the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under the Notes and the
Indenture; (ii) immediately after giving effect to such transaction, no Default
or Event of Default exists; and (iii) the Issuer will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, either (x) be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of the
covenant described below under the caption " -- Incurrence of Indebtedness and
Issuance of Preferred Stock" or (y) have a Fixed Charge Coverage Ratio at least
equal to the actual Fixed Charge Coverage Ratio for such four-quarter reference
period. Notwithstanding the foregoing clauses (ii) and (iii), (a) any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to any Subsidiary Guarantor and (b) any Guarantor may
merge with an Affiliate incorporated solely for the purpose of reincorporating
such Guarantor in another jurisdiction.
The Indenture provides that in the event of a sale or other disposition of
all of the assets of any Subsidiary Guarantor, by way of merger, consolidation
or otherwise, or a sale or other disposition of all of the capital stock of any
Subsidiary Guarantor then held by the Issuer and its Restricted Subsidiaries,
then such Subsidiary Guarantor will be released and relieved of any obligations
under its Note Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable provisions of the
Indenture. See " -- Repurchase at Option of Holders -- Asset Sales." In
addition, the Indenture provides that any Subsidiary Guarantor that is
designated as an Unrestricted Subsidiary in accordance with the provisions of
the Indenture will be released from its Note Guarantee upon effectiveness of
such designation.
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OPTIONAL REDEMPTION
Except as described in the following paragraphs, the New Notes will not be
redeemable at the Issuer's option prior to November 15, 2002. Thereafter, the
New Notes will be subject to redemption at any time at the option of the Issuer,
in whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
applicable redemption date, (subject to the right of Holders on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the twelve-month period beginning on November 15 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
-------------------------------------------------------------- ----------
<S> <C>
2002.......................................................... 105.000%
2003.......................................................... 103.333%
2004.......................................................... 101.667%
2005 and thereafter........................................... 100.000%
</TABLE>
In addition, at any time and from time to time, prior to November 15, 2000,
the Issuer may redeem up to 35% of the sum of (i) the original aggregate
principal amount of New Notes and (ii) the original aggregate principal amount
of any Additional Notes at a redemption price of 110% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the redemption date, (subject to the right of Holders on the relevant
record date to receive interest due on the relevant interest payment date), with
the net cash proceeds of a public offering of common stock of the Issuer or
Holding; provided that at least 65% of the sum of (i) the original aggregate
principal amount of New Notes and (ii) the original aggregate principal amount
of any Additional Notes remains outstanding immediately after the occurrence of
such redemption; and provided, further, that such redemption shall occur within
60 days of the date of the closing of such public offering.
At any time on or prior to November 15, 2002, the New Notes may be redeemed
as a whole but not in part at the option of the Issuer upon the occurrence of a
Change of Control, upon not less than 30 nor more than 60 days' prior notice
(but in no event may any such redemption occur more than 90 days after the
occurrence of such Change of Control) mailed by first-class mail to each
Holder's registered address, at a redemption price equal to 100% of the
principal amount thereof plus the Applicable Premium as of, and accrued but
unpaid interest and Liquidated Damages, if any, to, the redemption date, subject
to the right of Holders on the relevant record date to receive interest due on
the relevant interest payment date.
"Applicable Premium" means, with respect to a New Note at any redemption
date, the greater of (i) 1.0% of the principal amount of such New Note or (ii)
the excess of (A) the present value at such time of (1) the redemption price of
such New Note at November 15, 2002 (such redemption price being set forth in the
tables above) plus (2) all required interest payments due on such New Note
through November 15, 2002 (excluding accrued but unpaid interest), computed
using a discount rate equal to the Treasury Rate plus 75 basis points, over (B)
the principal amount of such New Note, if greater.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H. 15(519)
which has become publicly available at least two Business Days prior to the
redemption date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the
period from the redemption date to November 15, 2002, provided, however, that if
the period from the redemption date to November 15, 2002 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the redemption date to November 15, 2002
is less than one year,
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the weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.
SELECTION AND NOTICE
If less than all of the New Notes are to be redeemed at any time, selection
of New 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
New Notes are listed, or, if the New 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 that no New Notes of $1,000 or less shall be redeemed in part. Notices
of redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date to each Holder of New Notes to be redeemed at
its registered address. Notices of redemption may not be conditional. If any New
Note is to be redeemed in part only, the notice of redemption that relates to
such New 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 New Note. New Notes called for redemption become due on the date fixed
for redemption. On and after the redemption date, interest ceases to accrue on
New Notes or portions of them called for redemption.
MANDATORY REDEMPTION
Except as set forth below under "-- Repurchase at the Option of Holders"
the Issuer is not required to make mandatory redemption or sinking fund payments
with respect to the New Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, unless all New Notes have been
called for redemption pursuant to the provisions described above under the
caption "-- Optional Redemption," each Holder of New Notes will have the right
to require the Issuer to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of such Holder's New Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash (the
"Change of Control Payment") equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any,
to the date of purchase. Within 30 days following any Change of Control, unless
notice of redemption of all New Notes has then been given pursuant to the
provisions described under the caption "-- Optional Redemption" above, the
Issuer will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
New Notes on the date specified in such notice, which date shall be no earlier
than 30 days and no later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"), pursuant to the procedures required by the
Indenture and described in such notice. The Issuer will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations to the extent such laws and regulations are applicable in
connection with the repurchase of the New Notes as a result of a Change of
Control. To the extent that the provisions of any applicable securities laws or
regulations conflict with provisions of this covenant, the Issuer will comply
with such securities laws and regulations and will not be deemed to have
breached its obligations under this paragraph by virtue thereof.
On the Change of Control Payment Date, the Issuer will, to the extent
lawful, (1) accept for payment all New Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all New
Notes or portions thereof so tendered and (3) deliver or cause to be delivered
to the Trustee the New Notes so accepted together with an Officers' Certificate
stating the aggregate principal amount of New Notes or portions thereof being
purchased by the Issuer. The Paying Agent will promptly mail to each Holder of
New Notes so tendered the Change of Control Payment for such New Notes, and the
Trustee will promptly authenticate and mail (or cause to be transferred by book
entry) to each Holder a new Note
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equal in principal amount to any unpurchased portion of the New Note
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Indenture provides that,
prior to complying with the provisions of this covenant, but in any event within
90 days following a Change of Control, the Issuer will either repay all
outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of New
Notes required by this covenant, unless notice of redemption of all Notes has
then been given pursuant to the provisions described under the caption
"-- Optional Redemption" above and such redemption is permitted by the terms of
outstanding Senior Debt. The Issuer will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the New Notes to require that the Issuer
repurchase or redeem the New Notes in the event of a takeover, recapitalization
or similar transaction. The Change of Control purchase feature is a result of
negotiations between the Issuer and the Initial Purchasers. Management has no
present intention to engage in a transaction involving a Change of Control,
although it is possible that the Issuer would decide to do so in the future.
Subject to the limitations discussed below, the Issuer 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 Issuer's capital structure or credit ratings.
The Senior Credit Facility currently prohibits the Issuer from purchasing
any New Notes, and also provides that certain change of control events with
respect to the Issuer would constitute a default thereunder. Any future credit
agreements or other agreements relating to Senior Debt to which the Issuer
becomes a party may contain similar restrictions and provisions. In the event a
Change of Control occurs at a time when the Issuer is prohibited from purchasing
New Notes, the Issuer could seek the consent of its lenders to the purchase of
New Notes or could attempt to refinance the borrowings that contain such
prohibition. If the Issuer does not obtain such a consent or repay such
borrowings, the Issuer will remain prohibited from purchasing New Notes. In such
case, the Issuer's failure to purchase tendered New Notes would constitute an
Event of Default under the Indenture which would, in turn, constitute as default
under the Senior Credit Facility. In such circumstances, the subordination
provisions in the Indenture would restrict payments to the Holders of New Notes.
The Issuer will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Issuer and
purchases all New Notes validly tendered and not withdrawn under such Change of
Control Offer.
"Change of Control" means such time as:
(i) prior to the earlier to occur of (A) the first public offering of
Voting Stock of the Issuer or (B) the first public offering of Voting Stock
of Holding, the Initial Control Group ceases to be the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the total voting power of the Voting Stock
of the Issuer or Holding, whether as a result of the issuance of securities
of the Issuer or Holding, as the case may be, any merger, consolidation,
liquidation or dissolution of the Issuer or Holding, as the case may be,
any direct or indirect transfer of securities by the Initial Control Group
or otherwise (for purposes of this clause (i) and clause (ii) below, the
Initial Control Group shall be deemed to beneficially own any Voting Stock
of an entity (the "specified entity") held by any other entity (the "parent
entity") so long as the Initial Control Group beneficially owns (as so
defined), directly or indirectly, in the aggregate a majority of the voting
power of the Voting Stock of the parent entity;
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(ii) following the first public offering of Voting Stock of the
Issuer or Holdings, as the case may be, (A) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act), other than one or
more members of the Initial Control Group, is or becomes the beneficial
owner (as defined in clause (i) above, except that such 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 40%
of the total voting power of the Voting Stock of the Issuer or Holding, as
the case may be, and (B) the Initial Control Group "beneficially owns" (as
defined in clause (i) above), directly or indirectly, in the aggregate a
lesser percentage of the total voting power of the Voting Stock of the
Issuer or Holding, as the case may be, than such other person and does not
have the right or ability by voting power, contract or otherwise to elect
or designate for election a majority of the board of directors of the
Issuer or Holding, as the case may be, (for purposes of this clause (ii),
such other person shall be deemed to beneficially own any Voting Stock of a
specified entity held by a parent entity, if such other person
"beneficially owns" (as defined in clause (i) above), directly or
indirectly, in the aggregate more than 40% of the voting power of the
Voting Stock of such parent entity and the Initial Control Group
"beneficially owns" (as defined in clause (i) above), directly or
indirectly, in the aggregate a lesser percentage of the voting power of the
Voting Stock of such parent entity and does not have the right or ability
by voting power, contract or otherwise to elect or designate for election a
majority of the board of directors of such parent entity); or
(iii) any person other than the Initial Control Group, (A) (I)
nominates one or more individuals for election to the Board of Directors of
the Issuer or Holding, as the case may be and (II) solicits proxies,
authorization or consents in connection therewith and (B) such number of
nominees elected to serve on the Board of Directors in such election and
all previous elections after the Closing Date represents a majority of the
Board of Directors of the Issuer or Holding, as the case may be, following
such election.
"Initial Control Group" means Investcorp, its Affiliates, members of the
Management Group, the investors who are the initial holders of the Capital Stock
of Holding, any Person acting in the capacity of an underwriter or initial
purchaser in connection with a public or private offering of the Issuer's or
Holding's Capital Stock, any employee benefit plan of Holding, the Issuer or any
of its Subsidiaries or any participant therein, a trustee or other fiduciary
holding securities under any such employee benefit plan or any Permitted
Transferee of any of the foregoing Persons.
"Permitted Transferee" means, with respect to any Person, (i) any other
Person, directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person, (ii) the spouse, former
spouse, lineal descendants, heirs, executors, administrators, testamentary
trustees, legatees or beneficiaries of any such Person, (iii) a trust, the
beneficiaries of which, or a corporation or partnership or limited liability
company, the stockholders, general or limited partners or members of which,
include only such Person or his or her spouse, lineal descendants or heirs, in
each case to whom such Person has transferred the beneficial ownership of any
securities of the Issuer or Holding and (iv) any investment fund or investment
entity that is a subsidiary of such Person or a Permitted Transferee of such
Person.
ASSET SALES
The Indenture provides that the Issuer will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Issuer
(or the Restricted Subsidiary, as the case may be) receives consideration at the
time of such Asset Sale at least equal to the fair market value of the assets or
Equity Interests issued or sold or otherwise disposed of and (ii) at least 75%
of the consideration therefor received by the Issuer or such Restricted
Subsidiary is in the form of cash or Cash Equivalents; provided that the amount
of (x) any liabilities (as shown on the Issuer's or such Restricted Subsidiary's
most recent balance sheet), of the Issuer or any Restricted Subsidiary (other
than liabilities that are by their terms subordinated to the Notes or, in the
case of liabilities of a Restricted Subsidiary, the Note Guarantee of such
Subsidiary) that are assumed by the transferee of any such assets and (y) any
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securities, notes or other obligations received by the Issuer or any such
Restricted Subsidiary from such transferee that are converted by the Issuer or
such Restricted Subsidiary into cash (to the extent of the cash received) within
180 days after receipt, shall be deemed to be cash for purposes of this
provision; provided, further, however, that this clause (ii) shall not apply to
any sale of Equity Interests of or other Investments in Unrestricted
Subsidiaries.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Issuer may apply such Net Proceeds, at its option, (a) to repay Senior Debt
or Pari Passu Indebtedness (other than Indebtedness owed to Holding, the Issuer
or a Subsidiary of the Issuer, and provided that if the Issuer shall so reduce
Pari Passu Indebtedness, it will equally and ratably make an Asset Sale Offer
(in accordance with the procedures set forth below for an Asset Sale Offer) to
all Holders), (b) to invest in properties and assets that will be used or useful
in the business of the Issuer or any of its Subsidiaries or (c) to the
acquisition of a controlling interest in another business, the making of a
capital expenditure or the acquisition of other assets, in each case, in the
same or a similar line of business as the Issuer was engaged in on the Closing
Date. Pending the final application of any such Net Proceeds, the Issuer may
temporarily reduce borrowings under a Credit Facility or otherwise invest such
Net Proceeds in any manner that is not prohibited by the Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $5.0 million, the Indenture
provides that the Issuer will (i) make an offer to all Holders of Notes, and
(ii) prepay, purchase or redeem (or make an offer to do so) any other Pari Passu
Indebtedness of the Issuer in accordance with provisions requiring the Issuer to
prepay, purchase or redeem such Indebtedness with the proceeds from any Asset
Sales (or offer to do so), pro rata in proportion to the respective principal
amounts of the Notes and such other Indebtedness required to be prepaid,
purchased or redeemed or tendered for, in the case of the Notes pursuant to such
offer (an "Asset Sale Offer") to purchase the maximum principal amount of Notes
that may be purchased out of such pro rata portion of the Excess Proceeds, at an
offer price in cash in an amount equal to 100% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages thereon, if any to the
date of purchase, in accordance with the procedures set forth in the Indenture.
To the extent that the aggregate principal amount of Notes tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds, the Issuer may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro
rata basis. Upon completion of such offer to purchase, the amount of Excess
Proceeds shall be reset at zero.
The Issuer 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 or regulations are applicable in connection with the repurchase
of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions
of any applicable securities laws or regulations conflict with the provisions of
the Indenture, the Issuer will comply with such securities laws and regulations
and shall not be deemed to have breached its obligations described in the
Indenture by virtue thereof.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that the Issuer will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution (including any payment in
connection with any merger or consolidation) on account of the Issuer's or any
of its Restricted Subsidiaries' Equity Interests (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock)); (ii)
purchase, redeem or otherwise acquire or retire for value (including in
connection with any merger or consolidation) any Equity Interests of the Issuer
or Holding (or any Restricted Subsidiary held by Persons other than the Issuer
or another Restricted Subsidiary); (iii) make any payment on or with respect to,
or purchase, redeem, defease or otherwise acquire or retire for value any
Subordinated Debt, except (A) a payment of interest or principal at Stated
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Maturity and (B) the purchase, repurchase or other acquisition or retirement of
Indebtedness in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the date of
purchase, repurchase or other acquisition or retirement; or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Issuer would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the covenant
described below under the caption "-- Incurrence of Indebtedness and
Issuance of Preferred Stock"; and
(c) such Restricted Payment, together with (without duplication) the
aggregate amount of all other Restricted Payments made by the Issuer and
its Restricted Subsidiaries after the Recapitalization Closing Date
(excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (v)
(other than clauses (i) and (v)(A) of the definition of "Specified
Affiliate Payments") and (vi) of the next succeeding paragraph, but
including all other Restricted Payments permitted by the next succeeding
paragraph), is less than the sum (without duplication) of (i) 50% of the
Consolidated Net Income of the Issuer for the period (taken as one
accounting period) from the beginning of the fiscal quarter during which
the Recapitalization Closing Date occurs to the end of the Issuer's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by the Issuer from
the issue or sale (other than to a Subsidiary) of, or from capital
contributions with respect to, Equity Interests of the Issuer (other than
Disqualified Stock), in either case after the Recapitalization Closing
Date, plus (iii) the aggregate principal amount (or accreted value, if
less) of Indebtedness of the Issuer or any Restricted Subsidiary issued
since the Recapitalization Closing Date (other than to a Restricted
Subsidiary) that has been converted into Equity Interests (other than
Disqualified Stock) of the Issuer, plus (iv) 100% of the aggregate net cash
received by the Issuer or a Restricted Subsidiary of the Issuer since the
Recapitalization Closing Date from (A) Restricted Investments, whether
through interest payments, principal payments, dividends or other
distributions and payments, or the sale or other disposition (other than to
the Issuer or a Restricted Subsidiary) thereof made by the Issuer and its
Restricted Subsidiaries or (B) a cash dividend from, or the sale (other
than to the Issuer or a Restricted Subsidiary) of the stock of, an
Unrestricted Subsidiary, plus (v) upon the redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary, the fair market value of the
Investments of the Issuer and its Restricted Subsidiaries (other than such
Subsidiary) in such Subsidiary.
The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would
have complied with the provisions of the Indenture;
(ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any Equity Interests or Subordinated Debt of the Issuer
in exchange for, or out of the net cash proceeds of the substantially
concurrent sale (other than to a Restricted Subsidiary of the Issuer)
of, other Equity Interests of, or a capital contribution to, the Issuer
(other than any Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be
excluded from clause (c) (ii) of the preceding paragraph;
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(iii) the defeasance, redemption, repurchase, retirement or other
acquisition of Subordinated Debt made by an exchange for, or with the
net cash proceeds from an incurrence of, Permitted Refinancing
Indebtedness;
(iv) the payment of any dividend by a Restricted Subsidiary of the
Issuer to the holders of its common Equity Interests on a pro rata
basis;
(v) to the extent constituting Restricted Payments, the Specified
Affiliate Payments;
(vi) the payment of dividends, other distributions or other
amounts by the Issuer to Holding in amounts equal to amounts required
for Holding to pay Federal, state and local income taxes to the extent
such income taxes are attributable to the income of the Issuer and its
Subsidiaries; and
(vii) Restricted Payments in an aggregate amount not to exceed
$10.0 million.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the Issuer
and its Restricted Subsidiaries (except to the extent repaid in cash) in the
Subsidiary so designated, to the extent they do not constitute Permitted
Investments at the time such Subsidiary became an Unrestricted Subsidiary, will
be deemed to be Restricted Payments made at the time of such designation and
will reduce the amount available for Restricted Payments under the first
paragraph of this covenant. The amount of such outstanding Investments will be
equal to the portion of the fair market value of the net assets of any
Subsidiary of the Issuer at the time that such Subsidiary is designated an
Unrestricted Subsidiary that is represented by the interest of the Issuer and
its Restricted Subsidiaries in such Subsidiary, in each case as determined in
good faith by the Board of Directors of the Issuer. Such designation will only
be permitted if such Restricted Payment would be permitted at such time and if
such Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Issuer or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined in good
faith by the Board of Directors of the Issuer.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Indenture provides that the Issuer will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt) and that the Issuer will not issue any
Disqualified Stock and will not permit any of its Restricted Subsidiaries to
issue any shares of preferred stock; provided, however, that the Issuer and its
Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or
issue shares of Disqualified Stock and the Issuer's Restricted Subsidiaries may
issue preferred stock, if the Fixed Charge Coverage Ratio for the Issuer's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock or preferred stock is issued
would have been at least 1.75 to 1, if such Indebtedness is incurred or such
Disqualified Stock or preferred stock is issued on or prior to November 30,
1999, and 2.00 to 1, if such Indebtedness is incurred or such Disqualified Stock
or preferred stock is issued thereafter, in each case, 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 Disqualified Stock or
preferred stock had been issued, as the case may be, at the beginning of such
four-quarter period.
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The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Issuer or any of its Restricted
Subsidiaries of term and revolving Indebtedness and letters of credit (with
letters of credit being deemed to have a principal amount equal to the
undrawn face amount thereof) under Credit Facilities; provided that the
aggregate principal amount of all Indebtedness outstanding pursuant to this
clause (i) after giving effect to such incurrence does not exceed an amount
equal to $250.0 million;
(ii) the incurrence by the Issuer and its Restricted Subsidiaries of
Existing Indebtedness;
(iii) the incurrence by the Issuer of Indebtedness represented by the
New Notes and by the Subsidiary Guarantors of Indebtedness represented by
the Note Guarantees;
(iv) the incurrence by the Issuer or any of its Restricted
Subsidiaries of (A) Acquired Debt or (B) Indebtedness (including Capital
Lease Obligations) for the purpose of financing or refinancing all or any
part of the lease, purchase price or cost of construction or improvement of
any property (real or personal) or other assets that are used or useful in
the business of the Issuer or such Restricted Subsidiary (whether through
the direct purchase of assets or the Capital Stock of any Person owning
such assets and whether such Indebtedness is owed to the seller or Person
carrying out such construction or improvement or to any third party), in an
aggregate principal amount for all Indebtedness incurred pursuant to this
clause (iv), at the date of such incurrence (including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any other
Indebtedness incurred pursuant to this clause (iv)) not to exceed an amount
equal to 10.0% of Total Assets; provided that, in the case of Indebtedness
exceeding $2.0 million incurred pursuant to this clause (iv), such
Indebtedness exists at the date of such purchase or transaction or is
created within 180 days thereafter;
(v) the incurrence by the Issuer or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
(other than intercompany Indebtedness) that was permitted by the Indenture
to be incurred;
(vi) the incurrence by the Issuer or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Issuer and
any of its Restricted Subsidiaries, including any Indebtedness arising in
connection with a Receivables Facility; provided, however, that (A) any
subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness being held by a Person other than the Issuer or a
Restricted Subsidiary and (B) any sale or other transfer of any such
Indebtedness to a Person that is not either the Issuer or a Restricted
Subsidiary shall be deemed, in each case, to constitute an incurrence of
such Indebtedness by the Issuer or such Restricted Subsidiary, as the case
may be, that was not permitted by this clause (vi);
(vii) the incurrence by the Issuer or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred (A) for the purpose
of fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of the Indenture to be
outstanding or (B) for the purpose of fixing or hedging currency exchange
rate risk or commodity price risk incurred in the ordinary course of
business;
(viii) the guarantee by the Issuer or any of the Subsidiary Guarantors
of Indebtedness of the Issuer or a Restricted Subsidiary of the Issuer that
was permitted to be incurred by another provision of this covenant;
(ix) the incurrence of Indebtedness secured by or financing
Receivables (including any such Indebtedness under the Credit Facilities),
provided that the aggregate principal amount of such Indebtedness incurred
pursuant to this clause (ix) does not, at any time, exceed an amount equal
to $75.0 million less the aggregate Receivable Financing Amount of all
Receivables Facilities of the Issuer and its Restricted Subsidiaries;
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(x) the incurrence by the Issuer or any of its Restricted
Subsidiaries of Indebtedness under (or constituting reimbursement
obligations with respect to) letters of credit, surety bonds or similar
instruments issued in connection with the ordinary course of a Permitted
Business, including letters of credit in respect of workers' compensation
claims, self-insurance, and insurance written by MIICA in connection with a
Permitted Business; provided, however, that upon the drawing of such
letters of credit or other instrument, such obligations are reimbursed
within 30 days following such drawing;
(xi) the incurrence by Foreign Subsidiaries of Indebtedness for
working capital purposes, and by the Issuer or any of its Restricted
Subsidiaries of Guaranties of Indebtedness of Foreign Subsidiaries or
foreign joint ventures, provided that the aggregate principal amount of
such Indebtedness and of the Indebtedness so Guaranteed at any time
outstanding does not exceed 5% of Total Assets; and
(xii) the incurrence by the Issuer or any of its Restricted
Subsidiaries of additional Indebtedness (which may comprise Indebtedness
under the Senior Credit Facility) in an aggregate principal amount (or
accreted value, as applicable) at any time outstanding pursuant to this
clause (xii) not to exceed an amount equal to $35.0 million.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xii) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Issuer shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant and such item of Indebtedness will be
treated as having been incurred pursuant to only one of such clauses or pursuant
to the first paragraph hereof; provided that all outstanding Indebtedness under
the Senior Credit Facility immediately following the Recapitalization shall be
deemed to have been incurred pursuant to clauses (i) and/or (ix) of the
definition of Permitted Debt. Accrual of interest and the accretion of accreted
value will not be deemed to be an incurrence of Indebtedness for purposes of
this covenant.
LIENS
The Indenture provides that the Issuer will not, and will not permit any of
its Restricted Subsidiaries to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien of any kind securing Indebtedness
or trade payables (other than Permitted Liens) upon any of their property or
assets, now owned or hereafter acquired, unless all payments due under the
Indenture and the Notes are secured on an equal and ratable basis with the
obligations so secured until such time as such obligations are no longer secured
by a Lien.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
The Indenture provides that the Issuer will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary to (i)(a) pay dividends
or make any other distributions to the Issuer 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, or (b) pay any indebtedness
owed to the Issuer or any of its Restricted Subsidiaries, (ii) make loans or
advances to the Issuer or any of its Restricted Subsidiaries or (iii) transfer
any of its properties or assets to the Issuer or any of its Restricted
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (a) Existing Indebtedness, (b) the Indenture, the New Notes and the
Note Guarantees, (c) any agreement or other instrument of a Person acquired by
the Issuer or any of its Restricted Subsidiaries as in effect at the time of
such acquisition (but not created 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, (d) purchase money obligations
(including Capital Lease Obligations) for property acquired in the
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ordinary course of business that impose restrictions of the nature described in
clause (iii) above on the property so acquired, (e) restrictions created in
connection with any Receivables Facility that, in the good faith determination
of the Board of Directors or senior management of the Issuer, are necessary or
advisable to effect such Receivables Facility, (f) in the case of clause (iii),
any encumbrance or restriction (1) that restricts in a customary manner the
subletting, assignment, or transfer of any property or asset that is subject to
a lease, license or similar contract, (2) by virtue of any transfer of,
agreement to transfer, option or right with respect to, or Lien on, any property
or assets of the Issuer or any Restricted Subsidiary not otherwise prohibited by
the Indenture or (3) contained in security agreements or mortgages securing
Indebtedness to the extent such encumbrance or restrictions restrict the
transfer of the property subject to such security agreements or mortgages, (g)
contracts for the sale of assets, including any restriction with respect to a
Restricted Subsidiary imposed pursuant to an agreement entered into for the sale
or disposition of all or substantially all of the Capital Stock or assets of
such Restricted Subsidiary pending the closing of such sale or disposition, (h)
contractual encumbrances or restrictions in effect on the Recapitalization
Closing Date, including pursuant to the Senior Credit Facility and its related
documentation, (i) restrictions on cash or other deposits or net worth imposed
by leases, credit agreements or other agreements entered into in the ordinary
course of business, (j) customary provisions in joint venture agreements and
other similar agreements, (k) any encumbrances or restrictions created with
respect to Senior Debt of the Issuer or its Restricted Subsidiaries or
Indebtedness of Foreign Subsidiaries or Insurance Subsidiaries permitted to be
incurred subsequent to the Recapitalization Closing Date pursuant to the
provision of the covenant described under the caption "-- Incurrence of
Indebtedness and Issuance of Preferred Stock" and (l) any encumbrances or
restrictions of the type referred to in clauses (i), (ii) and (iii) imposed by
any amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings of the contracts, instruments or
obligations referred to in clauses (a) through (l), provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are, in the good faith judgment of the
Issuer, no more restrictive with respect to such dividend and other payment
restrictions than those contained in the dividend or other payment restrictions
prior to such amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing.
MERGER, CONSOLIDATION, OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS
The Indenture provides that the Issuer may not consolidate or merge with or
into (whether or not the Issuer is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another Person
unless (i) the Issuer is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Issuer) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made 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
the Issuer) or the Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all the obligations
of the Issuer under the Notes and the Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee; (iii) immediately
after such transaction no Default or Event of Default exists; and (iv) except in
the case of a merger of the Issuer with or into a Wholly Owned Restricted
Subsidiary of the Issuer, the Issuer or the Person formed by or surviving any
such consolidation or merger (if other than the Issuer), 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 as if such transaction had occurred at the beginning of the applicable
four-quarter period, either (x) be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of the covenant described above under the caption
" -- Incurrence of Indebtedness and Issuance of Preferred Stock" or (y) have a
Fixed Charge Coverage Ratio at least equal to the Fixed Charge Coverage Ratio of
the Issuer for such four-quarter reference period. Notwithstanding the foregoing
clauses (iii) and (iv), (a) any Restricted Subsidiary may consolidate with,
merge into or transfer all or part of its properties and assets to the Issuer,
and (b) the Issuer
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may merge with an Affiliate incorporated solely for the purpose of
reincorporating the Issuer in another jurisdiction.
TRANSACTIONS WITH AFFILIATES
The Indenture provides that the Issuer will not, and will not permit any of
its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Issuer or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Issuer or such Restricted Subsidiary
with an unrelated Person and (ii) the Issuer delivers to the Trustee (a) with
respect to any Affiliate Transaction entered into after the Recapitalization
Closing Date involving aggregate consideration in excess of $3.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the members
of the Board of Directors and (b) with respect to any Affiliate Transaction
involving aggregate consideration in excess of $10.0 million, an opinion as to
the fairness to the Holders of such Affiliate Transaction from a financial point
of view issued by an investment banking, appraisal or accounting firm of
national standing. In addition, the following will not be deemed to be Affiliate
Transactions: (1) the provision of administrative or management services by the
Issuer or any of its officers to any of its Restricted Subsidiaries in the
ordinary course of business, (2) any employment agreement, collective bargaining
agreement, employee benefit plan, related trust agreement or any similar
arrangement heretofore or hereafter entered into in the ordinary course of
business, (3) transactions between or among the Issuer and/or its Restricted
Subsidiaries, (4) Restricted Payments that are permitted by the provisions of
the Indenture described above under the caption "--Restricted Payments", (5)
payment of compensation to employees, officers, directors or consultants in the
ordinary course of business, (6) maintenance in the ordinary course of business
(and payments required thereby) of benefit programs, or arrangements for
employees, officers or directors, including vacation plans, health and life
insurance plans, deferred compensation plans, directors' and officers'
indemnification agreements and retirement or savings plans and similar plans,
(7) loans or advances to employees (or guarantees of third party loans to
employees) in the ordinary course of business, (8) sales of Receivables to a
Receivables Subsidiary, (9) the payment of annual management, consulting and
advisory fees and related expenses to Investcorp and its Affiliates (whether or
not such Persons are Affiliates of the Issuer), (10) payments by the Issuer or
any of its Restricted Subsidiaries to Investcorp and its Affiliates (whether or
not such Persons are Affiliates of the Issuer) made for any financial advisory,
financing, underwriting or placement services or in respect of other investment
banking activities, including in connection with acquisitions or divestitures,
which payments are approved by the Board of Directors of the Issuer in good
faith, (11) any tax sharing agreement as in effect on the Recapitalization
Closing Date and any other agreement as in effect on the Recapitalization
Closing Date (including the Recapitalization Agreement) or any amendment thereto
(so long as any such amendment is not disadvantageous to the Holders in any
material respect) or any transaction contemplated thereby (including
distributions by the Issuer to Holding to effect the Recapitalization), (12) the
payment of all fees and expenses related to the Recapitalization, (13)
transactions with customers, clients, suppliers, or purchasers or sellers of
goods or services, in each case in the ordinary course of business and otherwise
in compliance with the terms of the Indenture which are fair to the Issuer or
its Restricted Subsidiaries, or are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated party, in each
case in the reasonable determination of the Board of Directors of the Issuer or
the senior management thereof, and (14) Indebtedness permitted by paragraph (vi)
or to the extent such Indebtedness is on terms that are no less favorable to the
Issuer or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction with an unrelated Person, paragraph (xii)
of the covenant described under the caption " -- Incurrence of Indebtedness and
Issuance of Preferred Stock".
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ADDITIONAL NOTE GUARANTEES
The Indenture provides that all current and future Subsidiaries of the
Issuer other than Foreign Subsidiaries, Insurance Subsidiaries and Subsidiaries
that have been properly designated as Unrestricted Subsidiaries in accordance
with the Indenture for so long as they continue to constitute Unrestricted
Subsidiaries, will be Guarantors in accordance with the terms of the Indenture.
Notwithstanding the foregoing, if any Foreign Subsidiary or Insurance Subsidiary
that is a Restricted Subsidiary shall Guarantee any Indebtedness of the Issuer,
Holding or any Domestic Subsidiary while the New Notes are outstanding, then
such Foreign Subsidiary or Insurance Subsidiary, as the case may be, shall
become a Guarantor under the Indenture and will execute a Note Guarantee in
accordance with the provisions of the Indenture.
Each Note Guarantee is limited to an amount not to exceed the maximum
amount that can be Guaranteed by that Subsidiary (after giving effect to all its
guarantees of Indebtedness under the Senior Credit Facility) without rendering
the Note Guarantee, as it relates to such Subsidiary, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
Each such Note Guarantee is subordinated to Senior Debt of the respective
Guarantor on the same basis and to the same extent as the New Notes are
subordinated to Senior Debt of the Issuer. See " -- Subordination." Each
Guarantor may consolidate with or merge into or sell its assets, and may be
released from its obligations under its Guarantee, upon the terms and conditions
set forth in the Indenture.
NO SENIOR SUBORDINATED DEBT
The Indenture provides that (i) the Issuer will not incur any Indebtedness
that is expressly subordinate in right of payment to any Senior Debt and senior
in any respect in right of payment to the New Notes, once issued and (ii) no
Guarantor will incur any Indebtedness that is expressly subordinate in right of
payment to any Senior Debt and senior in any respect in right of payment to the
Note Guarantees.
BUSINESS ACTIVITIES
The Issuer will not, and will not permit any Restricted Subsidiary to,
engage in any business other than Permitted Businesses, except to such extent as
is not material to the Issuer and its Restricted Subsidiaries taken as a whole.
Holding will not engage in any business other than managing its investment in
the Issuer and any business incidental or reasonably related thereto.
REPORTS
Notwithstanding that the Issuer may not be required to remain subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act, to the
extent permitted by the Exchange Act, the Issuer will file with the Securities
and Exchange Commission (the "Commission"), and provide, within 15 days after
the Issuer is required to file the same with the Commission, the Trustee and the
Holders with the annual reports and the information, documents and other reports
that are specified in Sections 13 and 15(d) of the Exchange Act. In the event
the Issuer is not permitted to file such reports, documents and information with
the Commission, the Issuer will provide substantially similar information to the
Trustee and the Holders, as if the Issuer were subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default with respect to the New Notes, once issued: (i) default for 30 days in
the payment when due of interest on, or Liquidated Damages with respect to, the
Notes (whether or not prohibited by the subordination provisions of
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the Indenture); (ii) default in payment when due of the principal of or premium,
if any, on the Notes (whether or not prohibited by the subordination provisions
of the Indenture); (iii) failure by the Issuer (A) to comply with the provisions
described under the caption " -- Certain Covenants -- Merger, Consolidation, or
Sale of all or Substantially all Assets" or (B) for a period of 30 days after
receipt of written notice specifying such a failure, stating that such notice is
a "Notice of Default" under the Indenture and demanding that the Issuer remedy
the same, shall have been given by registered or certified mail, return receipt
requested, to the Issuer by the Trustee, or to the Issuer and the Trustee by the
Holders of at least 25% in aggregate principal amount of the Notes at the time
outstanding, to comply with the provisions described under the captions
" -- Repurchase at the Option of Holders Change of Control," " -- Repurchase at
the Option of Holders -- Asset Sales," " -- Certain Covenants -- Restricted
Payments," " -- Certain Covenants -- Liens", " -- Certain Covenants -- Dividend
and Other Payment Restrictions Affecting Restricted Subsidiaries," " -- Certain
Covenants -- Transactions with Affiliates," " -- Certain Covenants -- Additional
Note Guarantees," " -- Certain Covenants -- No Senior Subordinated Debt,"
" -- Certain Covenants -- Business Activities" or " -- Certain Covenants
Incurrence of Indebtedness and Issuance of Preferred Stock," (iv) failure by the
Issuer for 60 days after receipt of a Notice of Default to comply with any of
its other agreements in the Indenture or the Notes; (v) the failure by the
Issuer or any Restricted Subsidiary that is a Significant Subsidiary to pay any
Indebtedness within any applicable grace period after final maturity or
acceleration by the holders thereof because of a default if the total amount of
such Indebtedness unpaid or accelerated exceeds $20.0 million; (vi) any judgment
or decree for the payment of money in excess of $20.0 million is entered against
the Issuer or any Significant Subsidiary that is a Restricted Subsidiary and is
not discharged, waived or stayed and either (A) an enforcement proceeding has
been commenced by any creditor upon such judgment or decree or (B) there is a
period of 60 days following the entry of such judgment or decree during which
such judgment or decree is not discharged, waived or the execution thereof
stayed; (vii) except as permitted by the Indenture, any Note Guarantee by
Holding or a Guarantor that is a Significant Subsidiary shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect or any Guarantor, or any Person acting on behalf
of any Guarantor, shall deny or disaffirm its obligations under its Note
Guarantee; and (viii) certain events of bankruptcy or insolvency with respect to
the Issuer or any of its Restricted Subsidiaries that is a Significant
Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Upon such a declaration, such
amounts shall be due and payable immediately; provided, however, that if upon
such declaration there are any amounts outstanding under the Senior Credit
Facility and the amounts thereunder have not been accelerated, such amounts
shall be due and payable upon the earlier of the time such amounts are
accelerated or five Business Days after receipt by the Issuer and the
Representative of the lenders under the Senior Credit Facility of such
declaration. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency with respect to the
Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary,
all outstanding New Notes will become due and payable without further action or
notice. Holders of the New Notes may not enforce the Indenture or the New 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 Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any), interest or Liquidated Damages when
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due, no Holder may pursue any remedy with respect to the Indenture or the Notes
unless (i) such Holder has previously given the Trustee notice that an Event of
Default is continuing, (ii) Holders of at least 25% in principal amount of the
outstanding Notes have requested the Trustee to pursue the remedy, (iii) such
Holders have offered the Trustee reasonable security or indemnity against any
loss, liability or expense, (iv) the Trustee has not complied with such request
within 60 days after the receipt of the request and the offer of security or
indemnity, and (v) the Holders of a majority in principal amount of the
outstanding Notes have not given the Trustee a direction inconsistent with such
request within such 60-day period. Subject to certain restrictions, the Holders
of a majority in principal amount of the outstanding Notes are given the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee.
The Trustee, however, may refuse to follow any direction that conflicts
with law or the Indenture or that the Trustee determines is unduly prejudicial
to the rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking any action under the Indenture, the Trustee will be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each Holder notice of the Default
within the earlier of 90 days after it occurs or 30 days after it is known to a
trust officer or written notice of it is received by the Trustee. Except in the
case of a Default in the payment of principal of, premium (if any), interest or
Liquidated Damages on any Note, the Trustee may withhold notice if and so long
as a committee of its trust officers in good faith determines that withholding
notice is in the interests of Noteholders. In addition, the Issuer is required
to deliver to the Trustee, within 120 days after the end of each fiscal year, a
certificate indicating whether the signers thereof know of any Default that
occurred during the previous year. The Issuer also is required to deliver to the
Trustee, forthwith upon any officer of the Issuer becoming aware of any such
Default, written notice of any event which would constitute certain Defaults,
their status and what action the Issuer is taking or proposes to take in respect
thereof.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder or Affiliate of
the Issuer, as such, shall have any liability for any obligations of the Issuer
under the New Notes, the Indenture or for any claim based on, in respect of, or
by reason of, such obligations or their creation. No director, officer,
employee, incorporator or stockholder or Affiliate of any of the Guarantors, as
such, shall have any liability for any obligations of the Guarantors under the
Note Guarantees, the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of New Notes and Note
Guarantees by accepting a New Note and a Note Guarantee waives and releases all
such liabilities. The waiver and release are part of the consideration for
issuance of the New Notes and the Note Guarantees. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is the
view of the Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Issuer may, at its option and at any time, elect to have all of its and
any Guarantor's obligations discharged with respect to the outstanding Notes and
any Note Guarantees, as the case may be ("Legal Defeasance") and cure all then
existing Events of Default, except for (i) the rights of Holders of outstanding
Notes to receive payments in respect of the principal of, premium, if any, and
interest and Liquidated Damages on such Notes when such payments are due from
the trust referred to below, (ii) the Issuer'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
payment and money for Note payments held in trust, (iii) the rights, powers,
trusts, duties and immunities of the Trustee, and the Issuer's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Issuer may, at its option and at any time, elect to have the
obligations of the Issuer and the Guarantors released with respect to certain
covenants that are
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described in the Indenture and the Note Guarantees ("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 and the Note Guarantees.
In the event Covenant Defeasance occurs, certain events (not including
non-payment, and, solely with respect to the Issuer, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes and the Note
Guarantees.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Issuer or the Guarantors must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders of the Notes cash in U.S. dollars,
non-callable Government Notes, or a combination thereof, in such amounts as will
be sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest and
Liquidated Damages on the outstanding Notes on the stated maturity or on the
applicable redemption date, as the case may be, and the Issuer and the
Guarantors must specify whether the Notes are being defeased to maturity or to a
particular redemption date; (ii) in the case of Legal Defeasance, the Issuer or
the Guarantors shall have delivered to the appropriate Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that, subject to customary assumptions and exclusions, (A) the Issuer and the
Guarantors have received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the Closing Date, 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, subject to customary
assumptions and exclusions, the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred; (iii) in the case of Covenant
Defeasance, the Issuer or the Guarantors shall have delivered to the appropriate
Trustee an opinion of counsel in the United States reasonably acceptable to the
Trustee confirming that, subject to customary assumptions and exclusions, the
Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had not
occurred; (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
resulting from the borrowing of funds to be applied to such deposit and the
grant of any Lien securing such borrowing) 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 will not result in a breach or violation of, or constitute a default
under any material agreement or instrument (other than the Indenture, except for
the subordination provisions thereof) to which the Issuer or any of its
Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is
bound; (vi) the Issuer or the Guarantors must have delivered to the appropriate
Trustee an opinion of counsel, subject to customary assumptions and exclusions,
to the effect that after the 91st day following the deposit, the trust funds
will not be part of any "estate" formed by the bankruptcy or reorganization of
the Issuer or subject to the "automatic stay" under the Bankruptcy Code or in
the case of covenant defeasance, will be subject to a first priority lien in
favor of the Trustee for the benefit of the holders of the Notes; (vii) the
Issuer or the Guarantors must deliver to the appropriate Trustee an Officers'
Certificate stating that the deposit was not made by the Issuer with the intent
of preferring the Holders of Notes over the other creditors of the Issuer or the
Guarantors, as applicable, with the intent of defeating, hindering, delaying or
defrauding creditors of the Issuer or the Guarantors, as applicable, or others;
and (viii) the Issuer must deliver to the appropriate Trustee an Officers'
Certificate and an opinion of counsel (which opinion of counsel may be subject
to customary assumptions and exclusions), each stating that all conditions
precedent relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
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SATISFACTION AND DISCHARGE OF INDENTURE
Upon the request of the Issuer, the Indenture will cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
the Securities, as expressly provided for herein or pursuant hereto), the Issuer
and the Guarantors will be discharged from their obligations under the New Notes
and the Note Guarantees, and the Trustee, at the expense of the Issuer, will
execute proper instruments acknowledging satisfaction and discharge of the
Indenture when:
(a) either (i) all the Notes theretofore authenticated and delivered
(other than mutilated or destroyed, lost or stolen Notes that have been
replaced or paid and Securities that have been subject to defeasance under
the Indenture) have been delivered to the Trustee for cancellation or (ii)
all Notes not theretofore delivered to the Trustee for cancellation (A)
have become due and payable, (B) will become due and payable at maturity
within one year or (C) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Issuer,
and the Issuer has irrevocably deposited or caused to be deposited with the
Trustee funds in trust for such purpose in an amount sufficient to pay and
discharge, without the need to reinvest any proceeds thereof, the entire
Indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any, on) and interest on the
Securities to the date of such deposit (in the case of Securities that have
become due and payable) or to the Stated Maturity or redemption date, as
the case may be;
(b) the Issuer has paid or caused to be paid all sums payable under
the Indenture by the Issuer; and
(c) the Issuer has delivered to the Trustee an officers' certificate
and an opinion of counsel, each stating that all conditions precedent
provided in the Indenture relating to the satisfaction and discharge of the
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of the Indenture, certain
obligations of the Issuer shall survive.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange New Notes in accordance with the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Issuer may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Issuer is not required to transfer or exchange
any New Note selected for redemption or repurchase. Also, the Issuer is not
required to transfer or exchange any New Note for a period of 15 days before a
selection of Notes to be redeemed or before any repurchase offer.
The New Notes will be issued in registered form and the registered Holder
of a New Note will be treated as the owner of it for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the New Notes may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes), and any existing default or compliance with any provision of
the Indenture or the New Notes may be waived with the consent of the Holders of
a majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver, (ii) reduce the principal of, change the fixed maturity
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of any Note, reduce any premium payable upon optional redemption of the Notes or
otherwise alter the provisions with respect to the redemption or repurchase of
the Notes (other than provisions relating to the covenants described above under
the caption " -- Repurchase at the Option of Holders"), (iii) reduce the rate of
or change the time for payment of interest on any Note, (iv) waive a Default or
Event of Default in the payment of principal of or premium, if any, or interest
on the Notes (except a rescission of acceleration of the Notes by the Holders of
at least a majority in aggregate principal amount of the Notes and a waiver of
the payment default that resulted from such acceleration), (v) make any Note
payable in money other than that stated in the Notes, (vi) impair the rights of
Holders of Notes to receive payments of principal of or premium, if any, or
interest or Liquidated Damages on the Notes, (vii) make any change in the
foregoing amendment and waiver provisions, (viii) except for releases of
Guarantors as permitted by the Indenture, make any change to the Note Guarantees
in any manner that adversely affects the rights of the Holders or (ix) make any
change to the subordination provisions of the Indenture that adversely affects
the rights of the Holders.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Issuer 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 (provided that the
uncertificated Notes are issued in registered form for purposes of Section
163(f) of the Code, or in a manner such that the uncertificated Notes are
described in Section 163(f)(2)(B) of the Code), to provide for the assumption of
the Issuer's or any Guarantor's obligations to Holders of Notes in the case of a
merger, consolidation or sale of assets, to release any Note Guarantee in
accordance with the provisions of the Indenture to provide for additional
Guarantors, to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, to comply with requirements of
the Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act, or, subject to certain exceptions, to make any
change to certain provisions of the Indenture and the exhibits thereto that
applies only to Additional Notes.
Notwithstanding anything to the contrary contained above, no amendment,
waiver or supplement to the Indenture shall be made so as to adversely affect
the rights of any holder of Senior Debt without the consent of such holder.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should the Trustee become a creditor of the Issuer, to obtain payment of claims
in certain cases, or to realize on certain property received in respect of any
such claim as Note or otherwise. The Trustee will be permitted to engage in
other transactions; however, if the Trustee acquires any conflicting interest
the Trustee must eliminate such conflict within 90 days, apply to the Commission
for permission to continue or resign.
The Indenture provides that in case an Event of Default shall occur (which
shall not be cured), the Trustee will be required, in the exercise of its power,
to use the degree of care of a prudent man in the conduct of his own affairs.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture and
Registration Rights Agreement without charge by writing to the Issuer at the
following address: Werner Holding Co. (DE), Inc., 1105 North Market Street,
Suite 1300, Wilmington, Delaware 19899.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
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"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including Indebtedness incurred in connection with, or in contemplation of, such
other Person's merging with or into or becoming a Restricted Subsidiary of such
specified Person (provided such Person is not formed for the purpose of
incurring such Indebtedness and is engaged in a bona fide business prior to
incurring such Indebtedness or has material assets other than cash), and (ii)
Indebtedness secured by a Lien encumbering any asset acquired by such specified
Person.
"Affiliate" of any specified Person means (i) any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person, (ii) any other Person that owns, directly or
indirectly, 5% or more of such specified Person's Voting Stock or (iii) any
Person who is a director or officer (a) of such Person, (b) of any Subsidiary of
such Person or (c) of any Person described in clause (i) or (ii) above. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by" and "under common control with"), as
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including by way of a sale and leaseback) (provided that
the sale, lease, conveyance or other disposition of all or substantially all of
the assets of the Issuer and its Restricted Subsidiaries taken as a whole will
be governed by the provisions of the Indenture described above under the caption
" -- Certain Covenants - Merger, Consolidation or Sale of all or Substantially
all Assets" and not by the provisions of the Asset Sale covenant), and (ii) the
issue or sale by the Issuer or any of its Restricted Subsidiaries of Equity
Interests of any of the Issuer's Subsidiaries (other than director's qualifying
shares), in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions (a) that have a fair market
value in excess of $1.0 million or (b) for net proceeds in excess of $1.0
million. Notwithstanding the foregoing, (1) the following will not be Asset
Sales: (i) a transfer of assets by the Issuer to a Restricted Subsidiary or by a
Restricted Subsidiary to the Issuer or to another Restricted Subsidiary, (ii) an
issuance of Equity Interests by a Restricted Subsidiary to the Issuer or to
another Restricted Subsidiary, (iii) a contribution, transfer or other
disposition of Receivables in connection with a Receivables Facility provided
consideration in an amount at least equal to the fair market value of such
Receivables is received, directly or indirectly, by the Issuer or any of its
Restricted Subsidiaries, provided further that all the net cash proceeds of any
Receivables Facility are remitted to the Issuer or any Restricted Subsidiary,
(iv) a Restricted Payment or Permitted Investment that is permitted by the
covenant described above under the caption " -- Certain Covenants -- Restricted
Payments" (including any formation of or contribution of assets to a joint
venture), (v) leases or subleases, in the ordinary course of business, to third
parties of real property owned in fee or leased by the Issuer or its
Subsidiaries, (vi) a disposition, in the ordinary course of business, of a lease
of real property, (vii) any disposition of property of the Issuer or any of its
Subsidiaries that, in the reasonable judgment of the Issuer, has become
uneconomic, obsolete or worn out, (viii) any disposition of property or assets
(including any disposition of inventory and any licensing agreements) in the
ordinary course of business, other than in connection with a Receivables
Facility, (ix) the sale of Cash Equivalents, Permitted Insurance Company
Investments and Investment Grade Securities, (x) any exchange of like property
pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, and
(xi) any sale of life insurance policies to certain management personnel
pursuant to the Recapitalization Agreement in an approximate amount not to
exceed $2.0 million and (2) subject to clause (1)(iii), the term "Asset Sale"
shall include a contribution or other transfer of Receivables to, or a
disposition of Receivables by, an Unrestricted Subsidiary in connection with a
Receivables Facility of the Issuer and its Restricted Subsidiaries.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person, or any authorized committee of the Board of Directors
of such Person.
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"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any similar participation in profits and losses or equity of a Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than one
year from the date of acquisition, (iii) certificates of deposit and eurodollar
time deposits with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding one year and overnight bank
deposits, in each case with any commercial bank or trust company having capital
and surplus in excess of $300 million, (iv) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (ii) and (iii) above entered into with any financial institution meeting
the qualifications specified in clause (iii) above, (v) commercial paper having
the highest rating obtainable from Moody's Investors Service, Inc. ("Moody's")
or Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies,
Inc. ("S&P") and in each case maturing within one year after the date of
acquisition, (vi) investment funds investing 95% of their assets in securities
of the types described in clauses (ii)-(v) above, (vii) readily marketable
direct obligations issued by any state of the United States of America or any
political subdivision thereof having one of the two highest rating categories
obtainable from either Moody's or S&P and (viii) Indebtedness with a rating of
"A" or higher from S&P or "A2" or higher from Moody's.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Hedging Agreements" means any futures contract or other similar
agreement or arrangement designed to protect the Issuer or any Subsidiary
against fluctuations in commodities prices.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period (A) plus, to the
extent deducted in computing such Consolidated Net Income, (i) Fixed Charges and
the amortization of debt issuance costs, commissions, fees and expenses of such
Person and its Restricted Subsidiaries for such period, (ii) provision for taxes
based on income or profits (including franchise taxes) of such Person and its
Restricted Subsidiaries for such period, (iii) depreciation and amortization
expense, including amortization of inventory write-up under APB 16, amortization
of intangibles (including goodwill and the non-cash costs of Interest Rate
Agreements, Commodity Hedging Agreements or Currency Agreements, license
agreements and non-competition agreements), non-cash amortization of Capital
Lease Obligations, and organization costs, (iv) non-cash expenses related to the
amortization of management fees paid on or prior to the Closing Date, (v)
expenses and charges related to any equity offering or incurrence of
Indebtedness permitted to be incurred by the Indenture (including any such
expenses or charges relating to the Recapitalization), (vi) the amount of any
restructuring charge or reserve, (vii) unrealized gains and losses from hedging,
foreign currency or commodities translations and transactions, (viii) expenses
consisting of internal software development costs that are expensed during the
period but could have been capitalized in accordance with GAAP, (ix) any
write-downs, write-offs, and other non-cash charges and expenses (excluding
insurance reserves), (x) the amount of any minority interest expense of
Restricted Subsidiaries, and (xi) costs of surety bonds in connection with
financing activities, and (B) minus (x) non-cash items increasing such
Consolidated Net Income for such period and (y) any cash payment or expense
(excluding cash payments on account of insurance claims) for which a reserve or
charge of the kind described in the clause (vi), (ix) or (x) above was taken
previously during such period.
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"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 Restricted
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the referent Person or a Restricted Subsidiary of such Person, (ii) the
Net Income of any Restricted Subsidiary (other than an Insurance Subsidiary)
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, prohibited by operation
of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders unless such restriction with respect to the
payment of dividends has been permanently waived, (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) the cumulative effect of a
change in accounting principles shall be excluded (effected either through
cumulative effect adjustment or a retroactive application, in each case, in
accordance with GAAP), (v) to the extent deducted in determining Net Income, the
fees, expenses and other costs incurred in connection with the Recapitalization,
including payments to management contemplated by the Recapitalization Agreement,
in each case, to the extent that such fee, expense or cost was disclosed in the
Prospectus, shall be excluded, (vi) any unrealized gains or losses with respect
to Investments held in the insurance business of any Restricted Subsidiary shall
be excluded and (vii) with respect to periods prior to the Recapitalization
Closing Date, Consolidated Net Income shall include (without duplication) (A)
all adjustments relating to MIICA investment income (loss) reflected in the
calculation of EBITDA set forth in note (d) in the Notes to Unaudited Pro Forma
Condensed Consolidated Statements of Operations set forth in "Unaudited Pro
Forma Condensed Consolidated Financial Statements" and (B) all adjustments
relating to reductions in management compensation, non-recurring expenses, MIICA
investment income, non-recurring employee separation charges and non-recurring
private company expenses, in each case reflected in the calculation of Adjusted
EBITDA set forth in footnote (a) to the "Summary Historical and Pro Forma
Financial Information."
"Credit Facilities" means, with respect to the Issuer, one or more debt
facilities (including the Senior Credit Facility) or commercial paper facilities
with banks, insurance companies or other institutional lenders providing for
revolving credit loans, term loans, notes, receivables financing (including
through the sale of receivables to such lenders or to special purpose entities
formed to borrow from or issue securities to such lenders against such
receivables) or letters of credit or other credit facilities, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement to which the Issuer or any
Subsidiary is a party or of which it is a beneficiary.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Designated Senior Debt" means (i) any Indebtedness outstanding under the
Senior Credit Facility and (ii) any other Senior Debt permitted under the
Indenture the principal amount of which is $10.0 million or more and that has
been designated by the Issuer or any Guarantor as "Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event (other than as a result of a
Change of Control), matures or is mandatorily redeemable, pursuant to a sinking
fund obligation or otherwise, or redeemable at the option of the holder thereof,
in whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, however, that if such Capital Stock is issued
to any plan for the benefit of employees of the Issuer or its Subsidiaries or by
any
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such plan to such employees, such Capital Stock shall not constitute
Disqualified Stock solely because it may be required to be repurchased by the
Issuer in order to satisfy applicable statutory or regulatory obligations.
"Domestic Subsidiary" means any Restricted Subsidiary of the Issuer other
than a Foreign Subsidiary.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Issuer and its Restricted
Subsidiaries (other than Indebtedness under the Senior Credit Facility) in
existence on the Recapitalization Closing Date, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued (including
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings or any Receivables Facility, and net payments (if
any) pursuant to Hedging Obligations relating to Interest Rate Agreements or
Currency Agreements with respect to Indebtedness, excluding, however, (A)
amortization of debt issuance costs, commissions, fees and expenses, (B)
customary commitment, administrative and transaction fees and charges) and (C)
expenses attributable to letters of credit or similar arrangements supporting
insurance certificates issued to customers in the ordinary course of business,
(ii) the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period, (iii) any interest expense
on Indebtedness of another Person that is Guaranteed by such Person or one of
its Restricted Subsidiaries or secured by a Lien on assets of such Person or one
of its Restricted Subsidiaries (whether or not or, in the case of Indebtedness
of a Foreign Subsidiary, at any time after such, Guarantee or Lien is called
upon), (iv) all dividend payments, whether or not in cash, on any series of
preferred stock of any Restricted Subsidiary of such Person, (v) all dividend
payments, whether or not in cash, on any series of preferred stock of such
person other than dividend payments or accruals payable solely in Equity
Interests (other than Disqualified Stock) of such Person, in each case, on a
consolidated basis and in accordance with GAAP and (vi) commissions, discounts
and other fees and charges incurred in connection with a Receivables Facility of
the Issuer or any Restricted Subsidiary.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the Issuer or any
of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, 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 reference period. For purposes of
making the computation referred to above, Investments in Restricted
Subsidiaries, acquisitions, dispositions, mergers and consolidations that have
been made by the Issuer or any of its Restricted Subsidiaries during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date, and discontinued operations determined in
accordance with GAAP on or prior to the Calculation Date, shall be given effect
on a pro forma basis assuming that all such Investments in Restricted
Subsidiaries, acquisitions, dispositions, mergers and consolidations or
discontinued operations (and the reduction or increase of any associated fixed
charge obligations and
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the change in Consolidated Cash Flow resulting therefrom) had occurred on the
first day of the four-quarter reference period. If since the beginning of such
period any Person (that subsequently became a Restricted Subsidiary or was
merged with or into the Issuer or any Restricted Subsidiary since the beginning
of such period) shall have made any Investment in a Restricted Subsidiary,
acquisition, disposition, merger or consolidation or determined a discontinued
operation, that would have required adjustment pursuant to this definition, then
the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
thereto for such period as if such Investment, acquisition, disposition, merger
or consolidation or discontinued operations had occurred at the beginning of the
applicable four-quarter period. For purposes of this definition, whenever pro
forma effect is to be given to a transaction, the pro forma calculations shall
be made in good faith by a responsible financial or accounting officer of the
Issuer. If any Indebtedness to which pro forma effect is given bears interest at
a floating rate, the interest expense on such Indebtedness shall be calculated
as if the rate in effect on the Calculation Date had been the applicable
interest rate for the entire period (taking into account any Interest Rate
Agreement in effect on the Calculation Date). Interest on a Capital Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
by a responsible financial or accounting officer of the Issuer to be the rate of
interest implicit in such Capital Lease Obligation in accordance with GAAP.
Interest on Indebtedness that may optionally be determined at an interest rate
based upon a factor of a prime or similar rate, a eurocurrency interbank offered
rate, or other rate, shall be deemed to have been based upon the rate actually
chosen, or, if none, then based upon such optional rate chosen as the Issuer may
designate.
"Foreign Subsidiary" means any Subsidiary of the Issuer formed under the
laws of any jurisdiction other than the United States or any political
subdivision thereof substantially all of the assets of which are located outside
of the United States or that conducts substantially all of its business outside
of the United States.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession. All ratios and computations based on GAAP contained in the Indenture
shall be computed in conformity with GAAP as in effect as of the
Recapitalization Closing Date.
"Government Notes" means direct obligations of, or obligations guaranteed
by, the United States of America for the payment of which guarantee or
obligations the full faith and credit of the United States is pledged.
"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 letters of credit and reimbursement
agreements in respect thereof), of all or any part of any Indebtedness.
"Guarantors" means each of (i) Holding, (ii) the Issuer's Restricted
Subsidiaries on the Recapitalization Closing Date other than any (A) Foreign
Subsidiary or (B) Insurance Subsidiary and (iii) any other Restricted Subsidiary
of the Issuer that executes a Note Guarantee in accordance with the provisions
of the Indenture, and their respective successors and assigns, in each case
until released from its Note Guarantee in accordance with the terms of the
Indenture.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under Interest Rate Agreements, Currency Agreements or Commodity
Hedging Agreements.
"Holding" means Werner Holding Co. (PA), Inc.
"Indebtedness" means, with respect to any Person (without duplication), (i)
any indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes,
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debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or banker's acceptances or representing Capital
Lease Obligations or the balance deferred and unpaid of the purchase price of
any property, which purchase price is due more than six months after the date of
placing such property in service or taking delivery thereof, or representing any
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, (ii) all
indebtedness under clause (i) of other Persons secured by a Lien on any asset of
such Person (whether or not such indebtedness is assumed by such Person) and
(iii) to the extent not otherwise included, the Guarantee by such Person of any
indebtedness under clause (i) of any other Person; provided, however, that
Indebtedness shall not include (a) any servicing or guarantee of servicing
obligations with respect to Receivables, (b) obligations of the Issuer or any of
its Restricted Subsidiaries arising from agreements of the Issuer or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in connection
with the disposition of any business, assets or a Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any portion
of such business, assets or a Subsidiary for the purpose of financing such
acquisition; provided, however, that (x) such obligations are not reflected on
the balance sheet of the Issuer or any Restricted Subsidiary (contingent
obligations referred to in a footnote to financial statements and not otherwise
reflected on the balance sheet will not be deemed to be reflected on such
balance sheet for purposes of this clause (x)) and (y) the maximum assumable
liability in respect of all such obligations shall at no time exceed the gross
proceeds including noncash proceeds (the fair market value of such noncash
proceeds being measured at the time received and without giving effect to any
subsequent changes in value) actually received by the Issuer and its Restricted
Subsidiaries in connection with such disposition; or (c) obligations in respect
of performance and surety bonds and completion guarantees provided by the Issuer
or any Restricted Subsidiary in the ordinary course of business. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness that does not require current payments
of interest, and (ii) the principal amount thereof in the case of any other
Indebtedness.
"Insurance Subsidiary" means MIICA and its Subsidiaries that are engaged in
the insurance business or any business incidental thereto.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement, repurchase agreement, futures contract or other financial
agreement or arrangement designed to protect the Issuer or any Subsidiary
against fluctuations in interest rates.
"Investment Grade Securities" means (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents), (ii) debt securities or
debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such rating by such rating organization, or, if no
rating of S&P or Moody's then exists, the equivalent of such rating by any other
nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among the Issuer and
its Subsidiaries, and (iii) investments in any fund that invests exclusively in
investments of the type described in clauses (i) and (ii) which fund may also
hold immaterial amounts of cash pending investment and/or distribution.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations, but
excluding advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of such Person), advances
or capital contributions (excluding commission, travel, payroll, entertainment,
relocation and similar advances to officers and employees made in the ordinary
course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together with all items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP. If the Issuer or any
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Subsidiary of the Issuer sells or otherwise disposes of any Equity Interests of
any direct or indirect Subsidiary of the Issuer such that, after giving effect
to any such sale or disposition, such Person is no longer a Subsidiary of the
Issuer, the Issuer shall be deemed to have made an Investment on the date of any
such sale or disposition equal to the fair market value of the Equity Interests
of such Subsidiary not sold or disposed of in an amount determined as provided
in the final paragraph of the covenant described above under the caption
" -- Restricted Payments."
"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 or any lease
in the nature thereof); provided that in no event shall an operating lease be
deemed to constitute a Lien.
"Management Group" means the senior management of the Issuer or the
Restricted Subsidiaries of the Issuer.
"MIICA" means Manufacturers Indemnity and Insurance Company of America or
any successor thereto.
"Net Income" means, with respect to any Person and any period, the net
income (or loss) of such Person for such period, determined in accordance with
GAAP and before any reduction in respect of preferred stock dividends,
excluding, however, (i) any extraordinary or non-recurring gains or losses or
charges and gains or losses or charges from the sale of assets outside the
ordinary course of business, together with any related provision for taxes on
such gain or loss or charges and (ii) deferred financing costs written off in
connection with the early extinguishment of Indebtedness; provided, however,
that Net Income shall be deemed to include any increases during such period to
shareholder's equity of such Person attributable to tax benefits from net
operating losses and the exercise of stock options that are not otherwise
included in Net Income for such period.
"Net Proceeds" means the aggregate cash proceeds received by the Issuer or
any of its Restricted Subsidiaries in respect of any Asset Sale (including any
cash received upon the sale or other disposition of any non-cash consideration
received in any Asset Sale), net of the direct costs relating to such Asset Sale
(including legal, accounting and investment banking fees, and brokerage and
sales commissions) and any relocation expenses incurred as a result thereof,
taxes paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements), amounts
applied to the repayment of principal, premium (if any) and interest on
Indebtedness that is not subordinated to the Notes required (other than required
by clause (a) of the second paragraph of " -- Repurchase at the Option of
Holders -- Asset Sales") to be paid as a result of such transaction, all
distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset Sale, and
any deduction of appropriate amounts to be provided by the Issuer as a reserve
in accordance with GAAP against any liabilities associated with the asset
disposed of in such transaction and retained by the Issuer after such sale or
other disposition thereof, including pension and other post-employment benefit
liabilities and liabilities related to environmental matters or against any
indemnification obligations associated with such transaction.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Issuer
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness) or (b) is directly or indirectly liable (as a guarantor or
otherwise); and (ii) no default with respect to which (including any rights that
the holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness (other than the Notes being offered hereby) of the Issuer or
any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Issuer or any of its Restricted Subsidiaries; provided that, notwithstanding the
foregoing, the Issuer and any of its
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other Subsidiaries that sell Receivables to the Person incurring such
Indebtedness shall be allowed to provide such representations, warranties,
covenants and indemnities as are customarily required in such transactions so
long as no such representations, warranties, covenants or indemnities constitute
a Guarantee of payment or recourse against credit losses.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages, guarantees and other liabilities
payable under the documentation governing any Indebtedness, in each case whether
now or hereafter existing, renewed or restructured, whether or not from time to
time decreased or extinguished and later increased, created or incurred, whether
or not arising on or after the commencement of a proceeding under Title 11, U.S.
Code or any similar federal or state law for the relief of debtors (including
post-petition interest) and whether or not allowed or allowable as a claim in
any such proceeding.
"Pari Passu Indebtedness" means any Indebtedness of the Issuer or any
Guarantor that ranks pari passu with the New Notes or the Note Guarantee of such
Guarantor, as applicable.
"Permitted Business" means the climbing equipment, extruded products and
fabricated products businesses and any other business reasonably related,
complementary or incidental to any of those businesses (including any related
insurance business).
"Permitted Insurance Company Investments" means Investments in (a) Cash
Equivalents; (b) Investment Grade Securities; and (c) other types of debt and
equity securities, real estate or other Investments; provided, however, that (i)
the aggregate amount of all Permitted Insurance Company Investments referred to
in clause (c) shall not, at the time any such Investment is made, exceed 40% of
all outstanding Permitted Insurance Company Investments, and (ii) MIICA shall at
all times have an investment policy approved from time to time by the Board of
Directors of the Issuer or MIICA pursuant to which all Permitted Insurance
Company Investments shall be required to be made.
"Permitted Investments" means (a) any Investment in the Issuer or in a
Restricted Subsidiary (including in any Equity Interests of a Restricted
Subsidiary); (b) any Investment in Cash Equivalents or Investment Grade
Securities; (c) any Investment by the Issuer or any Restricted Subsidiary of the
Issuer in a Person, if as a result of such Investment (i) such Person becomes a
Restricted Subsidiary or (ii) such Person, in one transaction or a series of
substantially concurrent related transactions, is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Issuer or a Restricted Subsidiary; (d) any
securities received or other Investments made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption " -- Repurchase
at the Option of Holders - Asset Sales" or in connection with any other
disposition of assets not constituting an Asset Sale; (e) any acquisition of
assets solely in exchange for the issuance of Equity Interests (other than
Disqualified Stock) of the Issuer or Holding; (f) any Investments relating to a
Receivables Subsidiary; (g) loans or advances to employees (or guarantees of
third party loans to employees) in the ordinary course of business; (h) stock,
obligations or securities received in satisfaction of judgments or settlement of
debts; (i) receivables owing to the Issuer or any Restricted Subsidiary, if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms (including such
concessionary terms as the Issuer or such Restricted Subsidiary deems
reasonable); (j) any Investment existing on the Recapitalization Closing Date;
(k) Investments in Interest Rate Agreements, Currency Agreements and Commodity
Hedging Agreements otherwise permitted under the Indenture; (l) any transaction
to the extent it constitutes an Investment that is permitted and made in
accordance with the provisions of clause (13) of the last sentence of the
covenant described under the caption " -- Certain Covenants -- Transactions with
Affiliates"; (m) any Investment in a Permitted Business having an aggregate fair
market value, taken together with all other Investments made pursuant to this
clause (m) that are at that time outstanding, not to exceed 15.0% 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); (n) Permitted
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Insurance Company Investments; and (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
10.0% 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).
"Permitted Junior Securities" shall mean debt or equity securities of the
Issuer any Guarantor or any successor corporation to the Issuer or such
Guarantor issued pursuant to a plan of reorganization or readjustment of the
Issuer or such Guarantor that are subordinated to the payment of all then
outstanding Senior Debt of the Issuer or such Guarantor, as applicable at least
to the same extent that (i) in the case of the Issuer, the New Notes are
subordinated to the payment of all Senior Debt of the Issuer on the
Recapitalization Closing Date, and (ii) in the case of such Guarantor, that the
Note Guarantee of such Guarantor is subordinated to the payment of Senior Debt
of such Guarantor on the Recapitalization Closing Date, so long as (i) the
effect of the use of this defined term in the subordination provisions described
under the caption "Subordination" is not to cause the New Notes or the Note
Guarantees, as applicable to be treated as part of (a) the same class of claims
as the Senior Debt of the Issuer or such Guarantor, as applicable or (b) any
class of claims pari passu with, or senior to, the Senior Debt for any payment
or distribution in any case or proceeding or similar event relating to the
liquidation, insolvency, bankruptcy, dissolution, winding up or reorganization
of the Issuer and (ii) to the extent that any Senior Debt of the Issuer or such
Guarantor, as applicable outstanding on the date of consummation of any such
plan of reorganization or readjustment are not paid in full in cash on such
date, either (a) the holders of any such Senior Debt not so paid in full in cash
have consented to the terms of such plan of reorganization or readjustment or
(b) such holders receive securities which constitute Senior Debt of the Issuer
or such Guarantor, as applicable and which have been determined by the relevant
court to constitute satisfaction in full in money or money's worth of any Senior
Debt not paid in full in cash.
"Permitted Liens" means (i) Liens securing Senior Debt of the Issuer or a
Restricted Subsidiary that was permitted by the terms of the Indenture to be
incurred; (ii) Liens in favor of the Issuer or any Restricted Subsidiary; (iii)
Liens on property of a Person existing at the time such Person is merged into or
consolidated with the Issuer or any Restricted Subsidiary of the Issuer;
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 Issuer or a Restricted Subsidiary,
as the case may be; (iv) Liens on property existing at the time of acquisition
thereof by the Issuer or any Restricted Subsidiary of the Issuer, provided that
such Liens were in existence prior to the contemplation of such acquisition and
do not extend to any assets other than those acquired; (v) Liens to secure the
performance of bids, tenders, trade or government contracts (other than for
borrowed money), leases, licenses, statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (vi) without limitation of clause (i), Liens to
secure Indebtedness (including Capital Lease Obligations) permitted by clause
(iv) of the second paragraph of the covenant entitled " -- Incurrence of
Indebtedness and Issuance of Preferred Stock" covering only the assets acquired
with such Indebtedness; (vii) Liens existing on the Recapitalization Closing
Date; (viii) 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, provided that any reserve or other appropriate provision as shall
be required in conformity with GAAP shall have been made therefor; (ix) Liens on
Receivables to reflect sales of Receivables to and by a Receivables Subsidiary
pursuant to a Receivables Facility or securing Indebtedness permitted by
paragraph (ix) of the covenant described under the caption " -- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock;" (x)
Liens incurred in the ordinary course of business of the Issuer or any
Restricted Subsidiary of the Issuer with respect to obligations that do not
exceed $5.0 million 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
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the operation of business by the Issuer or such Restricted Subsidiary; (xi)
carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business in respect of
obligations that are not yet due or that are bonded or that are being contested
in good faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of the Issuer or such Restricted Subsidiary,
as the case may be, in accordance with GAAP; (xii) pledges or deposits in
connection with workmen's compensation, unemployment insurance and other social
security legislation; (xiii) easements (including reciprocal easement
agreements), rights-of-way, building, zoning and similar restrictions, utility
agreements, covenants, reservations, restrictions, encroachments, changes, and
other similar encumbrances or title defects incurred, or leases or subleases
granted to others, in the ordinary course of business, that do not in the
aggregate materially detract from the aggregate value of the properties of the
Issuer and its Subsidiaries, taken as a whole, or in the aggregate materially
interfere with or adversely affect in any material respect the ordinary conduct
of the business of the Issuer and its Subsidiaries on the properties subject
thereto, taken as a whole; (xiv) Liens on goods (and the proceeds thereof) and
documents of title and the property covered thereby securing Indebtedness in
respect of commercial letters of credit; (xv) (A) mortgages, liens, security
interests, restrictions, encumbrances or any other matters of record that have
been placed by any developer, landlord or other third party on property over
which the Issuer or any Restricted Subsidiary of the Issuer has easement rights
or on any real property leased by the Issuer on the Recapitalization Closing
Date and subordination or similar agreements relating thereto and (B) any
condemnation or eminent domain proceedings affecting any real property; (xvi)
leases or subleases to third parties; (xvii) Liens in connection with workmen's
compensation obligations and general liability exposure of the Issuer and its
Restricted Subsidiaries; (xviii) Liens arising by reason of a judgment, decree
or court order, to the extent not otherwise resulting in an Event of Default;
(xix) Liens securing Hedging Obligations entered into in the ordinary course of
business; (xx) without limitation of clause (i), Liens securing Refinancing
Indebtedness permitted to be incurred under the Indenture or amendments or
renewals of Liens that were permitted to be incurred, provided, in each case,
that such Liens do not extend to an additional property or asset; and (xxi)
Liens that secure Indebtedness of a Person existing at the time such Person
becomes a Restricted Subsidiary of the Issuer, provided that such Liens do not
extend to any assets other than those of the Person that became a Restricted
Subsidiary of the Issuer.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Issuer
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Issuer or any of its Restricted Subsidiaries
incurred in compliance with the Indenture; provided that: (i) the principal
amount (or accreted value, if applicable) of such Permitted Refinancing
Indebtedness does not exceed the principal amount of (or accreted value, if
applicable), plus accrued interest on, the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of reasonable premium
and fees and expenses incurred in connection therewith); (ii) in the case of
term Indebtedness, principal payments required under such Permitted Refinancing
Indebtedness have a Stated Maturity no earlier than the Stated Maturity of those
under the Indebtedness being refinanced and such Permitted Refinancing
Indebtedness has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the New Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the New Notes on terms at least as
favorable to the Holders of New Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Issuer or by its Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Receivables" means, collectively, (a) the Indebtedness and other
obligations owed to the Issuer or any of its Subsidiaries (before giving effect
to any sale or transfer thereof pursuant to a Receivables
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Facility), whether constituting an account, chattel paper, an instrument, a
document or general intangible, arising in connection with the sale of goods,
insurance and/or services by the Issuer or such Subsidiary, including the
obligation to pay any late fees, interest or other finance charges with respect
thereto (each of the foregoing, collectively, an "Account Receivable" ), (b) all
of the Issuer's or such Subsidiary's interest in the goods (including returned
goods), if any, the sale of which gave rise to any Account Receivable, and all
insurance contracts with respect thereto, (c) all other security interests or
Liens and property subject thereto from time to time, if any, purporting to
secure payment of any Account Receivable, together with all financing statements
and security agreements describing any collateral securing such Account
Receivable, (d) all Guarantees, insurance and other agreements or arrangements
of whatever character from time to time supporting or securing payment of any
Account Receivable, (e) all contracts, invoices, books and records of any kind
related to any Account Receivable, (f) all cash collections in respect of, and
cash proceeds of, any of the foregoing and any and all lockboxes, lockbox
accounts, collection accounts, concentration accounts and similar accounts in or
into which such collections and cash proceeds are now or hereafter deposited,
collected or concentrated, and (g) all proceeds of any of the foregoing.
"Receivables Facility" means, with respect to any Person, any Receivables
securitization or factoring program pursuant to which such Person receives
proceeds pursuant to a sale, pledge or other encumbrance of its Receivables. A
Receivables Facility involving the sale, pledge or other encumbrance of
Receivables of, and the direct or indirect receipt of the proceeds thereof by,
the Issuer or any Restricted Subsidiary thereof shall constitute a Receivables
Facility of the "Issuer" and/or its "Restricted Subsidiaries" whether or not as
part of such securitization or factoring program such Receivables are initially
contributed or otherwise transferred to an Unrestricted Subsidiary of the Issuer
(and then resold or encumbered by such Unrestricted Subsidiary).
"Receivables Financing Amount" means at any date, with respect to any
Receivables Facility of any Person that does not represent an incurrence of
Indebtedness, the sum on such date of (a) the aggregate uncollected balances of
Accounts Receivable (as defined in the definition of "Receivables") transferred
("Transferred Receivables") in such Receivables Facility plus (b) the aggregate
amount of all collections of Transferred Receivables theretofore received by
such Person but not yet remitted to the purchaser, net of all reserves and
holdbacks retained by or for the benefit of the purchaser and net of any
interest retained by such Person and reasonable costs and expenses (including
fees and commissions and taxes other than income taxes) incurred by such Person
in connection therewith and not payable to any Affiliate of such Person.
"Receivables Subsidiary" means any Subsidiary created primarily to purchase
or finance the receivables of the Issuer and/or its Subsidiaries pursuant to a
Receivables Facility, so long as it: (a) has no Indebtedness other than
Non-Recourse Debt and (b) is a Person with respect to which neither the Issuer
nor any of its other Subsidiaries has any direct obligation to maintain or
preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results other than to act as servicer of
Receivables. If, at any time, such Receivables Subsidiary would fail to meet the
foregoing requirements as a Receivables Subsidiary, it shall thereafter cease to
be a Receivables Subsidiary for purposes of the Indenture and any Indebtedness
of such Receivables Subsidiary shall be deemed to be incurred by a Subsidiary of
the Issuer as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under the covenant described under the caption
" -- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock," the Issuer shall be in default of such covenant).
"Representative" means any agent or representative in respect of any
Designated Senior Debt; provided 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.
"Restricted Investment" means an Investment other than a Permitted
Investment.
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"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Secured Debt" means any Indebtedness of the Issuer or any Guarantor
secured by a Lien.
"Senior Credit Facility" means the Credit Agreement expected to be dated as
of November 24,1997 among the Issuer and the financial institutions named
therein, and any related notes, collateral documents, letters of credit and
guarantees, including any appendices, exhibits or schedules to any of the
foregoing (as the same may be in effect from time to time), in each case, as
such agreements may be amended, modified, supplemented or restated from time to
time, or refunded, refinanced, restructured, replaced, renewed, repaid or
extended from time to time (whether with the original agents and lenders or
other agents or lenders or otherwise, and whether provided under the original
credit agreement or other credit agreements or otherwise).
"Senior Debt" means (i) all Indebtedness of the Issuer or any Guarantor
outstanding under the Senior Credit Facility and all Hedging Obligations with
respect thereto, (ii) any other Indebtedness (including Acquired Debt) permitted
to be incurred by the Issuer or any Guarantor under the terms of the Indenture,
unless the instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right of payment to the
Notes or the relevant Note Guarantee and (iii) all Obligations with respect to
the foregoing. Notwithstanding anything to the contrary in the foregoing, Senior
Debt will not include (v) any liability for federal, state, local or other taxes
owed or owing by the Issuer, (w) any Indebtedness of the Issuer or any Guarantor
to any of its Subsidiaries or other Affiliates (other than Indebtedness under
any Credit Facility to any such Affiliate), (x) any trade payables, (y) that
portion of Indebtedness incurred in violation of the covenant described above
under "Incurrence of Indebtedness and Preferred Stock" (but as to any such
Indebtedness under any Credit Facility, no such violation shall be deemed to
exist for purposes of this clause (y) if the lenders have obtained a
representation from a responsible financial officer of the Issuer to the effect
that the issuance of such Indebtedness does not violate such covenant) or (z)
any Indebtedness or obligation of the Issuer or any Guarantor which is expressly
subordinated in right of payment to any other Indebtedness or obligation of the
Issuer or such Guarantor, as applicable, including any Subordinated Debt.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such regulation is in effect on the Closing
Date.
"Specified Affiliate Payments" means: (i) the repurchase, redemption or
other acquisition or retirement for value of any Equity Interests of the Issuer
or any Restricted Subsidiary of the Issuer, or amounts paid to Holding on
account of any such acquisition or retirement for value of any Equity Interests
of Holding, held by any future, present or former employee, director, officer or
consultant of Holding or the Issuer (or any of its Restricted Subsidiaries)
pursuant to any management equity subscription agreement, stock option
agreement, put agreement, stockholder agreement or similar agreement that may be
in effect from time to time; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed
$3.0 million in any calendar year (with unused amounts in any calendar year
being carried over to succeeding calendar years subject to a maximum amount of
repurchases, redemptions or other acquisitions pursuant to this clause (i)
(without giving effect to the immediately following proviso) of $10.0 million in
any calendar year) and no payment default on Senior Debt or the Notes shall have
occurred and be continuing; provided further that such amount in any calendar
year may be increased by an amount not to exceed (A) the cash proceeds received
by the Issuer (including by way of capital contribution) since the
Recapitalization Closing Date from the sale of Equity Interests of Holding or
the Issuer to employees, directors, officers or consultants of Holding, the
Issuer or their respective Subsidiaries that occurs in such calendar year (it
being understood that such cash proceeds shall be included in clause (c)(ii) of
the first paragraph under the covenant described under the caption " -- Certain
Covenants -- Restricted Payments") plus (B) the cash proceeds from key man life
insurance policies received by the Issuer and
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its Restricted Subsidiaries in such calendar year (including proceeds from the
sale of such policies to the person insured thereby); and provided further that
cancellation of Indebtedness owing to the Issuer from employees, directors,
officers or consultants of the Issuer or any of its Subsidiaries in connection
with a repurchase of Equity Interests of the Issuer will not be deemed to
constitute a Restricted Payment for purposes of the Indenture; (ii) repurchases
of Equity Interests deemed to occur upon exercise of stock options or warrants
as a result of the payment of all or a portion of the exercise price of such
options or warrants with Equity Interests; (iii) payments by the Issuer or
Holding to members of management of the Issuer and its Subsidiaries in
connection with the Recapitalization to the extent disclosed in this Prospectus;
(iv) payments or other transactions permitted under clauses (8) and (11) of the
second sentence of the covenant described under " -- Certain
Covenants -- Transaction with Affiliates;" and (v) dividends, other
distributions or other amounts paid by the Issuer to Holding (A) in amounts
equal to amounts required for Holding to pay franchise taxes and other expenses
required to maintain its corporate existence and provide for other operating
costs of up to $750,000 per fiscal year or (B) to pay, or reimburse Holding for,
the costs, fees and expenses incident to a registration of any of the Capital
Stock of Holding for a primary offering under the Securities Act, so long as the
net proceeds (after payment of additional contingent amounts then due and
payable on account of Market Participation Rights) of such offering (if it is
completed) are contributed to, or otherwise used for the benefit of, the Issuer.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the documentation governing
such Indebtedness, and shall not include any contingent obligations to repay,
redeem or repurchase any such interest or principal prior to the date scheduled
for the payment thereof.
"Subordinated Debt" means any Indebtedness of the Issuer or any Guarantor
(whether outstanding on the Recapitalization Closing Date or thereafter
incurred) that is subordinate or junior in right of payment to the New Notes or
the applicable Note Guarantee pursuant to written agreement.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Total Assets" means, at any time, the total consolidated assets of the
Issuer and its Restricted Subsidiaries at such time. For the purposes of
paragraph (iv) of the covenant described under the caption " -- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock," Total
Assets shall be determined giving pro forma effect to the lease, acquisition,
construction or improvement of the assets being leased, acquired, constructed or
improved with the proceeds of the relevant Indebtedness.
"Unrestricted Subsidiary" means (i) any Receivables Subsidiary in existence
on the Recapitalization Closing Date, (ii) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution, and (iii) any Subsidiary of an Unrestricted Subsidiary; but in the
case of any Subsidiary referred to in clause (ii) (or any Subsidiary of any such
Subsidiary) only to the extent that such Subsidiary: (a) except in the case of a
Foreign Subsidiary, has no Indebtedness other than Non-Recourse Debt; (b) is not
party to any agreement, contract, arrangement or understanding with the Issuer
or any Restricted Subsidiary of the Issuer unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Issuer or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Issuer; (c) except in the case
of a Foreign Subsidiary, is a Person with respect to which neither the Issuer
nor
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any of its Restricted Subsidiaries has any direct or indirect obligation (x) to
subscribe for additional Equity Interests or (y) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any specified
levels of operating results; and (d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Issuer or any of
its Restricted Subsidiaries. Any such designation by the Board of Directors
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions and was permitted by the covenant described above under the caption
" -- Certain Covenants -- Restricted Payments." If, at any time, any
Unrestricted Subsidiary referred to in clause (ii) of the first sentence of this
definition (or any Subsidiary thereof) would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Issuer as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under the covenant described under the caption
" -- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock," the Issuer shall be in default of such covenant). The Board of Directors
of the Issuer may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the Issuer of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted under the covenant
described under the caption " -- Certain Covenants -- Incurrence of Indebtedness
and Issuance of Preferred Stock," calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding 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 (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Gibson, Dunn & Crutcher LLP, the following is a general
description of the material United States federal income tax consequences of the
Exchange Offer. It is based on the Internal Revenue Code of 1986, as amended to
the date hereof (the "Code"), existing and proposed Treasury regulations, and
judicial and administrative determinations, all of which are subject to change
at any time, possibly on a retroactive basis. The following relates only to Old
Notes, and New Notes received therefor, that are held as "capital assets" within
the meaning of Section 1221 of the Code by persons who are citizens or residents
of the United States. It does not discuss state, local, or foreign tax
consequences, nor does it discuss tax consequences to categories of holders that
are subject to special rules, such as foreign persons, tax-exempt organizations,
insurance companies, banks, and dealers in stocks and securities. Tax
consequences may vary depending on the particular status of an investor. No
rulings will be sought from the Internal Revenue Service ("IRS") with respect to
the federal income tax consequences of the Exchange Offer.
THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO AN INVESTOR'S DECISION TO PURCHASE THE NOTES.
EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISOR CONCERNING THE APPLICATION
OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO ITS PARTICULAR SITUATION
BEFORE DETERMINING WHETHER TO PURCHASE THE NOTES.
THE EXCHANGE OFFER
The exchange of Old Notes for New Notes pursuant to the Exchange Offer will
not constitute a material modification of the terms of the Notes and,
accordingly, such exchange will not constitute an exchange for federal income
tax purposes. Accordingly, such exchange will have no federal income tax
consequences to holders of Notes, either those who exchange or those who do not,
and each holder of Notes will continue to be required to include interest on the
Notes in its gross income in accordance with its method of accounting for
federal income tax purposes and the Company intends, to the extent required, to
take such position.
BACKUP WITHHOLDING
Under the Code, a holder of a Note may be subject, under certain
circumstances, to "backup withholding" at a 31% rate with respect to payments in
respect of interest thereon or the gross proceeds from the disposition thereof.
This withholding generally applies only if the holder (i) fails to furnish his
or her social security or other taxpayer identification number ("TIN") within a
reasonable time after request therefor, (ii) furnishes an incorrect TIN, (iii)
is notified by the IRS that he or she has failed to report properly payments of
interest and dividends and the IRS has notified the Company that he or she is
subject to backup withholding, or (iv) fails, under certain circumstances, to
provide a certified statement, signed under penalty of perjury, that the TIN
provided is his or her correct number and that he or she is not subject to
backup withholding. Any amount withheld from a payment to a holder under the
backup withholding rules is allowable as a credit against such holder's federal
income tax liability, provided that the required information is furnished to the
IRS. Corporations and certain other entities described in the Code and Treasury
regulations are exempt from such withholding if their exempt status is properly
established.
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PLAN OF DISTRIBUTION
Each 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 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 Issuer has agreed that for a period of 90 days after the
Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until , 1998 (90 days after the date of this Prospectus),
all dealers effecting transactions in the New Notes may be required to deliver a
prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Issuer will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the Letter
of Transmittal. The Issuer has agreed to pay all expenses incident to the
Exchange Offer (including the expenses of one counsel for the holders of the Old
Notes), other than commissions or concessions of any brokers or dealers, and
will indemnify the holders of the Old Notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
BOOK-ENTRY, DELIVERY AND FORM
GLOBAL NOTE
Except as set forth below, the New Notes will initially be issued in the
form of one or more permanent global Notes in definitive, fully registered form
without interest coupons (each, a "Global Note"). Upon issuance, each Global
Note will be deposited with the Trustee as custodian for, and registered in the
name of, a nominee of The Depository Trust Company ("DTC").
If a holder tendering Old Notes so requests, such holder's New Notes will
be issued as described below under "-- Certificated Securities" in registered
form without coupons (the "Certificated Securities").
Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in a Global
Note will be shown on, and the transfer of that 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).
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So long as DTC, or its nominee, is the registered owner or Holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or Holder of the Notes represented by such Global Note for all
purposes under the Indenture and the Notes. No beneficial owner of an interest
in a Global Note will be able to transfer that interest except in accordance
with DTC's applicable procedures, in addition to those provided for under the
Indenture.
Payments of the principal of, premium, if any, and interest, on a Global
Note will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. Neither the Company, the Trustee nor any Paying Agent will have
any responsibility or liability for any aspects of the records relating to or
payments made on account of beneficial ownership interests in a Global Note or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, and interest in respect of a Global Note, will
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Note as
shown on the records of DTC or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in such Global Note
held through such participants will be governed by standing instructions and
customary practices, 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.
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.
The Company expects that DTC will take any action permitted to be taken by
a Holder of a Note only at the direction of one or more participants to whose
account the DTC interests in a Global Note is credited and only in respect of
such portion of the aggregate principal amount of a Note as to which such
participant or participants has or have given direction.
DTC has advised the Company that it is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, 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 to facilitate the clearance and settlement of securities transactions
between participants through electronic book-entry changes in accounts of its
participants. 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.
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in a Global Note among participants of DTC, it
is under no obligation to perform or continue 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
respective participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.
CERTIFICATED SECURITIES
If (i) the Issuer notifies the Trustee in writing that DTC is no longer
willing or able to act as a depository and the Issuer is unable to locate a
qualified successor within 90 days or (ii) the Issuer, at its option, notifies
the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture, then, upon surrender by DTC of its Global
Note, Certificated Securities will be issued to each person that DTC identifies
as the beneficial owner of the New Notes represented by the Global Note. In
addition, any person having a beneficial interest in a Global Note ()r any
holder of Old Notes whose Old Notes have been accepted for exchange may, upon
request to the Trustee or the Exchange Agent, as the case may be, exchange such
beneficial interest or Old Notes for Certificated Securities.
107
<PAGE> 109
Upon any such issuance, the Trustee is required to register such Certificated
Securities in the name of such person or persons (or the nominee of any
thereof), and cause the same to be delivered thereto.
Neither the Company nor the Trustee shall be liable for any delay by DTC or
any participant or indirect participant in identifying the beneficial owners of
the related New Notes and each such person may conclusively rely on, and shall
be protected in relying on, instructions from DTC for all purposes (including
with respect to the registration and delivery, and the respective principal
amounts, of the New Notes to be issued).
LEGAL MATTERS
The validity of the Notes offered hereby will be passed upon for the Issuer
by Gibson, Dunn & Crutcher LLP, New York, New York.
EXPERTS
The consolidated financial statements of Werner Holding Co. (PA), Inc. as
of December 31, 1997 and 1996 and for each of the three years in the period
ended December 31, 1997 appearing in this Prospectus and Registration Statement
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing elsewhere herein, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
108
<PAGE> 110
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Auditors....................................................... F-2
Consolidated Balance Sheets.......................................................... F-3
Consolidated Statements of Operations................................................ F-5
Consolidated Statements of Changes in Shareholders' Equity (Deficit)................. F-6
Consolidated Statements of Cash Flows................................................ F-7
Notes to Consolidated Financial Statements........................................... F-8
</TABLE>
F-1
<PAGE> 111
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Werner Holding Co. (PA), Inc.
Greenville, Pennsylvania
We have audited the accompanying consolidated balance sheets of Werner
Holding Co. (PA), Inc. and subsidiaries as of December 31, 1996 and 1997, and
the related consolidated statements of operations, changes in shareholders'
equity (deficit) and cash flows for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Werner Holding
Co. (PA), Inc. and subsidiaries at December 31, 1996 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
Cleveland, Ohio
February 10, 1998
F-2
<PAGE> 112
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1996 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents.............................................. $ 986 $ 3,107
Accounts receivable, less allowance for doubtful accounts (1996 --
$1,930; 1997 -- $1,250)........................................ 46,277 62,913
Refundable income taxes........................................... 2,016 820
Inventories....................................................... 44,407 44,670
Deferred income taxes............................................. 2,577 4,451
Other............................................................. 1,837 6,936
-------- --------
Total current assets................................................ 98,100 122,897
Investments and other assets:
Insurance fund investments........................................ 80,949 58,579
Deferred income taxes............................................. 4,149 11,586
Deferred financing fees, net...................................... 174 15,098
Other............................................................. 15,249 14,196
-------- --------
100,521 99,459
Property, plant and equipment:
Land and improvements............................................. 5,740 7,369
Buildings......................................................... 29,372 34,666
Machinery and equipment........................................... 91,101 97,909
-------- --------
126,213 139,944
Less accumulated depreciation and amortization.................... 69,085 77,284
-------- --------
57,128 62,660
Capital projects in progress...................................... 5,436 3,169
-------- --------
62,564 65,829
-------- --------
TOTAL ASSETS........................................................ $261,185 $288,185
======== ========
</TABLE>
F-3
<PAGE> 113
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1996 1997
-------- --------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Short-term bank debt.............................................. $ $ 41,500
Accounts payable.................................................. 21,691 24,904
Accrued liabilities............................................... 19,614 24,896
Current maturities of long-term debt.............................. 7,571 1,450
-------- --------
Total current liabilities........................................... 48,876 92,750
Long-term obligations:
Long-term debt -- less current maturities (net of unamortized
original issue discount of $4,009 in 1997)..................... 75,871 279,541
Reserve for losses and loss adjustment expenses................... 45,320 49,644
Other............................................................. 16,039 19,922
-------- --------
137,230 349,107
Shareholders' equity (deficit):
Common stock:
Pre-Recapitalization common stock:
Class A -- $1.00 par value; voting; 42,000 shares authorized;
13,227 and 0 shares issued and outstanding in 1996 and 1997,
respectively................................................ 13
Class B -- $1.00 par value; non-voting; 378,000 shares
authorized; 148,473 and 0 shares issued and outstanding in
1996, and 1997, respectively................................ 148
Post-Recapitalization common stock:
Class A -- $.01 par value; voting; 5,000 shares authorized;
2,059 shares issued and outstanding in 1997................. --
Class B -- $.01 par value; voting; 25,000 shares authorized;
22,438 shares issued and outstanding in 1997................ --
Class C -- $.01 par value; non-voting; 45,000 shares
authorized; 4,682 shares issued and outstanding in 1997..... --
Class D -- $.01 par value; voting; 1,000 shares authorized;
1,000 shares issued and outstanding in 1997................. --
Class E -- $.01 par value; non-voting; 50,000 shares
authorized; 45,000 shares issued and outstanding in 1997.... 1
Additional paid-in capital........................................ 1,316 201,043
Retained earnings (deficit)....................................... 70,402 (353,949)
Other............................................................. 3,200 (767)
-------- --------
Total shareholders' equity (deficit)................................ 75,079 (153,672)
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)................ $261,185 $288,185
======== ========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 114
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
------------------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Net sales............................................... $336,029 $366,864 $416,321
Cost of sales........................................... 248,937 264,977 300,095
-------- -------- --------
Gross profit............................................ 87,092 101,887 116,226
General and administrative expense...................... 25,007 27,027 31,186
Selling and distribution expense........................ 47,073 47,846 48,944
Recapitalization expense................................ 22,714
Non-cash compensation charge............................ 78,527
-------- -------- --------
Operating profit (loss)................................. 15,012 27,014 (65,145)
Other income (expense), net............................. 4,214 9,851 (15,669)
-------- -------- --------
Income (loss) before interest and taxes................. 19,226 36,865 (80,814)
Interest expense........................................ 7,206 7,517 8,979
-------- -------- --------
Income (loss) before provision for income taxes......... 12,020 29,348 (89,793)
Income taxes............................................ 5,141 9,988 714
-------- -------- --------
Income (loss) before extraordinary charge............... 6,879 19,360 (90,507)
Extraordinary charge-early extinguishment of debt....... 579
-------- -------- --------
NET INCOME (LOSS)....................................... $ 6,300 $ 19,360 $(90,507)
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 115
WERNER HOLDING CO. (PA), INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE THREE YEARS ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRE-RECAPITALIZATION COMMON STOCK POST-RECAPITALIZATION COMMON STOCK
---------------------------------------------- ----------------------------------------
CLASS A CLASS B CLASS A CLASS B
-------------------- ---------------------- ------------------ ------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
--------- ------- ----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995...... 13,282 $ 14 149,887 $ 149
Net income......................
Dividends declared ($10.20 per
share).........................
Amortization of deferred
compensation...................
Unrealized gains on investments
(net of tax)...................
------ ------ ------- ------ ------- ------ ------- -------
Balance at December 31, 1995.... 13,282 14 149,887 149
Net income......................
Dividends declared ($11.25 per
share).........................
Amortization of deferred
compensation...................
Repurchase of common stock...... (55) (1) (1,414) (1)
Adjustment to minimum pension
liability......................
Unrealized losses on investments
(net of tax)...................
------ ------ ------- ------ ------- ------ ------- -------
Balance December 31, 1996....... 13,227 13 148,473 148
Net (loss)......................
Dividends declared ($10.50 per
share).........................
Amortization of deferred
compensation...................
Repurchase of common stock...... (55) -- (574) --
Adjustment to minimum pension
liability......................
Unrealized losses on investments
(net of tax)...................
Redemption and reclassification
of common stock in connection
with recapitalization,
including fees................. (13,172) (13) (147,899) (148) 2,059 -- 22,438 --
Issuance of common stock in
connection with
recapitalization...............
Non-cash compensation charge....
------ ------ ------- ------ ------- ------ ------- -------
BALANCE AT DECEMBER 31, 1997.... 2,059 $ -- 22,438 $ --
====== ====== ======= ====== ======= ====== ======= =======
<CAPTION>
CLASS C CLASS D CLASS E ADDITIONAL
------------------ ------------------ ------------------- PAID-IN RETAINED
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS CAPITAL EARNINGS
------- ------- ------- ------- -------- ------- ---------- ----------
<S> <<C> <C>
Balance at January 1, 1995...... $ 1,316 $ 49,652
Net income...................... 6,300
Dividends declared ($10.20 per
share)......................... (1,664)
Amortization of deferred
compensation...................
Unrealized gains on investments
(net of tax)...................
------- ------- ------- ------- ------- ------- -------- --------
Balance at December 31, 1995.... 1,316 54,288
Net income...................... 19,360
Dividends declared ($11.25 per
share)......................... (1,836)
Amortization of deferred
compensation...................
Repurchase of common stock...... (1,410)
Adjustment to minimum pension
liability......................
Unrealized losses on investments
(net of tax)...................
------- ------- ------- ------- ------- ------- -------- --------
Balance December 31, 1996....... 1,316 70,402
Net (loss)...................... (90,507)
Dividends declared ($10.50 per
share)......................... (1,691)
Amortization of deferred
compensation...................
Repurchase of common stock...... (731)
Adjustment to minimum pension
liability......................
Unrealized losses on investments
(net of tax)...................
Redemption and reclassification
of common stock in connection
with recapitalization,
including fees................. (1,515) (331,422)
Issuance of common stock in
connection with
recapitalization............... 4,682 -- 1,000 -- 45,000 1 122,715
Non-cash compensation charge.... 78,527
------- ------- ------- ------- ------- ------- -------- --------
BALANCE AT DECEMBER 31, 1997.... 4,682 $ -- 1,000 $ -- 45,000 $ 1 $ 201,043 $ (353,949)
======= ======= ======= ======= ======= ======= ======== ========
<CAPTION>
OTHER TOTAL
-------- ----------
Balance at January 1, 1995...... $ (1,287) $ 49,844
Net income...................... 6,300
Dividends declared ($10.20 per
share)......................... (1,664)
Amortization of deferred
compensation................... 242 242
Unrealized gains on investments
(net of tax)................... 7,381 7,381
------ --------
Balance at December 31, 1995.... 6,336 62,103
Net income...................... 19,360
Dividends declared ($11.25 per
share)......................... (1,836)
Amortization of deferred
compensation................... 185 185
Repurchase of common stock...... (1,412)
Adjustment to minimum pension
liability...................... (275) (275)
Unrealized losses on investments
(net of tax)................... (3,046) (3,046)
------ --------
Balance December 31, 1996....... 3,200 75,079
Net (loss)...................... (90,507)
Dividends declared ($10.50 per
share)......................... (1,691)
Amortization of deferred
compensation................... 133 133
Repurchase of common stock...... (731)
Adjustment to minimum pension
liability...................... (1,946) (1,946)
Unrealized losses on investments
(net of tax)................... (2,353) (2,353)
Redemption and reclassification
of common stock in connection
with recapitalization,
including fees................. 199 (332,899)
Issuance of common stock in
connection with
recapitalization............... 122,716
Non-cash compensation charge.... 78,527
------ --------
BALANCE AT DECEMBER 31, 1997.... $ (767) $ (153,672)
====== ========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 116
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
----------------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................................... $ 6,300 $ 19,360 $(90,507)
Reconciliation of net income (loss) to net cash (used in) provided
by
operating activities:
Recapitalization expense........................................ 22,714
Non-cash compensation charge.................................... 78,527
Loss from early extinguishment of debt.......................... 579
Depreciation and amortization................................... 8,018 9,201 11,500
Provision for losses on accounts receivable..................... 405 700 (115)
Provision for insurance claims.................................. 14,715 17,126 15,841
Payment of insurance claims..................................... (9,882) (13,347) (11,517)
Deferred income taxes........................................... (1,745) (3,625) (8,044)
Realized net (gains) losses on disposition and impairment of
insurance fund investments.................................... (1,671) (9,431) 16,407
Net purchases of trading securities............................. (2,660) (5,381) (1,975)
Changes in operating assets and liabilities:
Accounts receivable........................................... 154 (4,326) (16,521)
Refundable income taxes....................................... 393 (313) 1,196
Inventories................................................... (7,331) 3,644 (263)
Accounts payable.............................................. (12,088) 5,130 3,213
Accrued liabilities........................................... 601 3,414 (1,267)
Other, (net).................................................. 2,844 (2,634) (1,957)
-------- -------- --------
Net cash (used in) provided by operating activities................. (1,368) 19,518 17,232
INVESTING ACTIVITIES
Capital expenditures................................................ (12,517) (13,048) (11,710)
Insurance fund securities available-for-sale:
Purchases of debt and equity securities........................... (74,362) (176,034) (79,484)
Sale of debt and equity securities................................ 72,358 178,623 59,497
Net (purchases) sales of other insurance fund investments........... (4,147) 2,345 24,073
Other............................................................... (212) (7,718) 4,062
-------- -------- --------
Net cash (used in) provided by investing activities................. (18,880) (15,832) (3,562)
FINANCING ACTIVITIES
Redemption of common stock.......................................... (332,899)
Issuance of common stock............................................ 122,716
Payment of recapitalization fees and expenses....................... (37,952)
Refinancing of existing debt........................................ (65,571)
Issuance of Senior Subordinated Notes, net.......................... 130,950
Borrowings under Senior Credit Facility............................. 186,500
Net borrowings (repayments) under revolving credit agreements....... 24,800 7,600 (6,300)
Borrowings of long-term debt........................................ 6,000
Repayments of long-term debt........................................ (7,676) (7,642) (6,571)
Repurchase of common stock.......................................... (1,412) (731)
Dividends paid...................................................... (1,991) (1,836) (1,691)
Other............................................................... (345) (39)
-------- -------- --------
Net cash provided by (used in) financing activities................. 20,788 (3,329) (11,549)
-------- -------- --------
Net increase in cash and equivalents................................ 540 357 2,121
Cash and equivalents at beginning of year........................... 89 629 986
-------- -------- --------
CASH AND EQUIVALENTS AT END OF YEAR................................. $ 629 $ 986 $ 3,107
======== ======== ========
CASH PAID DURING THE YEAR FOR
Interest............................................................ $ 6,980 $ 6,756 $ 7,752
======== ======== ========
Income taxes........................................................ $ 6,493 $ 13,925 $ 9,955
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE> 117
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
A. DESCRIPTION OF BUSINESS
The Company operates predominantly in a single industry within the United
States: the manufacture of climbing equipment which includes aluminum,
fiberglass and wood ladders, scaffolding, stages and planks. In addition, the
Company manufactures and sells aluminum extruded products. The Company's
products are manufactured at common production facilities and use common
manufacturing processes.
The Company's export sales are less than 10% of total revenues. Sales to
one customer accounted for 10.5% and 18.0% of consolidated net sales for the
year ended December 31, 1996 and 1997, respectively. There were no other sales
to customers that exceeded 10% of consolidated net sales for each of the years
presented.
B. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation -- The consolidated financial statements of Werner
Holding Co. (PA), Inc. include its accounts and the accounts of its wholly-owned
subsidiary Werner Holding Co. (DE), Inc. and its wholly owned subsidiaries
(collectively the "Company"). Werner Holding Co. (PA), Inc. has no substantial
operations or assets, other than its investment in Werner Holding Co. (DE), Inc.
The consolidated financial condition and results of operations of Werner Holding
Co. (PA), Inc. are substantially the same as those of Werner Holding Co. (DE),
Inc. Intercompany accounts and transactions have been eliminated.
Revenue Recognition -- Sales are recorded when products are shipped.
Accounts Receivable
The Company provides credit, in the normal course of business, to its
customers. The Company's customers are not concentrated in any specific
geographic region. The Company performs ongoing credit evaluations of its
customers and maintains allowances for potential credit losses which, when
realized, have been within the range of management's expectations. Write-offs of
uncollectible accounts receivable have totaled $341, $557 and $565 in 1995, 1996
and 1997, respectively.
Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could differ from
those estimates.
Inventories -- Inventories are stated at the lower of cost or market (net
realizable value). Cost is determined principally by the last-in, first-out
(LIFO) method. The Company, in the normal course of business, regularly projects
its aluminum raw material requirements, and enters into futures contracts to
hedge the price risk associated with a certain percentage of anticipated
purchases. All gains and losses on hedging transactions are deferred and are
included as an adjustment to the cost of the aluminum when purchased. In 1995,
the Company revised its projections of aluminum raw material requirements,
reduced related purchase commitments and sold corresponding futures contracts
resulting in the recognition of a pre-tax gain of $1,688.
Property, Plant and Equipment -- Property, plant and equipment is stated at
cost. Depreciation expense is calculated principally by using accelerated
methods over the estimated useful lives of the
F-8
<PAGE> 118
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
B. SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
assets. The estimated useful lives for buildings range from 40 to 45 years and
for machinery and equipment range from 3 to 14 years.
Long-lived assets are reviewed for impairment. Measurement of impairment
may be based upon appraisals, market values of similar assets or discounted cash
flows.
Insurance Fund Investments -- The Company's captive insurance subsidiary,
Manufacturers Indemnity and Insurance Company of America ("MIICA"), maintains an
investment fund which consists of debt securities, equity securities, real
estate, cash and equivalents, and other investments. MIICA's investments in debt
and equity securities are available for sale; therefore, these securities are
reported at market value. Investments in real estate are recorded at depreciated
value and short-term and other investments are stated primarily at cost which
approximates market. Investments in special expiration price options are
classified as trading securities and are reported at market value.
Realized gains and losses on the sale of investments are recognized in
operations. The cost of securities sold is based on the specific identification
method. Changes in market values of debt and equity securities are reflected as
unrealized gains or losses directly in shareholders' equity and accordingly,
have no effect on operations until sold unless such losses are other than
temporary, at which time such losses are recognized in operations. Changes in
market values of special expiration price options are reported directly in
operations.
Reserve for Losses and Loss Adjustment Expenses -- MIICA maintains reserves
for the product liability, workers' compensation and environmental liability
claims of the Company. The reserve for losses and loss adjustment expenses
includes an amount determined from loss reports and individual cases and an
amount, based on past experience, for losses incurred but not reported. Such
reserve is necessarily based on estimates and, while management believes that
the amount is adequate, the ultimate liability may be in excess of or less than
the amount provided. The methods for making such estimates and for establishing
the resulting reserve are continually reviewed, and any adjustments are
reflected in earnings currently. Payments of claims are made from MIICA's
investment funds.
Advertising -- The Company expenses all advertising as incurred. These
expenses for the years ended December 31, 1995, 1996 and 1997 totaled $6,546,
$7,586, and $8,001, respectively.
Stock-Based Compensation -- The Company accounts for stock-based
compensation in accordance with the provisions of Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees.
Statement of Cash Flows -- Cash and equivalents include cash on hand,
demand deposits and short-term highly liquid debt instruments purchased with a
maturity of three months or less, exclusive of MIICA's investments.
Recently Issued Accounting Standards -- In June 1997, the Financial
Accounting Standards Board (FASB) issued Statements of Financial Accounting
Standards (SFAS) No. 130, Reporting Comprehensive Income, which requires that an
enterprise classify items of other comprehensive income (such as unrealized
gains and losses on investments in debt and equity securities) in a financial
statement and display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in-capital in the equity
section of the balance sheet. The Company will comply with the provisions of
this Statement upon its required adoption in 1998.
In June 1997, the FASB also issued SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information, which establishes new standards for
the way public business enterprises
F-9
<PAGE> 119
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
B. SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. The Company is currently studying the
effects of adoption of this statement which will be applicable for the Company
effective December 31, 1998.
Fair Values of Financial Instruments -- The Company's disclosures for
financial instruments are as follows:
Cash and equivalents -- The carrying amounts reported in the balance
sheet for cash and equivalents bear interest at prevailing market rates and
therefore approximates fair value.
Insurance fund investments -- Debt and equity securities and other
invested assets are stated at fair value.
Long-term debt -- The carrying amounts of the Company's borrowings
under the Senior Subordinated Notes, its credit agreements and the Variable
Rate Demand Industrial Building Revenue Bonds, bear interest at prevailing
market rates and therefore approximate their fair value at December 31,
1996 and 1997. The fair value of the Company's fixed rate senior notes was
estimated using discounted cash flow analyses based on the Company's
current incremental borrowing rates for similar types of borrowing
arrangements. The fair value of the senior notes was $11,000 at December
31, 1996.
Reclassification -- Certain prior year amounts have been reclassified to
conform to the current year presentation in the consolidated financial
statements.
C. RECAPITALIZATION
On October 8, 1997, the Company entered into a recapitalization agreement,
which was amended and restated on October 27, 1997 (the "Recapitalization
Agreement"), with certain affiliates of INVESTCORP S.A. ("Investcorp") and
certain other international investors organized by Investcorp (collectively the
"Investors").
The Recapitalization
Pursuant to the Recapitalization Agreement, on November 24, 1997, the
Company took the following actions (all of which together constituted the
"Recapitalization"):
(A) the Company filed with the Secretary of the State of the Commonwealth
of Pennsylvania the Restated Articles of Incorporation pursuant to which the
Company's capital stock was reclassified as follows:
(i) Each share of Pre-Recapitalization Class A Stock held by
shareholders who were not active in the management of the Company
("Non-Management Shareholders") was reclassified into the right to retain
0.1376 of a fully paid and non-assessable share of Class A Stock and the
right to receive 0.8624 of a fully paid and non-assessable share of Class
A-1 Stock and each share of Pre-Recapitalization Class B Stock held by
Non-Management Shareholders was reclassified into the right to retain
0.1376 of a fully paid and non-assessable share of Class B Stock and the
right to receive 0.8624 of a fully paid and non-assessable share of Class
B-1 Stock;
(ii) Each share of Class A Stock and Class B Stock held by
shareholders who were active in the management of the Company ("Management
Shareholders") was reclassified into the fractions
F-10
<PAGE> 120
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
C. RECAPITALIZATION -- CONTINUED
of fully paid and non-assessable shares of Class A Stock and Class A-1
Stock, and Class B Stock and Class B-1 Stock, respectively, as set forth in
the Recapitalization Agreement; and
(iii) Class C Common Stock, Class D Common Stock, Class E Common Stock
and Common Stock were newly authorized for issuance.
(B) the Class A-1 Stock and the Class B-1 Stock was then redeemed by the
Company at a cash redemption price of approximately $2,421 per share (totaling
approximately $330,700, plus the right to receive, upon certain conditions, an
additional, one-time, lump sum payment (the "Market Participation Right"); and
(C) The Pre-Recapitalization shareholders retained the outstanding shares
of Class A Stock and Class B Stock, and the Investors purchased for
approximately $122,700 shares of the Company's Class C Common Stock, Class D
Common Stock and Class E Common Stock.
Following the Recapitalization, the Pre-Recapitalization shareholders
(including the Management Shareholders) continue to own approximately 33% of the
outstanding voting equity of the Company and the Management Shareholders, who
continue to manage and operate the business, continue to own approximately 13%
of the Company's voting capital stock. Immediately following the
Recapitalization, the Investors owned approximately 67% of the outstanding
voting equity of the Company. Common stock with a par value of $.01 per share
has been authorized (131,000 shares), but no shares are issued or outstanding at
December 31, 1997.
Market Participation Right -- If, prior to the tenth anniversary of
November 24, 1997 (the "Recapitalization Closing Date") (i) there is an initial
underwritten public offering of at least 10% of the common equity of the
Company, or the Investors sell a majority of their shares of the Company and
(ii) at the time of such initial public offering or sale of shares, the
Company's equity value equals or exceeds certain target values that imply
significant annual compound rates of return (between 20% and 40%) to the
Post-Recapitalization shareholders, then those persons who have the Market
Participation Right shall be entitled to receive an aggregate amount equal to up
to 5% of the Company's equity value (the "Payment"). The Payment will be payable
in cash, provided that the Company, in its discretion, may make up to half of
the Payment in notes or similar obligations with market terms which the
Company's Board of Directors in good faith believes are of equivalent value.
Voting Rights -- Holders of the Class A Common Stock and Class B Common
Stock are entitled to one vote per share and holders of the Class D Common Stock
are entitled to approximately 50.7 votes per share. Class C Common Stock and
Class E Common Stock have no voting rights. Upon the occurrence of a sale of
100% of the outstanding equity securities of the Company, a sale of
substantially all the assets of the Company or a public offering of any equity
securities of the Company, each outstanding share of Class A Common Stock, Class
B Common Stock, Class C Common Stock, Class D Common Stock and Class E Common
Stock will convert into one share of Common Stock of the Company. When issued,
this new class of Common Stock of the Company will have one vote per share.
Recapitalization Financing -- The Recapitalization was funded by (i)
$186,500 of borrowings under the Senior Credit Facility as discussed in Note F,
(ii) $135,000 from the offering of the Senior Subordinated Notes as discussed in
Note F, and (iii) an equity contribution by the Investors of approximately
$122,700. The proceeds from these financings funded: the payment of
approximately $330,700 to holders of Class A-1 and Class B-1 Stock who redeemed
their shares; the repayment of approximately $66,000 of outstanding indebtedness
under the then existing credit facility and notes; and the payment
F-11
<PAGE> 121
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
C. RECAPITALIZATION -- CONTINUED
of approximately $45,200 million of fees and expenses (including $5,000 in
prepaid management fees) associated with the Recapitalization.
In addition, the Company has also entered into an agreement with certain
management employees under which these individuals will receive bonuses
aggregating approximately $6,600 upon completion of one year of service from the
Recapitalization Closing Date. This amount is included in other current assets
and accrued liabilities at December 31, 1997, and is being amortized over the
terms of the agreements.
Recapitalization Accounting -- The transaction was accounted for as a
recapitalization and as such, the historical basis of the Company's assets and
liabilities was not affected. Approximately $15,300 of Recapitalization related
costs primarily representing financing fees were capitalized and are being
amortized over the term of the related debt. Approximately $22,700 of
Recapitalization related costs were expensed and are reflected as a component of
operating income in the Company's Consolidated Statements of Operations. The
expensed costs represent investment banker fees, transaction fees, legal and
accounting fees, transaction bonuses paid to certain Company employees and
shareholders and other miscellaneous costs incurred in connection with the
Recapitalization. Additionally $2,200 of Recapitalization costs incurred related
to the redemption of the Pre-Recapitalization stock and the issuance of
Post-Recapitalization stock have been included as part of the stock redemption
charge to shareholders' equity.
Included in the recapitalization related costs above is approximately
$17,000 of amounts paid to Investcorp, including $5,000 which was paid during
1997 under a five year management fee arrangement.
D. NON-CASH COMPENSATION CHARGE
In 1997, the Company recorded a non-cash compensation charge of $78,500,
with an offsetting credit to additional paid in capital. Approximately $74,300
of this charge relates to the accelerated vesting, as a result of the
Recapitalization, of restricted Pre-Recapitalization class B common stock
previously granted to certain key employees of the Company and $4,200 of the
charge relates to the accelerated vesting, as a result of the Recapitalization,
of restricted Pre-Recapitalization class B common stock, previously granted to a
former key management employee resulting from a change in the terms of such
stock upon his separation from the Company.
E. INVENTORIES
Inventories are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1996 1997
------- -------
<S> <C> <C>
Finished goods............................................... $27,153 $26,512
Work in process.............................................. 12,538 11,953
Raw materials and supplies................................... 15,231 18,075
------- -------
Total inventories, which approximates replacement cost....... 54,922 56,540
Less excess of cost over LIFO stated values.................. 10,515 11,870
------- -------
NET INVENTORIES.............................................. $44,407 $44,670
======= =======
</TABLE>
F-12
<PAGE> 122
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
F. DEBT AND CREDIT ARRANGEMENTS
Debt and credit arrangements consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1996 1997
------- --------
<S> <C> <C>
Variable Rate Demand Industrial Building Revenue Bonds, due
2015...................................................... $ 5,000 $ 5,000
Secured Credit Facility:
Term loan facility........................................ 145,000
Unsecured Credit Agreement:
Revolving credit.......................................... 57,300
Term loan................................................. 14,000
Senior notes, payable through 1998.......................... 7,142
Senior Subordinated Notes, due 2007, net of unamortized
discount.................................................. 130,991
------- -------
Total debt and credit arrangements.......................... 83,442 280,991
Less current maturities..................................... 7,571 1,450
------- -------
DEBT CLASSIFIED AS LONG-TERM................................ $75,871 $279,541
======= =======
</TABLE>
As part of the Recapitalization, the Company entered into a new senior
credit facility with a group of banks (the "Senior Credit Facility"), and
pursuant to the indenture dated November 24, 1997, issued $135,000 of 10% Senior
Subordinated Notes (the "Notes"). Each of the Company's subsidiaries (except
MIICA) have guaranteed the Senior Credit Facility and the Notes. Such guarantee
of the Notes is subordinate to the guarantee of the Senior Credit Facility.
The Notes:
The $135,000 of Notes mature on November 15, 2007. Interest on the Notes is
payable semi-annually in arrears on May 15 and November 15 commencing on May 15,
1998. The Notes are general unsecured obligations of the Company ranking
subordinate in right of payment to all existing and future senior indebtedness
of the Company. The Notes will rank pari passu in right of payment with all
other indebtedness of the Company that is subordinated to senior indebtedness of
the Company.
The Notes are not redeemable at the Company's option prior to November 15,
2002. The Notes are redeemable at the Company's option at 105.000% during the 12
months beginning November 15, 2002, 103.333% during the 12 months beginning
November 15, 2003, 101.667% during the 12 months beginning November 15, 2004 and
at 100% thereafter (expressed as a percentage of principal amount). In addition,
prior to November 15, 2002, up to 35% of the Notes may be redeemed at 110% of
the principal amount out of the proceeds of certain equity offerings.
Senior Credit Facility:
The Senior Credit Facility entered into on November 24, 1997, consists of
$145,000 in term loan facilities; a $100,000 revolving credit facility; and a
$75,000 receivables credit facility.
Term Loan Facilities. The Term Loan Facilities consists of two tranches of
term loans in an aggregate principal amount of $145,000. The Tranche B term
loans are in an aggregate principal amount of $90,000, and the Tranche C term
loans are in an aggregate principal amount of $55,000. These loans were made in
a single drawing as part of the Recapitalization. The Tranche B and C term loans
will mature on November 30, 2004 and 2005, respectively. Installments of the
Tranche B term loans will be due in aggregate principal amounts of $900 per
annum for the first five years, $30,000 for
F-13
<PAGE> 123
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
F. DEBT AND CREDIT ARRANGEMENTS -- CONTINUED
the sixth year, and $55,500 for the seventh year. Installments of the Tranche C
term loans will be due in aggregate principal amounts of $550 for the first
seven years and $51,150 for the eighth year.
Revolving Credit Facility. The Revolving Credit Facility consists of a
revolving credit facility in an aggregate principal amount of $100,000 under
which no amounts were borrowed at December 31, 1997 except for amounts of $5,108
issued under the letter of credit subfacility. The Company is entitled to draw
amounts under the Revolving Facility for general corporate purposes and working
capital requirements. The Revolving Facility includes sub-limits for letters of
credit and swing line loans ("Swing Line Loans") available on same-day notice.
The Revolving Facility matures on November 30, 2003.
Receivables Facility. The Receivables Facility consists of a revolving
credit facility in an aggregate principal amount of $75,000, which is subject to
a borrowing base limit not to exceed 80% of eligible accounts receivable. At
December 31, 1997 $41,500 was outstanding under the Receivables Facility and is
classified as short-term bank debt. The Company is entitled to draw amounts
under the Receivables Facility for general corporate purposes and to meet
working capital requirements. The Receivables Facility matures on November 30,
2003. At December 31, 1997, $2,200 was available for borrowing under this
facility.
Borrowings under the Senior Credit Facility bear interest at alternative
floating rate structures at management's option and are collateralized by all of
the capital stock of each of the Company's subsidiaries and substantially all of
the inventory and property, plant and equipment of the Company and its
subsidiaries other than MIICA. The Senior Credit Facility requires an annual
commitment fee of 0.5% on the average daily unused amount of the Term Loan
Facility, the Revolving Credit Facility and the Receivables Facility.
Variable Rate Demand Industrial Building Revenue Bonds were issued in order
to finance the Company's acquisition of land and equipment and the subsequent
construction of a climbing products manufacturing facility. Under a lease
agreement, the Company makes rental payments to the issuer in amounts sufficient
to meet the debt service payments on the bonds. The bonds bear interest at a
variable rate established weekly which may not exceed 15% per annum. The
interest rate on the bonds may be converted to a fixed rate upon the
satisfaction of certain conditions. Prior to a conversion to a fixed rate, the
bonds are subject to purchase from the holder upon demand at a price equal to
principal plus accrued interest. On or prior to the date of conversion to a
fixed rate, the bonds are subject to redemption, in whole or in part, at the
option of the Company. After conversion to a fixed rate, the bonds are subject
to redemption, as a whole or in part, at the Company's option, on or after the
tenth anniversary of the conversion, at annual redemption prices varying from
103% to 100% of the principal outstanding. Certain assets having an original
cost of $3,889 are pledged as collateral for the bonds.
The Senior Credit Facility and the Notes contain various restrictive
covenants including restrictions on additional indebtedness, mergers, asset
dispositions, restricted payments, prepayment and amendments of subordinated
indebtedness. These covenants also prohibit, among other things, the payment of
dividends. The financial covenants of the Senior Credit Facility require the
Company to meet specific interest coverage, maximum leverage, minimum EBITDA,
and capital expenditure requirements.
The aggregate amount of principal payments is $1,450 in each of the years
1998 through 2002.
F-14
<PAGE> 124
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
G. ACCRUED LIABILITIES
Accrued liabilities consisted of the following at December 31:
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Advertising, promotions and allowances......... $ 5,455 $ 5,668
Payroll........................................ 6,236 6,521
Deferred management transaction bonuses........ 6,634
Other.......................................... 7,923 6,073
-------- --------
$19,614 $24,896
======== ========
</TABLE>
H. STOCK INCENTIVE PLANS
Management Stock Incentive Plan
In November 1997, the Company adopted the Stock Incentive Plan (the "Plan")
which is administered by the Compensation Committee of the Board of Directors.
Pursuant to the Plan, certain directors, employees and officers of the Company
will be given the opportunity to acquire shares of Class C Stock through the
grant of non-qualified and qualified stock options, stock appreciation rights
and restricted shares. Options granted pursuant to the Plan are exercisable at
no less than the fair market value of the Class C Stock at the time of grant.
Qualified stock options shall expire no more than ten years after the date of
grant. Non-qualified options shall expire no more than ten years and thirty days
after the date of grant. A total of 7,600 shares of Class C stock is reserved
for issuance under the Plan with a maximum of 2,500 shares to be issued to any
employee in any year. As of December 31, 1997 no options, stock appreciation
rights or restricted shares were issued under the Plan.
Stock Loan Plan
In connection with the Recapitaliztion, the Company established a stock
purchase plan for certain members of the Company's management. Such individuals
will have the opportunity to purchase shares of Class C Common Stock through a
Stock Loan Plan, which provides loans to the members of management entering into
stock purchase agreements. Shares with an aggregate fair market value of at
least $2,000 will be made available for purchase under the Stock Loan Plan and
stock purchase agreements.
Restricted Stock Plan
Until the date of the Recapitalization the Company maintained a restricted
stock plan. Amortization of unearned compensation was $242, $185 and $133 in
1995, 1996, and 1997, respectively. As discussed in Note D, in connection with
the Recapitalization the restricted stock awards which were outstanding at that
date became fully vested.
F-15
<PAGE> 125
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
I. INCOME TAXES
The components of income tax expense at December 31 are presented below:
<TABLE>
<CAPTION>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Current taxes:
Federal.......................................... $ 6,148 $12,797 $ 8,093
State and local.................................. 738 816 665
------- ------- -------
6,886 13,613 8,758
Deferred taxes:
Federal.......................................... (1,745) (3,094) (7,859)
State and local.................................. (531) (185)
------- ------- -------
(1,745) (3,625) (8,044)
------- ------- -------
TOTAL.............................................. $ 5,141 $ 9,988 714
======= ======= =======
</TABLE>
The income tax rate for financial reporting purposes varied from the
federal statutory rate as follows:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- -----
<S> <C> <C> <C>
Federal statutory rate.................................. 35.0% 35.0% 35.0%
Non-cash compensation charge............................ (30.6)
State income taxes, net of federal benefit.............. 6.7 1.0 (0.5)
Adjustments to estimated income tax accruals............ 1.1 (1.4) (3.6)
Other -- net............................................ (0.6) (1.1)
----- ----- ------
-- -- -
EFFECTIVE TAX RATE...................................... 42.8% 34.0% (0.8%)
======= ======= =======
</TABLE>
Significant components of the Company's deferred tax assets and liabilities
as of December 31 are as follows:
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Deferred tax liabilities:
Depreciation............................................... $ 4,568 $ 4,817
Investments in debt and equity securities.................. 2,050 783
Accrued expenses........................................... 2,275 3,596
------- -------
Total deferred tax liabilities............................... 8,893 9,196
Deferred tax assets:
Provision for loss and loss adjustment expenses............ 5,793 5,460
Accrued vacation........................................... 1,288 1,467
Pension obligation......................................... 2,438 2,821
Deferred compensation...................................... 2,349 3,040
Accrued expenses........................................... 3,734 8,264
Capital losses............................................. 17 5,287
Capital loss valuation allowance........................... (1,106)
------- -------
Total deferred tax assets.................................... 15,619 25,233
------- -------
NET DEFERRED TAX ASSETS...................................... $ 6,726 $16,037
======= =======
</TABLE>
SFAS No. 109, Accounting for Income Taxes, requires that deferred tax
assets be reduced by a valuation allowance if it is more likely than not that
some portion or all of the deferred tax assets will not be realized. As
realization of deferred tax assets relating to certain capital losses is
considered uncer-
F-16
<PAGE> 126
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
I. INCOME TAXES -- CONTINUED
tain, a valuation allowance has been recorded. The Company believes that it has
taxable income in prior periods sufficient to fully recognize its remaining
deferred tax assets.
J. LEASES
The Company leases certain real estate and various equipment under
long-term operating leases. Total rent expense for all leases amounted to
$5,623, $5,606 and $4,970 for 1995, 1996 and 1997, respectively.
Future minimum rental commitments as of December 31, 1997 for all
noncancelable operating leases are as follows:
<TABLE>
<S> <C>
1998.................................... $ 3,362
1999.................................... 2,550
2000.................................... 1,878
2001.................................... 765
2002.................................... 302
Thereafter.............................. 2,240
-------
TOTAL................................... 11,097
=======
</TABLE>
K. COMMITMENTS
The Company has contracts to provide most of its estimated aluminum
requirements with six principal suppliers. These contracts include stipulated
prices, with provisions for price adjustments based on market. The six contracts
are renegotiable, five in 1998 and one in 1999. MIICA has a letter of credit
(expiring April 30, 1998) of which $11,938 and $12,529 was outstanding at
December 31, 1996 and 1997, respectively.
L. EMPLOYEE RETIREMENT AND BENEFIT PLANS
The Company sponsors two non-contributory defined benefit pension plans to
provide retirement benefits for substantially all of its employees. The pension
plans provide benefits based on the participants' years of service and
compensation or stated amounts for each year of service. The Company's funding
policy is to contribute at least the amount that is sufficient to meet the
minimum funding requirements of applicable federal law.
A summary of the components of net periodic pension cost for these plans at
December 31 is as follows:
<TABLE>
<CAPTION>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Service cost -- benefits earned during the period... $ 1,097 $ 1,495 $ 1,483
Interest cost on projected benefit obligation....... 2,189 2,424 2,556
Actual return on plan assets........................ (3,707) (3,197) (671)
Net amortization and deferral....................... 891 166 (2,535)
------- ------- -------
TOTAL EXPENSE....................................... $ 470 $ 888 $ 833
======= ======= =======
</TABLE>
F-17
<PAGE> 127
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
L. EMPLOYEE RETIREMENT AND BENEFIT PLANS -- CONTINUED
The following table sets forth the funded status of these plans and the
related amounts included in the consolidated balance sheets at December 31:
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation................................. $ 25,070 $ 28,935
======== ========
Accumulated benefit obligation............................ $ 27,539 $ 31,931
======== ========
Plan assets at fair value................................... $ 32,510 $ 32,238
Projected benefit obligation................................ (34,324) (40,512)
-------- --------
Plan assets less than projected benefit obligation.......... (1,814) (8,274)
Less:
Unrecognized net gain (loss).............................. 717 (5,155)
Unrecognized prior service cost........................... 1,273 1,163
Unrecognized net assets at January 1, 1987, net of
amortization........................................... 1,409 1,171
Adjustment for minimum liability.......................... 243 1,681
-------- --------
NET PENSION LIABILITY RECORDED AT DECEMBER 31............... $ 5,456 $ 7,134
======== ========
</TABLE>
Plan assets consist primarily of listed common stocks, corporate and
government bonds and short-term investments.
The Company also sponsors an unfunded, non-qualified supplemental
retirement plan to provide to certain officers a defined pension benefit in
excess of limits imposed by federal tax law. Pension expense for this plan was
$1,370 in 1995, $1,639 in 1996 and $4,862 (including special retirement benefits
paid to certain former key management employees of $3,336) in 1997. At December
31, 1997, the projected benefit obligation for this plan totaled $13,739 of
which $4,642 (comprised of unrecognized net losses of $2,740, unrecognized prior
service cost of $1,216 and an unrecognized net obligation at January 1, 1987, of
$686) is subject to later amortization. The remaining $9,097 is included in
other long-term liabilities in the accompanying consolidated balance sheets.
Assumptions used in accounting for the pension plans as of December 31
were:
<TABLE>
<CAPTION>
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Discount rate.......................................... 7.50% 7.75% 7.00%
Rate of increase in compensation levels................ 5.00% 5.00% 5.00%
Expected long-term rate of return on assets............ 9.00% 9.00% 9.00%
</TABLE>
The decrease in the discount rate in 1997 from 1996 increased the
accumulated benefit obligation of the two non-contributory defined benefit plans
and the non-qualified supplemental retirement plan by $2,804 and $795,
respectively, at December 31, 1997.
The Company also sponsors various defined contribution plans which cover
substantially all of its employees. For certain employees covered by contract,
contributions are based on negotiated rates and hours worked; for others,
contributions are a percentage of employees' contributions. The expense related
to these plans was $1,318, $1,386, and $1,515 in 1995, 1996 and 1997,
respectively.
The Company sponsors several unfunded postretirement life and health-care
benefits to certain of its key employees. Benefits are determined based on
varying formulas using age at retirement and years of active service.
F-18
<PAGE> 128
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
L. EMPLOYEE RETIREMENT AND BENEFIT PLANS -- CONTINUED
The following table sets forth postretirement benefits recognized in the
Company's consolidated balance sheet:
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.................................................... $ 599 $ 1,514
Other fully eligible participants........................... 2,710 1,987
Other active participants................................... 964 1,121
------- -------
Subtotal...................................................... 4,273 4,622
Unrecognized transition obligation............................ (2,652) (2,505)
Unrecognized actuarial loss................................... (782) (741)
------- -------
POSTRETIREMENT BENEFIT LIABILITY RECORDED AT DECEMBER 31...... $ 839 $ 1,376
======= =======
</TABLE>
Net postretirement benefit cost for the plan at December 31 is as follows:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Service cost -- benefits earned during the period.......... $ 94 $131 $189
Interest cost on projected benefit obligation.............. 234 272 326
Net amortization and deferral.............................. 147 154 163
---- ---- ----
TOTAL EXPENSE.............................................. $475 $557 $678
==== ==== ====
</TABLE>
The accumulated postretirement benefit obligation was determined using an
assumed discount rate of 7.75% and 7.00% for the years ended December 31, 1996
and 1997, respectively, and health care cost trend rates of 7.5% in 1996 and
7.0% in 1997. The assumed health care cost trend rate for 1998 is 6.5%
decreasing ratably to 6.0% by the year 1999. The effect of a one percent
increase in the health care cost trend rate assumption would increase the
accumulated postretirement benefit obligation by $190 at December 31, 1997. The
increase to the post retirement benefit cost would not be material.
M. INSURANCE FUND INVESTMENTS
The following is a summary of the components of insurance fund investments:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1996 1997
------- -------
<S> <C> <C>
Cash and equivalents......................................... $ 2,935 $14,821
Debt securities.............................................. 2,895 17,851
Equity securities............................................ 25,721 20,422
Special expiration price options............................. 6,824
Other investments............................................ 12,104 5,485
Receivable from securities sold.............................. 30,470
------- -------
TOTAL INSURANCE FUND INVESTMENTS............................. $80,949 $58,579
======= =======
</TABLE>
F-19
<PAGE> 129
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
M. INSURANCE FUND INVESTMENTS -- CONTINUED
AVAILABLE-FOR-SALE SECURITIES
The insurance fund investment portfolio of debt and marketable equity
securities, at December 31, 1997 and 1996, primarily consists of the following
investments classified as available-for-sale:
<TABLE>
<CAPTION>
COST OR GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
December 31, 1996:
U.S. Treasury............................. $ 332 $ 2 $ 330
States and political subdivisions......... 1,090 $ 28 1,118
Foreign governments....................... 50 50
Corporate................................. 1,397 1,397
------- ------- ------- -------
Total debt securities..................... 2,869 28 2 2,895
Equity securities......................... 19,682 12,887 6,848 25,721
------- ------- ------- -------
$22,551 $ 12,915 $ 6,850 $28,616
======= ======= ======= =======
December 31, 1997:
U.S. Treasury............................. $13,272 $ 97 $ 20 $13,349
States and political subdivisions......... 1,075 41 1,116
Foreign governments....................... 401 1 400
Corporate................................. 2,981 6 1 2,986
------- ------- ------- -------
Total debt securities..................... 17,729 144 22 17,851
Equity securities......................... 18,536 4,893 3,007 20,422
------- ------- ------- -------
$36,265 $ 5,037 $ 3,029 $38,273
======= ======= ======= =======
</TABLE>
The gross realized gains and (losses) on sales of available-for-sale
securities totaled $4,251 and $(4,089) for 1995, $11,139 and $(3,893) for 1996,
and $4,118 and $(2,949) for 1997, respectively. During 1995, 1996, and 1997, the
change in net unrealized holding gain (loss) on available-for-sale securities
that has been included as a separate component of shareholders' equity totaled
$4,518 (net of deferred taxes of $2,424), $196 (net of deferred taxes of $106),
and $(2,636) (net of deferred taxes of $1,420), respectively.
In 1996 and 1997, MIICA recorded impairment losses of $656 and $9,884,
respectively, relating to available-for-sale equity securities deemed by
management to be other-than-temporarily impaired.
MIICA owns common stock shares and warrants that have restrictions and
cannot immediately be sold on the open market. These restricted securities have
a fair value of $14,983 and $7,950 at December 31, 1996 and 1997, respectively.
A substantial portion of the debt securities at December 31, 1997 mature in
the years 1999 through 2002, whereas others have contractual maturity dates of
the year 2003 or later.
TRADING SECURITIES
MIICA also owned special expiration price options which were classified as
trading securities. Those outstanding at December 31, 1996 were either sold,
exercised or allowed to expire in 1997. The fair value of these securities was
$6,824 at December 31, 1996. The average fair value of the options held during
the year ended December 31, 1996 and 1997 was $8,422 and $3,207, respectively.
Unrealized gains on these options were reported directly in net income and
totaled $2,935, $1,190, and
F-20
<PAGE> 130
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
M. INSURANCE FUND INVESTMENTS -- CONTINUED
$0 in 1995, 1996, and 1997, respectively. The net realized (losses) on sales of
these investments totaled $(1,037) in 1995, $(4,595) in 1996, and $(8,798) in
1997.
OTHER INVESTMENTS
MIICA has investments, which are not publicly traded and which are carried
on the equity method. During 1996, MIICA liquidated a substantial portion of
these investments realizing a net gain of $5,463. MIICA had a receivable of
$30,470 relating to the sale of these and other securities at December 31, 1996.
This receivable was collected in full during 1997. The net adjustment to
unrealized holding gains (losses) on these securities, included as a separate
component of shareholders' equity, totaled $2,863 in 1995 (net of deferred taxes
of $1,564); $(3,242) in 1996 (net of deferred tax benefits of $1,745); and $283
in 1997 (net of deferred taxes of $153). Equity income or losses from these
investments were not significant for any of the years presented. Other
investments at December 31, 1996 and 1997 also include real estate ventures of
$7,248 and $3,207, respectively.
N. OTHER INCOME (EXPENSE), NET
Other income (expense), net is comprised of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1995 1996 1997
------ ------ --------
<S> <C> <C> <C>
MIICA investment (loss) income:
Realized (losses) gains and impairment losses.......... $ (875) $7,458 $(17,513)
Unrealized gains on trading securities................. 2,935 1,190
Other investment (losses) earnings..................... (753) 803 2,952
------ ------ --------
Investment income (loss), net.......................... 1,307 9,451 (14,561)
Miscellaneous income (loss), net............................ 2,907 400 (1,108)
------ ------ --------
Total other income (expense), net........................... $4,214 $9,851 $(15,669)
====== ====== ========
</TABLE>
O. SUPPLEMENTAL GUARANTOR INFORMATION
As discussed in Note F, the Company in November 1997 completed refinancing
substantially all of its outstanding debt through borrowings under the Senior
Credit Facility and the Notes. The issuer of the refinanced debt is Werner
Holding Co. (DE), Inc. (the "Issuer"). The Issuer's wholly owned subsidiaries,
except for MIICA (the "Guarantor Subsidiaries"), along with Werner Holding Co.
(PA), Inc., its parent, have provided full, unconditional, joint and several
guarantees of the Senior Credit Facility and the Notes and will provide the same
guarantee for obligations of any registered notes exchanged for the Notes.
Following is condensed consolidated financial information for Werner
Holding Co. (PA), Inc. (the "Parent Company"), the Issuer, the Guarantor
Subsidiaries and MIICA (the "Non-Guarantor Subsidiary"). Separate financial
statements of the Guarantor Subsidiaries are not presented because management
has determined that they would not provide additional information that is
material to investors. Therefore, the Guarantor Subsidiaries are combined in the
presentation below.
Investments in subsidiaries are accounted for by the Company on the equity
method of accounting. Earnings at subsidiaries are, therefore, reflected in the
Company's investment account. The elimination entries eliminate investment in
subsidiaries and intercompany balances and transactions.
F-21
<PAGE> 131
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
O. SUPPLEMENTAL GUARANTOR INFORMATION -- CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------------------------------------------------
COMBINED
PARENT GUARANTOR NON-GUARANTOR
COMPANY ISSUER SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
------- ------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents........ $ 344 $ 13 $ 629 $ $ $ 986
Accounts receivable......... 47,069 818 (1,610) 46,277
Refundable income taxes..... 1,989 27 2,016
Inventories................. 44,407 44,407
Deferred income taxes....... 2,057 520 2,577
Other....................... 4,840 127 (3,130) 1,837
------- ------- ------- ------- --------
Total current assets.......... 344 13 100,991 1,465 (4,713) 98,100
Investments and other assets:
Insurance fund
investments.............. 80,949 80,949
Deferred income taxes....... 2,985 1,164 4,149
Deferred financing fees,
net...................... 174 174
Investment in
subsidiaries............. 74,735 74,722 (149,457)
Other....................... 19,572 677 (5,000) 15,249
------- ------- ------- ------- --------
74,735 74,722 22,731 82,790 (154,457) 100,521
Property, plant and equipment:
Land and improvements....... 5,740 5,740
Buildings................... 29,372 29,372
Machinery and equipment..... 90,884 217 91,101
------- ------- ------- ------- --------
125,996 217 126,213
Less accumulated
depreciation and
amortization............. 68,957 128 69,085
------- ------- ------- ------- --------
57,039 89 57,128
Capital projects in
progress................. 5,436 5,436
------- ------- ------- ------- --------
62,475 89 62,564
------- ------- ------- ------- --------
Total assets.................. $75,079 $74,735 $186,197 $84,344 $ (159,170) $261,185
======= ======= ======= ======= ========
</TABLE>
F-22
<PAGE> 132
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
O. SUPPLEMENTAL GUARANTOR INFORMATION -- CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------------------------------------------------------------------
COMBINED
PARENT GUARANTOR NON-GUARANTOR
COMPANY ISSUER SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
------- ------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND
SHAREHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable...... $ $ $ 20,830 $ 861 $ $ 21,691
Intercompany payable
(receivable)....... (1,508) 1,508
Accrued liabilities... 14,958 9,369 (4,713) 19,614
Current maturities of
long-term debt..... 7,571 7,571
------- ------- -------- ------- --------- --------
Total current
liabilities........... 41,851 11,738 (4,713) 48,876
Long-term obligations:
Long-term debt -- less
current
maturities......... 75,871 75,871
Intercompany payable
(receivable)....... 5,000 (5,000)
Reserve for losses and
loss adjustment
expenses........... 45,320 45,320
Other................. 16,039 16,039
------- ------- -------- ------- --------- --------
91,910 50,320 (5,000) 137,230
Total shareholders'
equity (deficit)...... 75,079 74,735 52,436 22,286 (149,457) 75,079
------- ------- -------- ------- --------- --------
Total liabilities and
shareholders' equity
(deficit)............. $75,079 $74,735 $186,197 $84,344 $ (159,170) $261,185
======= ======= ======== ======= ========= ========
</TABLE>
F-23
<PAGE> 133
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
O. SUPPLEMENTAL GUARANTOR INFORMATION -- CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, 1997
---------------------------------------------------------------------------------------
COMBINED
PARENT GUARANTOR NON-GUARANTOR
COMPANY ISSUER SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
--------- --------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and
equivalents.... $ 17 $ 6 $ 3,084 $ $ $ 3,107
Accounts
receivable..... 62,548 6,502 (6,137) 62,913
Refundable income
taxes.......... 664 156 820
Inventories....... 44,670 44,670
Deferred income
taxes.......... 2,623 1,828 4,451
Other............. 6,636 300 6,936
--------- --------- -------- --------- -------- --------
Total current
assets............ 17 6 120,225 8,786 (6,137) 122,897
Investments and
other assets:
Insurance fund
investments.... 58,579 58,579
Deferred income
taxes.......... 6,445 5,141 11,586
Deferred financing
fees, net...... 15,098 15,098
Investment in
subsidiaries... (153,689) 148,698 4,991
Other............. 13,447 749 14,196
--------- --------- -------- --------- -------- --------
(153,689) 163,796 19,892 64,469 4,991 99,459
Property, plant and
equipment:
Land and
improvements... 7,369 7,369
Buildings......... 34,666 34,666
Machinery and
equipment...... 97,736 173 97,909
--------- --------- -------- --------- -------- --------
139,771 173 139,944
Less accumulated
depreciation
and
amortization... 77,157 127 77,284
--------- --------- -------- --------- -------- --------
62,614 46 62,660
Capital projects
in progress.... 3,169 3,169
--------- --------- -------- --------- -------- --------
65,783 46 65,829
--------- --------- -------- --------- -------- --------
Total assets........ $(153,672) $ 163,802 $205,900 $ 73,301 $ (1,146) $288,185
========= ========= ======== ========= ======== ========
</TABLE>
F-24
<PAGE> 134
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
O. SUPPLEMENTAL GUARANTOR INFORMATION -- CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, 1997
--------------------------------------------------------------------------------------
COMBINED
PARENT GUARANTOR NON-GUARANTOR
COMPANY ISSUER SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
--------- -------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND
SHAREHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Short-term bank
debt............. $ $ 41,500 $ $ $ $ 41,500
Accounts payable.... 24,904 24,904
Intercompany payable
(receivable)..... 261 (261)
Accrued
liabilities...... 24,597 6,436 (6,137) 24,896
Current maturities
of long-term
debt............. 1,450 1,450
--------- --------- -------- --------- -------- --------
Total current
liabilities......... 42,950 49,762 6,175 (6,137) 92,750
Long-term obligations:
Long-term debt --
less current
maturities (net
of unamortized
discount of
$4,009).......... 274,541 5,000 279,541
Reserve for losses
and loss
adjustment
expenses......... 49,644 49,644
Other............... 19,922 19,922
--------- --------- -------- --------- -------- --------
274,541 24,922 49,644 349,107
Shareholders' equity
(deficit)........... (153,672) (153,689) 131,216 17,482 4,991 (153,672)
--------- --------- -------- --------- -------- --------
Total liabilities and
shareholders' equity
(deficit)........... $(153,672) $163,802 $205,900 $73,301 $ (1,146) $288,185
========= ========= ======== ========= ======== ========
</TABLE>
F-25
<PAGE> 135
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
O. SUPPLEMENTAL GUARANTOR INFORMATION -- CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
-----------------------------------------------------------------------------
COMBINED
PARENT GUARANTOR NON-GUARANTOR
COMPANY ISSUER SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
------- ------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales...................... $ $ $336,029 $ 1,421 $ (1,421) $336,029
Cost of sales.................. 248,937 248,937
------ ------ -------- ------ -------- --------
Gross profit................... 87,092 1,421 (1,421) 87,092
General and administrative
expense...................... 23,443 2,042 (478) 25,007
Selling and distribution
expense...................... 47,073 47,073
------ ------ -------- ------ -------- --------
Operating profit (loss)........ 16,576 (621) (943) 15,012
Income from equity investees... 6,300 6,300 (12,600)
Other income, net.............. 1,525 2,125 564 4,214
------ ------ -------- ------ -------- --------
Income before interest and
taxes........................ 6,300 6,300 18,101 1,504 (12,979) 19,226
Interest expense............... 7,148 58 7,206
------ ------ -------- ------ -------- --------
Income before provisions for
income taxes................. 6,300 6,300 10,953 1,446 (12,979) 12,020
Income taxes................... 4,964 177 5,141
------ ------ -------- ------ -------- --------
Income before extraordinary
charge....................... 6,300 6,300 5,989 1,269 (12,979) 6,879
Extraordinary charge -- early
extinguishment of debt....... 579 579
------ ------ -------- ------ -------- --------
NET INCOME..................... $6,300 $6,300 $ 5,410 $ 1,269 $(12,979) $ 6,300
====== ====== ======== ====== ======== ========
</TABLE>
F-26
<PAGE> 136
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
O. SUPPLEMENTAL GUARANTOR INFORMATION -- CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
------------------------------------------------------------------------------
COMBINED
PARENT GUARANTOR NON-GUARANTOR
COMPANY ISSUER SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
------- ------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales..................... $ $ $366,864 $ 687 $ (687) $366,864
Cost of sales................. 264,977 264,977
------- ------- -------- ------- -------- --------
Gross profit.................. 101,887 687 (687) 101,887
General and administrative
expense..................... 25,926 2,509 (1,408) 27,027
Selling and distribution
expense..................... 47,846 47,846
------- ------- -------- ------- -------- --------
Operating profit (loss)....... 28,115 (1,822) 721 27,014
Income from equity
investees................... 19,360 19,360 (38,720)
Other income, net............. 61 9,629 161 9,851
------- ------- -------- ------- -------- --------
Income before interest and
taxes....................... 19,360 19,360 28,176 7,807 (37,838) 36,865
Interest expense.............. 7,517 7,517
------- ------- -------- ------- -------- --------
Income before provision for
income taxes................ 19,360 19,360 20,659 7,807 (37,838) 29,348
Income taxes.................. 7,413 2,575 9,988
------- ------- -------- ------- -------- --------
NET INCOME.................... $19,360 $19,360 $ 13,246 $ 5,232 $(37,838) $ 19,360
======= ======= ======== ======= ======== ========
</TABLE>
F-27
<PAGE> 137
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
O. SUPPLEMENTAL GUARANTOR INFORMATION -- CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
--------------------------------------------------------------------------------
COMBINED
PARENT GUARANTOR NON-GUARANTOR
COMPANY ISSUER SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
-------- -------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales.................... $ $ $416,321 $ 2,704 $ (2,704) $416,321
Cost of sales................ 300,095 300,095
-------- -------- -------- -------- -------- --------
Gross profit................. 116,226 2,704 (2,704) 116,226
General and administrative
expense.................... 29,717 2,501 (1,032) 31,186
Selling and distribution
expense.................... 48,944 48,944
Recapitalization expense..... 22,714 22,714
Non-cash compensation
charge..................... 78,527 78,527
-------- -------- -------- -------- -------- --------
Operating (loss) profit...... (63,676) 203 (1,672) (65,145)
(Loss) from equity
investees.................. (90,507) (90,507) 181,014
Other (expense), net......... (1,106) (14,563) (15,669)
-------- -------- -------- -------- -------- --------
(Loss) before interest and
taxes...................... (90,507) (90,507) (64,782) (14,360) 179,342 (80,814)
Interest expense............. 8,979 8,979
-------- -------- -------- -------- -------- --------
(Loss) before provision for
income taxes............... (90,507) (90,507) (73,761) (14,360) 179,342 (89,793)
Income taxes................. 4,623 (3,909) 714
-------- -------- -------- -------- -------- --------
NET (LOSS)................... $(90,507) $(90,507) $(78,384) $ (10,451) $179,342 $(90,507)
======== ======== ======== ======== ======== ========
</TABLE>
F-28
<PAGE> 138
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
O. SUPPLEMENTAL GUARANTOR INFORMATION -- CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
-------------------------------------------------------------------------------
COMBINED
PARENT GUARANTOR NON-GUARANTOR
COMPANY ISSUER SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
------- ------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED
IN) OPERATING ACTIVITIES... $ $ $ (3,711) $ 2,343 $ $ (1,368)
INVESTING ACTIVITIES
Capital expenditures......... (12,517) (12,517)
Insurance fund securities
available-for-sale:
Purchases of debt and
equity securities..... (74,362) (74,362)
Sale of debt and equity
securities............ 72,358 72,358
Net purchases of other
insurance fund
investments................ (4,147) (4,147)
Other........................ (1,063) 851 (212)
Intercompany transactions.... 2,318 (66) (2,252) -- -- --
------- ------- ------- ------- ------- -------
Net cash provided by (used
in) investing activities... 2,318 (66) (15,832) (5,300) (18,880)
FINANCING ACTIVITIES
Net borrowings under
revolving credit
agreements................. 24,800 24,800
Borrowings of long-term
debt....................... 6,000 6,000
Repayment of long-term
debt....................... (7,676) (7,676)
Dividends paid............... (1,991) (1,991)
Other........................ (2,345) 2,000 (345)
------- ------- ------- ------- ------- -------
Net cash (used in) provided
by financing activities.... (1,991) -- 20,779 2,000 20,788
------- ------- ------- ------- ------- -------
Net increase (decrease) in
cash and equivalents....... 327 (66) 1,236 (957) 540
Cash and equivalents
(overdraft) at beginning of
year....................... 6 76 (950) 957 89
------- ------- ------- ------- ------- -------
CASH AND EQUIVALENTS AT END
OF YEAR.................... $ 333 $ 10 $ 286 $ $ $ 629
======= ======= ======= ======= ======= =======
</TABLE>
F-29
<PAGE> 139
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
O. SUPPLEMENTAL GUARANTOR INFORMATION -- CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
---------------------------------------------------------------------------------
COMBINED
PARENT GUARANTOR NON-GUARANTOR
COMPANY ISSUER SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
-------- -------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED
IN) OPERATING
ACTIVITIES............... $ $ $ 24,452 $ (4,934) $ $ 19,518
INVESTING ACTIVITIES
Capital expenditures....... (13,048) (13,048)
Insurance fund securities
available-for-sale:
Purchases of debt and
equity securities... (176,034) (176,034)
Sale of debt and
equity securities... 178,623 178,623
Net sales of other
insurance fund
investments.............. 2,345 2,345
Other...................... (7,718) (7,718)
Intercompany
transactions............. 3,259 3 (3,262)
-------- -------- -------- --------- -------- ---------
Net cash provided by (used
in) investing
activities............... 3,259 3 (24,028) 4,934 (15,832)
FINANCING ACTIVITIES
Net borrowings under
revolving credit
agreements............... 7,600 7,600
Repayments of long-term
debt..................... (7,642) (7,642)
Repurchase of common
stock.................... (1,412) (1,412)
Dividends paid............. (1,836) (1,836)
Other...................... (39) (39)
-------- -------- -------- --------- -------- ---------
Net cash (used in) provided
by financing
activities............... (3,248) (81) (3,329)
-------- -------- -------- --------- -------- ---------
Net increase in cash and
equivalents.............. 11 3 343 357
Cash and equivalents at
beginning of year........ 333 10 286 629
-------- -------- -------- --------- -------- ---------
CASH AND EQUIVALENTS AT END
OF YEAR.................. $ 344 $ 13 $ 629 $ $ $ 986
======== ======== ======== ========= ======== =========
</TABLE>
F-30
<PAGE> 140
WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
O. SUPPLEMENTAL GUARANTOR INFORMATION -- CONTINUED
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
---------------------------------------------------------------------------------
COMBINED
PARENT GUARANTOR NON-GUARANTOR
COMPANY ISSUER SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
-------- --------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED
IN) OPERATING
ACTIVITIES............... $ $ $ 24,318 $ (7,086) $ $ 17,232
INVESTING ACTIVITIES
Capital expenditures....... (11,710) (11,710)
Insurance fund securities
available-for-sale:
Purchases of debt and
equity securities... (79,484) (79,484)
Sale of debt and
equity securities... 59,497 59,497
Net sales of other
insurance fund
investments.............. 24,073 24,073
Other (net)................ 4,062 4,062
Intercompany
transactions............. 212,278 (279,505) 67,227 -- -- --
------- ------- ------- ------- ------- -------
Net cash provided by (used
in) investing
activities............... 212,278 (279,505) 59,579 4,086 (3,562)
FINANCING ACTIVITIES
Redemption of common
stock.................... (332,899) (332,899)
Issuance of common stock... 122,716 122,716
Payment of recapitalization
fees and expenses........ (37,952) (37,952)
Refinancing of existing
debt..................... (65,571) (65,571)
Issuance of Subordinated
Notes, net............... 130,950 130,950
Borrowings under Senior
Credit Facility.......... 186,500 186,500
Net (repayments) under
revolving credit
agreements............... (6,300) (6,300)
Repayments of long-term
debt..................... (6,571) (6,571)
Repurchase of common
stock.................... (731) (731)
Dividends paid............. (1,691) (1,691)
Capital contribution....... (8,000) 8,000
Other...................... 5,000 (5,000)
------- ------- ------- ------- ------- -------
Net cash (used in) provided
by financing
activities............... (212,605) 279,498 (81,442) 3,000 (11,549)
------- ------- ------- ------- ------- -------
Net (decrease) increase in
cash and equivalents..... (327) (7) 2,455 2,121
Cash and equivalents at
beginning of year........ 344 13 629 986
------- ------- ------- ------- ------- -------
CASH AND EQUIVALENTS AT END
OF YEAR.................. $ 17 $ 6 $ 3,084 $ $ $ 3,107
======= ======= ======= ======= ======= =======
</TABLE>
F-31
<PAGE> 141
======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS 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. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR 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 ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary................................... 3
Risk Factors.............................. 14
The Transactions.......................... 21
Use of Proceeds........................... 22
Capitalization............................ 23
Unaudited Pro Forma Condensed Consolidated
Statement of Operations................. 24
Selected Consolidated Historical Financial
Data.................................... 29
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 33
The Exchange Offer........................ 39
Business.................................. 48
Management................................ 57
Principal Shareholders.................... 65
Certain Transactions...................... 67
The Senior Credit Facility................ 68
Description of the New Notes.............. 70
Certain Federal Income Tax Consequences... 105
Plan of Distribution...................... 106
Book-Entry; Delivery and Form............. 106
Legal Matters............................. 108
Experts................................... 108
Index to Consolidated Financial
Statements.............................. F-1
</TABLE>
======================================================
======================================================
OFFER FOR ALL
OUTSTANDING
10% SENIOR SUBORDINATED NOTES
DUE 2007
IN EXCHANGE FOR
$135,000,000
10% SERIES A
SENIOR SUBORDINATED
NOTES DUE 2007
OF
WERNER HOLDING CO. (DE), INC.
WERNER LOGO
, 1998
======================================================
<PAGE> 142
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 1741 and 1742 of the Pennsylvania Business Corporation Law
("PBCL") authorize a Pennsylvania corporation to limit or eliminate the personal
liability of its directors and officers to the corporation, its shareholders or
third parties for monetary damages incurred by reason of the fact that such
director or officer is or was a representative of the corporation, but only if
such director or officer 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. In addition, for third party actions, this indemnification may
apply to any criminal proceeding if the director or officer had no reasonable
cause to believe his or her conduct was unlawful. The Company's Articles of
Incorporation include a provision which limits or eliminates the personal
liability of its directors and officers to the fullest extent permitted by
Sections 1741 and 1742 of the PBCL.
Section 1743 of the PBCL provides for a mandatory indemnification for a
representative of a business corporation who has been successful on the merits
or otherwise in defense of any action or proceeding referred to in Sections 1741
or 1742. This indemnification covers all expenses (including attorneys' fees)
actually and reasonably incurred by the representative in connection with such
action.
The Company's Bylaws provide that, except as prohibited by law, the Company
will indemnify against any expense, liability and loss (including attorneys'
fees) any director or officer who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, whether brought by or
in the right of the corporation or otherwise, incurred by reason of the fact
that such person is or was a director or officer of the Company or is or was
serving at the request of the Company as a director, officer, employee,
fiduciary, or other representative of another corporation, partnership, joint
venture, trust, employee benefit plan or other entity. Under Sections 1741 and
1742 of the PBCL, the representative is not indemnified by the corporation if he
or she did not act in good faith or in a manner he or she reasonably believed
was in the best interests of the corporation. The inclusion of these
indemnification provisions in the Company's Bylaws is intended to enable the
Company to attract qualified persons to serve as directors and officers who
might otherwise be reluctant to do so. The Company is also required to advance
expenses to an indemnitee provided that the Company receives a written
undertaking by or on behalf of the indemnitee to repay the amount advanced if it
should ultimately be determined that the indemnitee is not entitled to be
indemnified for such expenses.
II-1
<PAGE> 143
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- ------------------------------------------------------------------------------------
<C> <S>
1.1 Purchase Agreement dated November 14, 1997, among the Company, the Guarantors and
the Initial Purchasers.
1.2 Registration Rights Agreement among the Company, Chase Securities Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Goldman Sachs & Co., dated November 24,
1997.
1.3 Form of Letter of Transmittal.
2 Amended and Restated Recapitalization Agreement, dated as of October 27, 1997 by and
among Holding and certain investors organized by Investcorp S.A.
3.1 Certificate of Incorporation of Werner Holding Co. (DE), Inc.
3.2 By-laws of Werner Holding Co. (DE), Inc.
3.3 Amended and Restated Articles of Incorporation of Werner Holding Co. (PA), Inc.
3.4 By-laws of Werner Holding Co. (PA), Inc.
3.5 Articles of Incorporation of Werner Co.
3.6 By-laws of Werner Co.
3.7 Articles of Incorporation by Gold Medal Ladder Company.
3.8 By-laws of Gold Medal Ladder Company.
3.9 Articles of Incorporation of Kentucky Ladder Company.
3.10 By-laws of Kentucky Ladder Company.
3.11 Articles of Incorporation of Florida Ladder Company.
3.12 By-laws of Florida Ladder Company.
3.13 Articles of Incorporation of Werner Management Co.
3.14 By-laws of Werner Management Co.
3.15 Certificate of Incorporation of Werner Financial Inc.
3.16 By-laws of Werner Financial Inc.
3.17 Articles of Incorporation of R.D. Arizona Ladder Corp.
3.18 By-laws of R.D. Arizona Ladder Corp.
3.19 Certificate of Incorporation by WIP Technologies, Inc.
3.20 By-laws of WIP Technologies, Inc.
3.21 Certificate of Incorporation of Ardee Investment Co., Inc.
3.22 By-laws of Ardee Investment Co., Inc.
3.23 Articles of Incorporation of Olympus Properties, Inc.
3.24 By-laws of Olympus Properties, Inc.
3.25 Articles of Incorporation of Phoenix Management Services, Inc.
3.26 By-laws of Phoenix Management Services, Inc.
4.1 Indenture between the Company and IBJ Schroder Bank & Trust Company, as Trustee,
dated as of November 24, 1997.
4.2 Form of Note (included as Exhibit B to Exhibit 4.1).
</TABLE>
II-2
<PAGE> 144
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- ------------------------------------------------------------------------------------
<C> <S>
4.3 Registration Rights Agreement among the Company, Chase Securities Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Goldman, Sachs & Co. dated November 24,
1997 (filed as Exhibit 1.2)
4.4 Form of Letter of Transmittal (filed as Exhibit 1.3).
*5.1 Opinion of Gibson, Dunn & Crutcher LLP.
*8.1 Opinion of Gibson, Dunn & Crutcher LLP regarding certain tax matters.
*10.1 Form of Employee Protection Agreements between Holding and certain employees
(schedule attached).
10.2 Shareholder Agreement, dated as of November 24, 1997, by and among Holding,
Investcorp Investment Equity Limited, certain other holders of shares of Class D
Common Stock of Holding and the other individuals listed on the signature pages
thereto.
10.3 Form of Employment Agreement, dated as of November 24, 1997, between Werner
Management Co. and certain named executive officers.
10.4 Management Stock Incentive Plan, established by Werner Holding Co. (PA), Inc. as of
November 24, 1997.
10.5 Form of Stock Option Agreements pursuant to Stock Incentive Plan between Werner
Holding Co. (PA), Inc. and certain employees (schedule attached).
*10.6 Trust Indenture, dated as of September 1, 1990, between the County of Carroll,
Kentucky and Dai-Ichi Kangyo Trust Company.
*10.7 Variable Rate Demand Industrial Building Revenue Bonds issued by the County of
Carroll, Kentucky.
*10.8 Lease Agreement, dated as of September 1, 1990, between County of Carroll, Kentucky
and Kentucky Ladder Company.
*10.9 Lease Agreement, dated September 22, 1994, between SSMRT Bensenville Industrial Park
(3), Inc. and Olympus Properties, Inc.
10.10 Master Registration Rights Agreement, dated as of November 24, 1997, by Werner
Holding Co. (PA), Inc. for the benefit of certain shareholders.
10.11 Werner 1997 Stock Loan Plan.
10.12 Credit Agreement, dated as of November 24, 1997, among the Company, Bankers Trust
Company, as Administrative Agent and Co-Arranger, Merrill Lynch Capital Corporation,
as Syndication Agent and as Co-Arranger, The Chase Manhattan Bank, as Documentation
Agent, and Goldman Sachs Credit Partners L.P., as Co-Agent.
*10.13 Pension Plan for Certain Hourly Bargaining Unit Employees of Werner Co.
*10.14 Retirement Plan for Salaried Employees of Werner Holding Co. (DE), Inc.
*10.15 Supplemental Pension Plan A Applicable to Key Executives of Werner Holding Co. (DE),
Inc., its Parent and Subsidiaries
*10.16 Supplemental Pension Plan B Applicable to Elected Salaried Corporate Officers of
Werner Holding Co. (DE), Inc., its Parent and Subsidiaries
*10.17 Amendment to the Supplemental Pension Plan B Applicable to Elected Salaried
Corporate Officers of Werner Holding Co. (DE), Inc., its Parent and Subsidiaries.
*10.18 Werner Holding Co. (DE), Inc. Employee Savings Plan.
10.19 Form of Management Stock Purchase Agreement between Setup Limited, Werner Holding
Co. (PA), Inc. and certain individuals.
10.20 Form of Loan and Pledge Agreement of Werner Holding Co. (PA), Inc.
</TABLE>
II-3
<PAGE> 145
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- ------------------------------------------------------------------------------------
<C> <S>
10.21 Agreement for Management Advisory, Strategic Planning and Consulting Services
between the Company and Investcorp International, Inc.
10.22 Financing Advisory Agreement between the Company and Investcorp International Inc.
10.23 Stand-By Commitment Letter of Invifin S.A.
12 Statement re: Computation of Ratio of Earnings to Fixed Charges.
21 Subsidiaries of the Company.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1).
24 Powers of Attorney (included on Signature Pages of Registration Statement).
*25 Statement of Eligibility of Trustee.
27 Financial Data Schedule.
</TABLE>
- ---------------
* to be filed by amendment
ITEM 22. UNDERTAKINGS
(a) The Company undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933, as amended; (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; and (iii) to include any material information
with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment will be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The Company undertakes to respond to requests for information that is
incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or
13 of this form, within one business day of
II-4
<PAGE> 146
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
(c) The Company undertakes to supply by means of a post-effective amendment
all information concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in the Registration
Statement when it became effective.
II-5
<PAGE> 147
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenville, Pennsylvania on February
20, 1998.
WERNER HOLDING CO. (DE), INC.
By: /s/ DONALD M. WERNER
------------------------------------
Donald M. Werner
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Donald M. Werner, Eric J. Werner and Donald W.
Resnick his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and all 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, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 20, 1998.
<TABLE>
<C> <S>
/s/ DONALD M. WERNER Chairman of the Board, Chief Executive
- -------------------------------------------- Officer and President (Principal Executive
Donald M. Werner Officer)
/s/ DONALD W. RESNICK Chief Financial Officer and Treasurer
- -------------------------------------------- (Principal Financial Officer and Principal
Donald W. Resnick Accounting Officer)
/s/ HOWARD L. SOLOT Vice Chairman of the Board
- --------------------------------------------
Howard L. Solot
/s/ SAVIO W. TUNG Director
- --------------------------------------------
Savio W. Tung
/s/ CHARLES J. PHILIPPIN Director
- --------------------------------------------
Charles J. Philippin
/s/ CHRISTOPHER J. STADLER Director
- --------------------------------------------
Christopher J. Stadler
</TABLE>
II-6
<PAGE> 148
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenville, Pennsylvania on February
20, 1998.
WERNER HOLDING CO. (PA), INC.
By: /s/ DONALD M. WERNER
------------------------------------
Donald M. Werner
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Donald M. Werner, Eric J. Werner and Donald W.
Resnick his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and all 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, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 20, 1998.
<TABLE>
<C> <S>
/s/ DONALD M. WERNER Chairman of the Board, Chief Executive
- -------------------------------------------- Officer and President (Principal Executive
Donald M. Werner Officer)
/s/ DONALD W. RESNICK Chief Financial Officer and Treasurer
- -------------------------------------------- (Principal Financial Officer and Principal
Donald W. Resnick Accounting Officer)
/s/ HOWARD L. SOLOT Vice Chairman of the Board
- --------------------------------------------
Howard L. Solot
/s/ SAVIO W. TUNG Director
- --------------------------------------------
Savio W. Tung
/s/ CHARLES J. PHILIPPIN Director
- --------------------------------------------
Charles J. Philippin
/s/ CHRISTOPHER J. STADLER Director
- --------------------------------------------
Christopher J. Stadler
</TABLE>
II-7
<PAGE> 149
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenville, Pennsylvania on February
20, 1998.
WERNER CO.
By: /s/ DONALD M. WERNER
------------------------------------
Donald M. Werner
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Donald M. Werner, Eric J. Werner and Donald W.
Resnick his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and all 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, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 20, 1998.
<TABLE>
<C> <S>
/s/ DONALD M. WERNER Chairman of the Board, Chief Executive
- -------------------------------------------- Officer and President (Principal Executive
Donald M. Werner Officer)
/s/ DONALD W. RESNICK Chief Financial Officer and Treasurer
- -------------------------------------------- (Principal Financial Officer and Principal
Donald W. Resnick Accounting Officer)
/s/ HOWARD L. SOLOT Vice Chairman of the Board
- --------------------------------------------
Howard L. Solot
/s/ SAVIO W. TUNG Director
- --------------------------------------------
Savio W. Tung
/s/ CHARLES J. PHILIPPIN Director
- --------------------------------------------
Charles J. Philippin
/s/ CHRISTOPHER J. STADLER Director
- --------------------------------------------
Christopher J. Stadler
</TABLE>
II-8
<PAGE> 150
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenville, Pennsylvania on February
20, 1998.
GOLD MEDAL LADDER COMPANY
By: /s/ DONALD M. WERNER
------------------------------------
Donald M. Werner
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Donald M. Werner, Eric J. Werner and Donald W.
Resnick his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and all 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, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 20, 1998.
<TABLE>
<C> <S>
/s/ DONALD M. WERNER Chairman of the Board, Chief Executive
- -------------------------------------------- Officer and President (Principal Executive
Donald M. Werner Officer)
/s/ DONALD W. RESNICK Chief Financial Officer and Treasurer
- -------------------------------------------- (Principal Financial Officer and Principal
Donald W. Resnick Accounting Officer)
/s/ CHARLES J. PHILIPPIN Director
- --------------------------------------------
Charles J. Philippin
/s/ CHRISTOPHER J. STADLER Director
- --------------------------------------------
Christopher J. Stadler
</TABLE>
II-9
<PAGE> 151
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenville, Pennsylvania on February
20, 1998.
KENTUCKY LADDER COMPANY
By: /s/ HOWARD L. SOLOT
------------------------------------
Howard L. Solot
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Donald M. Werner, Eric J. Werner and Donald W.
Resnick his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and all 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, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 20, 1998.
<TABLE>
<C> <S>
/s/ DONALD M. WERNER Chairman of the Board and Chief Executive
- -------------------------------------------- Officer (Principal Executive Officer)
Donald M. Werner
/s/ HOWARD L. SOLOT President and Chief Operating Officer
- -------------------------------------------- (Principal Executive Officer)
Howard L. Solot
/s/ DONALD W. RESNICK Chief Financial Officer and Treasurer
- -------------------------------------------- (Principal Financial Officer and Principal
Donald W. Resnick Accounting Officer)
/s/ CHARLES J. PHILIPPIN Director
- --------------------------------------------
Charles J. Philippin
/s/ CHRISTOPHER J. STADLER Director
- --------------------------------------------
Christopher J. Stadler
</TABLE>
II-10
<PAGE> 152
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenville, Pennsylvania on February
20, 1998.
FLORIDA LADDER COMPANY
By: /s/ DONALD M. WERNER
------------------------------------
Donald M. Werner
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Donald M. Werner, Eric J. Werner and Donald W.
Resnick his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and all 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, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 20, 1998.
<TABLE>
<C> <S>
/s/ DONALD M. WERNER Chairman of the Board, Chief Executive
- -------------------------------------------- Officer and President (Principal Executive
Donald M. Werner Officer)
/s/ DONALD W. RESNICK Chief Financial Officer and Treasurer
- -------------------------------------------- (Principal Financial Officer and Principal
Donald W. Resnick Accounting Officer)
/s/ CHARLES J. PHILIPPIN Director
- --------------------------------------------
Charles J. Philippin
/s/ CHRISTOPHER J. STADLER Director
- --------------------------------------------
Christopher J. Stadler
</TABLE>
II-11
<PAGE> 153
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenville, Pennsylvania on February
20, 1998.
WERNER MANAGEMENT CO.
By: /s/ DONALD M. WERNER
------------------------------------
Donald M. Werner
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Donald M. Werner, Eric J. Werner and Donald W.
Resnick his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and all 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, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 20, 1998.
<TABLE>
<C> <S>
/s/ DONALD M. WERNER Chairman of the Board, Chief Executive
- -------------------------------------------- Officer, Chief Operating Officer and
Donald M. Werner President (Principal Executive Officer)
/s/ DONALD W. RESNICK Chief Financial Officer and Treasurer
- -------------------------------------------- (Principal Financial Officer and Principal
Donald W. Resnick Accounting Officer)
/s/ HOWARD L. SOLOT Vice Chairman of the Board
- --------------------------------------------
Howard L. Solot
/s/ SAVIO W. TUNG Director
- --------------------------------------------
Savio W. Tung
/s/ CHARLES J. PHILIPPIN Director
- --------------------------------------------
Charles J. Philippin
/s/ CHRISTOPHER J. STADLER Director
- --------------------------------------------
Christopher J. Stadler
</TABLE>
II-12
<PAGE> 154
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenville, Pennsylvania on February
20, 1998.
WERNER FINANCIAL INC.
By: /s/ DONALD W. RESNICK
------------------------------------
Donald W. Resnick
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Donald M. Werner, Eric J. Werner and Donald W.
Resnick his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and all 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, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 20, 1998.
<TABLE>
<C> <S>
/s/ DONALD W. RESNICK Chief Executive Officer, Chief Financial
- -------------------------------------------- Officer, President and Treasurer ( Principal
Donald W. Resnick Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
/s/ DONALD M. WERNER Chairman of the Board
- --------------------------------------------
Donald M. Werner
/s/ CHARLES J. PHILIPPIN Director
- --------------------------------------------
Charles J. Philippin
/s/ CHRISTOPHER J. STADLER Director
- --------------------------------------------
Christopher J. Stadler
</TABLE>
II-13
<PAGE> 155
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenville, Pennsylvania on February
20, 1998.
R.D. ARIZONA LADDER CORP.
By: /s/ DONALD M. WERNER
------------------------------------
Donald M. Werner
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Donald M. Werner, Eric J. Werner and Donald W.
Resnick his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and all 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, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 20, 1998.
<TABLE>
<C> <S>
/s/ DONALD M. WERNER Chairman of the Board, Chief Executive
- -------------------------------------------- Officer and President (Principal Executive
Donald M. Werner Officer)
/s/ DONALD W. RESNICK Chief Financial Officer and Treasurer
- -------------------------------------------- (Principal Financial Officer and Principal
Donald W. Resnick Accounting Officer)
/s/ CHARLES J. PHILIPPIN Director
- --------------------------------------------
Charles J. Philippin
/s/ CHRISTOPHER J. STADLER Director
- --------------------------------------------
Christopher J. Stadler
</TABLE>
II-14
<PAGE> 156
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenville, Pennsylvania on February
20, 1998.
WIP TECHNOLOGIES, INC.
By: /s/ DONALD M. WERNER
------------------------------------
Donald M. Werner
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Donald M. Werner, Eric J. Werner and Donald W.
Resnick his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and all 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, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 20, 1998.
<TABLE>
<C> <S>
/s/ DONALD M. WERNER Chairman of the Board, Chief Executive
- -------------------------------------------- Officer and President (Principal Executive
Donald M. Werner Officer)
/s/ DONALD W. RESNICK Chief Financial Officer and Treasurer
- -------------------------------------------- (Principal Financial Officer and Principal
Donald W. Resnick Accounting Officer)
/s/ CHARLES J. PHILIPPIN Director
- --------------------------------------------
Charles J. Philippin
/s/ CHRISTOPHER J. STADLER Director
- --------------------------------------------
Christopher J. Stadler
</TABLE>
II-15
<PAGE> 157
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenville, Pennsylvania on February
20, 1998.
ARDEE INVESTMENT CO., INC.
By: /s/ DONALD W. RESNICK
------------------------------------
Donald W. Resnick
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Donald M. Werner, Eric J. Werner and Donald W.
Resnick his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and all 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, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 20, 1998.
<TABLE>
<C> <S>
/s/ DONALD W. RESNICK Chief Executive Officer, Chief Financial
- -------------------------------------------- Officer, President and Treasurer ( Principal
Donald W. Resnick Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
/s/ DONALD M. WERNER Chairman of the Board
- --------------------------------------------
Donald M. Werner
/s/ CHARLES J. PHILIPPIN Director
- --------------------------------------------
Charles J. Philippin
/s/ CHRISTOPHER J. STADLER Director
- --------------------------------------------
Christopher J. Stadler
</TABLE>
II-16
<PAGE> 158
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenville, Pennsylvania on February
20, 1998.
OLYMPUS PROPERTIES, INC.
By: /s/ DONALD W. RESNICK
------------------------------------
Donald W. Resnick
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Donald M. Werner, Eric J. Werner and Donald W.
Resnick his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and all 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, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 20, 1998.
<TABLE>
<C> <S>
/s/ DONALD W. RESNICK Chief Executive Officer, Chief Financial
- -------------------------------------------- Officer, President and Treasurer ( Principal
Donald W. Resnick Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
/s/ DONALD M. WERNER Chairman of the Board
- --------------------------------------------
Donald M. Werner
/s/ CHARLES J. PHILIPPIN Director
- --------------------------------------------
Charles J. Philippin
/s/ CHRISTOPHER J. STADLER Director
- --------------------------------------------
Christopher J. Stadler
</TABLE>
II-17
<PAGE> 159
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenville, Pennsylvania on February
20, 1998.
PHOENIX MANAGEMENT SERVICES, INC.
By: /s/ DONALD W. RESNICK
------------------------------------
Donald W. Resnick
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Donald M. Werner, Eric J. Werner and Donald W.
Resnick his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this Registration Statement, including post-effective amendments, and to file
the same, with all exhibits thereto, and all 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, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 20, 1998.
<TABLE>
<C> <S>
/s/ DONALD W. RESNICK Chief Executive Officer, Chief Financial
- -------------------------------------------- Officer, President and Treasurer ( Principal
Donald W. Resnick Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
/s/ DONALD M. WERNER Chairman of the Board
- --------------------------------------------
Donald M. Werner
/s/ CHARLES J. PHILIPPIN Director
- --------------------------------------------
Charles J. Philippin
/s/ CHRISTOPHER J. STADLER Director
- --------------------------------------------
Christopher J. Stadler
</TABLE>
II-18
<PAGE> 1
Exhibit 1.1
WERNER HOLDING CO. (DE), INC.
$135,000,000
10% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
------------------
November 14, 1997
CHASE SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Werner Holding Co. (DE), Inc., a Delaware corporation (the
"Company"), proposes to issue and sell $135,000,000 aggregate principal amount
of its 10% Senior Subordinated Notes due 2007 (the "Securities"). The Securities
will be issued pursuant to an Indenture which is anticipated to be dated as of
November 24, 1997 (the "Indenture") among the Company, Werner Holding Co. (PA),
Inc., the parent company of the Company ("Holding"), as a guarantor, the
subsidiaries of the Company listed on the signature pages hereto (the
"Subsidiary Guarantors", and, together with Holding, the "Guarantors"), as
guarantors, and IBJ Schroder Bank and Trust Company, as trustee (the "Trustee").
The Securities will be guaranteed on a senior subordinated unsecured basis (the
"Note Guarantees") by each of the Guarantors. The Company hereby confirms its
agreement with Chase Securities Inc. ("CSI"), Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") and Goldman, Sachs & Co. (together with CSI and
DLJ, the "Initial Purchasers") concerning the purchase of the Securities from
the Company by the several Initial Purchasers.
The Securities will be offered and sold to the Initial
Purchasers without being registered under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon an exemption therefrom. The Company has
prepared a preliminary offering memorandum dated October 31, 1997 (the
"Preliminary Offering Memorandum") and will prepare an offering memorandum dated
the date hereof (the "Offering Memorandum") setting forth information concerning
the Company and the Securities. Copies of the Preliminary Offering Memorandum
have been, and copies of the Offering Memorandum will be, delivered by the
Company to the Initial Purchasers pursuant to the terms of this Agreement. Any
references herein to the Preliminary Offering Memorandum and the Offering
Memorandum shall be deemed to include all amendments and supplements thereto,
unless otherwise noted. The Company hereby confirms that it has authorized the
use of the Preliminary Offering Memorandum and the Offering Memorandum in
connection with the offering and resale of the Securities by the Initial
Purchasers in accordance with Section 2.
Holders of the Securities (including the Initial Purchasers
and their direct and indirect transferees) will be entitled to the benefits of a
Registration Rights Agreement,
<PAGE> 2
2
substantially in the form attached hereto as Annex A (the "Registration Rights
Agreement"), pursuant to which the Company will agree to file with the
Securities and Exchange Commission (the "Commission") (i) a registration
statement under the Securities Act (the "Exchange Offer Registration
Statement") registering an issue of senior subordinated notes of the Company
(the "Exchange Securities") which are identical in all material respects to the
Securities (except that the Exchange Securities will not contain terms with
respect to transfer restrictions or registration rights) and (ii) under certain
circumstances, a shelf registration statement pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement").
The Securities are being issued in connection with the
recapitalization ("Recapitalization") of Holding. Pursuant to the
Recapitalization Agreement dated October 8, 1997, as amended and restated on
October 27, 1997 (the "Recapitalization Agreement"), by and among Holding and
certain affiliates of Investcorp S.A. ("Investcorp") and certain other
international investors organized by Investcorp (collectively, the "Investors"),
Holding will, subject to the approval of Holding's shareholders, among other
things, redeem approximately 85% of its outstanding capital stock for
approximately $330.7 million and receipt of the Market Participation Right and
the Investors will purchase from Holding, for approximately $122.7 million,
shares of Holding capital stock representing approximately 67% of the
outstanding equity of Holding following Recapitalization. The transactions
contemplated by the Recapitalization Agreement, together with the repayment of
certain indebtedness of the Company and the payment of certain fees and
expenses, will be financed by (i) the $122.7 million equity investment by the
Investors, (ii) the offering of the Securities, and (iii) approximately $185.7
million of borrowings under a new senior credit facility.
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Company
and the Guarantors. The Company and the Guarantors jointly and
severally represent and warrant to, and agree with, the several Initial
Purchasers on and as of the date hereof and the Closing Date (as
defined in Section 3) that:
(a) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, did not, and on the
Closing Date the Offering Memorandum will not, contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided that the Company and the Guarantors make no
representation or warranty as to information contained in or omitted
from the Preliminary Offering Memorandum or the Offering Memorandum in
reliance upon and in conformity with written information relating to
the Initial Purchasers furnished to the Company by or on behalf of any
Initial Purchaser specifically for use therein (the "Initial
Purchasers' Information").
(b) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, contains all of the
information that, if requested by a prospective purchaser of the
Securities, would be required to be provided to such prospective
purchaser pursuant to Rule 144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 2 and their
compliance with the agreements set forth therein, it is not necessary,
in connection with the issuance and sale of the Securities to the
Initial Purchasers and the offer, resale and delivery of the Securities
by the Initial Purchasers in the manner contemplated by this Agreement
and the Offering Memorandum, to register the Securities under the
Securities Act or to qualify the
<PAGE> 3
3
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(d) Holding has no direct subsidiaries other than the Company.
The Company has no direct and/or indirect subsidiaries other than (i)
the Subsidiary Guarantors, Manufacturers Indemnity and Insurance
Company of America, Wentworth Institutional Realty Inc., and Ad Valorem
Properties, Inc. and (ii) Werner Distribution, Inc., Werner (FID), Co.,
Inc., BLP Corporation and Amarlite Architectural Products, Inc. The
subsidiaries listed in clause (ii) above have no assets other than
nominal assets and are in the process of being liquidated or dissolved.
Holding and each of its subsidiaries have been duly incorporated and
are validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation, are duly qualified to
do business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of property
or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in which
they are engaged, except where the failure to so qualify or be in good
standing or have such power or authority would not, singularly or in
the aggregate, have a material adverse effect on the condition
(financial or otherwise), results of operations, business or prospects
of Holding and its subsidiaries taken as a whole (a "Material Adverse
Effect"). Holding is not engaged in any business other than holding its
equity interest in the Company.
(e) As of the Closing Date, Holding and the Company will have
an authorized capitalization as set forth in the Offering Memorandum
under the heading "Capitalization"; all of the outstanding shares of
capital stock of Holding and each of its subsidiaries have been duly
and validly authorized and issued and are fully paid and
non-assessable; and the capital stock of Holding conforms in all
material respects to the description thereof contained in the Offering
Memorandum. Except as set forth in or contemplated by the Offering
Memorandum, all of the outstanding shares of capital stock of the
Company and each of its subsidiaries will be owned directly or
indirectly by Holding, free and clear of any lien, charge, encumbrance,
security interest, restriction upon voting or transfer or any other
claim of any third party.
(f) The Company and each of the Guarantors have full right,
power and authority to execute and deliver this Agreement, the
Indenture, the Registration Rights Agreement, and the Securities
(collectively, the "Transaction Documents") and to perform their
respective obligations hereunder and thereunder; and all corporate
action required to be taken for the due and proper authorization,
execution and delivery of each of the Transaction Documents and the
consummation of the transactions contemplated thereby have been duly
and validly taken.
(g) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors and constitutes a
valid and legally binding agreement of the Company and each of the
Guarantors.
(h) The Registration Rights Agreement has been duly authorized
by the Company and each of the Guarantors and, when duly executed and
delivered in accordance with its terms by each of the parties thereto,
will constitute a valid and legally binding agreement of the Company
and each of the Guarantors enforceable against the Company and each of
the Guarantors in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a
<PAGE> 4
4
proceeding in equity or at law) and except that any rights to
indemnification may be limited by Federal securities laws and public
policy considerations.
(i) The Indenture has been duly authorized by the Company and
each of the Guarantors and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company
and each of the Guarantors enforceable against the Company and each of
the Guarantors in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or
at law). On the Closing Date, the Indenture will conform in all
material respects to the requirements of the Trust Indenture Act and
the rules and regulations of the Commission applicable to an indenture
which is qualified thereunder.
(j) The Securities have been duly authorized by the Company
and, when duly executed, authenticated, issued and delivered as
provided in the Indenture and paid for as provided herein, will be duly
and validly issued and outstanding and will constitute valid and
legally binding obligations of the Company, entitled to the benefits of
the Indenture and enforceable against the Company in accordance with
their terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(k) The Recapitalization Agreement has been duly authorized,
executed and delivered by Holding and constitutes a valid and legally
binding agreement of Holding enforceable against Holding in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(l) Each Transaction Document (other than the Indenture)
conforms in all material respects to the description thereof contained
in the Offering Memorandum. As of the Closing Date, the Indenture will
conform in all material respects to the description thereof contained
in the Offering Memorandum.
(m) Except as set forth on Schedule 2(q) hereto or disclosed
in or contemplated by the Offering Memorandum, the execution, delivery
and performance by the Company and each of the Guarantors of each of
the Transaction Documents, the issuance, authentication, sale and
delivery of the Securities and compliance by the Company and each of
the Guarantors with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or
assets of Holding or any of its subsidiaries pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which Holding or any of its subsidiaries is a party or
by which Holding or any of its subsidiaries is bound or to which any of
the property or assets of Holding or any of its subsidiaries is
subject, except for such conflicts, breaches, violations, defaults,
liens, charges and encumbrance that are not reasonably likely to have a
Material Adverse Effect, nor will such actions result in any violation
of the provisions of the charter or by-laws of Holding or any of its
subsidiaries or any statute or any
<PAGE> 5
5
judgment, order, decree, rule or regulation of any court or arbitrator
or governmental agency or body having jurisdiction over Holding or any
of its subsidiaries or any of their properties or assets, except for
such violations that are not reasonably likely to have a Material
Adverse Effect; and no consent, approval, authorization or order of, or
filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, delivery and
performance by the Company and each of the Guarantors of each of the
Transaction Documents, the issuance, authentication, sale and delivery
of the Securities and compliance by the Company and the Guarantors with
the terms thereof and the consummation of the transactions contemplated
by the Transaction Documents, except for such consents, approvals,
authorizations, filings, registrations or qualifications (i) which
shall have been obtained or made prior to the Closing Date, (ii) as may
be required to be obtained or made under the Securities Act and
applicable state securities laws as provided in the Registration Rights
Agreement , or (iii) which if not obtained are not reasonably likely to
have a Material Adverse Effect.
(n) To the knowledge of the Company, Ernst & Young LLP are
independent certified public accountants with respect to Holding and
its subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public
Accountants ("AICPA") and its interpretations and rulings thereunder.
The historical financial statements (including the related notes)
contained in the Offering Memorandum comply in all material respects
with the requirements applicable to a registration statement on Form
S-1 under the Securities Act (except for the omission of financial
statement schedules required by Article 12 and separate financial
statements of Guarantor subsidiaries required by Rule 3-10 of
Regulation S-X) ; such financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods covered thereby and fairly present in
all material respects the financial position of the entities purported
to be covered thereby at the respective dates indicated and the results
of their operations and their cash flows for the respective periods
indicated; and the historical financial information contained in the
Offering Memorandum under the headings "Summary--Summary Historical and
Pro Forma Financial Information", "Capitalization", "Selected
Consolidated Historical Financial Data", "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
"Management--Executive Compensation" are derived from the accounting
records of Holding and its subsidiaries and fairly present the
information purported to be shown thereby. The pro forma financial
information contained in the Offering Memorandum has been prepared on a
basis consistent with the historical financial statements contained in
the Offering Memorandum (except for the pro forma adjustments specified
therein), includes all material adjustments to the historical financial
information required by Rule 11-02 of Regulation S-X under the
Securities Act and the Exchange Act to reflect the transactions
described in the Offering Memorandum, gives effect to assumptions made
on a reasonable basis and fairly presents in all material respects the
historical and proposed transactions contemplated by the Offering
Memorandum and the Transaction Documents. The other historical
financial and statistical information and data included in the Offering
Memorandum are, in all material respects, fairly presented.
(o) There are no legal or governmental proceedings pending to
which Holding or any of its subsidiaries is a party or of which any
property or assets of Holding or any of its subsidiaries is the subject
or to the best knowledge of Holding and the Company, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others, which, in each case, (i) are not disclosed in
the Offering Memorandum or (ii) singularly or in the aggregate, are
reasonably likely to have a Material Adverse Effect;
<PAGE> 6
6
(p) To the knowledge of the Company or the Guarantors, no
action has been taken and no statute, rule, regulation or order has
been enacted, adopted or issued by any governmental agency or body
which prevents the issuance of the Securities or suspends the sale of
the Securities in any jurisdiction; no injunction, restraining order or
order of any nature by any federal or state court of competent
jurisdiction has been issued with respect to Holding or any of its
subsidiaries which would prevent or suspend the issuance or sale of the
Securities or the use of the Preliminary Offering Memorandum or the
Offering Memorandum in any jurisdiction; no action, suit or proceeding
is pending against or, to the best knowledge of Holding or the Company,
threatened against or affecting Holding or any of its subsidiaries
before any court or arbitrator or any governmental agency, body or
official, domestic or foreign, which could reasonably be expected to
interfere with or adversely affect the issuance of the Securities or in
any manner draw into question the validity or enforceability of any of
the Transaction Documents or the Recapitalization Agreement or any
action taken or to be taken pursuant thereto; and Holding and its
subsidiaries have complied in all material respects with any and all
requests by any securities authority in any jurisdiction for additional
information to be included in the Preliminary Offering Memorandum and
the Offering Memorandum.
(q) Neither Holding nor any of its subsidiaries is (i) in
violation of its charter or by-laws, (ii) in default in any material
respect, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which it is a party or by which it is bound
or to which any of its property or assets is subject or (iii) in
violation in any material respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets
may be subject, except in each case as may be disclosed in the Offering
Memorandum, Schedule 2(q) hereto or for such violations or defaults
which are not reasonably likely to have a Material Adverse Effect.
(r) Holding and each of its subsidiaries possess all material
licenses, certificates, authorizations and permits issued by, and have
made all declarations and filings with, the appropriate federal, state
or foreign regulatory agencies or bodies which are necessary or
desirable for the ownership of their respective properties or the
conduct of their respective businesses as described in the Offering
Memorandum, except where the failure to possess or make the same would
not, singularly or in the aggregate, have a Material Adverse Effect,
and neither Holding nor any of its subsidiaries has received
notification of any revocation or modification of any such license,
certificate, authorization or permit or has any reason to believe that
any such license, certificate, authorization or permit will not be
renewed in the ordinary course.
(s) Holding and each of its subsidiaries have filed all
federal, state and material local and foreign income and franchise tax
returns required to be filed through the date hereof and have paid all
material taxes due thereon (other than those being contested in good
faith and for which adequate reserves have been provided), and no tax
deficiency has been determined adversely to Holding or any of its
subsidiaries which has had (nor does Holding or any of its subsidiaries
have any knowledge of any tax deficiency which, if determined adversely
to Holding or any of its subsidiaries, is reasonably likely to have) a
Material Adverse Effect.
(t) Neither Holding nor any of its subsidiaries is (i) an
"investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), and
<PAGE> 7
7
the rules and regulations of the Commission thereunder or (ii) a
"holding company" or a "subsidiary company" of a holding company or an
"affiliate" thereof within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(u) Holding and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
(v) Holding and each of its subsidiaries have insurance
covering their respective properties, operations, personnel and
businesses, which insurance is in amounts and insures against such
losses and risks as are adequate to protect Holding and its
subsidiaries and their respective businesses, except where the failure
to have such insurance is not reasonably likely to have a Material
Adverse Effect. Neither Holding nor any of its subsidiaries has
received notice from any insurer or agent of such insurer that capital
improvements or other expenditures are required or necessary to be made
in order to continue such insurance except such notices as are not
reasonably likely to have a Material Adverse Effect.
(w) Holding and each of its subsidiaries own or possess
adequate rights to use all patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses and know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the
conduct of their respective businesses as currently conducted, except
where the failure to own or possess such rights is not reasonably
likely to have a Material Adverse Effect; and the conduct of their
respective businesses will not conflict in any material respect with,
and Holding and its subsidiaries have not received any notice of any
claim of conflict with, any such rights of others except for such
claims which are not reasonably likely to have a Material Adverse
Effect.
(x) To the knowledge of the Company and the Guarantors,
Holding and each of its subsidiaries have good and marketable title in
fee simple to, or have valid rights to lease or otherwise use, all
items of real and personal property which are material to the business
of Holding and its subsidiaries, in each case free and clear of all
liens, encumbrances, claims and defects and imperfections of title
except such as (i) do not materially interfere with the use made and
proposed to be made of such property by Holding and its subsidiaries,
(ii) are not reasonably likely to have a Material Adverse Effect or
(iii) are disclosed in or contemplated by the Offering Memorandum.
(y) No labor disturbance by or dispute with the employees of
Holding or any of its subsidiaries exists or, to the best knowledge of
the Company, is contemplated or threatened except for such disturbances
or disputes which are not reasonably likely to have a Material Adverse
Effect.
(z) No "prohibited transaction" (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code")) or "accumulated
<PAGE> 8
8
funding deficiency" (as defined in Section 302 of ERISA) or any of the
events set forth in Section 4043(b) of ERISA (other than events with
respect to which the 30-day notice requirement under Section 4043 of
ERISA has been waived) has occurred with respect to any employee
benefit plan of Holding or any of its subsidiaries which is reasonably
likely to have a Material Adverse Effect; each such employee benefit
plan is in compliance in all material respects with applicable law,
including ERISA and the Code except for such noncompliance which is not
reasonably likely to have a Material Adverse Effect; Holding and each
of its subsidiaries have not incurred and do not expect to incur
liability under Title IV of ERISA with respect to the termination of,
or withdrawal from, any pension plan for which Holding or any of its
subsidiaries would have any liability except for any liability that is
not reasonably likely to have a Material Adverse Effect; and each such
pension plan that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which could
reasonably be expected to cause the loss of such qualification.
(aa) To the best knowledge of the Company and the Guarantors
and except as disclosed in or contemplated by the Offering Memorandum,
there has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission or other release of any kind
of toxic or other wastes or other hazardous substances by, due to or
caused by Holding or any of its subsidiaries (or any other entity
(including any predecessor) for whose acts or omissions Holding or any
of its subsidiaries is or could reasonably be expected to be liable)
upon any of the property now or previously owned or leased by Holding
or any of its subsidiaries, or upon any other property, in violation of
any statute or any ordinance, rule, regulation, order, judgment, decree
or permit or which would, under any statute or any ordinance, rule
(including rule of common law), regulation, order, judgment, decree or
permit, give rise to any liability, except for any violation or
liability which is not reasonably likely to have, singularly or in the
aggregate with all such violations and liabilities, a Material Adverse
Effect; and there has been no disposal, discharge, emission or other
release of any kind onto such property or into the environment
surrounding such property of any toxic or other wastes or other
hazardous substances with respect to which the Company has knowledge,
except for any such disposal, discharge, emission or other release of
any kind which is not reasonably likely to have, singularly or in the
aggregate with all such discharges and other releases, a Material
Adverse Effect.
(bb) On and immediately after the Closing Date, the Company
(on a consolidated basis and after giving effect to the issuance of the
Securities and to the other Transactions related thereto as described
in the Offering Memorandum) will be Solvent. As used in this paragraph,
the term "Solvent" means, with respect to a particular date, that on
such date (i) the present fair market value (or present fair saleable
value) of the assets of the Company is not less than the total amount
required to pay the probable liabilities of the Company on its total
existing debts and liabilities (including contingent liabilities) as
they become absolute and matured, (ii) the Company is able to realize
upon its assets and pay its debts and other liabilities, contingent
obligations and commitments as they mature and become due in the normal
course of business, (iii) assuming the sale of the Securities as
contemplated by this Agreement and the Offering Memorandum and the
consummation of the other Transactions, the Company is not incurring
debts or liabilities beyond its ability to pay as such debts and
liabilities mature and (iv) the Company is not engaged in any business
or transaction, and is not about to engage in any business or
transaction, for which its property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in
the industry in which the Company is engaged. In computing the amount
of such contingent liabilities at any time, it is
<PAGE> 9
9
intended that such liabilities will be computed at the amount that, in
the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.
(cc) Except as described in or contemplated by the Offering
Memorandum, there are no outstanding subscriptions, rights, warrants,
calls or options to acquire, or instruments convertible into or
exchangeable for, or agreements or understandings with respect to the
sale or issuance of, any shares of capital stock of or other equity or
other ownership interest in Holding or any of its subsidiaries.
(dd) Less than 25% of the assets of the Company and its
subsidiaries consist of "margin securities" as that term is defined in
Regulations G and U of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), and none of the proceeds of the
sale of the Securities will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security, for the purpose
of reducing or retiring any indebtedness which was originally incurred
to purchase or carry any margin security or for any other purpose which
might cause any of the Securities to be considered a "purpose credit"
within the meanings of Regulation G, T, U or X of the Federal Reserve
Board.
(ee) Except as disclosed in or contemplated by the Offering
Memorandum and except for fees paid in connection with the Commitment
Letter by and among Investcorp Investment Equity Limited, The Chase
Manhattan Bank, Chase Securities Inc., DLJ Bridge Finance, Inc., and
Goldman Sachs Credit Partners L.P., dated November 14, 1997 and
documents related thereto, neither Holding nor any of its subsidiaries
is a party to any contract, agreement or understanding with any person
that would give rise to a valid claim against Holding, the Company or
the Initial Purchasers for a brokerage commission, finder's fee or like
payment in connection with the offering and sale of the Securities.
(ff) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(gg) None of Holding, any of its affiliates or any person
acting on its or their behalf (other than the Initial Purchasers and
persons acting on their behalf, as to which no representation is made)
has engaged or will engage in any directed selling efforts (as such
term is defined in Regulation S under the Securities Act ("Regulation
S")), and all such persons have complied and will comply with the
offering restrictions requirement of Regulation S to the extent
applicable.
(hh) Neither Holding nor any of its affiliates has, directly
or through any agent (other than the Initial Purchasers and persons
acting on their behalf, as to which no representation is made), sold,
offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as such term is defined in the Securities
Act), which is or will be integrated with the sale of the Securities in
a manner that would require registration of the Securities under the
Securities Act.
(ii) None of Holding or any of its affiliates or any other
person acting on its or their behalf (other than the Initial Purchasers
and persons acting on their behalf, as to which no representation is
made) has engaged, in connection with the offering of the Securities,
in any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act.
<PAGE> 10
10
(jj) There are no securities of Holding or the Company
registered under the Securities and Exchange Act of 1934 (the "Exchange
Act"), or listed on a national securities exchange or quoted in a U.S.
automated inter-dealer quotation system.
(kk) Neither Holding nor the Company have taken and will not
take, directly or indirectly (other than through the Initial Purchasers
and persons acting on their behalf, as to which no representation is
made), any action prohibited by Regulation M under the Exchange Act in
connection with the offering of the Securities.
(ll) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Preliminary Offering Memorandum or the Offering
Memorandum has been made or reaffirmed without a reasonable basis or
has been disclosed other than in good faith.
(mm) Neither Holding nor any of its subsidiaries does business
with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Florida Statutes Section 517.075.
(nn) Except as disclosed in or as contemplated by the Offering
Memorandum, since the date as of which information is given in the
Offering Memorandum, except as otherwise stated therein, (i) there has
been no material adverse change or any development involving a
prospective material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs, management or business
prospects of Holding or its subsidiaries, whether or not arising in the
ordinary course of business, (ii) Holding and its subsidiaries have not
incurred any material liability or obligation, direct or contingent,
other than in the ordinary course of business, (iii) Holding and its
subsidiaries have not entered into any material transaction other than
in the ordinary course of business and (iv) there has not been any
change in the capital stock or long-term debt of Holding or any of its
subsidiaries or any dividend or distribution of any kind declared, paid
or made by Holding or any of its subsidiaries on any class of its
capital stock.
2. Purchase and Resale of the Securities. (a) On the basis of
the representations, warranties and agreements contained herein, and
subject to the terms and conditions set forth herein, the Company
agrees to issue and sell to each of the Initial Purchasers, severally
and not jointly, and each of the Initial Purchasers, severally and not
jointly, agrees to purchase from the Company, the principal amount of
Securities set forth opposite the name of such Initial Purchaser on
Schedule 1 hereto at a purchase price equal to 97.00% of the principal
amount thereof. The Company shall not be obligated to deliver any of
the Securities except upon payment for all of the Securities to be
purchased as provided herein.
(b) The Initial Purchasers have advised the Company that they
propose to offer the Securities for resale upon the terms and subject
to the conditions set forth herein and in the Offering Memorandum. The
Initial Purchasers agree to promptly (but in no event more than 2
business days after completion of the resale) notify the Company of the
completion of the resale of the Securities. Each Initial Purchaser,
severally and not jointly, represents and warrants to and agrees with
the Company and the Guarantors that (i) it is purchasing the Securities
pursuant to a private sale exempt from registration under the
Securities Act, (ii) it has not solicited offers for, or offered or
sold, and will not solicit offers for, or offer or sell, the Securities
by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D under the Securities
Act ("Regulation D") or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (iii) it
has solicited and will
<PAGE> 11
11
solicit offers for the Securities only from, and has offered or sold
and will offer, sell or deliver the Securities, as part of its initial
offering, only (A) within the United States to persons whom it
reasonably believes to be qualified institutional buyers ("Qualified
Institutional Buyers"), as defined in Rule 144A under the Securities
Act ("Rule 144A"), or if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or
agent, only when such person has represented to it that each such
account is a Qualified Institutional Buyer to whom notice has been
given that such sale or delivery is being made in reliance on Rule 144A
and in each case, in transactions in accordance with Rule 144A and (B)
outside the United States to persons other than U.S. persons in
reliance on and in compliance with Regulation S under the Securities
Act ("Regulation S").
(c) In connection with the offer and sale of Securities in
reliance on Regulation S, each Initial Purchaser, severally and not
jointly, represents and warrants to and agrees with the Company and the
Guarantors that:
(i) The Securities have not been registered under the
Securities Act of 1933, as amended (the "Securities Act") and
may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except pursuant to
an exemption from, or in transactions not subject to, the
registration requirements of the Securities Act.
(ii) Such Initial Purchasers have offered and sold
the Securities, and will offer and sell the Securities, (A) as
part of their distribution at any time and (B) otherwise until
40 days after the later of the commencement of the offering of
the Securities and the Closing Date, only in accordance with
Regulation S or Rule 144A or any other available exemption
from registration under the Securities Act.
(iii) None of such Initial Purchasers or any of their
affiliates or any other person acting on its or their behalf
has engaged or will engage in any directed selling efforts
with respect to the Securities, and all such persons have
complied and will comply with the offering restrictions
requirement of Regulation S.
(iv) at or prior to the confirmation of sale of any
Securities sold in reliance on Regulation S, it will have sent
to each distributor, dealer or other person receiving a
selling concession, fee or other remuneration that purchase
Securities from it during the restricted period a confirmation
or notice to substantially the following effect:
"The Securities covered hereby have not been
registered under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and may not be
offered or sold within the United States to, or for
the account or benefit of, U.S. persons (i) as part
of their distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of
the offering of the Securities and the date of
original issuance of the Securities, except in
accordance with Regulation S or Rule 144A or any
other available exemption from registration under the
Securities Act. Terms used above have the meanings
given to them by Regulation S."
<PAGE> 12
12
(v) it has not and will not enter into any
contractual arrangement with any distributor with respect to
the distribution of the Securities, except with its affiliates
or with the prior written consent of the Company.
Terms used in this Section 2(c) have the meanings given to them by
Regulation S.
(d) Each Initial Purchaser, severally and not jointly,
represents and warrants to and agrees with the Company and the
Guarantors that (i) it has not offered or sold and prior to the date
six months after the Closing Date will not offer or sell any Securities
to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and
will not result in an offer to the public in the United Kingdom within
the meaning of the Public Offers of Securities Regulations 1995; (ii)
it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 and the Public Offers of Securities
Regulations 1995 with respect to anything done by it in relation to the
Securities in, from or otherwise involving the United Kingdom; and
(iii) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the
issue of the Securities to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment
Advertisement) (Exemptions), Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
(e) Each Initial Purchaser, severally and not jointly, agrees
that, prior to or simultaneously with the confirmation of sale by such
Initial Purchaser to any purchaser of any of the Securities purchased
by such Initial Purchaser from the Company pursuant hereto, such
Initial Purchaser shall furnish to that purchaser a copy of the
Offering Memorandum (and any amendment or supplement thereto that the
Company shall have furnished to such Initial Purchaser prior to the
date of such confirmation of sale). In addition to the foregoing, each
Initial Purchaser acknowledges and agrees that the Company and, for
purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Sections 5(c) and (d) counsel for the Company and for the
Initial Purchasers and the Company's general counsel, respectively, may
rely upon the accuracy and truth of the representations and warranties
of the Initial Purchasers and their compliance with their agreements
contained in this Section 2, and each Initial Purchaser hereby consents
to such reliance.
(f) The Company acknowledges and agrees that the Initial
Purchasers may sell Securities to any affiliate of an Initial Purchaser
and that any such affiliate may sell Securities purchased by it to an
Initial Purchaser, subject to the terms, conditions, representations
and warranties set forth herein.
3. Delivery of and Payment for the Securities. (a) Delivery of
and payment for the Securities shall be made at the offices of Gibson,
Dunn & Crutcher LLP, New York, New York, or at such other place as
shall be agreed upon by the Initial Purchasers and the Company, at
10:00 A.M., New York City time, on November 24, 1997, or at such other
time or date, not later than seven full business days thereafter, as
shall be agreed upon by the Initial Purchasers and the Company (such
date and time of payment and delivery being referred to herein as the
"Closing Date").
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer
of same-day funds to such account or accounts as the Company shall
specify prior to the Closing Date or by such other means as the parties
hereto shall agree prior to the Closing Date against delivery
<PAGE> 13
13
to the Initial Purchasers of the certificates evidencing the
Securities. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of
the obligations of the parties hereunder. Upon delivery, the Securities
shall be in global form, registered in such names and in such
denominations as CSI on behalf of the Initial Purchasers shall have
requested in writing not less than two full business days prior to the
Closing Date. The Company agrees to make one or more global
certificates evidencing the Securities available for inspection by CSI
on behalf of the Initial Purchasers in New York, New York at least 24
hours prior to the Closing Date.
4. Further Agreements of the Company and Holding. Holding and
the Company agree with each of the several Initial Purchasers:
(a) at any time prior to completion of the resale of the
Securities by the Initial Purchasers, to advise the Initial Purchasers
promptly and, if requested, confirm such advice in writing, of the
happening of any event which makes any statement of a material fact
made in the Offering Memorandum untrue or which requires the making of
any additions to or changes in the Offering Memorandum (as amended or
supplemented from time to time) in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; to advise the Initial Purchasers promptly of any order
preventing or suspending the use of the Preliminary Offering Memorandum
or the Offering Memorandum, of any suspension of the qualification of
the Securities for offering or sale in any jurisdiction and of the
initiation or threatening of any proceeding for any such purpose; and
to use its reasonable best efforts to prevent the issuance of any such
order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum or suspending any such
qualification and, if any such suspension is issued, to use its
reasonable best efforts to obtain the lifting thereof at the earliest
possible time;
(b) to furnish promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of
the Preliminary Offering Memorandum and the Offering Memorandum (and
any amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the
Offering Memorandum, to furnish a copy thereof to each of the Initial
Purchasers and counsel for the Initial Purchasers and not to effect any
such amendment or supplement to which the Initial Purchasers shall
reasonably object by notice to the Company after a reasonable period to
review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, (i) any event shall occur or
condition exist as a result of which it is necessary, in the reasonable
opinion of counsel for the Initial Purchasers or counsel for the
Company to amend or supplement the Offering Memorandum so that the
Offering Memorandum will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the
time it is delivered to a purchaser, not misleading, or (ii) if it is
necessary to amend or supplement the Offering Memorandum to comply with
applicable law, to promptly prepare such amendment or supplement as may
be necessary to correct such untrue statement or omission or so that
the Offering Memorandum, as so amended or supplemented, will comply
with applicable law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of
<PAGE> 14
14
the Securities and prospective purchasers of the Securities designated
by such holders, upon request of such holders or such prospective
purchasers, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act, unless the Company is then subject
to and in compliance with Section 13 or 15(d) of the Exchange Act (the
foregoing agreement being for the benefit of the holders from time to
time of the Securities and prospective purchasers of the Securities
designated by such holders);
(f) for so long as the Securities are outstanding, to furnish
to the Initial Purchasers copies of any annual reports, quarterly
reports and current reports filed by the Company or Holding with the
Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as
may be designated by the Commission, and such other documents, reports
and information as shall be furnished by Holding or the Company to the
Trustee or to the holders of the Securities pursuant to the Indenture
or the Exchange Act or any rule or regulation of the Commission
thereunder;
(g) to promptly take from time to time such actions as the
Initial Purchasers may reasonably request to qualify the Securities for
offering and sale under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may designate and to continue
such qualifications in effect for so long as required for the resale of
the Securities by the Initial Purchasers; and to arrange for the
determination of the eligibility for investment of the Securities under
the laws of such jurisdictions as the Initial Purchasers may reasonably
request; provided that in no event shall Holding and its subsidiaries
be obligated to qualify to do business in any jurisdiction in which
they are not so qualified or to take any action which would subject it
to (i) service of process in suits, other than those arising out of the
sale of the Securities or (ii) taxation in excess of a nominal amount,
in each case where it is not now so subject;
(h) to use its reasonable best efforts to assist the Initial
Purchasers in arranging for the Securities to be designated Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL")
Market securities in accordance with the rules and regulations adopted
by the National Association of Securities Dealers, Inc. ("NASD")
relating to trading in the PORTAL Market and for the Securities to be
eligible for clearance and settlement through The Depository Trust
Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as such term is defined in the Securities Act) which
could be integrated with the sale of the Securities in a manner which
would require registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause its affiliates not to, and not to
authorize or knowingly permit any person acting on their behalf to,
solicit any offer to buy or offer to sell the Securities by means of
any form of general solicitation or general advertising within the
meaning of Regulation D or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act; and not to
offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, any securities under circumstances where such offer, sale,
contract or disposition would cause the exemption afforded by Section
4(2) of the Securities Act to cease to be applicable to the offering
and sale of the Securities as contemplated by this Agreement and the
Offering Memorandum;
(k) except as disclosed in or contemplated by the Offering
Memorandum, for a period of 180 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration
<PAGE> 15
15
statement for, or announce any offer, sale, contract for sale of or
other disposition of any debt securities issued or guaranteed by
Holding or any of its subsidiaries (other than the Securities) without
the prior written consent of the Initial Purchasers ;
(l) during the period from the Closing Date until two years
after the Closing Date, without the prior written consent of the
Initial Purchasers, not to, and not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to, resell any of the
Securities that have been reacquired by them, except for Securities
purchased by the Company or any of its affiliates and resold in a
transaction registered or exempt from registration under the Securities
Act;
(m) not to, for so long as the Securities are outstanding, be
or become, or be or become owned by, an open-end investment company,
unit investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company
Act, and to not be or become, or be or become owned by, a closed-end
investment company required to be registered, but not registered
thereunder;
(n) in connection with the offering of the Securities, until
CSI on behalf of the Initial Purchasers shall have notified the Company
of the completion of the resale of the Securities, not to, and to cause
its affiliated purchasers (as defined in Regulation M under the
Exchange Act) not to, either alone or with one or more other persons,
bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Securities, or
attempt to induce any person to purchase any Securities; and not to,
and to cause its affiliated purchasers not to, make bids or purchase
for the purpose of creating actual, or apparent, active trading in or
of raising the price of the Securities;
(o) in connection with the offering of the Securities, to make
the appropriate officers, employees, independent accountants and legal
counsel of Holding and its subsidiaries reasonably available upon
request by the Initial Purchasers;
(p) to furnish to each of the Initial Purchasers on the date
hereof a copy of the independent accountants' report included in the
Offering Memorandum signed by the accountants rendering such report;
(q) to do and perform all things required to be done and
performed by it under this Agreement that are within its control prior
to or after the Closing Date, and to use its reasonable best efforts to
satisfy all conditions precedent on its part to the delivery of the
Securities;
(r) to use its reasonable best efforts not to take any action
prior to the Closing Date which in the Company's reasonable judgment
would require the Offering Memorandum to be amended or supplemented
pursuant to Section 4(d);
(s) prior to the Closing Date, not to issue any press release
or other communication directly or indirectly or hold any press
conference with respect to Holding or any of its subsidiaries regarding
their condition, financial or otherwise, or earnings, business affairs
or business prospects (except for routine oral marketing communications
in the ordinary course of business and consistent with the past
practices of the Company), without the prior written consent of the
Initial Purchasers, unless in the judgment of Holding or the Company
and its respective counsel, and after notification to the Initial
Purchasers, such press release or communication is required by law; and
<PAGE> 16
16
(t) to apply the net proceeds from the sale of the Securities
as set forth in the Offering Memorandum under the heading "Use of
Proceeds".
5. Conditions of Initial Purchasers' Obligations. The
respective obligations of the several Initial Purchasers hereunder are
subject to the accuracy, on and as of the date hereof and the Closing
Date, of the representations and warranties of the Company and the
Guarantors contained herein, to the accuracy of the statements of the
Company and its officers made in any certificates delivered pursuant
hereto, to the performance by the Company and each of the Guarantors of
their obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial
Purchasers may agree; and no stop order suspending the sale of the
Securities in any jurisdiction shall have been issued and no proceeding
for that purpose shall have been commenced or shall be pending or
threatened.
(b) All corporate proceedings and other legal matters incident
to the authorization, form and validity of each of the Transaction
Documents and the Offering Memorandum, and all other legal matters
relating to the Transaction Documents and the transactions contemplated
thereby, shall be satisfactory in all material respects to the Initial
Purchasers, and the Company and the Guarantors shall have furnished to
the Initial Purchasers all documents and information that they or their
counsel may reasonably request to enable them to pass upon such
matters.
(c) Gibson, Dunn & Crutcher LLP, Eric Werner, Esq., general
counsel of the Company, and outside counsel to the Company qualified to
give Pennsylvania law opinions and reasonably acceptable to the Initial
Purchasers shall have furnished to the Initial Purchasers their written
opinions addressed to the Initial Purchasers and dated the Closing
Date, in form and substance reasonably satisfactory to the Initial
Purchasers, substantially to the effect set forth in Annexes B, C and
D, respectively, hereto.
(d) The Initial Purchasers shall have received from Cravath,
Swaine & Moore, counsel for the Initial Purchasers, such opinion or
opinions, dated the Closing Date, with respect to such matters as the
Initial Purchasers may reasonably require, and the Company and the
Guarantors shall have furnished to such counsel such documents and
information as they may reasonably request for the purpose of enabling
them to pass upon such matters.
(e) The Company shall have furnished to the Initial Purchasers
a letter (the "Initial Letter") of Ernst & Young LLP, addressed to the
Initial Purchasers and dated the date hereof, in form and substance
reasonably satisfactory to the Initial Purchasers, substantially to the
effect set forth in Annex E hereto.
(f) The Company shall have furnished to the Initial Purchasers
a letter (the "Bring-Down Letter") of Ernst & Young LLP, addressed to
the Initial Purchasers and dated the Closing Date (i) confirming that
they are independent public accountants with respect to the Company and
its subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the AICPA and its interpretations and rulings
thereunder, (ii) stating, as of the date of the Bring-Down Letter (or,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in the Offering Memorandum, as of a date not more than
<PAGE> 17
17
three business days prior to the date of the Bring-Down Letter), that
the conclusions and findings of such accountants with respect to the
financial information and other matters covered by the Initial Letter
are accurate in all material respects and (iii) confirming in all
material respects the conclusions and findings set forth in the Initial
Letter.
(g) The Company shall have furnished to the Initial Purchasers
a certificate, dated the Closing Date, of its chief executive officer
and its chief financial officer or other officers reasonably acceptable
to the Initial Purchasers stating that (A) such officers have carefully
examined the Offering Memorandum, (B) in their opinion, the Offering
Memorandum, as of its date, did not include any untrue statement of a
material fact and did not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and since the date of the Offering Memorandum, no event has
occurred which should have been set forth in a supplement or amendment
to the Offering Memorandum so that the Offering Memorandum (as so
amended or supplemented) would not include any untrue statement of a
material fact and would not omit to state a material fact required to
be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading and (C) to the best of their knowledge after reasonable
investigation, as of the Closing Date, the representations and
warranties of the Company and each of the Guarantors in this Agreement
are true and correct in all material respects, each of Holding and its
subsidiaries have complied in all material respects with all agreements
and satisfied all conditions on its part to be performed or satisfied
hereunder on or prior to the Closing Date, and subsequent to the date
of the most recent financial statements contained in the Offering
Memorandum, there has been no material adverse change in the financial
position or results of operation of Holding or any of its subsidiaries,
or any change, or any development including a prospective change, in or
affecting the condition (financial or otherwise), results of
operations, business or prospects of Holding and its subsidiaries taken
as a whole, except as set forth in the Offering Memorandum.
(h) The Initial Purchasers shall have received a counterpart
of the Registration Rights Agreement which shall have been executed and
delivered by a duly authorized officer of the Company and each
Guarantor.
(i) The Indenture shall have been duly executed and delivered
by the Company, each of the Guarantors and the Trustee, and the
Securities shall have been duly executed and delivered by the Company
and duly authenticated by the Trustee.
(j) The Securities shall have been approved by the NASD for
trading in the PORTAL Market.
(k) If any event shall have occurred that requires the Company
under Section 4(d) to prepare an amendment or supplement to the
Offering Memorandum, such amendment or supplement shall have been
prepared, the Initial Purchasers shall have been
given a reasonable opportunity to comment thereon, and copies thereof
shall have been delivered to the Initial Purchasers reasonably in
advance of the Closing Date.
(l) There shall not have occurred any invalidation of Rule
144A under the Securities Act by any court or any withdrawal or
proposed withdrawal of any rule or regulation under the Securities Act
or the Exchange Act by the Commission or any amendment or proposed
amendment thereof by the Commission which in the
<PAGE> 18
18
reasonable judgment of the Initial Purchasers would materially impair
the ability of the Initial Purchasers to purchase, hold or effect
resales of the Securities as contemplated hereby.
(m) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which information is given in the
Offering Memorandum (exclusive of any amendment or supplement thereto),
there shall not have been any change in the capital stock or long-term
debt or any change, or any development involving a prospective change,
in or affecting the condition (financial or otherwise), results of
operations, business or prospects of Holding and its subsidiaries taken
as a whole (other than as disclosed in or contemplated by the Offering
Memorandum), the effect of which, in any such case described above, is,
in the reasonable judgment of the Initial Purchasers, so material and
adverse as to make it impracticable or inadvisable to proceed with the
sale or delivery of the Securities on the terms and in the manner
contemplated by this Agreement and the Offering Memorandum (exclusive
of any amendment or supplement thereto).
(n) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Securities; and no injunction,
restraining order or order of any other nature by any federal or state
court of competent jurisdiction shall have been issued as of the
Closing Date which would prevent the issuance or sale of the
Securities.
(o) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the
Securities by any "nationally recognized statistical rating
organization", as such term is defined by the Commission for purposes
of Rule 436(g)(2) of the rules and regulations of the Commission under
the Securities Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its
rating of the Securities.
(p) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange or any over-the-counter market shall have been suspended or
limited, or minimum prices shall have been established on any such
exchange or market by the Commission, by any such exchange or by any
other regulatory body or governmental authority having jurisdiction or
(ii) any moratorium on commercial banking activities shall have been
declared by federal or New York state authorities or (iii) an outbreak
or escalation of hostilities or a declaration by the United States of a
national emergency or war or (iv) a material adverse change in general
economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) the effect of which, in the case of this clause (iv),
is, in the reasonable judgment of the Initial Purchasers, so material
and adverse as to make it impracticable or inadvisable to proceed with
the sale or the delivery of the Securities on the terms and in the
manner contemplated by this Agreement and in the Offering Memorandum
(exclusive of any amendment or supplement thereto).
(q) All conditions to the consummation of each of the
Transactions (other than the offering of the Securities) shall have
been satisfied or waived with the consent of the Initial Purchasers
(which consent shall not be unreasonably withheld) and each of such
Transactions shall be consummated substantially concurrently with the
sale of the
<PAGE> 19
19
Securities hereunder. The Initial Purchasers shall have received copies
of all closing documents relating to such Transactions.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if they are in form and
substance reasonably satisfactory to counsel for the Initial
Purchasers.
6. Termination. The obligations of the Initial Purchasers
hereunder may be terminated by the Initial Purchasers, in their
absolute discretion, by written notice given to and received by the
Company prior to delivery of and payment for the Securities if, prior
to that time, any of the events described in Section 5(l), (m), (n),
(o) or (p) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date,
any Initial Purchaser defaults in the performance of its obligations
under this Agreement, the non-defaulting Initial Purchasers may make
arrangements for the purchase of the Securities which such defaulting
Initial Purchaser agreed but failed to purchase by other persons
satisfactory to the Company and the non-defaulting Initial Purchasers,
but if no such arrangements are made within 36 hours after such
default, this Agreement shall terminate without liability on the part
of the non-defaulting Initial Purchasers, the Company or the
Guarantors, except that the Company and the Guarantors will continue to
be liable for the payment of expenses to the extent set forth in
Sections 8 and 12 and except that the provisions of Sections 9 and 10
shall not terminate and shall remain in effect. As used in this
Agreement, the term "Initial Purchasers" includes, for all purposes of
this Agreement unless the context otherwise requires, any party not
listed in Schedule 1 hereto that, pursuant to this Section 7, purchases
Securities which a defaulting Initial Purchaser agreed but failed to
purchase.
(b) Nothing contained herein shall relieve a defaulting
Initial Purchaser of any liability it may have to the Company or any
Guarantor or any non-defaulting Initial Purchaser for damages caused by
its default. If other persons are obligated or agree to purchase the
Securities of a defaulting Initial Purchaser, either the non-defaulting
Initial Purchasers or the Company may postpone the Closing Date for up
to seven full business days in order to effect any changes that in the
opinion of counsel for the Company or counsel for the Initial
Purchasers may be necessary in the Offering Memorandum or in any other
document or arrangement, and the Company agrees to promptly prepare any
amendment or supplement to the Offering Memorandum that effects any
such changes.
8. Reimbursement of Initial Purchasers' Expenses. If (a) this
Agreement shall have been terminated pursuant to Section 6 or 7, (b)
the Company shall fail to tender the Securities for delivery to the
Initial Purchasers for any reason permitted under this Agreement or (c)
the Initial Purchasers shall decline to purchase the Securities for any
reason permitted under this Agreement, the Company and the Guarantors
shall jointly and severally reimburse the Initial Purchasers for such
out-of-pocket expenses (including reasonable fees and disbursements of
counsel) as shall have been reasonably incurred by the Initial
Purchasers in connection with this Agreement and the proposed purchase
and resale of the Securities. Notwithstanding any provision herein to
the contrary, if this Agreement is terminated pursuant to Section 7 by
reason of the default of one or more of the Initial Purchasers, the
Company shall not be obligated to reimburse any defaulting Initial
Purchaser or their counsel on account of such expenses.
<PAGE> 20
20
9. Indemnification. (a) The Company and the Guarantors shall
jointly and severally indemnify and hold harmless each Initial
Purchaser, its affiliates, their respective officers, directors,
employees, representatives and agents, and each person, if any, who
controls any Initial Purchaser within the meaning of the Securities Act
or the Exchange Act (collectively referred to for purposes of this
Section 9(a) and Section 10 as an Initial Purchaser), from and against
any loss, claim, damage or liability, joint or several, or any action
in respect thereof (including, without limitation, any loss, claim,
damage, liability or action relating to purchases and sales of the
Securities), to which that Initial Purchaser may become subject,
whether commenced or threatened, under the Securities Act, the Exchange
Act, any other federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum or in any
amendment or supplement thereto or in any information provided by the
Company pursuant to Section 4(e) or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and shall
reimburse each Initial Purchaser promptly upon demand for any legal or
other expenses reasonably incurred by that Initial Purchaser in
connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any
such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company and the Guarantors shall
not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue
statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity
with any Initial Purchasers' Information; and provided, further, that
with respect to any such untrue statement in or omission from the
Preliminary Offering Memorandum, the indemnity agreement contained in
this Section 9(a) shall not inure to the benefit of any such Initial
Purchaser to the extent that the sale to the person asserting any such
loss, claim, damage, liability or action was an initial resale by such
Initial Purchaser and any such loss, claim, damage, liability or action
of or with respect to such Initial Purchaser results from the fact that
both (A) to the extent required by applicable law, a copy of the
Offering Memorandum was not sent or given to such person at or prior to
the written confirmation of the sale of such Securities to such person
and (B) the untrue statement in or omission from the Preliminary
Offering Memorandum was corrected in the Offering Memorandum unless, in
either case, such failure to deliver the Offering Memorandum was a
result of non-compliance by Holding or the Company with Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its affiliates, their
respective officers, directors, employees, representatives and agents,
and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act (collectively referred to for
purposes of this Section 9(b) and Section 10 as the Company), from and
against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject,
whether commenced or threatened, under the Securities Act, the Exchange
Act, any other federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum or in any
amendment or supplement thereto or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of
the circumstances
<PAGE> 21
21
under which they were made, not misleading, but in each case only to
the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with any Initial Purchasers' Information, and shall
reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending
or preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as
such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party pursuant to Section 9(a) or 9(b), notify
the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have under this Section 9 except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or
defenses) by such failure; and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this
Section 9. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not
be liable to the indemnified party under this Section 9 for any legal
or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that an indemnified party shall have
the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel for the indemnified party
will be at the expense of such indemnified party unless (1) the
employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based upon advice of counsel to the indemnified
party) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential
conflict exists (based upon advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party that makes it
impossible or inadvisable for counsel to the indemnifying party to
conduct the defense of both the indemnifying party and the indemnified
party (in which case the indemnifying party will not have the right to
direct the defense of such action on behalf of the indemnified party)
or (4) the indemnifying party has not in fact employed counsel
reasonably satisfactory to the indemnified party to assume the defense
of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of
the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than
one separate firm of attorneys (in addition to any local counsel) at
any one time for all such indemnified party or parties. Each
indemnified party, as a condition of the indemnity agreements contained
in Sections 9(a) and 9(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action
or claim. No indemnifying party shall be liable for any settlement of
any such action effected without its written consent (which consent
shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such
action, the
<PAGE> 22
22
indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of
such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party (which consent shall not
be unreasonably withheld), effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder
by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
The obligations of the Company, the Guarantors and the Initial
Purchasers in this Section 9 and in Section 10 are in addition to any
other liability that the Company, the Guarantors or the Initial
Purchasers, as the case may be, may otherwise have, including in
respect of any breaches of representations, warranties and agreements
made herein by any such party.
10. Contribution. If the indemnification provided for in
Section 9 is unavailable or insufficient to hold harmless an
indemnified party under Section 9(a) or 9(b), then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute
to the amount paid or payable by such indemnified party as a result of
such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company and the Guarantors, on the one hand,
and the Initial Purchasers, on the other, from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Guarantors, on
the one hand, and the Initial Purchasers, on the other, with respect to
the statements or omissions that resulted in such loss, claim, damage
or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by
the Company and the Guarantors, on the one hand, and the Initial
Purchasers on the other with respect to such offering shall be deemed
to be in the same proportion as the total net proceeds from the
offering of the Securities purchased under this Agreement (before
deducting expenses) received by or on behalf of the Company, on the one
hand, and the total discounts and commissions received by the Initial
Purchasers with respect to the Securities purchased under this
Agreement, on the other, bear to the total gross proceeds from the sale
of the Securities under this Agreement, in each case as set forth in
the table on the cover page of the Offering Memorandum. The relative
fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to the
Company and the Guarantors or information supplied by the Company and
the Guarantors, on the one hand, or to any Initial Purchasers'
Information, on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company, the Guarantors and the
Initial Purchasers agree that it would not be just and equitable if
contributions pursuant to this Section 10 were to be determined by pro
rata allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation that does
not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 10 shall be deemed to include, for
purposes of this Section 10, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 10, no Initial Purchaser
shall be required to contribute any amount in excess of
<PAGE> 23
23
the amount by which the total discounts and commissions received by
such Initial Purchaser with respect to the Securities purchased by it
under this Agreement exceeds the amount of any damages which such
Initial Purchaser has otherwise paid or become liable to pay by reason
of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute as
provided in this Section 10 are several in proportion to their
respective purchase obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Initial
Purchasers, the Company, the Guarantors and their respective
successors. This Agreement and the terms and provisions hereof are for
the sole benefit of only those persons, except as provided in Sections
9 and 10 with respect to affiliates, officers, directors, employees,
representatives, agents and controlling persons of the Company and the
Initial Purchasers and in Section 4(e) with respect to holders and
prospective purchasers of the Securities. Nothing in this Agreement is
intended or shall be construed to give any person, other than the
persons referred to in this Section 11, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision
contained herein. The term "successor" shall not include a purchaser
from the Initial Purchaser of any of the Securities in his status as
such purchaser.
12. Expenses. The Company and the Guarantors jointly and
severally agree with the Initial Purchasers to pay (a) the costs
incident to the authorization, issuance, sale, preparation and delivery
of the Securities and any taxes payable in that connection; (b) the
costs incident to the preparation, printing and distribution of the
Preliminary Offering Memorandum, the Offering Memorandum and any
amendments or supplements thereto; (c) the costs of reproducing and
distributing each of the Transaction Documents; (d) the costs incident
to the preparation, printing and delivery of the certificates
evidencing the Securities, including stamp duties and transfer taxes,
if any, payable upon issuance of the Securities; (e) the fees and
expenses of the Company's and the Guarantors' counsel and independent
accountants; (f) the fees and expenses of qualifying the Securities
under the securities laws of the several jurisdictions as provided in
Section 4(g) and of preparing, printing and distributing Blue Sky
Memoranda (including related fees and expenses of counsel for the
Initial Purchasers); (g) any fees charged by rating agencies for rating
the Securities; (h) the fees and expenses of the Trustee and any paying
agent (including related fees and expenses of any counsel to such
parties); (i) all expenses and application fees incurred in connection
with the application for the inclusion of the Securities on the PORTAL
Market and the approval of the Securities for book-entry transfer by
DTC; and (j) all other costs and expenses incident to the performance
of the obligations of the Company and the Guarantors under this
Agreement which are not otherwise specifically provided for in this
Section 12; provided, however, that except as provided in this Section
12 and Section 8, the Initial Purchasers shall pay their own costs and
expenses including the costs and expenses of their counsel, any
transfer taxes on the Securities that they may sell and the expenses of
advertising any offering of the Securities made by the Initial
Purchasers.
13. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the
Company, the Guarantors and the Initial Purchasers contained in this
Agreement or made by or on behalf of the Company or the Initial
Purchasers pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for the
Securities
<PAGE> 24
24
and shall remain in full force and effect, regardless of any
termination or cancelation of this Agreement or any investigation made
by or on behalf of any of them or any of their respective affiliates,
officers, directors, employees, representatives, agents or controlling
persons
14. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent
by mail or telecopy transmission to Chase Securities Inc., 270 Park
Avenue, New York, New York 10017, Attention: Mr. Thomas Walker
(telecopier no.: (212) 270-0994); or
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to Werner Holding Co., 93 Werner Road,
Greenville, PA 16125-9499, Attention: Eric Werner (telecopier no.:
(412) 588-0618), with a copy to: Gibson, Dunn & Crutcher LLP, 200 Park
Avenue, New York, New York 10166, Attention: E. Michael Greaney, Esq.
(telecopier no. (212) 351-4035) and to: Investcorp International, Inc.,
280 Park Avenue, New York, New York 10017, Attention: Christopher J.
Stadler (telecopier no. (212) 983-7073);
provided that any notice to an Initial Purchaser pursuant to Section
9(c) shall also be delivered or sent by mail to such Initial Purchaser
at its address set forth on the signature page hereof. Any such
statements, requests, notices or agreements shall take effect at the
time of receipt thereof. The Company shall be entitled to act and rely
upon any request, consent, notice or agreement given or made on behalf
of the Initial Purchasers by CSI.
15. Definition of Terms. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock
Exchange, Inc. is open for trading, (b) the term "subsidiary" has the
meaning set forth in Rule 405 under the Securities Act and (c) except
where otherwise expressly provided, the term "affiliate" has the
meaning set forth in Rule 405 under the Securities Act.
16. Initial Purchasers' Information. The parties hereto
acknowledge and agree that, for all purposes of this Agreement, the
Initial Purchasers' Information consists solely of the following
information in the Preliminary Offering Memorandum and the Offering
Memorandum: (i) the last paragraph on the front cover page concerning
the terms of the offering by the Initial Purchasers; (ii) the legend on
the inside front cover page concerning over-allotment and trading
activities by the Initial Purchasers; and (iii) the statements
concerning the Initial Purchasers contained in the third, fourth,
fifth, seventh , ninth, twelfth and thirteenth paragraphs under the
heading "Plan of Distribution".
17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. Counterparts. This Agreement may be executed in one or
more counterparts (which may include counterparts delivered by
telecopier) and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
19. Amendments. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom,
shall in any event be effective unless the same shall be in writing and
signed by the parties hereto.
<PAGE> 25
25
20. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the
meaning or interpretation of, this Agreement.
<PAGE> 26
26
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof,
whereupon this instrument will become a binding agreement between the
Company, the Guarantors and the several Initial Purchasers in
accordance with its terms.
Very truly yours,
WERNER HOLDING CO. (DE), INC.,
by /s/
-----------------------------------
Name:
Title:
WERNER HOLDING CO. (PA), INC.,
by /s/
-----------------------------------
Name:
Title:
WERNER CO.,
by /s/
-----------------------------------
Name:
Title:
GOLD MEDAL LADDER COMPANY,
by /s/
-----------------------------------
Name:
Title:
KENTUCKY LADDER COMPANY,
by /s/
-----------------------------------
Name:
Title:
<PAGE> 27
27
FLORIDA LADDER COMPANY,
by /s/
-----------------------------------
Name:
Title:
WERNER MANAGEMENT CO.,
by /s/
-----------------------------------
Name:
Title:
WERNER FINANCIAL INC.,
by /s/
-----------------------------------
Name:
Title:
R. D. ARIZONA LADDER CORP.,
by /s/
-----------------------------------
Name:
Title:
WIP TECHNOLOGIES, INC.,
by /s/
-----------------------------------
Name:
Title:
ARDEE INVESTMENT CO., INC.,
by /s/
----------------------------------
Name:
Title:
OLYMPUS PROPERTIES, INC.,
by /s/
-----------------------------------
Name:
Title:
<PAGE> 28
28
PHOENIX MANAGEMENT SERVICES, INC.,
by /s/
-----------------------------------
Name:
Title:
<PAGE> 29
29
Accepted:
CHASE SECURITIES INC.,
by /s/
------------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION,
by /s
------------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
2121 Avenue of the Stars
Suite 3000
Los Angeles, CA 90067
Attention: Legal Department
GOLDMAN, SACHS & CO.,
by /s/
------------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
85 Broad Street
New York, NY 10004
Attention: Legal Department
<PAGE> 30
Schedule I
Principal
Amount
Initial Purchasers of Securities
- ------------------ -------------
Chase Securities Inc........................................... $ 54,000,000
Donaldson, Lufkin & Jenrette Securities Corporation ........... 54,000,000
Goldman, Sachs & Co. .......................................... 27,000,000
----------
Total................................................. $ 135,000,000
============
<PAGE> 31
ANNEX A
[Form of Registration Rights Agreement]
<PAGE> 32
ANNEX B
Form of Opinion of Gibson, Dunn & Crutcher LLP
Gibson, Dunn & Crutcher LLP shall have furnished to the
Initial Purchasers their written opinion, as counsel to the Company, addressed
to the Initial Purchasers and dated the Closing Date, limited to New York law,
the Delaware General Corporation Law (the "DGCL") and the Federal securities
laws of the United States in form and substance and subject to additional
qualification, in each case reasonably satisfactory to the Initial Purchasers,
substantially to the effect set forth below:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware,
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its businesses requires such qualification,
and has all power and authority necessary to own or hold its properties
and to conduct the businesses in which it is engaged (except where the
failure to so qualify or have such power or authority would not,
singularly or in the aggregate, have a Material Adverse Effect);
(ii) the Company has an authorized capitalization as set forth
in the Offering Memorandum, and all of the outstanding shares of
capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable;
(iii) the descriptions in the Offering Memorandum of statutes,
legal and govern mental proceedings and contracts and other documents
set forth under the headings "Summary-The Transactions," "The
Transactions," "Summary-The Offering," "Risk Factors-Restrictive Loan
Covenants," "Risk Factors-Legal Proceedings," "Risk Factors-
Environmental Regulation", "Business-Environmental Matters", "
Business-Legal Proceedings," "Principal Shareholders-Right of First
Offer; Tag-Along Rights," "Certain Transactions-Agreements with Certain
Shareholders" and "The New Credit Facility" are accurate in all
material respects; the statements in the Offering Memorandum under the
heading "Certain Federal Income Tax Consequences," to the extent that
they constitute summaries of matters of law or regulation or legal
conclusions, have been reviewed by such counsel and fairly summarize
the matters described therein in all material respects; and such
counsel does not have actual knowledge of any current or pending legal
or governmental actions, suits or proceedings which would be required
to be described in the Offering Memorandum if the Offering Memorandum
were a prospectus included in a registration statement on Form S-1
which are not described as so required;
(iv) the Indenture conforms in all material respects with the
requirements of the Trust Indenture Act and the rules and regulations
of the Commission applicable to an indenture which is qualified
thereunder;
(v) the Company and each of the Guarantors incorporated under
the DGCL (the "Delaware Guarantors") have full right, power and
authority to execute and deliver each of the Transaction Documents and
to perform its obligations thereunder; and all corporate action
required to be taken by the Company and the Delaware Guarantors for the
due and proper authorization, execution and delivery of each of the
Transaction Documents and the consummation of the transactions
contemplated thereby have been duly and validly taken;
(vi) each of the Purchase Agreement and the Registration
Rights Agreement has been duly authorized, executed and delivered by
the Company and each of the Delaware Guarantors and constitutes a valid
and legally binding agreement of the
<PAGE> 33
2
Company and each of the Delaware Guarantors enforceable against the
Company and each of the Delaware Guarantors in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally including, without limitation, the effect of statutory
or other laws regarding fraudulent conveyances or transfers,
preferential transfers, and of laws affecting distributions by
corporations to stockholders, and by general equitable principles
including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing (whether considered in a proceeding in
equity or at law) and except to the extent that the indemnification
provisions thereof may be unenforceable;
(vii) the Indenture has been duly authorized, executed and
delivered by the Company and each of the Delaware Guarantors and,
assuming due authorization, execution and delivery thereof by the
Trustee and the Guarantors (other than the Delaware Guarantors), the
Indenture constitutes a valid and legally binding agreement of the
Company and each of the Delaware Guarantors enforceable against the
Company and each of the Delaware Guarantors in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally including, without limitation, the effect of statutory
or other laws regarding fraudulent conveyances or transfers,
preferential transfers, and of laws affecting distributions by
corporations to stockholders and by general equitable principles
including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing (whether considered in a proceeding in
equity or at law);
(viii) the Securities have been duly authorized and issued by
the Company and, assuming due authentication thereof by the Trustee and
upon payment and delivery in accordance with the Purchase Agreement,
will constitute valid and legally binding obligations of the Company
entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally including, without
limitation, the effect of statutory or other laws regarding fraudulent
conveyances or transfers, preferential transfers, and of laws affecting
distributions by corporations to stockholders, and by general equitable
principles including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (whether considered in a
proceeding in equity or at law);
(ix) assuming that the Recapitalization Agreement has been
duly authorized, executed and delivered by Holding , the
Recapitalization Agreement constitutes a valid and legally binding
agreement of Holding enforceable against Holding in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally including, without limitation, the effect of statutory
or other laws regarding fraudulent conveyances or transfers,
preferential transfers, and of laws affecting distributions by
corporations to stockholders, and by general equitable principles
including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing (whether considered in a proceeding in
equity or at law);
(x) each Transaction Document conforms in all material
respects to the description thereof contained in the Offering
Memorandum;
(xi) except as disclosed in Schedule 2(q) to the Purchase
Agreement, the execution and delivery by the Company and each of the
Guarantors of each of the
<PAGE> 34
3
Transaction Documents, the performance of the payment obligations
thereunder and the issuance, authentication, sale and delivery of the
Securities will not materially conflict with or result in a material
breach or violation of any of the terms or provisions of, or constitute
a material default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of Holding
or any of its subsidiaries pursuant to, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which
Holding or any of its subsidiaries is a party or by which Holding or
any of its subsidiaries is bound or to which any of the property or
assets of Holding or any of its subsidiaries is subject and that has
been identified to such counsel as material to Holding and its
subsidiaries, taken as a whole, nor will such actions result in any
material violation of the provisions of the charter or by-laws of
Holding, the Company or any Delaware Guarantor or any New York statute,
law or regulation that in our experience is generally applicable to the
transactions of the type contemplated hereby or the DGCL or, to our
actual knowledge, any judgment, injunction, order or decree applicable
to Holding or any of its Subsidiaries or any of their respective
properties; and no consent, approval, authorization or order of, or
filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, or delivery
by the Company and each of the Guarantors of each of the Transaction
Documents, the performance of the payment obligations thereunder and
the issuance, authentication, sale and delivery of the Securities,
except for such consents, approvals, authorizations, filings,
registrations or qualifications (i) which have been obtained or made
prior to the Closing Date and (ii) as may be required to be obtained or
made under the Securities Act and applicable state securities laws as
provided in the Registration Rights Agreement;
(xii) to the best knowledge of such counsel, there are no
pending actions or suits or judicial, arbitral, rule-making,
administrative or other proceedings to which Holding or any of its
subsidiaries is a party or of which any property or assets of Holding
or any of its subsidiaries is the subject which (A) singularly or in
the aggregate could reasonably be expected to have a Material Adverse
Effect or (B) questions the validity or enforceability of any of the
Transaction Documents or any action taken or to be taken pursuant
thereto;
(xiii) neither Holding nor any of its subsidiaries is an
"investment company" or, to the best of such counsel's knowledge, a
company "controlled by" an investment company within the meaning of the
Investment Company Act and the rules and regulations of the Commission
thereunder;
(xiv) neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance, execution or
delivery of the Securities will violate Regulation G, T, U or X of the
Federal Reserve Board; and
(xv) assuming the accuracy of the representations and
warranties and compliance with the agreements of the Company, the
Guarantors and the Initial Purchasers contained in the Purchase
Agreement, no registration of the Securities under the Securities Act
or qualification of the Indenture under the Trust Indenture Act is
required in connection with the issuance and sale of the Securities by
the Company to the Initial Purchasers and the offer, resale and
delivery of the Securities by the Initial Purchasers in the manner
contem plated by the Purchase Agreement and the Offering.
Such counsel shall also state that they have participated in
conferences with representatives of the Company and the Guarantors,
representatives of Holding's independent accountants and counsel and
representatives of the Initial Purchasers and their counsel at which
<PAGE> 35
4
conferences the contents of the Preliminary Offering Memorandum and the Offering
Memorandum and any amendment and supplement thereto and related matters were
discussed and, although such counsel assumes no responsibility for the accuracy,
completeness or fairness of the Offering Memorandum or any amendment or
supplement thereto (except as expressly provided above), nothing has come to the
attention of such counsel to cause such counsel to believe that the Offering
Memorandum or any amendment or supplement thereto (other than the financial
statements (including the schedules and notes thereto) and other financial and
statistical information contained therein, as to which such counsel need express
no belief), as of the date thereof and as of 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.
In rendering such opinion, such counsel may rely as to matters
of fact, to the extent such counsel deems reasonably proper, on certificates of
responsible officers of the Company, any Guarantor and public officials which
are furnished to the Initial Purchasers.
<PAGE> 36
ANNEX C
Rider to Opinion of Eric Werner, Esq.
9. to the best of my knowledge, there are no pending actions
or suits or judicial, arbitral, rule-making, administrative or other
proceedings to which Holding or any of its subsidiaries is a party or
of which any property or assets of Holding or any of its subsidiaries
is the subject and no such proceedings are threatened or contemplated
by governmental authorities or threatened by others, in each case which
(A) singularly or in the aggregate, if determined adversely to Holding
or any of its subsidiaries, could reasonably be expected to have a
Material Adverse Effect or (B) questions the validity or enforceability
of any of the Documents or any action taken or to be taken pursuant
thereto.
<PAGE> 37
ANNEX D
Form of Opinion of Pennsylvania Counsel
Outside counsel to the Company qualified to give Pennsylvania
law opinions and reasonably acceptable to the Initial Purchasers shall have
furnished to the Initial Purchasers their written opinion, as Pennsylvania
counsel to the Company, addressed to the Initial Purchasers and dated the
Closing Date, in form and substance and subject to additional qualifications, in
each case reasonably satisfactory to the Initial Purchasers, substantially to
the effect set forth below:
(i) Holding has an authorized capitalization as set forth in
the Offering Memorandum; and the capital stock of Holding conforms in
all material respects to the description thereof contained in the
Offering Memorandum;
(ii) each of the Guarantors incorporated in jurisdictions
other than Delaware (the "Non-Delaware Guarantors") have full right,
power and authority to execute and deliver each of the Transaction
Documents and to perform its obligations thereunder; and all corporate
action required to be taken by the Non-Delaware Guarantors for the due
and proper authorization, execution and delivery of each of the
Transaction Documents and the consummation of the transactions
contemplated thereby have been duly and validly taken;
(iii) each of the Purchase Agreement and the Registration
Rights Agreement has been duly authorized, executed and delivered by
the Non-Delaware Guarantors and constitutes a valid and legally binding
agreement of each of the Non-Delaware Guarantors enforceable against
each of the Non-Delaware Guarantors in accordance with its terms,
except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally including, without limitation, the effect of statutory
or other laws regarding fraudulent conveyances or transfers,
preferential transfers, and of laws affecting distributions by
corporations to stockholders, and by general equitable principles
including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing (whether considered in a proceeding in
equity or at law) and except to the extent that the indemnification
provisions thereof may be unenforceable;
(iv) the Indenture has been duly authorized, executed and
delivered by each of the Non-Delaware Guarantors and, assuming due
authorization, execution and delivery thereof by the Trustee,
constitutes a valid and legally binding agreement of each of the
Non-Delaware Guarantors enforceable against each of the Non-Delaware
Guarantors in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally including, without
limitation, the effect of statutory or other laws regarding fraudulent
conveyances or transfers, preferential transfers, and of laws affecting
distributions by corporations to stockholders, and by general equitable
principles including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (whether considered in a
proceeding in equity or at law);
(v) the Recapitalization Agreement has been duly authorized,
executed and delivered by Holding and constitutes a valid and legally
binding agreement of Holding enforceable against Holding in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally including, without limitation, the effect of statutory
or other laws
<PAGE> 38
regarding fraudulent conveyances or transfers, preferential transfers,
and of laws affecting distributions by corporations to stockholders,
and by general equitable principles including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing
(whether considered in a proceeding in equity or at law);
In rendering such opinion, such counsel may (i) rely as to
matters of fact, to the extent such counsel deems reasonably proper, on
certificates of responsible officers of the Company, any Guarantor and public
officials which are furnished to the Initial Purchasers and (ii) may assume that
the corporate laws of any jurisdiction (other than Pennsylvania) under which any
Non-Delaware Guarantor is organized are identical to the laws of Pennsylvania.
<PAGE> 39
ANNEX E
[Form of Initial Comfort Letter]
The Company shall have furnished to the Initial Purchasers a
letter of Ernst & Young LLP, addressed to the Initial Purchasers and dated the
date of the Purchase Agreement, in form and substance satisfactory to the
Initial Purchasers, substantially to the effect set forth below:
(i) they are independent certified public accountants with
respect to Holding and its subsidiaries within the meaning of Rule 101
of the Code of Professional Conduct of the AICPA and its
interpretations and rulings;
(ii) in their opinion, the audited financial statements and
pro forma financial information included in the Offering Memorandum and
reported on by them comply in form in all material respects with the
accounting requirements of the Exchange Act and the related published
rules and regulations of the Commission thereunder that would apply to
the Offering Memorandum if the Offering Memorandum were a prospectus
included in a registration statement on Form S-1 under the Securities
Act (except that certain supporting schedules are omitted);
(iii) based upon a reading of the latest unaudited financial
statements made available by Holding, the procedures of the AICPA for a
review of interim financial information as described in Statement of
Auditing Standards No. 71, reading of minutes and inquiries of certain
officials of Holding who have responsibility for financial and
accounting matters and certain other limited procedures requested by
the Initial Purchasers and described in detail in such letter, nothing
has come to their attention that causes them to believe that (A) any
unaudited financial statements included in the Offering Memorandum do
not comply as to form in all material respects with applicable
accounting requirements, (B) any material modifications should be made
to the unaudited financial statements included in the Offering
Memorandum for them to be in conformity with generally accepted
accounting principles applied on a basis substantially consistent with
that of the audited financial statements included in the Offering
Memorandum or (C) the information included under the headings
"Summary-- Summary Historical and Pro Forma Financial Information",
"Capitalization", "Selected Consolidated Historical Financial Data",
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" and "Management-- Executive Compensation" is not
in conformity with the disclosure requirements of Regulation S-K that
would apply to the Offering Memorandum if the Offering Memorandum were
a prospectus included in a registration statement on Form S-1 under the
Securities Act;
(iv) based upon the procedures detailed in such letter with
respect to the period subsequent to the date of the last available
balance sheet, including reading of minutes and inquiries of certain
officials of Holding who have responsibility for financial and
accounting matters, nothing has come to their attention that causes
them to believe that (A) at a specified date not more than three
business days prior to the date of such letter, there was any change in
capital stock, increase in long-term debt or decrease in net current
assets as compared with the amounts shown in the December 31, 1996
unaudited balance sheet included in the Offering Memorandum or (B) for
the period from [ ], 199[ ] to a specified date not
more than three business days prior to the date of such letter, there
were any decreases, as compared with the corresponding period in the
preceding year, in net sales, income from operations, EBITDA or
net income, except in all instances for changes, increases or
decreases that the Offering Memorandum discloses have occurred or
which are set forth in such letter, in which case the letter shall be
accompanied by an explanation by Holding as to the significance
thereof unless said explanation is not deemed necessary by the Initial
Purchasers;
<PAGE> 40
2
(v) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of Holding) set forth in the Offering
Memorandum agrees with the accounting records of Holding, excluding any
questions of legal interpretation.
(vi) on the basis of a reading of the unaudited pro forma
financial information included in the Offering Memorandum, carrying out
certain specified procedures, reading of minutes and inquiries of
certain officials of Holding who have responsibility for financial and
accounting matters and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in
the pro forma financial information, nothing came to their attention
which caused them to believe that the pro forma financial information
does not comply in form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or that the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of such information.
<PAGE> 41
3
Schedule 2(q) to Purchase Agreement
1. Amended and Restated Senior Revolving Credit and Term Loan Agreement
dated as of July 31, 1995, as amended, and related documentation thereunder, by
and between National City Bank and the Banks set forth therein and Werner Co.
and Olympus Properties, Inc. The credit facility is guaranteed by the Company
and other related entities pursuant to an Amended and Restated Parent Guarantee.
Pursuant to Section 11(m) of the Guarantee, the Company is not permitted to
enter into any merger transaction or sell or transfer all or any material part
of its business except in certain limited situations. Any breach of this section
is deemed an Event of Default under Section 5(c) of the Amended and Restated
Senior Revolving Credit and Term Loan Agreement and the Agent may, after first
obtaining the consent of Banks holding at least two-thirds in aggregate
principal amount of the loans, declare the entire amount outstanding under the
credit facility immediately due and payable. All amounts outstanding under this
Agreement will be repaid on or prior to the Closing Date.
2. Amended and Restated Note Purchase Agreement dated as of October 1,
1991, as amended, and related documentation thereunder, by and between
Prudential Insurance Company of America and PRUCO Life Insurance Company and
R.D. Werner Co., Inc. and Olympus Properties, Inc. The outstanding principal
amount of the Notes as of August 1, 1997, is $3,571,000. The Notes are due May
25, 1998, and are guaranteed by the Company and other related entities. The
Notes may be prepaid at any time upon 10 business days prior notice. Pursuant to
Section 9(b)(4) of the Second Amended and Restated Parents Guarantee, the
Company is not permitted to enter into any merger transaction or sale of assets
except in certain limited situations. Any breach of this section is deemed an
Event of Default under the Notes and the holders of two-thirds in principal
amount of the Notes can declare all of the Notes to be immediately due and
payable. All amounts outstanding under this Agreement will be repaid on or prior
to the Closing Date.
3. Trust Indenture dated as of September 1, 1990, entered into between
the County of Carroll, Kentucky ("Issuer") and Dai-Ichi Kangyo Trust Company
pursuant to which the Issuer issued its Variable Rate Demand Industrial Building
Revenue Bonds (Kentucky Ladder Company Project) (the "Bonds") in the aggregate
principal amount of $5,000,000. Pursuant to the Indenture, a Bond holder may
instruct the remarketing agent to sell the Bonds and if the remarketing agent
notifies the Trustee that no sale can be made, Kentucky Ladder Company ("KLC")
is obligated to purchase the Bonds from a draw under a Letter of Credit provided
by National City Bank. KLC has entered into a Reimbursement Agreement dated as
of October 1, 1994, with National City Bank whereby it is obligated to repay any
amounts drawn upon the Letter of Credit. Under Section 8 of the Reimbursement
Agreement, any default under the Amended and Restated Senior Revolving Credit
and Term Loan agreement (as described in paragraph 1 above), is an Event of
Default under the reimbursement Agreement. Upon the occurrence of such Event of
Default, National City Bank may, in its sole discretion, notify the Trustee to
declare a default under the Bonds.
<PAGE> 1
Exhibit 1.2
WERNER HOLDING CO. (DE), INC.
$135,000,000
10% Senior Subordinated Notes due 2007
REGISTRATION RIGHTS AGREEMENT
-----------------------------
November 14, 1997
CHASE SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Werner Holding Co. (DE), Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to Chase Securities Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Goldman, Sachs & Co. (collectively,
the "INITIAL PURCHASERS"), upon the terms and subject to the conditions set
forth in a purchase agreement dated November 14, 1997 among the Company, Werner
Holding Co. (PA), Inc. ("Holding"), the subsidiaries of the Company listed on
the signature pages hereto (the "Subsidiary Guarantors", and, together with
Holding, the "Guarantors"), and the Initial Purchasers (the "PURCHASE
AGREEMENT"), $135,000,000 aggregate principal amount of its 10% Senior
Subordinated Notes due 2007 (the "SECURITIES"). Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Purchase
Agreement.
As an inducement to the Initial Purchasers to enter into the
Purchase Agreement and in satisfaction of a condition to the obligations of the
Initial Purchasers thereunder, the Company and the Guarantors agree with the
Initial Purchasers, for the benefit of the holders (including the Initial
Purchasers) of the Securities, the Exchange Securities (as defined herein) and
the Private Exchange Securities (as defined herein) (collectively, the
"HOLDERS"), as follows:
1. REGISTERED EXCHANGE OFFER. The Company and the Guarantors
shall (i) prepare and, not later than 90 days following the date of original
issuance of the Securities (the "ISSUE DATE"), file with the Commission a
registration statement (the "EXCHANGE OFFER REGISTRATION STATEMENT") on an
appropriate form under the Securities Act with respect to a proposed offer to
the Holders (the "REGISTERED EXCHANGE OFFER") to issue and deliver to such
Holders, in exchange for Securities, a like aggregate principal amount of debt
securities of the Company (the "EXCHANGE SECURITIES") that are identical in all
material respects to the Securities, except for the transfer restrictions
relating to the Securities and the absence of registration rights, (ii) use
their best efforts to cause the Exchange Offer Registration Statement to become
effective under the
<PAGE> 2
2
Securities Act on or prior to 180 days after the Issue Date, and (iii) unless
the Exchange Offer would not be permitted by applicable law or Commission
policy, commence the Registered Exchange Offer and use their best efforts to
issue on or prior to 30 business days after the date on which the Exchange Offer
Registration Statement is declared effective by the Commission, Exchange
Securities in exchange for all Securities tendered prior thereto in the
Registered Exchange Offer (such period being called the "EXCHANGE OFFER
REGISTRATION PERIOD"). The Exchange Securities will be issued under the
Indenture or an indenture (the "EXCHANGE SECURITIES INDENTURE") between the
Company, the Guarantors and the Trustee or such other bank or trust company that
is reasonably satisfactory to the Initial Purchasers, as trustee (the "EXCHANGE
SECURITIES TRUSTEE"), such indenture to be identical in all material respects to
the Indenture, except for the transfer restrictions relating to the Securities.
Upon the effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder electing to exchange Securities for Exchange Securities
(assuming that such Holder (a) is not an affiliate of the Company, a Guarantor
or an Exchanging Dealer (as defined herein) not complying with the requirements
of the next sentence, (b) is not an Initial Purchaser holding Securities that
have, or that are reasonably likely to have, the status of an unsold allotment
in an initial distribution, (c) acquires the Exchange Securities in the ordinary
course of such Holder's business and (d) has no arrangements or understandings
with any person to participate in the distribution of the Securities or the
Exchange Securities) and to trade such Exchange Securities from and after their
receipt without any limitations or restrictions under the Securities Act and
without material restrictions under the securities laws of the several states of
the United States. The Company, the Guarantors, the Initial Purchasers and each
Exchanging Dealer acknowledge that, pursuant to current interpretations by the
Commission's staff of Section 5 of the Securities Act, (i) each Holder that is a
broker-dealer electing to exchange Securities, acquired for its own account as a
result of market making activities or other trading activities, for Exchange
Securities (an "EXCHANGING DEALER"), is required to deliver a prospectus
containing substantially the information set forth in Annex A hereto on the
cover, in Annex B hereto in the "Exchange Offer Procedures" section and the
"Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of
Distribution" section of such prospectus in connection with a sale of any such
Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer and (ii) if any Initial Purchaser elects to sell
Exchange Securities acquired in exchange for Securities constituting any portion
of an unsold allotment, it is required to deliver a prospectus, containing the
information required by Items 507 and/or 508 or Regulation S-K under the
Securities Act, as applicable, in connection with such a sale.
If, prior to the consummation of the Registered Exchange
Offer, any Holder holds any Securities acquired by it that have, or that are
reasonably likely to be determined to have, the status of an unsold allotment in
an initial distribution, or any Holder is not entitled to participate in the
Registered Exchange Offer, the Company and the Guarantors shall, upon the
written request of any such Holder, simultaneously with the delivery of the
Exchange Securities in the Registered Exchange Offer, issue and deliver to any
such Holder, in exchange for the Securities held by such Holder (the "PRIVATE
EXCHANGE"), a like aggregate principal amount of debt securities of the Company
(the "PRIVATE EXCHANGE SECURITIES") that are identical in all material respects
to the Exchange Securities, except for the transfer restrictions relating to
such Private Exchange Securities. The Private Exchange Securities will be issued
under the same indenture as the Exchange Securities, and the Company shall use
its reasonable best efforts to cause the Private Exchange Securities to bear the
same CUSIP number as the Exchange Securities.
<PAGE> 3
3
In connection with the Registered Exchange Offer, the Company
and the Guarantors shall:
(a) mail to each Holder a copy of the prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than
20 business days (or longer, if required by applicable law) after the
date on which notice of the Registered Exchange Offer is mailed to the
Holders;
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of
New York;
(d) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York City time, on the last
business day on which the Registered Exchange Offer shall remain open;
and
(e) otherwise comply in all respects with all laws that are
applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered
Exchange Offer and any Private Exchange, as the case may be, the Company and the
Guarantors shall:
(a) accept for exchange all Securities tendered and not
validly withdrawn pursuant to the Registered Exchange Offer and the
Private Exchange;
(b) deliver to the Trustee for cancelation all Securities so
accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as
the case may be, promptly to authenticate and deliver to each Holder,
Exchange Securities or Private Exchange Securities, as the case may be,
equal in principal amount to the Securities of such Holder so accepted
for exchange.
The Company and the Guarantors shall use their best efforts to
keep the Exchange Offer Registration Statement effective and to amend and
supplement the prospectus contained therein in order to permit such prospectus
to be used by all persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Securities; PROVIDED that (i) in
the case where such prospectus and any amendment or supplement thereto must be
delivered by an Exchanging Dealer, such period shall be the lesser of 90 days
and the date on which all Exchanging Dealers have sold all Exchange Securities
held by them and (ii) the Company and the Guarantors shall make such prospectus
and any amendment or supplement thereto available to any broker-dealer for use
in connection with any resale of any Exchange Securities for a period not to
exceed 90 days after the consummation of the Registered Exchange Offer.
The Indenture or the Exchange Securities Indenture, as the
case may be, shall provide that the Securities, the Exchange Securities and the
Private Exchange Securities shall vote and consent together on all matters as
one class and that none of the Securities, the Exchange
<PAGE> 4
4
Securities or the Private Exchange Securities will have the right to vote or
consent as a separate class on any matter.
Interest on each Exchange Security and Private Exchange
Security issued pursuant to the Registered Exchange Offer and in the Private
Exchange will accrue from the last interest payment date on which interest was
paid on the Securities surrendered in exchange therefor or, if no interest has
been paid on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer
shall be required to represent to the Company that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understandings with any person to
participate in the distribution of the Securities or the Exchange Securities
within the meaning of the Securities Act and (iii) such Holder is not an
affiliate of the Company or any Guarantor or, if it is such an affiliate, such
Holder will comply with the registration and prospectus delivery requirements of
the Securities Act to the extent applicable.
Notwithstanding any other provisions hereof, the Company and
the Guarantors will ensure that, except for the Holders' Information (as defined
in Section 2(c)), (i) any Exchange Offer Registration Statement and any
amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the Securities Act and the rules
and regulations of the Commission thereunder, (ii) any Exchange Offer
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any Exchange
Offer Registration Statement, and any supplement to such prospectus, does not,
as of the consummation of the Registered Exchange Offer, include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
2. SHELF REGISTRATION. If (i) the Company and the Guarantors
are not required to file the Exchange Offer Registration Statement or permitted
to consummate the Registered Exchange Offer because the Registered Exchange
Offer is not permitted by applicable law or Commission policy, (ii) any
Securities validly tendered pursuant to the Registered Exchange Offer are not
exchanged for Exchange Securities within 30 days after the Effectiveness Target
Date (as defined in Section 3) of the Exchange Offer Registration Statement or
(iii) any Holder of Securities notifies the Company prior to the 20th day
following consummation of the Registered Exchange Offer that (A) it is
prohibited by law or Commission policy from participating in the Registered
Exchange Offer, (B) that it may not resell the Exchange Securities acquired by
it in the Registered Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales, (C) that it is an
Initial Purchaser and that such Securities are not eligible to be exchanged for
Exchange Securities or (D) that it is a broker-dealer and owns Securities
acquired directly from the Company or an affiliate of the Company, the Company
and the Guarantors will file with the Commission a shelf registration statement
on an appropriate form under the Securities Act relating to the offer and sale
of the Transfer Restricted Securities (as defined below) by the Holders thereof
from time to time in accordance with the methods of distribution set forth in
such registration statement (hereafter, a "SHELF REGISTRATION STATEMENT" and
together with any Exchange Offer Registration Statement, a "REGISTRATION
STATEMENT"). If the Company and the Guarantors are required to file a Shelf
Registration Statement the following provisions shall apply:
<PAGE> 5
5
(a) The Company and the Guarantors will use their best efforts
to file the Shelf Registration Statement with the Commission on or prior to 90
days after such filing obligation arises and to cause the Shelf Registration
Statement to be declared effective by the Commission on or prior to 135 days
after such obligation arises.
(b) The Company and the Guarantors shall use their reasonable
best efforts to keep the Shelf Registration Statement continuously effective in
order to permit the prospectus forming part thereof to be used by Holders of
Transfer Restricted Securities for a period of two years from the Issue Date or
such shorter period that will terminate when all the Transfer Restricted
Securities covered thereby (i) have been sold pursuant thereto or (ii) are
distributed to the public pursuant to Rule 144 under the Securities Act or are
saleable pursuant to Rule 144(k) under the Securities Act (in any such case,
such period being called the "SHELF REGISTRATION PERIOD"). The Company and the
Guarantors shall be deemed not to have used their reasonable best efforts to
keep the Shelf Registration Statement effective during the requisite period if
any of them voluntarily takes any action that would result in Holders of
Transferred Restricted Securities covered thereby not being able to offer and
sell such Transfer Restricted Securities during that period, unless (i) such
action is required by applicable law, or (ii) such action is taken by the
Company in good faith and for valid business reasons (not including avoidance of
the Company's obligations hereunder), including the acquisition or divestiture
of assets, so long as the Company promptly thereafter complies with the
requirements of Section 4(j) hereof, if applicable.
(c) Notwithstanding any other provisions hereof, the Company
and the Guarantors will ensure that (i) any Shelf Registration Statement and any
amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the Securities Act and the rules
and regulations of the Commission thereunder, (ii) any Shelf Registration
Statement and any amendment thereto (in either case, other than with respect to
information included therein in reliance upon or in conformity with written
information furnished to the Company by or on behalf of any Holder specifically
for use therein (the "HOLDERS' INFORMATION")) does not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Shelf Registration Statement, and any
supplement to such prospectus (in either case, other than with respect to
Holders' Information), does not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
3. LIQUIDATED DAMAGES. (a) The parties hereto agree that the
Holders of Transfer Restricted Securities will suffer damages if the Company or
any Guarantor fails to fulfill its obligations under Section 1 or Section 2, as
applicable, and that it would not be feasible to ascertain the extent of such
damages. Accordingly, if (i) the Company and the Guarantors fail to file any of
the Registration Statements required by this Registration Rights Agreement on or
before the date specified for such filing, (ii) any of such Registration
Statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness in Section 1 or Section 2(a), as applicable
(the "EFFECTIVENESS TARGET DATE"), (iii) unless the Registered Exchange Offer
would not be permitted by applicable law or Commission policy, the Company and
the Guarantors fail to consummate the Registered Exchange Offer within 30
business days of the Effectiveness Target Date with respect to the Exchange
Offer Registration Statement, or (iv) the Shelf Registration Statement or the
Exchange Offer Registration Statement is declared effective but thereafter
ceases to be effective or usable in connection with resales or exchanges of
Transfer Restricted Securities during the periods specified in Section 1 or
Section 2, as applicable, (each such event referred to in clauses (i) through
(iv) above a "REGISTRATION DEFAULT"), then the
<PAGE> 6
6
Company and the Guarantors agree to pay liquidated damages (the "Liquidated
Damages") to each Holder of Transferred Restricted Securities, with respect to
the first 90-day period immediately following the occurrence of the first
Registration Default in an amount equal to $.05 per week per $1,000 principal
amount of Transferred Restricted Securities held by such Holder. The amount of
the Liquidated Damages will increase by an additional $.05 per week per $1,000
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of $.20 per week per $1,000 principal
amount of Transferred Restricted Securities. All accrued Liquidated Damages will
be paid by the Company and the Guarantors, on each date on which interest on the
Securities is otherwise payable, in the same manner as interest payments on the
Securities. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease. As used herein, the term "TRANSFER RESTRICTED
SECURITIES" means (i) each Security until the date on which such Security has
been exchanged for a freely transferable Exchange Security in the Registered
Exchange Offer, (ii) each Exchange Security following the exchange by a
broker-dealer in the Registered Exchange Offer of a Security for an Exchange
Security, until the date on which such Exchange Security is sold to a purchaser
who receives from such broker-dealer on or prior to the date of such sale a copy
of the prospectus contained in the Exchange Offer Registration Statement, (iii)
each Security or Private Exchange Security until the date on which it has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iv) each Security or Private Exchange
Security until the date on which it has been distributed to the public pursuant
to Rule 144 under the Act. Notwithstanding anything to the contrary in this
Section 3(a), the Company and the Guarantors shall not be required to pay
Liquidated Damages to a Holder of Transfer Restricted Securities if such Holder
failed to comply with its obligations to make the representations set forth in
the second to last paragraph of Section 1 or failed to provide the information
required to be provided by it, if any, pursuant to Section 4(n).
(b) The Company shall notify the Trustee and the Paying Agent
under the Indenture immediately upon the happening of each and every
Registration Default. The Company and the Guarantors shall pay the Liquidated
Damages due on the Transfer Restricted Securities by depositing with the Paying
Agent (which may not be the Company for these purposes), in trust, for the
benefit of the Holders thereof, prior to 10:00 a.m., New York City time, on the
next interest payment date specified by the Indenture and the Securities, sums
sufficient to pay the Liquidated Damages then due or by making payment in such
other manner as may be specified for the payment of interest in the Indenture or
the Exchange Securities Indenture. The Liquidated Damages due shall be payable
on each interest payment date specified by the Indenture and the Securities to
the record holder entitled to receive the interest payment to be made on such
date. Each obligation to pay Liquidated Damages shall be deemed to accrue from
and including the date of the applicable Registration Default.
(c) The parties hereto agree that the Liquidated Damages
provided for in this Section 3 constitute a reasonable estimate of and are
intended to constitute the sole damages that will be suffered by Holders of
Transfer Restricted Securities by reason of the occurrence of any of the events
described in Section 3(a)(i) through 3(a)(iv) hereof.
4. REGISTRATION PROCEDURES. In connection with any
Registration Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser,
prior to the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and shall use its reasonable best
<PAGE> 7
7
efforts to reflect in each such document, when so filed with the Commission,
such comments as any Initial Purchaser may reasonably propose; (ii) include the
information set forth in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section and in Annex C hereto in the "Plan of Distribution" section of the
prospectus forming a part of the Exchange Offer Registration Statement, and
include the information set forth in Annex D hereto in the Letter of Transmittal
delivered pursuant to the Registered Exchange Offer; and (iii) if reasonably
requested by any Initial Purchaser, include the information required by Items
507 or 508 of Regulation S-K, as applicable, in the prospectus forming a part of
the Exchange Offer Registration Statement.
(b) The Company shall advise each Initial Purchaser, each
Exchanging Dealer and the Holders (if applicable) and, if requested by any such
person, confirm such advice in writing (which advice pursuant to clauses
(ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the
prospectus until the requisite changes have been made):
(i) when any Registration Statement and any amendment
thereto has been filed with the Commission and when such Registration
Statement or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to any Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or any Guarantor of any
notification with respect to the suspension of the qualification of the
Securities, the Exchange Securities or the Private Exchange Securities
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event that requires the making
of any changes in any Registration Statement or the prospectus included
therein in order that the statements therein are not misleading and do
not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(c) The Company and the Guarantors will make every reasonable
effort to obtain the withdrawal at the earliest possible time of any order
suspending the effectiveness of any Registration Statement.
(d) The Company will furnish to each Holder of Transfer
Restricted Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one conformed copy of such Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules and, if any such Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).
(e) The Company will, during the Shelf Registration Period,
deliver to each Holder of Transfer Restricted Securities included within the
coverage of any Shelf Registration Statement, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Company and the Guarantors consent to
<PAGE> 8
8
the use (in accordance with applicable law) of such prospectus or any amendment
or supplement thereto by each of the selling Holders of Transfer Restricted
Securities in connection with the offer and sale of the Transfer Restricted
Securities covered by such prospectus or any amendment or supplement thereto.
(f) The Company will furnish to each Initial Purchaser and
each Exchanging Dealer, and to any other Holder who so requests, without charge,
at least one conformed copy of the Exchange Offer Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
and, if any Initial Purchaser or Exchanging Dealer or any such Holder so
requests in writing, all exhibits thereto (including those, if any, incorporated
by reference).
(g) The Company will, during the Exchange Offer Registration
Period or the Shelf Registration Period, as applicable, promptly deliver to each
Initial Purchaser, each Exchanging Dealer and such other persons that are
required to deliver a prospectus following the Registered Exchange Offer,
without charge, as many copies of the final prospectus included in the Exchange
Offer Registration Statement or the Shelf Registration Statement and any
amendment or supplement thereto as such Initial Purchaser, Exchanging Dealer or
other persons may reasonably request; and the Company and the Guarantors consent
to the use (in accordance with applicable law) of such prospectus or any
amendment or supplement thereto by any such Initial Purchaser, Exchanging Dealer
or other persons, as applicable, as aforesaid.
(h) Prior to the effective date of any Registration Statement,
the Company and the Guarantors will use their reasonable best efforts to
register or qualify, or cooperate with the Holders of Securities, Exchange
Securities or Private Exchange Securities included therein and their respective
counsel in connection with the registration or qualification of, such
Securities, Exchange Securities or Private Exchange Securities for offer and
sale under the securities or blue sky laws of such jurisdictions as any such
Holder reasonably requests in writing and do any and all other acts or things
necessary or advisable to enable the offer and sale in such jurisdictions of the
Securities, Exchange Securities or Private Exchange Securities covered by such
Registration Statement; PROVIDED that the Company and the Guarantors will not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject it to general
service of process or to taxation in any such jurisdiction where it is not then
so subject.
(i) The Company and the Guarantors will cooperate with the
Holders of Securities, Exchange Securities or Private Exchange Securities to
facilitate the timely preparation and delivery of certificates representing
Securities, Exchange Securities or Private Exchange Securities to be sold
pursuant to any Registration Statement free of any restrictive legends and in
such denominations and registered in such names as the Holders thereof may
request in writing at least 3 business days prior to sales of Securities,
Exchange Securities or Private Exchange Securities pursuant to such Registration
Statement.
(j) If any event contemplated by Section 4 (b)(ii) through (v)
occurs during the period for which the Company and the Guarantors are required
to maintain an effective Registration Statement, the Company and the Guarantors
will promptly prepare and file with the Commission a post-effective amendment to
the Registration Statement or a supplement to the related prospectus or file any
other required document so that, as thereafter delivered to purchasers of the
Securities, Exchange Securities or Private Exchange Securities from a Holder or
an Exchanging Dealer, the prospectus will not include an untrue statement of a
material fact
<PAGE> 9
9
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the
Securities, Exchange Securities and the Private Exchange Securities, as the case
may be, and provide the applicable trustee with printed certificates for the
Securities, the Exchange Securities or the Private Exchange Securities, as the
case may be, in a form eligible for deposit with The Depository Trust Company.
(l) The Company and the Guarantors will comply with all
applicable rules and regulations of the Commission and the Company will make
generally available to its security holders as soon as practicable after the
effective date of the applicable Registration Statement an earning statement
satisfying the provisions of Section 11(a) of the Securities Act.
(m) The Company and the Guarantors will cause the Indenture or
the Exchange Securities Indenture, as the case may be, to be qualified under the
Trust Indenture Act as required by applicable law in a timely manner.
(n) The Company may require each Holder of Transfer Restricted
Securities to be registered pursuant to any Shelf Registration Statement to
furnish to the Company such information (including supplements thereto)
concerning the Holder and the distribution of such Transfer Restricted
Securities as the Company may from time to time reasonably require for inclusion
in such Shelf Registration Statement, and the Company may exclude from such
registration the Transfer Restricted Securities of any Holder that fails to
furnish such information (including supplements thereto) within a reasonable
time after receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder
of Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company pursuant to Section 4(b)(ii) through (v) hereof, such
Holder will discontinue disposition of such Transfer Restricted Securities until
such Holder's receipt of copies of the supplemental or amended prospectus
contemplated by Section 4(j) hereof or until advised in writing (the "ADVICE")
by the Company that the use of the applicable prospectus may be resumed. If the
Company shall give any notice under Section 4(b)(ii) through (v) during the
period that the Company is required to maintain an effective Registration
Statement (the "EFFECTIVENESS PERIOD"), such Effectiveness Period shall be
extended by the number of days during such period from and including the date of
the giving of such notice to and including the date when each seller of Transfer
Restricted Securities covered by such Registration Statement shall have received
(x) the copies of the supplemental or amended prospectus contemplated by Section
4(j) (if an amended or supplemental prospectus is required) or (y) the Advice
(if no amended or supplemental prospectus is required).
(p) In the case of a Shelf Registration Statement, the Company
and the Guarantors shall enter into such customary agreements (including, if
requested, an underwriting agreement in customary form to be negotiated between
the parties in good faith) and take all such other action, if any, as Holders of
a majority in aggregate principal amount of the Securities, Exchange Securities
and Private Exchange Securities being sold or the managing underwriters (if any)
shall reasonably request in order to facilitate any disposition of Securities,
Exchange Securities or Private Exchange Securities pursuant to such Shelf
Registration Statement.
(q) In the case of a Shelf Registration Statement, the Company
and the Guarantors shall (i) make reasonably available for inspection by a
representative of, and Special
<PAGE> 10
10
Counsel (as defined below) acting for, Holders of a majority in aggregate
principal amount of the Securities, Exchange Securities and Private Exchange
Securities being sold and any underwriter participating in any disposition of
Securities, Exchange Securities or Private Exchange Securities pursuant to such
Shelf Registration Statement, all relevant financial and other records,
pertinent corporate documents and properties of Holding and its subsidiaries and
(ii) use their reasonable best efforts to have their officers, directors,
employees, accountants and counsel supply all relevant information reasonably
requested by such representative, Special Counsel or any such underwriter (an
"INSPECTOR") in connection with such Shelf Registration Statement, subject to
executing a confidentiality undertaking in customary form and with respect to
confidential and/or proprietary information of the Company and the Guarantors.
(r) In the case of a Shelf Registration Statement, the Company
and the Guarantors shall, if requested by Holders of a majority in aggregate
principal amount of the Securities, Exchange Securities and Private Exchange
Securities being sold, their Special Counsel or the managing underwriters (if
any) in connection with such Shelf Registration Statement, use their best
efforts to cause (i) their counsel to deliver an opinion relating to the Shelf
Registration Statement and the Securities, Exchange Securities or Private
Exchange Securities, as applicable, in customary form, (ii) their officers to
execute and deliver all customary documents and certificates reasonably
requested by Holders of a majority in aggregate principal amount of the
Securities, Exchange Securities and Private Exchange Securities being sold,
their Special Counsel or the managing underwriters (if any) and (iii) their
independent public accountants to provide a comfort letter or letters in
customary form, subject to receipt of appropriate documentation as contemplated,
and only if permitted, by Statement of Auditing Standards No. 72.
5. REGISTRATION EXPENSES. The Company and the Guarantors,
jointly and severally, will bear all expenses incurred in connection with the
performance of their obligations under Sections 1, 2, 3 and 4 and in the case of
a Shelf Registration Statement, the Company and the Guarantors, jointly and
severally, will reimburse the Initial Purchasers and the Holders for the
reasonable fees and disbursements of one firm of attorneys (in addition to any
local counsel) chosen by the Holders of a majority in aggregate principal amount
of the Securities, the Exchange Securities and the Private Exchange Securities
to be sold pursuant to such Registration Statement (the "SPECIAL COUNSEL")
acting for the Initial Purchasers or Holders in connection therewith.
6. INDEMNIFICATION. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Initial Purchaser or Exchanging Dealer, as
applicable, the Company and the Guarantors shall, jointly and severally,
indemnify and hold harmless each Holder (including, without limitation, any such
Initial Purchaser or Exchanging Dealer), its affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls such Holder within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 6 and
Section 7 as a Holder) from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, without
limitation, any loss, claim, damage, liability or action relating to purchases
and sales of Securities, Exchange Securities or Private Exchange Securities), to
which that Holder may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or any prospectus forming part thereof or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not
<PAGE> 11
11
misleading, and shall reimburse each Holder promptly upon demand for any legal
or other expenses reasonably incurred by that Holder in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; PROVIDED, HOWEVER, that the Company and
the Guarantors shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, an
untrue statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with any Holders'
Information; and PROVIDED, FURTHER, that with respect to any such untrue
statement in or omission from any related preliminary prospectus, the indemnity
contained in this Section 6(a) shall not inure to the benefit of any Holder from
whom the person asserting any such loss, claim, damage, liability or action
received Securities, Exchange Securities or Private Exchange Securities to the
extent that such loss, claim, damage, liability or action of or with respect to
such Holder results from the fact that both (A) a copy of the final prospectus
was not sent or given to such person at or prior to the written confirmation of
the sale of such Securities, Exchange Securities or Private Exchange Securities
to such person and such delivery was required by the Securities Act and (B) the
untrue statement in or omission from the related preliminary prospectus was
corrected in the final prospectus unless, in either case, such failure to
deliver the final prospectus was a result of non-compliance by the Company with
Section 4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each
Holder shall indemnify and hold harmless the Company, the Guarantors, their
affiliates, their respective officers, directors, employees, representatives and
agents, and each person, if any, who controls the Company or the Guarantors
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 6(b) and Section 7 as the Company),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any such Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any
Holders' Information furnished to the Company by such Holder, and shall
reimburse the Company and/or the Guarantors for any legal or other expenses
reasonably incurred by the Company and/or the Guarantors in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; PROVIDED, HOWEVER, that no such Holder
shall be liable for any indemnity claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Securities, Exchange
Securities or Private Exchange Securities pursuant to such Shelf Registration
Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying
party in writing of the claim or the commencement of that action; PROVIDED,
HOWEVER, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 6 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and PROVIDED, FURTHER,
<PAGE> 12
12
that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 6. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 6 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than the reasonable costs of investigation;
PROVIDED, HOWEVER, that an indemnified party shall have the right to employ its
own counsel in any such action, but the fees, expenses and other charges of such
counsel for the indemnified party will be at the expense of such indemnified
party unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based upon advice of counsel to the indemnified party)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (3) a conflict or potential conflict exists (based upon advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party that makes it impossible or inadvisable for counsel to the indemnifying
party to conduct the defense of both the indemnifying party and the indemnified
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity contained in
Sections 6(a) and 6(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
7. CONTRIBUTION. If the indemnification provided for in
Section 6 is unavailable or insufficient to hold harmless an indemnified party
under Section 6(a) or 6(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company from the offering and sale
of the Securities, on the one hand, and a Holder with respect to the sale by
such Holder of Securities, Exchange Securities or Private Exchange Securities,
on the other, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative
<PAGE> 13
13
benefits referred to in clause (i) above but also the relative fault of the
Company, on the one hand, and such Holder, on the other, with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and a Holder, on the other, with respect to such offering and such sale shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Securities (before deducting expenses) received by or on behalf of the
Company as set forth in the table on the cover of the Offering Memorandum, on
the one hand, bear to the total proceeds received by such Holder with respect to
its sale of Securities, Exchange Securities or Private Exchange Securities, on
the other. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to the Company or
information supplied by the Company, on the one hand, or to any Holders'
Information supplied by such Holder, on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this Section 7 were
to be determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof, referred to above in
this Section 7 shall be deemed to include, for purposes of this Section 7, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 7, an
indemnifying party that is a Holder of Securities, Exchange Securities or
Private Exchange Securities shall not be required to contribute any amount in
excess of the amount by which the total price at which the Securities, Exchange
Securities or Private Exchange Securities sold by such indemnifying party to any
purchaser exceeds the amount of any damages which such indemnifying party has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
8. RULES 144 AND 144A. The Company and the Guarantors shall
use their reasonable best efforts to file the reports required to be filed by it
under the Securities Act and the Exchange Act in a timely manner and, if at any
time the Company is not required to file such reports, it will, upon the written
request of any Holder of Transfer Restricted Securities, make publicly available
other information so long as necessary to permit sales of such Holder's
securities pursuant to Rules 144 and 144A. The Company and the Guarantors
covenant that they will take such further action as any Holder of Transfer
Restricted Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Transfer Restricted Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rules 144 and 144A (including, without limitation, the
requirements of Rule 144A(d)(4)). Upon the written request of any Holder of
Transfer Restricted Securities, the Company shall deliver to such Holder a
written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
9. UNDERWRITTEN REGISTRATIONS. If any of the Transfer
Restricted Securities covered by any Shelf Registration Statement are to be sold
in an underwritten offering, the investment banker or investment bankers and
manager or managers that will administer the offering will be selected by the
Holders of a majority in aggregate principal amount of such Transfer Restricted
Securities included in such offering, subject to the consent of the Company
<PAGE> 14
14
(which shall not be unreasonably withheld or delayed), and such Holders shall be
responsible for all underwriting commissions and discounts in connection
therewith.
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
10. MISCELLANEOUS. (a) AMENDMENTS AND WAIVERS. The provisions
of this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities, taken as a single class. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders whose Securities, Exchange
Securities or Private Exchange Securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of a majority in aggregate
principal amount of the Securities, Exchange Securities and the Private Exchange
Securities being sold by such Holders pursuant to such Registration Statement.
(b) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier or air courier guaranteeing next-day delivery:
(1) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section
10(b), which address initially is, with respect to each Holder, the
address of such Holder maintained by the Registrar under the Indenture,
with a copy in like manner to Chase Securities Inc., Donaldson, Lufkin
& Jenrette Securities Corporation, and Goldman, Sachs & Co.;
(2) if to an Initial Purchaser, initially at its address set
forth in the Purchase Agreement; and
(3) if to the Company or the Guarantors, initially at the
address set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; one business
day after being delivered to a next-day air courier; five business days after
being deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Company, the Guarantors and their respective successors and assigns.
(d) COUNTERPARTS. This Agreement may be executed in any number
of counterparts (which may be delivered in original form or by telecopier) and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
<PAGE> 15
15
(e) DEFINITION OF TERMS. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange, Inc.
is open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
(f) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(h) REMEDIES. In the event of a breach by the Company or the
Guarantors or by any Holder of any of their obligations under this Agreement,
each Holder, the Company or the Guarantors, as the case may be, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages (other than the recovery of damages for a breach by the Company of its
obligations under Sections 1 or 2 hereof for which Liquidated Damages have been
paid pursuant to Section 3 hereof), will be entitled to specific performance of
its rights under this Agreement. The Company, the Guarantors and each Holder
agree that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of any of the provisions of this Agreement
and hereby further agree that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.
(i) NO INCONSISTENT AGREEMENTS. The Company and the Guarantors
represent, warrant and agree that (i) they have not entered into and shall not,
on or after the date of this Agreement, enter into any agreement that is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof, (ii) they have not previously
entered into any agreement which remains in effect granting any registration
rights with respect to any of their debt securities to any person and (iii)
without limiting the generality of the foregoing, without the written consent of
the Holders of a majority in aggregate principal amount of the then outstanding
Transfer Restricted Securities, they shall not grant to any person the right to
request the Company to register any debt securities of the Company under the
Securities Act unless the rights so granted are not in conflict or inconsistent
with the provisions of this Agreement.
(j) NO PIGGYBACK ON REGISTRATIONS. Neither the Company, the
Guarantors nor any of their security holders (other than the Holders of Transfer
Restricted Securities in such capacity) shall have the right to include any
securities of the Company or any Guarantor in any Shelf Registration or
Registered Exchange Offer other than Transfer Restricted Securities.
(k) SEVERABILITY. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.
<PAGE> 16
16
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Guarantors and the Initial Purchasers.
Very truly yours,
WERNER HOLDING CO. (DE), INC.,
by /s/
----------------------------
Name:
Title:
WERNER HOLDING CO. (PA), INC.,
by /s/
----------------------------
Name:
Title:
WERNER CO.,
by /s/
----------------------------
Name:
Title:
GOLD MEDAL LADDER COMPANY,
by /s/
----------------------------
Name:
Title:
KENTUCKY LADDER COMPANY,
by /s/
----------------------------
Name:
Title:
<PAGE> 17
17
FLORIDA LADDER COMPANY,
by /s/
----------------------------
Name:
Title:
WERNER MANAGEMENT CO.,
by /s/
----------------------------
Name:
Title:
WERNER FINANCIAL INC.,
by /s/
----------------------------
Name:
Title:
R. D. ARIZONA LADDER CORP.,
by /s/
----------------------------
Name:
Title:
WIP TECHNOLOGIES, INC.,
by /s/
----------------------------
Name:
Title:
ARDEE INVESTMENT, INC.,
by /s/
----------------------------
Name:
Title:
<PAGE> 18
18
OLYMPUS PROPERTIES, INC.,
by /s/
----------------------------
Name:
Title:
PHOENIX MANAGEMENT SERVICES, INC.,
by /s/
----------------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.,
by /s/
----------------------------
Authorized Signatory
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION,
by /s/
----------------------------
Authorized Signatory
GOLDMAN, SACHS & CO.,
by /s/
----------------------------
Authorized Signatory
<PAGE> 19
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
<PAGE> 20
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
<PAGE> 21
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 90 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until _______________,
199_, all dealers effecting transactions in the Exchange Securities may be
required to deliver a prospectus. 1/
Neither the Company nor any of the Guarantors will receive any
proceeds from any sale of Exchange Securities by broker-dealers. Exchange
Securities received by broker-dealers for their own account pursuant to the
Registered Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the Exchange Securities or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer or the purchasers of any such Exchange Securities. Any
broker-dealer that resells Exchange Securities that were received by it for its
own account pursuant to the Registered Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Securities may be deemed to
be an "underwriter" within the meaning of the Securities Act and any profit on
any such resale of Exchange Securities and any commission or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For a period of 90 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company and the Guarantors have agreed to pay
all expenses incident to the Registered Exchange Offer (including the expenses
of one counsel for the Holders of the Securities) other than commissions or
concessions of any broker-dealers and will indemnify the Holders of the
Securities (including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
- --------
1/ In addition, the legend required by Item 502(e) of Regulation
S-K will appear on the back cover page of the Registered
Exchange Offer prospectus.
<PAGE> 22
ANNEX D
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
-----------------------------------------------
Address:
--------------------------------------------
-----------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE> 1
Exhibit 1.3
LETTER OF TRANSMITTAL
OFFER FOR ALL OUTSTANDING
PRIVATELY PLACED 10% SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
10% SERIES A SENIOR SUBORDINATED NOTES DUE 2007
OF
WERNER HOLDING CO. (DE), INC.
- --------------------------------------------------------------------------------
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1998, UNLESS EXTENDED
- --------------------------------------------------------------------------------
THE EXCHANGE AGENT IS IBJ SCHRODER BANK & TRUST COMPANY, WHOSE MAILING
ADDRESS, FACSIMILE NUMBER AND TELEPHONE NUMBER ARE AS FOLLOWS:
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY HAND DELIVERY OR OVERNIGHT COURIER:
IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company
P.O. Box 84 1 State Street
Bowling Green Station New York, New York 10004
New York, New York 10224-0084 Attention: Securities Processing Window
Attention: Reorganization Operations Subcellar One (SC1)
Department
BY TELEPHONE:
BY FACSIMILE: (212) 858-2103
(212) 858-2611
</TABLE>
- --------------------------------------------------------------------------------
DESCRIPTION OF SECURITIES TENDERED
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF REGISTERED HOLDER AS IT APPEARS ON THE PRIVATELY
PLACED 10% SENIOR SUBORDINATED NOTES DUE 2007 ("OLD NOTES")
- -----------------------------------------------------------------------------------------------------------------
CERTIFICATE NUMBER(S) PRINCIPAL AMOUNT
OF OLD NOTES OF OLD NOTES
TRANSMITTED TRANSMITTED
----------------------------------------
----------------------------------------
----------------------------------------
- -----------------------------------------------------------------------------------------------------------------
----------------------------------------
TOTAL SHARES
</TABLE>
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE
ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE> 2
Ladies and Gentlemen:
1. The undersigned hereby agrees to exchange the aggregate principal amount
of privately placed 10% Senior Subordinated Notes Due 2007 (the "Old Notes") for
a like principal amount of 10% Series A Senior Subordinated Notes Due 2007 (the
"Notes") of the Company, upon the terms and subject to the conditions contained
in the Registration Statement on Form S-4 filed by Werner Holding Co. (DE),
Inc., a Delaware corporation, with the Securities and Exchange Commission (the
"Registration Statement") and the accompanying Prospectus dated ,
1998 included therein (the "Prospectus"), receipt of which is hereby
acknowledged.
2. The undersigned hereby acknowledges and agrees that the Notes will bear
interest from and including November 24, 1997, the date of issuance of the Old
Notes. Accordingly, the undersigned will forego accrued but unpaid interest on
his, her or its Old Notes that are exchanged for Notes from and including
November 24, 1997 but will receive such interest under the Notes.
3. The undersigned hereby represents and warrants that he, she or it has
full authority to tender the Old Notes described above. The undersigned will,
upon request, execute and deliver any additional documents deemed by the Company
to be necessary or desirable to complete the exchange of the Old Notes.
4. The undersigned understands that the tender of the Old Notes pursuant to
all of the procedures set forth in the Prospectus will constitute an agreement
between the undersigned and the Company as to the terms and conditions set forth
in the Prospectus.
5. The undersigned hereby represents and warrants that the undersigned is
acquiring the Notes in the ordinary course of the business of the undersigned
and that the undersigned is not engaged in, and does not intend to engage in, a
distribution of the Notes.
6. If the undersigned is a broker-dealer, (i) it hereby represents and
warrants that it acquired the Old Notes for its own account as a result of
market-making activities or other trading activities and (ii) it hereby
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), in connection with
any resale of the Notes received hereby. The acknowledgment contained in the
foregoing sentence shall not be deemed an admission that the undersigned is an
"underwriter" within the meaning of the Securities Act.
7. Any obligation of the undersigned hereunder shall be binding upon the
successors, assigns, executors, administrators, trustees in bankruptcy and legal
and personal representatives of the undersigned.
<PAGE> 3
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTION 1)
To be completed ONLY IF the Notes are to be issued in the name of someone
other than the undersigned or are to be sent to someone other than the
undersigned or to the undersigned at an address other than that provided above.
Issue to:
Name
- ----------------------------------------------------------------------------
(PLEASE PRINT)
Address
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
(INCLUDING ZIP CODE)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTION 1)
To be completed ONLY IF the Notes are to be issued in the name of someone
other than the undersigned or are to be sent to someone other than the
undersigned or to the undersigned at an address other than that provided above.
Mail to:
Name
--------------------------------------------------------------------------
(PLEASE PRINT)
Address
-----------------------------------------------------------------------
- ------------------------------------------------------------------------------
(INCLUDING ZIP CODE)
- -------------------------------------------------------------------------------
SIGNATURE
---------
(Must be signed by the registered holder exactly as name(s) appear(s) on Old
Notes. If signature is by trustee, executor, administrator, guardian,
attorney-in-fact, offer of a corporation or other person acting in a fiduciary
or representative capacity, please set forth full title. See Instruction 3.)
- ------------------------------------- Taxpayer Identification No.
(NAME(S) OF REGISTERED HOLDER(S))
----------------------------------
By:
----------------------------------- Signature Guaranteed By:
NAME:
TITLE: ----------------------------------
(SEE INSTRUCTION 1)
Date: Title:
--------------------------------- -----------------------------
Address: Name of Institution:
------------------------------ ---------------
Address:
- -------------------------------------- ---------------------------
Telephone No. Date:
------------------------- ------------------------------
- ------------------------------------------------------------------------------
PLEASE READ THE INSTRUCTIONS BELOW, WHICH FORM A PART OF THIS LETTER OF
TRANSMITTAL.
<PAGE> 4
INSTRUCTIONS
1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal must
be guaranteed by a firm that is a member of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc. or by
a commercial bank or trust company having an office in the United States which
is a member of a recognized Medallion Signature Program approved by the
Securities Transfer Association, Inc. (an "Eligible Institution") unless (i) the
"Special Issuance and Delivery Instructions" above have not been completed or
(ii) the old Notes described above are tendered for the account of an Eligible
Institution.
2. DELIVERY OF LETTER OF TRANSMITTAL AND OLD NOTES. The Old Notes,
together with a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), should be mailed or delivered to the Exchange Agent at the
address set forth above.
THE METHOD OF DELIVERY OF OLD NOTES AND OTHER DOCUMENTS IS AT THE ELECTION
AND RISK OF THE RESPECTIVE HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL (WITH
RETURN RECEIPT), PROPERLY INSURED, IS SUGGESTED.
3. GUARANTEED DELIVERY PROCEDURES. Registered holders who wish to tender
their Old Notes and (i) whose Old Notes are not immediately available or (ii)
who cannot deliver their Old Notes, the Letter of Transmittal or any other
required documents to the Exchange Agent 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 registered holder of the Old
Notes, the certificate number or numbers of such Old Note(s) 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 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 (or
facsimile thereof), as well as the certificate(s) representing all
tendered Old Notes in proper form for transfer and all other documents
required by the Letter of Transmittal are received by the Exchange Agent
within five New York Stock Exchange trading days after the Expiration
Date.
Upon request of the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to registered holders who wish to tender their Old Notes according to the
guaranteed delivery procedures set forth above.
4. SIGNATURES ON LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by a person other than a registered holder
of any Old Notes, such Old Notes must be endorsed or accompanied by appropriate
bond powers, in either case signed exactly as the name or names of the
registered holder or holders appear on the Old Notes.
If this Letter of Transmittal or any Old Notes or bond power is signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
person should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
5. EXCHANGE OF OLD NOTES ONLY. Only the above-described Old Notes may be
exchanged for Notes pursuant to the Exchange Offer.
6. MISCELLANEOUS. All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of tendered Old Notes
will be resolved by the Company, whose determination will be final and binding.
The Company reserves the absolute right to reject any or all tenders that are
not in proper form or the acceptance of which would, in the opinion of counsel
for the Company, be unlawful. The Company also reserves the right to waive any
irregularities or conditions of tender as to particular Old Notes.
<PAGE> 5
The Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in this Letter of Transmittal) will be final and
binding. Unless waived, any irregularities in connection with tenders or
consents must be cured within such time as the Company shall determine. Neither
the Company nor the Exchange Agent shall be under any duty to give notification
of defects in such tenders or shall incur liabilities for failure to give such
notification. Tenders of Old Notes will not be deemed to have been made until
such irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the irregularities
have not been cured or waived will be returned by the Exchange Agent to the
tendering holder thereof.
IMPORTANT TAX INFORMATION
Under current Federal income tax law, an Old Noteholder whose tendered Old
Notes are accepted for payment generally is required to provide the Exchange
Agent (as agent for the payer) with his or her correct taxpayer identification
number ("TIN") on Substitute Form W-9 below. If such Old Noteholder is an
individual, the TIN is his or her social security number. If the Exchange Agent
is not provided with the correct TIN, the Old Noteholder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that are
made to such Old Noteholders with respect to New Notes exchanged pursuant to the
Offer may be subject to backup withholding.
Certain Old Noteholders (including, among others, all corporations and
certain foreign individuals) may not be subject to these backup withholding and
reporting requirements. Exempt Old Noteholders should indicate their exempt
status on Substitute Form W-9. In order for a foreign individual to qualify as
an exempt recipient, that Old Noteholder must submit a properly completed
Internal Revenue Service Form W-8, signed under penalties of perjury, attesting
to his or her exempt status. Such statements can be obtained from the Exchange
Agent. See the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31 percent of any such payments made to the Old Noteholder. Backup withholding
is not an additional tax. Rather, the federal income tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to an Old
Noteholder with respect to Old Notes exchanged pursuant to the Offer, each Old
Noteholder is required to notify the Exchange Agent of his, her or its correct
TIN by completing the Substitute Form W-9 below certifying the TIN provided on
such form is correct (or that such Old Noteholder is awaiting a TIN) and that
(1) the Old Noteholder has not been notified by the Internal Revenue Service
that he, she or it is subject to backup withholding as a result of a failure to
report all interest or dividends or (2) the Internal Revenue Service has
notified the Old Noteholder that he, she or it is no longer subject to backup
withholding.
<PAGE> 6
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Old Noteholder is required to give the Exchange Agent the social
security number or employer identification number of the record owner of the Old
Notes. If the Old Notes are in more than one name or are not in the name of the
actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on which
number to report.
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY, AS AGENT
- ------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING ------------------------------
DEPARTMENT OF THE BELOW Social Security Number(s)
TREASURY OR
INTERNAL REVENUE ------------------------------
SERVICE Employer Identification Number
----------------------------------------------------------------------------
PAYER'S REQUEST FOR PART 2 -- Certification -- Under penalties of perjury, I certify that:
TAXPAYER (1) The number shown on this form is my correct Taxpayer Identification
IDENTIFICATION Number (or I am waiting for a number to be issued to me) and
NUMBER ("TIN") (2) I am not subject to backup withholding because: (a) I am exempt from
backup withholding, (b) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends or (c) the
IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you
have been notified by the IRS that you are subject to backup withholding
because of under-reporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to
backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out item
(2).
- ---------------------------------------------------------------------------------------------
PART 3
Awaiting
Signature Date TIN [ ]
------------------------------------------------ ------------
- ---------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31
PERCENT OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER, PLEASE REVIEW
THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.
<PAGE> 7
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within sixty (60) days, 31
percent of all reportable payments made to me thereafter will be withheld until
I provide a number.
<TABLE>
<S> <C>
- --------------------------------------------- ---------------------------------------------
Signature Date
</TABLE>
<PAGE> 1
Exhibit 2
AMENDED AND RESTATED
RECAPITALIZATION AGREEMENT
by and among
WERNER HOLDING CO. (PA), INC.
and
THE INVESTORS LISTED ON SCHEDULE 1
Dated as of October 27, 1997
<PAGE> 2
AMENDED AND RESTATED RECAPITALIZATION AGREEMENT
AMENDED AND RESTATED RECAPITALIZATION AGREEMENT (this "Agreement"),
dated as of October 27, 1997 (the "Agreement"), by and among Werner Holding Co.
(PA), Inc., a Pennsylvania corporation (the "Company"), and the Cayman Islands
corporations listed on Schedule 1 (each, an "Investor" and, collectively, the
"Investors").
WHEREAS, the Board of Directors of the Company (the "Company Board")
has decided to effect a comprehensive recapitalization of the Company as
described herein which includes certain transactions between the Company and
the Investors (the "Recapitalization");
WHEREAS, the Company Board has (i) determined that the
Recapitalization is fair to, and in the best interests of, the Company and its
shareholders, and (ii) resolved to approve and adopt this Agreement and the
transactions contemplated hereby upon the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, as a condition to the Investors' willingness to enter into
this Agreement and consummate the transactions contemplated hereby, the
Investors have required that certain shareholders agree, among other things, to
vote shares of the Company's Class A Common Stock, par value $1 per share (the
"Pre-Recapitalization Company Class A Common Stock"), and the Company's Class B
Common Stock, par value $1 per share (the "Pre-Recapitalization Company Class B
Common Stock"), beneficially owned by them in accordance with the terms of a
Shareholder Voting Agreement, dated as of October 8, 1997 (the "Voting
Agreement"), by and among the Investors and the shareholders parties thereto
(the "Shareholders") and comply with the other provisions of such Voting
Agreement; and in order to induce the Investors to enter into this Agreement,
the Shareholders have executed and delivered the Voting Agreement;
WHEREAS, the amendment and restatement of the Company's articles of
incorporation contemplated by the Recapitalization require for approval (i) the
vote of a majority of the issued and outstanding shares of each of (a) the
Pre-Recapitalization Company Class A Common Stock, and (b) the
Pre-Recapitalization Company Class B
<PAGE> 3
Common Stock, and (ii) all other votes required by Section 1906 of the
Pennsylvania Business Corporation Law (the "PBCL");
WHEREAS, the Company Board has determined that there is a reasonable
basis for the reclassification of the Company Class A Common Stock and the
Company Class B Common Stock provided for hereunder;
WHEREAS, the Company and the Investors desire to make certain
representations, warranties, covenants and agreements in connection with the
Recapitalization and also to prescribe various conditions to the
Recapitalization; and
WHEREAS, it is intended that the transactions contemplated hereby be
accounted for as a recapitalization for financial reporting purposes.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
THE RECAPITALIZATION
Section I.1 AMENDMENT AND RESTATEMENT OF THE COMPANY'S ARTICLES OF
INCORPORATION. In accordance with the PBCL, and upon the terms and subject to
the satisfaction or waiver of conditions contained in this Agreement, at or
prior to the Closing, the Company shall file with the Secretary of State of the
Commonwealth of Pennsylvania Articles of Amendment to amend and restate the
Company's Articles of Incorporation to read in their entirety substantially in
the form attached as Exhibit A (the "Amended Articles"). The Amended Articles
shall, among other things, provide as follows:
(a) The Company shall have eight classes of common stock, par value
$.01 per share (collectively, the "Post-Recapitalization Company Common
Stock"), and, (i) the first class of common stock shall be designated as
2
<PAGE> 4
"Class A Common Stock", (ii) the second class of common stock shall be
designated as "Class A-1 Common Stock", (iii) the third class of common stock
shall be designated as "Class B Common Stock", (iv) the fourth class of common
stock shall be designated as "Class B-1 Common Stock", (v) the fifth class of
common stock shall be designated as "Class C Common Stock", (vi) the sixth
class of common stock shall be designated as "Class D Common Stock", (vii) the
seventh class of common stock shall be designated as "Class E Common Stock",
and (viii) the eighth class of common stock shall be designated as "Common
Stock".
(b) Each share of Class A-1 Common Stock and each share of Class B-1
Common Stock shall be subject to mandatory redemption by the Company at any
time prior to March 31, 1998 at a redemption price of $2,421.29 per share (the
"Initial Cash Redemption Price") plus the right to potentially receive
additional consideration depending on certain future events, including the
future growth in the value of the equity of the Company, as set forth in the
Amended Articles.
Section I.2 RECLASSIFICATION OF SHARES.
(a) Upon the effectiveness of the Amended Articles, each issued and
outstanding share (other than any shares to be cancelled pursuant to Section
1.2(b)) of Pre-Recapitalization Company Class A Common Stock and
Pre-Recapitalization Company Class B Commcn Stock (collectively, the
"Pre-Recapitalization Company Common Stock") shall be reclassified and
converted as follows:
(i) for each share of Pre-Recapitalization Company Class A
Common Stock held by the shareholders of the Company listed on
Schedule 2 and noted thereon as being affiliated shareholders (the
"Listed Shareholders"): (A) the right to receive a fraction of a
fully paid and nonassessable share of Class A Common Stock, and (B)
the right to receive a fraction of a fully paid and nonassessable
share of Class A-1 Common Stock, as provided on Schedule 2;
(ii) for each share of Pre-Recapitaliza-
3
<PAGE> 5
tion Company Class A Common Stock held by shareholders of the Company
other than the Listed Shareholders (the "Other Shareholders"): (A)
the right to receive .1376 of a fully paid and nonassessable share of
Class A Common Stock, and (B) the right to receive .8624 of a fully
paid and nonassessable share of Class A-1 Common Stock;
(iii) for each share of Pre-Recapitalization Company Class B
Common Stock held by the Listed Shareholders: (A) the right to receive
a fraction of a share of a fully paid and nonassessable share of Class
B Common Stock, and (B) the right to receive a fraction of a share of
a fully paid and nonassessable share of Class B-1 Common Stock, as
provided on Schedule 2; and
(iv) for each share of Pre-Recapitalization Company Class B
Common Stock held by the Other Shareholders: (A) the right to receive
.1376 of a fully paid and nonassessable share of Class B Common Stock,
and (B) the right to receive .8624 of a fully paid and nonassessable
share of Class B-1 Common Stock.
(b) Each share of Pre-Recapitalizaticn Company Common Stock held in
the treasury of the Company or by any Subsidiary of the Company immediately
prior to the Closing Date shall, at the Closing, by virtue of the
Recapitalization and without any action on the part of the holder thereof, be
cancelled and retired and cease to exist and no payment shall be made with
respect thereto.
Section I.3 PURCHASE AND SALE OF THE INVESTOR SHARES. Pursuant to the
terms and subject to the conditions of this Agreement, at the Closing, (a) the
Company shall sell to each of the Investors the number of shares of
Post-Recapitalization Company Common Stock, and from such classes of Class C
Common Stock, Class D Common Stock or Class E Common Stock, to be set forth
next to the name of such Investor on Schedule 3 (the "Investor Shares") for an
aggregate purchase price for all Investor Shares of $122,715,000 (the "Purchase
Price") and
4
<PAGE> 6
for a per share purchase price of $2,421.29, (b) the Investors shall pay the
Purchase Price (allocated among the Investors in accordance with Schedule 3),
by wire transfer of immediately available funds, to such account or accounts
designated by the Company not less than two business days prior to the Closing
Date, and (c) the Company shall issue to each of the Investors certificates
representing the Investor Shares purchased by such Investor pursuant to this
Section 1.3.
Section I.4 REDEMPTION OF SHARES. At the Closing, following the
effectiveness of the Amended Articles and the receipt of the Purchase Price,
and after giving effect to the transactions contemplated by Section 1.2, the
Company shall redeem (the "Redemption") all of the issued and outstanding
shares of Class A-1 Common Stock and Class B-1 Common Stock.
Section I.5 COMPLIANCE WITH SECTION 1906 OF THE PBCL. The treatment of
shares of Pre-Recapitalization Company Common Stock hereunder is intended to
comply with the provisions of Section 1906 of the PBCL applicable to the
transactions contemplated hereby.
Section I.6 THE CLOSING. The closing of the Recapitalization (the
"Closing") shall take place at 10:00 a.m., E.S.T., at the offices of Gibson,
Dunn & Crutcher LLP, 200 Park Avenue, New York, New York 10166 (or such other
place as the parties may agree) as soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VI. The date on
which the Closing occurs is referred to herein as the "Closing Date." The
effectiveness of the Amended Articles, the purchase and sale of the Investor
Shares and the Redemption shall be deemed to occur sequentially in that order
but the Closing will be conducted in such a manner that none of such events
will occur unless all three of such events occur at the Closing.
ARTICLE II
EXCHANGE OF CERTIFICATES
5
<PAGE> 7
Section II.1 EXCHANGE PROCEDURES.
(a) Contemporaneously with the mailing of the Proxy Statement (as
hereinafter defined), the Closing Date, the Company will mail to each holder of
record of a certificate or certificates which immediately prior to the Closing
Date represented shares of Pre-Recapitalization Company Common Stock (the
"Certificates") (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Company) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Company Class A Common Stock and Company Class B Common Stock and the
Initial Cash Redemption Price to which such holder is entitled as a result of
the Redemption pursuant to Section 1.4. Upon surrender to the Company of a
Certificate for cancellation, together with such letter of transmittal duly
executed, and such other customary documents as may be required pursuant to
such instructions, the holder of such Certificate shall receive in exchange
therefor, as soon as practicable following the Closing, (i) certificates
evidencing that number of shares of Company Class A Common Stock and Company
Class B Common Stock which such holder is entitled to receive pursuant to
Section 1.2, and (ii) the Initial Cash Redemption Price such holder is entitled
to receive pursuant to Section 1.4, and the Certificate so surrendered shall
forthwith be cancelled. No interest will be paid or accrued with respect to any
Initial Cash Redemption Price payable upon the surrender of the Certificates.
If any certificate is to be issued in, or if cash is to be remitted to, a name
other than that in which the Certificate surrendered for exchange is
registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed, with signature guaranteed, or otherwise
in proper form for transfer and that the Person requesting such exchange shall
pay to the Company or its transfer agent any transfer or other taxes required
by reason of the issuance of certificates in a name other than that of the
registered holder of the Certificate surrendered, or establish to the
satisfaction of the Company or its transfer agent that such
6
<PAGE> 8
taxes have been paid or are not applicable. Following the effectiveness of the
Amended Articles and until surrendered in accordance with the provisions of
this Section 2.1, each Certificate (other than Certificates representing shares
held in the Company's treasury or by any Subsidiary of the Company) shall
represent for all purposes only the right to receive, upon such surrender,
shares of Company Class A Common Stock and Company Class B Common Stock in
accordance with Section 1.2 and the Initial Cash Redemption Price in accordance
with Section 1.4, without any interest thereon, subject to any required
withholding taxes.
(b) Beginning at 5:00 p.m., E.S.T. on the last business day before the
Closing Date, there shall be no transfers of the shares of Pre-Recapitalization
Company Common Stock on the stock transfer books of the Company which were
outstanding immediately prior to the Closing. If, after the Closing Date,
Certificates are presented to the Company, they shall be cancelled and
exchanged for shares of Company Class A Common Stock and Company Class B Common
Stock in accordance with Section 1.2 and the Initial Cash Redemption Price in
accordance with Section 1.4, without any interest thereon, subject to any
required withholding taxes, in accordance with the procedures set forth in this
Article II.
(c) No dividends or other distributions with respect to shares of
Company Class A Common Stock or Company Class B Common Stock with a record date
after the Closing Date shall be paid to the holder of any unsurrendered
Certificate with respect to shares of Company Class A Common Stock or Company
Class B Common Stock represented thereby until the surrender of such
Certificate in accordance with this Article II.
(d) The Company shall not be liable to any Person in respect of any
shares of Company Class A Common Stock or Company Class 2 Common Stock (or
dividends or distributions with respect thereto) or the Initial Cash Redemption
Price delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
Section II.2 COLLECTION OF CERTIFICATES. The Company shall use all
commercially reasonable efforts to collect the
7
<PAGE> 9
Certificates prior to the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Investors as
follows:
Section III.1 ORGANIZATION. (a) Each of the Company and its
Subsidiaries is a corporation or other entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted, except as set forth in Sections 3.1 or 3.2(c) of the letter
delivered by the Company to the Investor Representative (as defined herein) or
its representatives, at or prior to the execution of this Agreement (the
"Company Disclosure Letter"). Each of the Company and its Subsidiaries is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of the business conducted by
it makes such qualification or licensing necessary, except where the failure to
be so duly qualified, licensed and in good standing or to be so qualified or
licensed would not have a Company Material Adverse Effect. The Company has
heretofore delivered to the Investor Representative or its representatives a
complete and correct copy of each of its articles of incorporation and by-laws,
as currently in effect, and has heretofore made available to the Investor
Representative or its representatives a complete and correct copy of the
articles of incorporation and by-laws of each of its Subsidiaries, as currently
in effect.
(b) As used in this Agreement, the word "Subsidiary" means, with
respect to any party, any corporation, partnership or other entity or
organization, whether incorporated or unincorporated, of which (i) such party
or any other Subsidiary of such party is
8
<PAGE> 10
a general partner (excluding such partnerships where such party or any
Subsidiary of such party does not have a majority of the voting interest in
such partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of
the board of directors or others performing similar functions with respect to
such corporation or other entity or organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries. As used in this Agreement,
"Company Material Adverse Effect" means any change or effect that either
individually or in the aggregate with all such other changes or effects is or
is reasonably likely to be materially adverse to the business, financial
condition or operations of the Company and its Subsidiaries, taken as a whole;
PROVIDED, HOWEVER, that the effects of changes that are generally applicable to
(i) the United States economy or (ii) the United States securities markets
shall be excluded from the determination of Company Material Adverse Effect;
and PROVIDED, FURTHER, that any adverse effect on the Company and its
Subsidiaries resulting from the execution of this Agreement and the
announcement of this Agreement and the transactions contemplated hereby shall
also be excluded from the determination of Company Material Adverse Effect.
Section III.2 CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 420,000 shares of Pre-Recapitalization Company Common Stock,
which is comprised of 42,000 authorized shares of Pre-Recapitalization Company
Class A Common Stock and 378,000 authorized shares of Pre-Recapitalization
Company Class B Common Stock. As of September 30, 1997, there were (i)
13,172.30 shares of Pre-Recapitalization Company Class A Common Stock issued
and outstanding, and (ii) 147,898.70 shares of Pre-Recapitalization Company
Class B Common Stock issued and outstanding. Since September 30, 1997, no
additional shares of capital stock have been issued. All the outstanding shares
of the Company's capital stock are duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights. Except as disclosed in Section
3.2(a) of the Company Disclosure Letter, as of the date hereof, there are no
existing (i) options, warrants, calls, sub-
9
<PAGE> 11
scriptions or other rights, convertible securities, agreements or commitments
of any character obligating the Company or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock of, or other equity interest in,
the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, (ii) obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
or make any payment in respect of any capital stock (or equivalent equity
interests of entities other than corporations) of the Company or any of its
Subsidiaries, (iii) voting trusts or other voting arrangements to which the
Company or, to the knowledge of the Company, voting trusts to which any
affiliate of the Company, is a party with respect to the voting of the capital
stock of the Company (excluding trusts which are shareholders of record), (iv)
agreements or arrangements to which the Company is required to register any
shares of capital stock of the Company under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (the "Securities
Act"), or (v) debt agreements or instruments which grant any rights to vote
(contingent or otherwise) on matters on which shareholders of the Company may
vote.
(b) Except as disclosed in Section 3.2(b) of the Company Disclosure
Letter, all of the outstanding shares of capital stock (or equivalent equity
interests of entities other than corporations) of each of the Company's
Subsidiaries are owned of record and beneficially, directly or indirectly, by
the Company free and clear of all liens, pledges, security interests, claims or
other encumbrances.
(c) Except for interests in its Subsidiaries, investments held by the
Company's captive insurer, Manufacturers Indemnity Insurance Company of America
("MIICA"), or as disclosed in Section 3.2(c) of the Company Disclosure Letter
or as otherwise disclosed on the financial statements referred to in Section
3.5, the Company does not own directly or indirectly any interest or investment
(whether equity or debt) in any corporation, partnership, joint venture, trust
or other entity having a value in excess of $750,000.
Section III.3 AUTHORIZATION; VALIDITY OF AGREEMENT; COMPANY ACTION.
10
<PAGE> 12
The Company has full corporate power and authority to execute and deliver this
Agreement and, subject to obtaining the necessary approval of its shareholders,
to perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
the Company of this Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by the Company Board and, except
for obtaining the approval by the Company's shareholders of the Amended
Articles, no other corporate action on the part of the Company is necessary to
authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Company and, subject to approval of the
Amended Articles by the Company's shareholders (and assuming due and valid
authorization, execution and delivery hereof by the Investors), is a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws, now
or hereafter in effect, affecting creditors' rights generally, and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
Section III.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as
disclosed in Section 3.4 of the Company Disclosure Letter and except for (a)
the filing of the Amended Articles, (b) applicable requirements under
corporation or "blue sky" laws of various states, (c) filings with the
Commissioner of Insurance of the State of Colorado, and (d) matters
specifically described in this Agreement, neither the execution, delivery or
performance of this Agreement by the Company nor the consummation by the
Company of the transactions contemplated hereby will (i) violate any provision
of the articles of incorporation or by-laws of the Company or any of its
Subsidiaries, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
11
<PAGE> 13
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which the
Company or any of its Subsidiaries is a party or by which any of them or any of
their respective properties or assets may be bound, (iii) violate any order,
writ, judgment, code, ordinance, injunction, decree, law, statute, rule or
regulation applicable to the Company, any of its Subsidiaries or any of their
respective properties or assets, or (iv) require on the part of the Company or
any of its Subsidiaries any filing or registration with, notification to,
authorization, consent or approval of, or action by, any court, arbitral
authority, or governmental legislative, executive or regulatory authority or
agency (a "Governmental Entity"); except in the case of clauses (ii), (iii) or
(iv) for such violations, breaches or defaults which, or filings,
registrations, notifications, authorizations, consents or approvals the failure
of which to obtain, individually or in the aggregate, (A) would not have a
Company Material Adverse Effect and would not materially adversely affect the
ability of the Company to consummate the transactions contemplated by this
Agreement or (B) would become applicable as a result of the particular status
of, or any facts pertaining to, the Investors.
Section III.5 FINANCIAL STATEMENTS. (a) The Company has delivered to
the Investor Representative or its representatives the audited consolidated
balance sheets (including the related notes and independent auditors' report
thereon) of the Company and its consolidated Subsidiaries as of December 31,
1996 and December 31, 1995, and the related audited consolidated statements of
income and retained earnings and cash flows of the Company and its consolidated
Subsidiaries for each of the three years in the period ended December 31, 1996
(collectively, the "1996 Financial Statements"). Each of the consolidated
balance sheets (including the related notes) included in the 1996 Financial
Statements presents fairly, in all material respects, the financial position of
the Company and its consolidated Subsidiaries as of the respective dates
thereof, and the other related statements (including the related notes)
included in the 1996 Financial Statements present fairly,
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in all material respects, the results of operations and cash flows of the
Company and its consolidated Subsidiaries for the respective periods or as of
the respective dates set forth therein. Each of the consolidated balance sheets
and statements of income and retained earnings and cash flows (including the
related notes) included in the 1996 Financial Statements has been prepared, in
all material respects, in accordance with United States Generally Accepted
Accounting Principles ("GAAP") applied on a consistent basis during the
periods involved, except as otherwise noted therein.
(b) The Company has delivered to the Investor Representative or its
representatives the unaudited consolidated balance sheet of the Company and its
consolidated Subsidiaries as of August 31, 1997 and the unaudited consolidated
statement of income of the Company and its consolidated Subsidiaries for the
eight-month period ended August 31, 1997 (collectively, the "Unaudited Financial
Statements"). Except for normally recurring year-end adjustments, which
adjustments will not be material either individually or in the aggregate to the
Company and its consolidated Subsidiaries taken as a whole, and the absence of
any notes to the Unaudited Financial Statements, (i) the consolidated balance
sheet included in the Unaudited Financial Statements presents fairly, in all
material respects, the financial position of the Company and its consolidated
Subsidiaries as of August 31, 1997, (ii) the other related statements included
in the Unaudited Financial Statements present fairly, in all material respects,
the results of operations of the Company and its consolidated Subsidiaries for
the eight-month period ended August 31, 1997, and (iii) each of the
consolidated balance sheet and the statement of income included in the
Unaudited Financial Statements has been prepared, in all material respects, in
accordance with GAAP applied on a consistent basis during the period involved,
except as otherwise noted therein.
Section III.6 NO UNDISCLOSED LIABILITIES. Except as disclosed in
Section 3.6 of the Company Disclosure Letter and except (a) for liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, since August 31, 1997, (b) for liabilities and obligations disclosed
in the
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1996 Financial Statements or the Unaudited Financial Statements, and (c) for
liabilities and obligations incurred in connection with the Recapitalization or
otherwise as contemplated by this Agreement, since August 31, 1997, neither the
Company nor any of its Subsidiaries has incurred any liabilities or obligations
that would be required to be reflected or reserved against in a consolidated
balance sheet of the Company and its consolidated Subsidiaries prepared in
accordance with GAAP as applied in preparing the consolidated balance sheet of
the Company and its consolidated Subsidiaries as of August 31, 1997 and that
would constitute a Company Material Adverse Effect. On May 1, 1997, the Company
paid $1,000,000 to each of Robert Werner and Richard Werner (the "Retired
Executives") pursuant to the terms of the Company's Supplemental Pension Plan A
and resolutions of the Company Board. Other than the compensation pursuant to
the terms of the Retired Executives' Consulting Agreements, dated as of May 1,
1997, certain medical, dental and pension benefits, and the non-cash benefits
granted pursuant to the resolution of the Company Board referred to above, the
Company is not obligated to pay to the Retired Executives any additional cash
compensation of any kind.
Section III.7 ABSENCE OF CERTAIN CHANGES. Except as (a) disclosed in
the 1996 Financial Statements or the Unaudited Financial Statements, (b)
disclosed in Section 3.7 of the Company Disclosure Letter or (c) contemplated
by this Agreement, since August 31, 1997, (i) the Company and its Subsidiaries
have conducted their businesses in the ordinary course and have not suffered
any change, event or circumstance which, individually or in the aggregate,
constitutes or could reasonably be expected to constitute a Company Material
Adverse Effect, (ii) the Company has not declared, set aside or paid any
dividends or other distribution with respect to the Pre-Recapitalization
Company Common Stock except for regular quarterly cash dividends which have been
declared consistent with the Company's past practice, (iii) no material change
to the accounting principles, practices or methods used in the preparation of
the 1996 Financial Statements has been made, except as required by GAAP or
applicable law, and (iv) neither the Company nor any of its Subsidiaries has
taken any action which, if taken after the date hereof, would violate
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Section 5.1.
Section III.8 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 3.8(a) and Section 5.4(c) of the Company Disclosure Letter
set forth a list of all employee benefit plans, (including but not limited to
plans described in section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), established, maintained or contributed to by
the Company or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), which together with the Company would be deemed a "single
employer" within the meaning of section 4001(b)(15) of ERISA ("Benefit
Plans"), or to which any of them have any obligation to make contributions, and
all employment, change in control and severance agreements with employees of
the Company ("Employee Agreements"). True and complete copies of all Benefit
Plans and Employee Agreements, including all amendments to date, have been made
available to the Investor Representative or its representatives by the Company.
(b) Except as set forth in Section 3.8(b) of the Company Disclosure
Letter, with respect to each Benefit Plan that is not a "Multiemployer Plan"
within the meaning of Section 3(37) of ERISA: (i) if intended to qualify under
section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
such plan has received a determination letter from the United States Internal
Revenue Service (the "IRS") stating that it so qualifies and that its trust is
exempt from taxation under section 501(a) of the Code and nothing has occurred
to the knowledge of the Company since the date of such determination that could
materially adversely affect such qualification or exempt status, (ii) such plan
has been administered in all material respects in accordance with its terms and
applicable law, (iii) no breaches of fiduciary duty have occurred which might
reasonably be expected to give rise to material liability on the part of the
Company, (iv) no disputes are pending, or, to the knowledge of the Company,
threatened that give rise to or might reasonably be expected to give rise to
material liability on the part of the Company, (v) no prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) has
occurred that gives rise to or might reasonably be
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expected to give rise to material liability on the part of the Company, (vi)
all contributions required to be made to such plan as of the date hereof
(taking into account any extensions for the making of such contributions) have
been made in full, and (vii) neither the Company nor any Subsidiary has
incurred any liability to the Pension Guaranty Benefit Corporation that has not
been satisfied in full. To the best of the Company's knowledge, the foregoing
is also true with respect to all Benefit Plans that are Multiemployer Plans.
(c) No Benefit Plan is a plan described in section 4063(a) of ERISA.
With respect to any Benefit Plan that is a "multiemployer pension plan," (i)
neither the Company nor any ERISA Affiliate has made or suffered a "complete
withdrawal" or a "partial withdrawal," as such terms are respectively defined
in sections 4203 and 4205 of ERISA or has incurred any other obligation or
liability under Title IV of ERISA or Section 515 of ERISA that has not been
satisfied in full (or any liability resulting therefrom has been satisfied in
full), (ii) no event has occurred that presents a material risk of a partial or
complete withdrawal, (iii) neither the Company nor any ERISA Affiliate has any
contingent liability under section 4204 of ERISA, and (iv) to the best of the
Company's knowledge, no circumstances exist that present a material risk that
any such plan will go into reorganization, become insolvent or suffer a mass
withdrawal.
(d) No Benefit Plan has incurred an accumulated funding deficiency, as
defined in section 302 of ERISA or section 412 of the Code, whether or not
waived.
(e) Except as disclosed in Section 3.8(e) of the Company Disclosure
Letter, with respect to each Benefit Plan that is a "welfare plan" (as defined
in section 3(1) of ERISA), no such plan provides medical, life insurance or
death benefits with respect to current or former employees of the Company or
any of its Subsidiaries beyond their termination of employment (other than to
the extent required by applicable law).
(f) Except as set forth in Section 3.8(f) of the Company Disclosure
Letter, no material liability has been or is expected to be incurred by the
16
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Company or any ERISA Affiliate (either directly or indirectly, including as a
result of an indemnification obligation or any joint and several liability
obligations) under or pursuant to Title I or IV of ERISA or the penalty or the
excise tax or joint and several liability provisions of the Code, relating to
its or their employee benefit plans, and no event, transaction or condition has
occurred or exists that has resulted in or would reasonably be expected to
result in any such liability to The Investors, the Company or any ERISA
Affiliate or any employee benefit plan of the Company or any ERISA Affiliate.
(g) As of the last valuation date prior to the date hereof, the market
value of assets under each Benefit Plan which is a "pension plan" (as defined
in section 3(2) of ERISA (other than any multiemployer plan)) is not less than
the present value of all liabilities thereunder determined for purposes of the
minimum funding requirements of Section 412 of the Code and Statement of
Financial Accounting Standards No. 87. Except as set forth in Section 3.8(g) of
the Company Disclosure Letter, no Benefit Plan has any unfunded accrued
benefits that are not fully reflected in the financial statements referred to
in Section 3.5.
(h) Except for any multi-employer plans and plans maintained pursuant
to a collective bargaining agreement, each Benefit Plan can be amended or
terminated at any time and without liability other than for benefits accrued
prior to such amendment or termination.
(i) The Company and each of its Subsidiaries have complied in material
respects with the continuation coverage requirements of Title X of the
Consolidation Omnibus Budget Reconciliation Act of 1985, as amended.
Section III.9 LITIGATION. Except as disclosed in Sections 3.8(b),
3.8(f), 3.9, 3.13, 3.16 or 3.17 of the Company Disclosure Letter, there is no
action, suit, proceeding, arbitration or, to the knowledge of the Company,
audit or investigation pending or, to the knowledge of the Company, action,
suit, proceeding, arbitration audit or investigation threatened, involving the
Company or any of its Subsidiaries, or any of their respective
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affiliates, by or before any Governmental Entity or by any third party that,
individually, is reasonably likely to have a Company Material Adverse Effect.
To the knowledge of the Company, none of the items listed in Sections 3.8(b),
3.8(f), 3.9, 3.13, 3.16 or 3.17 of the Company Disclosure Letter are reasonably
likely to have a Company Material Adverse Effect, after giving effect to
insurance and all reserves of the Company relating to such litigation.
Section III.10 NO DEFAULT; COMPLIANCE WITH APPLICABLE LAWS. Except as
disclosed in Section 3.10 of the Company Disclosure Letter, neither the Company
nor any of its Subsidiaries is in default or violation of any term, condition
or provision of (i) its articles of incorporation or by-laws or similar
organizational documents, (ii) any of the Company Material Agreements (as
hereinafter defined), or (iii) any statute, law, rule, regulation, judgment,
decree, order, arbitration award, concession, grant, franchise, permit or
license or other governmental authorization or approval applicable to the
Company or any of its Subsidiaries, including, without limitation, laws, rules
and regulations relating to the environment, occupational health and safety,
employee benefits, wages, workplace safety, equal employment opportunity and
race, religious or sex discrimination, excluding from the foregoing clauses
(i), (ii) and (iii), defaults or violations which, individually or in the
aggregate, are not reasonably likely to have a Company Material Adverse Effect.
Section III.11 TAXES. (a) Except as disclosed in Section 3.11 of the
Company Disclosure Letter, the Company and each of its Subsidiaries has (i)
timely filed all Tax Returns (as defined herein) required to be filed by any of
them (taking into account applicable extensions) and all such returns were
true, correct and complete in all material respects when filed and (ii) paid or
accrued (in accordance with GAAP) all material Taxes (as defined herein) due
for the periods covered by such Tax Returns other than such Taxes as are being
contested in good faith by the Company or its Subsidiaries.
(b) Except as disclosed in Section 3.11 of
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the Company Disclosure Letter, the IRS has completed its examination of the
federal income Tax Returns of the Ccmpany and each of its Subsidiaries for the
assessment of income Taxes for all taxable periods, as to which the statutory
period remains open and such Tax Returns were required to be filed, through and
including the taxable period ended December 31, 1996.
(c) Except as disclosed in Section 3.11 of the Company
Disclosure Letter, there are no material ongoing federal, state, local or
foreign audits or examinations of any Tax Return of the Company or its
Subsidiaries.
(d) Except as disclosed in Section 3.11 of the Company
Disclosure Letter, no material deficiencies for any Tax have been proposed,
asserted or assessed against the Company or any of its Subsidiaries that have
not been finally settled or paid in full, or for which adequate reserves have
not been set aside for the payment thereof.
(e) Except as disclosed in Section 3.11 of the Company
Disclosure Letter, there are no outstanding written requests, agreements,
consents or waivers to extend the statutory period of limitations applicable to
the assessment of any material Taxes or deficiencies against the Company or any
of its Subsidiaries.
(f) Except as disclosed in Section 3.11 of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries is a party
to any agreement providing for the allocation or sharing of Taxes.
(9) Except as disclosed in Section 3.11 of the Company
Disclosure Letter, there are no material liens for Taxes upon the assets of the
Company or any of its Subsidiaries which are not provided for in the 1996
Financial Statements or the Unaudited Financial Statements, except liens for
Taxes not yet due and payable and liens for taxes that are being contested in
good faith.
(h) The Company is not a United States Real Property Holding
Corporation (a "USRPHC") within the meaning of Section 897 of the Code and was
not a USRPHC on any "determination date" (as defined in Section 1.897-2(c) of
the Treasury regulations) that occurred in
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the five-year period preceding the Closing.
(i) Neither the Company nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code or agreed to have Section 341(f)
of the Code apply to the disposition of a subsection (f) asset (as such term is
defined by Section 341(f) of the Code) owned by the Company or any of its
Subsidiaries.
(j) Except as provided in Section 3.11 of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries (i) has greed or is
required to make any adjustments pursuant to Section 481(a) of the Code or any
similar provision of state or local law by reason of a change in accounting
method initiated by it or any other relevant party, (ii) has any actual
knowledge that the IRS has proposed any such adjustment or change in accounting
method, or (iii) has any application pending with any taxing authority
requesting permission for any changes in accounting methods that relate to the
business or the assets of the Company.
(k) Except as provided in Section 3.11 of the Company Disclosure
Letter, the Company has not executed any closing agreement pursuant to Section
7121 of the Code.
(l) Except as provided in Section 3.11 of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has made any payments,
is obligated to make any payments, or is a party to any agreement that could
obligate it to make a payment that will not be deductible under Section 280G of
the Code.
(m) Except as provided in Section 3.11 of the Company Disclosure
Letter, no gain will be recognized by the Company or Werner (DE) International
Inc. (the "DISC") as a result of the transactions described in Section 5.12.
(n) Except as provided in Section 3.11 of the Company Disclosure
Letter, none of the assets of the Company is property that is required to be
owned by another Person pursuant to Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended, as in effect immediately prior to the Tax Reform Act
of 1986, or is "tax exempt use property" within the meaning of Section
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168(h) of the Code.
(o) "Taxes" shall mean any and all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, real or personal property, sales, withholding, social security,
occupation, use, service, service use, value added, license, net worth,
payroll, franchise, transfer and recording taxes, fees, levies and any charges
of any kind whatsoever, imposed by the IRS or any taxing authority (whether
domestic or foreign including, without limitation, any state, local or foreign
government or any subdivision or taxing agency thereof (including a United
States possession)), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest,
penalties or additional amounts attributable to, or imposed upon, or with
respect to, any such taxes, charges, fees, levies or other assessments. "Tax
Return" shall mean any report, return, document, declaration or other
information or filing required to be supplied to any federal, state, local or
foreign taxing authority or jurisdiction with respect to Taxes.
Section III.12 PROPERTY. (a) Section 3.12(a) of the Company Disclosure
Letter lists the location of and briefly describes the use of all material real
property owned by the Company and its Subsidiaries. The Company has delivered
or made available to the Investor Representative or its representatives true
and complete copies of the deeds, title insurance policies, surveys, mortgages,
agreements and other documents in the Company's possession related to such real
property. Except as set forth in Section 3.12(a) of the Company Disclosure
Letter, with respect to such real property (i) the Company or its Subsidiaries,
as the case may be, has sufficient title to such real property to conduct its
business as currently conducted in all material respects, and such real
property is free and clear of any security interest, easement, covenant or
other restriction, except for real estate taxes not yet delinquent, security
interests, easements, covenants and other restrictions, which individually or
in the aggregate would not have a Company Material Adverse Effect, (ii) there
are no pending, or to the knowledge of the Company, threatened, condemnation
proceedings or lawsuits
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or administrative actions relating to the property which would have a Company
Material Adverse Effect and (iii) there are no outstanding options or rights of
first refusal to purchase any parcel of real property or any portion thereof or
interest therein.
(b) Section 3.12(b) of the Company Disclosure Letter lists and briefly
describes all material real property leased or subleased to the Company or any
Subsidiaries. The Company has delivered or made available to the Investor
Representative or its representatives correct and complete copies of the leases
and subleases listed on Section 3.12 of the Company Disclosure Letter. With
respect to each lease and sublease listed on Section 3.12(b) of the Company
Disclosure Letter (i) the lease or sublease is legal, valid, binding,
enforceable and in full force and effect, and (ii) neither the Company nor any
of its Subsidiaries is in breach or default of such lease or sublease and no
event has occurred which, with notice or lapse of time, would constitute a
breach or default by either the Company or any of its Subsidiaries or permit
termination, modification, or acceleration by any third party thereunder,
except for such breaches, defaults or accelerations which individually or in
the aggregate would not have a Company Material Adverse Effect.
(c) The Company and its Subsidiaries have sufficient title to all
material personal property owned or leased by the Company or any of its
Subsidiaries, to conduct the business of the Company and its Subsidiaries, in
all material respects, consistent with past practice. All such material
personal property, including but not limited to all material machinery, tools
and equipment, has been maintained in accordance with normal industry practice,
is in good operating condition and repair (subject to normal wear and tear), is
adequate and sufficient in all material respects for the conduct of the
business of the Company and its Subsidiaries consistent with past practice and
is free and clear of any liens other than liens that would not have a Company
Material Adverse Effect.
Section III.13 INTELLECTUAL PROPERTY. Except as disclosed in Section
3.13 of the Company Disclosure Letter, and except for such claims, which
individually or in the aggregate,
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would not have a Company Material Adverse Effect, there are no pending or
threatened claims, of which the Company or its Subsidiaries have been given
written notice, by any Person against their use of any material trademarks,
trade names, service marks, service names, mark registrations, logos, assumed
names and copyright registrations, patents and all applications therefor which
are owned by the Company or its Subsidiaries and used in their respective
operations as currently conducted (collectively, the "Company Intellectual
Property"). The Company or one of its Subsidiaries has such ownership of or
such rights by license, lease or other agreement to the Company Intellectual
Property as are necessary to permit them to conduct their respective operations
as currently conducted, except where the failure to have such rights would not
have a Company Material Adverse Effect.
Section III.14 COMPUTER SOFTWARE. Except as set forth in Section 3.14
of the Company Disclosure Letter, the Company and its Subsidiaries have such
title or such rights by license, lease or other agreement to the computer
software programs (other than off-the-shelf software) which are owned,
licensed, leased or otherwise used by the Company and its Subsidiaries except
where the failure to have such rights would not have a Company Material Adverse
Effect.
Section III.15 CONTRACTS. The Company has delivered or made available
to the Investor Representative or its representatives copies of all written
Company Material Agreements (as hereinafter defined). Except as set forth in
Section 3.15 of the Company Disclosure Letter, each Company Material Agreement
is in full force and effect and, to the knowledge of the Company, is valid and
enforceable by the Company or a Subsidiary of the Company, as the case may be,
in accordance with its terms except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. Except as set
forth in Section 3.15 of the
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Company Disclosure Letter, neither the Company nor any of its Subsidiaries is
in default in the observance or the performance of any term or obligation to be
performed by it under any Company Material Agreement except for such defaults
the effect of which, individually or in the aggregate, would not have a Company
Material Adverse Effect. To the knowledge of the Company, no other Person is in
default in the observance or the performance of any term or obligation to be
performed by it under any Company Material Agreement. As used in this
Agreement, "Company Material Agreement" shall mean each agreement, arrangement,
instrument, bond, commitment, franchise, indemnity, indenture, lease, license
or understanding, whether or not in writing, to which the Company or any of its
Subsidiaries is a party or to which the Company, any of its Subsidiaries or any
of their respective properties is subject that (i) obligates the Company or any
of its Subsidiaries to pay an amount in excess of $250,000 in any twelve-month
period beginning after December 31, 1996, (ii) provides for the extension of
credit, (iii) provides for a guaranty by the Company or any of its Subsidiaries
of obligations of others in excess of $250,000, (iv) constitutes an employment
agreement, consulting agreement or personal service contract not terminable on
less than sixty (60) days' notice without penalty, (v) represents a contract
upon which the Company and its Subsidiaries taken as a whole are substantially
dependent or that is otherwise material to the business of the Company and its
Subsidiaries taken as a whole, or (vi) limits, in any material respect, the
ability of the Company or any of its Subsidiaries to engage in any line of
business, compete with any Person or expand the nature or geographic scope of
its business.
Section III.16 ENVIRONMENTAL LAWS AND REGULATIONS. Except as set forth
in Section 3.16 of the Company Disclosure Letter, (a) the Company and each of
its Subsidiaries is and at all times has been in compliance with all applicable
federal, state, local and foreign laws and regulations relating to protection
of human health and the environment (collectively, "Environmental Laws"),
except for non-compliance which would not, individually or in the aggregate,
have a Company Material Adverse Effect, which compliance includes, but is not
limited to, the possession by the Company and its Subsidiaries
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of material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof, (b) neither the Company nor any of its Subsidiaries has received
written notice of, or to the knowledge of the Company, is the subject of, any
actions, causes of action, claims, investigations, demands, or notices by any
Person alleging liability under or non-compliance with any Environmental Law
("Environmental Claims") which would, individually or in the aggregate, have a
Company Material Adverse Effect, and (c) to the knowledge of the Company, no
Hazardous Substances have been released, disposed of, emitted, treated, stored,
generated, placed, deposited, discharged, or spilled at, upon or under, or have
migrated in, on, or under, any facility ever owned, operated or leased by the
Company and any of its Subsidiaries (or any facility to which the Company and
any of its Subsidiaries have sent any Hazardous Substance) with which the
Company has reasonable grounds to believe would give rise to liability under or
noncompliance with any Environmental Law which would, individually or in the
aggregate, have a Company Material Adverse Effect. "Hazardous Substance" means
any substance or material which is regulated under any Environmental Law.
Section III.17 LABOR MATTERS. Except as set forth in Section 3.17 of
the Company Disclosure Letter, (a) neither the Company nor any of its
Subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, (b) there is no unfair labor practice or labor arbitration
proceeding pending or, to the knowledge of the Company, threatened against the
Company or its Subsidiaries, and (c) no strike, work stoppage, work slowdown,
sick-out or lock-out is pending or, to the knowledge of the Company, threatened
except in the case of (b) and (c) for any matter which would not have,
individually or in the aggregate, a Company Material Adverse Effect.
Section III.18 APPLICABILITY OF PENNSYLVANIA TAKEOVER STATUTES. The
provisions of Subchapters G, H, I and J of Chapter 25 of the PBCL are not
applicable to the Company or the transactions
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contemplated by this Agreement.
Section III.19 BROKERS OR FINDERS. The Company represents as to
itself, its Subsidiaries and its affiliates, that none of the foregoing has
entered into any contract, arrangement or understanding with any agent, broker,
investment banker, financial advisor or other Person which may result in any
such Person being entitled to any brokers' or finders' fee or any other
commission or similar fee in connection with any of the negotiations leading to
this Agreement or the consummation of the transactions contemplated hereby,
except Goldman, Sachs & Co. ("Goldman Sachs"), whose fees and expenses will be
paid by the Company in accordance with the Company's agreement with such firm
(a copy of which has been furnished to the Investor Representative or its
representatives).
Section III.20 OPINION OF FINANCIAL ADVISOR. The Company has received
an opinion from Goldman Sachs to the effect that the consideration to be
received by the shareholders of the Company in connection with the
Recapitalization is fair to such shareholders from a financial point of view.
Section III.21 TRANSACTIONS WITH AFFILIATES. Except as disclosed in
Section 3.6, Section 3.8, Section 3.15 or Section 5.4 of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to or bound
by any contract, agreement or arrangement with any shareholder, director,
officer or employee of the Company or any of its subsidiaries that (a) provides
for payments (other than employee compensation and benefits in the ordinary
course of business) in excess of $75,000 in any twelve (12) month period or (b)
is not terminable on notice of six months or less by the Company or a
subsidiary (as applicable) at its option and without penalty or liability.
Section III.22 DISSENTERS' RIGHTS. No shareholder of the Company shall
have, by reason of the transactions contemplated hereby, if consummated in
accordance with the terms hereof, any right to dissent from such transactions,
or to obtain
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the fair value of such shareholders' shares, pursuant to Section 1571 of the
PBCL or other applicable law.
Section III.23 PAYMENTS. Except as set forth in Section 3.23 of the
Company Disclosure Letter, the transactions contemplated by this Agreement will
not trigger any severance or change of control payments, accelerated
prepayments or other similar arrangements, or any other extraordinary payments
to any employee or former employee of the Company (other than payments to such
Persons in their capacity as shareholders of the Company) in excess of $250,000
in the aggregate.
Section III.24 SHARE OWNERSHIP. Section 3.24 of the Company Disclosure
Letter sets forth a true, accurate and complete list of the record holders of
Company Class A Common Stock and the Company Class B Common Stock, as of
September 30, 1997, indicating the number of shares of Company Class A Common
Stock and Company Class B Common Stock held of record by each such holder as of
such date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
The Investors jointly and severally represent and warrant to the
Company as follows:
Section IV.1 ORGANIZATION. Each of the Investors is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Each of the Investors is duly qualified or licensed to
do business and in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing would not have a material
adverse effect on such Investor's ability to perform its obligations hereunder.
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Section IV.2 AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION.
Each of the Investors has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by the Investors of this Agreement, and the consummation of the
transactions contemplated hereby, has been duly authorized by their respective
boards of directors and no other corporate action is necessary to authorize the
execution and delivery by any of the Investors of this Agreement and the
consummation by it of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by each of the Investors, and (assuming due
and valid authorization, execution and delivery hereof by the Company) is a
valid and binding obligation of each of the Investors, enforceable against each
of the Investors in accordance with its terms, except that (i) such enforcement
may be subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section IV.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for (a)
applicable requirements under corporation or "blue sky" laws of various states,
(b) filings with the Commissioner of Insurance of the State of Colorado, and
(c) as described in this Agreement, neither the execution, delivery or
performance of this Agreement by the Investors nor the consummation by the
Investors of the transactions contemplated hereby will (i) violate any
provision of the articles of incorporation, by-laws or similar organizational
documents of any of the Investors, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
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which any of the Investors or their respective affiliates is a party or by
which any of them or any of their respective properties or assets may be bound,
(iii) violate any order, writ, judgment, code, ordinance, injunction, decree,
law, statute, rule or regulation applicable to the Investors, any of their
respective affiliates or any of their respective properties or assets, or (iv)
require on the part of any of the Investors or any of their respective
affiliates any filing or registration with, notification to, authorization,
consent or approval of, or action by, any Governmental Entity; except in the
case of clauses (ii), (iii) or (iv) for such violations, breaches or defaults
which, or filings, registrations, notifications, authorizations, consents or
approvals the failure of which to obtain would not have, individually or in the
aggregate, an Investor Material Adverse Effect and would not materially
adversely affect the ability of the Investors to consummate the transactions
contemplated by this Agreement. As used in this Agreement, "Investor Material
Adverse Effect" means any change or effect that either individually or in the
aggregate with all such other changes or effects is or is reasonably likely to
be materially adverse to the business, financial condition or operations of any
Investor; provided, however, that the effects of changes that are generally
applicable to (i) the United States economy, or (ii) the United States
securities markets shall be excluded from the determination of an Investor
Material Adverse Effect; and PROVIDED, FURTHER, that any adverse effect on any
Investor resulting from the execution of this Agreement and the announcement of
this Agreement and the transactions contemplated hereby shall also be excluded
from the determination of an Investor Material Adverse Effect.
Section IV.4 BROKERS OR FINDERS. Each of the Investors represents as
to itself, its Subsidiaries and its affiliates, that none of the foregoing has
entered into any contract, arrangement or understanding with any agent, broker,
investment banker, financial advisor or other Person which may result in any
such Person being entitled to any brokers' or finders' fee or any other
commission or similar fee in connection with any of the negotiations leading to
this Agreement or the consummation of the transactions contemplated hereby.
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Section IV.5 SUFFICIENT FUNDS. The Investors will have sufficient
funds to purchase the Investor Shares and will cause sufficient funds to be
available to the Company prior to the Closing to enable the Company to
consummate the transactions contemplated by this Agreement and to pay all fees
and expenses related to such transactions to the extent contemplated by this
Agreement. Without limiting the foregoing, as of the Closing Date, the Company
will have available to it a working capital credit facility in an amount not
less than $50 million.
Section IV.6 INVESTCORP AND INVESTOR AGREEMENTS. The Investor
Representative has delivered to the Company a letter setting forth the
aggregate fees to be paid by the Company to any of Investcorp Bank E.C.
("Investcorp"), Investcorp International, Inc., the Investors and their
respective affiliates.
Section IV.7 HSR. No filing by any of the Investors is required under
the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, in
connection with any of the transactions contemplated by this Agreement.
Section IV.8 INVESTMENT INTENT OF INVESTORS. (a) Each Investor
understands that it is receiving the Investor Shares delivered pursuant to this
Agreement for investment purposes and not with a view to, or in connection
with, any distribution thereof within the meaning of the U.S. securities laws.
Each Investor understands that the Investor Shares may not be sold, offered for
sale, pledged or otherwise transferred unless pursuant to an effective
registration statement under the Securities Act and qualification or other
compliance under applicable blue sky or state securities laws, or pursuant to
an applicable exemption from such requirements.
(b) Each of the Investors (i) possesses knowledge and experience in
financial and business matters such that it is capable of evaluating the risks
of the investment in the securities issued pursuant to this Agreement; and (ii)
has the financial wherewithal
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to sustain the risk of the investment contemplated hereby.
ARTICLE V
COVENANTS
Section V.1 INTERIM OPERATIONS OF THE COMPANY. The Company covenants
and agrees that, except (i) as contemplated by this Agreement, (ii) as
disclosed in Section 5.1 of the Company Disclosure Letter or (iii) with the
prior written consent of the Investor Representative, after the date hereof and
prior to the Closing Date:
(a) The Company and each of its Subsidiaries shall use their
commercially reasonable efforts to preserve, in all material respects, the
current business operations, existing business relationships and goodwill of
the Company and each of its Subsidiaries, consistent with past practice;
(b) The business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course of business;
(c) The Company will not amend its articles of incorporation, by-laws
or similar organizational documents or cause or permit any amendment of the
articles of incorporation, by-laws or similar organizational documents of any
of its Subsidiaries;
(d) The Company shall not (i) split, combine or reclassify the
outstanding Pre-Recapitalization Company Common Stock or cause or permit any of
its Subsidiaries to split, combine or reclassify any outstanding capital stock
of any such Subsidiary, (ii) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock or with respect to the capital stock of any Subsidiary (other than the
quarterly dividend to shareholders of the Company payable on October 1, 1997
and dividends from any wholly-owned Subsidiary of the Company to the Company or
any other wholly-owned Subsidiary of the Company), (iii) issue or sell or cause
any Subsidiary to issue or sell any additional shares of, or
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securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, shares of capital stock of any
class of the Company or its Subsidiaries, or (iv) redeem, purchase or otherwise
acquire directly or indirectly any of its capital stock or cause or permit any
of its Subsidiaries to redeem, purchase or otherwise acquire directly or
indirectly any capital stock of such Subsidiary;
(e) Neither the Company nor any of its Subsidiaries shall (i) adopt
any new employee benefit plan (including any stock option, stock benefit or
stock purchase plan) or amend any existing employee benefit plan, in any
material respect, except for changes which are less favorable to participants
in such plans or as may be required by applicable law, or (ii) increase any
compensation or enter into or amend any employment, consulting, severance,
termination or similar agreement with any of its present or future employees,
officers or directors, except for normal increases in the ordinary and usual
course of business and the payment of cash bonuses to employees pursuant to and
consistent with existing plans or programs;
(f) Neither the Company nor any of its Subsidiaries shall, except as
may be required or contemplated by this Agreement or in the ordinary and usual
course of business (i) acquire, sell, lease or dispose of any of its assets or
properties other than any such assets or properties the value of which does not
exceed $250,000 individually and $1,000,000 in the aggregate, or (ii) enter
into any commitment or transaction which would be material to the Company and
its Subsidiaries taken as a whole;
(g) Neither the Company nor any of its Subsidiaries shall: (i) incur
or assume any long-term or short-term debt or issue any debt securities except
for borrowings under existing lines of credit in the ordinary course of
business consistent with past practice, (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the material obligations of any other Person (other than
Subsidiaries of the Company), except in the ordinary and usual course of
business consistent with past practice in an amount not to exceed $250,000
individually and $1,000,000 in the aggregate, (iii) make
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any loans, advances or capital contributions to, or investments in, any other
Person (other than to Subsidiaries of the Company) in excess of $250,000
individually and $1,000,000 in the aggregate, other than in the ordinary and
usual course of business consistent with past practice, (iv) pledge or
otherwise encumber shares of capital stock of the Company or its Subsidiaries,
or (v) mortgage or pledge any of its assets, tangible or intangible, or create
any mortgage, lien, pledge, charge, security interest or encumbrance of any
kind with respect to any such asset except in the ordinary and usual course of
business consistent with past practice with respect to assets having a value
not exceeding $250,000 individually and $1,000,000 in the aggregate;
(h) Neither the Company nor any of its Subsidiaries shall (i) acquire
(by merger, consolidation or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof or any equity
interest therein (other than purchases of marketable securities in the ordinary
course of business), (ii) enter into any contract or agreement other than in
the ordinary course of business consistent with past practice which would be
material to the Company and its Subsidiaries taken as a whole, (iii) other than
capital expenditures provided for in the Company's 1997 capital expenditures
budget, which budget has been delivered or made available to the Investor
Representative or its representatives, authorize any new capital expenditure or
expenditures which, individually, is in excess of $250,000 or, in the
aggregate, are in excess of $1,000,000, or (iv) enter into or amend any
contract, agreement, commitment or arrangement providing for the taking of any
action which would be prohibited hereunder;
(i) Neither the Company nor any of its Subsidiaries shall adopt a plan
of complete or partial liquidation or resolutions providing for or authorizing
such liquidation or a dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization;
(j) Neither the Company nor any of its Subsidiaries shall make any
federal, state, local or foreign tax election to settle or compromise any
federal, state, local or foreign tax liabilities which individu-
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ally is in excess of $250,000 or, in the aggregate, are in excess of
$1,000,000;
(k) Neither the Company nor any of its Subsidiaries shall materially
change any of the accounting methods used by it unless required by GAAP or
applicable law;
(l) The Company will not settle or compromise, or cause or permit any
Subsidiary to settle or compromise, any claim (including arbitration) or
litigation, which after insurance reimbursement results in liability to the
Company or any Subsidiary in excess of $750,000, without the prior written
consent of the Investors, which consent will not be unreasonably withheld; and
(m) Neither the Company nor any of its Subsidiaries will authorize or
enter into an agreement to do any of the foregoing.
Section V.2 ACCESS TO INFORMATION. The Company shall afford to the
Investor Representative and its officers, employees, accountants, counsel and
other authorized representatives reasonable access, during normal business
hours throughout the period prior to the earlier of the Closing Date and the
date of termination of this Agreement, to the plants, properties, contracts,
commitments, books and records (including but not limited to Tax Returns) of
the Company and its Subsidiaries and shall use its reasonable best efforts to
cause its respective representatives to furnish promptly to the Investor
Representative and its representatives such additional financial and operating
data and other information of the Company's and its Subsidiaries' businesses
and properties as the Investor Representative and its representatives may from
time to time reasonably request. Unless otherwise required by law and until the
Closing, Investcorp, the Investors and their respective representatives will
hold any such information which is non-public in confidence in accordance with
the provisions of the Confidentiality Agreement between the Company and
Investcorp International, Inc., dated as of June 23, 1997 (the "Confidentiality
Agreement"), and each of the Investors hereby agrees to be bound by such
Confidentiality Agreement as though a party thereto.
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Section V.3 NO SOLICITATION. (a) From the date hereof until the
earlier of the Closing or the termination of this Agreement pursuant to Article
VII, the Company and its Subsidiaries will not, and will use their best efforts
to cause their respective officers, directors, employees and investment
bankers, attorneys or other agents retained by or acting on behalf of the
Company or any of its Subsidiaries not to, (i) initiate, solicit or encourage,
directly or indirectly, any inquiries or the making of any proposal that
constitutes or is reasonably likely to lead to any Acquisition Proposal (as
hereinafter defined), (ii) except as permitted below, engage in negotiations or
discussions with, or furnish any information or data to any third party
relating to an Acquisition Proposal, or (iii) except as permitted below, enter
into any agreement with respect to any Acquisition Proposal or approve any
Acquisition Proposal. Notwithstanding anything to the contrary contained in
this Section 5.3 or in any other provision of this Agreement, the Company and
the Company Board may participate in discussions or negotiations (including, as
a part thereof, making any counterproposal) with or furnish information to any
third party making an unsolicited Acquisition Proposal (a "Potential Acquiror")
or approve an unsolicited Acquisition Proposal if either (A) the Company Board
determines in good faith, after receiving advice from its financial advisor,
that a Potential Acquiror has submitted to the Company an Acquisition Proposal
which is a Superior Proposal (as hereinafter defined), or (B) the Company
Board determines in good faith, based upon advice of its outside legal
counsel, that the failure to participate in such discussions or negotiations or
to furnish such information or approve an Acquisition Proposal is reasonably
likely to violate the Company Board's fiduciary duties under applicable law.
The Company agrees that any non-public information furnished to a Potential
Acquiror will be pursuant to a confidentiality agreement substantially similar
to the confidentiality provisions of the confidentiality agreement entered into
between the Company and Investcorp International, Inc. In the event that the
Company shall determine to provide any information as described above, or shall
receive any Acquisition Proposal, it shall promptly inform the Investor
Representative in writing as to the fact that information is to be provided and
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shall furnish to the Investor Representative the identity of the recipient of
such information and/or the Potential Acquiror and the terms of such
Acquisition Proposal, except to the extent that the Company Board determines in
good faith, based upon advice of its outside legal counsel, that any such
action described in this sentence is reasonably likely to violate such Company
Board's fiduciary duties under, or otherwise violate, applicable law.
(b) The Company Board shall not (i) withdraw or modify or propose to
withdraw or modify, in any manner adverse to the Investors, the approval or
recommendation of such Board of Directors of the Amended Articles or (ii)
approve or recommend, or propose to approve or recommend, any Acquisition
Proposal unless, in each case, (A) the Company Board determines in good faith,
after receiving advice from its financial advisor, that such Acquisition
Proposal is a Superior Proposal or (B) the Company Board determines in good
faith, based upon advice of its outside legal counsel, that the failure to take
such action is reasonably likely to result in a breach of the Company Board's
fiduciary duties under applicable law.
(c) For purposes of this Agreement, "Acquisition Proposal" shall mean
any bona fide proposal, whether in writing or otherwise, made by a third party
(which is unaffiliated with Investcorp) to acquire beneficial ownership (as
defined under Rule 13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of all or a material portion of the assets of, or any
material equity interest in, the Company or its material Subsidiaries pursuant
to a merger, consolidation or other business combination, sale of shares of
capital stock, sale of assets, tender offer or exchange offer or similar
transaction involving the Company or its material Subsidiaries including,
without limitation, any single or multi-step transaction or series of related
transactions which is structured to permit such third party to acquire
beneficial ownership of any material portion of the assets of, or any material
portion of the equity interest in, the Company or its material Subsidiaries
(other than the transactions contemplated by this Agreement).
(d) The term "Superior Proposal" means
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any bona fide proposal to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, more than a majority of the Company's
shares then outstanding or all or substantially all the assets of the Company,
and otherwise on terms which the Company Board determines in good faith to be
more favorable to the Company and its shareholders than the Recapitalization.
Section V.4 EMPLOYEE BENEFITS. (a) Effective as of the Closing Date
and for a two-year period thereafter, except as otherwise approved by a
unanimous vote of the Company Board, the Company and its Subsidiaries and
successors shall provide those Persons who, immediately prior to the Closing
Date, were employees ("Company Employees") of the Company or its Subsidiaries
on the Closing Date with employee benefits that are no less favorable in the
aggregate than those provided to Company Employees immediately prior to October
8, 1997.
(b) Following the Closing Date, the Company will continue to honor,
pursuant to the terms thereof, all employment, severance, retention, bonus,
other incentive agreements and arrangements, postretirement medical, dental and
life insurance arrangements and all supplemental pension plans, in each case as
amended through October 8, 1997 (each, an "Employee Arrangement"), for the
benefit of any employees and former employees of the Company or any Subsidiary
thereof, including, without limitation, those Employee Arrangements set forth
in Section 5.4(c) of the Company Disclosure Letter. Notwithstanding the
foregoing, no benefit under any Employee Arrangement which vested on or prior
to the Closing Date can be modified.
(c) All benefits described in Section 5.4(c) of the Company Disclosure
Letter shall be deemed fully vested on the Closing Date.
(d) The Investors and the Company acknowledge that the transactions
contemplated by this Agreement shall constitute a "change in control" for
purposes of any Employee Arrangement.
(e) As soon as practicable following the date of this Agreement, the
Company shall take such
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actions as may be required to (i) provide that at the Closing Date all awards
of Pre-Recapitalization Company Common Stock granted to any employee of the
Company or any of its Subsidiaries prior thereto pursuant to the Company's
Restricted Stock Plan shall be deemed fully vested, and (ii) amend the terms of
the Company's Restricted Stock Plan to provide that any terms providing for
rights of first refusal shall be deleted, effective as of the Closing Date.
(f) As soon as practicable following the date of this Agreement, the
individuals listed on Section 5.4(f) of the Company Disclosure Letter shall be
offered the right to purchase, at the cash surrender value, the Company-owned
life insurance on their respective lives; provided, however, that such
individuals provide notice of the exercise of such right prior to the tenth day
prior to the Closing Date. The individuals listed on Section 5.4(f) of the
Company Disclosure Letter shall, if such individual so elects, effect such
purchase promptly following the Closing but in no event later than January 15,
1998.
(g) At or prior to the Closing Date, (i) the obligations of the
Company to each of Richard L. Werner and Robert I. Werner under their
respective consulting agreements with the Company shall be accelerated, and
Richard L. Werner and Robert I. Werner shall each receive from the Company
approximately $875,000, in immediately available funds in full settlement of
such obligations of the Company, (ii) the obligations of the Company to provide
to each of Donald M. Werner and Howard L. Solot a consulting agreement upon
their respective retirements shall be accelerated, and each shall receive from
the Company $1 million in immediately available funds in full satisfaction of
such obligations of the Company, and (iii) the obligations of the Company to
Donald M. Werner and Howard L. Solot under the Company's Supplemental Pension
Plan A and resolutions of the Company Board shall be accelerated and Donald M.
Werner and Howard L. Solot shall each receive from the Company $1 million in
immediately available funds pursuant thereto in full settlement of such
obligations of the Company.
(h) For purposes of this Section 5.4, the term "Ccmpany Employees"
shall mean all employees of
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the Company and its Subsidiaries immediately prior to the Closing Date,
including those on lay-off, disability or leave of absence, paid or unpaid.
(i) Effective as of the Closing Date, the Company shall adopt a stock
option plan(s), which shall contain the terms set forth in Exhibit B.
(j) Effective as of the Closing Date, the Company shall execute and
deliver employment agreements with each of the Persons listed on Schedule 4,
and such agreements shall be substantially in the form contained in Exhibit B.
(k) The Company shall pay all bonuses accrued for fiscal year 1997 in
accordance with the Company's past practice.
Section V.5 PUBLICITY. The initial press releases with respect to the
execution of this Agreement shall be in a form acceptable to the Investors and
the Company. Thereafter, so long as this Agreement is in effect, neither the
Company, the Investors nor any of their respective affiliates shall issue or
cause the publication of any press release with respect to the
Recapitalization, this Agreement or the other transactions contemplated hereby
without the prior agreement of the other party, except as may be required by
law.
Section V.6 DIRECTORS' AND OFFICERS' INDEMNIFICATION. (a) From and
after the Closing Date, the Company shall, indemnify, defend and hold harmless
any Person who is now, or has been at any time prior to October 8, 1997, or who
becomes prior to the Closing Date, an officer or director (the "Indemnified
Party") of the Company and its Subsidiaries against all losses, claims,
damages, liabilities, costs and expenses (including attorneys' fees and
expenses), judgments, fines, losses, and amounts paid in settlement in
connection with any actual or threatened action, suit, claim, proceeding or
investigation (each a "Claim") to the extent that any such Claim is based on,
or arises out of, (i) the fact that such Person is or was, or took or failed to
take any action as, a director, officer, employee or agent of the Company or
any of its Subsidiar-
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ies or is or was serving at the request of the Company or any of its
Subsidiaries as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (ii) this Agreement,
or any of the transactions contemplated hereby, in each case to the extent that
any such Claim pertains to any matter or fact arising, existing, or occurring
prior to or at the Closing Date, regardless of whether such Claim is asserted
or claimed prior to, at or after the Closing Date, to the full extent permitted
under Pennsylvania law or the Company's articles of incorporation and by-laws
in effect on October 8, 1997, including provisions relating to advancement of
expenses incurred in the defense of any action or suit. Without limiting the
foregoing, in the event any Indemnified Party becomes involved in any capacity
in any Claim, then, from and after the Closing Date, the Company shall
periodically advance to such Indemnified Party its legal and other expenses
(including the cost of any investigation and preparation incurred in connection
therewith), subject to the provision by such Indemnified Party of an
undertaking to reimburse the amounts so advanced in the event of a final
non-appealable determination by a court of competent jurisdiction that such
Indemnified Party is not entitled thereto.
(b) The Company agrees that all rights to indemnification and all
limitations of liability existing in favor of the Indemnified Party as provided
in the Company's articles of incorporation and by-laws as in effect as of
October 8, 1997 shall continue in full force and effect, without any amendment
thereto, for a period of six years from the Closing Date; PROVIDED THAT, in
the event any claim or claims are asserted or made within such six year period,
all rights to indemnification in respect of any such claim or claims shall
continue until disposition of any and all such claims; PROVIDED, FURTHER, that
any determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under Pennsylvania law,
the Company's articles of incorporation or by-laws or such agreements, as the
case may be, shall be made by independent legal counsel selected by the
Indemnified Party and reasonably acceptable to the Company and; PROVIDED,
FURTHER, that nothing in this Section 5.6 shall impair any rights or
obligations of any present or former directors or officers of the
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Company.
(c) In the event the Company or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then, and in each such case, to the extent necessary to
effectuate the purposes of this Section 5.6, proper provision shall be made so
that the successors and assigns of the Company assume the obligations set forth
in this Section 5.6 and none of the actions described in clauses (i) or (ii)
shall be taken until such provision is made.
Section V.7 PROXY STATEMENT. (a) The Company shall prepare as soon as
practicable, following the date of this Agreement, a proxy statement (together
with all amendments, schedules, and exhibits thereto, the "Proxy Statement"),
in accordance with all applicable laws, rules and regulations, with respect to
the special meeting of the Company's shareholders called to approve the Amended
Articles (the "Company Special Meeting"). The Investor Representative and its
counsel shall be provided with a reasonable opportunity to review and comment
on the Proxy Statement and any related materials prepared in connection with
the Company Special Meeting.
(b) The Company shall include in the Proxy Statement the
recommendation of the Company Board that the shareholders of the Company vote
in favor of the approval of the Amended Articles; provided, however, that the
Company Board may withdraw, modify or change such recommendation only to the
extent that (A) the Company Board determines in good faith, after receiving
advice from its financial advisor, that a Potential Acquiror has submitted to
the Company an Acquisition Proposal which is a Superior Proposal, or (B) the
Company Board determines in good faith, based upon the advice of its outside
legal counsel, that the failure to withdraw, modify or change such
recommendation is reasonably likely to result in a breach of the Company
Board's fiduciary duties under applicable law.
(c) Each of the Company and the Inves-
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tors shall furnish all information concerning it as is reasonably requested to
be included in the Proxy Statement. The Company agrees that the Proxy Statement
and each amendment or supplement thereto, at the time it is mailed to the
shareholders of the Company, will not include 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 provided, however, that the foregoing
shall not apply to the extent that any such untrue statement of a material fact
or omission to state a material fact was made by the Company in reliance upon
and in conformity with written information concerning the Investors furnished
to the Company by the Investor Representative, the Investors or their
respective representatives specifically for use in the Proxy Statement. The
Investors agree that the written information provided by it specifically for
inclusion in the Proxy Statement and each amendment or supplement thereto, at
the time it is mailed to the shareholders of the Company, 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.
(d) No amendment or supplement to the Proxy Statement will be made
without the approval of each of the Company and the Investor Representative,
which approval will not be unreasonably withheld or delayed.
Section V.8 SHAREHOLDERS' MEETING. As soon as practicable after the
completion of the Proxy Statement, the Company, acting through the Company
Board, shall, in accordance with applicable law and its articles of
incorporation, and for the purpose of considering and taking action upon the
Amended Articles, duly call, give notice of, convene and hold the Company
Special Meeting.
Section V.9 APPROVALS AND CONSENTS; COOPERATION; NOTIFICATION. (a) The
parties hereto shall use their respective reasonable best efforts, and
cooperate with each other, to obtain as promptly as
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practicable all governmental and third party authorizations, approvals,
consents or waivers required in order to consummate the transactions
contemplated by this Agreement.
(b) The Company and the Investors shall take all actions necessary to
file as soon as practicable all notifications, filings and other documents
required to obtain all governmental authorizations, approvals, consents or
waivers, and to respond as promptly as practicable to any inquiries received
from any Governmental Entity for additional information or documentation and to
respond as promptly as practicable to all inquiries and requests received from
any State Attorney General or other Governmental Entity in connection
therewith.
(c) The Company shall give prompt notice to the Investors of the
occurrence of any Company Material Adverse Effect, and the Investors shall give
prompt notice to the Company of the occurrence of any Investor Material Adverse
Effect. Each of the Company and the Investors shall give prompt notice to the
other of the occurrence or failure to occur of an event that would, or, with
the lapse of time would, cause any condition contained in Article VI not to be
satisfied.
Section V.10 PRINCIPAL CORPORATE OFFICES. At the Closing Date, and for
at least the two-year period thereafter, except as otherwise approved by a
unanimous vote of the Company Board, the Company's principal corporate offices
and its commercial business units shall be maintained in their current
locations.
Section V.11 TAKEOVER STATUTES. If any "fair price", "moratorium",
"control share acquisition" or other form of antitakeover statute or regulation
shall become applicable to the transactions contemplated hereby, the Company
and each of the Investors and their respective boards of directors shall grant
such approvals and take such actions as are reasonably necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to eliminate or minimize the
effects of such statute or regulation on the transactions
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contemplated hereby.
Section V.12 DOMESTIC INTERNATIONAL SALES CORPORATION. As soon as
practicable after the date hereof, but prior to the Closing Date, the DISC
shall first discharge all of its liabilities and then shall be merged with and
into the Company. Prior to the Closing, the DISC will distribute to its
stockholders all of the accumulated cash held by the DISC.
Section V.13 FURTHER ASSURANCES. Each of the parties hereto agrees to
use its respective reasonable best efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement.
Section V.14 NOTIFICATION OF COLORADO INSURANCE DEPARTMENT. Promptly
following the execution of this Agreement, the Company and the Investors shall
notify the Colorado Department of Insurance as to the indirect change of
control of MIICA to be effected as a result of the Recapitalization and the
other transactions contemplated hereby.
Section V.15 NEW FINANCING. Between the date hereof and the Closing,
the Investors and the Company agree to fully cooperate in connection with the
Company's efforts to secure financing of the transactions contemplated hereby
(the "New Financing"), including calling for the prepayment or redemption of
any existing indebtedness of the Company, provided that the Company shall not
be required to pay any fees or other costs with respect to the New Financing
prior to the Closing and that any agreements or understandings which the
Company may make prior to the Closing relating to the New Financing or the
prepayment or redemption OF any existing indebtedness shall be conditioned upon
the occurrence of the Closing.
Section V.16 LANDLORD CONSENTS. Prior to the Closing, the Company
shall use reasonable efforts to obtain any landlord lease consents that may be
required by the terms of any of the
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Company's real property leases upon consummation of the transactions
contemplated herein, in a form reasonably acceptable to the Investors;
PROVIDED, HOWEVER, that the receipt of any or all such landlord lease consents
shall not be a condition to the Closing under this Agreement.
Section V.17 BOUGHT SHARE PROGRAM. Following the execution of this
Agreement, the Company and the Investors shall develop a "bought share"
program, in accordance with the terms set forth in Exhibit B, to provide
non-shareholder members of the Company's management with the opportunity to
invest up to approximately $2 million in shares of non-voting
Post-Recapitalization Company Common Stock.
Section V.18 CAPITAL ADEQUACY OF THE SURVIVING CORPORATION. The
Investors covenant that they shall (i) use their commercially reasonable best
efforts to cause the opinion referred to in Section 6.3(d), relating to the
expected solvency of the Company following the Recapitalization, to be
delivered to the Company as soon as available (but in any event prior to
Closing), and (ii) deliver to the Company, as soon as available (but in any
event prior to Closing), any other certificates or opinions relating to the
expected solvency of the Company following the Recapitalization and related
financings and shall cause such certificates or opinions to be addressed to the
Company Board so that the Company Board is entitled to rely thereon. The
Company agrees to provide, and will cause its Subsidiaries and its and their
respective employees and advisors to provide, commercially reasonable
cooperation with respect to solvency matters, including, without limitation,
the preparation of customary certificates of the Company's chief financial
officer.
Section V.19 RECONSTITUTION OF COMPANY BOARD. At or prior to the
Closing Date, the Company shall take all actions as may be required so that
the Company Board shall consist of (ii) two members of the Company's current
management and (ii) three designees of the Investors which will constitute a
majority of the Company Board.
Section V.20 SHAREHOLDER AGREEMENTS. Effective as of the Closing Date,
the Company shall execute and deliver shareholder
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agreements with each of the Persons listed on Schedule 5 and such agreements
shall contain the terms set forth in Exhibit C.
ARTICLE VI
CONDITIONS
Section VI.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The obligations
of the Company, on the one hand, and the Investors, on the other hand, to
consummate the Recapitalization and the transactions contemplated hereby are
subject to the satisfaction (or, if permissible, waiver by the party for whose
benefit such conditions exist) of the following conditions:
(a no court, arbitrator or governmental body, agency or official shall
have issued any order, decree or ruling, and there shall not be any statute,
rule or regulation, restraining, enjoining or prohibiting the consummation of
the material transactions contemplated by this Agreement; provided that the
parties shall have used their best efforts to cause any such order, decree,
ruling, statute, rule or regulation to be vacated or lifted;
(b all consents, permits and approvals required to be obtained from
any Person shall have been received or obtained on or prior to the Closing
Date, except to the extent that the failure to so obtain would not be
reasonably likely to result in a Company Material Adverse Effect; and
(c the shareholders of the Company shall have approved the Amended
Articles in accordance with the PBCL.
Section VI.2 CONDITIONS TO THE OBLIGATIONS OF THE INVESTORS. The
obligations of the Investors to consummate the Recapitalization are subject to
the satisfaction (or waiver by the Investors) of the following further
conditions:
(a (i) the representations and warran-
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ties of the Company contained in Sections 3.2(a), 3.23 and 3.24 of Article III
shall be true and accurate as of the Closing Date as if made at and as of such
time (other than those representations and warranties that address matters only
as of a particular date or only with respect to a specific period of time which
need only be true and accurate as of such date or with respect to such period),
and (ii) all other representations and warranties of the Company contained in
Article III shall be true and accurate as of the Closing Date as if made at and
as of such time (other than those representations and warranties that address
matters only as of a particular date or only with respect to a specific period
of time which need only be true and accurate as of such date or with respect to
such period), except where the failure of such representations and warranties
to be so true and accurate (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein), would not
individually or in the aggregate have a Company Material Adverse Effect;
(b the Company shall have performed in all material respects its
obligations hereunder required to be performed by it at or prior to the Closing
Date;
(c if requested, the Investors shall have received a certificate
signed on behalf of the Company by the chief executive officer and the chief
financial officer of the Company, dated as of the Closing Date, to the effect
that, to the best of such officer's knowledge, the conditions set forth in
Sections 6.1(a), 6.1(b), 6.1(c), 6.2(a) and 6.2(b) have been satisfied; and
(d the Company shall have taken all actions necessary to cause the
Redemption to become effective immediately following the issuance of the
Investor Shares, and such actions shall be irrevocable on the part of the
Company, subject only to the requisite approval by the Company's
shareholders of the Amended Articles and the purchase and sale of the Investor
Shares.
Section VI.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the Recapitalization are subject to
the satisfaction (or
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waiver by the Company) of the following further conditions:
(a the representations and warranties of the Investors contained in
Article IV shall be true and accurate as of the Closing Date as if made at and
as of such time (other than those representations and warranties that address
matters only as of a particular date or only with respect to a specific period
of time which need only be true and accurate as of such date or with respect to
such period), except where the failure of such representations and warranties
to be so true and accurate (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein) would not have an
Investor Material Adverse Effect;
(b the Investors shall have performed in all material respects all of
the respective obligations hereunder required to be performed by the investors,
as the case may be, at or prior to the Closing Date;
(c if requested, the Company shall have received a certificate signed
on behalf of each of the Investors, by the chief executive officer or chief
financial officer of each of the Investors, dated as of the Closing Date, to
the effect that, to the best of such officer's knowledge, the conditions set
forth in Sections 6.1(a), 6.1(b), 6.3(a) and 6.3(b) have been satisfied; and
(d the Investors shall have obtained and furnished to the Company an
opinion from a nationally recognized valuation firm chosen by the Investors and
reasonably acceptable to the Company to the effect that the consummation of the
transactions contemplated hereby shall not violate Section 1551 of the PBCL or
otherwise constitute a fraudulent conveyance under applicable law, which
opinion shall be in customary form and subject to customary assumptions and
qualifications, and shall be addressed to the Company and to such other Persons
as determined by the Investors.
ARTICLE VII
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TERMINATION
Section VII.1 TERMINATION. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and the
Recapitalization contemplated herein may be abandoned at any time prior to the
Closing Date, whether before or after shareholder approval thereof:
(a By the mutual consent of the Company and the Investors;
(b By either the Company or the Investors:
i) if the Recapitalization shall not have occurred on or
prior to January 31, 1998; PROVIDED, HOWEVER, that the right to
terminate this Agreement under this Section 7.1(b)(i) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of
the Recapitalization to occur on or prior to such date; or
ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree,
ruling or other action the parties hereto shall have used their best
efforts to lift), in each case permanently restraining, enjoining
or otherwise prohibiting the material transactions contemplated by
this Agreement and such order, decree, ruling or other action shall
have become final and no-nappealable;
(c By the Company:
i) if the Company Board shall have (A) withdrawn, or modified
or changed in a manner adverse to Investors its approval or
recommendation of the Amended Articles in order to approve and permit
the Company to execute a definitive agreement with a Person, other
than the Investors, Investcorp or any of their respective affiliates
or designees, relating to an Acquisition Proposal, and (B) either (x)
determined in good faith, after receiving advice from its financial
advisor, that
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such third party has submitted to the Company an Acquisition Proposal
which is a Superior Proposal, or (y) determined in good faith, based
upon advice of its outside legal counsel, that the failure to take
such action as set forth in the preceding clause (A) is reasonably
likely to result in a breach of the Company Board's fiduciary duties
under applicable law; PROVIDED, HOWEVER, that the Company shall have
paid to the Investors (pro rata based on the number of Investor Shares
purchased by such Investors pursuant to Section 1.3) the fee required
by Section 7.2(a);
ii) if any of the Investors (x) breaches or fails in any
material respect to perform or comply with any of its material
covenants and agreements contained herein or (y) breaches its
representations and warranties in any material respect and such breach
would have an Investor Material Adverse Effect, in each case such that
the conditions set forth in Section 6.1 or Section 6.3 would not be
satisfied; PROVIDED, HOWEVER, that if any such breach is curable by
the breaching party through the exercise of the breaching party's best
efforts and for so long as the breaching party shall be so using its
best efforts to cure such breach, the Company may not terminate this
Agreement pursuant to this Section 7.1(c)(ii); or
iii) if the Company fails to obtain the required approval hy
its shareholders of the Amended Articles at the Company Special
Meeting; PROVIDED, HOWEVER, that the Company shall have paid to the
Investors (pro rata based on the number of Investor Shares purchased
by such Investors pursuant to Section 1.3) any fee required by Section
7.2(a).
(d By the Investors:
i) if the Company (x) breaches or fails in any material
respect to perform or comply with any of its material covenants and
agreements contained herein or (y) breaches its representations and
warranties in any material respect and such breach would have a
Company Material Adverse Effect, in each case such that the conditions
set
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forth in Section 6.1 or Section 6.2 would not be satisfied; PROVIDED,
HOWEVER, that if any such breach is curable by the Company through the
exercise of the Company's best efforts and for so long as the Company
shall be so using its best efforts to cure such breach, the Investors
may not terminate this Agreement pursuant to this Section 7.1(d)(i);
ii) if the Company Board shall have withdrawn, or modified or
changed in a manner adverse to the Investors its approval or
recommendation of the Amended Articles or shall have recommended an
Acquisition Proposal or other business combination, or the Company
shall have entered into an agreement in principle (or similar
agreement) or definitive agreement providing for an Acquisition
Proposal or other business combination with a Person, other than the
Investors, Investcorp or any of their respective affiliates or
designees, or the Company Board resolves to do any of the foregoing;
or
iii) if the shareholders of the Company do not approve the
Amended Articles at the Company Special Meeting.
Section VII.2 EFFECT OF TERMINATION. (a) If (w) the Company shall
terminate this Agreement pursuant to Section 7.1(c)(i), (x) the Investors shall
terminate this Agreement pursuant to Section 7.1(d)(ii), (y) the Investors
shall terminate this Agreement pursuant to Section 7.1(d)(iii) or the Company
shall have terminated this Agreement pursuant to Section 7.1(c)(iii) and in
either case there shall have been made or commenced an Acquisition Proposal by
a Person other than the Investors, Investcorp or any of their respective
affiliates or designees (a "Third Party Acquiror") with respect to the Company,
or (z) the Investors shall terminate this Agreement pursuant to Section
7.1(d)(i) at any time after an Acquisition Proposal has been made by such Third
Party Acquiror and, within one year following such termination, the Company
shall have entered into a definitive agreement with such Third Party Acquiror
with respect to an Acquisition Proposal or similar business combination or such
a transaction is consummated with
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such Third Party Acquiror, then the Company shall pay to the Investors (pro
rata based on the number of Investor Shares purchased by such Investors
pursuant to Section 1.3), not later than the date of termination of this
Agreement in the case of clauses (w), (x) and (y) above, $15 million (the
"Termination Fee") in cash by check or wire transfer. The Company acknowledges
that the agreements contained in this Section 7.2 are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, the Investors would not enter into this Agreement. Accordingly, if
the Company fails to promptly pay the amount due pursuant to this Section 7.2
and, in order to obtain such payment, the Investors commence a suit in
accordance with the terms of this Agreement which results in a judgment against
the Company for the Termination Fee, the Company shall pay to the Investors
their costs and expenses (including attorneys' fees) in connection with such
suit, together with accrued interest on the Termination Fee which interest
shall be accrued from, and at the prime rate of Citibank, N.A. in effect on,
the date such payment was required to be made. If the Company is the prevailing
party in such suit, then the Investors shall pay to the Company its costs and
expenses (including attorneys' fees) in connection with such suit.
(b In the event of the termination of this Agreement as provided in
Section 7.1, written notice thereof shall forthwith be given to the other party
or parties specifying the provision hereof pursuant to which such termination
is made, and this Agreement shall forthwith become null and void, and there
shall be no liability on the part of the Investors or the Company or their
respective directors, officers, employees, shareholders, representatives,
agents or advisors other than, with respect to the Investors and the Company,
the obligations pursuant to this Section 7.2, Article VIII and the last
sentence of Section 5.2. Nothing contained in this Section 7.2 shall relieve
any of the Investors or the Company from liability for willful breach of this
Agreement.
ARTICLE VIII
MISCELLANEOUS
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Section VIII.1 AMENDMENT AND MODIFICATION. Subject to applicable law,
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the shareholders of the Company
contemplated hereby, by written agreement of the parties hereto at any time
prior to the Closing Date with respect to any of the terms contained herein.
Section VIII.2 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Closing Date or the termination of this Agreement. This Section 8.2 shall
not limit any covenant or agreement contained in this Agreement which by its
terms contemplates performance after the Closing Date.
Section VIII.3 NOTICES. Subject to Section 8.9, all notices, consents
and other communications hereunder shall be in writing and shall be deemed to
have been duly given (a) when delivered by hand or by Federal Express or a
similar overnight courier to, (b) five days after being deposited in any United
States Post Office enclosed in a postage prepaid, registered or certified
envelope addressed to, or (c) when successfully transmitted by telecopier (with
a confirming copy of such communication to be sent as provided in clauses (a)
or (b) above) to, the party for whom intended, at the address or telecopier
number for such party set forth below (or at such other address or telecopier
number for a party as shall be specified by like notice, provided, however,
that any notice of change of address or telecopier number shall be effective
only upon receipt):
(a if to the Investors, to:
Investcorp Investment Equity Limited
P.O. Box 1111
West Wind Building
George Town, Grand Cayman
British West Indies
Telecopy No.: (345) 949-7920
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with copies to:
Investcorp International, Inc.
280 Park Avenue, 37th Floor West
New York, New York 10017
Telecopy No.: (212) 599-4700
Attention: Christopher J. Stadler
and
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166-0193
Telecopy No.: (212) 351-4035
Attention: E. Michael Greaney, Esq.
(b if to the Company, to:
Werner Holding Co. (PA), Inc.
93 Werner Road
Greenville, Pennsylvania 16125-9499
Telecopy No.: (412) 588-0618
Attention: Eric J. Werner, General Counsel
with copies to:
Skadden, Arps, Slate, Meagher &
Flom LLP
919 Third Avenue
New York, New York 10022
Telecopy No.: (212) 735-2000
Attention: Roger S. Aaron, Esq.
and
Cohen & Grisby, P.C.
2900 CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222
Telecopy No.: (412) 391-3382
Attention: Charles C. Cohen, Esq.
Section VIII.4 INTERPRETATION. The words "hereof," "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a
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<PAGE> 56
whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit and schedule references are to the articles,
sections, paragraphs, exhibits and schedules of this Agreement unless otherwise
specified. Whenever the words "include," "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation." The words describing the singular number shall include the plural
and vice versa, words denoting any gender shall include all genders. The phrase
"to the knowledge of" or any similar phrase shall mean such facts and other
information which as of the date of determination are actually known to any
vice president, chief financial officer, general counsel, chief compliance
officer, controller, and any officer superior to any of the foregoing, of the
referenced party after the conduct of a reasonable investigation under the
circumstances by such officer. The phrases "the date of this Agreement," "the
date hereof" and terms of similar import, unless the context otherwise
requires, shall be deemed to refer to October 27, 1997. As used in this
Agreement, the term "affiliate(s)" shall have the meaning set forth in Rule
12b-2 of the Exchange Act. As used in this Agreement, "Person" means an
individual, corporation, partnership, joint venture, association, trust, estate
or other entity or organization, including a Governmental Entity. As used in
this Agreement, the term "business day" means a day, other than a Saturday or a
Sunday, on which banking institutions in New York are required to be open. The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.
Section VIII.5 COUNTERPARTS. This Agreement may be executed in
multiple counterparts, all of which shall together be considered one and the
same agreement.
Section VIII.6 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This
Agreement, the Confidentiality Agreement and the Company Disclosure Letter (a)
constitute the entire agreement and supersede all prior agree-
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ments and understandings, both written and oral, among the parties with respect
to the subject matter hereof, and (b) except as provided in Section 5.6, are
not intended to confer upon any person, other than the parties hereto and the
Investor Representative (as defined below) (with respect to Section 8,17) and
their respective successors and permitted assigns, any rights or remedies
hereunder.
Section VIII.7 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section VIII.8 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of Pennsylvania
applicable to contracts to be made and performed entirely therein without
giving effect to the principles of conflicts of law thereof or of any other
jurisdiction.
Section VIII.9 JURISDICTION. Each of the parties hereto hereby
expressly and irrevocably submits to the non-exclusive personal jurisdiction of
the United States District Court for the Western District of Pennsylvania and
to the jurisdiction of any other competent courts of the Commonwealth of
Pennsylvania located in the County of Allegheny (collectively, the
"Pennsylvania Courts"), preserving, however, all rights of removal to such
federal courts under 28 U.S.C. Section 1441, in connection with all disputes
arising out of or in connection with this Agreement or the transactions
contemplated hereby and agrees not to commence any litigation relating thereto
except in such courts. If the aforementioned courts do not have subject matter
jurisdiction, then the proceeding shall be brought in any other state or
federal courts located in the Commonwealth of Pennsylvania, preserving,
however, all rights of removal to such federal courts under 28 U.S.C. Section
1441. Each of the parties hereby irrevocably and unconditionally (i) waives any
objection
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to the laying of venue of any litigation arising out of this Agreement or the
transactions contemplated hereby in the Pennsylvania Courts, (ii) waives and
agrees not to plead or claim in any such courts that any such litigation
brought in any such courts has been brought in an inconvenient forum, (iii)
waives the right to any other jurisdiction or venue for any litigation arising
out of or in connection with this Agreement or the transactions contemplated
hereby to which any of them may be entitled by reason of its present or future
domicile, and (iv) consents to service of any and all process in any action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby by the mailing or telecopying such process to the Investor
Representative at the address or telecopy number, as the case may be, specified
in Section 8.3 hereof. Notwithstanding the foregoing, each of the parties
hereto agrees that each of the other parties shall have the right to bring any
action or proceeding for enforcement of a judgment entered by the Pennsylvania
Courts in any other court or jurisdiction. Nothing herein shall limit the right
of a party to effect service of process on the other party by any legally
available method.
Section VIII.10 SPECIFIC PERFORMANCE. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not
be made whole by monetary damages. It is accordingly agreed that the parties
hereto (a) will waive, in any action for specific performance, the defense of
adequacy of a remedy at law and (b) shall be entitled, in addition to any other
remedy to which they may be entitled at law or in equity, to compel specific
performance of this Agreement in any action instituted in accordance with
Section 8.9.
Section VIII.11 JOINT AND SEVERAL LIABILITY. Each of the Investors
hereby agrees that they will be jointly and severally liable for all covenants,
agreements, obligations and representations and warranties made by any of them
in this Agreement.
Section VIII.12 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be
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assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors
and permitted assigns.
Section VIII.13 EXPENSES. Except as otherwise provided herein, all
costs and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not any of the transactions
contemplated hereby is consummated.
Section VIII.14 HEADINGS. Headings of the Articles and Sections of this
Agreement and the Table of Contents are for convenience of the parties only,
and shall be given no substantive or interpretative effect whatsoever.
SECTION VIII.15 WAIVERS. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed 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.
Section VIII.16 COMPANY DISCLOSURE LETTER. The Company Disclosure
Letter shall be construed with and as an integral part of this Agreement to the
same extent as if the same had been set forth verbatim herein. The disclosure
of any matter in the Company Disclosure Letter shall not be deemed to be an
admission or representation as to the materiality of the item so disclosed.
Section VIII.17 INVESTOR REPRESENTATIVE. Each of the Investors hereby
designates and appoints Investcorp Investment Equity Limited, a Cayman Islands
corporation, as such Investor's
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agent, attorney-in-fact and representative (in such capacity, the "Investor
Representative"), and as such is hereby authorized and directed to take all
such actions and exercise all such rights, power or authority, and make any
decision or determination as are required, authorized or permitted by this
Agreement to be performed, exercised or made by such Investor. Any such actions
taken, exercises of rights, power or authority, and any decision or
determination made by the Investor Representative consistent therewith, shall
be absolutely and irrevocably binding on each Investor as if such Investor
personally had taken such action, exercised such rights, power or authority or
made such decision or determination in such Investor's individual capacity. The
Investor Representative hereby acknowledges that it has full power and
authority to act in the premises (including, without limitation, the power and
authority, on behalf of the Investors, to execute and deliver any certificate,
notice, consent or instructions hereunder) and to designate and appoint a
substitute or substitutes to act hereunder with the same power and authority as
the Investor Representative would have if personally acting. Each of the
Investors agrees that each party hereto may conclusively rely without further
investigation on the instructions and decisions of the Investor Representative
acting in such capacity on behalf of any Investor, and that, as between each
Investor and each other party hereto, all actions of any Investor
Representative acting in such capacity shall be conclusively binding on each
Investor. Each Investor acknowledges that the foregoing appointment and
designation shall be deemed to be coupled with an interest, shall be
irrevocable and shall survive the death or incapacity of such Investor. The
Investor Representative shall not be liable to the Investors for the
performance of any act or the failure to act under or in connection with this
Agreement, and the Investors shall indemnify and hold harmless the Investor
Representative from any liability in connection with acting as such, so long as
he acted or failed to act in good faith in what it reasonably believed to be
the scope of his authority for a purpose which he reasonably believed to be in
the best interests of the Investors. A successor to the Investor Representative
may be chosen by a majority of the Investors provided that notice thereof is
given by the new Investor Representative to the Company.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
59
<PAGE> 61
IN WITNESS WHEREOF, the Company and the Investors have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
WERNER HOLDING CO. (PA), INC.
By: /s/
-------------------------------------
Name:
Title:
INVESTCORP INVESTMENT EQUITY
LIMITED
By: /s/
-------------------------------------
Name:
Title:
BALLET LIMITED
By: /s/
-------------------------------------
Name:
Title:
DENARY LIMITED
By: /s/
-------------------------------------
Name:
Title:
GLEAM LIMITED
By: /s/
-------------------------------------
Name:
Title:
HIGHLANDS LIMITED
60
<PAGE> 62
By: /s/
------------------------------------
Name:
Title:
NOBLE LIMITED
By: /s/
------------------------------------
Name:
Title:
OUTRIGGER LIMITED
By: /s/
-----------------------------------
Name:
Title:
QUILL LIMITED
By: /s/
------------------------------------
Name:
Title:
RADIAL LIMITED
By: /s/
------------------------------------
Name:
Title:
SHORELINE LIMITED
By: /s/
------------------------------------
Name:
Title:
61
<PAGE> 1
Exhibit 3.1
State of Delaware PAGE 1
Office of the Secretary of State
-------------------------------------
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF INCORPORATION OF "WERNER HOLDING CO. (DE), INC.", FILED IN THIS
OFFICE ON THE THIRTY-FIRST DAY OF AUGUST, A.D. 1988, AT 9 O'CLOCK A.M.
/s/ William T. Quillen
2171153 8100 SEAL OF SECRETARY'S OFFICE -------------------------
William T. Quillen,
Secretary of State
AUTHENTICATION: 7004176
144003138 DATE: 01-21-94
<PAGE> 2
758244002
FILED
AUG 31 1988
/s/ ?????
CERTIFICATE OF INCORPORATION
OF
WERNER HOLDING CO. (DE), INC.
THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, does hereby certify as follows:
ARTICLE I
---------
The name of the Corporation is Werner Holding Co. (DE),
Inc.
ARTICLE II
----------
The registered office of the Corporation in the State of Delaware is
located at 229 South State Street, in the City of Dover, County of Kent. The
name of the Corporation's registered agent in the State of Delaware at such
address is The Prentice-Hall Corporation System, Inc.
ARTICLE III
-----------
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
<PAGE> 3
ARTICLE IV
----------
The total number of shares of stock which the Corporation shall have
authority to issue is three thousand (3,000) shares of Common Stock, with a par
value of $.01 per share.
ARTICLE V
---------
Election of directors need not be by ballot unless the By-Laws of the
Corporation shall so provide.
ARTICLE VI
----------
In furtherance and not in limitation of the power conferred upon the
Board of Directors by law, the Board of Directors shall have power to make,
adopt, alter, amend and repeal, from time to time, the By-Laws of the
Corporation, subject to the right of the stockholders entitled to vote with
respect thereto to alter and repeal By-Laws made by the Directors.
ARTICLE VII
-----------
The incorporator of the Corporation is Frank T. Guadagnino, whose
mailing address is P.O. Box 2009, Pittsburgh, Pennsylvania 15230.
ARTICLE VIII
------------
Personal Liability of Directors.
--------------------------------
1. To the fullest extent that the laws of the State of
Delaware, as the same exist or may hereafter be amended, permit
-2-
<PAGE> 4
elimination of the personal liability of directors, no director of this
Corporation shall be personally liable to this Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director.
2. The provisions of this Article VIII shall be deemed to be a contract
with each director of this Corporation who serves as such at any time while this
Article VIII is in effect, and each such director shall be deemed to be serving
as such in reliance on the provisions of this Article VIII. Any amendment or
repeal of this Article VIII or adoption of any By-Law of this Corporation or
other provision of the Certificate of Incorporation of this Corporation which
has the effect of increasing director liability shall operate prospectively only
and shall not affect any action taken, or any failure to act, by a director of
this Corporation prior to such amendment, repeal, By-Law or other provision
becoming effective.
ARTICLE IX
----------
Indemnification of, and Advancement of
Expenses to, Directors, Officers and Others.
--------------------------------------------
1. RIGHT TO INDEMNIFICATION. Except as prohibited by law, every
director and officer of the Corporation shall be entitled as of right to be
indemnified by the Corporation against all expenses and liability (as those
terms are defined below in this Paragraph 1) incurred by such person in
connection with any actual or threatened claim, action, suit or proceeding,
whether
-3-
<PAGE> 5
civil, criminal, administrative, investigative or other, or whether brought by
or against such person or by or in the right of the Corporation or otherwise, in
which such person may be involved, as a party or otherwise, by reason of such
person being or having been a director or officer of the Corporation or a
subsidiary of the Corporation or by reason of the fact that such person is or
was serving at the request of the Corporation as a director, officer, employee,
fiduciary or other representative of another corporation, partnership, joint
venture, trust, employee benefit plan or other entity (such claim, action, suit
or proceeding hereinafter being referred to as "Action"); provided, however,
that no such right to indemnification shall exist with respect to an Action
brought by an indemnitee (as defined below) against the Corporation (an
"Indemnitee Action") except as provided in the last sentence of this Paragraph
1. Persons who are not directors or officers of the Corporation may be similarly
indemnified in respect of service to the Corporation or a subsidiary of the
Corporation or to another such entity at the request of the Corporation to the
extent the Board of Directors of the Corporation at any time designates any of
such persons as entitled to the benefits of this Article IX. As used in this
Article IX, "indemnitee" includes each director and officer of the Corporation
and each other person designated by the Board of Directors of the Corporation as
entitled to the benefits of this Article IX; "expenses" means all expenses
actually and reasonably incurred, including fees and expenses of counsel
selected by an indemnitee; and "liability" means all liability incurred,
-4-
<PAGE> 6
including the amounts of any judgments, excise taxes, fines or penalties and any
amounts paid in settlement. An indemnitee shall be entitled to be indemnified
pursuant to this Article against expenses incurred in connection with an
Indemnitee Action if (i) the Indemnitee Action is instituted under Paragraph 3
of this Article IX and the indemnitee is successful in whole or in part in such
Indemnitee Action, (ii) the indemnitee is successful in whole or in part in
another Indemnitee Action for which expenses are claimed or (iii) the
indemnification for expenses is included in a settlement of, or is awarded by a
court in, such other Indemnitee Action.
2. RIGHT TO ADVANCEMENT OF EXPENSES. Every indemnitee shall be entitled
as of right to have the expenses of the indemnitee in defending any Action or in
bringing and pursuing any Indemnitee Action under Paragraph 3 of this Article IX
paid in advance by the Corporation prior to final disposition of the Action or
Indemnitee Action, provided that the Corporation receives a written undertaking
by or on behalf of the indemnitee to repay the amount advanced if it should
ultimately be determined that the indemnitee is not entitled to be indemnified
for the expenses.
3. RIGHT OF INDEMNITEE TO BRING ACTION. If a written claim for
indemnification under Paragraph 1 of this Article IX or for advancement of
expenses under Paragraph 2 of this Article IX is not paid in full by the
Corporation within 30 days after the
-5-
<PAGE> 7
claim has been received by the Corporation, the indemnitee may at any time
thereafter bring an Indemnitee Action to recover the unpaid amount of the claim
and, if successful in whole or in part, the indemnitee shall also be entitled to
be paid the expense of bringing and pursuing such Indemnitee Action. The only
defense to an Indemnitee Action to recover on a claim for indemnification under
Paragraph 1 of this Article IX shall be that the conduct of the indemnitee was
such that under Delaware law the Corporation is prohibited from indemnifying the
indemnitee for the amount claimed, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel and stockholders) to have made a
determination prior to the commencement of such Indemnitee Action that
indemnification of the indemnitee is proper in the circumstances, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel or stockholders) that the conduct of the indemnitee was such that
indemnification is prohibited by Delaware law, shall be a defense to such
Indemnitee Action or create a presumption that the conduct of the indemnitee was
such that indemnification is prohibited by Delaware law. The only defense to an
Indemnitee Action to recover on a claim for advancement of expenses under
Paragraph 2 of this Article IX shall be failure by the indemnitee to provide the
undertaking required by Paragraph 2 of this Article IX.
-6-
<PAGE> 8
4. FUNDING AND INSURANCE. The Corporation may create a trust fund,
grant a security interest, cause a letter of credit to be issued or use other
means (whether or not similar to the foregoing) to ensure the payment of all
sums required to be paid by the Corporation to effect indemnification as
provided in this Article IX. The Corporation may purchase and maintain insurance
to protect itself and any indemnitee against any expenses or liability incurred
by the indemnitee in connection with any Action, whether or not the Corporation
would have the power to indemnify the indemnitee against the expenses or
liability by law or under the provisions of this Article IX.
5. NON-EXCLUSIVITY: NATURE AND EXTENT OF RIGHTS. The rights to
indemnification and advancement of expenses provided for in this Article IX
shall (i) not be deemed exclusive of any other rights, whether now existing or
hereafter created, to which any indemnitee may be entitled under any agreement,
provision in the Certificate of Incorporation or By-Laws of the Corporation,
vote of stockholders or disinterested directors or otherwise, (ii) be deemed to
create contractual rights in favor of each indemnitee who serves at any time
while this Article IX is in effect (and each such indemnitee shall be deemed to
be serving in reliance on the provisions of this Article IX), (iii) continue as
to each indemnitee who has ceased to have the status pursuant to which the
indemnitee was entitled or was designated as entitled to indemnification under
this Article IX and inure to the benefit of the heirs and legal representatives
of each indemnitee and (iv) be
-7-
<PAGE> 9
applicable to Actions commenced after this Article IX becomes effective, whether
arising from acts or omissions occurring before or after this Article IX becomes
effective. Any amendment or repeal of this Article IX or adoption of any By-Law
of this Corporation or other provision of the Certificate of Incorporation of
this Corporation which has the effect of limiting in any way the rights to
indemnification or advancement of expenses provided for in this Article IX shall
operate prospectively only and shall not affect any action taken, or any failure
to act, by an indemnitee prior to such amendment, repeal, By-Law or other
provision becoming effective.
6. PARTIAL INDEMNITY. If an indemnitee is entitled under any provision
of this Article IX to indemnification by the Corporation for some or a portion
of the expenses or liability incurred by the indemnitee in the preparation,
investigation, defense, appeal or settlement of any Action or Indemnitee Action
but not, however, for the total amount thereof, the Corporation shall indemnify
the indemnitee for the portion of such expenses or liability to which the
indemnitee is entitled.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 30th day
of August, 1988.
/s/ Frank T. Guadagnino
-----------------------------------
Frank T. Guadagnino, Incorporator
-8-
<PAGE> 1
Exhibit 3.2
BY-LAWS
of
WERNER HOLDING CO. (DE), INC.
(A Delaware corporation)
Amended and Restated May 14, 1997
<PAGE> 2
INDEX
BY-LAWS
<TABLE>
<S> <C>
ARTICLE I
STOCKHOLDERS................................................................. 1
Section 1.01. ANNUAL MEETINGS................................................................ 1
---------------
Section 1.02. SPECIAL MEETINGS............................................................... 1
----------------
Section 1.03. NOTICE OF ANNUAL AND SPECIAL MEETINGS.......................................... 1
-------------------------------------
Section 1.04. QUORUM......................................................................... 1
------
Section 1.05. VOTING......................................................................... 2
------
Section 1.06. PROCEDURE AT STOCKHOLDERS' MEETINGS............................................ 2
-----------------------------------
Section 1.07. ACTION WITHOUT MEETING......................................................... 2
----------------------
ARTICLE II
DIRECTORS .................................................................. 2
Section 2.01. NUMBER, ELECTION AND TERM OF OFFICE............................................ 2
-----------------------------------
Section 2.02. CHAIRMAN OF THE BOARD........................................................... 3
---------------------
Section 2.03. ANNUAL MEETING.................................................................. 3
--------------
Section 2.04. REGULAR MEETINGS............................................................... 3
----------------
Section 2.05. SPECIAL MEETINGS............................................................... 3
----------------
Section 2.06. NOTICE OF ANNUAL AND SPECIAL MEETINGS.......................................... 3
-------------------------------------
Section 2.07. QUORUM AND MANNER OF ACTING.................................................... 3
---------------------------
Section 2.08. ACTION WITHOUT MEETING......................................................... 4
----------------------
Section 2.09. PARTICIPATION BY CONFERENCE TELEPHONE.......................................... 4
-------------------------------------
Section 2.10. RESIGNATIONS................................................................... 4
------------
Section 2.11. REMOVAL OF DIRECTORS........................................................... 4
--------------------
Section 2.12. VACANCIES...................................................................... 4
---------
Section 2.13. COMPENSATION OF DIRECTORS...................................................... 4
-------------------------
Section 2.14. COMMITTEES..................................................................... 4
----------
Section 2.15. PERSONAL LIABILITY OF DIRECTORS................................................ 5
-------------------------------
ARTICLE III
OFFICERS AND EMPLOYEES........................................................... 5
Section 3.01. EXECUTIVE OFFICERS............................................................. 5
------------------
Section 3.02. ADDITIONAL OFFICERS; OTHER AGENTS AND EMPLOYEES................................ 5
------------------------------------- ---------
Section 3.03. THE PRESIDENT.................................................................. 5
-------------
Section 3.04. THE VICE PRESIDENTS............................................................ 5
-------------------
Section 3.05. THE SECRETARY AND ASSISTANT SECRETARIES........................................ 6
---------------------------------------
Section 3.06. THE TREASURER AND ASSISTANT TREASURERS......................................... 6
--------------------------------------
Section 3.07. VACANCIES...................................................................... 6
---------
Section 3.08. DELEGATION OF DUTIES........................................................... 6
--------------------
Section 3.09. PERSONAL LIABILITY OF OFFICERS, EMPLOYEES AND AGENTS........................... 6
----------------------------------------------------
ARTICLE IV
SHARES OF CAPITAL STOCK............................................................ 7
Section 4.01. SHARE CERTIFICATES............................................................. 7
------------------
Section 4.02. TRANSFER OF SHARES............................................................. 7
------------------
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 4.03. TRANSFER AGENTS AND REGISTRARS................................................. 7
------------------------------
Section 4.04. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES.............................. 7
-------------------------------------------------
Section 4.05. REGULATIONS RELATING TO SHARES................................................. 7
------------------------------
Section 4.06. HOLDERS OF RECORD.............................................................. 7
-----------------
Section 4.07. FIXING OF RECORD DATE........................................................... 8
---------------------
ARTICLE V
LOANS, NOTES, CHECKS,
CONTRACTS AND OTHER INSTRUMENTS .................................................... 8
Section 5.01. NOTES, CHECKS, ETC............................................................. 8
-------------------
Section 5.02. EXECUTION OF INSTRUMENTS GENERALLY............................................. 8
----------------------------------
Section 5.03. PROXIES IN RESPECT OF STOCK OR OTHER SECURITIES OR OTHER
--------------------------------------------------------
CORPORATIONS........................................ 8
------------
ARTICLE VI
GENERAL PROVISIONS............................................................... 9
Section 6.01. OFFICES........................................................................ 9
-------
Section 6.02. CORPORATE SEAL................................................................. 9
--------------
Section 6.03. FISCAL YEAR.................................................................... 9
-----------
ARTICLE VII
VALIDATION OF CERTAIN CONTRACTS....................................................... 9
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS............................................... 10
ARTICLE IX
AMENDMENTS.................................................................. 10
INDEX
</TABLE>
<PAGE> 4
WERNER HOLDING CO. (DE), INC.
By-Laws
ARTICLE I
STOCKHOLDERS
SECTION 1.01. ANNUAL MEETINGS. Annual meetings of the
stockholders shall be held at such place, either within or without the State of
Delaware, and at such time and date as the Board of Directors shall determine
and as set forth in the notice of the meeting.
SECTION 1.02. SPECIAL MEETINGS. Special meetings of the
stockholders may be called at any time, for the purpose or purposes set forth in
the call, by the Chairman of the Board, the President, the Board of Directors or
the holders of at least one-fifth of all the shares outstanding and entitled to
vote thereat, by delivering a written request to the Secretary. At any time,
upon the written request of any person or persons who have duly called a special
meeting, it shall be the duty of the Secretary to fix the date of the meetings,
to be held not more than 75 days after receipt of the request, and to give due
notice thereof. Special meetings shall be held at such place, either within or
without the State of Delaware, and at such time and date as the Board of
Directors shall determine and as set forth in the notice of the meeting.
SECTION 1.03. NOTICE OF ANNUAL AND SPECIAL MEETINGS. Except as
otherwise expressly required by law, notice of each meeting of stockholders,
whether annual or special, shall be given at least 5 and not more than 60 days
prior to the date on which the meeting is to be held to each stockholder of
record entitled to vote thereat by delivery of a notice thereof to him
personally or by sending a copy thereof through the mail or by telecommunication
equipment, charges prepaid, to his address appearing on the records of the
Corporation. Each such notice shall specify the place, day and hour of the
meeting and, in the case of a special meeting, shall briefly state the purpose
or purposes for which the meeting is called. A written waiver of notice, signed
by the person or persons entitled to such notice, whether before or after the
date and time fixed for the meeting shall be deemed the equivalent of such
notice. Neither the business to be transacted at nor the purpose of the meeting
need be specified in a waiver of notice of such meeting.
SECTION 1.04. QUORUM. A stockholders' meeting duly called
shall not be organized for the transaction of business unless a quorum is
present. At any meeting the presence in person or by proxy of stockholder
entitled to cast at least a majority of the votes which all stockholders are
entitled to cast on the particular matter shall constitute a quorum for the
purpose of considering such matter, except as otherwise expressly provided by
law or by the Certificate of Incorporation or By-Laws of the Corporation. The
stockholders present at a duly organized meeting can continue to do business
until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum. If a meeting cannot be organized because a quorum has
not attended, those present may adjourn the meeting from time to time to such
time (not more than 30 days after the next previous adjourned meeting) and place
as they may determine, without notice other than by announcement at the meeting
of the time and place of the adjourned meeting; and in the case of any meeting
called for the election of directors, those who attend the second of such
adjourned meetings, although entitled to cast less than a majority of the votes
entitled to be cast on any matter to be considered at the meeting, shall
nevertheless constitute a quorum for the purpose of electing directors.
1
<PAGE> 5
SECTION 1.05. VOTING. At every meeting of stockholders, each
holder of record of issued and outstanding stock of the Corporation entitled to
vote at such meeting shall be entitled to vote in person or by proxy and, except
where a date has been fixed as the record date for the determination of
stockholders entitled to notice of or to vote at such meeting, no holder of
record of a share of stock which has been transferred on the books of the
Corporation within 10 days next preceding the date of such meeting shall be
entitled to notice of or to vote at such meeting in respect of such share so
transferred. Resolutions of the stockholders shall be adopted, and any action of
the stockholders at a meeting upon any matter shall be taken and be valid, only
if at least a majority of the votes cast with respect to such resolutions or
matter are cast in favor thereof, except as otherwise expressly provided by law
or by the Certificate of Incorporation or ByLaws of the Corporation. The
Chairman of the Board (if one has been elected and is present) shall be
chairman, and the Secretary (if present) shall act as secretary, at all meetings
of the stockholders. In the absence of the Chairman of the Board, the President
shall be chairman; and in the absence of both of them, the chairman shall be
designated by the Board of Directors or if not so designated shall be elected by
the stockholders present; and in the absence of the Secretary, an Assistant
Secretary shall act as secretary of the meeting.
SECTION 1.06. PROCEDURE AT STOCKHOLDERS' MEETINGS. The
organization of each meeting of the stockholders, the order of business thereat
and all matters relating to the manner of conducting the meetings shall be
determined by the chairman of the meeting, whose decisions may be overruled only
by majority vote (which shall not be by ballot) of the stockholders present and
entitled to vote at the meeting in person or by proxy. Meetings shall be
conducted in a manner designed to accomplish the business of the meeting in a
prompt and orderly fashion and to be fair and equitable to all stockholders, but
it shall not be necessary to follow Roberts' Rules of Order or any other manual
of parliamentary procedure.
SECTION 1.07. ACTION WITHOUT MEETING. Any action required or
permitted to be taken at any annual or special meeting of stockholders, or any
action which may be taken at any annual or special meeting, may be taken without
a meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, 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 such written consent is filed with the
minutes of proceedings of the stockholders. 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.
ARTICLE II
DIRECTORS
SECTION 2.01. NUMBER, ELECTION AND TERM OF OFFICE. The number
of directors which shall constitute the full Board of Directors shall be
determined by resolution of the board of directors or by the stockholders at the
annual meeting provided, however, that in no event shall the number of directors
be less than three or more than eleven. Each director shall hold office for the
term for which he is elected and thereafter until his successor is duly elected
or until his prior death, resignation or removal. Directors need not be
stockholders.
2
<PAGE> 6
SECTION 2.02. CHAIRMAN OF THE BOARD. The Board of Directors
shall elect a Chairman of the Board. The Chairman when present shall preside at
all meetings of the shareholders and of the Board of Directors.
SECTION 2.03. ANNUAL MEETING. Annual Meetings of the Board of
Directors shall be held each year at the same place as and immediately after the
annual meeting of stockholders, or at such other place and time as shall
theretofore have been determined by the Board. At its regular annual meeting,
the Board of Directors shall organize itself and elect the officers of the
Corporation for the ensuing year, and may transact any other business.
SECTION 2.04. REGULAR MEETINGS. Regular meetings of the Board
of Directors may be held at such intervals and at such time and place as shall
from time to time be determined by the Board. After there has been such
determination and notice thereof has been once given to each person then a
member of the Board of Directors, regular meetings may be held at such intervals
and time and place without further notice being given.
SECTION 2.05. SPECIAL MEETINGS. Special meetings of the Board
of Directors may be called at any time by the Board, by the Chairman of the
Board, by the President or by any two directors to be held on such day and at
such time and place as shall be specified by the person or persons calling the
meeting.
SECTION 2.06. NOTICE OF ANNUAL AND SPECIAL MEETINGS. Except as
otherwise expressly required by law, notice of the annual meeting of the Board
of Directors need not be given. Except as otherwise expressly required by law,
notice of every special meeting of the Board of Directors specifying the place,
date and time thereof shall be given to each director either by being mailed on
at least the third day prior to the date of the meeting or by being sent by
telecommunications equipment or given personally or by telephone at least 24
hours prior to the time of the meeting. A written waiver of notice of a special
meeting, signed by the person or persons entitled to such notice, whether before
or after the date and time stated therein fixed for the meeting, shall be deemed
the equivalent of such notice, and attendance of a director at a meeting shall
constitute a waiver of notice of such meeting except when the director attends
the meeting for the express purpose of objecting, when he enters the meeting, to
the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at nor the purpose of the
meeting need be specified in a waiver of notice of such meeting.
SECTION 2.07. QUORUM AND MANNER OF ACTING. At all meetings of
the Board of Directors, except as otherwise expressly provided by law or by the
Certificate of Incorporation or By-Laws of the Corporation, the presence of a
majority of the full Board shall be necessary and sufficient to constitute a
quorum for the transaction of business. If a quorum is not present at any
meeting, the meeting may be adjourned from time to time by a majority of the
directors present until a quorum as aforesaid shall be present, but notice of
the time and place to which such a meeting is adjourned shall be given to any
directors not present either by being sent by telecommunications equipment or
given personally or by telephone at least 8 hours prior to the date of
reconvening. Resolutions of the Board of Directors shall be adopted, and any
action of the Board at a meeting upon any matter shall be taken and be valid,
only with the affirmative vote of at least a majority of the directors present
at the meeting, except as otherwise provided herein. The Chairman of the Board
(if one has been elected and is present) shall be chairman, and the Secretary
(if present) shall act as secretary, at all meetings of the Board. In the
absence of the Chairman of the Board, the President shall be chairman, and in
the absence of both of them the directors present shall select a member of the
Board of Directors to be chairman; and in the absence of the Secretary and
Assistant Secretary, the chairman of the meeting shall designate any person to
act as secretary of the meeting.
3
<PAGE> 7
SECTION 2.08. ACTION WITHOUT MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a consent in writing,
setting forth the actions so taken, shall be signed by all members of the Board
or such committees, as the case may be, and such written consent is filed with
the minutes of the Board or committee.
SECTION 2.09. PARTICIPATION BY CONFERENCE TELEPHONE. Members
of the Board of Directors of the Corporation, or any committee designated by the
Board, may participate in a meeting of the Board or committee by means of
conference telephone or similar communications equipment by which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
SECTION 2.10. RESIGNATIONS. A director may resign by
submitting his written resignation to the Chairman of the Board (if one has been
elected) or the Secretary. Unless otherwise specified therein, the resignation
of a director need not be accepted to make it effective and shall be effective
immediately upon its receipt by such officer or as otherwise specified therein.
If the resignation of a director specifies that it shall be effective at some
time later than receipt, until that time the resigning director shall be
competent to act on all matters before the Board of Directors, including filling
the vacancy caused by such resignation.
SECTION 2.11. REMOVAL OF DIRECTORS. The entire Board of
Directors or any individual director may be removed at any time for cause or
without cause by the holders of a majority of the shares then entitled to vote
at an election of directors. The vacancy or vacancies caused in the Board of
Directors by such removal may but need not be filled by such stockholders at the
same meeting or at a special meeting of the stockholders called for that
purpose.
SECTION 2.12. VACANCIES. Any vacancy that shall occur in the
Board of Directors by reason of death, resignation, removal, increase in the
number of directors or any other cause whatever shall, unless filled as provided
in Section 2.11 of this Article II, be filled by a majority of the then members
of the Board, whether or not a quorum, and each person so elected shall be a
director until he or his successor is elected by the stockholders at a meeting
called for the purpose of electing directors, or until his prior death,
resignation or removal.
SECTION 2.13. COMPENSATION OF DIRECTORS. The Corporation may
allow compensation to its directors for their services, as determined from time
to time by resolution adopted by the Board of Directors.
SECTION 2.14. COMMITTEES. The Board of Directors may, by
resolution adopted by a majority of the full Board, designate one or more
committees consisting of directors to have and exercise such authority of the
Board in the management of the business and affairs of the Corporation as the
resolution of the Board creating such committee may specify and as is otherwise
permitted 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. In the absence or disqualification of
any member of such committee or committees, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another director to act at the
meeting in the place of such absent or disqualified member.
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SECTION 2.15. PERSONAL LIABILITY OF DIRECTORS.
(a) To the fullest extent that the laws of the State of
Delaware, as the same exist or may hereafter be amended, permit elimination of
the personal liability of directors, no director of this Corporation shall be
personally liable to this Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director.
(b) The provisions of this Section 2.15 shall be deemed to be
a contract with each director of this Corporation who serves as such at any time
while this Section 2.15 is in effect, and each such director shall be deemed to
be serving as such in reliance on the provisions of this Section 2.15. Any
amendment or repeal of this Section 2.15 or adoption of any By-Law of this
Corporation or other provision of the Certificate of Incorporation of this
Corporation which has the effect of increasing director liability shall operate
prospectively only and shall not affect any action taken, or any failure to act,
by a director of this Corporation prior to such amendment, repeal, By-Law or
other provision becoming effective.
ARTICLE III
OFFICERS AND EMPLOYEES
SECTION 3.01. EXECUTIVE OFFICERS. The Executive Officers of
the Corporation shall be the President, a Secretary and a Treasurer, and may
include one or more Vice Presidents as the Board of Directors may from time to
time determine, all of whom shall be elected by the Board of Directors. Any two
or more offices may be held by the same person. Each Executive Officer shall
hold office until the next succeeding annual meeting of the Board of Directors
and thereafter until his successor is duly elected and qualifies, or until his
earlier death, resignation or removal.
SECTION 3.02. ADDITIONAL OFFICERS; OTHER AGENTS AND EMPLOYEES.
The Board of Directors may from time to time appoint or hire such additional
officers, assistant officers, agents, employees and independent contractors as
the Board deems advisable; and the Board or the President shall prescribe their
duties, conditions of employment and compensation. Subject to the power of the
Board of Directors, the President may employ from time to time such other
agents, employees, and independent contractors as he may deem advisable for the
prompt and orderly transaction of the business of the Corporation, and he may
prescribe their duties and the conditions of their employment, fix their
compensation and dismiss them, without prejudice to their contract rights, if
any.
SECTION 3.03. THE PRESIDENT. Subject to the control of the
Board of Directors, the President shall have general policy supervision of and
general management and executive powers over all the property, business,
operations and affairs of the Corporation, and shall see that the policies and
programs adopted or approved by the Board are carried out. The President shall
exercise such further powers and duties as from time to time may be prescribed
in these By-Laws or by the Board of Directors.
SECTION 3.04. THE VICE PRESIDENTS. The Vice Presidents may be
given by resolution of the Board of Directors general executive powers, subject
to the control of the President, concerning one or more or all segments of the
operations of the Corporation. The Vice Presidents shall exercise such further
powers and duties as from time to time may be prescribed in these By-Laws or by
the Board of Directors or by the President. At the request of the President or
in his absence or disability, the senior Vice President shall exercise all the
powers and duties of the President.
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SECTION 3.05. THE SECRETARY AND ASSISTANT SECRETARIES. It
shall be the duty of the Secretary (a) to keep or cause to be kept an original
or duplicate record of the proceedings of the stockholders and the Board of
Directors, and a copy of the Certificate of Incorporation and of the By-Laws;
(b) to attend to the giving of notices of the Corporation as may be required by
law or these By-Laws; (c) to be custodian of the corporate records and of the
seal of the Corporation and see that the seal is affixed to such documents as
may be necessary or advisable; (d) to have charge of the stock books of the
Corporation, and a share register, giving the names of the stockholders in
alphabetical order, and showing their respective addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the shares, and the date of cancellation of every certificate surrendered for
cancellation; and (e) to exercise all powers and duties as may be prescribed by
the Board of Directors or by the President from time to time. The Secretary by
virtue of his office shall be an Assistant Treasurer. The Assistant Secretaries
shall assist the Secretary in the performance of his duties and shall also
exercise such further powers and duties as from time to time may be assigned to
them by the Board of Directors, the President or the Secretary. At the direction
of the Secretary or in his absence or disability, an Assistant Secretary shall
perform the duties of the Secretary.
SECTION 3.06. THE TREASURER AND ASSISTANT TREASURERS. The
Treasurer shall have custody of all the funds and securities of the Corporation.
He shall collect all moneys due the Corporation and deposit such moneys to the
credit of the Corporation in such banks, trust companies, or other depositories
as may have been duly designated by the Board of Directors. He shall endorse for
collection on behalf of the Corporation checks, notes, drafts and other
documents, and may sign and deliver receipts, vouchers and releases of liens
evidencing payments made to the Corporation. Subject to Section 5.01 of these
By-Laws, he shall cause to be disbursed the funds of the Corporation by payment
in cash or by checks or drafts upon the authorized depositories of the
Corporation. He shall have charge of the books and accounts of the Corporation.
He shall perform all acts incident to the office of Treasurer and such other
duties as may be assigned to him by the Board of Directors. The Treasurer by
virtue of his office shall be an Assistant Secretary. The Assistant Treasurers
shall assist the Treasurer in the performance of his duties and shall also
exercise such further powers and duties as from time to time may be assigned to
them by the Board of Directors, the President or the Treasurer. At the direction
of the Treasurer or in his absence or disability, an Assistant Treasurer shall
perform the duties of the Treasurer.
SECTION 3.07. VACANCIES. Vacancy in any office or position by
reason of death, resignation, removal, disqualification, disability or other
cause, shall be filled in the manner provided in this Article III for regular
election or appointment to such office.
SECTION 3.08. DELEGATION OF DUTIES. The Board of Directors may
in its discretion delegate from the time being the powers and duties, or any of
them, of any officer to any other person whom it may selection.
SECTION 3.09. PERSONAL LIABILITY OF OFFICERS, EMPLOYEES AND
AGENTS. The Corporation shall indemnify its officers, employees and agents to
the full extent permitted by Section 145 of the Delaware General Corporation
Law, as amended from time to time, or any successor provision of Delaware law.
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ARTICLE IV
SHARES OF CAPITAL STOCK
SECTION 4.01. SHARE CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors may from time to time prescribe, signed by the
President or any Vice President and by the Treasurer or any Assistant Treasurer
or the Secretary or any Assistant Secretary. The signatures of such officers may
be facsimiles. Each such certificate shall set forth the name of the registered
holder thereof, the number and class of shares and the designation of the
series, if any, which the certificate represents. The Board of Directors may, if
it so determines, direct that certificates for shares of stock of the
Corporation be signed by a transfer agent or registered by a registrar or both,
in which case such certificates shall not be valid until so signed or
registered.
In the case of any officer of the Corporation who shall have
signed, or whose facsimile signature shall have been used on, any certificate
for shares of stock of the Corporation shall cease to be such officer, whether
because of death, resignation, removal or otherwise, before such certificate
shall have been delivered by the Corporation, such certificate shall
nevertheless be deemed to have been adopted by the Corporation and may be issued
and delivered as though the person who signed such certificate or whose
facsimile signature shall have been used thereon had not ceased to be such
officer.
SECTION 4.02. TRANSFER OF SHARES. Transfer of shares of stock
of the Corporation shall be made only on the books of the Corporation by the
registered holder thereof or by his attorney thereunto authorized by an
instrument duly executed and filed with the Corporation, and on surrender of the
certificate or certificates for such shares properly endorsed or accompanied by
properly executed stock powers and evidence of the payment of all taxes imposed
upon such transfer. Except as provided in Section 4.04 of this Article IV, every
certificate surrendered for transfer shall be canceled and no new certificate or
certificates shall be issued in exchange for any existing certificate until such
existing certificate shall have been so cancelled.
SECTION 4.03. TRANSFER AGENTS AND REGISTRARS. The Board of
Directors may appoint any one or more qualified banks, trust companies or other
corporations organized under any law of any state of the United States or under
the laws of the United States as agent or agents for the Corporation in the
transfer of the stock of the Corporation and likewise may appoint any one or
more such qualified banks, trust companies or other corporations as registrar or
registrars of the stock of the Corporation.
SECTION 4.04. LOST, STOLEN, DESTROYED OR MUTILATED
CERTIFICATES. New certificates for shares of stock may be issued to replace
certificates lost, stolen, destroyed or mutilated upon such terms and
conditions, which may but need not include the giving of a satisfactory bond or
other indemnity, as the Board of Directors may from time to time determine.
SECTION 4.05. REGULATIONS RELATING TO SHARES. The Board of
Directors shall have power and authority to make such rules and regulations not
inconsistent with these By-Laws or with law as it may deem expedient concerning
the issue, transfer and registration of certificates representing shares of
stock of the Corporation.
SECTION 4.06. HOLDERS OF RECORD. The Corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder and owner in fact thereof and 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
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or not it shall have express or other notice thereof, except as otherwise
expressly provided by the laws of the State of Delaware.
SECTION 4.07. FIXING OF RECORD DATE. The Board of Directors
may fix a record date which does not precede the date on which the resolution
fixing such record date is adopted,
(a) in order to determine the stockholders entitled to notice
of or to vote at any meeting of stockholders provided such record date is not
less than ten or more than sixty days prior to the date of any such meeting; and
(b) in order to determine the stockholders entitled to consent
to corporate action in writing without a meeting provided such record date is
not more than ten days after the date on which the resolution fixing such record
date is adopted; and
(c) in order to determine the stockholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change conversion
or exchange of stock, or for the purpose of any other lawful action, provided
such record date is not more than sixty days prior to such action.
In such case, only such stockholders as shall be stockholders
of record on the date so fixed shall be entitled to notice of, or to vote at,
such meeting or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation after
any record date fixed as aforesaid.
ARTICLE V
LOANS, NOTES, CHECKS,
CONTRACTS AND OTHER INSTRUMENTS
SECTION 5.01. NOTES, CHECKS, ETC. All notes, drafts,
acceptances, checks, endorsements (other than for deposit) and all evidences of
indebtedness of the Corporation whatsoever shall be signed by such officers or
agents and shall be subject to such requirements as to countersignature or other
conditions as the Board of Directors from time to time may designate. Facsimile
signatures on checks may be used unless prohibited by the Board of Directors.
SECTION 5.02. EXECUTION OF INSTRUMENTS GENERALLY. Except as
provided in Section 5.01 of this Article V, all contracts and other instruments
requiring execution by the Corporation may be executed and delivered by the
President, any Vice President or the Treasurer, and authority to sign any such
contracts or instruments, which may be general or confined to specific
instances, may be conferred by the Board of Directors upon any other person or
persons. Any person having authority to sign on behalf of the Corporation may
delegate, from time to time, by instrument in writing, all or any part of such
authority to any person or person if authorized so to do by Board of Directors.
SECTION 5.03. PROXIES IN RESPECT OF STOCK OR OTHER SECURITIES
OR OTHER CORPORATIONS. Unless otherwise provided by the Board of Directors, the
President may from time to time appoint an attorney or attorneys or an agent or
agents of the Corporation to exercise in the name and on behalf of the
Corporation the powers and rights which the Corporation may have as the holder
of stock or other securities in any other corporation to vote or consent in
respect of such stock or other securities, may instruct the person or persons
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so appointed as to the manner of exercising such powers and rights and may
execute or cause to be executed in the name and on behalf of the Corporation and
under its corporate seal or otherwise all such written proxies or other
instruments as he may deem necessary or proper in order that the Corporation may
exercise its said powers and rights.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01. OFFICES. The registered office of the
Corporation shall be at 1105 North Market Street, Suite 1300, Wilmington,
Delaware. The Corporation may have other offices, within or without the State of
Delaware, at such place or places as the Board of Directors may from time to
time determine or the business of the Corporation may require.
SECTION 6.02. CORPORATE SEAL. The Board of Directors shall
prescribe the form of a suitable corporate seal, which shall contain the full
name of the Corporation and the year and state of incorporation. Such seal may
be used by causing it or a facsimile or reproduction thereof to be affixed to or
placed upon the document to be sealed.
SECTION 6.03. FISCAL YEAR. Unless otherwise determined by
the Board of Directors, the fiscal year of the Corporation shall be the calendar
year.
ARTICLE VII
VALIDATION OF CERTAIN CONTRACTS
SECTION 7.01. No contract or other transaction between the
Corporation and another person shall be invalidated or otherwise adversely
affected by the fact that any one or more stockholders, directors or officers of
the Corporation -
(i) is pecuniarily or otherwise interested in, or is a
stockholder, director, officer, or member of, such other person, or
(ii) is a party to, or is in any other way pecuniarily or
otherwise interested in, the contract or other transaction, or
(iii) is in any way connected with any person pecuniarily or
otherwise interested in such contract or other transaction, provided the fact of
such interest shall be disclosed or known to the Board of Directors or the
stockholders, as the case may be, and in any action of the stockholders or of
the Board authorizing or approving any such contract or other transaction, any
and every stockholder or director may be counted in determining the existence of
a quorum with like force and effect as though he were not so interested, or were
not such a stockholder, director, member or officer, or were not such a party,
or were not so connected. Such director, stockholder or officer shall not be
liable to account to the Corporation for any profit realized by him from or
through any such contract or transaction approved or authorized as aforesaid. As
used herein, the term "person" includes a corporation, partnership, firm,
association or other legal entity.
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ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 8.01. To the maximum extent provided by applicable
law, no director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. The foregoing sentence shall not eliminate or limit the
liability of a director, (i) for breach of the director's duty of loyalty of the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct of a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Article VIII shall apply to or have any effect on
the liability or alleged liability of any director of the Corporation for or
with respect to any acts or omissions of such director occurring prior to such
amendment.
Directors and officers of the Corporation shall be indemnified
as of right to the fullest extent now or hereafter permitted by law in
connection with any actual or threatened civil, criminal, administrative or
investigative action, suit or proceeding (whether brought by or in the name of
the Corporation or otherwise) arising out of their service to the Corporation or
to another organization at the request of the Corporation. Persons who are not
directors or officers of the Corporation may be similarly indemnified in respect
of such service to the extent authorized at any time by the Board of Directors
of the Corporation. The Corporation may purchase and maintain insurance to
protect itself and any such director, officer or other person against any
liability asserted against him and incurred by him in respect of such service
whether or not the Corporation would have the power to indemnify him against
such liability by law or under the provisions of this Article. The provisions of
this Article shall be applicable to actions, suits or proceedings commenced
after the adoption hereof, whether arising from acts or omissions occurring
before or after the adoption hereof, and to directors, officers and other
persons who have ceased to render such service, and shall inure to the benefit
of the heirs, executors and administrators of the directors, officers and other
persons referred to in this Article.
ARTICLE IX
AMENDMENTS
SECTION 9.01. These By-Laws may be amended, altered and
repealed, and new By-Laws may be adopted, by the stockholders or the Board of
Directors of the Corporation at any regular or special meeting. No provision of
these By-laws shall vest any property or contract right in any stockholder.
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Exhibit 3.3
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
WERNER HOLDING CO. (PA), INC.
(Originally incorporated on January 2, 1945)
ARTICLE I -- NAME
-----------------
The name of the corporation (hereinafter called the "Corporation") is
Werner Holding Co. (PA), Inc.
ARTICLE II -- REGISTERED OFFICE
-------------------------------
The address of the registered office of the Corporation in the Commonwealth
of Pennsylvania is 93 Werner Road, Greenville, Pennsylvania 16125.
ARTICLE III -- PURPOSE
----------------------
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the Business Corporation Law of
the Commonwealth of Pennsylvania (the "PBCL").
ARTICLE IV -- CAPITALIZATION
----------------------------
1. DEFINITIONS. As used in this Article, the following terms shall
have the following meanings:
"AFFILIATE", with respect to a Class D Shareholder that is not a
natural person, means (i) any Person which, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Class D
Shareholder or (ii) any Person who is a director or officer (a) of such Class D
Shareholder, (b) of any subsidiary of such Class D Shareholder or (c) of any
Person described in clause (i) above. For purposes of this definition,
"control" of a Person shall mean the power, directly or indirectly, (y) to vote
fifty percent (50%) or more of the securities having ordinary voting power for
the election of directors of such Person whether by ownership of securities,
contract, proxy or otherwise, or (z) to direct or cause the direction of the
management and policies of such Person whether by ownership of securities,
contract, proxy or otherwise.
"AFFILIATED SHAREHOLDER", means the Class A and Class B Shareholders
identified on Exhibit A hereto.
<PAGE> 2
"ARTICLES OF INCORPORATION" means this Restated Articles of
Incorporation of the Corporation.
"BOARD" means the Board of Directors of the Corporation.
"BUSINESS DAY" means any day other than a Saturday, Sunday, federal
holiday or other day on which commercial banks in New York City are authorized
or required to close under the laws of the State of New York.
"CLASS A COMMON STOCK" means the Class A Common Stock described in
Section 2.
"CLASS A STOCK" has the meaning set forth in Section 2.
"CLASS A-I STOCK" means the Class A-I Common Stock described in
Section 2.
"CLASS B COMMON STOCK" means the Class B Common Stock described in
Section 2.
"CLASS B STOCK" has the meaning set forth in Section 2.
"CLASS B-I STOCK" means the Class B-I Common Stock described in
Section 2.
"CLASS C STOCK" means the Class C Common Stock described in Section 2.
"CLASS D STOCK" means the Class D Common Stock described in Section 2.
"CLASS E STOCK" means the Class E Common Stock described in Section 2.
"CLASS A SHAREHOLDER" means a record holder of one or more shares of
Class A Stock.
"CLASS B SHAREHOLDER" means a record holder of one or more shares of
Class B Stock.
"CLASS C SHAREHOLDER" means a record holder of one or more shares of
Class C Stock.
"CLASS D SHAREHOLDER" means a record holder of one or more shares of
Class D Stock.
"CLASS E SHAREHOLDER" means a record holder of one or more shares of
Class E Stock.
"COMMON SHAREHOLDER" means a record holder of one or more shares of
Common Stock.
"COMMON STOCK" has the meaning set forth in Section 2.
"CONVERSION DATE" has the meaning set forth in Section 6.
"CORPORATION" means Werner Holding Co. (PA), Inc.
"DIFFERENCE SHARES" has the meaning set forth in Section 6.
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<PAGE> 3
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"INITIAL PUBLIC OFFERING" means the effectiveness after November 24,
1997 of a registration statement under the Securities Act on any of Forms S-1,
S-2, S-3 or any similar successor form covering any of the Stock, and the
completion of a sale of such Stock thereunder, (i) following which the
Corporation is, or becomes, a reporting company under Section 12(b) or 12(g) of
the Exchange Act, and (ii) as a result of which the Stock is traded on the New
York Stock Exchange or the American Stock Exchange, or quoted on the NASDAQ
Stock Market or is traded or quoted on any other national stock exchange.
"INITIATING HOLDER" has the meaning set forth in Section 4(a).
"IPO DATE" means the closing date of the Initial Public Offering.
"NON-REDEEMABLE SHARES" means all shares of Class A Stock, Class B
Stock, Class C Stock or Class E Stock that have been previously sold (whether
under Section 5 or Section 6(c)) pursuant to a Tag-Along Transfer other than
pursuant to a Single Transaction Sale.
"NOTICE DATE" has the meaning set forth in Section 5(b).
"OPTION" has the meaning set forth in Section 4(b).
"OTHER SHAREHOLDERS" has the meaning set forth in Section 5(a).
"PERMITTED TRANSFEREE" with respect to a Transfer by a Class D
Shareholder, means (i) with respect to any Class D Shareholder who is a natural
person, a Transfer to (a) such Shareholder's spouse or issue, or (b) a trust
the beneficiaries of which, and a partnership the limited and general partners
of which, include only the Class D Shareholder, his spouse or issue; (ii) with
respect to any Class D Shareholder that is not a natural person, (A) a Transfer
to an Affiliate of such Class D Shareholder; or (B) a Transfer to another Class
D Shareholder or its Affiliates; PROVIDED such other Class D Shareholder
referenced in clauses (i) and (ii) did not acquire its shares of Class D Stock
pursuant to a Tag-Along Transfer.
"PERSON" means any natural person, partnership, limited liability
company, corporation (including the Corporation), trust or unincorporated
organization or a government or a political subdivision thereof.
"PROPOSED PURCHASE AMOUNT" has the meaning set forth in Section 5(a).
"PROPOSED TRANSFEREE" has the meaning set forth in Section 5(a).
"PROPOSED TRANSFEROR" has the meaning set forth in Section 5(a).
"REDEMPTION DATE" has the meaning set forth in Section 6(e).
"SALE NOTICE" has the meaning set forth in Section 4(a).
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<PAGE> 4
"SALE OF THE CORPORATION" means (i) the sale of one hundred percent
(100%) of the outstanding shares of Stock; (ii) a sale of all or substantially
all of the assets of the Corporation; or (iii) a merger, consolidation or
recapitalization of the Corporation as a result of which the ownership of the
Stock of the Corporation (or the voting stock of the surviving corporation, if
the Corporation is not the survivor) is changed to the extent of one hundred
percent (100%).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SHAREHOLDER" means a record holder of one or more shares of Class A
Stock, Class B Stock, Class C Stock, Class D Stock, Class E Stock or Common
Stock.
"SINGLE TRANSACTION SALE" means a Sale of the Corporation in a single
transaction.
"STAGGERED SALE" means a Sale of the Corporation in more than one
transaction, each such transaction also being referred to individually as a
"Staggered Sale."
"STOCK" has the meaning set forth in Section 2.
"SHAREHOLDER AGREEMENTS" means those certain Shareholder Agreements
entered into in connection with the Recapitalization of the Corporation prior
to or contemporaneously with the effectiveness of these Articles of
Incorporation among the Corporation and certain Persons who then are or are
thereby becoming Shareholders, as the same may be supplemented, modified,
amended and restated from time to time in the manner provided therein. A copy
of the Shareholder Agreements will be supplied by the Corporation to any
Shareholder party thereto upon written request made to the Corporation at its
registered office.
"TAG-ALONG ACCEPTANCE DATE" has the meaning set forth in Section 5(c).
"TAG-ALONG NOTICE" has the meaning set forth in Section 5(c).
"TAG-ALONG PRO RATA AMOUNT" has the meaning set forth in Section 5(a).
"TAG-ALONG REDEMPTION PRICE" has the meaning set forth in Section
6(b).
"TAG-ALONG TRANSFER" has the meaning set forth in Section 5(a).
"TRANSFER", with respect to any share of Stock, means the sale,
assignment, pledge, hypothecation, gift or other disposition whatsoever (other
than pursuant to the Initial Public Offering or pursuant to the redemption by
the Corporation or the conversion by the Holder of any such share of Stock, in
either case in accordance with the terms of these Articles of Incorporation) of
such share, or the encumbrance or granting of any rights or interests
whatsoever in or with respect to such share, except with respect to any such
encumbrance or granting of rights or interests with respect to the Shareholder
Agreements.
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<PAGE> 5
"TRANSFER NOTICE" has the meaning set forth in Section 5(b).
"WARRANT" means the Class E Stock Purchase Warrant to be issued on or
about the effective date of these Articles of Incorporation by the Corporation
which entitles the Warrant Holder(s), upon the occurrence of a Warrant
Triggering Event, to purchase a number of shares of Common Stock of the
Corporation as specified therein.
"WARRANT DATE" means (i) if the Warrant Triggering Event is the
Initial Public Offering, the IPO Date, or (ii) if the Warrant Triggering Event
is a Sale of the Corporation, the closing date of (A) the Single Transaction
Sale, if the Sale of the Corporation is pursuant to a Single Transaction Sale,
or (B) the Staggered Sale that causes a Sale of the Corporation to occur, if
the Sale of the Corporation is pursuant to a series of Staggered Sales.
"WARRANT HOLDER(S)" means the Holder(s) of the Warrants.
"WARRANT REDEMPTION PRICE" has the meaning set forth in Section 6(c).
"WARRANT SHARES" means the shares of Common Stock purchasable by the
Warrant Holder(s) pursuant to the exercise of the Warrants, which shall equal
in all cases the number of shares of Class E Stock redeemed in connection with
the exercise of such Warrant.
"WARRANT TRIGGERING EVENT" means the first to occur of (i) an Initial
Public Offering or (ii) a Sale of the Corporation, whether such sale occurs
pursuant to a Single Transaction Sale or a series of Staggered Sales.
2. DESIGNATION AND NUMBER. The total number of shares of all classes
of stock which the Corporation shall have authority to issue is 410,000. There
shall be eight classes of stock of the Corporation. The first class of stock of
the Corporation shall have a par value of $0.01 per share and shall be
designated as "Class A Common Stock" and the number of shares constituting such
class shall be 5,000. The second class shall have a par value of $0.01 per
share and shall be designated "Class A-I Common Stock" and the number of shares
constituting such class shall be 13,000. The third class of stock of the
Corporation shall have a par value of $0.01 per share and shall be designated
as "Class B Common Stock" and the number of shares constituting such class
shall be 25,000. The fourth class of stock of the Corporation shall have a par
value of $0.01 per share and shall be designated as "Class B-I Common Stock"
and the number of shares constituting such class shall be 140,000. The fifth
class of stock of the Corporation shall have a par value of $0.01 per share and
shall be designated as "Class C Common Stock" and the number of shares
constituting such class shall be 45,000. The sixth class of stock of the
Corporation shall have a par value of $0.01 per share and shall be designated
as "Class D Common Stock" and the number of shares constituting such class
shall be 1,000. The seventh class of stock of the Corporation shall have a par
value of $0.01 per share and shall be designated as "Class E Common Stock" and
the number of share constituting such class shall be 50,000. The eighth class
of stock of the Corporation shall have a par value of $0.01 per share and shall
be designated as "Common Stock" and the number of shares constituting such
class shall be 131,000. The Class A Common Stock and the Class A-I Stock are
sometimes referred to collectively herein as the "Class A Stock". The Class B
Common Stock and the Class B-I Stock are sometimes
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referred to collectively herein as the "Class B Stock". The Class A Stock,
Class B Stock, Class C Stock, Class D Stock, Class E Stock and Common Stock are
sometimes referred to collectively herein as the "Stock". The Corporation may,
by an amendment to the Articles of Incorporation duly adopted, increase or
decrease, at any time and from time to time (but not below the number of shares
of Class A Stock, Class B Stock, Class C Stock, Class D Stock, Class E Stock or
Common Stock then outstanding), the number of authorized shares of Class A
Stock, Class B Stock, Class C Stock, Class D Stock, Class E Stock or Common
Stock, as the case may be. Shares of Stock redeemed, purchased or otherwise
acquired by the Corporation pursuant to the terms hereof shall be retired and
shall revert to authorized but unissued Class A Stock, Class B Stock, Class C
Stock, Class D Stock, Class E Stock or Common Stock, as the case may be. Shares
of any class of stock may be issued in fractions of a share which shall entitle
each holder thereof, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and
have the benefit of all other rights of holders of such class of stock.
(a) Upon the effectiveness hereof, each issued and outstanding share
(other than any shares to be canceled pursuant to Section 2(b)) of Class A
Stock and Class B Stock shall, without any action on the part of the holder
thereof or the Corporation, be reclassified and converted as follows:
(i) for each share of Class A Common Stock held by Affiliated
Shareholders, a fraction of a fully paid and non-assessable share of
Class A Common Stock and a fraction of a fully paid and non-assessable
share of Class A-I Stock, as provided on Exhibit A hereto;
(ii) for each share of Class A Common Stock held by all
persons other than Affiliated Shareholders, .1376 of a fully paid and
non-assessable share of Class A Common Stock and .8624 of a fully paid
and non-assessable share of Class A-I Stock.
(iii) for each share of Class B Common Stock held by
Affiliated Shareholders, a fraction of a fully paid and non-assessable
share of Class B Common Stock and a fraction of a fully paid and
non-assessable share of Class B-I Stock, as provided on Exhibit A
hereto;
(iv) for each share of Class B Common Stock held by all
persons other than Affiliated Shareholders, .1376 of a fully paid and
non-assessable share of Class B Common Stock and .8624 of a fully paid
and non-assessable share of Class B-I Stock.
(b) Each share of Class A Stock and Class B Stock held in the treasury
of the Corporation or by any subsidiary of the Corporation immediately prior to
the effectiveness hereof shall, upon the effectiveness hereof and without any
action on the part of the Corporation or such subsidiary of the Corporation, be
canceled and retired and cease to exist.
(c) The treatment of the shares of Class A Stock and Class B Stock
hereunder is intended to comply with the provisions of Section 1906 of the PBCL
which shall specifically apply to the transactions contemplated hereby.
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3. RESTRICTIONS ON TRANSFER.
(a) Except for Transfers to a Permitted Transferee, no Class D
Shareholder shall Transfer any share of Class D Stock owned by such Class D
Shareholder except in accordance with the terms of these Articles of
Incorporation. Any Transfer or attempt to Transfer any share of Class D Stock
in violation of the terms and conditions of these Articles of Incorporation
shall be null and void and of no force and effect, the transferee thereof shall
not be deemed to be the registered holder thereof nor entitled to any rights
with respect thereto, and the Corporation shall refuse to Transfer any of such
Class D Stock on its books to such alleged transferee.
(b) No Shareholder shall Transfer any shares of Stock unless such
Transfer complies with the conditions specified in this Section 3(b), which are
intended to ensure compliance with the provisions of the Securities Act. Prior
to any Transfer, the holder of the shares of Stock proposed to be Transferred
shall give written notice to the Corporation of such holder's intention to
effect such Transfer. Each such notice shall describe the manner and
circumstances of the proposed Transfer in sufficient detail. If the proposed
Transfer is not to (i) such Shareholder's spouse or issue, (ii) a trust the
beneficiaries of which, and a partnership the limited and general partners of
which, include only the Shareholder or his or her spouse or issue, (iii) a
foundation created or established by the Shareholder, (iv) a charitable
remainder trust for the benefit of the Shareholder or his or her spouse or
issue, (v) the executor, administrator, or personal representative of the
estate of the Shareholder or (vi) any guardian, trustee or conservator
appointed with respect to the assets of the Shareholder, each such notice, if
requested by the Corporation, shall be accompanied by either (i) a written
opinion of legal counsel who is reasonably satisfactory to the Corporation,
addressed to the Corporation and reasonably satisfactory in form and substance
to the Corporation's counsel, to the effect that the proposed Transfer may be
effected without registration under the Securities Act and qualification under
applicable state securities laws, or (ii) a "no action" letter from the SEC to
the effect that the Transfer of such securities without registration under the
Securities Act will not result in a recommendation by the staff of the SEC that
action be taken with respect thereof, or a combination of (i) and (ii) above,
whereupon the holder of such shares of Stock shall be entitled to Transfer such
shares in accordance with the terms of these Articles and the written notice
delivered by the holder to the Corporation. Each certificate evidencing the
shares of Stock Transferred as above provided shall bear the appropriate
restrictive legend set forth in Section 10, PROVIDED THAT, following the
Initial Public Offering, such certificates shall bear the legend set forth in
Section 10 or another legend only if, in the opinion of counsel to the
Corporation, the imposition of such legend is required under the Securities Act
or other applicable law. Any purported Transfer in violation of this Section
3(b) shall be null and void and of no force or effect, and the Corporation
shall not record any such Transfer on its stock transfer books. The
restrictions on Transfer contained in this Section 3(b) shall not apply to
Transfers of shares of Stock (i) in the Initial Public Offering; or (ii)
following the Initial Public Offering, PROVIDED THAT such Transfer is made in
compliance with the Securities Act and applicable state securities laws and in
accordance with any restrictions on transfer contained in any restrictive
legend set forth on the certificates representing such shares.
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4. RIGHT OF FIRST OFFER ON CLASS A STOCK AND CLASS B STOCK.
(a) At any time prior to an Initial Public Offering, if a Class A
Shareholder or a Class B Shareholder proposes to sell any Class A or Class B
Stock (the "Initiating Holder") to any Person (other than (i) (A) to such Class
A or Class B Shareholder's spouse or issue, (B) a trust the beneficiaries of
which, and a partnership the limited and general partners of which, include
only such Shareholder or his or her spouse or issue, (C) a foundation created
or established by such Shareholder, (D) a charitable remainder trust for the
benefit of such Shareholder or his or her spouse or issue, (E) the executor,
administrator, or personal representative of the estate of such Shareholder or
(F) any guardian, trustee or conservator appointed with respect to the assets
of such Shareholder, (ii) upon a Tag-Along Transfer pursuant to Section 5
hereof or (iii) a Sale of the Corporation), such Initiating Holder shall
furnish to the Corporation a written notice specifying the number of shares of
such Class A or Class B Stock proposed to be sold, the proposed sale price and
all other material terms and conditions of the proposed sale (a "Section 4 Sale
Notice").
(b) The Corporation shall then have the irrevocable option,
exercisable by written notice to the Initiating Holder within 20 days after
receipt of a Section 4 Sale Notice, to purchase all (but not less than all) of
the shares of Class A Stock and Class B Stock covered by such Notice at the
same price and on the same terms and conditions as contained in such Notice
(the "Option").
(c) In the event that the Corporation elects to exercise the Option,
the closing of the purchase or purchases pursuant to the exercise of such
Option shall occur at the offices of the Corporation on the date specified in
the notice of exercise, which date shall not be later than 30 days after
receipt by the Initiating Holder of such notice of exercise (or such earlier
date, if any, mutually agreed upon by the Initiating Holder and the
Corporation). At such closing, (i) the Initiating Holder shall deliver to the
Corporation the stock certificate or certificates evidencing such Class A Stock
and/or Class B Stock in valid form for transfer with appropriate and duly
executed assignments, stock powers or endorsements, as the case may be, bearing
any necessary documentary stamps and accompanied by such certificates of
authority, consents to transfer or other instruments or evidences of good title
of the Initiating Holder to such shares of Class A and/or Class B Stock, free
and clear of any and all claims, liens, pledges and encumbrances, as may
reasonably be requested by the Corporation, and (ii) the Corporation shall pay
to the Initiating Holder the applicable purchase price.
(d) If the Option is not validly exercised within the applicable
option period specified in Section 4(b) above or if prior to the expiration of
such option period the Corporation shall have given the Initiating Holder
written notice that it will not exercise the Option, then the Initiating Holder
shall be free, for a period of 90 days beginning on earlier of the day after
the expiration of such option period or the date on which the Initiating Holder
shall have received such notices of non-election, as applicable, to sell such
Class A Stock and/or Class B Stock to any other purchaser or purchasers at
prices, terms and conditions no less favorable to the
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Initiating Holder than those contained in the Section 4 Sale Notice. Upon
expiration of such 90 day period, the Initiating Holder shall again comply with
the provisions of this Section 4 if it desires to sell shares of Class A or
Class B Stock before an Initial Public Offering.
5. TAG-ALONG RIGHTS.
(a) TRANSFER BY CLASS D SHAREHOLDERS. If, other than in connection
with the Initial Public Offering, any Class D Shareholder or Shareholders (for
purposes of this Section 5, singularly or collectively, the "Proposed
Transferor"), at any time or from time to time in one transaction or in a
series of transactions, desires to enter into an agreement (whether oral or
written) to Transfer its shares of Class D Stock or any part thereof in a
transaction which is a sale to any Person other than a Permitted Transferee
(the "Proposed Transferee"), such proposed Transfer shall be deemed a
"Tag-Along Transfer" and, each of the Class A Shareholders, Class B
Shareholders, Class C Shareholders and Class E Shareholders (collectively, the
"Other Shareholders") shall have the right, but not the obligation, as a
condition to such Tag-Along Transfer, to have the Proposed Transferee purchase
from each such Other Shareholder up to the number of shares (the "Tag-Along Pro
Rata Amount") of Class A Stock, Class B Stock, Class C Stock or Class E Stock
derived by multiplying the total number of shares of Class A Stock, Class B
Stock, Class C Stock or Class E Stock exclusive of Non-Redeemable Shares, as
the case may be, owned by such Other Shareholder by a fraction, the numerator
of which is equal to the number of shares of Class D Stock that is proposed to
be Transferred by the Proposed Transferor to the Proposed Transferee (the
"Proposed Purchase Amount") and the denominator of which is the total number of
shares of Class D Stock (other than shares of Class D Stock that have
previously been Transferred pursuant to a Tag-Along Transfer) outstanding as of
the Notice Date (as defined in Section 5(b)). All Tag-Along Transfers by Other
Shareholders shall be on the same terms and conditions (with such changes as
are necessary to apply such terms and conditions to a sale by such Other
Shareholders) as the proposed Tag-Along Transfer by the Proposed Transferor,
PROVIDED THAT no Other Shareholder may be required to make any representation
or warranty in connection with the Tag-Along Transfer other than as to its
ownership and authority to Transfer the shares of Stock to be Transferred by
it, free and clear of any and all liens and encumbrances (other than under
these Articles of Incorporation) and in compliance with all applicable laws.
(b) TRANSFER NOTICE. The Proposed Transferor participating in a
Tag-Along Transfer shall at least thirty (30) Business Days prior to the
closing date thereof provide the Corporation and the Other Shareholders with
written notice (the "Transfer Notice") of the proposed Tag-Along Transfer
containing the following:
(i) the name and address of the Proposed Transferor and
the Proposed Transferee;
(ii) the Proposed Purchase Amount;
(iii) the proposed amount to be paid for such shares of
Class D Stock, the terms and conditions of payment offered by the
Proposed Transferee, the closing date
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for the proposed Tag-Along Transfer and the estimated expenses
payable pursuant to Section 5(d);
(iv) the aggregate number of shares of Class A Stock,
Class B Stock Class C Stock or Class E Stock as the case may be,
held of record as of the date the Transfer Notice is sent (the
"Notice Date") by the Other Shareholder to whom the notice is sent;
(v) the aggregate number of shares of Class A Stock,
Class B Stock, Class C Stock or Class E Stock as the case may be,
held of record as of the Notice Date by all Other Shareholders as a
group;
(vi) the Tag-Along Pro Rata Amount; and
(vii) a statement confirming that the Proposed
Transferee has agreed (i) to the tag-along rights, and (ii)
pursuant to Section 6(d), to purchase the number of shares of Stock
redeemed pursuant to Section 6(b).
Upon written request by the Proposed Transferor, the Corporation
shall provide to the Proposed Transferor the information referred to in (iv)
and (v) above for inclusion in the Transfer Notice and such other information
as may be required to enable the Proposed Transferor to comply with the terms
of this Section 5(b).
(c) TAG-ALONG NOTICE. Each Other Shareholder desiring to
participate in the proposed Tag-Along Transfer shall provide a written notice
(the "Tag-Along Notice") to the Proposed Transferor on or before the expiration
of fifteen (15) Business Days after the Notice Date (the "Tag-Along Acceptance
Date") stating the number of shares held by such Other Shareholder (up to its
Tag-Along Pro Rata Amount) to be included in the proposed Tag-Along Transfer on
the terms and conditions specified in the Transfer Notice. The Tag-Along Notice
given by each Other Shareholder shall include and constitute such Other
Shareholder's binding agreement to include a number of shares equal to its
Tag-Along Pro Rata Amount (or such lesser amount as stated in the Tag-Along
Notice) in the Tag-Along Transfer on the terms and conditions specified in the
Transfer Notice and in these Articles of Incorporation. If the Proposed
Transferee does not purchase all of the shares of Stock of the Proposed
Transferor and the Other Shareholders included in such proposed Tag-Along
Transfer, as well as shares to be issued under Section 6(c) in connection with
the Tag-Along Transfer, then the proposed Tag-Along Transfer to such Proposed
Transferee shall be prohibited and any attempt to consummate the proposed
Tag-Along Transfer shall be null and void and of no force and effect.
(d) Each Proposed Transferor and each Other Shareholder whose
shares are sold in a Tag-Along Transfer shall be entitled to receive the
proceeds of such Tag-Along Transfer less its pro rata share, based on the
number of shares included in such Tag-Along Transfer, of the expenses of the
transaction including, without limitation, legal, accounting and investment
banking fees and expenses, such determination of expenses to be made in the
sole discretion of the Board of Directors of the Corporation.
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(e) The provisions of this Section 5 shall not apply to a
subsequent Transfer of any share of Class D Stock that has previously been the
subject of a completed Tag-Along Transfer which complied with the provisions of
this Section 5.
6. REDEMPTION. The provisions of Section 6(a) shall apply only to
any redemption of the Class A-I Stock and Class B-I Stock. The provisions of
Sections 6(b) through 6(f) shall not apply to any redemption of Class A-I Stock
and Class B-I Stock.
(a) The Corporation, in its sole discretion at any time on or prior
to March 31, 1998, may redeem, out of funds legally available therefor, any or
all of the outstanding shares of Class A-I Stock and Class B-I Stock, pro rata
among the holders of Class A-I Stock and Class B-I Stock according to the
number of shares of Class A-I Stock and Class B-I Stock held by each
stockholder. The redemption price for each share of Class A-I Stock and Class
B-I Stock shall equal $2,421.29 in cash and the right to receive an additional
payment pursuant to the terms of Exhibit B hereto (collectively, the "Special
Redemption Price"). The Corporation may exercise its right to effect a
redemption contemplated by this Section 6(a) by action of the Board and such
redemption shall be deemed effective for all purposes on the date and at the
time specified by the Board at the time such Board action is taken, which may
be simultaneous with the taking of such action (the "Special Redemption Date").
The Corporation shall promptly give notice of such redemption by first class
mail to each holder of record of Class A-I Stock and Class B-I Stock on the
Special Redemption Date at such holder's address of record in the stock
register or other appropriate records of the Corporation (provided that neither
the failure to give such notice nor any deficiency therein shall limit or
otherwise affect the validity or effectiveness of such redemption). From and
after the time of the Special Redemption Date, notwithstanding that any
certificates for shares so redeemed shall not have been surrendered for
cancellation, all shares so called for redemption shall no longer be
outstanding and all rights with respect to such shares shall forthwith cease
and terminate, except only the right of the holders thereof to receive the
Special Redemption Price, without interest.
(b) The number of shares of Class A Stock, Class B Stock, Class C
Stock or Class E Stock equal to the difference ("Difference Shares") between
(i) the number of shares included in any Tag-Along Transfer by the Class A
Shareholder, Class B Shareholder, Class C Shareholder or Class E Shareholder
pursuant to Section 5 and (ii) the Tag-Along Pro Rata Amount for each such
Class A Shareholder, Class B Shareholder, Class C Shareholder or Class E
Shareholder shall be redeemed by the Corporation, to the extent it is lawfully
permitted to do so, out of funds legally available therefor PRO RATA, based on
the number of Difference Shares held by such Shareholders, from each of the
Class A Shareholders, Class B Shareholders, Class C Shareholders and Class E
Shareholders who elected to include in the Tag-Along Transfer a number of
shares of Stock less than the number of shares that constitute their Tag-Along
Pro Rata Amount or any such Shareholders that did not elect to participate in a
Tag-Along Transfer at a redemption price (the "Tag-Along Redemption Price") for
each share of Class A Stock, Class B Stock, Class C Stock so redeemed in cash
equal to the per share price paid for the Class D Stock by the Proposed
Transferee (provided that, if the consideration to be paid by the Proposed
Transferee includes any non-cash consideration, the per share amount to be paid
in such redemption shall be the fair value of the per share consideration to be
paid by such
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Proposed Transferee as determined in good faith by the Board) less such Other
Shareholder's PRO RATA share, based on the number of shares of Stock so
redeemed from such Other Shareholder, of the expenses of the Tag-Along Transfer
including, without limitation, legal, accounting and investment banking fees
and expenses, such determination of expenses to be made in the sole discretion
of the Board of Directors of the Corporation. The provisions of this Section
6(b) shall not apply to the Non-Redeemable Shares. Redemption under this
subsection is conditioned upon the contemporaneous purchase by the Proposed
Transferee of the shares issuable under Section 6(d) in connection with the
applicable Tag-Along Transfer.
(c) If the Warrant Holder(s) exercise(s) the Class E Warrant, the
Corporation shall redeem, to the extent it is lawfully permitted to do so, from
the Class E Shareholders, PRO RATA based on the number of shares of such Class
E Stock then owned by each such Shareholder, out of funds legally available
therefor, a number of shares of Class E Stock equal to the number of Warrant
Shares at a redemption price (the "Warrant Redemption Price") equal to the par
value of each share of Class E Stock so redeemed. The provisions of this
Section 6(c) shall not apply to the Non-Redeemable Shares. If a redemption
pursuant to this Section 6(c) occurs as a result of a Sale of the Corporation,
such redemption shall occur, immediately prior to any redemption pursuant to
Section 6(b) hereof. Redemption under this subsection is conditioned upon the
contemporaneous purchase of the Warrant Shares by the Warrant Holder(s)
pursuant to the Class E Warrant.
(d) The shares of Class E Stock redeemed by the Corporation
pursuant to a Section 6(c) mandatory redemption shall, on the Redemption Date
(as defined in Section 6(e)), be retired and upon such retirement shall
automatically revert to authorized but unissued shares of Class E Stock, and
the Corporation shall, on the Redemption Date, but immediately after such
redemption, issue, to the extent it is lawfully permitted to do so, to the
Warrant Holder(s) a number of shares of Common Stock equal to the number of
Warrant Shares. The shares of Class A Stock, Class B Stock, Class C Stock or
Class E Stock redeemed by the Corporation pursuant to a Section 6(b) mandatory
redemption pursuant to a Tag-Along Transfer shall, on the Redemption Date, be
retired and upon such retirement shall automatically revert to authorized but
unissued shares of Class A Stock, Class B Stock, Class C Stock or Class E
Stock, as relevant, and the Corporation shall, on the Redemption Date, but
immediately after such redemption, issue, to the extent it is lawfully
permitted to do so, to the Proposed Transferee a number of shares of Class A
Stock, Class B Stock, Class C Stock or Class E Stock equal to the number of
shares of such classes of Stock so redeemed. Upon any issuance of shares of
Class A Stock, Class B Stock, Class C Stock or Class E Stock equal to the
number of shares of such class of Stock redeemed pursuant to a Section 6(b)
mandatory redemption (and as a condition to such issuance), the Corporation
shall receive from the Proposed Transferee as the purchase price for such
shares an amount equal to the Tag-Along Redemption Price.
(e) The Corporation shall give to each holder of record of the
shares of Class A Stock, Class B Stock, Class C Stock or Class E Stock to be
redeemed pursuant to the terms of this Section 6 prior written notice of such
redemption not less than two Business Days prior to the date such shares will
be redeemed (the "Redemption Date") which (i) in the case of a redemption
pursuant to Section 6(b) shall be the closing date of the Tag-Along Transfer
and
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(ii) in the case of a redemption pursuant to Section 6(c) shall be the Warrant
Date. Each such notice shall state: (A) the Redemption Date; (B) the total
number of shares of the Class A Stock, Class B Stock, Class C Stock or Class E
Stock to be redeemed and, if fewer than all the shares held by such holder are
to be redeemed, the number of such shares to be redeemed from such holder; (C)
the Tag-Along Redemption Price or the Warrant Redemption Price, as relevant;
and (D) the fact that the certificates for the shares subject to redemption are
to be surrendered in exchange for payment of the Tag-Along Redemption Price or
Warrant Redemption Price, as relevant, at the principal office of the
Corporation or at such other place as the Corporation shall designate.
(f) On the Redemption Date, the shares of Class A Stock, Class B
Stock, Class C Stock or Class E Stock required to be redeemed pursuant to the
terms of this Section 6 shall be deemed to have been so redeemed,
notwithstanding that the certificates representing such Class A Stock, Class B
Stock, Class C Stock or Class E Stock shall not have been surrendered at the
principal office of the Corporation or such other place as the Corporation may
have designated or that notice from the Corporation shall not have been given
by the Corporation or, if given, shall not have been received by any holder of
Class A Stock, Class B Stock, Class C Stock or Class E Stock whose shares of
Stock are to be so redeemed. All certificates representing the redeemed shares
of Class A Stock, Class B Stock, Class C Stock or Class E Stock, including all
certificates not so delivered by such Class A Shareholders, Class B
Shareholders, Class C Shareholders or Class E Shareholders, shall be, or shall
be deemed to be, canceled by the Corporation as of the Redemption Date and
shall thereafter no longer be of any force or effect.
7. CONVERSION.
If the Initial Public Offering or a Sale of the Corporation
(whether pursuant to a Single Transaction Sale or a series of Staggered Sales)
occurs, each issued and outstanding share of Class A Stock, Class B Stock,
Class C Stock, Class D Stock and Class E Stock, not otherwise redeemed by the
Corporation pursuant to the mandatory redemption provisions of Section 6(b) or
6(c) hereof shall automatically convert into one share of Common Stock
effective on the Redemption Date (or, in the case of an Initial Public Offering
in which no Redemption Date occurs, the IPO Date, or, in the case of a Sale of
the Corporation in which no Redemption Date occurs, then effective immediately
prior to the consummation of such Sale of the Corporation), but immediately
after the redemptions and issuances described in Section 6 (the "Conversion
Date"). Prior to or on the Conversion Date, each holder of shares of Class A
Stock, Class B Stock, Class C Stock, Class D Stock or Class E Stock shall
surrender such holder's certificates evidencing such shares at the principal
office of the Corporation or at such other place as the Corporation shall
designate to such holder in writing at least ten (10) Business Days prior to
the Conversion Date, and shall, within ten (10) Business Days after the
Conversion Date, be entitled to receive from the Corporation certificates
evidencing the number of shares of Common Stock into which such shares of Class
A Stock, Class B Stock, Class C Stock, Class D Stock or Class E Stock are
converted. On the Conversion Date, each holder of shares of Class A Stock,
Class B Stock, Class C Stock, Class D Stock or Class E Stock shall be deemed to
be a holder of record of the Common Stock issuable upon such conversion,
notwithstanding that the certificates
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representing such Class A Stock, Class B Stock, Class C Stock, Class D Stock or
Class E Stock shall not have been surrendered at the principal office of the
Corporation or such other place as the Corporation may have designated, that
notice from the Corporation shall not have been given or, if given, shall not
have been received by any holder of shares of Class A Stock, Class B Stock,
Class C Stock, Class D Stock or Class E Stock, or that certificates evidencing
such shares of Common Stock shall not then be actually delivered to such
holder. All certificates representing the converted shares of Class A Stock,
Class B Stock, Class C Stock, Class D Stock or Class E Stock, including all
certificates not so delivered by such Class A Stock, Class B Stock, Class C
Stock, Class D Stock or Class E Shareholders, shall be, or shall be deemed to
be, canceled by the Corporation as of the Conversion Date and shall thereafter
no longer be of any force or effect and the Corporation shall not thereafter
issue any such shares of Class A Stock, Class B Stock, Class C Stock, Class D
Stock or Class E Stock.
8. VOTING RIGHTS.
(a) Holders of shares of Class A Stock and Common Stock shall be
entitled to one vote and holders of Class D Stock shall be entitled to 50.6818
votes, for each share of such stock held on all matters as to which
Shareholders may be entitled to vote pursuant to the PBCL. Except as otherwise
required by the PBCL, holders of shares of Class B Stock shall not have any
voting rights; provided however, in the event that the Corporation issues any
shares of Class D Stock, as of immediately prior to and after such issuance,
holders of shares of Class B Stock shall be entitled to one vote for each share
of Class B Stock held on all matters as to which Shareholders may be entitled
to vote pursuant to the PBCL.
(b) Except as otherwise required by the PBCL, holders of Class A-I,
Class B-I, Class C or Class E Stock shall not have any voting rights.
(c) The Shareholders of the Corporation shall not have the right to
cumulate their votes for the election of directors of the Corporation.
(d) Except as otherwise required by the PBCL, the Shareholders
entitled to vote on any matter submitted to the Shareholders for a vote shall
vote together as a single group and not as separate classes.
9. LIQUIDATION RIGHTS.
(a) Any distribution made upon the liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or involuntary,
shall be allocated PRO RATA based upon the number of shares of Stock held by
each Shareholder.
(b) None of the sale, transfer, conveyance or lease of all or
substantially all of the property or business of the Corporation, the merger or
consolidation of the Corporation into or with any other corporation or the
merger or consolidation of any other corporation into or with the Corporation
shall be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section 9.
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10. LEGEND.
(a) All certificates representing shares of Class A Stock and Class
B Stock of the Corporation shall, in addition to other legends that may be
required by state or federal securities laws, bear the following legend:
"THESE SECURITIES ARE SUBJECT TO A RIGHT OF FIRST OFFER IN FAVOR OF
THE CORPORATION UPON ANY PROPOSED SALE OF THESE SECURITIES. THE CORPORATION
WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS THE POWERS,
DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS."
(b) All certificates representing shares of Class A, Class B, Class
C Stock and Class E Stock of the Corporation shall, in addition to other
legends that may be required by state or federal securities laws, bear the
following legend:
"THESE SECURITIES ARE SUBJECT TO MANDATORY REDEMPTION BY THE
CORPORATION. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER
WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR
SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS."
and the certificates representing shares of Class A Stock and Class B Stock of
the Corporation held by officers and directors of the Corporation and shares of
Class C and Class E Stock of the Corporation shall bear the following additional
legend:
"AS SPECIFIED IN THE ARTICLES OF INCORPORATION OF THE CORPORATION,
THE TRANSFERABILITY OF THESE SECURITIES IS SUBJECT TO RESTRICTION. THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE AND MAY BE REOFFERED AND SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
(c) All certificates representing shares of Class D Stock in the
Corporation shall, in addition to other legends that may be required by state
or federal securities laws, bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY BE REOFFERED AND SOLD ONLY
IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
"AS SPECIFIED IN THE ARTICLES OF INCORPORATION OF THE CORPORATION,
THE TRANSFERABILITY OF THESE SECURITIES IS SUBJECT TO RESTRICTION. THE
CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH
15
<PAGE> 16
SHAREHOLDER WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR
SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS."
(d) All certificates representing shares of Common Stock in the
Corporation shall, in addition to other legends that may be required by state
or federal securities laws, bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY BE REOFFERED AND SOLD ONLY
IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
"THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER
WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR
SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS."
PROVIDED THAT, as specified in Section 3(b) hereof, following the Initial Public
Offering, such certificates shall bear the first legend set forth in this
Section 10(d) above or another legend similar to it only if, in the opinion of
counsel to the Corporation, the imposition of such legend is required under the
Securities Act or other applicable law and, to the extent applicable, the second
and third legends.
(e) All certificates representing shares of Stock shall bear such
additional legends as may be required pursuant to the Shareholder Agreements.
11. RECORD HOLDERS. The Corporation shall be entitled to recognize
the exclusive right of a person registered in its records as the holder of
shares of Class A, Class B, Class C, Class D, Class E or Common Stock and such
record holders shall be deemed the holders of such shares for all purposes.
ARTICLE V -- MANAGEMENT OF BUSINESS AND AFFAIRS
-----------------------------------------------
For the management of the business and for the conduct of the affairs of
the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation and of its directors and of its Shareholders or any
class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed by, or in
the manner provided in, the Bylaws. The phrase "whole Board" and the phrase
"total number of directors" shall be deemed to have the same meaning, to wit,
the total number of directors which the Corporation would have if there were no
vacancies. No election of directors need be by written ballot.
16
<PAGE> 17
2. After the original or other Bylaws of the Corporation have been
adopted, amended, or repealed, as the case may be, in accordance with the
provisions of Section 1504 of the PBCL, and, after the Corporation has received
any payment for any of its stock, the power to adopt, amend, or repeal the
Bylaws of the Corporation may be exercised by the Board of Directors of the
Corporation.
ARTICLE VI -- DIRECTOR LIABILITY
--------------------------------
(a) To the fullest extent that the laws of the Commonwealth of
Pennsylvania permit elimination or limitation of the liability of directors, no
director of the Corporation shall be personally liable for monetary damages as
such for any action taken, or any failure to take any action, as a director.
(b) The provisions of this Article and of Article VII shall be deemed
to be a contract with each director of the Corporation who serves as such at
any time while this Article is in effect and each such director shall be deemed
to be so serving in reliance on the provisions of this Article. Any amendment
or repeal of this Article or adoption of any by-law or other provision of the
Articles of the Corporation which has the effect of increasing director
liability shall operate prospectively only and shall not have any effect with
respect to any action taken, or any failure to act, by a director prior to the
adoption of such amendment, repeal, by-law or other provision.
ARTICLE VII -- INDEMNIFICATION
------------------------------
(a) Except as prohibited by law, every director and officer of the
Corporation shall be entitled as of right to be indemnified by the Corporation
against expenses and any liability paid or incurred by such person in
connection with any actual or threatened claim, action, suit or proceeding,
civil, criminal, administrative, investigative or other, whether brought by or
in the right of the Corporation or otherwise, in which he or she may be
involved in any manner, as a party, witness or otherwise, or is threatened to
be made so involved, by reason of such person being or having been a director
or officer of the Corporation or of a subsidiary of the Corporation or by
reason of the fact that such person is or was serving at the request of the
Corporation as a director, officer, employee, fiduciary or other representative
of another corporation, partnership, joint venture, trust, employee benefit
plan or other entity (such claim, action, suit or proceeding hereinafter being
referred to as "Action"); provided, that, no such right of indemnification
shall exist with respect to an Action initiated by an indemnitee (as
hereinafter defined) against the Corporation (an "Indemnitee Action") except as
provided in the last sentence of this Subsection (a). Persons who are not
directors or officers of the Corporation may be similarly indemnified in
respect of the Corporation to the extent the board of directors at any time
denominates any of such persons as entitled to the benefits of this Article
VII. As used in this Article, "indemnitee" shall include each director and
officer of the Corporation and each other person denominated by the board of
directors as entitled to the benefits of this Article, "expenses" shall include
fees and expenses of counsel selected by an indemnitee, and "liability" shall
include amounts of judgments, excise taxes, fines, penalties and amounts paid
in settlement. An indemnitee shall be entitled to be indemnified pursuant to
this Subsection (a) for expenses
17
<PAGE> 18
incurred in connection with any Indemnitee Action only (i) if the indemnitee is
successful, as provided in Subsection (c) of this Article, (ii) if the
indemnitee is successful in whole or in part in another Indemnitee Action for
which expenses are claimed or (iii) if the indemnification for expenses is
included in a settlement of, or is awarded by a court in, such other Indemnitee
Action.
(b) Every indemnitee shall be entitled as of right to have his or her
expenses in defending any Action, in initiating and pursuing any Indemnitee
Action for indemnity or advancement or expenses under Subsection (c) of this
Article VII, paid in advance by the Corporation prior to final disposition of
such Action or Indemnitee Action, provided that the Corporation receives a
written undertaking by or on behalf of the indemnitee to repay the amount
advanced if it should ultimately be determined that the indemnitee is not
entitled to be indemnified for such expenses.
(c) If a written claim under Subsection (a) or Subsection (b) of this
Article VII is not paid in full by the Corporation within thirty days after
such claim has been received by the Corporation, the indemnitee may at any time
thereafter initiate an Indemnitee Action to recover the unpaid amount of the
claim and, if successful in whole or in part, the indemnitee shall also be
entitled to be paid the expense of prosecuting such Indemnitee Action. The only
defense to an Indemnitee Action to recover on a claim for indemnification under
Subsection (a) of this Article shall be that the indemnitee's conduct was such
that under Pennsylvania law the Corporation is prohibited from indemnifying the
indemnitee for the amount claimed, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
board of directors, independent legal counsel and its shareholders) to have
made a determination prior to the commencement of such Indemnitee Action that
indemnification of the indemnitee is proper in the circumstances, nor an actual
determination by the Corporation (including its board of directors, independent
legal counsel or its shareholder) that the indemnitee's conduct was such that
indemnification is prohibited by Pennsylvania law, shall be a defense to such
Indemnitee Action or create a presumption that the indemnitee's conduct was
such that indemnification is prohibited by Pennsylvania law. The only defense
to an Indemnitee Action to recover a claim for advancement of expenses under
Subsection (b) of this Article VII shall be the indemnitee's failure to provide
the undertaking required by Subsection (b) of this Article VII.
(d) The Corporation may purchase and maintain insurance to protect
itself and any person eligible to be indemnified hereunder against any
liability or expense asserted or incurred by such person in connection with any
Action, whether or not the Corporation would have the power to indemnify such
person against such liability or expense by law or under the provisions of this
Article VII. The Corporation may create a trust fund, grant a security
interest, cause a letter of credit to be issued or use other means (whether or
not similar to the foregoing) to ensure the payment of such sums as may become
necessary to effect indemnification as provided herein.
(e) The rights to indemnification and advancement of expenses
provided for in this Article VII shall (i) not be deemed exclusive of any other
rights, whether now existing or hereafter created, to which any indemnitee may
be entitled under any agreement or by-law,
18
<PAGE> 19
charter provision, vote of shareholders or directors or otherwise, (ii) be
deemed to create contractual rights in favor of each indemnitee who serves the
Corporation at any time while this Article is in effect (and each such
indemnitee shall be deemed to be so serving in reliance on the provisions of
this Article) and (iii) continue as to each indemnitee who has ceased to have
the status pursuant to which he or she was entitled or was denominated as
entitled to indemnification under this Article and shall inure to the benefit
of the heirs and legal representatives of each indemnitee. Any amendment or
repeal of this Article or adoption of any by-law or other provision of the
Articles of the Corporation which limits in any way the right to
indemnification or the right to advancement of expenses provided for in this
article shall operate prospectively only and shall not affect any action taken,
or failure to act, by an indemnitee prior to the adoption of such amendment,
repeal, by-law or other provision.
(f) If an indemnitee is entitled under any provision of this Article
VII to indemnification by the Corporation for some or a portion of the expenses
or a liability paid or incurred by the indemnitee in the preparation,
investigation, defense, appeal or settlement of any Action or Indemnitee Action
but not, however, for the total amount thereof, the Corporation shall indemnify
the indemnitee for the portion of such expenses or liability to which the
indemnitee is entitled.
ARTICLE VIII -- AMENDMENTS
--------------------------
From time to time any of the provisions of these Articles of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the Commonwealth of Pennsylvania at the time in force
may be added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the Shareholders of the Corporation
by these Articles of Incorporation are granted subject to the provisions of
this Article.
ARTICLE IX--TERM
----------------
The term of the Corporation is perpetual.
19
<PAGE> 20
IN WITNESS WHEREOF, the Corporation has duly adopted these Restated
Articles of Incorporation, which restates and supersedes the provisions of the
Articles of Incorporation of the Corporation, in accordance with Sections 1914
and 1912 of the Business Corporation Law, and has caused this certificate to be
executed by its duly authorized officer this day of November, 1997.
WERNER HOLDING CO. (PA), INC.
By:
-------------------------------------
Name:
Title: Secretary
20
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT A
TO ARTICLES OF INCORPORATION
Class A Stock Class B Stock
----------------------------- ----------------------------
Fraction of Fraction of Fraction of Fraction of
Class A Class A-1 Class B Class B-1
Affiliated Shareholder Common Stock Stock Common Stock Stock
---------------------- ------------ ----- ------------ -----
<S> <C> <C> <C> <C>
Donald M. Werner ...................................... .17601158 .82398842 .17601158 .82398842
Donald M. Werner and Barbara L. Werner, Jt. Tenants.... 0.0 0.0 .17601158 .82398842
Barbara L. Werner ..................................... 0.0 0.0 .17601158 .82398842
Howard L. Solot ....................................... .1796557 .8203443 .17965570 .82034430
Janet F. Solot ........................................ .1796557 .8203443 .17965570 .82034430
Bruce D. Werner-Trust ................................. 0.0 0.0 .17301143 .82698860
Bruce D. Werner ....................................... .17301143 .82698857 0.0 0.0
Bruce D. Werner Family Limited Partnership ............ 0.0 0.0 .17301143 .82698917
Bruce D. Werner and Tanuny H. Werner, Jt. Tenants ..... 0.0 0.0 .17301143 .82698857
Michael E. Werner, Trustee of Michael B. Werner
Rev. Trust U/A/D 1/2/96 ............................. 0.0 0.0 .27341055 .72658945
Michael E. Werner ..................................... .27341055 .72658945 0.0 0.0
Laura W. Werner, Trustee of the Laura W. Werner
Rev. Trust U/A/D 1/2/95 ............................. 0.0 0.0 .13760000 .86240000
Jonathan C. Werner Gift Trust U/A/D 11/1/96 ........... 0.0 0.0 .13760000 .86240000
Margot A. Werner Gift Trust U/A/D 11/l/96 ............. 0.0 0.0 .13760000 .86240000
Stephanie N. Warner Gift Trust U/A/D 11/1/96 .......... 0.0 0.0 .13760000 .86240000
Craig R. Werner-Trust ................................. .1645486 .83354514 .16645486 .83354514
Craig R. Werner ....................................... .1645486 .83354514 0.0 0.0
Craig R. Werner, Custodian for Kurt J. Werner ......... 0.0 0.0 .16645486 .83354514
Craig R. Werner, Custodian for Kyle G. Werner ......... 0.0 0.0 .16645486 .83354514
Craig R. Werner, Custodian for Erica Renee Werner ..... 0.0 0.0 .16645486 .83354514
Eric J. Werner ........................................ .16470433 .83529567 .16470433 .83529567
Eric J. Werner and Melanie R. Werner, Jt. Tenants ..... 0.0 0.0 .16470433 .83529567
Melanie R. Werner, Custodian for Isabelle N. Werner ... 0.0 0.0 .18389665 .81610335
Melanie R. Werner, Custodian for Sophia K. Werner 0.0 0.0 .29681914 .70318086
Michael J. Solot ...................................... .17437581 .82562419 .17437581 .82562419
</TABLE>
A-1
<PAGE> 22
Exhibit B
to Articles of Incorporation
TERMS OF MARKET PARTICIPATION PAYMENT
(a) Subject to the provisions of section (e) below, if (i) a Liquidity
Event shall first occur on or prior to November 24, 2007 and (ii) at the time of
such Liquidity Event, the Final Equity Value shall equal or exceed the Targeted
Equity Value, each Person entitled to receive on the Special Redemption Date a
portion of the redemption price which is payable as of such date (the "Initial
Payment") or a Permitted Transferee of such Person (each, a "Recipient") shall
be entitled to receive from the Corporation a percentage of the Market
Participation Payment equal to the percentage of the total Initial Payments
payable as of the Special Redemption Date which such Person or its transferor,
as the case may be, was entitled to receive as of such date. The Market
Participation Payment shall constitute a contractual right of each Recipient and
shall not entitle such Recipient to any voting or other right which might be
applicable to holders of securities of the Corporation. The Market Participation
Payment shall be payable in cash, provided that the Corporation, in its
discretion, may substitute for up to half of the Market Participation Payment
notes or similar obligations with a maturity date of not more than 7 years and
interest and other market terms which the Board of Directors of the Corporation
in good faith believes, after consulting with a nationally recognized securities
organization, will provide equivalent value. Any substitution of notes or
similar obligations shall be effected on a proportionate basis to all
Recipients. Notwithstanding anything contained herein to the contrary, no Market
Participation Payment shall be payable if (i) a Liquidity Event has occurred and
the Final Equity Value at the time of the Liquidity Event does not equal or
exceed the Targeted Equity Value at such time, (ii) more than ten years shall
have elapsed from the date of the Recapitalization to the date of the first
occurrence of a Liquidity Event or (iii) prohibited by applicable law (in which
event the payment shall be made if and when permitted by applicable law).
(b) The Market Participation Payment shall be payable promptly following
the occurrence of a Liquidity Event and a determination by the Board of the
Directors of the Corporation of the amount of the Market Participation Payment.
Any determination made by the Board of Directors of the Corporation in good
faith with respect to the Market Participation Payment shall be final and
binding absent manifest error. The Corporation shall promptly notify the
Recipients of the Board's determination, which notice shall include setting
forth in reasonable detail the basis of the Board's determination. At the
request of Recipients entitled to not less than 25% of the Market Participation
Payment, the Corporation shall have the Board's determination confirmed by a
nationally recognized accounting firm.
(c) The Corporation shall treat each Person entitled to receive an Initial
Payment as the Recipient, unless and until the Corporation shall have received
sufficient notice (as determined in good faith by the Corporation) that such
Person has transferred all or a part of his, her or its rights to the Market
Participation Payment to a Permitted Transferee in accordance with this Exhibit
B. In such event, the Corporation shall treat the Permitted Transferee as the
Recipient of the relevant share of the Market Participation Payment to the
extent of the interest so transferred. The rights granted pursuant to this
Exhibit B may not be transferred to any Person other than a Permitted
Transferee.
(d) The Corporation shall maintain a register of Recipients. The
Corporation shall mail to each Recipient a check and, if appropriate, a note or
other obligation representing the portion of the Market Participation Payment
which such Person is entitled, at the address set forth in the register
maintained by the Corporation as of the Special Redemption Date or as changed by
such Person in writing signed by such Person and delivered to the corporate
secretary of the Corporation. The Corporation shall have no obligation to use
any other address or to confirm or make any investigation of any Recipient's
address other than as set forth in the preceding sentence. Once the Corporation
has delivered a Recipient's portion of the Market Participation Payment as set
forth above, the Corporation shall have no obligation to maintain any funds or
reserves in respect of the amount of the portion of such payment which is made
by check beyond three months after the date of delivery of such check, and in
respect of the amount of the portion of such payment which is made by note or
other obligation beyond three months after the maturity date of such note or
obligation.
B-1
<PAGE> 23
(e) Notwithstanding anything contained herein to the contrary, the
obligations of the Corporation hereunder, and the rights of a Recipient to a
portion of the Market Participation Payment, shall not be modified without (i)
the written consent to such modification of Recipients who would at the time be
entitled to receive a majority of the Market Participation Payment and (ii) the
approval of the Board of Directors of the Corporation.
(f) For purposes of this Exhibit B, the following terms shall have
following meanings.
"AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. A Person will be deemed to control a corporation if
such Person possesses, directly or indirectly, the power 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.
"COMPANY COMMON STOCK" means any and all classes of common stock of the
Corporation.
"FINAL EQUITY VALUE" means an aggregate amount equal to: (i) (A) the
aggregate value of the equity of the Corporation outstanding immediately prior
to consummation of the Liquidity Event determined by multiplying the total
number of shares of Company Common Stock outstanding immediately prior to the
Liquidity Event (utilizing the treasury method of accounting to treat options to
purchase shares of any class of Company Common Stock) by the Terminal Per Share
Value, plus (B) an amount equal to amounts paid in dividends (other than
dividends payable in additional shares of Company Common Stock) on shares of
Company Common Stock outstanding immediately after the Recapitalization or
issued with respect thereto pursuant to a stock split, stock dividend or other
similar transaction ("Original Shares"), or for Original Shares repurchased
since the Recapitalization and prior to the Liquidity Event, compounded at an
annual rate equal to the Targeted Return Rate from the date of any such payment,
MULTIPLIED by (ii) a fraction the numerator of which shall be the total number
of Original Shares (treating as outstanding any Original Shares repurchased),
and the denominator of which shall be a number equal to the sum of the total
number of shares of Common Stock outstanding immediately prior to the Liquidity
Event and the total number of Original Shares repurchased, LESS (iii) the amount
of the Market Participation Payment.
"INITIAL EQUITY VALUE" means the product of the number of shares of Common
Stock outstanding immediately following the Recapitalization MULTIPLIED by
$2,421.29.
"INVESTCORP SHAREHOLDERS" means the entities listed in Schedule 1 to the
Recapitalization Agreement, any Affiliates of such entities and any other
investor with whom Investcorp Bank E.C. or any Affiliate thereof has an
administrative relationship.
"LIQUIDITY EVENT" means consummation of either (i) an initial
underwritten public offering of shares of Company Common Stock after which a
number of shares of Company Common Stock representing at least 10% of the
outstanding shares of Company Common Stock (calculated on a fully diluted basis)
are publicly held and the Company Common Stock is listed or admitted for trading
on a national securities exchange or quoted in the National Association of
Securities Dealers Automated Quotations National Market System or traded in the
over-the-counter market or (ii) a sale (either in one transaction or a series of
related transactions) by the Investcorp Shareholders to a non-Investcorp
Shareholder of a number of shares representing in the aggregate at least a
majority of the shares originally held by the Investcorp Shareholders (in either
instance adjusted for stock splits, stock dividends or other similar
transactions).
"MARKET PARTICIPATION PAYMENT" means an aggregate amount equal to 5%
of the Final Equity Value (determined without excluding the amounts referred to
in clause (iii) of the definition of the term "Final Equity Value").
B-2
<PAGE> 24
"PERMITTED TRANSFEREE" means (i) such Recipient's spouse or issue (each a
"Family Member"), (ii) the trustee or trustees of a trust solely (except for
remote contingent interests) for the benefit of the Recipient and/or one or more
Family Members, (iii) a foundation created or established by the Recipient, (iv)
a charitable remainder trust for the benefit of the Recipient and/or one or more
Family Members and/or designated charities, (v) a partnership of which the
Recipient or a Family Member owns all of the partnership interests, (vi) the
executor, administrator, or personal representative of the estate of the
Recipient, (vii) any guardian, trustee or conservator appointed with respect to
the assets of the Recipient, (viii) any person who succeeds to the rights of the
Recipient under this Exhibit B by the laws of descent and distribution, (ix) any
beneficiary of a trust or partnership which is a Recipient as of the Special
Redemption Date or which becomes a Recipient following the Special Redemption
Date in accordance with the preceding clauses (ii) or (v), and (x) any Person
which is of a type or category deemed by the Board of Directors of the
Corporation to be consistent with the intent of the preceding clauses (i)
through (ix) and approved by the Board of Directors of the Corporation.
"PERSON" means any natural person, partnership, limited liability company,
corporation (including the Corporation) , trust or unincorporated organization
or a government or a political subdivision thereof.
"RECAPITALIZATION" has the meaning set forth in the preamble of the
Recapitalization Agreement.
"RECAPITALIZATION AGREEMENT" means the Recapitalization Agreement, dated as
of October 8, 1997, and as amended from time to time, by and among Werner
Holding Co. (PA), Inc. and the Investcorp Shareholders.
"RECIPIENT" means any Person that is entitled to receive a portion of the
Market Participation Payment in accordance with this Exhibit B.
"SPECIAL REDEMPTION DATE" means the date prior to March 31, 1998 on which
Class A-1 Stock and Class B-1 Stock of the Corporation is redeemed by the
Corporation.
"TARGETED RETURN RATE" means a compounded annual rate of return from the
date of the Recapitalization until the date of a Liquidity Event corresponding
to the following rates and years:
YEAR FOLLOWING RECAPITALIZATION
DURING WHICH LIQUIDITY EVENT OCCURS RATE
----------------------------------- ----
1st ...................................... 40.0%
2nd ...................................... 32.5%
3rd ...................................... 27.5%
4th ...................................... 25.0%
5th ...................................... 25.0%
6th ...................................... 25.0%
7th ...................................... 22.5%
8th ...................................... 20.0%
9th ...................................... 20.0%
10th ..................................... 20.0%
"TARGETED EQUITY VALUE" means the dollar amount at the time of a Liquidity
Event that is equal to the Initial Equity Value compounded annually at the
Targeted Return Rate.
"TERMINAL PER SHARE VALUE" means (i) with respect to an initial public
offering, the average closing price per share of the publicly traded Company
Common Stock over the first 30 trading days after the initial public offering as
reported in the Wall Street Journal or any other comparable source selected in
good faith by the Board of Directors of the Corporation, and (ii) with respect
to the sale of Investcorp Shareholders of shares of Company Common Stock, the
per share price paid for the Investcorp Shareholders, shares in the sale
transaction.
B-3
<PAGE> 1
Exhibit 3.4
BY-LAWS
OF
WERNER HOLDING CO. (PA), INC.
*** ARTICLE I ***
SHAREHOLDERS
------------
Section 1 - Annual Meeting
- --------------------------
The annual meeting of the shareholders of the corporation for the
election of directors, consideration of reports to be presented before such
meeting and the transaction of such other business as may properly come before
the meeting shall be held at the registered office of the corporation, or at
such other place or places within or without the Commonwealth of Pennsylvania
as the board of directors of the corporation may designate, in March of each
calendar year on the date and at the time fixed by the board of directors.
Section 2 - Financial Report to Shareholders
- --------------------------------------------
The directors shall cause to be sent to the shareholders, within one
hundred twenty (120) days after the close of the fiscal year of the
corporation, financial statements which shall include a balance sheet as of the
close of such year, together with statements of income and surplus for such
year, prepared so as to present fairly its financial condition and the results
of its operations.
Section 3 - Special Meetings
- ----------------------------
Special meetings of the shareholders may be called at any time by the
president, the board of directors or shareholders entitled to cast at least
one-fifth of the votes which all shareholders are entitled to cast at the
particular meeting. At any time, upon written request of any person or persons
who have duly called a special meeting, it shall be the duty of the secretary
to fix the date of the meeting, to be held not more than sixty (60) days after
the receipt of the request, and to give due notice thereof. If the secretary
shall neglect or refuse to fix the date of the meeting and give notice thereof,
the person or persons calling the meeting may do so.
Section 4 - Notices of Meetings
- -------------------------------
Written notice of each meeting of the shareholders shall be given by,
or at the direction of, the person or persons authorized to call such meeting
to each shareholder of record entitled to vote at such meeting at least five
(5) days prior to the day named for such meeting.
Section 5 - Quorum
- ------------------
At all meetings of the shareholders the presence, in person or by
proxy, of shareholders entitled to cast at least a majority of the votes which
all shareholders are entitled to cast on the particular matter shall constitute
a quorum for the purpose of considering such matter.
-1-
<PAGE> 2
WERNER HOLDING CO. (PA), INC. MARCH 11,1997
BY-LAWS PAGE 2 OF 9
*** ARTICLE II ***
BOARD OF DIRECTORS
------------------
Section 1 - Number and Qualifications
- -------------------------------------
The business and affairs of the corporation shall be managed by a
board of directors, consisting of not less than three nor more than eleven
members, who shall be elected at the annual meeting of the shareholders for a
term ending with the next annual meeting of shareholders and shall hold office
until their successors are elected and qualified. The directors need not be
shareholders of the corporation.
Section 2 - Chairman of the Board
- ---------------------------------
The board of directors shall elect the Chairman of the Board. The
Chairman when present shall preside at all meetings of the shareholders and the
board of directors.
Section 3 - Election of Officers
- --------------------------------
Immediately after election by the shareholders, the board of directors
shall meet and elect and fix the compensation of the officers of the
corporation who shall hold office for a term ending with the first meeting of
the board of directors following the next annual meeting of shareholders and
until their successors are elected and qualify.
Section 4 - Regular Meetings
- ----------------------------
The first regular meeting of the board of directors shall be held each
year immediately following the adjournment of the shareholder's meeting at
which the directors are elected. Other regular meetings of the board of
directors shall be held at such time and place as may be fixed by the board.
Section 5 - Special Meetings
- ----------------------------
(a) Special meetings of the board of directors may be called at any
time by the president and shall be called by the president on the written
request of a majority of the directors then in office. The secretary shall give
notice of each special meeting by mailing written notice thereof to each
director at least five days prior to the day named for the meeting.
(b) One or more directors may participate in a meeting of the board of
directors or of a committee of the board of directors by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other.
Section 6 - Quorum
- ------------------
A majority of the directors in office shall be necessary to constitute
a quorum for the transaction of business and the acts of a majority of the
directors present at a meeting at which a quorum is present shall be the acts
of the board of directors.
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<PAGE> 3
WERNER HOLDING CO. (PA), INC. MARCH 11,1997
BY-LAWS PAGE 3 OF 9
Section 7 - Removal
- -------------------
The board of directors may at any time declare vacant the office of a
director who is unable to function as a director because of illness or for any
other reason. Vacancies in the board of directors shall be filled by a majority
of the remaining members of the board though less than a quorum and each person
so elected shall be a director until his successor is elected by the
shareholders.
Section 8 - Committees
- ----------------------
The board of directors may create an executive committee, or any other
committee, to the extent permitted by law and may delegate to such committee or
committees such authority as the board of directors may determine.
Section 9 - Powers
- ------------------
The board of directors shall manage the business and affairs of the
corporation. In addition to the powers and authority by these By-laws expressly
conferred upon them, the board of directors may exercise all such powers and do
all such lawful acts and things as are not by statute, by these By-laws or by
its Articles of Incorporation directed or required to be exercised or done by
the shareholders.
*** ARTICLE ***
OFFICERS
--------
Section 1 - Number and Election
- -------------------------------
The officers of the corporation shall consist of the president, chief
executive officer, one or more vice presidents, the secretary and one or more
assistant secretaries and the treasurer and one or more assistant treasurers,
all of whom shall be elected by the board of directors and shall at all times
be subject to the direction and control of the board of directors.
Section 2 - Powers and Duties
- -----------------------------
The officers of the corporation shall each have such powers and duties
as generally pertain to their respective offices and such further powers and
duties as from time to time may be conferred upon them by the board of
directors.
Section 3 - Absence or Inability to Act
- ---------------------------------------
In the case of absence or inability to act of any officer of the
corporation, or of any person authorized to act in his place, the board of
directors may from time to time delegate the powers or duties of such officer
to any other officer, any director or any other person whom it may select.
-3-
<PAGE> 4
WERNER HOLDING CO. (PA), INC. MARCH 11,1997
BY-LAWS PAGE 4 OF 9
Section 4 - Salaries
- --------------------
The salaries of officers of the corporation elected by the board of
directors shall be fixed by the board of directors.
Section 5 - Vacancies
- ---------------------
The board of directors shall have power to fill any vacancies in any
office occurring for whatever reason.
Section 6 - Bonds
- -----------------
Any officer may be required by the board of directors to give bond for
the faithful discharge of his duties in such sum, with such surety or sureties
and of such character as the board may from time to time prescribe.
Section 7 - Removal
- -------------------
Any officer elected by the board of directors may be removed by the
board of directors whenever in its judgment the best interests of the
corporation will be served thereby.
*** ARTICLE IV ***
CERTIFICATES OF STOCK
---------------------
Section 1 - Form
- ----------------
Certificates for shares shall bear the signatures of the president or
a vice president and the secretary or an assistant secretary and shall contain
such statements as are required by law or by these By-laws and shall otherwise
be in such form as the board of directors may from time to time determine or
approve.
Section 2 - Transfers
- ---------------------
Shares shall be transferable on the books of the corporation by the
holders thereof, in person or by duly authorized attorney, upon surrender and
cancellation, for certificates for a like number of shares of the same class or
series, with duly executed assignment and power of transfer endorsed thereon or
attached thereto and with such proof of the authenticity of the signatures as
the corporation or its agents may reasonably require.
Section 3 - Lost Certificates
- -----------------------------
No certificate for shares shall be issued in place of any certificate
alleged to have been lost, stolen or destroyed except upon the production of
such evidence of the loss, theft or destruction and upon indemnification of the
corporation and its agents to such extent and in such manner as the board of
directors may from time to time prescribe or require.
-4-
<PAGE> 5
WERNER HOLDING CO. (PA), INC. MARCH 11,1997
BY-LAWS PAGE 5 OF 9
Section 4 - Restriction on Right of Transfer
- --------------------------------------------
From and after March 22, 1994 and continuing until such time as the
restriction on right of transfer provided for in this Section 4 shall be
terminated by action of the board of directors of the corporation, shares of
Class "A" Common Stock and Class "B" Common Stock of the corporation shall not
be transferable and shall not be transferred on the books of the corporation
unless a simultaneous transfer is made by the same transferor to the same
transferee of a like number of shares of Common Stock of Werner (DE)
International, Inc., a Delaware corporation. Certificates representing shares
of Class "A" Common Stock and Class "B" Common Stock may contain a legend
reflecting such restriction.
*** ARTICLE V ***
MISCELLANEOUS
-------------
Section 1 - Dividends
- ---------------------
Subject to any restrictions contained in the Articles of Incorporation
and any restrictions imposed by statute, the board of directors may declare and
pay dividends only out of unreserved and unrestricted earned surplus of the
corporation.
Section 2 - Negotiable Instruments
- ----------------------------------
All checks, drafts, bills of exchange, notes, acceptances, obligations
and other instruments for the payment of money shall be signed in the name of
the corporation by such officer or officers or person or persons as the board
of directors may from time to time authorize.
Section 3 - Contracts
- ---------------------
The board of directors may authorize any officer or officers or agent
or agents to enter into or execute and deliver in the name and on behalf of the
corporation any and all deeds, bonds, mortgages, contracts and other
obligations or instruments.
Section 4 - Corporate Seal
- --------------------------
The seal of the corporation shall be in such form as the board of
directors may designate or approve.
Section 5 - Fiscal Year
- -----------------------
The fiscal year of the corporation shall end on the 31st day of
December of each year or such other twelve consecutive months as the board of
directors may by resolution designate.
-5-
<PAGE> 6
WERNER HOLDING CO. (PA), INC. MARCH 11,1997
BY-LAWS PAGE 6 OF 9
*** ARTICLE VI ***
INDEMNIFICATION
---------------
Personal liability of directors and indemnification of, and
advancement of expenses to directors, officers and others shall be governed by
the following provisions;
Section 1 - Personal Liability of Directors
- -------------------------------------------
(a) To the fullest extent that the laws of the Commonwealth of
Pennsylvania, as in effect on January 27, 1987 or as thereafter amended, permit
elimination or limitation of the liability of directors, no director of the
corporation shall be personally liable for monetary damages as such for any
action taken, or any failure to take any actions, as a director.
(b) This Section 1 shall not apply to any actions filed prior to
January 27, 1987, nor to any breach of performance of duty or any failure of
performance of duty by any director of the corporation occurring prior to
January 27, 1987. The provisions of this Section shall be deemed to be a
contract with each director of the corporation who serves as such at any time
while this Section is in effect and each such director shall be deemed to be so
serving in reliance on the provisions of this Section. Any amendment or repeal
of this Section or adoption of any other By-law or other provision of the
Articles of the corporation which has the effect of increasing director
liability shall operate prospectively only and shall not affect any action
taken, or any failure to act, prior to the adoption of such amendment, repeal,
other By-law or other provision.
Section 2 - Indemnification of, and Advancement of Expenses to, Directors,
- --------------------------------------------------------------------------
Officers and Others
- -------------------
(a) RIGHT TO INDEMNIFICATION. Except as prohibited by law, every
director and officer of the corporation shall be entitled as of right to be
indemnified by the corporation against expenses and any liability paid or
incurred by such person in connection with any actual or threatened claim,
action, suit or proceeding, civil, criminal, administrative, investigative or
other, whether brought by or in the right of the corporation or otherwise, in
which he or she may be involved in any manner, as a party witness or otherwise,
or is threatened to be made so involved, by reason of such person being or
having been a director or officer of the corporation or of a subsidiary of the
corporation or by reason of the fact that such person is or was serving at the
request of the corporation as a director, officer, employee, fiduciary or other
representative of another corporation, partnership, joint venture, trust,
employee benefit plan or other entity (such claim, action, suit or proceeding
hereinafter being referred to as "Action"); provided, that no such right of
indemnification shall exist with respect to an Action initiated by an
indemnitee (as hereinafter defined) against the corporation (an "Indemnitee
Action") except as provided in the last sentence of this Subsection (a).
Persons who are not directors or officers of the corporation may be similarly
indemnified in respect of service to the corporation or to another such entity
at the request of the corporation to the extent the board of directors at any
time denominates any of such persons as entitled to the benefits of this
Section. As used in this Section 2, "indemnitee" shall include each director
and officer of the corporation and each other person denominated by the board
of directors as entitled to the benefits of this Section 2, "expenses" shall
include fees and expenses of counsel selected by an indemnitee and "liability"
shall include amounts of judgments, excise taxes, fines, penalties and amounts
paid in settlement.
-6-
<PAGE> 7
WERNER HOLDING CO. (PA), INC. MARCH 11,1997
BY-LAWS PAGE 7 OF 9
An indemnitee shall be entitled to be indemnified pursuant to this Subsection
(a) for expenses incurred in connection with any Indemnitee Action only (i) if
the indemnitee is successful, as provided in Subsection (c) of this Section 2,
(ii) if the indemnitee is successful in whole or in part in another Indemnitee
Action for which expenses are claimed or (iii) if the indemnification for
expenses is included in a settlement of, or is awarded by a court in, such
other Indemnitee Action.
(b) RIGHT TO ADVANCEMENT OF EXPENSES. Every indemnitee shall be
entitled as of right to have his or her expenses in defending any Action, or in
initiating and pursuing any Indemnitee Action for indemnity or advancement of
expenses under Subsection (c) of this Section 2, paid in advance by the
corporation prior to final disposition of such Action or Indemnitee Action,
provided that the corporation receives a written undertaking by or on behalf of
the indemnitee to repay the amount advanced if it should ultimately be
determined that the indemnitee is not entitled to be indemnified for such
expenses.
(c) RIGHT OF INDEMNITEE TO INITIATE ACTION. If a written claim under
Subsection (a) or Subsection (b) of this Section 2 is not paid in full by the
corporation within thirty days after such claim has been received by the
corporation, the indemnitee may at any time thereafter initiate an Indemnitee
Action to recover the unpaid amount of the claim and, if successful in whole or
in part, the indemnitee shall also be entitled to be paid the expense of
prosecuting such Indemnitee Action. The only defense to any Indemnitee Action
to recover a claim for indemnification under Subsection (a) of this Section 2
shall be that the indemnitee's conduct was such that under Pennsylvania law the
corporation is prohibited from indemnifying the indemnitee for the amount
claimed, but the burden of proving such defense shall be on the corporation.
Neither the failure of the corporation (including its board of directors,
independent legal counsel and its shareholders) to have made a determination
prior to the commencement of such Indemnitee Action that indemnification of the
indemnitee is proper in the circumstances, nor an actual determination by the
corporation (including its board of directors, independent legal counsel or its
shareholders) that the indemnitee's conduct was such that indemnification is
prohibited by Pennsylvania law, shall be a defense to such Indemnitee Action or
create a presumption that the indemnitee's conduct was such that
indemnification is prohibited by Pennsylvania law. The only defense to an
Indemnitee Action to recover a claim for advancement of expenses under
Subsection (b) of this Section 2 shall be the indemnitee's failure to provide
the undertaking required by Subsection (b) of this Section 2.
(d) INSURANCE AND FUNDING. The corporation may purchase and maintain
insurance to protect itself and any person eligible to be indemnified hereunder
against any liability or expense asserted or incurred by such person in
connection with any Action, whether or not the corporation would have the power
to indemnify such person against such liability or expense by law or under the
provisions of this Section 2. The corporation may create a trust fund, grant a
security interest, cause a letter of credit to be issued or use other means
(whether or not similar to the foregoing) to ensure the payment of such sums as
may become necessary to effect indemnification as provided herein.
(e) NON-EXCLUSIVITY; NATURE AND EXTENT OF RIGHTS. The rights to
indemnification and advancement of expenses provided for in this Section 2
shall (i) not be deemed exclusive of any other rights, whether now existing or
hereafter created, to which any indemnitee may be entitled under any agreement
or by-law, charter provision, vote of shareholders or directors or otherwise,
(ii) be deemed to create contractual rights in favor of each indemnitee who
serves the corporation at any time while this Section 2 is in effect (and each
such indemnitee shall be deemed to be so serving in reliance on the provisions
of this Section), (iii) continue
-7-
<PAGE> 8
WERNER HOLDING CO. (PA), INC. MARCH 11,1997
BY-LAWS PAGE 8 OF 9
as to each indemnitee who has ceased to have the status pursuant to which he or
she was entitled or was denominated as entitled to indemnification under this
Section 2 and shall inure to the benefit of the heirs and legal representatives
of each indemnitee and (iv) be applicable to Actions commenced after January
27, 1987, whether arising from acts or omissions occurring before or after
January 27, 1987. Any amendment or repeal of this Section 2 or adoption of any
other By-law or other provision of the Articles of the corporation which limits
in any way the right to indemnification or the right to advancement of expenses
provided for in this Section 2 shall operate prospectively only and shall not
affect any action taken, or failure to act, by an indemnitee prior to the
adoption of such amendment, repeal, other By-law or other provision.
(f) PARTIAL INDEMNITY. If an indemnitee is entitled under any
provision of this Section 2 to indemnification by the corporation for some or a
portion of the expenses or a liability paid or incurred by the indemnitee in
the preparation, investigation, defense, appeal or settlement of any Action or
Indemnitee Action but not, however, for the total amount thereof, the
corporation shall indemnify the indemnitee for the portion of such expenses or
liability to which the indemnitee is entitled.
(g) APPLICABILITY OF SECTION. This Section 2 shall apply to every
Action other than an Action filed prior to January 27, 1987, except that it
shall not apply to the extent that Pennsylvania law does not permit its
application to any breach of performance of duty or any failure of performance
of duty by an indemnitee occurring prior to January 27, 1987.
*** ARTICLE VII ***
AMENDMENTS
----------
These By-laws may be amended, altered, repealed or added to at any
regular or special meeting duly convened after notice to the directors or
shareholders of that purpose and the powers hereby conferred shall be exercised
by a majority vote of the members of the board of directors or by the vote of
shareholders entitled to cast at least a majority of the votes which all
shareholders are entitled to cast thereon, as the case maybe.
PLEASE NOTE
- -----------
Article VI of the By-laws of the corporation was deleted and a new
Article VI of the By-laws of the corporation reading as set forth below was
adopted; provided, however, that to the extent only that Section 8367 of the
Directors' Liability Act (Act No. 145 of the Pennsylvania General Assembly
approved November 28, 1986, effective January 27, 1987) does not permit new
Article VI to apply to any breach of performance of duty or any failure of
performance of duty by a director, officer or other person occurring prior to
January 27, 1987, the provisions of the former Article VI of the By-laws of the
corporation shall continue to apply to such matters.
-8-
<PAGE> 9
WERNER HOLDING CO. (PA), INC. MARCH 11,1997
BY-LAWS PAGE 9 OF 9
*** OLD ARTICLE VI ***
INDEMNIFICATION
---------------
Directors, officers and employees of the corporation shall be
indemnified as of right to the fullest extent now or hereafter permitted by law
in connection with any actual or threatened civil, criminal, administrative or
investigative action, suit or proceeding (whether brought by or in the name of
the corporation or otherwise) arising out of their service to the corporation
or to another organization at the corporation's request. The corporation may
maintain insurance to protect itself and any such director, officer or employee
against any liability, cost or expense incurred in connection with any such
action, suit or proceeding, whether or not the corporation would have the power
to indemnify such director, officer or employee against such liability, cost or
expense by law or under the provisions of this Article. The provisions of this
Article shall be applicable to actions, suits or proceedings commenced after
the adoption hereof, whether arising from acts or omissions occurring before or
after the adoption hereof, and to persons who have ceased to be directors,
officers, or employees and shall inure to the benefit of the heirs, executors
and administrators of persons entitled to indemnity or indemnified hereunder.
-9-
<PAGE> 1
Exhibit 3.5
PENNSYLVANIA DEPARTMENT OF STATE 252
CORPORATION BUREAU
ROOM 308 NORTH OFFICE BUILDING
P.O. BOX 8722
HARRISBURG, PA 17105-8722
WERNER CO.
THE CORPORATION BUREAU IS HAPPY TO SEND YOU YOUR FILED DOCUMENT. PLEASE
NOTE THE FILE DATE AND THE SIGNATURE OF THE SECRETARY OF THE COMMONWEALTH. THE
CORPORATION BUREAU IS HERE TO SERVE YOU AND WANTS TO THANK YOU FOR DOING
BUSINESS IN PENNSYLVANIA. IF YOU HAVE ANY QUESTIONS PERTAINING TO THE
CORPORATION BUREAU, CALL (717) 787-1057.
ENTITY NUMBER: 2613157
MICROFILM NUMBER: 09479
1690-1691
CAPITOL PARALEGAL SERVICES
COUNTER
<PAGE> 2
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE FILED IN THE DEPARTMENT
CORPORATION BUREAU OF STATE ON DEC 20, 1994
/s/ Robert M. Grant
-----------------------
Secretary of the
Commonwealth
ARTICLES OF INCORPORATION
DOMESTIC BUSINESS CORPORATION
In compliance with the requirements of 15 Pa. C.S. Section 1306
(relating to articles of incorporation), the undersigned, desiring to be
incorporated as a business corporation, hereby certifies that:
1. The name of the corporation is
WERNER CO.
2. The address of its registered office in this Commonwealth is
93 Werner Road
Greenville, PA 16125
3. The corporation is incorporated under the Pennsylvania Business
Corporation law of 1988 (15 Pa. C.S. Section 1101 et seq.), as the same may be
amended.
4. The aggregate number of shares which the Corporation shall have
authority to issue is One Thousand (1,000) shares of common stock, no par
value.
5. The name and address of the incorporator is as follows:
Wendy A. Meikle
Suite A
109 Woodfield Drive
Greenville, PA 16125
[STAMP]
Dec. 20 94
PA Dept. of State
<PAGE> 3
6. To the fullest extent permitted by law, no director of the
corporation shall be personally liable for monetary damages for any action
taken, or any failure to take any action.
7. The effective date of this filing shall be 12:01 a.m., January 1,
1995.
IN TESTIMONY WHEREOF, the incorporator has signed these Articles of
Incorporation this 19th day of December, 1994.
/s/ Wendy A. Meikle
--------------------------
Wendy A. Meikle
Sole Incorporator
<PAGE> 1
Exhibit 3.6
Bylaws
of
WERNER CO.
(a Pennsylvania Corporation)
Amended and Restated
May 15, 1997
<PAGE> 2
INDEX TO Bylaws
ARTICLE I
Offices and Fiscal Year .......................................... 1
Section 1.01. Registered office .................................. 1
Section 1.02. Other offices ...................................... 1
Section 1.03. Fiscal year ........................................ 1
ARTICLE II
Notice - Waivers - Meetings Generally ............................ 1
Section 2.01. Manner of giving notice .......................... 1
Section 2.02. Notice of meetings of Board of Directors ......... 2
Section 2.03. Notice of meetings of Shareholders ............... 2
Section 2.04. Waiver of notice ................................. 2
Section 2.05. Modification of proposal contained in notice ..... 2
Section 2.06. Exception to requirement of notice ............... 3
Section 2.07. Use of conference telephone and similar
equipment .................................. 3
ARTICLE III
Shareholders ..................................................... 3
Section 3.01. Place of meeting ................................. 3
Section 3.02. Annual meeting ................................... 3
Section 3.03. Special meetings ................................. 3
Section 3.04. Quorum and adjournment ........................... 4
Section 3.05. Action by Shareholders ........................... 5
Section 3.06. Organization ..................................... 5
Section 3.07. Voting rights of Shareholders .................... 6
Section 3.08. Voting and other action by proxy ................. 6
Section 3.09. Voting by fiduciaries and pledgees ............... 6
Section 3.10. Voting by joint holders of shares ................ 7
Section 3.11. Voting by Corporations ........................... 7
Section 3.12. Determination of Shareholders of record .......... 7
Section 3.13. Voting Lists ..................................... 8
Section 3.14. Judges of election ............................... 8
Section 3.15. Consent of Shareholders in lieu of meeting ....... 9
Section 3.16. Minors as security holders ....................... 9
ARTICLE IV
Board of Directors ............................................... 9
Section 4.01. Powers; personal liability ....................... 9
Section 4.02. Qualifications and selection of Directors ....... 11
Section 4.03. Number and term of office ....................... 11
Section 4.04. Vacancies ....................................... 12
Section 4.05. Removal of directors ............................ 12
<PAGE> 3
Section 4.06. The Chairman and vice chairman of the board ...... 12
Section 4.07. Place of meetings ................................ 12
Section 4.08. Organization of meetings ......................... 12
Section 4.09. Regular meetings ................................. 13
Section 4.10. Special meetings ................................. 13
Section 4.11. Quorum of and action by Directors ................ 13
Section 4.12. Executive and other committees ................... 13
Section 4.13. Compensation ..................................... 14
ARTICLE V
Officers ......................................................... 14
Section 5.01. Officers generally ............................... 14
Section 5.02. Election and term of office ...................... 14
Section 5.03. Subordinate officers, committees and agents ...... 14
Section 5.04. Removal of officers and agents ................... 15
Section 5.05. Vacancies ........................................ 15
Section 5.06. Authority ........................................ 15
Section 5.07. The President .................................... 15
Section 5.08. The Senior Vice Presidents and Vice Presidents ... 15
Section 5.09. The Secretary and Assistant Secretaries .......... 15
Section 5.10. The Treasurer and Assistant Treasurers ........... 16
Section 5.11. Salaries ......................................... 16
ARTICLE VI
Certificates of Stock, Transfer, Etc ............................. 16
Section 6.01. Share certificates ............................... 16
Section 6.02. Issuance ......................................... 17
Section 6.03. Transfer ......................................... 17
Section 6.04. Record holder of Shares .......................... 17
Section 6.05. Lost, destroyed or mutilated certificates ........ 17
ARTICLE VII
Indemnification of Directors, Officers and
Other Authorized Representatives ................................. 17
Section 7.01. Scope of indemnification ......................... 17
Section 7.02. Proceeding initiated by indemnified
representative ............................... 19
Section 7.03. Advancing expenses ............................... 19
Section 7.04. Securing of indemnification obligations .......... 19
Section 7.05. Payment of indemnification ....................... 19
Section 7.06. Arbitration ...................................... 19
Section 7.07. Contribution ..................................... 20
Section 7.08. Mandatory indemnification of Directors.
Officers, etc. ................................ 20
Section 7.09. Contract rights; amendment or repeal ............. 20
Section 7.10. Scope of Article ................................. 20
Section 7.11. Reliance on provisions ........................... 21
Section 7.12. Interpretation ................................... 21
ii
<PAGE> 4
ARTICLE VIII
Miscellaneous .................................................... 21
Section 8.01. Corporate seal ................................... 21
Section 8.02. Checks ........................................... 21
Section 8.03. Contracts ........................................ 21
Section 8.04. Interested Directors or officers; quorum ......... 21
Section 8.05. Deposits ......................................... 22
Section 8.06. Corporate records ................................ 22
Section 8.07. Financial Reports ................................ 22
Section 8.08. Amendment of Bylaws .............................. 23
iii
<PAGE> 5
WERNER CO.
Bylaws
ARTICLE I
---------
Offices and Fiscal Year
Section 1.01. REGISTERED OFFICE. The registered office of the
Corporation in Pennsylvania shall be at 93 Werner Road, Greenville,
Pennsylvania 16125, until otherwise established by an amendment of the articles
or by the Board of Directors and a record of such change is filed with the
Department of State in the manner provided by law.
Section 1.02. OTHER OFFICES. The Corporation may also have offices at
such other places within or without Pennsylvania as the Board of Directors may
from time to time appoint or the business of the Corporation may require.
Section 1.03. FISCAL YEAR. The fiscal year of the Corporation shall
end on December 31 of each year.
ARTICLE II
----------
Notice - Waivers - Meetings Generally
Section 2.01. MANNER OF GIVING NOTICE.
(a) GENERAL RULE. Whenever written notice is required to be given to
any person under the provision of the Business Corporation Law or by the
articles or these Bylaws, it may be given to the person either personally or by
sending a copy thereof by first class or express mail, postage prepaid, or be
telegram (with messenger service specified), telex or TWX (with answer back
received) or courier service, charges prepaid, or by telecopier, to the address
(or to the telex, TWX, telecopier or telephone number) of the person appearing
on the books of the Corporation or, in the case of directors, supplied by the
director to the Corporation for the purpose of notice. If the notice is sent by
mail, telegraph or courier service, it shall be deemed to have been given to
the person entitled thereto when deposited in the United States mail or with a
telegraphic office or courier service for delivery to that person or, in the
case of telex or TWX, when dispatched or, in the case of telecopier, when
received. A notice of meeting shall specify the place, day and time of the
meeting and any other information required by any other provision of the
Business Corporation Law, the articles or these Bylaws.
(b) ADJOURNED SHAREHOLDER MEETINGS. When a meeting of Shareholders is
adjourned, it shall not be necessary to give any notice of the adjourned
meeting or of the business to be transacted at an adjourned meeting, other than
by announcement at the meeting at which the adjournment is taken, unless the
board fixes a new record date for the adjourned meeting.
1
<PAGE> 6
Section 2.02. NOTICE OF MEETINGS OF BOARD OF DIRECTORS. Notice of a
regular meeting of the Board of Directors need not be given. Notice of every
special meeting of the Board of Directors shall be given to each Director at
least 24 hours (in the case of notice by telephone, telex, TWX or telecopier)
or 48 hours (in the case of notice by telegraph, courier service or express
mail) or five days (in the case of notice by first class mail) before the time
at which the meeting is to be held. Every such notice shall state the time and
place of the meeting. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board of Directors need be specified
in a notice of the meeting.
Section 2.03. NOTICE OF MEETINGS OF SHAREHOLDERS.
(a) GENERAL RULE. Written notice of the annual meeting of Shareholders
shall be given at least ten (10) days prior to the meeting to each Shareholder
entitled to vote thereat. Written notice of each special meeting of
Shareholders shall be given at least five (5) days prior to the meeting to each
Shareholder entitled to vote thereat. Such notice shall specify the general
nature of the business to be transacted at such special meeting, and no other
business may be transacted at such special meeting.
If the Secretary neglects or refuses to give notice of a meeting, the person or
persons calling the meeting may do so. In the case of a special meeting of
Shareholders, the notice shall specify the general nature of the business to be
transacted.
(b) NOTICE OF ACTION BY SHAREHOLDERS ON THE BYLAWS. In the case of a
meeting of Shareholders that has as one of its purposes action on the Bylaws,
written notice shall be given to each Shareholder that the purpose, or one of
the purposes, of the meeting is to consider the adoption, amendment or repeal
of the Bylaws. There shall be included in, or enclosed with, the notice a copy
of the proposed amendment or a summary of the changes to be effected thereby.
Section 2.04. WAIVER OF NOTICE.
(a) WRITTEN WAIVER. Whenever any written notice is required to be given
under the provisions of applicable law, the articles or these Bylaws, a waiver
thereof in writing, signed by the person or persons entitled to the notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of the notice. Except as otherwise required by this subsection,
neither the business to be transacted at, nor the purpose of, a meeting need be
specified in the waiver of notice of the meeting. In the case of a special
meeting of Shareholders, the waiver of notice shall specify the general nature
of the business to be transacted.
(b) WAIVER BY ATTENDANCE. Attendance of a person at any meeting shall
constitute a waiver of notice of the meeting except where a person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting was not lawfully called
or convened.
Section 2.05. MODIFICATION OF PROPOSAL CONTAINED IN NOTICE. Whenever
the language of a proposed resolution is included in a written notice of a
meeting required to be given under the provisions of the Business Law or the
articles or these Bylaws, the meeting considering the resolution may without
further notice adopt it with such clarifying or other amendments as do not
enlarge its original purpose.
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Section 2.06. EXCEPTION TO REQUIREMENT OF NOTICE.
(a) GENERAL RULE. Whenever any notice or communication is required to
be given to any person under the provisions of the Business Corporation Law or
by the articles or these Bylaws or by the terms of any agreement or other
instrument or as a condition precedent to taking any corporate action and
communication with that person is then unlawful, the giving of the notice or
communication to that person shall not be required.
(b) SHAREHOLDERS WITHOUT FORWARDING ADDRESSES. Notice or other
communications shall not be sent to any Shareholder with whom the Corporation
has been unable to communicate for more than 24 consecutive months because
communications to the Shareholder are returned unclaimed or the Shareholder has
otherwise failed to provide the Corporation with a current address. Whenever
the Shareholder provides the Corporation with a current address, the
Corporation shall commence sending notices and other communications to the
Shareholder in the same manner as to other Shareholders.
Section 2.07. USE OF CONFERENCE TELEPHONE AND SIMILAR EQUIPMENT. One or
more persons may participate in a meeting of the Board of Directors or the
Shareholders of the Corporation by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at the meeting.
ARTICLE III
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Shareholders
Section 3.01. PLACE OF MEETING. All meetings of the Shareholders of the
Corporation shall be held at the registered office of the Corporation unless
another place is designated by the Board of Directors in the notice of a
meeting.
Section 3.02. ANNUAL MEETING. The Board of Directors may fix the date
and time of the annual meeting of the Shareholders, but if no such date and
time is fixed by the board, the meeting for any calendar year shall be held on
the third Tuesday of March in each year if not a legal holiday and, if a legal
holiday, then on the next succeeding day which is not a legal holiday, and at
said meeting the Shareholders then entitled to vote shall elect directors and
shall transact such other business as may properly be brought before the
meeting. If the annual meeting shall not have been called and held within six
months after the designated time, any Shareholder may call the meeting at any
time thereafter.
Section 3.03. SPECIAL MEETINGS.
(a) CALL OF SPECIAL MEETINGS. Special meetings of the Shareholders may
be called at any time;
(1) by the Board of Directors;
(2) by the Chairman;
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(3) by the President; or
(4) unless otherwise provided in the articles, by Shareholders entitled
to cast at least 20% of the votes that all Shareholders are entitled to cast
at the particular meeting.
(b) FIXING OF TIME FOR MEETING. At any time, upon written request of
any person who has called a special meeting, it shall be the duty of the
Secretary to fix the time of the meeting which shall be held not more than 60
days after the receipt of the request. If the Secretary neglects or refuses to
fix the time of the meeting, the person or persons calling the meeting may do
so.
Section 3.04. QUORUM AND ADJOURNMENT.
(a) GENERAL RULE. A meeting of Shareholders of the Corporation duly
called shall not be organized for the transaction of business unless a quorum
is present. The presence of Shareholders entitled to cast more than 50% of
the votes that all Shareholders are entitled to cast on a particular matter to
be acted upon at the meeting shall constitute a quorum for the purposes of
consideration and action on the matter. Shares of the Corporation owned,
directly or indirectly, by it and controlled, directly or indirectly, by the
Board of Directors of the Corporation, as such, shall not be counted in
determining the total number of outstanding Shares for quorum purposes at any
given time.
(b) WITHDRAWAL OF A QUORUM. The Shareholders present at a duly
organized meeting can continue to do business until adjournment notwithstanding
the withdrawal of enough Shareholders to leave less than a quorum.
(c) ADJOURNMENT FOR LACK OF QUORUM. If a meeting cannot be organized
because a quorum has not attended, those present may, except as provided by
applicable law, adjourn the meeting to such time and place as they may
determine.
(d) ADJOURNMENTS GENERALLY. Any meeting at which Directors are to be
elected shall be adjourned only from day to day, or for such longer periods not
exceeding 15 days each as the Shareholders present and entitled to vote shall
direct, until the Directors have been elected. Any other regular or special
meeting may be adjourned for such period as the Shareholders present and
entitled to vote shall direct.
(e) ELECTING DIRECTORS AT ADJOURNED MEETING. Those Shareholders
entitled to vote who attend a meeting called for the election of Directors that
has been previously adjourned for lack of a quorum, although less than a quorum
as fixed in this section, shall nevertheless constitute a quorum for the
purpose of electing Directors.
(f) OTHER ACTION IN ABSENCE OF QUORUM. Those Shareholders entitled to
vote who attend a meeting of Shareholders that has been previously adjourned
for one or more periods aggregating at least 15 days because of an absence of
a quorum, although less than a quorum as fixed in this section, shall
nevertheless constitute a quorum for the purpose of acting upon any matter set
forth in the notice of the meeting if the notice states that those Shareholders
who attend the adjourned meeting shall nevertheless constitute a quorum for the
purpose of acting upon the matter.
Section 3.05. ACTION BY SHAREHOLDERS.
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(a) GENERAL RULE. Except as otherwise provided by applicable law or the
articles or these Bylaws, whenever any Corporation action is to be taken by
vote of the Shareholders of the Corporation, it shall be authorized by a
majority of the votes cast at a duly organized meeting of Shareholders by the
holders of Shares entitled to vote thereon.
(b) INTERESTED SHAREHOLDERS. Any merger or other transaction authorized
under 15 Pa. C.S. Subchapter 19C between the Corporation or subsidiary
thereof and a Shareholder of this Corporation, or any voluntary liquidation
authorized under 15 Pa. C.S. Subchapter 19F in which a Shareholder is treated
differently from other Shareholders of the same class (other than any
dissenting Shareholders), shall require the affirmative vote of Shareholders
entitled to cast at least a majority of the votes that all Shareholders other
than the interested Shareholder are entitled to cast with respect to the
transaction, without counting the vote of the interested Shareholder. For the
purposes of the preceding sentence, interested Shareholder shall include the
Shareholder who is a party to the transaction or who is treated differently
from other Shareholders and any person, or group of persons, that is acting
jointly or in concert with the interested Shareholder and any persons who,
directly or indirectly, controls, is controlled by or is under common control
with the interested Shareholder. An interested Shareholder shall not include
any person who, in good faith and not for the purpose of circumventing this
subsection, is an agent, bank, broker, nominee or trustee for one or more other
persons, to the extent that the other person or persons are not interested
Shareholders.
(c) EXCEPTIONS. Subsection (b) shall not apply to a transaction:
(1) that has been approved by a majority vote of the directors without
counting the vote of directors who:
(i) are directors or officers of, or have a material equity interest
in, the interested Shareholder; or
(ii) were nominated for election as a director by the interested
Shareholder, and first elected as a director, within 24 months of the date of
the vote on the proposed transaction; or
(2) in which the consideration to be received by the Shareholders for
shares of any class of which shares are owned by the interested Shareholder is
not less than the highest amount paid by the interested Shareholder in
acquiring shares of the same class.
(d) ADDITIONAL APPROVALS. The approvals required by subsection (b)
shall be in addition to, and not in lieu of, any other approval required by the
Business Corporation Law, the articles or these Bylaws, or otherwise.
Section 3.06. ORGANIZATION. At every meeting of the Shareholders, the
Chairman or, in the case of vacancy in office or absence of the Chairman, one
of the following officers present in the order stated: the Vice Chairman, if
there be one, the President, the Senior Vice Presidents in their order of rank
and seniority, or a person chosen by vote of the Shareholders present, shall
act as chairman of the meeting. The Secretary or, in the absence of the
Secretary, an Assistant Secretary, or, in the absence of both the Secretary and
Assistant Secretaries, a person appointed by the Chairman of the meeting, shall
act as Secretary.
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Section 3.07. VOTING RIGHTS OF SHAREHOLDERS. Unless otherwise provided
in the articles, every Shareholder of the Corporation shall be entitled to one
vote for every Share standing in the name of the Shareholder on the books of
the Corporation.
Section 3.08. VOTING AND OTHER ACTION BY PROXY.
(a) GENERAL RULE.
(1) Every Shareholder entitled to vote at a meeting of Shareholders or
to express consent or dissent to corporate action in writing without a meeting
may authorize another person to act for the Shareholder by proxy.
(2) The presence of, or vote or other action at a meeting of
Shareholders, or the expression of consent or dissent of corporate action in
writing, by a proxy of a Shareholder shall constitute the presence of, or vote
or action by, or written consent or dissent of the Shareholder.
(3) Where two or more proxies of a Shareholder are present, the
Corporation shall, unless otherwise expressly provided in the proxy, accept as
the vote of all shares represented thereby the vote cast by a majority of them
and, if a majority of the proxies cannot agree whether the shares represented
shall be voted or upon the manner of voting the shares, the voting of the
shares shall be divided equally among those persons.
(b) MINIMUM REQUIREMENTS. Every proxy shall be executed in writing by
the Shareholder or by the duly authorized attorney-in-fact of the Shareholder
and filed with the secretary of the Corporation. A proxy, unless coupled with
an interest, shall be revocable at will, notwithstanding any other agreement or
any provision in the proxy to the contrary, but the revocation of a proxy shall
not be effective until written notice thereof has been given to the secretary
of the Corporation. An unrevoked proxy shall not be valid after three years
from the date of its execution unless a longer time is expressly provided
therein. A proxy shall not be revoked by the death or incapacity of the maker
unless, before the vote is counted or the authority is exercised, written
notice of the death or incapacity is given to the secretary of the Corporation.
(c) EXPENSES. Unless otherwise restricted in the articles, the
Corporation shall pay reasonable expenses of solicitation of votes, proxies or
consents of Shareholders by or on behalf of the board of directors or its
nominees for election to the board, including solicitation by professional
proxy solicitors and otherwise.
Section 3.09. VOTING BY FIDUCIARIES AND PLEDGEES. Shares of the
Corporation standing in the name of a trustee or other fiduciary and shares
held by an assignee for the benefit of creditors or by a receiver may be voted
by the trustee, fiduciary, assignee or receiver. A Shareholder whose shares are
pledged shall be entitled to vote the shares until the shares have been
transferred into the name of the pledgee, or a nominee of the pledgee, but
nothing in this section shall affect the validity of a proxy given to a pledgee
or nominee.
Section 3.10. VOTING BY JOINT HOLDERS OF SHARES.
(a) GENERAL RULE. Where shares of the Corporation are held jointly or
as tenants in common by two or more persons, as fiduciaries or otherwise:
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(1) if only one or more of such persons is present in person or by
proxy, all of the shares standing in the names of such persons shall be deemed
to be represented for the purpose of determining a quorum and the Corporation
shall accept as the vote of all the shares the vote cast by a joint owner or a
majority of them; and
(2) if the persons are equally divided upon whether the shares held by
them shall be voted or upon the manner of voting the shares, the voting of the
shares shall be divided equally among the persons without prejudice to the
rights of the joint owner or the beneficial owners thereof among themselves.
(b) EXCEPTION. If there has been filed with the secretary of the
Corporation a copy, certified by an attorney at law to be correct, of the
relevant portions of the agreement under which the shares are held or the
instrument by which the Corporation or estate was created or the order of court
appointing them or of an order of court directing the voting of the shares, the
persons specified as having such voting power in the document latest in date of
operative effect so filed, and only those persons, shall be entitled to vote
the shares but only in accordance therewith.
Section 3.11. VOTING BY CORPORATIONS
(a) VOTING BY CORPORATE SHAREHOLDERS. Any corporation that is a
Shareholder of this Corporation may vote by any of its officers or agents, or
by proxy appointed by any officer or agent, unless some other person, by
resolution of the board of directors of the other corporation or a provision of
its articles or Bylaws, a copy of which resolution or provision certified to be
correct by one of its officer has been filed with the secretary of this
Corporation, is appointed its general or special proxy in which case that
person shall be entitled to vote the share.
(b) CONTROLLED SHARES. Shares of this Corporation owned, directly or
indirectly, by it and controlled, directly or indirectly, by the board of
directors of this Corporation, as such, shall not be voted at any meeting and
shall not be counted in determining the total number of outstanding shares for
voting purposes at any given time.
Section 3.12. DETERMINATION OF SHAREHOLDERS OF RECORD.
(a) FIXING RECORD DATE. The Board of Directors may fix a time prior to
the date of any meeting of Shareholders as a record date for the determination
of the Shareholders entitled to notice of, or to vote at, the meeting, which
time, except in the case of an adjourned meeting, shall be not more than 90
days prior to the date of the meeting of Shareholders. Only Shareholders of
record on the date fixed shall be so entitled notwithstanding any transfer of
Shares on the books of the Corporation after any record date fixed as provided
in this subsection. The Board of Directors may similarly fix a record date for
the determination of Shareholders of record for any other purpose. When a
determination of Shareholders of record has been made as provided in this
section for purposes of a meeting, the determination shall apply to any
adjournment thereof unless the Board fixes a new record date for the adjourned
meeting.
(b) DETERMINATION WHEN A RECORD DATE IS NOT FIXED. If a record date is
not fixed:
(1) The record date for determining Shareholders entitled to notice of
or to vote at a meeting of Shareholders shall be at the close of business on
the day next preceding the
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day on which notice is given or, if notice is waived, at the close of business
on the day immediately preceding the day on which the meeting is held.
(2) The record date for determining Shareholders entitled to express
consent or dissent to Corporation action in writing without a meeting, when
prior action by the Board of Directors is not necessary, shall be the close of
business on the day on which the first written consent or dissent is filed with
the Secretary of the Corporation
(3) The record date for determining Shareholders for any other purpose
shall be at the close of business on the day on which the board of directors
adopts the resolution relating thereto.
Section 3.13. VOTING LISTS.
(a) GENERAL RULE. The officer or agent having charge of the transfer
books for shares of the Corporation shall make a complete list of the
Shareholders entitled to vote at any meeting of Shareholders, arranged in
alphabetical order, with the address of and the number of shares held by each.
The list shall be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any Shareholder during the whole time
of the meeting for the purposes thereof.
(b) EFFECT OF LIST. Failure to comply with the requirements of this
section shall not affect the validity of any action taken at a meeting prior to
a demand at the meeting by any Shareholder entitled to vote thereat to examine
the list. The original share register or transfer or a duplicate thereof kept
in this Commonwealth, shall be prima facie evidence as to who are the
Shareholders entitled to examine the list or share register or transfer book or
to vote at any meeting of Shareholders.
Section 3.14. JUDGES OF ELECTION.
(a) APPOINTMENT. In advance of any meeting of Shareholders of the
Corporation, the board of directors may appoint judges of election, who need
not be Shareholders, to act at the meeting or any adjournment thereof. If
judged of election are not so appointed, the presiding officer of the meeting
may, and on the request of any Shareholder shall, appoint judges of election at
the meeting. The number of judges shall be one or three. A person who is a
candidate for office to be filled at the meeting shall not act as a judge.
(b) VACANCIES. In case any person appointed as a judge fails to appear
or fails or refuses to act, the vacancy may be filled by anointment made by the
board of directors in advance of the convening of the meeting or at the meeting
by the presiding officer thereof.
(c) DUTIES. The judges of election shall determine the number of
shares outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, the authenticity, validity and effect of
proxies, receive votes or ballots, hear and determine all challenges and
questions in any way arising in connection with the right to vote, count and
tabulate all votes, determine the result and do such acts as may be proper to
conduct the election or vote with fairness to all Shareholders. The judges of
election shall perform their duties impartially, in good faith, to the best of
their ability and as expeditiously as is practical. If
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there are three judges of election, the decision, act or certificate of a
majority shall be effective in all respects as the decision, act or certificate
of all.
(d) REPORT. On request of the presiding officer of the meeting, or of
any Shareholder, the judges shall make a report in writing of any challenge or
question or matter determined by them, and execute a certificate of any fact
found by them. Any report or certificate made by them shall be prima facie
evidence of the facts stated therein.
Section 3.15. CONSENT OF SHAREHOLDERS IN LIEU OF MEETING. Any action
required or permitted to be taken at a meeting of the Shareholders or of a
class of Shareholders may be taken without a meeting upon the written consent
of Shareholders who would have been entitled to cast the minimum number of
votes that would be necessary to authorize the action at a meeting at which all
Shareholders entitled to vote thereon were present and voting. The consents
shall be filed with the Secretary of the Corporation.
Section 3.16. MINORS AS SECURITY HOLDERS. The Corporation may treat a
minor who holds shares or obligations of the Corporation as having capacity to
receive and to empower others to receive dividends, interest, principal and
other payments or distributions, to vote or express consent or dissent and to
make elections and exercise rights relating to such shares or obligations
unless, in the case of payments of distributions on shares, the corporate
officer responsible for maintaining the list of Shareholders or the transfer
agent of the Corporation or, in the case of payments or distributions on
obligations, the treasurer or paying officer or agent has received written
notice that the holder is a minor.
ARTICLE IV
----------
Board of Directors
Section 4.01. POWERS; PERSONAL LIABILITY.
(a) GENERAL RULE. Unless otherwise provided by applicable law, all
powers vested in the Corporation by Chapter 95 of Title 15 of the Pennsylvania
Consolidated Statutes shall be exercised by or under the authority of, and the
business and affairs of the Corporation shall be managed under the direction
of, the Board of Directors.
(b) STANDARD OF CARE; JUSTIFIABLE RELIANCE. A Director shall stand in
a fiduciary relation to the Corporation and shall perform his or her duties as
a Director, including duties as a member of any committee of the Board upon
which the Directors may serve, in good faith, in a manner the Director
reasonably believes to be in the best interests of the Corporation and with
such care, including reasonable inquiry, skill and diligence, as a person of
ordinary prudence would use under similar circumstances. In performing his or
her duties, a Director shall be entitled to rely in good faith on information,
opinions, reports or statements, including financial statements and other
financial data, in each case prepared or presented by any of the following:
(1) One or more officers or employees of the Corporation whom
the Director reasonably believes to be reliable and competent in the
matters presented.
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(2) Counsel, public accountants or other persons as to matters which
the Director reasonably believes to be within the professional or expert
competence of such person.
(3) A committee of the Board upon which the Director does not serve,
duly designated in accordance with law, as to matters within its designated
authority, which committee the Director reasonably believes to merit
confidence.
A Director shall not be considered to be acting in good faith if the Director
has knowledge concerning the matter in question that would cause his or her
reliance to be unwarranted.
(c) CONSIDERATION OF FACTORS. In discharging the duties of their
respective positions, the Board of Directors collectively, committees of the
Board and individual Director may, in considering the best interests of the
Corporation, consider the effects of any action upon employees, upon suppliers
and customers of the Corporation and upon communities in which offices or other
establishments of the Corporation are located, and all other pertinent factors.
The consideration of those factors shall not constitute a violation of
subsection (b).
(d) PRESUMPTION. Absent breach of fiduciary duty, lack of good faith
or self-dealing, actions taken as a Director or any failure to take any action
shall be presumed to be in the best interests of the Corporation.
(e) PERSONAL LIABILITY OF DIRECTORS.
(1) A Director shall not be personally liable, as such, for monetary
damages for any action taken, or any failure to take any action, unless:
(i) the director has breached or failed to perform the duties of
his or her office under this section; and
(ii) the breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness.
(2) The provisions of paragraph (1) shall not apply to the
responsibility or liability of a director pursuant to any criminal statue, or
the liability of a director for the payment of taxes pursuant to Local, State
or Federal law.
(f) NOTATION OF DISSENT. A Director who is present at a meeting of the
Board of Directors, or of a committee of the Board, at which action on any
Corporation matter is taken shall be presumed to have assented to the action
taken unless his or her dissent is entered in the minutes of the meeting or
unless the Director files a written dissent to the action with the Secretary of
the meeting before the adjournment thereof or transmits the dissent in writing
to the Secretary of the Corporation immediately after the adjournment of the
meeting. The right to dissent shall not apply to a Director who voted in favor
of the action. Nothing in this section shall bar a Director from asserting that
minutes of the meeting incorrectly omitted his or her dissent if, promptly upon
receipt of a copy of such minutes, the Director notifies the Secretary, in
writing, of the asserted omission or inaccuracy.
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Section 4.02. QUALIFICATIONS AND SELECTION OF DIRECTORS.
(a) QUALIFICATIONS. Each Director of the Corporation shall be (i) a
natural person of full age who need not be a resident of Pennsylvania or a
Shareholder of the Corporation and/or (ii) a corporation or other entity
authorized to serve as a fiduciary of a Corporation pursuant to the provisions
of 7 P.S. Section 106.
(b) ELECTION OF DIRECTORS. Except as otherwise provided in the these
Bylaws, Directors of the Corporation shall be elected by the Shareholders. In
elections for Directors, voting need not be by ballot, except upon demand made
by a Shareholder entitled to vote at the election and before the voting begins.
The candidates receiving the highest number of votes from each class or group
of classes, if any, entitled to elect Directors separately up to the number of
Directors to be elected by the class or group of classes shall be elected. If
at any meeting of Shareholders, Directors of more than one class are to be
elected, each class of Directors shall be elected in a separate election.
(c) CUMULATIVE VOTING. Unless the articles provide for straight
voting, in each election of directors every Shareholder entitled to vote shall
have the right to multiply the number of votes to which the Shareholder may be
entitled by the total number of directors to be elected in the same election by
the holders of the class or classes of shares which his or her shares are a
part and the Shareholder may cast eh whole number of his or her votes for one
candidate or may distribute them among two or more candidates.
Section 4.03. NUMBER AND TERM OF OFFICE.
(a) NUMBER. The Board of Directors shall consist of such number not
fewer than three (3) nor more than ten (10) as may be determined from time to
time by resolution of the Board of Directors.
(b) TERM OF OFFICE. Each Director shall hold office until the
expiration of the term for which he or she was selected and until a successor
has been selected and qualified or until his or her earlier death, resignation
or removal. A decrease in the number of Directors shall not have the effect of
shortening the term of any incumbent Director.
(c) RESIGNATION. Any Director may resign at any time upon written
notice to the Corporation. The resignation shall be effective upon receipt
thereof by the Corporation or at such subsequent time as shall be specified in
the notice of resignation.
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Section 4.04. VACANCIES.
(a) GENERAL RULE. Vacancies in the office of Board of Directors,
including vacancies resulting from an increase in the number of Directors, may
be filled by a majority vote of the Board of Directors though less than a
quorum, or by a sole remaining Board of Directors, and each person so selected
shall be a Director to serve for the balance of the unexpired term, and until a
successor has been selected and qualified or until his or her earlier death,
resignation or removal.
(b) ACTION BY RESIGNED DIRECTORS. When the resignation of one or more
Directors is to be effective at a future date, the Directors then in office,
including those who have so resigned, shall have power by the applicable vote
to fill the vacancies, the vote thereon to take effect when the resignations
become effective.
Section 4.05. REMOVAL OF DIRECTORS.
(a) REMOVAL BY THE SHAREHOLDERS. The entire board of directors, or any
class of the board, or any individual director may be removed from office
without assigning any cause by the vote of Shareholder, or of the holders of a
class or series of shares, entitled to elect directors, or the class of
directors. In case the board or a class of the board or any one or more
directors are so removed, new directors may be elected at the same meeting. The
board of directors may be removed at any time with or without cause by the
unanimous vote or consent of the Shareholders entitled to vote thereon.
(b) REMOVAL BY THE BOARD. The board of directors may declare vacant
the office of a director who has been judicially declared of unsound mind or
who has been convicted of an offense punishable by imprisonment for a term of
more than one year or if, within 60 days after notice of his or her selection,
the director does not accept the office either in writing or by attending a
meeting of the board of directors.
Section 4.06. THE CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. The
Chairman of the Board or in the absence of the Chairman, the Vice Chairman of
the Board, shall preside at all meetings of the Shareholders and of the Board
of Directors and shall perform such other duties as may from time to time be
requested by the Board of Directors.
Section 4.07. PLACE OF MEETINGS. Meetings of the Board of Directors
may be held at such place within or without Pennsylvania as the Board of
Directors may from time to time appoint or as may be designated in the notice
of the meeting.
Section 4.08. ORGANIZATION OF MEETINGS. At every meeting of the Board
of Directors, the Chairman, if there be one, or, in the case of a vacancy in
the office or absence of the Chairman and Vice Chairman, one of the following
officers present in the order stated: the President, the Vice Presidents in
their order of rank and seniority, or a person chosen by a majority of the
Directors present, shall act as Chairman of the meeting. The Secretary or, in
the absence of the Secretary, an Assistant Secretary, or, in the absence of the
Secretary and the Assistant Secretaries, any person appointed by the Chairman
of the meeting, shall act as Secretary.
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Section 4.09. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such time and place as shall be designated from time
to time by resolution of the Board of Directors.
Section 4.10. SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be held whenever called by the Chairman or by two or more of
the Directors.
Section 4.11. QUORUM OF AND ACTION BY DIRECTORS.
(a) GENERAL RULE. A majority of the Directors in office shall be
necessary to constitute a quorum for the transaction of business and the acts
of a majority of the Directors present and voting at a meeting at which a
quorum is present shall be the acts of the Board of Directors.
(b) ACTION BY WRITTEN CONSENT. Any action required or permitted to be
taken at a meeting of the Board of Directors may be taken without a meeting if,
prior or subsequent to the action, a consent or consents thereto by all of the
Directors in office is filed with the secretary of the Corporation. If and
during any period when there shall be only one Director, the foregoing Sections
4.07 to 4.10 shall not apply, and all actions of the Board of Directors shall
be by written consent in accordance with this Section 4.11(b).
Section 4.12. EXECUTIVE AND OTHER COMMITTEES.
(a) ESTABLISHMENT AND POWERS. The Board of Directors may, by
resolution adopted by a majority of the Directors in office, establish one or
more committees to consist of one or more Directors of the Corporation. Any
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all of the powers and authority of the Board of
Directors except that a committee shall not have any power or authority as to
the following;
(1) The submission to Shareholders of any action requiring
approval of Shareholders under applicable law.
(2) The creation or filling of vacancies in the office of
Board of Directors.
(3) The adoption, amendment or repeal of these Bylaws.
(4) The amendment or repeal of any resolution of the Board of
Directors that by its terms is amendable or repealable only by the
Board.
(5) Action on matters committed by a resolution of the Board
of Directors to another committee of the Board.
(b) ALTERNATE COMMITTEE MEMBERS. The Board 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 or for the purposes of any
written action by the committee. In the absence or disqualification of a member
and alternate member or members of a committee, the member or members thereof
present at any meeting and not disqualified from
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voting, whether or not constituting a quorum, may unanimously appoint another
Director to act at the meeting in the place of the absent or disqualified
member.
(c) TERM. Each committee of the Board shall serve at the pleasure of
the Board.
(d) COMMITTEE PROCEDURES. The term "Board of Directors" or "Board",
when used in any provision of these Bylaws relating to the organization or
procedures of or the manner of taking action by the Board of Directors, shall
be construed to include and refer to any executive or other committee of the
Board.
Section 4.13. COMPENSATION. The Board of Directors shall have the
authority to fix the compensation of Directors for their services as Directors
and a Director may be a salaried officer of the Corporation.
ARTICLE V
---------
Officers
Section 5.01. OFFICERS GENERALLY
(a) NUMBER, QUALIFICATIONS AND DESIGNATION. The officers of the
Corporation shall be the President, the Secretary, the Treasurer, the Senior
Vice Presidents and such other officers as may be elected in accordance with
the provisions of Section 5.03. Officers may but need not be Directors or
Shareholders of the Corporation. The President and Secretary shall be natural
persons of full age. The Treasurer may be a corporation, but if a natural
person shall be of full age. Any number of offices may be held by the same
person.
(b) RESIGNATIONS. Any officer may resign at any time upon written
notice to the Corporation. The resignation shall be effective upon receipt
thereof by the Corporation or at such subsequent time as may be specified in
the notice of resignation.
(c) BONDING. The Corporation may secure the fidelity of any or all of
its officers by bond or otherwise.
(d) STANDARD OF CARE. Except as otherwise provided in the articles, an
officer shall perform his or her duties as an officer in good faith, in a
manner he or she reasonably believes to be in the best interests of the
Corporation and with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances. A person who so performs his or her duties shall not be liable
by reason of having been an officer of the Corporation.
Section 5.02. ELECTION AND TERM OF OFFICE. The officers of the
Corporation, except those elected by delegated authority pursuant to Section
5.03, shall be elected annually by the Board of Directors, and each such
officer shall hold office for a term of one year and until a successor has been
selected and qualified or until his or her earlier death, resignation or
removal.
Section 5.03. SUBORDINATE OFFICERS COMMITTEES AND AGENTS. The Board
of Directors may from time to time elect such other officers and appoint such
committees, employees or other
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agents as the business of the Corporation may require, including one or more
Vice Presidents, Assistant Secretaries, and Assistant Treasurers, each of whom
shall hold office for such period, have such authority, and perform such duties
as are provided in these Bylaws or as the Board of Directors may from time to
time determine. The Board of Directors may delegate to any officer or committee
the power to elect subordinate officers and to retain or appoint employees or
other agents, or committees thereof and to prescribe the authority and duties
of such subordinate officers, employees committees or other agents.
Section 5.04. REMOVAL OF OFFICERS AND AGENTS. Any officer or agent of
the Corporation may be removed by the Board of Directors with or without cause.
The removal shall be without prejudice to the contract rights, if any, of any
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
Section 5.05. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause, shall be filled by
the Board of Directors or by the officer or committee to which the power to
fill such office has been delegated pursuant to Section 5.03, as the case may
be, and if the office is one for which these Bylaws prescribe a term, shall be
filled for the unexpired portion of the term.
Section 5.06. AUTHORITY. All officers of the Corporation, as between
themselves and the Corporation, shall have such authority and perform such
duties in the management of the Corporation as may be provided by or pursuant
to resolutions or orders of the Board of Directors or, in the absence of
controlling provisions in the resolutions or orders of the Board of Directors,
as may be determined by or pursuant to these Bylaws.
Section 5.07. THE PRESIDENT. Subject to the control of the Board of
Directors, the President shall have general and active management of the day to
day business of the Corporation. The President may sign and execute all
instruments in the name of the Corporation.
Section 5.08. THE SENIOR VICE PRESIDENTS AND VICE PRESIDENTS. The
Senior Vice Presidents shall have and the Vice Presidents may be given by
resolution of the Board of Directors general executive powers, subject to the
control of the President, concerning one or more or all segments of the
operations of the Corporation. The Vice Presidents shall exercise such further
powers and duties as from time to time may be prescribed in these Bylaws or by
the Board of Directors or the President. Each Vice President, by virtue of his
office, shall be an Assistant Secretary. At the request of the President, or in
his absence or disability, any Senior Vice President shall exercise the powers
and duties of the President.
Section 5.09. THE SECRETARY AND ASSISTANT SECRETARIES. It shall be the
duty of the Secretary (a) to keep an original or duplicate record of the
proceedings of the Shareholders and the Board of Directors, and a copy of the
articles and of the Bylaws; (b) to give such notices as may be required by law
or these Bylaws; (c) to keep the Corporation's contracts, insurance policies,
leases, deeds and other business records; (d) to be custodian of the records
and of the seal of the Corporation and see that the seal is affixed to such
documents as may be necessary or advisable; (e) to see that the Corporations
Certificates and other documents or records similar or related thereto as
required by law are properly prepared, kept, and filed; (f) to have charge of
and keep, or cause to be kept by a transfer agent or registrar, the stock books
of the Corporation and such records as to the identity of the Shareholders, and
as to the Shares issued to and held of record by
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them, as may be required by law; and (g) to exercise all powers and duties
incident to the office of Secretary; and such further powers and duties as from
time to time may be prescribed in these Bylaws or by the Board of Directors or
the President. The Secretary by virtue of his office shall be an Assistant
Treasurer. Each officer of the Corporation by virtue of his office shall be an
Assistant Secretary. The Assistant Secretaries shall assist the Secretary in
the performance of his duties and shall also exercise such further powers and
duties as from time to time may be prescribed by the Board of Directors, the
President or the Secretary. At the direction of the Secretary or in his absence
or disability, an Assistant Secretary shall exercise the powers and duties of
the Secretary.
Section 5.10. THE TREASURER AND ASSISTANT TREASURERS. It shall be the
duty of the Treasurer (a) to see that the Corporation's lists, books, reports,
statements, tax returns, and other documents or records similar or related
thereto as required by law are properly prepared, kept and filed; (b) to be the
principal officer in charge of tax and financial matters, budgeting and
accounting of the Corporation; (c) to have charge and custody of and be
responsible for the Corporation's funds, securities and investments; (d) to
receive and give receipts for checks, notes, obligations, funds and securities
of the Corporation, and deposit monies and other valuable effects in the name
and to the credit of the Corporation, in such depositories as shall be
designated by the Board of Directors; (e) subject to the terms and provisions
hereof, to cause the funds of the Corporation to be disbursed by payment in
cash or by checks or drafts upon the authorized depositories of the
Corporation, and to cause to be taken and preserved proper vouchers for such
disbursements; (f) to render to the President and the Board of Directors
whenever they may require it an account of all his transactions as Treasurer,
and reports as to the financial position and operations of the Corporation; (g)
to keep appropriate, complete and accurate books and records of account of all
the Corporation's business and transactions; and (h) to exercise all powers and
duties incident to the office of Treasurer; and such further duties from time
to time as may be prescribed in these Bylaws or by the Board of Directors or
the President. The Assistant Treasurers shall assist the Treasurer in the
performance of his duties and shall also exercise such further powers and
duties as from time to time may be prescribed by the Board of Directors, the
President or the Treasurer. At the direction of the Treasurer or in his absence
or disability, an Assistant Treasurer shall exercise the powers and duties of
the Treasurer.
Section 5.11. SALARIES. The salaries of the officers elected by the
Board of Directors shall be fixed from time to time by the Board of Directors
or by such officer as may be designated by resolution of the Board. The
salaries or other compensation of any other officers, employees and other
agents shall be fixed from time to time by the officer or committee to which
the power to elect such officers or to retain or appoint such employees or
other agents has been delegated pursuant to Section 5.03. No officer shall be
prevented from receiving such salary or other compensation by reason of the
fact that the officer is also a Director of the Corporation.
ARTICLE VI
----------
Certificates of Stock, Transfer, Etc.
Section 6.01. SHARE CERTIFICATES. Certificates for Shares of the
Corporation shall be in such form as approved by the Board of Directors, and
shall state that the Corporation is formed under the laws of Pennsylvania, the
name of the person to whom issued, and the number and class of Shares and the
designation of the series (if any) that the certificate represents. The Share
register
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or transfer books and blank Share certificates shall be kept by the Secretary
or by any transfer agent or registrar designated by the Board of Directors for
that purpose.
Section 6.02. ISSUANCE. The Share certificates of the Corporation
shall be numbered and registered in the Share register or transfer books of the
Corporation as they are issued. They shall be signed by the President or a
Senior Vice President and by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer,and shall bear the Corporation seal, which
may be a facsimile, engraved or printed; but where such certificate is signed
by a transfer agent or a registrar the signature of any Corporation officer
upon such certificate may be a facsimile, engraved or printed. In case any
officer who has signed, or whose facsimile signature has been placed upon, any
Share certificate shall have ceased to be such officer because of death,
resignation or otherwise, before the certificate is issued, it may be issued
with the same effect as if the officer had not ceased to be such at the date of
its issue. The provisions of this Section 6.02 shall be subject to any
inconsistent or contrary agreement at the time between the Corporation and any
transfer agent or registrar.
Section 6.03. TRANSFER. Transfers of Shares shall be made on the Share
register or transfer books of the Corporation upon surrender of the certificate
therefor, endorsed by the person named in the certificate or by an attorney
lawfully constituted in writing. No transfer shall be made inconsistent with
the provisions of the Uniform Commercial Code, 13 Pa. C.S.A. Section 8101
ET SEQ., and its amendments and supplements.
Section 6.04. RECORD HOLDER OF SHARES. The Corporation shall be
entitled to treat the person in whose name any Share or Shares of the
Corporation stand on the books of the Corporation as the absolute owner
thereof, and shall not be bound to recognize any equitable or other claim to,
or interest in, such Share or Shares on the part of any other person.
Section 6.05. LOST, DESTROYED OR MUTILATED CERTIFICATES. The holder of
any Shares of the Corporation shall immediately notify the Corporation of any
loss, destruction or mutilation of the certificates therefor, and the Board of
Directors may, in their discretion, cause a new certificate or certificates to
be issued to such holder, in case of mutilation of the certificate, upon the
surrender of the mutilated certificate or, in case of loss or destruction of
the certificate, upon satisfactory proof of such loss or destruction and, if
the Board of Directors shall so determine, the deposit of a bond in such form
and in such sum, and with such surety or sureties, as it may direct.
ARTICLE VII
-----------
Indemnification of Directors, Officers and
Other Authorized Representatives.
Section 7.01. SCOPE OF INDEMNIFICATION.
(a) GENERAL RULE. The Corporation shall indemnify an indemnified
representative against any liability incurred in connection with any proceeding
in which the indemnified representative may be involved as a party or otherwise
by reason of the fact that such person is or was serving in an indemnified
capacity, including, without limitation, liabilities resulting from any actual
or alleged breach or neglect of duty, error, misstatement or misleading
statement, negligence, gross negligence or act giving rise to strict or
products liability, except:
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(1) where such indemnification is expressly prohibited by
applicable law;
(2) where the conduct of the indemnified representative has
been finally determined pursuant to Section 7.06 or otherwise:
(i) to constitute willful misconduct or recklessness
within the meaning of 15 Pa C.S. Section 513(b) and 1746(b)
and 42 Pa. C.S. Section 8365(b) or any superseding provision
of law sufficient in the circumstances to bar indemnification
against liabilities arising from the conduct; or
(ii) to be based upon or attributable to the receipt
by the indemnified representative from the Corporation of a
personal benefit to which the indemnified representative is
not legally entitled; or
(3) to the extent such indemnification has been finally
determined in a final adjudication pursuant to Section 7.06 to be
otherwise unlawful.
(b) PARTIAL PAYMENT. If an indemnified representative is entitled to
indemnification in respect of a portion, but not all, of any liabilities to
which such person may be subject, the Corporation shall indemnify such
indemnified representative to the maximum extent for such portion of the
liabilities.
(c) PRESUMPTION. The termination of a proceeding by judgment, order,
settlement or conviction or upon a plea of NOLO CONTENDRE or its equivalent
shall not of itself create a presumption that the indemnified representative is
not entitled to indemnification.
(d) DEFINITIONS. For purposes of this Article:
(1) "indemnified capacity" means any and all past, present
and future service by an indemnified representative in one or more
capacities as a Director, officer, employee or agent of the
Corporation, or, at the request of the Corporation, as a director,
officer, employee, agent, fiduciary or Director of another
corporation, partnership, joint venture, Corporation, employee benefit
plan or other entity or enterprise;
(2) "indemnified representative" means any and all Directors
and officers of the Corporation and any other person designated as an
indemnified representative by the Board of Directors (which may, but
need not, include any person serving at the request of the
Corporation, as a director, officer, employee, agent, fiduciary or
Director of another corporation, partnership, joint venture,
Corporation, employee benefit plan or other entity or enterprise);
(3) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed with
respect to an employee benefit plan, or cost or expense, of any nature
(including, without limitation, attorneys' fees and disbursements);
and
(4) "proceeding" means any threatened, pending or completed
action, suit, appeal or other proceeding of any nature, whether civil,
criminal,
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administrative or investigative, whether formal or informal, and
whether brought by or in the right of the Corporation, a class of its
security holders or otherwise.
Section 7.02. PROCEEDING INITIATED BY INDEMNIFIED REPRESENTATIVE.
Notwithstanding any other provision of this Article, the Corporation shall not
indemnify under this Article an indemnified representative for any liability
incurred in a proceeding initiated (which shall not be deemed to include
counter-claims or affirmative defenses) or participated in as an intervenor or
AMICUS CURIAE by the person seeking indemnification unless such initiation of
or participation in the proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors in office.
This section does not apply to reimbursement of expenses incurred in
successfully prosecuting or defending an arbitration under Section 7.06 or
otherwise successfully prosecuting or defending the rights of an indemnified
representative granted by or pursuant to this Article.
Section 7.03. ADVANCING EXPENSES. The Corporation shall pay the
expenses (including attorneys' fees and disbursements) incurred in good faith
by an indemnified representative in advance of the final disposition of a
proceeding described in Section 7.01 or the initiation of or participation in
which is authorized upon receipt of an undertaking by or on behalf of the
indemnified representative to repay the amount if it is ultimately determined
that such person is not entitled to be indemnified by the Corporation pursuant
to this Article. The financial ability of an indemnified representative to
repay an advance shall not be a prerequisite to the making of such advance.
Section 7.04. SECURING OF INDEMNIFICATION OBLIGATIONS. To further
effect, satisfy or secure the indemnification obligations provided herein or
otherwise, the Corporation may maintain insurance, obtain a letter of credit,
act as self insurer, create a reserve, Corporation, escrow, cash collateral or
other fund or account, enter into indemnification agreements, pledge or grant a
security interest in any assets or properties of the Corporation, or use any
other mechanism or arrangement whatsoever in such amounts, at such costs, and
upon such other terms and conditions as the Board of Directors shall deem
appropriate. Absent fraud, the determination of the Board of Directors with
respect to such amounts, costs, terms and conditions shall be conclusive
against all security holders, officers and Directors and shall not be subject
to challenge.
Section 7.05. PAYMENT OF INDEMNIFICATION. An indemnified
representative shall be entitled to indemnification within 30 days after a
written request for indemnification has been delivered to the Secretary of the
Corporation.
Section 7.06. ARBITRATION
(a) GENERAL RULE. Any dispute related to the right to indemnification,
contribution or advancement of expenses as provided under this Article, except
with respect to indemnification for liabilities arising under the Securities
Act of 1933 that the Corporation has undertaken to submit to a court for
adjudication, shall be decided only by arbitration in the metropolitan area in
which the principal executive offices of the Corporation are located at the
time, in accordance with the commercial arbitration rules then in effect of the
American Arbitration Association, before a panel of three arbitrators, one of
which shall be selected by the Corporation, the second of which shall be
selected by the indemnified representative and the third of whom shall be
selected by the other two arbitrators. In the absence of the American
Arbitration Association, or if for any reason
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arbitration rules of the American Arbitration Association cannot be initiated,
or if one of the parties fails or refuses to select an arbitrator or if the
arbitrators selected by the Corporation and the indemnified representative
cannot agree on the selection of the third arbitrator within 30 days after such
time as the Corporation and the indemnified representative have each been
notified of the selection of the other's arbitrator, the necessary arbitrator
or arbitrators shall be selected by the presiding judge of the court of general
jurisdiction in such metropolitan area.
(b) BURDEN OF PROOF. The party or parties challenging the right of an
indemnified representative to the benefits of this Article shall have the
burden of proof.
(c) EXPENSES. The Corporation shall reimburse an indemnified
representative for the expenses (including attorney's fees and disbursements)
incurred in successfully prosecuting or defending such arbitration.
(d) EFFECT. Any award entered by the arbitrators shall be final,
binding and nonappealable and judgement may be entered thereon by any party in
accordance with applicable law in any court of competent jurisdiction, except
that the Corporation shall be entitled to interpose as a defense in any such
judicial enforcement proceeding any prior final judicial determination adverse
to the indemnified representative under Section 7.01(a)(2) in a proceeding not
directly involving indemnification under this Article. This arbitration
provision shall be specifically enforceable.
Section 7.07. CONTRIBUTION. If the indemnification provided for in
this Article or otherwise is unavailable for any reason in respect of any
liability or portion thereof, the Corporation shall contribute to the
liabilities to which the indemnified representative may be subject in such
proportion as is appropriate to reflect the intent of this Article or
otherwise.
Section 7.08. MANDATORY INDEMNIFICATION OF DIRECTORS, OFFICERS, ETC.
Without limiting the other provisions of this Article VII, to the extent that
an authorized representative of the Corporation has been successful on the
merits or otherwise in defense of any action or proceeding referred to in 15
Pa. C.S.A. Sections 1741 or 1742 or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including
attorneys' fees and disbursements) actually and reasonably incurred by such
person in connection therewith.
Section 7.09. CONTRACT RIGHTS; AMENDMENT OR REPEAL. All rights under
this Article shall be deemed a contract between the Corporation and the
indemnified representative pursuant to which the Corporation and each
indemnified representative intend to be legally bound. Any repeal, amendment or
modification hereof shall be prospective only and shall not affect any rights
or obligations then existing.
Section 7.10. SCOPE OF ARTICLE. The rights granted by this Article
shall not be deemed exclusive of any other rights to which those seeking
indemnification, contribution or advancement of expenses may be entitled under
any statute, agreement, vote of Shareholders or disinterested Directors or
otherwise both as to action in an indemnified capacity and as to action in any
other capacity. The indemnification, contribution and advancement of expenses
provided by or granted pursuant to this Article shall continue as to a person
who has ceased to be an indemnified representative in respect of matters
arising prior to such time, and shall inure to the benefit of the heirs,
executors, administrators and personal representatives of such a person.
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Section 7:11. RELIANCE ON PROVISIONS. Each person who shall act as an
indemnified representative of the Corporation shall be deemed to be doing so in
reliance upon the rights provided by this Article.
Section 7.12. INTERPRETATION. The provisions of this Article are
intended to constitute Bylaws authorized by 15 Pa. C.S.A. Section 513 and
1746 and 42 Pa. C.S.A. Section 8365.
ARTICLE VIII
------------
Miscellaneous
Section 8.01. CORPORATE SEAL. The Corporation shall have a corporate
seal in the form of a circle containing the name of the Corporation, the year
of incorporation and such other details as may be approved by the board of
directors.
Section 8.02. CHECKS. All checks, notes, bills of exchange or other
orders in writing shall be signed by the President, any Vice President or the
Treasurer and by such other or additional person or persons as the Board of
Directors or any person authorized by resolution of the Board of Directors may
from time to time designate.
Section 8.03. CONTRACTS.
(a) GENERAL RULE. Except as otherwise required by applicable law in
the case of transactions that require action by the Shareholders, the Board of
Directors may authorize any officer or agent to enter into any contract or to
execute or deliver any instrument on behalf of the Corporation, and such
authority may be general or confined to specific instances.
(b) STATUTORY FORM OF EXECUTION OF INSTRUMENTS. Any note, mortgage,
evidence of indebtedness, contract or other document, or any assignment or
endorsement thereof, executed or entered into between the Corporation and any
other person, when signed by one or more officers or agents having actual or
apparent authority to sign it, or by the President or Vice President and
Secretary or Assistant Secretary or Treasurer or Assistant Treasurer of the
Corporation, shall be held to have been properly executed for and on behalf of
the Corporation, without prejudice to the rights of the Corporation against any
person who shall have executed the instrument in excess of his or her actual
authority.
Section 8.04. INTERESTED DIRECTORS OR OFFICERS; QUORUM.
(A) GENERAL RULE. A contract or transaction between the Corporation and
one or more of its Directors or officers or between the Corporation and another
corporation, partnership, joint venture, trust or other enterprise in which one
or more of its directors or officers are directors or officers or have a
financial or other interest, shall not be void or voidable solely for that
reason, or solely because the Board of Directors or officer is present at or
participates in the meeting of the Director that authorizes the contract or
transaction, or solely because his, her or their votes are counted for that
purpose, if:
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(1) the material facts as to the relationship or interest and
as to the contract or transaction are disclosed or are known to the Board of
Directors and the Board authorize the contract or transaction by the
affirmative votes of a majority of the disinterested Directors even though the
disinterested Directors are less than a quorum;
(2) the material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are known to
the Shareholders entitled to vote thereon and the contract or transaction is
specifically approved in good faith by vote of those Shareholders; or
(3) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified by the Board of
Directors or the Shareholders.
(b) QUORUM. Common or interested Directors may be counted in
determining the presence of a quorum at a meeting of the Board which authorizes
a contract or transaction specified in subsection (a).
Section 8.05. DEPOSITS. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, Corporation
companies or other depositories as the Board of Directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by
such one or more officers or employees as the Board of Directors shall from
time to time determine.
Section 8.06. CORPORATE RECORDS.
(a) REQUIRED RECORDS. The Corporation shall keep complete and accurate
books and records of account, minutes of the proceedings of the incorporators,
Shareholders and Directors and a Share register giving the names and addresses
of all Shareholders and the number and class of Shares held by each. The Share
register shall be kept at either the registered office of the Corporation in
Pennsylvania or at its principal place of business wherever situated or at the
office of its registrar or transfer agent. Any books, minutes or other records
may be in written form or any other form capable of being converted into
written form within a reasonable time.
(b) RIGHT OF INSPECTION. Every Shareholder shall, upon written
verified demand stating the purpose thereof, have a right to examine, in person
or by agent or attorney, during the usual hours for business for any proper
purpose, the Share register, books and records of account, and records of the
proceedings of the settlor, Shareholders and Directors and to make copies or
extracts therefrom. A proper purpose shall mean a purpose reasonably related to
the interest of the person as a Shareholder. In every instance where an
attorney or other agent is the person who seeks the right of inspection, the
demand shall be accompanied by a verified power of attorney or other writing
that authorizes the attorney or other agent to so act on behalf of the
Shareholder. The demand shall be directed to the Corporation at its registered
office in Pennsylvania or at its principal place of business wherever situated.
Section 8.07. FINANCIAL REPORTS. Unless otherwise agreed between the
Corporation and a Shareholder, the Corporation shall furnish to its
Shareholders annual financial statements,
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including at least a balance sheet as of the end of each fiscal year and a
statement of income and expenses for the fiscal year. The financial statements
shall be prepared on the basis of generally accepted accounting principles, if
the Corporation prepared financial statements for the fiscal year on that basis
for any purpose, and may be consolidated statements of the Corporation and one
or more of its subsidiaries. The financial statements shall be mailed by the
Corporation to each of its Shareholders entitled thereto within 120 days after
the close of each fiscal year and, after the mailing and upon written request,
shall be mailed by the Corporation to any Shareholder or beneficial owner
entitled thereto to whom a copy of the most recent annual financial statements
has not previously been mailed. Statements that are audited or reviewed by a
public accountant shall be accompanies by the report of the accountant; and in
other cases, each copy shall be accompanied by a statement of the person in
charge of the financial records of the Corporation;
(1) Stating his reasonable belief as to whether or not the financial
statements were prepared in accordance with generally accepted accounting
principles and, if not, describing the basis of presentation.
(2) Describing any material respects in which the financial statements
were not prepared on a basis consistent with those prepared for the previous
year.
Section 8.08. AMENDMENT OF BYLAWS. These Bylaws may be amended or
repealed, or new Bylaws may be adopted, either (i) by vote of the Shareholders
at any duly organized annual or special meeting of Shareholders, or (ii) with
respect to those matters that are not by statute committed expressly to the
Shareholders and regardless of whether the Shareholders have previously adopted
or approved the bylaw being amended or repealed, by vote of a majority of the
board of directors in office at any regular or special meeting of the
directors. Any change in these Bylaws shall take effect when adopted unless
otherwise provided in the resolution effecting the change. See Section 2.03(b)
(relating to notice of action by Shareholders on Bylaws).
23
<PAGE> 1
Exhibit 3.7
COMMONWEALTH OF PENNSYLVANIA
[PHOTO - LOGO]
August 25, 1988
TO ALL TO WHOM THESE PRESENTS SHALL COME: GREETING:
I DO HEREBY CERTIFY That from an examination of the indices and corporate
records of this department, it appears that on June 30, 1952, a Certificate of
Incorporation was issued to a Pennsylvania corporation entitled
'General Aluminum Products Co.' now
"GOLD MEDAL LADDER COMPANY"
I DO FURTHER CERTIFY, that no proceedings in dissolution adversely
affecting the corporate existence of the foregoing have subsequently been filed.
WHEREFORE, it appears that this corporation remains a presently subsisting
corporation as of the date hereof.
[SEAL]
IN TESTIMONY WHEREOF, I have hereunto
set my hand and caused the Great Seal of
the Commonwealth to be affixed, the day and
year above written.
-------------------------------------------
Secretary of the Commonwealth
<PAGE> 2
ARTICLES OF INCORPORATION
TO THE DEPARTMENT OF STATE; 3-1-52.18 16
COMMONWEALTH OF PENNSYLVANIA: ------------
In compliance with the requirements of the "BUSINESS CORPORATION LAW,"
approved the 5th day of May, A. D. 1933, P. L. 364, as amended, the undersigned,
desiring that they may be incorporated as a business corporation, do hereby
certify:
** 1st. The name of the corporation is Gold Medal Ladder Company
-----------------------------
2nd. The location and post office address of its initial
registered office in this Commonwealth is
93 Werner Road Greenville Mercer 16125
- -------------------------------------------------------------------------------
(No.) (street) (city) (county) (zip)
** 3rd. The purpose or purposes of the corporation are:
To engage in and to do any lawful act concerning any or all lawful
business for which corporations may be incorporated under the Pennsylvania
Business Corporation Law, such law being the same law under which this
corporation was incorporated, including without limitation the manufacture
and sale of ladders, platforms, planks, sectional pruning poles and
miscellaneous scaffolding hardware.
4th. The TERM of its existence is perpetual.
5th. The authorized capital stock of the corporation is -$10,000.00 divided
into*
One thousand (1,000) shares of common stock, par value $10.00 per share.
6th. The value of the property with which the corporation will begin
business is Three Hundred Dollars ($300.00).
*Note: There should be set forth the number and par value of all shares having
par value, the number of shares without par value, and the stated capital
applicable thereto. If the shares are to be divided into classes, a description
of each class, and a statement of the preferences, qualifications, limitations,
restrictions, and the special or relative rights granted to, or imposed upon,
the shares of each class.
**Indicates revisions as of 3/3/87.
<PAGE> 3
3-1-52.18 17
7th. The names and addresses of the first directors:
Name Address
(Including street and number, if any)
Kathleen L. Baskin, 68 Clarksville Street, Greenville, Pennsylvania
L. N. Dilley, 77 First Avenue, Greenville, Pennsylvania
Archie C. Voorhies, 77 Chambers Avenue, Greenville, Pennsylvania
8th. The names and addresses of the incorporators and the number and class of
shares subscribed by each are:
Name Address No. and Class of Shares
(Including street and
number, if any)
Kathleen L. Baskin 68 Clarksville Street, 10 shares common stock
Greenville, PA
L. N. Dilley 77 First Avenue, 10 shares common stock
Greenville, PA
Archie C. Voorhies 77 Chambers Avenue, 10 shares common stock
Greenville, PA
9th. The number of incorporators who are citizens of the United States is three.
___________________(SEAL) Kathleen L. Baskin (SEAL)
___________________(SEAL) L. N. Dilley (SEAL)
___________________(SEAL) Archie C. Voorhies (SEAL)
**10th. Personal liability of directors and indemnification of, and advancement
of expenses TO directors, officers and others shall be governed by the following
provisions:
Section 1 - Personal Liability of Directors.
- --------------------------------------------
(a) To the fullest extent that the laws of the Commonwealth of
Pennsylvania, as in effect on January 27, 1987 or as thereafter amended, permit
elimination or limitation of the liability of directors, no director of the
corporation shall be personally liable for monetary damages as such for any
action taken, or any failure to take any actions, as a director.
(b) This Section I shall not apply to any actions filed prior to
January 27, 1987, nor to any breach of performance of duty or any failure of
performance of duty by any director of the corporation occurring prior
to January 27, 1987. The provisions of this Section shall be deemed to be a
contract with each director of the corporation who serves as such at any time
while this Section is in effect and each such director shall be deemed to be so
serving in reliance on the provisions of this Section. Any amendment or repeal
of this Section or adoption of any other By-Law or other provision of the
Articles of the corporation which has the effect of increasing director
liability shall operate prospectively only and shall not affect any action
taken, or any failure to act, prior to the adoption of such amendment, repeal,
other By-Law or other provision.
Section 2 - Indemnification of, and Advancement of Expenses to, Directors,
- --------------------------------------------------------------------------
Officers and Others.
- ---------------------
(a) RIGHT TO INDEMNIFICATION. Except as prohibited by law, every director and
officer of the corporation shall be entitled as of right to be indemnified by
the corporation against expenses and any liability paid or incurred by such
person in connection with any actual or threatened claim, action, suit or
proceeding, civil, criminal, administrative, investigative or other, whether
brought by or in the right of the corporation or otherwise, in which he or she
may be involved in any manner, as a party, witness or otherwise, or is
threatened to be made so involved, by reason of such person being or having
been a director or officer of the corporation or of a subsidiary of the
corporation or by reason of the fact that such person is or was serving at the
request of the corporation as a director, officer, employee, fiduciary or other
representative of another corporation, partnership, joint venture, trust,
employee benefit plan or other entity (such claim, action, suit or proceeding
hereinafter being referred to as "Action"); provided, that no such right of
indemnification shall exist with respect to an Action initiated by an
indemnitee (as hereinafter defined) against the corporation (an "Indemnitee
Action") except as provided in the last sentence of this Subsection (a).
Persons who are not directors or officers of the corporation may be similarly
indemnified in respect of service to the corporation or to another such entity
at the request of the corporation to the extent the board of directors at any
time denominates any of such persons as entitled to the benefits of this
Section. As used in this Section 2, "indemnitee" shall include each director
and officer of the corporation and each other person denominated by the board
of directors as entitled to the benefits of this Section 2, "expenses" shall
include fees and expenses of counsel selected by an indemnitee and "liability"
shall include amounts of judgments, excise taxes, fines, penalties and amounts
paid in settlement.
An indemnitee shall be entitled to be indemnified pursuant to this Subsection
(a) for expenses incurred in connection with any Indemnitee Action only (i) if
the indemnitee is successful, as provided in Subsection (c) of this Section 2,
(ii) if the indemnitee is successful in whole or in part in another indemnitee
Action for which expenses are claimed or (iii) if the indemnification for
expenses is included in a settlement of, or is awarded by a court in, such
other Indemnitee Action.
<PAGE> 4
(b) RIGHT TO ADVANCEMENT OF EXPENSES. Every indemnitee shall be entitled
as of right to have his or her expenses in defending any Action, or in
initiating and pursing any Indemnitee Action for indemnity or advancement of
expenses under Subsection (c) of this Section 2, paid in advance by the
corporation prior to final disposition of such Action or Indemnitee Action,
provided that the corporation receives a written undertaking by or on behalf of
the indemnitee to repay the amount advanced if it should ultimately be
determined that the indemnitee is not entitled to be indemnified for such
expenses.
(c) RIGHT OF INDEMNITEE TO INITIATE ACTION. If a written claim under
Subsection (a) or Subsection (b) of this Section 2 is not paid in full by the
corporation within thirty days after such claim has been received by the
corporation, the indemnitee may at any time thereafter initiate an Indemnitee
Action to recover the unpaid amount of the claim and, if successful in whole or
in part, the indemnitee shall also be entitled to be paid the expense of
prosecuting such Indemnitee Action. The only defense to any Indemnitee Action to
recover a claim for indemnification under Subsection (a) of this Section 2 shall
be that the indemnitee's conduct was such that under Pennsylvania law the
corporation is prohibited from indemnifying the indemnitee for the amount
claimed, but the burden of proving such defense shall be on the corporation.
Neither the failure of the corporation (including its board of directors,
independent legal counsel and its shareholders) to have made a determination
prior to the commencement of such Indemnitee Action that indemnification of the
indemnitee is proper in the circumstances, nor an actual determination by the
corporation (including its board of directors, independent legal counsel or its
shareholders) that the indemnitee's conduct was such that indemnification is
prohibited by Pennsylvania law, shall be a defense to such Indemnitee Action or
create a presumption that the indemnitee's conduct was such that indemnification
is prohibited by Pennsylvania law. The only defense to an Indemnitee Action to
recover a claim for advancement of expenses under Subsection (b) of this Section
2 shall be the indemnitee's failure to provide the Undertaking required by
Subsection (b) of this Section 2.
(d) INSURANCE AND FUNDING. The corporation may purchase and maintain
insurance to protect itself and any person eligible to be indemnified hereunder
against any liability or expense asserted or incurred by such person in
connection with any Action, whether or not the corporation would
have the power to indemnify such person against such liability or expense by law
or under the provisions of this Section 2. The corporation may create a trust
fund, grant a security interest, cause a letter of credit to be issued or use
other means (whether or not similar to the foregoing) to ensure the payment of
such sums as may become necessary to effect indemnification as provided herein.
(e) NON-EXCLUSIVITY; NATURE AND EXTENT OF RIGHTS. The rights to
indemnification and advancement of expenses provided for in this Section 2 shall
(i) not be deemed exclusive of any other rights, whether now existing or
hereafter created, to which any indemnitee may be entitled under any agreement
or by-law, charter provision, vote of shareholders or directors
<PAGE> 5
or otherwise, (ii) be deemed to create contractual rights in favor of each
indemnitee who serves the corporation at any time while this Section 2 is in
effect (and each such indemnitee shall be deemed to be so serving in reliance
on the provisions of this Section), (iii) continue as to each indemnitee who has
ceased to have the status pursuant to which he or she was entitled or was
denominated as entitled to indemnification under this Section 2 and shall inure
to the benefit of the heirs and legal representatives of each indemnitee and
(iv) be applicable to Actions commenced after January 27, 1987, whether arising
from acts or omissions occurring before or after January 27, 1987. Any amendment
or repeal of this Section 2 or adoption of any By-Law or other provision of the
Articles of the corporation which limits in any way the right to indemnification
or the right to advancement of expenses provided for in this Section 2 shall
operate prospectively only and shall not affect any action taken, or failure to
act, by an indemnitee prior to the adoption of such amendment, repeal, By-Law or
other provision.
(f) PARTIAL INDEMNITY. If an indemnitee is entitled under any provision
of this Section 2 to indemnification by the corporation for some or a portion of
the expenses or a liability paid or incurred by the indemnitee in the
preparation, investigation, defense, appeal or settlement of any Action or
Indemnitee Action but not however, for the total amount thereof, the
corporation shall indemnify the indemnitee for the portion of such expenses or
liability to which the indemnitee is entitled.
g) APPLICABILITY OF SECTION. This Section 2 shall apply to every Action
other than an Action filed prior to January 27, 1987, except that it shall not
apply to the extent that Pennsylvania law does not permit its application to any
breach of performance of duty or any failure of performance of duty by an
indemnitee occurring prior to January 27, 1987.
Commonwealth of Pennsylvania )
County of Mercer ) ss:
Before me, a Notary Public in and for the county aforesaid, personally
came the above named, Kathleen L. Baskin, L. N. Dilley and Archie C. Voorhies,
who, in due form of law, acknowledged the foregoing instrument to be their act
and deed for the purposes therein specified.
Witness my hand and seal of office the 19th day of June, A. D. 1952.
Margaret E. Rowley
-------------------------------------
(NOTARIAL SEAL) Notary Public
My Commission Expires Mar. 13, 1955
Approved and filed in the Department of State, 30th day of June, A. D.
1952.
Gene D. Smith
-------------------------------------
Secretary of the Commonwealth
ows
<PAGE> 6
3-1-52.18 18
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
To All To Whom These Presents Shall Come, Greeting:
WHEREAS, In and by the Business Corporation Law, approved the 5th day of
May Anno Domini, one thousand nine hundred and thirty-three, the Department of
State is Authorized and required to issue a
CERTIFICATE OF INCORPORATION
evidencing the incorporation of a business corporation organized under the
provisions of that law.
AND WHEREAS, The stipulations and conditions of that law have been
fully complied with by the persons desiring to incorporate as
GENERAL ALUMINUM PRODUCTS CO.
THEREFORE, KNOW YE, That subject to the Constitution of this
Commonwealth and under the authority of the Business Corporation Law, I do by
these presents, which I have caused to be sealed with the Great Seal of the
Commonwealth, create, erect, and incorporate the incorporators of and the
subscribers to the shares of the proposed corporation named above, their
associates and successors, and also those who may thereafter become subscribers
or holders of the shares of such corporation into a body politic and corporate
in deed and in law by the same chosen and hereinbefore specified, which shall
exist
perpetually
and shall be invested with, and have any enjoy all the powers, privileges, and
franchises incident to a business corporation and be subject to all the duties,
requirements, and restrictions specified and enjoined in and by the Business
Corporation Law and all other applicable laws of this Commonwealth.
GIVEN under my Hand and the Great Seal
********************* of the Commonwealth, at the City
* SEAL OF THE STATE * of Harrisburg, this 30th day of
* OF * June in the year of our Lord one
* PENNSYLVANIA * thousand nine hundred and fifty-
********************* two and of the Commonwealth the
one hundred and seventy-sixth.
Gene D. Smith
-------------------------------------
Secretary of the Commonwealth
<PAGE> 7
ARTICLES OF INCORPORATION
TO THE DEPARTMENT OF STATE:
COMMONWEALTH OF PENNSYLVANIA:
In compliance with the requirements of the "BUSINESS CORPORATION LAW,"
approved the 5th day of May, A.D. 1988, P.L. 864, as amended, the undersigned,
desiring that they may be incorporated as a business corporation, do hereby
certify:
1st. The name of the corporation is General Aluminum Products Co.
-----------------------------------
- -------------------------------------------------------------------------------
2nd. The location and post office address of the initial registered
office in this Commonwealth is
P.O. Box 606 Greenville Mercer
- -------------------------------------------------------------------------------
(number) (street) (city) (county)
3rd. The purpose or purposes of the corporation are:
To buy, sell, manufacture, fabricate and deal in all kinds, forms and
combinations of aluminum or other metals, and in the products of aluminum or
other metals, or in which aluminum or any other metal forms a substantial part,
and in the accessories thereof; and to transact a general aluminum
manufacturing, jobbing, fabricating, supply and sales business.
4th. The term of its existence is perpetual.
5th. The authorized capital stock of the corporation is $10,000.00
divided into*
One thousand (1,000) shares of common stock, par value $10.00 per share.
6th. The value of the property with which the corporation will begin
business is Three Hundred Dollars ($300.00).
<PAGE> 8
7th. The names and addresses of the first directors:
Name Address
(Including street and number, if any)
Kathleen L. Baskin, 68 Clarksville Street, Greenville, Pennsylvania
L. M. Dilley 77 First Avenue, Greenville, Pennsylvania
Archie C. Voorhies 77 Chambers Avenue, Greenville, Pennsylvania
8th. The names and addresses of the incorporators and the number and
class of shares subscribed by each are:
<TABLE>
<CAPTION>
Name Address
(Including street and number, if any) No. and Class of Shares
<S> <C> <C>
Kathleen L. Baskin 68 Clarksville Street, Greenville, Penna. 10 shares common stock
L. M. Dilley 77 First Avenue, Greenville, Penna. 10 shares common stock
Archie C. Voorhies 77 Chambers Avenue, Greenville, Penna. 10 shares common stock
</TABLE>
9th The number of incorporators who are citizens of the United States is
three
(SEAL) /s/ Kathleen L. Baskin (SEAL)
- -------------------------------------- -----------------------------------
(SEAL) /s/ L. M. Dilley (SEAL)
- -------------------------------------- -----------------------------------
(SEAL) /s/ Archie C. Voorhies (SEAL)
- -------------------------------------- -----------------------------------
Commonwealth of Pennsylvania )
) SS:
County of Mercer )
Before me, a Notary Public in and for the county aforesaid, personally
came the above named, Kathleen L. Baskin, L.M. Dilley and Archie C. Voorhies,
who, in due form of law, acknowledged the foregoing instrument to be their act
and deed for the purposes therein specified.
Witness my hand and seal of office the 19th day of June A.D. 1952.
Margaret E. Rowley
-----------------------------------------------
MAR. 13, 1955
-----------------------------------------------
Approved and filed in the Department of State, 30th day of June A.D.
1952.
/s/ illegible
---------------------------------------
Secretary of the Commonwealth
<PAGE> 9
COMMONWEALTH OF PENNSYLVANIA
[LOGO]
January 27, 1994
Department of State
TO ALL WHOM THESE PRESENTS SHALL COME, GREETING:
IN RE: GOLD MEDAL LADDER COMPANY
I, Dr. Brenda K. Mitchell, Secretary of the Commonwealth of the
Commonwealth of Pennsylvania do hereby certify that the foregoing and annexed
is a true and correct photocopy of Articles of Incorporation and all
amendments.
which appear of record in this department.
[SEAL]
IN TESTIMONY WHEREOF, I have hereunto set my hand
and caused the Seal of the Secretary's Office to
be affixed, the day and year above written.
/s/ Brenda K. Mitchell
-------------------------------------------------
Secretary of the Commonwealth
<PAGE> 10
87181691
COMMONWEALTH OF PENNSYLVANIA
[LOGO]
DEPARTMENT OF STATE
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, In and by Article VIII of the Business Corporation law, approved the
fifth day of May, Anno Domini one thousand nine hundred and thirty-three, P. L.
364, as amended, the Department of State is authorized and required to issue a
CERTIFICATE OF AMENDMENT
evidencing the amendment of the Articles of Incorporation of a business
corporation organized under or subject to the provisions of that Law, and
WHEREAS, The stipulations and conditions of that Law pertaining to the
amendment of Articles of Incorporation have been fully complied with by
GENERAL ALUMINUM PRODUCTS, CO.
name changed to
GOLD MEDAL LADDER COMPANY
THEREFORE, KNOW YE, That subject to the Constitution of the Commonwealth and
under the authority of the Business Corporation Law, I do by these presents,
which I have caused to be sealed with the Great Seal of the Commonwealth, extend
the rights and powers of the corporation named above, in accordance with the
terms and provisions of the Articles of Amendment presented by it to the
Department of State, with full power and authority to use and enjoy such rights
and powers, subject to all the provisions and restrictions of the Business
Corporation Law and all other applicable laws of this Commonwealth.
[SEAL] GIVEN under my Hand and the Great Seal of the Commonwealth,
at the City of Harrisburg, this 4th day of March in
the year of our Lord one thousand nine hundred and
eighty-seven and of the Commonwealth the two hundred
eleventh.
/s/ James J. Hagerty
---------------------------------------------
Secretary of the Commonwealth
<PAGE> 11
COMMONWEALTH OF PENNSYLVANIA
[LOGO]
DEPARTMENT OF STATE
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, In and by the Business Corporation Law, approved the 5th day of May,
Anno Domini, one thousand nine hundred and thirty-three, the Department of State
is authorized and required to issue a
CERTIFICATE OF INCORPORATION
evidencing the incorporation of a business corporation organized under the
provisions of that law.
AND WHEREAS, The stipulations and conditions of that Law have been fully
complied with by the persons desiring to incorporate as
- ------------------------- GENERAL ALUMINUM PRODUCTS, CO. -----------------------
THEREFORE, KNOW YE, That subject to the Constitution of this Commonwealth and
under the authority of the Business Corporation Law, I do by these presents,
which I have caused to be sealed with the Great Seal of the Commonwealth,
create, erect, and incorporate the incorporators of and the subscribers to the
shares of the proposed corporation named above, their associates and successors,
and also those who may thereafter become subscribers or holders of the shares of
such corporation, into a body politic and corporate in deed and in law by the
name chosen and hereinbefore specified, which shall exist
- --------------------------------- perpetually ----------------------------------
and shall be invested with, and have and enjoy all the powers, privileges, and
franchises incident to a business corporation and be subject to all the duties,
requirements, and restrictions specified and enjoined in and by the Business
Corporation Law and all other applicable laws of this Commonwealth.
[SEAL] GIVEN under my Hand and the Great Seal of the Commonwealth,
at the City of Harrisburg, this 30th day of June in
the year of our Lord one thousand nine hundred and
fifty-two and of the Commonwealth the one hundred
seventy-sixth.
/s/ General Smith
---------------------------------------------
Secretary of the Commonwealth
<PAGE> 12
----------------------------------
|
Applicant's Account No.___________________ | Filed this ________________ day of
|
DSCB: BCL-806 (Rev. 8-72) | Mar 04, 1997, A.D. 19___
|
Filing Fee: $40 | Commonwealth of Pennsylvania
|
AB-2 | Department of State
|
|
Article of | /s/ James J. Hagerty
Amendment-- | Secretary of the Commonwealth
Domestic Business Corporation |
----------------------------------
87181684
---------------------------------------
136642
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
- -------------------------------------------------------------------------------
In compliance with the requirements of section 806 of the Business
Corporation Law, act of May 5, 1933 (P.L. 364) (15 P.S. Section 1806), the
undersigned corporation, desiring to amend its Articles, does hereby certify
that:
1. The name of the corporation is:
General Aluminum Products Co.
--------------------------------------------------------------------------
2. The location of its registered office in this Commonwealth is (the
Department of State is hereby authorized to correct the following statement
to conform to the records of the Department):
P.O. BOX 606
---------------------------------------------------------------------------
(NUMBER) (STREET)
Greenville, Pennsylvania 16125
---------------------------------------------------------------------------
(CITY) (ZIP CODE)
3. The statute by or under which it was incorporated is:
Business Corporation Law of the Commonwealth of Pennsylvania,
Act of May 5, 1933, P.L. 364
---------------------------------------------------------------------------
4. The date of its incorporation is: June 30, 1952
-----------------------------------------
5. (Check, and if appropriate, complete one of the following:
[ ] The meeting of the shareholders of the corporation at which the
amendment was adopted was held at the time and place and pursuant to
the kind and period of notice herein stated.
Time: The ____ day of _____________________________, 19___.
Place: ____________________________________________________________________
Kind and period of notice _________________________________________________
___________________________________________________________________________
[X] The amendment was adopted by a consent in writing, setting forth the
action so taken, signed by all of the shareholders entitled to vote
thereon and filed with the Secretary of the corporation.
6. At the time of the action of shareholders:
(a) The total number of shares outstanding was:
Thirty (30)
___________________________________________________________________________
(b) The number of shares entitled to vote was:
Thirty (30)
___________________________________________________________________________
<PAGE> 13
DSCB:BCL - 806(Rev. 8-72)-2 87181685
7. In the action taken by the shareholders:
(a) The number of shares voted in favor of the amendments was:
Thirty (30)
- -------------------------------------------------------------------------------
(b) The number of shares voted against the amendment was:
Zero (0)
- -------------------------------------------------------------------------------
8. The amendment adopted by the shareholders, set forth in full, is as
follows:
A. Change of Name [See Section A of attached]
B. Change of Location of Registered Office [See Section B of attached]
C. Change of Statement of Purpose [See Section C of attached]
D. Addition of Liability and Indemnification Provisions [See Section
D of attached]
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer and its
corporate seal, duly attested by another such officer, to be hereunto affixed
this 3rd day of March, 1987.
GENERAL ALUMINUM PRODUCTS CO.
-----------------------------------
(NAME OF CORPORATION)
Attest: By: /s/ Richard L. Werner
----------------------------------
(SIGNATURE)
/s/ ????
- ------------------------------- President
(SIGNATURE) ----------------------------------
(TITLE, PRESIDENT, VICE PRESIDENT, ETC.)
Secretary
- -------------------------------
(TITLE, SECRETARY, ASSISTANT SECRETARY, ETC.)
(CORPORATE SEAL)
INSTRUCTION FOR COMPLETION OF FORM:
A. Any necessary copies of Form DSCB:17.2 (Consent to Appropriation of
Name) or Form DSCB:17.3 (Consent to Use of Similar Name) shall
accompany Articles of Amendment effecting a change of name.
B. Any necessary governmental approvals shall accompany this form.
C. Where action is taken by partial written consent pursuant to the
Articles, the second alternate of Paragraph 5 should be modified
accordingly.
D. If the shares of any class where entitled to vote as a class, the
number of shares of each class so entitled and the number of shares of
all other classes entitled to vote should be set forth in Paragraph
6(b).
E. If the shares of any class were entitled to vote as a class, the
number of shares of such class and the number of shares of all other
classes voted for and against such amendment respectively should be
set forth in Paragraphs 7(a) and 7(b).
F. BCL Section 807 (15 P. S. Section 1807) requires that the corporation
shall advertise its intention to file or the filing of Articles of
Amendment. Proofs of publication of such advertising should not be
delivered to the Department, but should be filed with the minutes of
the corporation.
<PAGE> 14
GENERAL ALUMINUM PRODUCTS CO.
AMENDMENTS TO ARTICLES OF INCORPORATION
---------------------------------------
The Articles of Incorporation of General Aluminum Products Co., which were
approved and filed in the Department of State of the Commonwealth of
Pennsylvania on June 30, 1952, are hereby amended in the following respects:
A. CHANGE OF NAME. The name of the corporation, as set forth in Article
1st, is hereby changed to "Gold Medal Ladder Company".
B. CHANGE OF LOCATION OF REGISTERED OFFICE. The location of the registered
office of the Corporation, as set forth in Article 2nd, is hereby changed to
Werner Road, Greenville, Pennsylvania 16125.
C. CHANGE OF STATEMENT OF PURPOSE. The purpose or purposes of the
corporation, as set forth in Article 3rd, are hereby amended to read as follows:
To engage in and do any lawful act concerning any or all lawful
business for which Pennsylvania Business Corporation Law, such law
being the same law under which this corporation was incorporated,
including without limitation the manufacture and sale of ladders,
platforms, planks, sectional pruning poles and miscellaneous
scaffolding hardware.
<PAGE> 15
D. ADDITION OF LIABILITY AND INDEMNIFICATION PROVISIONS. The following
new provisions are hereby added as Article 10th:
10th. Personal liability of directors and indemnification of, and
advancement of expenses to, directors, officers and others shall be
governed by the following provisions:
SECTION 1 - PERSONAL LIABILITY OF DIRECTORS.
(a) To the fullest extent that the laws of the Commonwealth of
Pennsylvania, as in the effect on January 27, 1987 or as thereafter
amended, permit elimination or limitation of the liability of
directors, no director of the corporation shall be personally liable
for monetary damages as such for any action taken, or any failure to
take any action, as a director.
(b) This Section 1 shall not apply to any actions filed prior
to January 27, 1987, nor to any breach of performance of duty by any
director of the corporation occurring prior to January 27, 1987. The
provisions of this Section shall be deemed to be a contract with each
director of the corporation who serves as such at any time while this
Section is in effect and each such director shall be deemed to be so
serving in reliance on the provisions of this Section. Any amendment or
repeal of this Section or adoption of any other By-Law or other
provision of the Articles of the corporation which has the effect of
increasing director liability shall operate prospectively only and
shall not affect any action taken, or any failure to act, prior to the
adoption of such amendment, repeal, other By-Law or other provision.
SECTION 2 - INDEMNIFICATION OF, AND ADVANCEMENT OF EXPENSES TO,
DIRECTORS, OFFICERS AND OTHERS.
(a) RIGHT TO INDEMNIFICATION. Except as prohibited by law,
every director and officer of the corporation shall be entitled as of
right to be indemnified by the corporation against expenses and any
liability paid or incurred by such person in connection with any actual
or threatened claim, action, suit or proceeding, civil, criminal,
administrative, investigative or other, whether brought by or in the
right of the corporation or otherwise, in which he or she may be
involved in any manner, as a party, witness or otherwise, or is
threatened to be made so involved,
-2-
<PAGE> 16
by reason of such person being or having been a director or officer of
the corporation or of a subsidiary of the corporation or of a
subsidiary of the corporation or by reason of the fact that such person
is or was serving at the request of the corporation as a director,
officer, employee, fiduciary or other representative of another
corporation, partnership, joint venture, trust, employee benefit plan
or other entity (such claim, action, suit or proceeding hereinafter
being referred to as an "Action"); provided, that no such right of
indemnification shall exist with respect to an Action initiated by an
indemnitee (as hereinafter defined) against the corporation (an
"Indemnitee Action") except as provided in the last sentence of this
Subsection (a). Persons who are not directors or officers of the
corporation may be similarly indemnified in respect of service to the
corporation or to another such entity at the request of corporation to
the extent the board of directors at any time denominates any of such
persons as entitled to the benefits of this Section. As used in this
Section 2, "indemnitee" shall include each director and officer of the
corporation and each other person denominated by the board of directors
as entitled to the benefits of this Section 2, "expenses" shall include
fees and expenses of counsel selected by an indemnitee and "liability"
shall include amounts of judgments, excise taxes, fines, penalties and
amounts paid in settlement. An indemnitee shall be entitled to be
indemnified pursuant to this Subsection (a) for expenses incurred in
connection with any Indemnitee Action only (i) if the indemnitee is
successful as provided in Subsection (c) of this Section 2, (ii) if the
indemnitee is successful in whole or in part in another Indemnitee
Action for which expenses are claimed or (iii) if the indemnification
for expenses is included in a settlement of, or is awarded by a court
in, such other Indemnitee Action.
(b) RIGHT TO ADVANCEMENT OF EXPENSES. Every indemnitee shall be
entitled as of right to have his or her expense in defending any
Action, or in initiating and pursuing any Indemnitee Action for
indemnity or advancement of expenses under Subsection (c) of this
Section 2, paid in advance by the corporation prior to final
disposition of such Action or Indemnitee Action, provided that the
corporation receives a written undertaking by or on behalf of the
indemnitee to repay the amount advanced if it should ultimately be
determined that the indemnitee is not entitled to be indemnified for
such expenses.
(c) RIGHT OF INDEMNITEE TO INITIATE ACTION. If a written claim
under Subsection (a) or Subsection (b) of
-3-
<PAGE> 17
87181689
this Section 2 is not paid in full by the corporation within thirty
days after such claim has been received by the corporation, the
indemnitee may at any time thereafter initiate an Indemnitee Action to
recover the unpaid amount of the claim and, if successful in whole or
in part, the indemnitee shall also be entitled to be paid the expense
of prosecuting such Indemnitee Action. The only defense to an
Indemnitee Action to recover a claim for indemnification under
Subsection (a) of this Section 2 shall be that the indemnitee's conduct
was such that under Pennsylvania law the corporation is prohibited from
indemnifying the indemnitee for the amount claimed, but the burden of
proving such defense shall be on the corporation. Neither the failure
of the corporation (including its board of directors, independent legal
counsel and its shareholders) to have made a determination prior to the
commencement of such Indemnitee Action that indemnification of the
indemnitee is proper in the circumstances, nor an actual determination
by the corporation (including its board of directors, independent legal
counsel or its shareholders) that the indemnitee's conduct was such
that indemnification is prohibited by Pennsylvania law, shall be a
defense to such Indemnitee Action or create a presumption that the
indemnitee's conduct was such that indemnification is prohibited by
Pennsylvania law. The only defense to an Indemnitee Action to recover a
claim for advancement of expenses under Subsection (b) of this Section
2 shall be the indemnitee's failure to provide the undertaking required
by Subsection (b) of this Section 2.
(d) INSURANCE AND FUNDING. The corporation may purchase and
maintain insurance to protect itself and any person eligible to be
indemnified hereunder against any liability or expense asserted or
incurred by such person in connection with any Action, whether or not
the corporation would have the power to indemnify such person against
such liability or expense by law or under the provisions of this
Section 2. The corporation may create a trust fund, grant a security
interest, cause a letter of credit to be issued or use other means
(whether or not similar to the foregoing) to ensure the payment of such
sums as may become necessary to effect indemnification as provided
herein.
(e) NON-EXCLUSIVITY; NATURE AND EXTENT OF RIGHTS. The rights
to indemnification and advancement of expenses provided for in this
Section 2 shall (i) not be deemed exclusive of any other rights,
whether now existing or hereafter created, to which any indemnitee may
be entitled under any agreement or by-law, charter provision, vote of
shareholders or directors or
-4-
<PAGE> 18
87181690
otherwise, (ii) be deemed to create contractual rights in favor of each
indemnitee who serves the corporation at any time while this Section 2
is in effect (and each such indemnitee shall be deemed to be so serving
in reliance on the provisions of this Section), (iii) continue as to
each indemnitee who has ceased to have the status pursuant to which he
or she was entitled or was denominated as entitled to indemnification
under this Section 2 and shall inure to the benefit of the heirs and
legal representatives of each indemnitee and (iv) be applicable to
Actions commenced after January 27, 1987, whether arising from acts or
omissions occurring before or after January 27, 1987. Any amendment or
repeal of this Section 2 or adoption of any By-Law or other provision
of the Articles of the corporation which limits in any way the right to
indemnification or the right to advancement of expenses provided for in
this Section 2 shall operate prospectively only and shall not affect
any action taken, or failure to act, by an indemnitee prior to the
adoption of such amendment, repeal, By-Law or other provision.
(f) PARTIAL INDEMNITY. If an indemnitee is entitled under any
provision of this Section 2 to indemnification by the corporation for
some or a portion of the expenses or a liability paid or incurred by
the indemnitee in the preparation, investigation, defense, appeal or
settlement of any Action or Indemnitee Action but not, however, for the
total amount thereof, the corporation shall indemnify the indemnitee
for the portion of such expenses or liability to which the indemnitee
is entitled.
(g) APPLICABILITY OF SECTION. This Section 2 shall apply to
every Action other than an Action filed prior to January 27, 1987,
except that it shall not apply to the extent that Pennsylvania law does
not permit its application to any breach of performance of duty or any
failure of performance of duty by an indemnitee occurring prior to
January 27, 1998.
-5-
<PAGE> 1
Exhibit 3.8
BY-LAWS
of
GOLD MEDAL LADDER COMPANY
(a Pennsylvania corporation)
Amended and Restated May 15, 1997
<PAGE> 2
BY-LAWS
of
GOLD MEDAL LADDER COMPANY
ARTICLE I
Shareholders
------------
Section 1 - Annual Meeting
- --------------------------
The annual meeting of the shareholders of the corporation for the
election of directors, consideration of reports to be presented before such
meeting and the transaction of such other business as may properly come before
the meeting shall be held at the registered office of the corporation, or at
such other place or places within or without the Commonwealth of Pennsylvania as
the Board of Directors of the corporation may designate, in March of each
calendar year on the date and at the time fixed by the Board of Directors.
Section 2 - Financial Report to Shareholders
- --------------------------------------------
The directors shall cause to be sent to the shareholders, within one
hundred twenty (120) days after the close of the fiscal year of the corporation,
financial statements which shall include a balance sheet as of the close of such
year, together with statements of income and surplus for such year, prepared so
as to present fairly its financial condition and the results of its operations.
Section 3 - Special Meetings
- ----------------------------
Special meetings of the shareholders may be called at any time by the
president, the Board of Directors or shareholders entitled to cast at least
one-fifth of the votes which all shareholders are entitled to cast at the
particular meeting. At any time, upon written request of any person or persons
who have duly called a special meeting, it shall be the duty of the secretary to
fix the date of the meeting, to be held not more than sixty (60) days after the
receipt of the request, and to give due notice thereof. If the secretary shall
neglect or refuse to fix the date of the meeting and give notice thereof, the
person or persons calling the meeting may do so.
Section 4 - Notices of Meetings
- -------------------------------
Written notice of each meeting of the shareholders shall be given by,
or at the direction of, the person or persons authorized to call such meeting to
each shareholder of record entitled to vote at such meeting at least five (5)
days prior to the day named for such meeting.
<PAGE> 3
Section 5 - Quorum
- ------------------
At all meetings of the shareholders, the presence, in person or by
proxy, of shareholders entitled to cast at least a majority of the votes which
all shareholders are entitled to cast on the particular matter shall constitute
a quorum for the purpose of considering such matter.
ARTICLE II
Board of Directors
------------------
Section 1 - Number and Qualifications
- -------------------------------------
The business and affairs of the corporation shall be managed by a Board
of Directors, consisting of not less than three nor more than eleven members,
who shall be elected at the annual meeting of the shareholders for a term ending
with the next annual meeting of shareholders and shall hold office until their
successors are elected and qualified. The directors need not be shareholders of
the corporation.
Section 2 - The Chairman of the Board
- -------------------------------------
The Board of Directors shall elect a Chairman of the Board. The
Chairman shall preside at all meetings of the shareholders and of the Board of
Directors.
Section 3 - Election of Officers
- --------------------------------
Immediately after election by the shareholders, the Board of Directors
shall meet and elect and fix the compensation of the officers of the corporation
who shall hold office for a term ending with the first meeting of the Board of
Directors following the next annual meeting of shareholders and until their
successors are elected and qualify.
Section 4 - Regular Meetings
- ----------------------------
The first regular meeting of the Board of Directors shall be held each
year immediately following the adjournment of the shareholders' meeting at which
the directors are elected. Other regular meetings of the Board of Directors
shall be held at such time and place as may be fixed by the board.
Section 5 - Special Meetings
- ----------------------------
(a) Special meetings of the Board of Directors may be called at any
time by the president and shall be called by the president on the written
request of a majority of the directors then in office. The secretary shall give
notice of each special meeting by mailing written notice thereof to each
director at least five days prior to the day named for the meeting.
<PAGE> 4
(b) One or more directors may participate in a meeting of the Board of
Directors or of a committee of the Board of Directors by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other.
Section 6 - Quorum
- ------------------
A majority of the directors in office shall be necessary to constitute
a quorum for the transaction of business and the acts of a majority of the
directors present at a meeting at which a quorum is present shall be the acts of
the Board of Directors.
Section 7 - Removal
- -------------------
The Board of Directors may at any time declare vacant the office of a
director who is unable to function as a director because of illness or for any
other reason. Vacancies in the Board of Directors shall be filled by a majority
of the remaining members of the board though less than a quorum and each person
so elected shall be a director until his successor is elected by the
shareholders.
Section 8 - Committees
- ----------------------
The Board of Directors may create an executive committee, or any other
committee, to the extent permitted by law and may delegate to such committee or
committees such authority as the Board of Directors may determine.
Section 9 - Powers
- ------------------
The Board of Directors shall manage the business and affairs of the
corporation. In addition to the powers and authority by these By-Laws expressly
conferred upon them, the Board of Directors may exercise all such powers and do
all such lawful acts and things as are not by statute, by these By-Laws or by
its Articles of Incorporation directed or required to be exercised or done by
the shareholders.
ARTICLE III
Officers
--------
Section 1 - Number and Election
- -------------------------------
The officers of the corporation shall consist of president, chief
executive officer, one or more vice presidents, the secretary and one or more
assistant secretaries and the treasurer and one or more assistant treasurers,
all of whom shall be elected by the Board of Directors and shall at all times be
subject to the direction and control of the Board of Directors.
<PAGE> 5
Section 2 - Powers and Duties
- -----------------------------
The president and other officers of the corporation shall each have
such powers and duties as generally pertain to their respective offices and such
further powers and duties as from time to time may be conferred upon them by the
Board of Directors.
Section 3 - Absence or Inability to Act
- ---------------------------------------
In the case of absence or inability to act of any officer of the
corporation, or any person authorized to act in his place, the Board of
Directors may from time to time delegate the powers or duties of such officer to
any other officer, any director or any other person whom it may select.
Section 4 - Salaries
- --------------------
The salaries of officers of the corporation elected by the Board of
Directors shall be fixed by the Board of Directors.
Section 5 - Vacancies
- ---------------------
The Board of Directors shall have power to fill any vacancies in any
office occurring for whatever reason.
Section 6 - Bonds
- -----------------
Any officer may be required by the Board of Directors to give bond for
the faithful discharge of his duties in such sum, with such surety or sureties
and of such character as the board may from time to time prescribe.
Section 7 - Removal
- -------------------
Any officer elected by the Board of Directors may be removed by the
Board of Directors whenever in its judgment the best interests of the
corporation will be served thereby.
ARTICLE IV
Certificates of Stock
---------------------
Section 1 - Form
- ----------------
Certificates for shares shall bear the signatures of the president or a
vice president and the secretary or an assistant secretary and shall contain
such statements as are required by law or by these By-Laws and shall otherwise
be in such form as the Board of Directors may from time to time determine or
approve.
<PAGE> 6
Section 2 - Transfers
- ---------------------
Shares shall be transferable on the books of the corporation by the
holders thereof, in person or by duly authorized attorney, upon surrender and
cancellation, for certificates for a like number of shares of the same class or
series, with duly executed assignment and power of transfer endorsed thereon or
attached thereto and with such proof of the authenticity of the signatures as
the corporation or its agents may reasonably require.
Section 3 - Lost Certificates
- -----------------------------
No certificate for shares shall be issued in place of any certificate
alleged to have been lost, stolen or destroyed except upon the production of
such evidence of the loss, theft or destruction and upon indemnification of the
corporation and its agents to such extent and in such manner as the Board of
Directors may from time to time prescribe or require.
ARTICLE V
Miscellaneous
-------------
Section 1 - Dividends
- ---------------------
Subject to any restrictions contained in the Articles of Incorporation
and any restrictions imposed by statute, the Board of Directors may declare and
pay dividends only out of unreserved and unrestricted earned surplus of the
corporation.
Section 2 - Negotiable Instruments
- ----------------------------------
All checks, drafts, bills of exchange, notes, acceptances, obligations
and other instruments for the payment of money shall be signed in the name of
the corporation by such officer or officers or person or persons as the Board of
Directors may from time to time authorize.
Section 3 - Contracts
- ---------------------
The Board of Directors may authorize any officer or officers or agent
or agents to enter into or execute and deliver in the name and on behalf of the
corporation any and all deeds, bonds, mortgages, contracts and other obligations
or instruments.
Section 4 - Corporate Seal
- --------------------------
The seal of the corporation shall be in such form as the Board of
Directors may designate or approve.
<PAGE> 7
Section 5 - Fiscal Year
- -----------------------
The fiscal year of the corporation shall end on the 31st day of
December of each year or such other twelve consecutive months as the Board of
Directors may by resolution designate.
ARTICLE VI
Indemnification
---------------
Personal liability of directors and indemnification of, and advancement
of expenses to directors, officers and others shall be governed by the following
provisions:
Section 1 - Personal Liability of Directors
- -------------------------------------------
(a) To the fullest extent that the laws of the Commonwealth of
Pennsylvania, as in effect on January 27, 1987, or as thereafter amended, permit
elimination or limitation of the liability of directors, no director of the
corporation shall be personally liable for monetary damages as such for any
action taken, or any failure to take any actions, as a director.
(b) This Section 1 shall not apply to any actions filed prior to
January 27, 1987, nor to any breach of performance of duty or any failure of
performance of duty by any director of the corporation occurring prior to
January 27, 1987. The provisions of this Section shall be deemed to be a
contract with each director of the corporation who serves as such at any time
while this Section is in effect and each such director shall be deemed to be so
serving in reliance on the provisions of this Section. Any amendment or repeal
of this Section or adoption of any other By-Law or other provision of the
Articles of the corporation which has the effect of increasing director
liability shall operate prospectively only and shall not affect any action
taken, or any failure to act, prior to the adoption of such amendment, repeal,
other By-Law or other provision.
Section 2 - Indemnification of, and Advancement of Expenses, to Directors,
- --------------------------------------------------------------------------
Officers and Others
- -------------------
(a) RIGHT TO INDEMNIFICATION. Except as prohibited by law, every
director and officer of the corporation shall be entitled as of right to be
indemnified by the corporation against expenses and any liability paid or
incurred by such person in connection with any actual or threatened claim,
action, suit or proceeding, civil, criminal, administrative, investigative or
other, whether brought by or in the right of the corporation or otherwise, in
which he or she may be involved in any manner, as a party witness or otherwise,
or is threatened to be made so involved, by reason of such person being or
having been a director or officer of the corporation or of a subsidiary of the
corporation or by reason of the fact that such person is or was serving at the
request of the corporation as a director, officer, employee, fiduciary or other
representative of another corporation, partnership, joint venture, trust,
employee benefit plan or other entity (such claim, action, suit or proceeding
hereinafter being referred to as "Action"); provided, that no such right of
indemnification shall exist with respect to an Action initiated by an indemnitee
(as hereinafter defined) against the corporation (an "indemnitee Action") except
as provided in the last sentence of this Subsection (a). Persons who are not
directors
<PAGE> 8
or officers of the corporation may be similarly indemnified in respect of
service to the corporation or to another such entity at the request of the
corporation to the extent the Board of Directors at any time denominates any of
such persons as entitled to the benefits of this Section. As used in this
Section 2, "indemnitee" shall include each director and officer of the
corporation and each other person denominated by the Board of Directors as
entitled to the benefits of this Section 2, "expenses" shall include fees and
expenses of counsel selected by an indemnitee and "liability" shall include
amounts of judgments, excise taxes, fines, penalties and amounts paid in
settlement.
An indemnitee shall be entitled to be indemnified pursuant to this Subsection
(a) for expenses incurred in connection with any Indemnitee Action only (i) if
the indemnitee is successful, as provided in Subsection (c) of this Section 2,
(ii) if the indemnitee is successful in whole or in part in another indemnitee
Action for which expenses are claimed or (iii) if the indemnification for
expenses is included in a settlement of, or is awarded by a court in, such other
Indemnitee Action.
(b) RIGHT TO ADVANCEMENT OF EXPENSES. Every indemnitee shall be
entitled as of right to have his or her expenses in defending any Action, or in
initiating and pursuing any Indemnitee Action for indemnity or advancement of
expenses under Subsection (c) of this Section 2, paid in advance by the
corporation prior to final disposition of such Action or Indemnitee Action,
provided that the corporation receives a written undertaking by or on behalf of
the indemnitee to repay the amount advanced if it should ultimately be
determined that the indemnitee is not entitled to be indemnified for such
expenses.
(c) RIGHT OF INDEMNITEE TO INITIATE ACTION. If a written claim under
Subsection (a) or Subsection (b) of this Section 2 is not paid in full by the
corporation within thirty days after such claim has been received by the
corporation, the indemnitee may at any time thereafter initiate an indemnitee
Action to recover the unpaid amount of the claim and, if successful in whole or
in part, the indemnitee shall also be entitled to be paid the expense of
prosecuting such Indemnitee Action. The only defense to any Indemnitee Action to
recover a claim for indemnification under Subsection (a) of this Section 2 shall
be that the indemnitee's conduct was such that under Pennsylvania law, the
corporation is prohibited from indemnifying the indemnitee for the amount
claimed, but the burden of proving such defense shall be on the corporation.
Neither the failure of the corporation (including its Board of Directors,
independent legal counsel and its shareholders) to have made a determination
prior to the commencement of such Indemnitee Action that indemnification of the
indemnitee is proper in the circumstances, nor an actual determination by the
corporation (including its Board of Directors, independent legal counsel or its
shareholders) that the indemnitee's conduct was such that indemnification is
prohibited by Pennsylvania law, shall be a defense to such Indemnitee Action or
create a presumption that the indemnitee's conduct was such that indemnification
is prohibited by Pennsylvania law. The only defense to an Indemnitee Action to
recover a claim for advancement of expenses under Subsection (b) of this Section
2 shall be the indemnitee's failure to provide the undertaking required by
Subsection (b) of this Section 2.
(d) INSURANCE AND FUNDING. The corporation may purchase and maintain
insurance to protect itself and any person eligible to be indemnified hereunder
against any liability or expense asserted or incurred by such person in
connection with any Action, whether or not the corporation would have the power
to indemnify such person against such liability or expense by law or under the
<PAGE> 9
provisions of this Section 2. The corporation may create a trust fund, grant a
security interest, cause a letter of credit to be issued or use other means
(whether or not similar to the foregoing) to ensure the payment of such sums as
may become necessary to effect indemnification as provided herein.
(e) NON-EXCLUSIVITY; NATURE AND EXTENT OF RIGHTS. The rights to
indemnification and advancement of expenses provided for in this Section 2 shall
(i) not be deemed exclusive of any other rights, whether now existing or
hereafter created, to which any indemnitee may be entitled under any agreement
or by-law, charter provision, vote of shareholders or directors or otherwise,
(ii) be deemed to create contractual rights in favor of each indemnitee who
serves the corporation at any time while this Section 2 is in effect (and each
such indemnitee shall be deemed to be so serving in reliance on the provisions
of this Section), (iii) continue as to each indemnitee who has ceased to have
the status pursuant to which he or she was entitled or was denominated as
entitled to indemnification under this Section 2 and shall inure to the benefit
of the heirs and legal representatives of each indemnitee and (iv) be applicable
to Actions commenced after January 27, 1987, whether arising from acts or
omissions occurring before or after January 27, 1987. Any amendment or repeal of
this Section 2 or adoption of any By-Law or other provision of the Articles of
the corporation which limits in any way the right to indemnification or the
right to advancement of expenses provided for in this Section 2 shall operate
prospectively only and shall not affect any action taken, or failure to act, by
an indemnitee prior to the adoption of such amendment, repeal, ByLaw or other
provision.
(f) PARTIAL INDEMNITY. If an indemnitee is entitled under any provision
of this Section 2 to indemnification by the corporation for some or a portion of
the expenses or a liability paid or incurred by the indemnitee in the
preparation, investigation, defense, appeal or settlement of any Action or
Indemnitee Action but not, however, for the total amount thereof, the
corporation shall indemnify the indemnitee for the portion of such expenses or
liability to which the indemnitee is entitled.
(g) APPLICABILITY OF SECTION. This Section 2 shall apply to every
Action other than an Action filed prior to January 27, 1987, except that it
shall not apply to the extent that Pennsylvania law does not permit its
application to any breach of performance of duty or any failure of performance
of duty by an indemnitee occurring prior to January 27, 1987.
ARTICLE VII
Amendments
----------
These By-Laws may be amended, altered, repealed or added to at any
regular or special meeting duly convened after notice to the directors or
shareholders of that purpose and the powers hereby conferred shall be exercised
by a majority vote of the members of the Board of Directors or by the vote of
shareholders entitled to cast at least a majority of the votes which all
shareholders are entitled to cast thereon, as the case may be.
<PAGE> 1
Exhibit 3.9
COMMONWEALTH OF PENNSYLVANIA
Department of State
[Seal]
CERTIFICATE OF INCORPORATION
OFFICE OF THE SECRETARY OF THE COMMONWEALTH
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, Under the provisions of the laws of the Commonwealth, the Secretary of
the Commonwealth is authorized and required to issue a "Certificate of
Incorporation" evidencing the incorporation of an entity.
WHEREAS, The stipulations and conditions of the Law have been fully complied
with by
KENTUCKY LADDER COMPANY
THEREFORE, KNOW YE, That subject to the Constitution of this Commonwealth, and
under the authority of the Laws thereof, I do by these presents, which I have
caused to be sealed with the Great Seal of the Commonwealth, declare and certify
the creation, erection and incorporation of the above in deed and in law by the
name chosen hereinbefore specified.
Such corporation shall have and enjoy and shall be subject to all the
powers, duties, requirements, and restrictions, specified and enjoined in and by
the applicable laws of this Commonwealth.
GIVEN under my Hand and the Great Seal of the Commonwealth,
at the City of Harrisburg, this 21st day of February in
the year of our Lord one thousand nine hundred and
[SEAL] eighty-nine and of the Commonwealth the two hundred
thirteenth
/s/ James J. Hagerty
-----------------------------
Secretary of the Commonwealth
ALDER COHEN & GRIGSBY ESQS
2900 CNG TOWER
625 LIBERTY AVENUE
PITTSBURGH, PA 15222
<PAGE> 2
8916 713
1081273
Applicant's Acct No. ___________ Filed this ________ day of
________, A.D. 1989
Commonwealth of Pennsylvania
Department of State
________________________________
FEB 21 1989
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE /s/ James J. Hagerty
CORPORATION BUREAU Secretary of the Commonwealth
________________________________ ______________________________
ARTICLES OF INCORPORATION
of
KENTUCKY LADDER COMPANY
In compliance with the requirements of Section 204 of the Business
Corporation Law, Act of May 5, 1933 (P.L. 364), as amended (15 P.S. Section
1204), the undersigned, desiring to incorporate a business corporation, hereby
certifies that:
1. CORPORATE NAME. the name of the corporation is Kentucky Ladder
Company.
2. REGISTERED OFFICE. The location and post office address of the
initial registered office of the corporation in this Commonwealth is 93 Werner
Road, P.O. Box 580, Greenville, Pennsylvania 16125. (43)
3. PURPOSES. The corporation is incorporated under the Business
Corporation Law of the Commonwealth of Pennsylvania for the purpose of having
unlimited power to engage in and to do any lawful act concerning any or all
lawful business for which corporations may be incorporated under the Act of May
5, 1933, P.O. 364, as amended, under the provisions of which this corporation
has been incorporated.
4. CORPORATE EXISTENCE. The term for which the corporation is to exist
is perpetual.
5. STOCK. The aggregate number of shares which the corporation shall
have authority to issue is three thousand (3,000) shares of Common Stock, with
a par value of $.01 per share.
6. INCORPORATOR. The name and post office address of the incorporator
is Frank J. Rauktis, c/o Alder Cohen & Grigsby, P.C., 2900 CNG Tower, 625
Liberty Avenue, Pittsburgh, Pennsylvania, 15222, and the number and class of
shares subscribed for by such incorporator is one share of Common Stock, with a
par value of $.01 per share.
<PAGE> 3
8916 714
7. PERSONAL LIABILITY OF DIRECTORS.
(a) ELIMINATION OF LIABILITY. To the fullest extent that the laws of
the Commonwealth of Pennsylvania, as now in effect or as hereafter amended,
permit elimination or limitation of the liability of directors, no director of
the Corporation shall be personally liable for monetary damages as such for any
action taken, or any failure to take any action, as a director.
(b) NATURE AND EXTENT OF RIGHTS. The provisions of this Article shall
be deemed to be a contract with each director of the Corporation who serves as
such at any time while this Article is in effect and each such director shall be
deemed to be so serving in reliance on the provisions of this Article. Any
amendment or repeal of this Article or adoption of any By-Law or provision of
the Articles of the Corporation which has the effect of increasing director
liability shall operate prospectively only and shall not have any effect with
respect to any action taken, or any failure to act, by a director prior
thereto.
8. INDEMNIFICATION OF, AND ADVANCEMENT OF EXPENSES TO, DIRECTORS,
OFFICERS AND OTHERS.
(a) RIGHT TO INDEMNIFICATION. Except as prohibited by law, every
director and officer of the Corporation shall be entitled as of right to be
indemnified by the Corporation against expenses and any liabilities paid or
incurred by such person in connection with any actual or threatened claim,
action, suit or proceeding, civil, criminal, administrative, investigative or
other, whether brought by or in the right of the Corporation or otherwise, in
which he or she may be involved in any manner, as a party, witness or otherwise,
or is threatened to be made so involved, by reason of such person being or
having been a director or officer of the Corporation or of a subsidiary of the
Corporation or by reason of the fact that such person is or was serving at the
request of the Corporation as a director, officer, employee, fiduciary or other
representative of another Corporation, partnership, joint venture, trust,
employee benefit plan or other entity (such claim, action, suit or proceeding
hereinafter being referred to as "Action"); provided, that no such right of
indemnification shall exist with respect to an Action initiated by an indemnitee
(as hereinafter defined) against the Corporation (an "Indemnitee Action") except
as provided in the last sentence of this Subsection (a). Persons who are not
directors or officers of the Corporation may be similarly indemnified in respect
of service to the Corporation or to another such entity at the request of the
Corporation to the extent the Board of Directors at any time denominates any of
such persons as entitled to the benefits of this Article. As used in this
Article, "indemnitee" shall include each director and officer of the Corporation
and each other person denominated by the Board of Directors as entitled to the
benefits of this Article, "expenses" shall mean all expenses actually and
reasonably incurred,
-2-
<PAGE> 4
8916 715
including fees and expenses of counsel selected by an indemnitee, and
"liabilities" shall mean amounts of judgments, excise taxes, fines, penalties
and amounts paid in settlement. An indemnitee shall be entitled to be
indemnified pursuant to this Subsection (a) for expenses incurred in connection
with any Indemnitee Action only (i) if the Indemnitee Action is instituted under
Subsection (c) of this Article 8 and the indemnitee is successful in whole or in
part in such Action, (ii) if the indemnitee is successful in whole or in part in
another Indemnitee Action for which expenses are claimed or (iii) if the
indemnification for expenses is included in a settlement of, or is awarded by a
court in, such other Indemnitee Action.
(b) RIGHT TO ADVANCEMENT OF EXPENSES. Every indemnitee shall be
entitled as of right to have his or her expenses in defending any Action, or in
initiating and pursuing any Indemnitee Action for indemnity or advancement of
expenses under Subsection (c) of this Article, paid in advance by the
Corporation prior to final disposition of such Action or Indemnitee Action,
provided that the Corporation receives a written undertaking by or on behalf of
the indemnitee to repay the amount advanced if it should ultimately be
determined that the indemnitee is not entitled to be indemnified for such
expenses.
(c) RIGHT OF INDEMNITEE TO INITIATE ACTION. If a written claim under
Subsection (a) or Subsection (b) of this Article is not paid in full by the
Corporation within thirty days after such claim has been received by the
Corporation, the indemnitee may at any time thereafter initiate an Indemnitee
Action to recover the unpaid amount of the claim and, if successful in whole or
in part, the indemnitee shall also be entitled to be paid the expense of
prosecuting such Indemnitee Action. The only defense to an Indemnitee Action to
recover on a claim for indemnification under Subsection (a) of this Article
shall be that the indemnitee's conduct was such that under Pennsylvania law the
Corporation is prohibited from indemnifying the indemnitee for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its board of directors,
independent legal counsel and its shareholders) to have made a determination
prior to the commencement of such Indemnitee Action that indemnification of the
indemnitee is proper in the circumstances, nor an actual determination by the
Corporation (including its board of directors, independent legal counsel or its
shareholders) that the indemnitee's conduct was such that indemnification is
prohibited by Pennsylvania law, shall be a defense to such Indemnitee Action or
create a presumption that the indemnitee's conduct was such that indemnification
is prohibited by Pennsylvania law. The only defense to an Indemnitee Action to
recover a claim for advancement of expenses under Subsection (b) of this Article
shall be the indemnitee's failure to provide the undertaking required by
Subsection (b) of this Article 8.
-3-
<PAGE> 5
8916 716
(d) INSURANCE AND FUNDING. The Corporation may purchase and maintain
insurance to protect itself and any person eligible to be indemnified hereunder
against any liability or expense asserted or incurred by such person in
connection with any Action, whether or not the Corporation would have the power
to indemnify such person against such liability or expense by law or under the
provisions of this Article. The Corporation may create a trust fund, grant a
security interest, cause a letter of credit to be issued or use other means
(whether or not similar to the foregoing) to ensure the payment of such sums as
may become necessary to effect indemnification as provided herein.
(e) NON-EXCLUSIVITY; NATURE AND EXTENT OF RIGHTS. The rights to
indemnification and advancement of expenses provided for in this Article shall
(i) not be deemed exclusive of any other rights, whether now existing or
hereafter created, to which any indemnitee may be entitled under any agreement
or by-law, charter provision, vote of shareholders or directors or otherwise,
(ii) be deemed to create contractual rights in favor of each indemnitee who
serves the Corporation at any time while this Article is in effect (and each
such indemnitee shall be deemed to be so serving in reliance on the provisions
of this Article), and (iii) continue as to each indemnitee who has ceased to
have the status pursuant to which he or she was entitled or was denominated as
entitled to indemnification under this Article and shall inure to the benefit of
the heirs and legal representatives of each indemnitee. Any amendment or repeal
of this Article or adoption of any By-Law or other provision of the Articles of
the Corporation which limits in any way the right to indemnification or the
right to advancement of expenses provided for in this Article shall operate
prospectively only and shall not affect any action taken, or failure to act, by
an indemnitee prior to the adoption of such amendment, repeal, By-Law or other
provision.
(f) PARTIAL INDEMNITY. If an indemnitee is entitled under any provision
of this Article to indemnification by the Corporation some or a portion of the
expenses or a liabilities paid or incurred by the indemnitee in the preparation,
investigation, defense, appeal or settlement of any Action or Indemnitee Action
but not, however, for the total amount thereof, the Corporation shall indemnify
the indemnitee for the portion of such expenses or liabilities to which the
indemnitee is entitled.
IN TESTIMONY WHEREOF, the incorporator has signed and sealed these
Articles of Incorporation this 20th day of February, 1989.
Incorporator:
/s/ Frank J. Rauktis (SEAL)
---------------------------------
Frank J. Rauktis
Sole Incorporator
-4-
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------- ----------------------------------------
BUREAU USE ONLY (T/C 53)
DSCB:BCL-206 (Rev.81) Department of State Number
P.O. Naly CO., 427 Fourth Ave.,
Pgh., PA 15219
----------------------------------------
COMMONWEALTH OF PENNSYLVANIA CORPORATION Box Number
DEPARTMENT OF STATE REGISTRY INFORMATION
CORPORATION BUREAU FOR ----------------------------------------
308 NORTH OFFICE BUILDING DEPARTMENT OF STATE Filing Period Inc. Date 3 4 5
HARRISBURG, PA 17120 AND REVENUE
----------------------------------------
(FILE IN TRIPLICATE) Standard Industrial Code Report Code
FILING FEE: NONE
==================================================================================================================================
</TABLE>
[X] BUSINESS CORPORATION [ ] NON-PROFIT CORPORATION
[ ] MOTOR VEHICLE FOR HIRE
- --------------------------------------------------------------------------------
Name of Corporation/Business Federal E.I.N.
Kentucky Ladder Company Applied For
- --------------------------------------------------------------------------------
Location of Initial Registered Office in Pennsylvania (Street/Route, City,
County, State, Zip Code)
93 Werner Road, P. O. Box 580
- --------------------------------------------------------------------------------
(Street and Number or R.D. Number and Box)
Greenville Mercer PA 16125
- --------------------------------------------------------------------------------
(City or Town) (County) (State) (Zip Code)
- --------------------------------------------------------------------------------
Mailing Address if different than #3 (location where correspondence, tax report
forms, etc. are to be sent)
- --------------------------------------------------------------------------------
(Street and Number/or R.D. Number and Box)
- --------------------------------------------------------------------------------
(City or Town) (County) (State) (Zip Code)
- --------------------------------------------------------------------------------
Foreign corporations: Location of proposed registered office
(Street and Number, Post Office, State)
- --------------------------------------------------------------------------------
Date Business Started in P.A.
- --------------------------------------------------------------------------------
Principal Officers (President, Vice President, Secretary, Treasurer)
- --------------------------------------------------------------------------------
A. Name Title Social Security Number
Howard Solot President & Chairman of the Board
- --------------------------------------------------------------------------------
Home Address
- --------------------------------------------------------------------------------
B. Name Title Social Security Number
Marc L. Werner Treasurer ###-##-####
- --------------------------------------------------------------------------------
Home Address
- --------------------------------------------------------------------------------
C. Name Title Social Security Number
Eric J. Werner Secretary
- --------------------------------------------------------------------------------
Home Address
- --------------------------------------------------------------------------------
D. Name
- --------------------------------------------------------------------------------
Home Address
- --------------------------------------------------------------------------------
Date and State of Incorporation or Organization
Date: Pending State: Commonwealth of Pennsylvania
- --------------------------------------------------------------------------------
Applicant is Operating as:
[xx] Corporation [ ] An Individual [ ] Co-Partnership
[ ] Joint Stock Association [ ] Association of Individuals [ ] Other
- --------------------------------------------------------------------------------
Provide the Act of General Assembly or authority under which you are organized
or incorporated (full citation of statute or status -- attach a separate sheet
if more space is required) Act of May 5, 1933, P.L. 364, as amended
- --------------------------------------------------------------------------------
Is the corporation authorized to issue capital stock? No [ ] Yes [X]
If yes, amount authorized? 3,000 shares of Common Stock
- --------------------------------------------------------------------------------
Amount of Capital paid in and Date
Amount: None as of Date: 2-20-89
- --------------------------------------------------------------------------------
Is the Corporation part of a system operating in Pennsylvania No [X] [ ] Yes
If yes, provide parent's box number, name and subsidiary corporation. (Attach
a separate sheet listing subsidiary corporation).
Box Number: Name:
- --------------------------------------------------------------------------------
Corporation's fiscal Standard Industrial Classification Code
year ends: December 31
- --------------------------------------------------------------------------------
Describe principal Pa. business activity to be engaged in, within one year of
this application date (attach separate sheet if necessary).
For Motor Vehicles: Include routes to be traveled.
Manufacture of climbing equipment
- --------------------------------------------------------------------------------
For Foreign Corporations Only -- provide text of purpose as stated in articles.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGE IN FILING PERIOD (APPLICABLE TO CORPORATIONS ONLY)
The Corporation listed on the reverse side, with its principal office in
Pennsylvania, certifies that its fiscal year closes on
(attach explanation if needed) and that the Corporation reports to the U.S.
Government on the same filing basis. Business was started in Pennsylvania on
- --------------------------------------------------------------------------------
CERTIFICATION
I/We certify that the information provided on this form has been examined
and is, to the best of my/our knowledge true and correct.
/s/ [Illegible]
--------------------------------------
(Incorporator of Proposed Domestic
Business Corporation)
--------------------------------------
(Name of Foreign Corporation or
Corporate Incorporator)
Attest
By
- -------------------------- --------------------------------------
(Secretary, Assistant (President, Vice President, Etc.)
Secretary, Etc.)
(Corporate Seal)
- --------------------------------------------------------------------------------
DEPARTMENT OF STATE USE ONLY:
Certificate of Incorporation [ ] , Certificate of Domestication [ ],
Certificate of Authority [ ], Issued by the Department of State on
the _____________________ date of ________________________, A.D. 19_______
- --------------------------------------------------------------------------------
NOTE: - The Department of Revenue should be notified of any address
changes and should be notified annually of any change in
Corporate Officers or of a change in authority to issue
capital stock.
- All PA. Corporate Tax Reports, except those for Motor Vehicle For
Hire, must be filed with the Commonwealth on the same fiscal
basis as filed with the United States Government Motor Vehicle
For Hire, i.e., Gross Receipts Tax Reports, must be filed on a
calendar year basis only.
- This form must be mailed in triplicate to:
Commonwealth of Pennsylvania
Department of State
Corporation Bureau
Harrisburg, PA 17120
In the case of a proposed business corporation, this Registry Statement
shall be executed by one of the original corporate members. A corporate
incorporator or a foreign business corporation shall be executed under the seal
of the corporation by two authorized officers. The Registry Information must be
submitted in triplicate, with one statement including a copy of the stated
purposes of a foreign corporation. Only one copy need be manually signed. The
remaining copies may be either conformed or facsimile copies.
<PAGE> 1
Exhibit 3.10
BY-LAWS
of
KENTUCKY LADDER COMPANY
(a Pennsylvania corporation)
Amended and Restated May 15, 1997
<PAGE> 2
KENTUCKY LADDER COMPANY
By-Laws
-------
ARTICLE I
SHAREHOLDERS
------------
Section 1.01. ANNUAL MEETINGS. Annual meetings of the shareholders
shall be held on the third Tuesday of March in each year if not a legal
holiday, and if a legal holiday, then on the next succeeding day which is not a
legal holiday, at 93 Werner Road, P.O. Box 580, Greenville, Pennsylvania, at
the principal business office of the Corporation, or at such other date, time
and place as may be fixed by the Board of Directors. Written notice of the
annual meeting shall be given at least ten (10) days prior to the meeting to
each shareholder entitled to vote thereat. Any business may be transacted at
the annual meeting regardless of whether the notice calling such meeting
contains a reference thereto, except as otherwise required by law.
Section 1.02. SPECIAL MEETINGS. Special meetings of the shareholders
may be called at any time, for the purpose or purposes set forth in the call,
by the Chairman of the Board, the President, the Board of Directors or the
holders of at least one fifth of all the shares entitled to vote thereat, by
delivering a written request to the Secretary. Special meetings shall be held
at the principal business office of the Corporation, or at such other place as
may be fixed by the Board of Directors. The Secretary shall thereupon fix the
time and date of such special meeting, which shall be held not more than sixty
days after the receipt of such request, and shall give due notice thereof.
Written notice of each special meeting shall be given a least five days prior
to the meeting to each shareholder entitled to vote thereat. Such notice shall
specify the general nature of the business to be transacted at such special
meeting, and no other business may be transacted at such special meeting.
Section 1.03. ORGANIZATION. The Chairman of the Board, if one has been
elected and is present, or if not, the President, or in his absence the Vice
President having the greatest seniority, shall preside, and the Secretary, or
in his absence any Assistant Secretary, shall take the minutes, at all meetings
of the shareholders.
Section 1.04. MEETINGS BY TELEPHONE. One or more shareholders may
participate in any annual or special meeting of the shareholders by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in a
meeting in this manner by a shareholder will be considered to be attendance in
person for all purposes under these By-Laws.
Section 1.05. ACTION WITHOUT A MEETING. Any action which may be taken
at a meeting of the shareholders may be taken without a meeting if a consent or
consents in writing, setting forth the
1
<PAGE> 3
action so taken, shall be signed by two-thirds of the shareholders who would be
entitled to vote at a meeting for such purpose and shall be filed with the
Secretary.
ARTICLE II
DIRECTORS
Section 2.01. NUMBER, ELECTION AND TERM OF OFFICE. The number of
Directors which shall constitute the full Board of Directors shall be fixed by
the Board of Directors but shall not be less than three nor more than seven
unless such lesser number is permitted by the Pennsylvania Business Corporation
Law. A full Board of Directors shall be elected at each annual meeting of the
shareholders. Each Director shall hold office from the time of his election,
but shall be responsible as a Director from such time only if he consents to
his election; otherwise from the time he accepts office or attends his first
meeting of the Board, and thereafter until his successor is duly elected, or
until his earlier death, resignation or removal.
Section 2.02. THE CHAIRMAN OF THE BOARD. The Board of Directors shall
elect a Chairman of the Board. The Chairman when present shall preside at all
meetings of the Shareholders and of the Board of Directors.
Section 2.03. REGULAR MEETINGS; NOTICE. Regular meetings of the Board
of Directors shall be held at such time and place as shall be designated by the
Board of Directors from time to time. Notice of such regular meetings shall not
be required, except as otherwise expressly required herein or by law, and
except that whenever the time or place of regular meetings shall be initially
fixed and then changed, notice of such action shall be given promptly by
telephone or otherwise to each Director not participating in such action. Any
business may be transacted at any regular meeting.
Section 2.04. ANNUAL MEETING OF THE BOARD. A regular meeting of the
Board of Directors shall be held immediately after and at the same place as the
annual meeting of the shareholders. Such regular meeting shall be the annual
organization meeting at which the Board shall organize itself and elect the
executive officers of the Corporation for the ensuing year and may transact any
other business.
Section 2.05. SPECIAL MEETINGS; NOTICE. Special meetings of the Board
of Directors may be called at any time by the Board itself, or by the Chairman
or the President, or by at least one-fourth of the directors, to be held at
such place and day and hour as shall be specified by the person or persons
calling the meeting. Notice of every special meeting of the Board of Directors
shall be given by the Secretary to each Director at least two days before the
meeting. Any business may be transacted at any special meeting regardless of
whether the notice calling such meeting contains a reference thereto, except as
otherwise required by law.
Section 2.06. ORGANIZATION. At all meetings of the Board of Directors,
the presence of at least a majority of the directors in office shall be
necessary and sufficient to constitute a quorum for
2
<PAGE> 4
the transaction of business. If a quorum is not present at any meeting, the
meeting may be adjourned from time to time by a majority of the Directors
present until a quorum as aforesaid shall be present, but notice of the time
and place to which such meeting is adjourned shall be given to any Directors
not present either by being sent by telegraph or given personally or by
telephone at least eight hours prior to the hour of reconvening. Resolutions of
the Board shall be adopted, and any action of the Board upon any matter shall
be valid and effective, with the affirmative vote of a majority of the
Directors present at a meeting duly convened and at which a quorum is present.
The Chairman of the Board, if one has been elected and is present, or if not,
the President, if he is a Director and is present, or if not, a Director
designated by the Board, shall preside at each meeting of the Board. The
Secretary, or in his absence any Assistant Secretary, shall take the minutes at
all meetings of the Board of Directors. In the absence of the secretary and an
Assistant Secretary, the presiding officer shall designate any person to take
the minutes of the meeting.
Section 2.07. MEETINGS BY TELEPHONE. One or more Directors may
participate in any regular or special meeting of the Board of Directors or of a
committee of the Board of Directors by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting in this manner by a
Director will be considered to be attendance in person for all purposes under
these By-Laws.
Section 2.08. PRESUMPTION OF ASSENT. Minutes of each meeting of the
Board shall be made available to each Director at or before the next succeeding
meeting. Each Director shall be presumed to have assented to such minutes
unless his objection thereto shall be made to the Secretary at or within two
days after such succeeding meeting.
Section 2.09. ACTION WITHOUT A MEETING. Any action which may be taken
at a meeting of the Board of Directors or any committee thereof may be taken
without a meeting if a consent or consents in writing, setting forth the action
so taken, shall be signed by all of the Directors or members of such committee,
as the case may be, and shall be filed with the Secretary.
Section 2.10. RESIGNATIONS. Any Director may resign by submitting his
resignation to the Secretary. Such resignation shall become effective upon its
receipt by the Secretary or as otherwise specified therein.
Section 2.11. COMMITTEES. By resolution adopted by a majority of the
whole Board, standing or temporary committees, which may include an Executive
Committee, consisting of at least two Directors may be appointed by the Board
of Directors from time to time. Each such committee shall have and exercise
such authority of the Board of Directors in the management of the business and
affairs of the Corporation as the Board may specify from time to time, which
may include declaration of dividends, authorization of the issuance and terms
of sale of stock or debt securities, fixing the relative rights and preferences
of preferred stock or other securities issue by the Corporation and any other
action which the Pennsylvania Business Corporation Law provides shall or may be
taken by the Board of Directors. The Board may designate one or more Directors
as alternate members of any committee to replace any absent or disqualified
member at any meeting
3
<PAGE> 5
of the committee, and in the event of such absence or disqualification, the
member or members of such committee present at any meeting and not disqualified
from voting, whether or not such member or members constitute a quorum, may
unanimously appoint another Director to act at the meeting in the place of any
such absent or disqualified member. Any action taken by any committee shall be
subject to alteration or revocation by the Board of Directors; provided,
however, that third parties shall not be prejudiced by such alteration or
revocation.
Section 2.12. PERSONAL LIABILITY OF DIRECTORS.
(a) ELIMINATION OF LIABILITY. To the fullest extent that the laws of
the Commonwealth of Pennsylvania, as now in effect or as hereafter amended,
permit elimination or limitation of the liability of directors, no Director of
the Corporation shall be personally liable for monetary damages as such for any
action taken, or any failure to take any action, as a Director.
(b) NATURE AND EXTENT OF RIGHTS. The provisions of this Section shall
be deemed to be a contract with each Director of the Corporation who serves as
such at any time while this Section is in effect and each such Director shall
be deemed to be so serving in reliance on the provisions of this Section. Any
amendment or repeal of this Section or adoption of any By-Law or provision of
the Articles of the Corporation which has the effect of increasing director
liability shall operate prospectively only and shall not have any effect with
respect to any action taken, or any failure to act, by a Director prior
thereto.
ARTICLE III
OFFICERS AND EMPLOYEES
----------------------
Section 3.01. EXECUTIVE OFFICERS. The Executive Officers of the
Corporation shall be the President, the Executive Vice President, the Secretary
and Treasurer, and shall include one or more Vice Presidents as the Board may
from time to time determine, all of whom shall be elected by the Board of
Directors. Any two or more offices may be held by the same person. Each
Executive Officer shall hold office at the pleasure of the Board of Directors,
or until his death or resignation.
Section 3.02. ADDITIONAL OFFICERS; OTHER AGENTS AND EMPLOYEES. The
Board of Directors may from time to time appoint or employ such additional
officers, assistant officers, agents, employees and independent contractors as
the Board deems advisable; the Board or the President shall prescribe their
duties, conditions of employment and compensation; and the Board shall have the
right to dismiss them at any time, without prejudice to their contract rights,
if any. The President may employ from time to time such other agents, employees
and independent contractors as he may deem advisable for the prompt and orderly
transaction of the business of the Corporation, and he may prescribe their
duties and the conditions of their employment, fix their compensation and
dismiss them at any time, without prejudice to their contract rights, if any.
4
<PAGE> 6
Section 3.03. THE PRESIDENT. Subject to the control of the Board of
Directors, the President shall have general and active management of the day to
day business of the Corporation. The President may sign and execute all
instruments in the name of the Corporation.
Section 3.04. THE VICE PRESIDENTS. The Vice Presidents may be given by
resolution of the Board general executive powers, subject to the control of the
President, concerning one or more or all segments of the operations of the
Corporation. The Vice Presidents shall exercise such further powers and duties
as from time to time may be prescribed in these By-Laws or by the Board of
Directors or the President. Each Vice President, by virtue of his office, shall
be an Assistant Secretary. At the request of the President, or in his absence
or disability, the Executive Vice President shall exercise the powers and
duties of the President.
Section 3.05. THE SECRETARY AND ASSISTANT SECRETARIES. It shall be the
duty of the Secretary (a) to keep an original or duplicate record of the
proceedings of the shareholders and the Board of Directors, and a copy of the
Articles and of the By-Laws; (b) to give such notices as may be required by law
or by these By-Laws; (c) to be custodian of the corporate records and of the
seal of the Corporation and see that the seal is affixed to such documents as
may be necessary or advisable; (d) to have charge of and keep, or cause to be
kept by a transfer agent or registrar, the stock books of the Corporation and
such records as to the identity of the shareholders, and as to the shares
issued to and held of record by them, as may be required by law; and (e) to
exercise all powers and duties incident to the office of Secretary; and such
further powers and duties as from time to time may be prescribed in these
By-Laws or by the Board of Directors or the President. The Secretary by virtue
of his office shall be an Assistant Treasurer. Each officer of the Corporation
by virtue of his office shall be an Assistant Secretary. The Assistant
Secretaries shall assist the Secretary in the performance of his duties and
shall also exercise such further powers and duties as from time to time may be
prescribed by the Board of Directors, the President or the Secretary. At the
direction of the Secretary or in his absence or disability, an Assistant
Secretary shall exercise the powers and duties of the Secretary.
Section 3.06. THE TREASURER AND ASSISTANT TREASURERS. It shall be the
duty of the Treasurer (a) to keep the Corporation's contracts, insurance
policies, leases, deeds and other business records; (b) to see that the
Corporation's lists, books, reports, statements, tax returns, certificates, and
other documents and records required by law are properly prepared, kept and
filed; (c) to be the principal officer in charge of tax and financial matters,
budgeting and accounting of the Corporation; (d) to have charge and custody of
and be responsible for the Corporation's funds, securities and investments; (e)
to receive and give receipts for checks, notes, obligations, funds and
securities of the Corporation, and deposit monies and other valuable effects in
the name and to the credit of the Corporation, in such depositories as shall be
designated by the Board of Directors; (f) subject to the provisions of Section
5.01 hereof, to cause the funds of the Corporation to be disbursed by payment
in cash or by checks or drafts upon the authorized depositories of the
Corporation, and to cause to be taken and preserved proper vouchers for such
disbursements; (g) to render to the President and the Board of Directors
whenever they may require it an account of all his transactions as Treasurer,
and reports as to the financial position and operations of the Corporation; (h)
to keep appropriate, complete and accurate books and records of account of all
the Corporation's business and
5
<PAGE> 7
transactions; and (i) to exercise all powers and duties incident to the office
of Treasurer; and such further duties from time to time as may be prescribed in
these By-Laws or by the Board of Directors or the President. The Assistant
Treasurers shall assist the Treasurer in the performance of his duties and
shall also exercise such further powers and duties as from time to time may be
prescribed by the Board of Directors, the President or the Treasurer. At the
direction of the Treasurer or in his absence or disability, an Assistant
Treasurer shall exercise the powers and duties of the Treasurer.
Section 3.07. VACANCIES. Any vacancy in any office or position by
reason of death, resignation, removal, disqualification, disability or other
cause shall be filled in the manner provided in this Article III for regular
election or appointment to such office.
Section 3.08. DELEGATION OF DUTIES. The Board of Directors may in its
discretion delegate for the time being the powers and duties, or any of them,
of any officer to any other person whom it may select.
ARTICLE IV
SHARES OF CAPITAL STOCK
Section 4.01. SHARE CERTIFICATES. Every holder of fully-paid stock of
the Corporation shall be entitled to a certificate or certificates, to be in
such form as the Board of Directors may from time to time prescribe, and signed
(in facsimile or otherwise, as permitted by law) by the President or a Vice
President and the Secretary or the Treasurer or an Assistant Secretary or an
Assistant Treasurer and sealed with the corporate seal or a facsimile thereof,
which shall represent the number and class of shares of stock owned by such
holder. The Board may authorize the issuance of certificates for fractional
shares or, in lieu thereof, scrip or other evidence of ownership, which may (or
may not) as determined by the Board entitle the holder thereof to voting,
dividends or other rights of shareholders.
Section 4.02. TRANSFER OF SHARES. Transfers of shares of stock of the
Corporation shall be made on the books of the Corporation only upon surrender
to the Corporation of the certificate or certificates for such shares properly
endorsed, by the shareholder or by his assignee, agent or legal representative,
who shall furnish proper evidence of assignment, authority or legal succession,
or by the agent of one of the foregoing thereunto duly authorized by an
instrument duly executed and filed with the Corporation, in accordance with
regular commercial practice.
Section 4.03. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. New
certificates for shares of stock may be issued to replace certificates lost,
stolen, destroyed or mutilated upon such condition as the Board of Directors
may from time to time determine.
6
<PAGE> 8
Section 4.04. REGULATIONS RELATING TO SHARES. The Board of Directors
shall have power and authority to make all such rules and regulations not
inconsistent with these By-Laws as it may deem expedient concerning the issue,
transfer and registration of certificates representing shares of the
Corporation.
Section 4.05. HOLDERS OF RECORD. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock of the Corporation
as the holder and owner in fact thereof for all purposes and 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 it shall have express or other notice
thereof, except as otherwise expressly provided by law.
ARTICLE V
MISCELLANEOUS CORPORATION TRANSACTIONS AND DOCUMENTS
----------------------------------------------------
Section 5.01. EXECUTION OF NOTES, CHECKS, CONTRACTS AND OTHER
INSTRUMENTS. All notes, bonds, drafts, acceptances, checks endorsements (other
than for deposit), guarantees and all evidences of indebtedness of the
Corporation whatsoever, and all deeds, mortgages, contracts and other
instruments requiring execution by the Corporation, may be signed by the
President, any Vice President or the Treasurer, and authority to sign any of
the foregoing, which may be general or confined to specific instances, may be
conferred by the Board of Directors upon any other person or persons. Any
person having authority to sign on behalf of the Corporation may delegate, from
time to time, by instrument in writing, all or any part of such authority to
any other person or persons if authorized to do so by the Board of Directors,
which authority may be general or confined to specific instances. Facsimile
signatures on checks may be used if authorized by the Board of Directors.
Section 5.02. VOTING SECURITIES OWNED BY CORPORATION. Securities owned
by the Corporation and having voting power in any other corporation shall be
voted by the President or any Vice President, unless the Board confers
authority to vote with respect thereto, which may be general or confined to
specific investments, upon some other person. Any person authorized to vote
such securities shall have the power to appoint proxies, with general power of
substitution.
ARTICLE VI
GENERAL PROVISIONS
------------------
Section 6.01. OFFICES. The principal business office of the
Corporation shall be at 93 Werner Road, P.O. Box 580, Greenville, PA 16125. The
Corporation may also have offices at such other places within or without the
Commonwealth of Pennsylvania as the business of the Corporation may require.
7
<PAGE> 9
Section 6.02 CORPORATE SEAL. The Board of Directors shall prescribe
the form of a suitable corporate seal, which shall contain the full name of the
Corporation and the year and state of incorporation.
Section 6.03. FISCAL YEAR. The fiscal year of the Corporation shall
end on such day as shall be fixed by the Board of Directors.
Section 6.04. FINANCIAL REPORTS TO SHAREHOLDERS. The Board shall have
discretion to determine whether financial reports shall be sent to
shareholders, what such reports shall contain, and whether they shall be
audited or accompanied by the report of an independent or certified public
accountant.
ARTICLE VII
AMENDMENTS
----------
Section 7.01. AMENDMENTS. These By-Laws may be amended, altered or
repealed, and new by-laws may be adopted, by the shareholders or the Board of
Directors at any regular or special meeting. No provision of these By-Laws
shall vest any property or contract right in any person.
8
<PAGE> 1
Exhibit 3.11
STATE OF FLORIDA
[LOGO - PHOTO - IN GOD WE TRUST]
DEPARTMENT OF STATE
I certify that the attached is a true and correct copy of Amended and Restated
Articles of Incorporation, filed May 21, 1987, for FLORIDA LADDER COMPANY, a
Florida corporation, as shown by the records of this office.
The document number of this corporation is 160140.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
4th day of June, 1987
[SEAL- GREAT SEAL OF THE STATE OF FLORIDA
IN GOD WE TRUST]
/s/ George Firestone
-------------------------------------
George Firestone
Secretary of State
<PAGE> 2
ARTICLES OF AMENDMENT
OF
FLORIDA LADDER COMPANY
Amending and Restating its Articles
of Incorporation in their entirety
PURSUANT to Section 607.194 of the Florida General Corporation Act the
undersigned, being all the directors and the sole shareholder of Florida Ladder
Company, a Florida corporation, adopt these Articles of Amendment amending and
restating the Articles of Incorporation of Florida Ladder Company in their
entirety.
FIRST: The name of this corporation is Florida Ladder Company.
SECOND: The Articles of Incorporation of this corporation are amended
and restated in their entirety so as to read in full as follows:
AMENDED AND RESTATED ARTICLES OF INCORPORATION
of
FLORIDA LADDER COMPANY
ARTICLE I. The name of this corporation is Florida Ladder
Company.
ARTICLE II. The duration of this corporation is perpetual.
ARTICLE III. The purpose for which this corporation is
organized is the transaction of any or all lawful business for which
corporations may be organized under the Florida General Corporation
Act.
<PAGE> 3
ARTICLE IV. The aggregate number of shares which this
corporation shall have authority to issue is 500 shares of common stock
of the par value of $1,000 per share.
ARTICLE V. The number of directors of this corporation shall
be as fixed in or pursuant to its By-Laws. Directors of this
corporation may be removed from office and vacancies in the board of
directors of this corporation may be filled, as provided in the
By-Laws of this corporation.
THIRD: These Articles of Amendment were adopted by all the directors
and the sole shareholder of this corporation on May 12, 1987.
FOURTH: Upon the filing of these Articles of Amendment with the
Department of State of the State of Florida this corporation's original
Articles of Incorporation, as theretofore amended, shall be superseded and
thenceforth the Amended and Restated Articles of Incorporation of this
corporation set forth above shall be the Articles of Incorporation of this
corporation.
IN WITNESS WHEREOF the undersigned have set their hands and seals on
May 12, 1987.
/s/ Richard L. Werner (Seal)
----------------------------
Richard L. Werner
/s/ Donald M. Werner (Seal)
----------------------------
Donald M. Werner
-2-
<PAGE> 4
/s/ Marc L. Werner (Seal)
----------------------------
Marc L. Werner
/s/ John P. Wiener, Jr. (Seal)
-----------------------------
John P. Wiener, Jr.
/s/ Tobin B. Wiener (Seal)
------------------------------
Tobin B. Wiener
ATTEST: R.D. Werner Co., Inc.
/s/ illegible By /s/ illegible
- ------------------------------ ------------------------------
Asst. Secretary President
[Corporate Seal]
CERTIFICATE
-------------
I, MARC L. WERNER, Secretary of FLORIDA LADDER COMPANY, hereby certify
that Richard L. Werner, Donald M. Werner Marc L. Werner, John P. Wiener, Jr.
and Tobin B. Wiener are all the directors of FLORIDA LADDER COMPANY and that
R.D. Werner Co., Inc. is the sole shareholder of FLORIDA LADDER COMPANY.
WITNESS my hand and seal this 12th day of May, 1987.
/s/ Marc L. Werner (Seal)
-------------------------------
Marc L. Werner
-3-
<PAGE> 5
STATE OF FLORIDA
[LOGO - PHOTO - IN GOD WE TRUST]
DEPARTMENT OF STATE
I certify that the attached is a true and correct copy of the Articles of
Incorporation, as amended to date, of FLORIDA LADDER COMPANY, a corporation
organized under the laws of the State of Florida, as shown by the records of
this office.
The document number of this corporation is 160140.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
4th day of June, 1987
[SEAL- GREAT SEAL OF THE STATE OF FLORIDA
IN GOD WE TRUST]
Jim Smith
Secretary of State
<PAGE> 6
CERTIFICATE OF INCORPORATION
OF
FLORIDA LADDER COMPANY
(Incorporated Under the laws of the State of Florida)
We, the undersigned, hereby associate ourselves together for the
purpose of becoming a corporation under the laws of the State of Florida, by
and under the provisions of the statutes of the State of Florida, providing
for the formation liability, rights, privileges and immunities of a
corporation for profit.
ARTICLE I - MAKE OF COMPANY - The name of this corporation shall be
"Florida Ladder Company."
ARTICLE II - GENERAL NATURE OF BUSINESS - The general nature of the
business and the objects and purposes proposed to be transacted and carried on
are to do any and all of the things herein mentioned, as fully and to the same
extent as natural persons might or could do. viz.:
To manufacture, make, buy, sell, import, export, deal and trade in
ladders, furniture, and wood, metal, plastic, ceramic and other types of
products of every kind and description;
To buy and sell, deal in, develop, promote and finance real estate and
real estate properties, buildings and improvements on its own account or for or
with others;
To buy, acquire, purchase, own, hold, transfer, sell, mortgage, pledge,
hypothecate, encumber, develop, import, export and deal in any and all kinds of
property;
To own, operate and transact the business of factor, broker, importer,
exporter, warehousemen or sale's agent;
To own, operate and transact the business of a retail and/or wholesale
and/or commission merchant or dealer in any line of goods or commodities, and
dispose of any such business in whole or in part;
To own, operate and transact the business of ranching, dairying,
trucking and/or farming;
<PAGE> 7
To deal in motor vehicles and to deal in and manufacture motor vehicle
equipment, accessories and supplies;
To carry or, engage in, or buy and dispose of in whole or in part, any
trading, commercial, manufacturing, amusement or mining business;
To buy, own, hold and/or operate hotels, restaurants, theatres, places
of amusement, shows, public concessions or amusement or recreational resorts or
enterprises, stores and/or factories and dispose of the same in part or in
entirety;
To own, hold and/or operate ships, barges, lighters, tugs and vessels
of all kinds, (but this corporation shall not engage in the business of a canal
company);
To acquire, hold, sell and/or dispose of any of the capital stock,
debentures, bonds or obligations of any other corporation or association;
To lease any of the properties or business herein encumbered or
mentioned for any of the purposes herein specified or to let the same;
To engage in, operate, own, carry on and do the business of a wholesale
and/or retail, lumber, hardware and marine-supply merchant and produce,
manufacture and _______ in ____ manner of materials equipment and supplies
used or suitable for use in the construction and/or maintenance of any sort
vessel, watercraft, building or structure.
To have generally all powers necessary, needful or desirable for the
full and complete exercise of any or all of the rights, powers and privileges
indicated in this Article or incidental thereto; it being understood that the
numerations of specific powers herein shall in no way restrict or impair any
material or incidental powers not specifically mentioned hereinabove, and not
specifically restricted by law; and it being further understood that this
corporation shall, without being in any way limited by the foregoing
enumeration, have all of the powers of a corporation for profit organized under
the existing laws of Florida and under said laws as and when they may later be
amended and/or supplemented.
-8-
<PAGE> 8
ARTICLE III - CAPITAL STOCK - The authorized capital stock of the
corporation shall be divided into a _______________________ (200) shares of
common voting stock of no par value union shall be fully paid when issued and
non-assessable. All of said stock shall be payable in each, property, labor
or services at a just valuation to be fixed by the Board of Directors at
their first meeting or at a meeting __________ for that purpose; property,
labor or services may be purchased, or paid for, with the capital stock at a
just valuation to be fixed by the board of directors at a meeting call for
that purpose. No other class of stock may be authorized.
ARTICLE IV - [paragraph illegible]
ARTICLE V - This corporation shall ____________________ existence
unless sooner dissolved according to ____________.
ARTICLE VI - PRINCIPAL PLACE OF BUSINESS - The principal place of
business of said corporation shall be at __________ Airport, ______ County,
Florida, _______ to having branch offices at other places within or without the
Note of Florida and ____________ without the United States of America.
ARTICLE VII - BOARD OF DIRECTORS - The number of directors of this
corporation shall be not less than three nor more than ten.
ARTICLE VIII - Directors - The _______ of post office addressee of the
members o the first board of Directors of this corporation shall hold office
for the first year or until their successors are chosen, shall be:
Name Address
---- -------
Julius Delagrange P.O. Box 2044, Sarasota, Florida
William M. Stuart 6 Floyd Avenue, Sarasota, Florida
s.M. B___________ 701 Windsor Avenue, Sarasota , Florida
ARTICLE IX - SUBSCRIBER - The name and post office address of each
-3-
<PAGE> 9
subscriber and the number of shares of stock which each agree to take are:
Name Address No. Share
------ ------- -----------
Julius Delagrange P.O. Box 2044, Sarasota, Florida 46
William N. Stuart 262 Floyd Ave., Sarasota, Florida 48
W. M. Beetners 791 Windsor Ave., Sarasota, Florida 10
ARTICLE X - SPECIAL CHARTER PROVIDER -
(1) The Officers of this corporation shall consist of a President,
Vice-President, Secretary and Treasurer. The office of Treasurer may be
combined with either that of President or Secretary and held by one and the
same person and the office of Vice-President may also be combined with that of
Secretary in the manner, but one person shall not hold more than two offices
simultaneously.
(2) The members of the Board of Directors shall be stockholders of the
corporation and shall be elected by the stockholders; but the officers of the
corporation shall be appointed or selected by the directors.
(3) The annual meeting of stockholders shall be held at the principal
office of the company on the second Tuesday in January of each year for the
purpose of electing directors for the ensuing year and for such other business
as may come up for consideration. The time of holding such annual meeting may,
however, be changed from time to time and fixed in the by-laws.
IN WITNESS WHEREOF, we have hereunto set our hands and seals at
Sarasota, Florida, this 30th day of December, A.D. 1979.
/s/ illegible (Seal)
--------------------------------
/s/ illegible (Seal)
--------------------------------
/s/ illegible (Seal)
--------------------------------
-4-
<PAGE> 10
STATE OF FLORIDA
COUNTY OF SARASOTA
Before the undersigned authority personally appeared this day JULIUS
DELAGRANGE, WILLIAM N. STUART and W.M. WEATHERS, to me well known to be the
individuals described in and who executed the foregoing certificate of
incorporation, and severally acknowledged that they executed the same freely
and voluntarily for the uses and purposes therein expressed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
the City of Sarasota, this 30th day of December, A.D. 1949.
/s/ illegible
-----------------------------------------
Notary Public, State of Florida at Large
My commission expires April 30, 1951.
<PAGE> 11
AMENDMENT TO CERTIFICATE OF INCORPORATION OF
FLORIDA LADDER COMPANY
The undersigned, constituting all the Directors and all of the
Stockholders of FLORIDA LADDER COMPANY, pursuant to the provisions of Section
601.18 Florida Statutes, do hereby file this written statement manifesting
their intention that the certificate of incorporation be amended in the
following manner and that this amendment be filed in the office of the
Secretary of State by the secretary of the corporation and that the secretary
pay all necessary fees and filing taxes to the Secretary of State in connection
therewith.
The authorized capital stock of this corporation is changed
from a maximum of 200 shares of common voting stock at no par
value which shall be fully paid when issued and non-assessable to a
maximum 300 shares of common stock of $1,000.00 par value which shall be
fully paid when issued and non-assessable.
This the 1st day of December, A.D. 1969.
/s/ John P. Wiener
-------------------------------
John P. Wiener
/s/ Matthew A. Wiener
--------------------------------
Matthew A. Wiener
/s/ William A. Weathers
-------------------------------
William M. Weathers
/s/ Emmett Addy
-------------------------------
Emmett Addy
/s/ John F. Burkett, Jr.
-------------------------------
John F. Burkett, Jr.
<PAGE> 12
C E R T I F I C A T E
---------------------
WILLIAM A. WEATHERS, secretary of FLORIDA LADDER COMPANY, does hereby
certify that the above named persons who have signed the foregoing Amendments
to the Certificate of Incorporation of FLORIDA LADDER COMPANY, to-wit; JOHN P.
WIENER, MARGERY A. WIENER, WILLIAM M. WEATHERS, EMMET ADDY and JOHN P. BURKETT,
JR., constitute all of the Directors and all of the Stockholders of FLORIDA
LADDER COMPANY.
/s/ William M. Weathers
-------------------------------------
William M. Weathers
(CORPORATE SEAL)
<PAGE> 13
AMENDMENT TO CERTIFICATE OF INCORPORATION OF
FLORIDA LADDER COMPANY
The undersigned, constituting all the Directors and all of the
Stockholders of FLORIDA LADDER COMPANY, pursuant to the provisions of Section
608.18 Florida Statutes, do hereby file this written statement manifesting their
intention that the certificate of incorporation be amended in the following
manner and that this amendment be filed in the office of the Secretary of State
by the Secretary of the corporation, and that the secretary pay all necessary
fees and filing taxes to the Secretary of State in connection therewith.
The Authorized capital stock of the corporation __________________ for
a maximum of 300 shares of common voting stock of $1,000,000 par value which
shall be fully paid when issued and non-assessed to a maximum of 500 shares of
common stock of $1,000,000 par value which shall be fully paid when issued and
non-assessable. This the 26th day of January, A.D. 1971.
/s/ John P. Wiener
-------------------------------
John P. Wiener
/s/ Margery A. Wiener
--------------------------------
Margery A. Wiener
/s/ Emmet Addy
-------------------------------
Emmet Addy
/s/ John F. Burkett, Jr.
-------------------------------
John F. Burkett, Jr.
<PAGE> 14
C E R T I F I C A T E
---------------------
MARGERY A. WIENER, Secretary of FLORIDA LADDER COMPANY, does hereby
certify that the above named persons who have signed the foregoing Amendment to
the Certificate of Incorporation of FLORIDA LADDER COMPANY, to-wit: JOHN P.
WIENER, MARGERY A. WIENER, EMMET ADDY and JOHN F. BURKETT, JR., constitute all
of the Directors and all of the stockholders of FLORIDA LADDER COMPANY.
/s/ Margery A. Wiener
---------------------------------
Margery A. Wiener
<PAGE> 15
ARTICLES OF AMENDMENT
OF
FLORIDA LADDER COMPANY
Amending and Restating its Articles
of Incorporation in their entirety
PURSUANT to Section 607.194 of the Florida General Corporation Act the
undersigned, being all the directors and the sole shareholder of Florida Ladder
Company, a Florida corporation, adopt these Articles of Amendment amending and
restating the Articles of Incorporation of Florida Ladder Company in their
entirety.
FIRST: The name of this corporation is Florida Ladder Company.
SECOND: The Articles of Incorporation of this corporation are amended
and restated in their entirety so as to read in full as follows:
AMENDED AND RESTATED ARTICLES OF INCORPORATION
of
FLORIDA LADDER COMPANY
ARTICLE I. The name of this corporation is Florida Ladder
Company.
ARTICLE II. The duration of this corporation is perpetual.
ARTICLE III. The purpose for which this corporation is
organized is the transaction of any or all lawful business for which
corporations may be organized under the florida General Corporation
Act.
<PAGE> 16
ARTICLE IV. The aggregate number of shares which this
corporation shall have authority to issue is 500 shares of common stock
of the par value of $1,000 per share.
ARTICLE V. The number of directors of this corporation shall
be as fixed in or pursuant to its By-Laws. Directors of this
corporation may be removed from office and vacancies in the board of
directors of this corporation may be filled, as provided in the
By-Laws of this corporation.
THIRD: These Articles of Amendment were adopted by all the directors
and the sole shareholder of this corporation on May 12, 1987.
FOURTH: Upon the filing of these Articles of Amendment with the
Department of State of the State of Florida this corporation's original
Articles of Incorporation, as theretofore amended, shall be superseded and
thenceforth the Amended and Restated Articles of Incorporation of this
corporation set forth above shall be the Articles of Incorporation of this
corporation.
IN WITNESS WHEREOF the undersigned have set their hands and seals on
May 12, 1987.
/s/ Richard L. Werner (Seal)
----------------------------
Richard L. Werner
/s/ Donald M. Werner (Seal)
----------------------------
Donald M. Werner
-2-
<PAGE> 17
/s/ Marc L. Werner (Seal)
----------------------------
Marc L. Werner
/s/ John P. Wiener, Jr. (Seal)
-----------------------------
John P. Wiener, Jr.
/s/ Tobin B. Wiener (Seal)
------------------------------
Tobin B. Wiener
ATTEST: R.D. Werner Co., Inc.
/s/ illegible By /s/ illegible
- ------------------------------ ------------------------------
Asst. Secretary President
[Corporate Seal]
CERTIFICATE
-------------
I, MARC L. WERNER, Secretary of FLORIDA LADDER COMPANY, hereby certify
that Richard L. Werner, Donald M. Werner Marc L. Werner, John P. Wiener, Jr.
and Tobin B. Wiener are all the directors of FLORIDA LADDER COMPANY and that
R.D. Werner Co., Inc. is the sole shareholder of FLORIDA LADDER COMPANY.
WITNESS my hand and seal this 12th day of May, 1987.
/s/ Marc L. Werner (Seal)
-------------------------------
Marc L. Werner
-3-
<PAGE> 18
STATE OF FLORIDA
[LOGO - PHOTO - IN GOD WE TRUST]
DEPARTMENT OF STATE
I certify from the records of this office that FLORIDA LADDER COMPANY is a
corporation organized under the laws of the State of Florida, filed on January
6, 1950.
The document number of this corporation is 160140.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
23rd day of August, 1988
[SEAL- GREAT SEAL OF THE STATE OF FLORIDA
IN GOD WE TRUST]
Jim Smith
Secretary of State
<PAGE> 19
STATE OF FLORIDA
[LOGO - PHOTO - IN GOD WE TRUST]
DEPARTMENT OF STATE
I certify that the attached is a true and correct copy of Articles of
Incorporation, as amended to date, of FLORIDA LADDER COMPANY, a corporation
organized under the laws of the State of Florida, as shown by the records of
this office.
The document number of this corporation is 160140.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
18th day of June, 1988
[SEAL- GREAT SEAL OF THE STATE OF FLORIDA
IN GOD WE TRUST]
Jim Smith
Secretary of State
<PAGE> 20
AMENDMENT TO CERTIFICATE OF INCORPORATION OF
FLORIDA LADDER COMPANY
The undersigned, constituting all the Directors and all of the
Stockholders of FLORIDA LADDER COMPANY, pursuant to the provisions of Section
608.18 Florida Statutes, do hereby file this written statement manifesting their
intention that the certificate of incorporation be amended in the following
manner and that this amendment be filed in the office of the Secretary of State
by the Secretary of the corporation, and that the secretary pay all necessary
fees and filing taxes to the Secretary of State in connection therewith.
The Authorized capital stock of the corporation __________________ for
a maximum of 300 shares of common voting stock of $1,000,000 par value which
shall be fully paid when issued and non-assessed to a maximum of 500 shares of
common stock of $1,000,000 par value which shall be fully paid when issued and
non-assessable. This the 26th day of January, A.D. 1971.
/s/ John P. Wiener
-------------------------------
John P. Wiener
/s/ Margery A. Wiener
--------------------------------
Margery A. Wiener
/s/ Emmet Addy
-------------------------------
Emmet Addy
/s/ John F. Burkett, Jr.
-------------------------------
John F. Burkett, Jr.
<PAGE> 21
C E R T I F I C A T E
---------------------
MARGERY A. WIENER, Secretary of FLORIDA LADDER COMPANY, does hereby
certify that the above named persons who have signed the foregoing Amendment to
the Certificate of Incorporation of FLORIDA LADDER COMPANY, to-wit: JOHN P.
WIENER, MARGERY A. WIENER, EMMET ADDY and JOHN F. BURKETT, JR., constitute all
of the Directors and all of the stockholders of FLORIDA LADDER COMPANY.
/s/ Margery A. Wiener
---------------------------------
Margery A. Wiener
<PAGE> 22
ARTICLES OF AMENDMENT
OF
FLORIDA LADDER COMPANY
Amending and Restating its Articles
of Incorporation in their entirety
PURSUANT to Section 607.194 of the Florida General Corporation Act the
undersigned, being all the directors and the sole shareholder of Florida Ladder
Company, a Florida corporation, adopt these Articles of Amendment amending and
restating the Articles of Incorporation of Florida Ladder Company in their
entirety.
FIRST: The name of this corporation is Florida Ladder Company.
SECOND: The Articles of Incorporation of this corporation are amended
and restated in their entirety so as to read in full as follows:
AMENDED AND RESTATED ARTICLES OF INCORPORATION
of
FLORIDA LADDER COMPANY
ARTICLE I. The name of this corporation is Florida Ladder
Company.
ARTICLE II. The duration of this corporation is perpetual.
ARTICLE III. The purpose for which this corporation is
organized is the transaction of any or all lawful business for which
corporations may be organized under the florida General Corporation
Act.
<PAGE> 23
ARTICLE IV. The aggregate number of shares which this
corporation shall have authority to issue is 500 shares of common stock
of the par value of $1,000 per share.
ARTICLE V. The number of directors of this corporation shall
be as fixed in or pursuant to its By-Laws. Directors of this
corporation may be removed from office and vacancies in the board of
directors of this corporation may be filled, as provided in the
By-Laws of this corporation.
THIRD: These Articles of Amendment were adopted by all the directors
and the sole shareholder of this corporation on May 12, 1987.
FOURTH: Upon the filing of these Articles of Amendment with the
Department of State of the State of Florida this corporation's original
Articles of Incorporation, as theretofore amended, shall be superseded and
thenceforth the Amended and Restated Articles of Incorporation of this
corporation set forth above shall be the Articles of Incorporation of this
corporation.
IN WITNESS WHEREOF the undersigned have set their hands and seals on
May 12, 1987.
/s/ Richard L. Werner (Seal)
----------------------------
Richard L. Werner
/s/ Donald M. Werner (Seal)
----------------------------
Donald M. Werner
-2-
<PAGE> 24
/s/ Marc L. Werner (Seal)
----------------------------
Marc L. Werner
/s/ John P. Wiener, Jr. (Seal)
-----------------------------
John P. Wiener, Jr.
/s/ Tobin B. Wiener (Seal)
------------------------------
Tobin B. Wiener
ATTEST: R.D. Werner Co., Inc.
/s/ illegible By /s/ illegible
- ------------------------------ ------------------------------
Asst. Secretary President
[Corporate Seal]
CERTIFICATE
-------------
I, MARC L. WERNER, Secretary of FLORIDA LADDER COMPANY, hereby certify
that Richard L. Werner, Donald M. Werner Marc L. Werner, John P. Wiener, Jr.
and Tobin B. Wiener are all the directors of FLORIDA LADDER COMPANY and that
R.D. Werner Co., Inc. is the sole shareholder of FLORIDA LADDER COMPANY.
WITNESS my hand and seal this 12th day of May, 1987.
/s/ Marc L. Werner (Seal)
-------------------------------
Marc L. Werner
-3-
<PAGE> 25
STATE OF FLORIDA
COUNTY OF SARASOTA
Before the undersigned authority personally appeared this day JULIUS
DELAGRANGE, WILLIAM N. STUART and W.M. WEATHERS, to me well known to be the
individuals described in and who executed the foregoing certificate of
incorporation, and severally acknowledged that they executed the same freely
and voluntarily for the uses and purposes therein expressed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
the City of Sarasota, this 30th day of December, A.D. 1949.
/s/ illegible
-----------------------------------------
Notary Public, State of Florida at Large
My commission expires April 20, 1951.
<PAGE> 26
AMENDMENT TO CERTIFICATE OF INCORPORATION OF
FLORIDA LADDER COMPANY
The undersigned, constituting all the Directors and all of the
Stockholders of FLORIDA LADDER COMPANY, pursuant to the provisions of Section
601.18 Florida Statutes, do hereby file this written statement manifesting
their intention that the certificate of incorporation be amended in the
following manner and that this amendment be filed in the office of the
Secretary of State by the secretary of the corporation and that the secretary
pay all necessary fees and filing taxes to the Secretary of State in connection
therewith.
The authorized capital stock of this corporation is changed
from a maximum of 200 shares of common voting stock at no par
value which shall be fully paid when issued and non-assessable to a
maximum 300 shares of common stock of $1,000.00 par value which shall be
fully paid when issued and non-assessable.
This the 1st day of December, A.D. 1969.
/s/ John P. Wiener
-------------------------------
John P. Wiener
/s/ Matthew A. Wiener
--------------------------------
Matthew A. Wiener
/s/ William A. Weathers
-------------------------------
William M. Weathers
/s/ Emmet Addy
-------------------------------
Emmet Addy
/s/ John F. Burkett, Jr.
-------------------------------
John F. Burkett, Jr.
<PAGE> 27
C E R T I F I C A T E
---------------------
WILLIAM A. WEATHERS, secretary of FLORIDA LADDER COMPANY, does hereby
certify that the above named persons who have signed the foregoing Amendments
to the Certificate of Incorporation of FLORIDA LADDER COMPANY, to-wit; JOHN P.
WIENER, MARGERY A. WIENER, WILLIAM M. WEATHERS, EMMET ADDY and JOHN P. BURKETT,
JR., constitute all of the Directors and all of the Stockholders of FLORIDA
LADDER COMPANY.
/s/ William M. Weathers
-------------------------------------
William M. Weathers
(CORPORATE SEAL)
<PAGE> 28
CERTIFICATE OF INCORPORATION
OF
FLORIDA LADDER COMPANY
(Incorporated Under the laws of the State of Florida)
We, the undersigned, hereby associate ourselves together for the
purpose of becoming a corporation under the laws of the State of Florida, by
and under the provisions of the statutes of the State of Florida, providing
for the formation liability, rights, privileges and immunities of a
corporation for profit.
ARTICLE I - NAME OF COMPANY - The name of this corporation shall be
"Florida Ladder Company."
ARTICLE II - GENERAL NATURE OF BUSINESS - The general nature of the
business and the objects and purposes proposed to be transacted and carried on
are to do any and all of the things herein mentioned, as fully a d to the same
extent as natural persons might or could do. viz.:
To manufacture, make, buy, sell, import, export, deal and trade in
ladders, furniture, and wood, metal, plastic, ceramic and other types of
products of every kind and description;
To buy and sell, deal in, develop, promote and finance real estate and
real estate properties, buildings and improvements on its own account or for or
with others;
To buy, acquire, purchase, own, hold, transfer, sell, mortgage, pledge,
hypothecate, encumber, develop, import, export and deal in any and all kinds of
property;
To own, operate and transact the business of factor, broker, importer,
exporter, warehousemen or sale's agent;
To own, operate and transact the business of a retail and/or wholesale
and/or commission merchant or dealer in any line of goods or commodities, and
dispose of any such business in whole or in part;
To own, operate and transact the business of ranching, dairying,
trucking and/or farming;
<PAGE> 29
To deal in motor vehicles and to deal in and manufacture motor vehicle
equipment, accessories and supplies;
To carry or, engage in, or buy and dispose of in whole or in part, any
trading, commercial, manufacturing, amusement or mining business;
To buy, own, hold and/or operate hotels, restaurants, theatres, places
of amusement, shows, public concessions or amusement or recreational resorts or
enterprises, stores and/or factories and dispose of the same in part or in
entirety;
To own, hold and/or operate ships, barges, fighters, tugs and vessels
of all kinds, (but this corporation shall not engage in the business of a canal
company);
To acquire, hold, sell and/or dispose of any of the capital stock,
debentures, bonds or obligations of any other corporation or association;
To lease any of the properties or business herein encumbered or
mentioned for any of the purposes herein specified or to let the same;
To engage in, operate, own, carry on and do the business of a wholesale
and/or retail, lumber, hardware and marine-supply merchant and produce,
manufacture and _______ in ____ manner of materials equipment and supplies
used or suitable for use in the construction and/or maintenance of any sort
vessel, watercraft, building or structure.
To have generally all powers necessary, needful or desirable for the
full and complete exercise of any or all of the rights, powers and privileges
indicated in this Article or incidental thereto; it being understood that the
numerations of specific powers herein shall in no way restrict or impair any
material or incidental powers not specifically mentioned hereinabove, and not
specifically restricted by law; and it being further understood that this
corporation shall, without being in any way limited by the foregoing
enumeration, have all of the powers of a corporation for profit organized under
the existing laws of Florida and under said laws as and when they may later be
amended and/or supplemented.
-8-
<PAGE> 30
ARTICLE III - CAPITAL STOCK - The authorized capital stock of the
corporation shall be divided into a _______________________ (200) shares of
common voting stock of no par value union shall be fully paid when issued and
non-assessable. All of said stock shall be payable in each, property, labor
or services at a just valuation to be fixed by the Board of Directors at
their first meeting or at a meeting __________ for that purpose; property,
labor or services may be purchased, or paid for, with the capital stock at a
just valuation to be fixed by the board of directors at a meeting call for
that purpose. No other class of stock may be authorized.
ARTICLE IV - [paragraph illegible]
ARTICLE V - This corporation shall ____________________ existence
unless sooner dissolved recording to ____________.
ARTICLE VI - PRINCIPAL PLACE OF BUSINESS - The principal place of
business of said corporation shall be at __________ Airport, ______ County,
Florida, _______ to having branch offices at other places within or without the
Note of Florida and ____________ without the United States of America.
ARTICLE VII - BOARD OF DIRECTORS - The number of directors of this
corporation shall be not less than three nor more than ten.
ARTICLE VIII - Directors - The _______ of post office addressee of the
members o the first board of Directors of this corporation shall hold office
for the first year or until their successors are chosen, shall be:
Name Address
---- -------
Julius Delagrange P.O. Box 2044, Sarasota, Florida
William M. Stuart 6 Floyd Avenue, Sarasota, Florida
s.M. B___________ 701 windsor Avenue, Sarasota , Florida
ARTICLE IX - SUBSCRIBER - The name and post office address of each
-3-
<PAGE> 31
subscriber and the number of shares of stock which each agree to take are:
Name Address No. Share
------ ------- -----------
Julius Delagrange P.O. Box 2044, Sarasota, Florida 46
William N. Stuart 262 Floyd Ave., Sarasota, Florida 48
W. M. Beetners 791 Windsor Ave., Sarasota, Florida 10
ARTICLE X - SPECIAL CHARTER PROVIDER -
(1) The Officers of this corporation shall consist of a President,
Vice-President, Secretary and Treasurer. The office of Treasurer may be
combined with either that of President or Secretary and held by one and the
same person and the office of Vice-President may also be combined with that of
Secretary in the manner, but one person shall not hold more than two office
simultaneously.
(2) The members of the Board of Directors shall be stockholders of the
corporation and shall be elected by the stockholders; but the officers of the
corporation shall be appointed or selected by the directors.
(3) The annual meeting of stockholders shall be held at the principal
office of the company on the second Tuesday in January of each year for the
purpose of electing directors for the ensuing year and for such other business
as may come up for consideration. The time of holding such annual meeting may,
however, be changed from time to time and fixed in the by-laws.
IN WITNESS WHEREOF, we have hereunto set our hands and seals at
Sarasota, Florida, this 30th day of December, A.D. 1979.
/s/ illegible (Seal)
--------------------------------
/s/ illegible (Seal)
--------------------------------
/s/ illegible (Seal)
--------------------------------
-4-
<PAGE> 1
Exhibit 3.12
BY-LAWS
of
FLORIDA LADDER COMPANY
(a Florida corporation)
Amended and Restated May 15, 1997
<PAGE> 2
BY-LAWS
of
FLORIDA LADDER COMPANY
ARTICLE I
Shareholders
------------
Section 1 - Annual Meeting
- --------------------------
The annual meeting of the shareholders of the corporation for the
election of directors, consideration of reports to be presented at such meeting
and the transaction of such other business as may properly come before such
meeting shall be held in March of each year at such place (within or without the
State of Florida), date and time as the board of directors of the corporation
may designate.
Section 2 - Special Meetings
- ----------------------------
Special meetings of the shareholders may be called at any time by the
president or the board of directors.
Section 3 - Notice of Meetings
- ------------------------------
Written notice of each meeting of the shareholders shall be given by,
or at the direction of, the person or persons authorized to call such meeting to
each shareholder of record entitled to vote at such meeting at least ten days
but not more than sixty days prior to the day named for such meeting.
ARTICLE II
Board of Directors
------------------
Section 1 - Number and Term of Office
- -------------------------------------
The business and affairs of the corporation shall be managed by a board
of directors consisting of such number of members, not less than three nor more
than ten, as shall be fixed by the board of directors from time to time.
Directors shall be elected at an annual meeting of the shareholders for a term
ending with the next annual meeting of shareholders and shall hold office until
their successors are elected.
-1-
<PAGE> 3
Section 2 - The Chairman of the Board
- -------------------------------------
The Board of Directors shall elect a Chairman of the Board. The
Chairman when present shall preside at all meetings of the Shareholders and of
the Board of Directors.
Section 3 - Election of Officers
- --------------------------------
Immediately after election by the shareholders, the board of directors
shall meet and elect and fix the compensation of the officers of the corporation
who shall hold office for a term ending with the first meeting of the board of
directors following the next annual meeting of shareholders and until their
successors are elected.
Section 4 - Regular Meetings
- ----------------------------
The first regular meeting of the board of directors each year shall be
held immediately following the adjournment of the annual meeting of the
shareholders that year. Other regular meetings of the board of directors shall
be held at such times and places as may be fixed by the board.
Section 5 - Special Meetings
- ----------------------------
Special meetings of the board of directors may be called at any time by
the president or by any two directors. The secretary shall give written notice
of each special meeting to each director at least two days prior to the day of
the meeting.
Section 6 - Participation in Meetings
- -------------------------------------
One or more directors may participate in a meeting of the board of
directors by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time.
Section 7 - Quorum
- ------------------
A majority of the directors in office shall be necessary to constitute
a quorum for the transaction of business and the acts of a majority of the
directors present at a meeting at which a quorum is present shall be the acts of
the board of directors.
Section 8 - Removal; Vacancies
- ------------------------------
The board of directors may at any time declare vacant the office of a
director who is unable to function as a director because of illness or for any
other reason. Vacancies in the board of directors shall be filled by a majority
of the remaining members of the board though less than a quorum and each person
so elected shall be a director until his successor is elected.
-2-
<PAGE> 4
Section 9 - Committees
- ----------------------
The board of directors may create an executive committee, or any other
committee, and may delegate to such committee or committees such authority as
the board of directors may determine except that no such committee shall have
the authority to:
(a) Approve or recommend to shareholders actions or proposals
required by law to be approved by shareholders;
(b) Designate candidates for the office of director for purposes
of proxy solicitation or otherwise;
(c) Fill vacancies on the board of directors or any committee
thereof;
(d) Amend these By-laws;
(e) Authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the
board of directors; or
(f) Authorize or approve the issuance or sale of, or any
contract to issue or sell, shares or designate the terms of
a series of a class of shares except that the board of
directors, having acted regarding general authorization for
the issuance or sale of shares, or any contract therefor,
and, in the case of a series, the designation thereof, may,
pursuant to a general formula or method specified by the
board by resolution or by adoption of a stock option or
other plan, authorize a committee to fix the terms of any
contract for the sale of the shares and to fix the terms
upon which such shares may be issued or sold including,
without limitation, the price, the rate or manner of payment
of dividends, provisions for redemption, sinking fund,
conversion and voting or preferential rights and provisions
for other features of a class of shares, or a series of a
class of shares, with full power in such committee to adopt
any final resolution setting forth all the terms thereof and
to authorize the statement of the terms of a series for
filing with the Florida Department of State.
-3-
<PAGE> 5
Section 10 - Powers
- -------------------
The board of directors shall manage the business and affairs of the corporation.
In addition to the powers and authority by these By-Laws expressly conferred
upon them, the board of directors may exercise all such powers and do all such
lawful acts and things as are not by statute, by these By-Laws or by the
corporation's Articles of Incorporation directed or required to be exercised or
done by the shareholders.
ARTICLE III
Officers
--------
Section 1 - Number of Election
- ------------------------------
The officers of the corporation shall consist of a president, one or
more vice presidents, the secretary and one or more assistant secretaries and
the treasurer and one or more assistant treasurers, all of whom shall be elected
for terms of one year by the board of directors at its first regular meeting
each year and shall at all times be subject to the direction and control of the
board of directors.
Section 2 - Powers and Duties
- -----------------------------
The president and the other officers of the corporation shall each have
such powers and duties as generally pertain to their respective offices and such
further powers and duties as from time to time may be confirmed upon them by the
board of directors.
Section 3 - Absence or Inability to Act
- ---------------------------------------
In the case of absence or inability to act of any officer of the
corporation, or of any person authorized to act in his place, the board of
directors may from time to time delegate the powers or duties of such officer to
any other officer, any director or any other person whom it may select.
Section 4 - Salaries
- --------------------
The salaries of officers of the corporation elected by the board of
directors shall be fixed by the board of directors.
Section 5 - Vacancies
- ---------------------
The board of directors shall have power to fill any vacancies in any
office occurring for whatever reason.
-4-
<PAGE> 6
Section 6 - Bonds
- -----------------
Any officer may be required by the board of directors to give bond for
the faithful discharge of his duties in such sum, with such surety or sureties
and of such character as the board may from time to time prescribe.
Section 7 - Removal
- -------------------
Any officer elected by the board of directors may be removed by the
board of directors whenever in its judgment the best interests of the
corporation will be served thereby.
ARTICLE IV
Certificates of Stock
---------------------
Section 1 - Form
- ----------------
Certificates for shares shall bear the signatures of the president or a
vice president and the secretary or an assistant secretary and shall contain
such statements as are required by law or by these By-Laws and shall otherwise
be in such form as the board of directors may from time to time determine or
approve.
Section 2 - Transfers
- ---------------------
Shares shall be transferable on the books of the corporation by the
holders thereof, in person or by duly authorized attorney, upon surrender and
cancellation, for certificates for a like number of shares of the same class or
series, with duly executed assignment and power of transfer endorsed thereon or
attached thereto and with such proof of the authenticity of the signatures as
the corporation or its agents may reasonably require.
Section 3 - Lost Certificates
- -----------------------------
No certificates for shares shall be issued in place of any certificate
alleged to have been lost, stolen or destroyed except upon indemnification of
the corporation and its agents to such extent and in such manner as the board of
directors may from time to time prescribe or require.
-5-
<PAGE> 7
ARTICLE V
Miscellaneous
-------------
Section 1 - Dividends
- ---------------------
Subject to any restrictions imposed by statute, the board of directors
may declare and pay dividends only out of unreserved and unrestricted earned
surplus of the corporation.
Section 2 - Negotiable Instruments
- ----------------------------------
All checks, drafts, bills of exchange, notes, acceptances, obligations
and other instruments for the payment of money shall be signed in the name of
the corporation by such officer or officers or person or persons as the board of
directors may from time to time authorize.
Section 3 - Contracts
- ---------------------
The board of directors may authorize any officer or officers or agent
or agents to enter into or execute and deliver in the name and on behalf of the
corporation any and all deeds, bonds, mortgages, contracts and other obligations
or instruments.
Section 4 - Corporate Seal
- --------------------------
The seal of the corporation shall be in such form as the board of
directors may designate or approve.
Section 5 - Fiscal Year
- -----------------------
The fiscal year of the corporation shall end on the 31st day of
December of each year or at the end of such other month as the board of
directors may by resolution designate.
ARTICLE VI
Indemnification
---------------
Directors and officers of the corporation shall be indemnified as of
right, and shall be entitled as of right to advancement of expenses, to the
fullest extent now or hereafter permitted by law in connection with any actual
or threatened civil, criminal, administrative or investigative action, suit or
proceeding (whether brought by or in the name of the corporation or otherwise)
arising out of their service to the corporation or to another organization at
the corporation's request. Persons who are not directors or officers of the
corporation may be similarly indemnified in respect of such service to the
extent authorized at any time by the board of directors. The corporation may
maintain
-6-
<PAGE> 8
insurance to protect itself and any such director, officer or other person
against any liability, cost or expense incurred in connection with any such
action, suit or proceeding.
ARTICLE VII
Amendments
----------
These By-Laws may be amended, altered, repealed or added to at any
regular or special meeting of the board of directors duly convened after notice
to the directors of that purpose and the powers hereby conferred to amend,
alter, repeal or add to these By-Laws shall be exercised by a majority vote of
the members of the board of directors.
-7-
<PAGE> 1
Exhibit 3.13
PENNSYLVANIA DEPARTMENT OF STATE
CORPORATION BUREAU
ROOM 308 NORTH OFFICE BUILDING
P.O. BOX 8722
HARRISBURG, PA 17105-8722
WERNER MANAGEMENT CO.
THE CORPORATION BUREAU IS HAPPY TO SEND YOU YOUR FILED DOCUMENT. PLEASE
NOTE THE FILE DATE AND THE SIGNATURE OF THE SECRETARY OF THE COMMONWEALTH. THE
CORPORATION BUREAU IS HERE TO SERVE YOU AND WANTS TO THANK YOU FOR DOING
BUSINESS IN PENNSYLVANIA. IF YOU HAVE ANY QUESTIONS PERTAINING TO THE
CORPORATION BUREAU, CALL (717) 787-1057.
ENTITY NUMBER: 2613163
MICROFILM NUMBER: 09479
1685 - 1686
CAPITOL PARALEGAL SERVICES
COUNTER
<PAGE> 2
9479-1685
COMMON WEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
Filed In The Department Of State On Dec 20 1994
/s/ Robert M. Grant
-----------------------------------------------
Secretary Of The Commonwealth
2613163
ARTICLES OF INCORPORATION
DOMESTIC BUSINESS CORPORATION
In compliance with the requirements of 15 Pa. C.S. Section 1306 (relating
to articles of incorporation), the undersigned, desiring to be incorporated as a
business corporation, hereby certifies that:
1. The name of the corporation is
WERNER MANAGEMENT CO.
2. The address of its registered office in this Commonwealth is
93 Werner Road
Greenville, PA 16125
3. The corporation is incorporated under the Pennsylvania
Business Corporation Law of 1988 (15 Pa. C.S. Section 1101 et seq.), as the same
may be amended.
4. The aggregate number of shares which the Corporation shall
have authority to issue is One Thousand (1,000) shares of common stock, no par
value.
5. The name and address of the incorporator is as follows:
Wendy A. Meikle
Suite A
109 WOODFIELD Drive
Greenville, PA 16125
DEC 20
PA DEPARTMENT OF STATE
<PAGE> 3
9479-1686
6. To the fullest extent permitted by law, no director of the
corporation shall be personally liable for monetary damages for any action
taken, or any failure to take any action.
7. The effective date of this filing shall be 12:01 a.m.,
January 1, 1995.
IN TESTIMONY WHEREOF, the incorporator has signed these Articles of
Incorporation this 19th day of December, 1994.
/s/ Wendy A. Meikle
-------------------------------
Wendy A. Meikle
Sole Incorporator
<PAGE> 1
Exhibit 3.14
Bylaws
of
WERNER MANAGEMENT CO.
(a Pennsylvania Corporation)
Amended and Restated
May 15, 1997
<PAGE> 2
INDEX TO Bylaws
ARTICLE I
Offices and Fiscal Year .......................................... 1
Section 1.01. Registered office .................................. 1
Section 1.02. Other offices ...................................... 1
Section 1.03. Fiscal year ........................................ 1
ARTICLE II
Notice - Waivers - Meetings Generally ............................ 1
Section 2.01. Manner of giving notice .......................... 1
Section 2.02. Notice of meetings of Board of Directors ......... 2
Section 2.03. Notice of meetings of Shareholders ............... 2
Section 2.04. Waiver of notice ................................. 2
Section 2.05. Modification of proposal contained in notice ..... 2
Section 2.06. Exception to requirement of notice ............... 3
Section 2.07. Use of conference telephone and similar
equipment ................................... 3
ARTICLE III
Shareholders ..................................................... 3
Section 3.01. Place of meeting ................................. 3
Section 3.02. Annual meeting ................................... 3
Section 3.03. Special meetings ................................. 3
Section 3.04. Quorum and adjournment ........................... 4
Section 3.05. Action by Shareholders ........................... 5
Section 3.06. Organization ..................................... 5
Section 3.07. Voting rights of Shareholders .................... 6
Section 3.08. Voting and other action by proxy ................. 6
Section 3.09. Voting by fiduciaries and pledgees ............... 6
Section 3.10. Voting by joint holders of shares ................ 7
Section 3.11. Voting by Corporations ........................... 7
Section 3.12. Determination of Shareholders of record .......... 7
Section 3.13. Voting lists ..................................... 8
Section 3.14. Judges of election ............................... 8
Section 3.15. Consent of Shareholders in lieu of meeting ....... 9
Section 3.16. Minors as security holders ....................... 9
ARTICLE IV
Board of Directors ............................................... 9
Section 4.01. Powers; personal liability ....................... 9
Section 4.02. Qualifications and selection of Directors ....... 11
Section 4.03. Number and term of office ....................... 11
Section 4.04. Vacancies ....................................... 11
Section 4.05. Removal of directors ............................ 12
<PAGE> 3
Section 4.06. The Chairman and vice chairman of the board ...... 12
Section 4.07. Place of meetings ................................ 12
Section 4.08. Organization of meetings ......................... 12
Section 4.09. Regular meetings ................................. 12
Section 4.10. Special meetings ................................. 12
Section 4.11. Quorum of and action by Directors ................ 13
Section 4.12. Executive and other committees ................... 13
Section 4.13. Compensation ..................................... 14
ARTICLE V
Officers ......................................................... 14
Section 5.01. Officers generally ............................... 14
Section 5.02. Election and term of office ...................... 14
Section 5.03. Subordinate officers, committees and agents ...... 14
Section 5.04. Removal of officers and agents ................... 14
Section 5.05. Vacancies ........................................ 15
Section 5.06. Authority ........................................ 15
Section 5.07. The President .................................... 15
Section 5.08. The Senior Vice Presidents and Vice Presidents ... 15
Section 5.09. The Secretary and Assistant Secretaries .......... 15
Section 5.10. The Treasurer and Assistant Treasurers ........... 16
Section 5.11. Salaries ......................................... 16
ARTICLE VI
Certificates of Stock, Transfer, Etc. ............................ 16
Section 6.01. Share certificates ............................... 16
Section 6.02. Issuance ......................................... 16
Section 6.03. Transfer ......................................... 17
Section 6.04. Record holder of Shares .......................... 17
Section 6.05. Lost, destroyed or mutilated certificates ........ 17
ARTICLE VII
Indemnification of Directors, Officers and
Other Authorized Representatives ................................. 17
Section 7.01. Scope of indemnification ......................... 17
Section 7.02. Proceeding initiated by indemnified
representative ................................ 18
Section 7.03. Advancing expenses ............................... 19
Section 7.04. Securing of indemnification obligations .......... 19
Section 7.05. Payment of indemnification ....................... 19
Section 7.06. Arbitration ...................................... 19
Section 7.07. Contribution ..................................... 20
Section 7.08. Mandatory indemnification of Directors,
Officers. etc. ................................ 20
Section 7.09. Contract rights; amendment or repeal ............. 20
Section 7.10. Scope of Article ................................. 20
Section 7.11. Reliance on provisions ........................... 20
Section 7.12. Interpretation ................................... 20
ii
<PAGE> 4
ARTICLE VIII
Miscellaneous .................................................... 21
Sectjon 8.01. Corporate seal ................................... 21
Sectjon 8.02. Checks ........................................... 21
Section 8.03. Contracts ........................................ 21
Section 8.04. Interested Directors or officers; quorum ......... 21
Section 8.05. Deposits ......................................... 22
Section 8.06. Corporate records ................................ 22
Section 8.07. Financial Reports ................................ 22
Section 8.08. Amendment of Bylaws .............................. 23
iii
<PAGE> 5
WERNER MANAGEMENT CO.
Bylaws
ARTICLE I
---------
Offices and Fiscal Year
Section 1.01. REGISTERED OFFICE. The registered office of the
Corporation in Pennsylvania shall be at 93 Werner Road, Greenville,
Pennsylvania 16125, until otherwise established by an amendment of the articles
or by the Board of Directors and a record of such change is filed with the
Department of State in the manner provided by law.
Section 1.02. OTHER OFFICES. The Corporation may also have offices at
such other places within or without Pennsylvania as the Board of Directors may
from time to time appoint or the business of the Corporation may require.
Section 1.03. FISCAL YEAR. The fiscal year of the Corporation shall
end on December 31 of each year.
ARTICLE II
Notice - Waivers - Meetings Generally
Section 2.01. MANNER OF GIVING NOTICE.
(a) GENERAL RULE. Whenever written notice is required to be given to
any person under the provision of the Business Corporation Law or by the
articles or these Bylaws, it may be given to the person either personally or by
sending a copy thereof by first class or express mail, postage prepaid, or be
telegram (with messenger service specified), telex or TWX (with answer back
received) or courier service, charges prepaid, or by telecopier, to the address
(or to the telex, TWX, telecopier or telephone number) of the person appearing
on the books of the Corporation or, in the case of directors, supplied by the
director to the Corporation for the purpose of notice. If the notice is sent by
mail, telegraph or courier service, it shall be deemed to have been given to
the person entitled thereto when deposited in the United States mail or with a
telegraphic office or courier service for delivery to that person or, in the
case of telex or TWX, when dispatched or, in the case of telecopier, when
received. A notice of meeting shall specify the place, day and time of the
meeting and any other information required by any other provision of the
Business Corporation Law, the articles or these Bylaws.
(b) ADJOURNED SHAREHOLDER MEETINGS. When a meeting of Shareholders is
adjourned, it shall not be necessary to give any notice of the adjourned
meeting or of the business to be transacted at an adjourned meeting, other than
by announcement at the meeting at which the adjournment is taken, unless the
board fixes a new record date for the adjourned meeting.
1
<PAGE> 6
Section 2.02. NOTICE OF MEETINGS OF BOARD OF DIRECTORS. Notice of a
regular meeting of the Board of Directors need not be given. Notice of every
special meeting of the Board of Directors shall be given to each Director at
least 24 hours (in the case of notice by telephone, telex, TWX or telecopier)
or 48 hours (in the case of notice by telegraph, courier service or express
mail) or five days (in the case of notice by first class mail) before the time
at which the meeting is to be held. Every such notice shall state the time and
place of the meeting. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board of Directors need be specified
in a notice of the meeting.
Section 2.03. NOTICE OF MEETINGS OF SHAREHOLDERS.
(a) GENERAL RULE. Written notice of the annual meeting of Shareholders
shall be given at least ten (10) days prior to the meeting to each Shareholder
entitled to vote thereat. Written notice of each special meeting of
Shareholders shall be given at least five (5) days prior to the meeting to each
Shareholder entitled to vote thereat. Such notice shall specify the general
nature of the business to be transacted at such special meeting, and no other
business may be transacted at such special meeting.
If the Secretary neglects or refuses to give notice of a meeting, the person or
persons calling the meeting may do so. In the case of a special meeting of
Shareholders, the notice shall specify the general nature of the business to be
transacted.
(b) NOTICE OF ACTION BY SHAREHOLDERS ON THE BYLAWS. In the case of a
meeting of Shareholders that has as one of its purposes action on the Bylaws,
written notice shall be given to each Shareholder that the purpose, or one of
the purposes, of the meeting is to consider the adoption, amendment or repeal
of the Bylaws. There shall be included in, or enclosed with, the notice a copy
of the proposed amendment or a summary of the changes to be effected thereby.
Section 2.04. WAIVER OF NOTICE.
(a) WRITTEN WAIVER. Whenever any written notice is required to be
given under the provisions of applicable law, the articles or these Bylaws, a
waiver thereof in writing, signed by the person or persons entitled to the
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of the notice. Except as otherwise required by this
subsection, neither the business to be transacted at, nor the purpose of, a
meeting need be specified in the waiver of notice of the meeting. In the case
of a special meeting of Shareholders, the waiver of notice shall specify the
general nature of the business to be transacted.
(b) WAIVER BY ATTENDANCE. Attendance of a person at any meeting shall
constitute a waiver of notice of the meeting except where a person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting was not lawfully called
or convened.
Section 2.05. MODIFICATION OF PROPOSAL CONTAINED IN NOTICE. Whenever
the language of a proposed resolution is included in a written notice of a
meeting required to be given under the provisions of the Business Law or the
articles or these Bylaws, the meeting considering the resolution may without
further notice adopt it with such clarifying or other amendments as do not
enlarge its original purpose.
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Section 2.06. EXCEPTION TO REQUIREMENT OF NOTICE.
(a) GENERAL RULE. Whenever any notice or communication is required to
be given to any person under the provisions of the Business Corporation Law or
by the articles or these Bylaws or by the terms of any agreement or other
instrument or as a condition precedent to taking any corporate action and
communication with that person is then unlawful, the giving of the notice or
communication to that person shall not be required.
(b) SHAREHOLDERS WITHOUT FORWARDING ADDRESSES. Notice or other
communications shall not be sent to any Shareholder with whom the Corporation
has been unable to communicate for more than 24 consecutive months because
communications to the Shareholder are returned unclaimed or the Shareholder has
otherwise failed to provide the Corporation with a current address. Whenever
the Shareholder provides the Corporation with a current address, the
Corporation shall commence sending notices and other communications to the
Shareholder in the same manner as to other Shareholders.
Section 2.07. USE OF CONFERENCE TELEPHONE AND SIMILAR EQUIPMENT. One
or more persons may participate in a meeting of the Board of Directors or the
Shareholders of the Corporation by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at the meeting.
ARTICLE III
Shareholders
Section 3.01. PLACE OF MEETING. All meetings of the Shareholders of
the Corporation shall be held at the registered office of the Corporation
unless another place is designated by the Board of Directors in the notice of a
meeting.
Section 3.02. ANNUAL MEETING. The Board of Directors may fix the date
and time of the annual meeting of the Shareholders, but if no such date and
time is fixed by the board, the meeting for any calendar year shall be held on
the third Tuesday of March in each year if not a legal holiday and, if a legal
holiday, then on the next succeeding day which is not a legal holiday, and at
said meeting the Shareholders then entitled to vote shall elect directors and
shall transact such other business as may properly be brought before the
meeting. If the annual meeting shall not have been called and held within six
months after the designated time, any Shareholder may call the meeting at any
time thereafter.
Section 3.03. SPECIAL MEETINGS.
(a) CALL OF SPECIAL MEETINGS. Special meetings of the Shareholders may
be called at any time:
(1) by the Board of Directors;
(2) by the Chairman;
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(3) by the President; or
(4) unless otherwise provided in the articles, by
Shareholders entitled to cast at least 20% of the votes that all Shareholders
are entitled to cast at the particular meeting.
(b) FIXING OF TIME FOR MEETING. At any time, upon written request of
any person who has called a special meeting, it shall be the duty of the
Secretary to fix the time of the meeting which shall be held not more than 60
days after the receipt of the request. If the Secretary neglects or refuses to
fix the time of the meeting, the person or persons calling the meeting may do
so.
Section 3.04. QUORUM AND ADJOURNMENT.
(a) GENERAL RULE. A meeting of Shareholders of the Corporation duly
called shall not be organized for the transaction of business unless a quorum
is present. The presence of Shareholders entitled to cast more than 50% of
the votes that all Shareholders are entitled to cast on a particular matter to
be acted upon at the meeting shall constitute a quorum for the purposes of
consideration and action on the matter. Shares of the Corporation owned,
directly or indirectly, by it and controlled, directly or indirectly, by the
Board of Directors of the Corporation, as such, shall not be counted in
determining the total number of outstanding Shares for quorum purposes at any
given time.
(b) WITHDRAWAL OF A QUORUM. The Shareholders present at a duly
organized meeting can continue to do business until adjournment notwithstanding
the withdrawal of enough Shareholders to leave less than a quorum.
(c) ADJOURNMENT FOR LACK OF QUORUM. If a meeting cannot be organized
because a quorum has not attended, those present may, except as provided by
applicable law, adjourn the meeting to such time and place as they may
determine.
(d) ADJOURNMENTS GENERALLY. Any meeting at which Directors are to be
elected shall be adjourned only from day to day, or for such longer periods not
exceeding 15 days each as the Shareholders present and entitled to vote shall
direct, until the Directors have been elected. Any other regular or special
meeting may be adjourned for such period as the Shareholders present and
entitled to vote shall direct.
(e) ELECTING DIRECTORS AT ADJOURNED MEETING. Those Shareholders
entitled to vote who attend a meeting called for the election of Directors that
has been previously adjourned for lack of a quorum, although less than a quorum
as fixed in this section, shall nevertheless constitute a quorum for the
purpose of electing Directors.
(f) OTHER ACTION IN ABSENCE OF QUORUM. Those Shareholders entitled to
vote who attend a meeting of Shareholders that has been previously adjourned
for one or more periods aggregating at least 15 days because of an absence of
a quorum, although less than a quorum as fixed in this section, shall
nevertheless constitute a quorum for the purpose of acting upon any matter set
forth in the notice of the meeting if the notice states that those Shareholders
who attend the adjourned meeting shall nevertheless constitute a quorum for the
purpose of acting upon the matter.
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Section 3.05. ACTION BY SHAREHOLDERS.
(a) GENERAL RULE. Except as otherwise provided by applicable law or
the articles or these Bylaws, whenever any Corporation action is to be taken by
vote of the Shareholders of the Corporation, it shall be authorized by a
majority of the votes cast at a duly organized meeting of Shareholders by the
holders of Shares entitled to vote thereon.
(b) INTERESTED SHAREHOLDERS. Any merger or other transaction
authorized under 15 Pa. C.S. Subchapter 19C between the Corporation or
subsidiary thereof and a Shareholder of this Corporation, or any voluntary
liquidation authorized under 15 Pa. C.S. Subchapter 19F in which a Shareholder
is treated differently from other Shareholders of the same class (other than
any dissenting Shareholders), shall require the affirmative vote of
Shareholders entitled to cast at least a majority of the votes that all
Shareholders other than the interested Shareholder are entitled to cast with
respect to the transaction, without counting the vote of the interested
Shareholder. For the purposes of the preceding sentence, interested Shareholder
shall include the Shareholder who is a party to the transaction or who is
treated differently from other Shareholders and any person, or group of
persons, that is acting jointly or in concert with the interested Shareholder
and any persons who, directly or indirectly, controls, is controlled by or is
under common control with the interested Shareholder. An interested Shareholder
shall not include any person who, in good faith and not for the purpose of
circumventing this subsection, is an agent, bank, broker, nominee or trustee
for one or more other persons, to the extent that the other person or persons
are not interested Shareholders.
(c) EXCEPTIONS. Subsection (b) shall not apply to a transaction:
(1) that has been approved by a majority vote of the directors without
counting the vote of directors who:
(i) are directors or officers of, or have a material equity
interest in, the interested Shareholder; or
(ii) were nominated for election as a director by the interested
Shareholder, and first elected as a director, within 24 months of the date of
the vote on the proposed transaction; or
(2) in which the consideration to be received by the Shareholders for
shares of any class of which shares are owned by the interested Shareholder is
not less than the highest amount paid by the interested Shareholder in
acquiring shares of the same class.
(d) ADDITIONAL APPROVALS. The approvals required by subsection (b)
shall be in addition to, and not in lieu of, any other approval required by the
Business Corporation Law, the articles or these Bylaws, or otherwise.
Section 3.06. ORGANIZATION. At every meeting of the Shareholders, the
Chairman or, in the case of vacancy in office or absence of the Chairman, one
of the following officers present in the order stated: the Vice Chairman, if
there be one, the President, the Senior Vice Presidents in their order of rank
and seniority, or a person chosen by vote of the Shareholders present, shall
act as chairman of the meeting. The Secretary or, in the absence of the
Secretary, an Assistant
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Secretary, or, in the absence of both the Secretary and Assistant Secretaries,
a person appointed by the Chairman of the meeting, shall act as Secretary.
Section 3.07. VOTING RIGHTS OF SHAREHOLDERS. Unless otherwise provided
in the articles, every Shareholder of the Corporation shall be entitled to one
vote for every Share standing in the name of the Shareholder on the books of
the Corporation.
Section 3.08. VOTING AND OTHER ACTION BY PROXY.
(a) GENERAL RULE.
(1) Every Shareholder entitled to vote at a meeting of
Shareholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person to act for the Shareholder by
proxy.
(2) The presence of, or vote or other action at a meeting of
Shareholders, or the expression of consent or dissent of corporate action in
writing, by a proxy of a Shareholder shall constitute the presence of, or vote
or action by, or written consent or dissent of the Shareholder.
(3) Where two or more proxies of a Shareholder are present, the
Corporation shall, unless otherwise expressly provided in the proxy, accept as
the vote of all shares represented thereby the vote cast by a majority of them
and, if a majority of the proxies cannot agree whether the shares represented
shall be voted or upon the manner of voting the shares, the voting of the
shares shall be divided equally among those persons.
(b) MINIMUM REQUIREMENTS. Every proxy shall be executed in writing by
the Shareholder or by the duly authorized attorney-in-fact of the Shareholder
and filed with the secretary of the Corporation. A proxy, unless coupled with
an interest, shall be revocable at will, notwithstanding any other agreement or
any provision in the proxy to the contrary, but the revocation of a proxy shall
not be effective until written notice thereof has been given to the secretary
of the Corporation. An unrevoked proxy shall not be valid after three years
from the date of its execution unless a longer time is expressly provided
therein. A proxy shall not be revoked by the death or incapacity of the maker
unless, before the vote is counted or the authority is exercised, written
notice of the death or incapacity is given to the secretary of the Corporation.
(c) EXPENSES. Unless otherwise restricted in the articles, the
Corporation shall pay reasonable expenses of solicitation of votes, proxies or
consents of Shareholders by or on behalf of the board of directors or its
nominees for election to the board, including solicitation by professional
proxy solicitors and otherwise.
Section 3.09. VOTING BY FIDUCIARIES AND PLEDGEES. Shares of the
Corporation standing in the name of a trustee or other fiduciary and shares
held by an assignee for the benefit of creditors or by a receiver may be voted
by the trustee, fiduciary, assignee or receiver. A Shareholder whose shares are
pledged shall be entitled to vote the shares until the shares have been
transferred into the name of the pledgee, or a nominee of the pledgee, but
nothing in this section shall affect the validity of a proxy given to a pledgee
or nominee.
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Section 3.10. VOTING BY JOINT HOLDERS OF SHARES.
(a) GENERAL RULE. Where shares of the Corporation are held jointly or
as tenants in common by two or more persons, as fiduciaries or otherwise;
(1) if only one or more of such persons is present in person or
by proxy, all of the shares standing in the names of such persons shall be
deemed to be represented for the purpose of determining a quorum and the
Corporation shall accept as the vote of all the shares the vote cast by a joint
owner or a majority of them; and
(2) if the persons are equally divided upon whether the shares
held by them shall be voted or upon the manner of voting the shares, the voting
of the shares shall be divided equally among the persons without prejudice to
the rights of the joint owner or the beneficial owners thereof among
themselves.
(b) EXCEPTION. If there has been filed with the secretary of the
Corporation a copy, certified by an attorney at law to be correct, of the
relevant portions of the agreement under which the shares are held or the
instrument by which the Corporation or estate was created or the order of court
appointing them or of an order of court directing the voting of the shares, the
persons specified as having such voting power in the document latest in date of
operative effect so filed, and only those persons, shall be entitled to vote
the shares but only in accordance therewith.
Section 3.11. VOTING BY CORPORATIONS
(a) VOTING BY CORPORATE SHAREHOLDERS. Any corporation that is a
Shareholder of this Corporation may vote by any of its officers or agents, or
by proxy appointed by any officer or agent, unless some other person, by
resolution of the board of directors of the other corporation or a provision of
its articles or Bylaws, a copy of which resolution or provision certified to be
correct by one of its officer has been filed with the secretary of this
Corporation, is appointed its general or special proxy in which case that
person shall be entitled to vote the share.
(b) CONTROLLED SHARES. Shares of this Corporation owned, directly or
indirectly, by it and controlled, directly or indirectly, by the board of
directors of this Corporation, as such, shall not be voted at any meeting and
shall not be counted in determining the total number of outstanding shares for
voting purposes at any given time.
Section 3.12. DETERMINATION OF SHAREHOLDERS OF RECORD.
(a) FIXING RECORD DATE. The Board of Directors may fix a time prior to
the date of any meeting of Shareholders as a record date for the determination
of the Shareholders entitled to notice of, or to vote at, the meeting, which
time, except in the case of an adjourned meeting, shall be not more than 90
days prior to the date of the meeting of Shareholders. Only Shareholders of
record on the date fixed shall be so entitled notwithstanding any transfer of
Shares on the books of the Corporation after any record date fixed as provided
in this subsection. The Board of Directors may similarly fix a record date for
the determination of Shareholders of record for any other purpose. When a
determination of Shareholders of record has been made as provided in this
section for purposes of a meeting, the determination shall apply to any
adjournment thereof unless the Board fixes a new record date for the adjourned
meeting.
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(b) DETERMINATION WHEN A RECORD DATE IS NOT FIXED. If a record date is
not fixed;
(1) The record date for determining Shareholders entitled to
notice of or to vote at a meeting of Shareholders shall be at the close of
business on the day next preceding the day on which notice is given or, if
notice is waived, at the close of business on the day immediately preceding the
day on which the meeting is held.
(2) The record date for determining Shareholders entitled to
express consent or dissent to Corporation action in writing without a meeting,
when prior action by the Board of Directors is not necessary, shall be the
close of business on the day on which the first written consent or dissent is
filed with the Secretary of the Corporation
(3) The record date for determining Shareholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
Section 3.13. VOTING LISTS.
(a) GENERAL RULE. The officer or agent having charge of the transfer
books for shares of the Corporation shall make a complete list of the
Shareholders entitled to vote at any meeting of Shareholders, arranged in
alphabetical order, with the address of and the number of shares held by each.
The list shall be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any Shareholder during the whole time
of the meeting for the purposes thereof.
(b) EFFECT OF LIST. Failure to comply with the requirements of this
section shall not affect the validity of any action taken at a meeting prior to
a demand at the meeting by any Shareholder entitled to vote thereat to examine
the list. The original share register or transfer or a duplicate thereof kept
in this Commonwealth, shall be prima facie evidence as to who are the
Shareholders entitled to examine the list or share register or transfer book or
to vote at any meeting of Shareholders.
Section 3.14. JUDGES OF ELECTION.
(a) APPOINTMENT. In advance of any meeting of Shareholders of the
Corporation, the board of directors may appoint judges of election, who need
not be Shareholders, to act at the meeting or any adjournment thereof. If
judged of election are not so appointed, the presiding officer of the meeting
may, and on the request of any Shareholder shall, appoint judges of election at
the meeting. The number of judges shall be one or three. A person who is a
candidate for office to be filled at the meeting shall not act as a judge.
(b) VACANCIES. In case any person appointed as a judge fails to appear
or fails or refuses to act, the vacancy may be filled by anointment made by the
board of directors in advance of the convening of the meeting or at the meeting
by the presiding officer thereof.
(c) DUTIES. The judges of election shall determine the number of
shares outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, the authenticity, validity and effect of
proxies, receive votes or ballots, hear and determine all challenges and
questions in any way arising in connection with the right to vote,
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count and tabulate all votes, determine the result and do such acts as may be
proper to conduct the election or vote with fairness to all Shareholders. The
judges of election shall perform their duties impartially, in good faith, to
the best of their ability and as expeditiously as is practical. If there are
three judges of election, the decision, act or certificate of a majority shall
be effective in all respects as the decision, act or certificate of all.
(d) REPORT. Qn request of the presiding officer of the meeting, or of
any Shareholder, the judges shall make a report in writing of any challenge or
question or matter determined by them, and execute a certificate of any fact
found by them. Any report or certificate made by them shall be prima facie
evidence of the facts stated therein.
Section 3.15. CONSENT OF SHAREHOLDERS IN LIEU OF MEETING. Any action
required or permitted to be taken at a meeting of the Shareholders or of a
class of Shareholders may be taken without a meeting upon the written consent
of Shareholders who would have been entitled to cast the minimum number of
votes that would be necessary to authorize the action at a meeting at which all
Shareholders entitled to vote thereon were present and voting. The consents
shall be filed with the Secretary of the Corporation.
Section 3.16. MINORS AS SECURITY HOLDERS. The Corporation may treat a
minor who holds shares or obligations of the Corporation as having capacity to
receive and to empower others to receive dividends, interest, principal and
other payments or distributions, to vote or express consent or dissent and to
make elections and exercise rights relating to such shares or obligations
unless, in the case of payments of distributions on shares, the corporate
officer responsible for maintaining the list of Shareholders or the transfer
agent of the Corporation or, in the case of payments or distributions on
obligations, the treasurer or paying officer or agent has received written
notice that the holder is a minor.
ARTICLE IV
----------
Board of Directors
Section 4.01. POWERS; PERSONAL LIABILITY.
(a) GENERAL RULE. Unless otherwise provided by applicable law, all
powers vested in the Corporation by Chapter 95 of Title 1 5 of the Pennsylvania
Consolidated Statutes shall be exercised by or under the authority of, and the
business and affairs of the Corporation shall be managed under the direction
of, the Board of Directors.
(b) STANDARD OF CARE; JUSTIFIABLE RELIANCE. A Director shall stand in
a fiduciary relation to the Corporation and shall perform his or her duties as
a Director, including duties as a member of any committee of the Board upon
which the Directors may serve, in good faith, in a manner the Director
reasonably believes to be in the best interests of the Corporation and with
such care, including reasonable inquiry, skill and diligence, as a person of
ordinary prudence would use under similar circumstances. In performing his or
her duties, a Director shall be entitled to rely in good faith on information,
opinions, reports or statements, including financial statements and other
financial data, in each case prepared or presented by any of the following:
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(1) One or more officers or employees of the Corporation whom the
Director reasonably believes to be reliable and competent in the matters
presented.
(2) Counsel, public accountants or other persons as to matters
which the Director reasonably believes to be within the professional or expert
competence of such person.
(3) A committee of the Board upon which the Director does not
serve, duly designated in accordance with law, as to matters within its
designated authority, which committee the Director reasonably believes to merit
confidence.
A Director shall not be considered to be acting in good faith if the Director
has knowledge concerning the matter in question that would cause his or her
reliance to be unwarranted.
(c) CONSIDERATION OF FACTORS. In discharging the duties of their
respective positions, the Board of Directors collectively, committees of the
Board and individual Director may, in considering the best interests of the
Corporation, consider the effects of any action upon employees, upon suppliers
and customers of the Corporation and upon communities in which offices or other
establishments of the Corporation are located, and all other pertinent factors.
The consideration of those factors shall not constitute a violation of
subsection (b).
(d) PRESUMPTION. Absent breach of fiduciary duty, lack of good faith
or self-dealing, actions taken as a Director or any failure to take any action
shall be presumed to be in the best interests of the Corporation.
(e) PERSONAL LIABILITY OF DIRECTORS.
(1) A Director shall not be personally liable, as such, for
monetary damages for any action taken, or any failure to take any action,
unless;
(i) the director has breached or failed to perform the duties
of his or her office under this section; and
(ii) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness.
(2) The provisions of paragraph (1) shall not apply to the
responsibility or liability of a director pursuant to any criminal statue, or
the liability of a director for the payment of taxes pursuant to Local, State
or Federal law.
(f) NOTATION OF DISSENT. A Director who is present at a meeting of the
Board of Directors, or of a committee of the Board, at which action on any
Corporation matter is taken shall be presumed to have assented to the action
taken unless his or her dissent is entered in the minutes of the meeting or
unless the Director files a written dissent to the action with the Secretary of
the meeting before the adjournment thereof or transmits the dissent in writing
to the Secretary of the Corporation immediately after the adjournment of the
meeting. The right to dissent shall not apply to a Director who voted in favor
of the action. Nothing in this section shall bar a Director from asserting that
minutes of the meeting incorrectly omitted his or her dissent if, promptly upon
receipt
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of a copy of such minutes, the Director notifies the Secretary, in writing, of
the asserted omission or inaccuracy.
Section 4.02. QUALIFICATIONS AND SELECTION OF DIRECTORS.
(a) QUALIFICATIONS. Each Director of the Corporation shall be (i) a
natural person of full age who need not be a resident of Pennsylvania or a
Shareholder of the Corporation and/or (ii) a corporation or other entity
authorized to serve as a fiduciary of a Corporation pursuant to the provisions
of 7 P.S. Section 106.
(b) ELECTION OF DIRECTORS. Except as otherwise provided in the these
Bylaws, Directors of the Corporation shall be elected by the Shareholders. In
elections for Directors, voting need not be by ballot, except upon demand made
by a Shareholder entitled to vote at the election and before the voting begins.
The candidates receiving the highest number of votes from each class or group
of classes, if any, entitled to elect Directors separately up to the number of
Directors to be elected by the class or group of classes shall be elected. If
at any meeting of Shareholders, Directors of more than one class are to be
elected, each class of Directors shall be elected in a separate election.
(c) CUMULATIVE VOTING. Unless the articles provide for straight
voting, in each election of directors every Shareholder entitled to vote shall
have the right to multiply the number of votes to which the Shareholder may be
entitled by the total number of directors to be elected in the same election by
the holders of the class or classes of shares which his or her shares are a
part and the Shareholder may cast the whole number of his or her votes for one
candidate or may distribute them among two or more candidates.
Section 4.03. NUMBER AND TERM OF OFFICE.
(a) NUMBER. The Board of Directors shall consist of such number not
fewer than three (3) nor more than ten (10) as may be determined from time to
time by resolution of the Board of Directors.
(b) TERM OF OFFICE. Each Director shall hold office until the
expiration of the term for which he or she was selected and until a successor
has been selected and qualified or until his or her earlier death, resignation
or removal. A decrease in the number of Directors shall not have the effect of
shortening the term of any incumbent Director.
(c) RESIGNATION. Any Director may resign at any time upon written
notice to the Corporation. The resignation shall be effective upon receipt
thereof by the Corporation or at such subsequent time as shall be specified in
the notice of resignation.
Section 4.04. VACANCIES.
(a) GENERAL RULE. Vacancies in the office of Board of Directors,
including vacancies resulting from an increase in the number of Directors, may
be filled by a majority vote of the Board of Directors though less than a
quorum, or by a sole remaining Board of Directors, and each person so selected
shall be a Director to serve for the balance of the unexpired term, and until a
successor has been selected and qualified or until his or her earlier death,
resignation or removal.
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(b) ACTION BY RESIGNED DIRECTORS. When the resignation of one or more
Directors is to be effective at a future date, the Directors then in office,
including those who have so resigned, shall have power by the applicable vote
to fill the vacancies, the vote thereon to take effect when the resignations
become effective.
Section 4.05. REMOVAL OF DIRECTORS.
(a) REMOVAL BY THE SHAREHOLDERS. The entire board of directors, or any
class of the board, or any individual director may be removed from office
without assigning any cause by the vote of Shareholder, or of the holders of a
class or series of shares, entitled to elect directors, or the class of
directors. In case the board or a class of the board or any one or more
directors are so removed, new directors may be elected at the same meeting. The
board of directors may be removed at any time with or without cause by the
unanimous vote or consent of the Shareholders entitled to vote thereon.
(b) REMOVAL BY THE BOARD. The board of directors may declare vacant
the office of a director who has been judicially declared of unsound mind or
who has been convicted of an offense punishable by imprisonment for a term of
more than one year or if, within 60 days after notice of his or her selection,
the director does not accept the office either in writing or by attending a
meeting of the board of directors.
Section 4.06. THE CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. The
Chairman of the Board or in the absence of the Chairman, the Vice Chairman of
the Board, shall preside at all meetings of the Shareholders and of the Board
of Directors and shall perform such other duties as may from time to time be
requested by the Board of Directors.
Section 4.07. PLACE OF MEETINGS. Meetings of the Board of Directors
may be held at such place within or without Pennsylvania as the Board of
Directors may from time to time appoint or as may be designated in the notice
of the meeting.
Section 4.08. ORGANIZATION OF MEETINGS. At every meeting of the Board
of Directors, the Chairman, if there be one, or, in the case of a vacancy in
the office or absence of the Chairman and Vice Chairman,one of the following
officers present in the order stated: the President, the Vice Presidents in
their order of rank and seniority, or a person chosen by a majority of the
Directors present, shall act as Chairman of the meeting. The Secretary or, in
the absence of the Secretary, an Assistant Secretary, or, in the absence of the
Secretary and the Assistant Secretaries, any person appointed by the Chairman
of the meeting, shall act as Secretary.
Section 4.09. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such time and place as shall be designated from time
to time by resolution of the Board of Directors.
Section 4.10. SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be held whenever called by the Chairman or by two or more of
the Directors.
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Section 4.11. QUORUM OF AND ACTION BY DIRECTORS.
(a) GENERAL RULE. A majority of the Directors in office shall be
necessary to constitute a quorum for the transaction of business and the acts
of a majority of the Directors present and voting at a meeting at which a
quorum is present shall be the acts of the Board of Directors.
(b) ACTION BY WRITTEN CONSENT. Any action required or permitted to be
taken at a meeting of the Board of Directors may be taken without a meeting if,
prior or subsequent to the action, a consent or consents thereto by all of the
Directors in office is filed with the secretary of the Corporation. If and
during any period when there shall be only one Director, the foregoing Sections
4.07 to 4.10 shall not apply, and all actions of the Board of Directors shall
be by written consent in accordance with this Section 4.11(b).
Section 4.12. EXECUTIVE AND OTHER COMMITTEES.
(a) ESTABLISHMENT AND POWERS. The Board of Directors may, by
resolution adopted by a majority of the Directors in office, establish one or
more committees to consist of one or more Directors of the Corporation. Any
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all of the powers and authority of the Board of
Directors except that a committee shall not have any power or authority as to
the following;
(1) The submission to Shareholders of any action requiring
approval of Shareholders under applicable law.
(2) The creation or filling of vacancies in the office of
Board of Directors.
(3) The adoption, amendment or repeal of these Bylaws.
(4) The amendment or repeal of any resolution of the Board of
Directors that by its terms is amendable or repealable only by the
Board.
(5) Action on matters committed by a resolution of the Board
of Directors to another committee of the Board.
(b) ALTERNATE COMMITTEE MEMBERS. The Board 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 or for the purposes of any
written action by the committee. In the absence or disqualification of a member
and alternate member or members of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another Director to act at the
meeting in the place of the absent or disqualified member.
(c) TERM. Each committee of the Board shall serve at the pleasure of
the Board.
(d) COMMITTEE PROCEDURES. The term "Board of Directors" or "Board",
when used in any provision of these Bylaws relating to the organization or
procedures of or the manner of taking action by the Board of Directors, shall
be construed to include and refer to any executive or other committee of the
Board.
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Section 4.13. COMPENSATION. The Board of Directors shall have the
authority to fix the compensation of Directors for their services as Directors
and a Director may be a salaried officer of the Corporation.
ARTICLE V
---------
Officers
Section 5.01. OFFICERS GENERALLY
(a) NUMBER QUALIFICATIONS AND DESIGNATION. The officers of the
Corporation shall be the President, the Secretary, the Treasurer, the Senior
Vice Presidents and such other officers as may be elected in accordance with
the provisions of Section 5.03. Officers may but need not be Directors or
Shareholders of the Corporation. The President and Secretary shall be natural
persons of full age. The Treasurer may be a corporation, but if a natural
person shall be of full age.
(b) RESIGNATIONS. Any officer may resign at any time upon written
notice to the Corporation. The resignation shall be effective upon receipt
thereof by the Corporation or at such subsequent time as may be specified in
the notice of resignation.
(c) BONDING. The Corporation may secure the fidelity of any or all of
its officers by bond or otherwise.
(d) STANDARD OF CARE. Except as otherwise provided in the articles, an
officer shall perform his or her duties as an officer in good faith, in a
manner he or she reasonably believes to be in the best interests of the
Corporation and with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances. A person who so performs his or her duties shall not be liable
by reason of having been an officer of the Corporation.
Section 5.02. ELECTION AND TERM OF OFFICE. The officers of the
Corporation, except those elected by delegated authority pursuant to Section
5.03, shall be elected annually by the Board of Directors, and each such
officer shall hold office for a term of one year and until a successor has been
selected and qualified or until his or her earlier death, resignation or
removal.
Section 5.03. SUBORDINATE OFFICERS, COMMITTEES AND AGENTS. The Board
of Directors may from time to time elect such other officers and appoint such
committees, employees or other agents as the business of the Corporation may
require, including one or more Vice Presidents, Assistant Secretaries, and
Assistant Treasurers, each of whom shall hold office for such period, have such
authority, and perform such duties as are provided in these Bylaws or as the
Board of Directors may from time to time determine. The Board of Directors may
delegate to any officer or committee the power to elect subordinate officers
and to retain or appoint employees or other agents, or committees thereof and
to prescribe the authority and duties of such subordinate officers, employees
committees or other agents.
Section 5.04. REMOVAL OF OFFICERS AND AGENTS. Any officer or agent of
the Corporation may be removed by the Board of Directors with or without cause.
The removal shall be without
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<PAGE> 19
prejudice to the contract rights, if any, of any person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
Section 5.05. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause, shall be filled by
the Board of Directors or by the officer or committee to which the power to
fill such office has been delegated pursuant to Section 5.03, as the case may
be, and if the office is one for which these Bylaws prescribe a term, shall be
filled for the unexpired portion of the term.
Section 5.06. AUTHORITY. All officers of the Corporation, as between
themselves and the Corporation, shall have such authority and perform such
duties in the management of the Corporation as may be provided by or pursuant
to resolutions or orders of the Board of Directors or, in the absence of
controlling provisions in the resolutions or orders of the Board of Directors,
as may be determined by or pursuant to these Bylaws.
Section 5.07. THE PRESIDENT. Subject to the control of the Board of
Directors, the President shall have general and active management of the day to
day business of the Corporation. The President may sign and execute all
instruments in the name of the Corporation.
Section 5.08. THE SENIOR VICE PRESIDENTS AND VICE PRESIDENTS. The
Senior Vice Presidents shall have and the Vice Presidents may be given by
resolution of the Board of Directors general executive powers, subject to the
control of the President, concerning one or more or all segments of the
operations of the Corporation. The Vice Presidents shall exercise such further
powers and duties as from time to time may be prescribed in these Bylaws or by
the Board of Directors or the President. Each Vice President, by virtue of his
office, shall be an Assistant Secretary. At the request of the President, or in
his absence or disability, any Senior Vice President shall exercise the powers
and duties of the President.
Section 5.09. THE SECRETARY AND ASSISTANT SECRETARIES. It shall be the
duty of the Secretary (a) to keep an original or duplicate record of the
proceedings of the Shareholders and the Board of Directors, and a copy of the
articles and of the Bylaws; (b) to give such notices as may be required by law
or these Bylaws; (c) to keep the Corporation's contracts, insurance policies,
leases, deeds and other business records; (d) to be custodian of the records
and of the seal of the Corporation and see that the seal is affixed to such
documents as may be necessary or advisable; (e) to see that the Corporations
Certificates and other documents or records similar or related thereto as
required by law are properly prepared, kept, and filed; (f) to have charge of
and keep, or cause to be kept by a transfer agent or registrar, the stock books
of the Corporation and such records as to the identity of the Shareholders, and
as to the Shares issued to and held of record by them, as may be required by
law; and (g) to exercise all powers and duties incident to the office of
Secretary; and such further powers and duties as from time to time may be
prescribed in these Bylaws or by the Board of Directors or the President. The
Secretary by virtue of his office shall be an Assistant Treasurer. Each officer
of the Corporation by virtue of his office shall be an Assistant Secretary. The
Assistant Secretaries shall assist the Secretary in the performance of his
duties and shall also exercise such further powers and duties as from time to
time may be prescribed by the Board of Directors, the President or the
Secretary. At the direction of the Secretary or in his absence or disability,
an Assistant Secretary shall exercise the powers and duties of the Secretary.
15
<PAGE> 20
Section 5.10. THE TREASURER AND ASSISTANT TREASURERS. It shall be the
duty of the Treasurer (a) to see that the Corporation's lists, books, reports,
statements, tax returns, and other documents or records similar or related
thereto as required by law are properly prepared, kept and filed; (b) to be the
principal officer in charge of tax and financial matters, budgeting and
accounting of the Corporation; (c) to have charge and custody of and be
responsible for the Corporation's funds, securities and investments; (d) to
receive and give receipts for checks, notes, obligations, funds and securities
of the Corporation, and deposit monies and other valuable effects in the name
and to the credit of the Corporation, in such depositories as shall be
designated by the Board of Directors; (e) subject to the terms and provisions
hereof, to cause the funds of the Corporation to be disbursed by payment in
cash or by checks or drafts upon the authorized depositories of the
Corporation, and to cause to be taken and preserved proper vouchers for such
disbursements; (f) to render to the President and the Board of Directors
whenever they may require it an account of all his transactions as Treasurer,
and reports as to the financial position and operations of the Corporation; (g)
to keep appropriate, complete and accurate books and records of account of all
the Corporation's business and transactions; and (h) to exercise all powers and
duties incident to the office of Treasurer; and such further duties from time
to time as may be prescribed in these Bylaws or by the Board of Directors or
the President. The Assistant Treasurers shall assist the Treasurer in the
performance of his duties and shall also exercise such further powers and
duties as from time to time may be prescribed by the Board of Directors, the
President or the Treasurer. At the direction of the Treasurer or in his absence
or disability, an Assistant Treasurer shall exercise the powers and duties of
the Treasurer.
Section 5.11. SALARIES. The salaries of the officers elected by the
Board of Directors shall be fixed from time to time by the Board of Directors
or by such officer as may be designated by resolution of the Board. The
salaries or other compensation of any other officers, employees and other
agents shall be fixed from time to time by the officer or committee to which
the power to elect such officers or to retain or appoint such employees or
other agents has been delegated pursuant to Section 5.03. No officer shall be
prevented from receiving such salary or other compensation by reason of the
fact that the officer is also a Director of the Corporation.
ARTICLE VI
----------
Certificates of Stock, Transfer, Etc.
Section 6.01. SHARE CERTIFICATES. Certificates for Shares of the
Corporation shall be in such form as approved by the Board of Directors, and
shall state that the Corporation is formed under the laws of Pennsylvania, the
name of the person to whom issued, and the number and class of Shares and the
designation of the series (if any) that the certificate represents. The Share
register or transfer books and blank Share certificates shall be kept by the
Secretary or by any transfer agent or registrar designated by the Board of
Directors for that purpose.
Section 6.02. ISSUANCE. The Share certificates of the Corporation
shall be numbered and registered in the Share register or transfer books of the
Corporation as they are issued. They shall be signed by the President or a
Senior Vice President and by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer, and shall bear the Corporation seal, which
may be a facsimile, engraved or printed; but where such certificate is signed
by a transfer agent or a registrar the signature of any Corporation officer
upon such certificate may be a facsimile, engraved or printed. In case any
officer who has signed, or whose facsimile signature has been placed upon,
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<PAGE> 21
any Share certificate shall have ceased to be such officer because of death,
resignation or otherwise, before the certificate is issued, it may be issued
with the same effect as if the officer had not ceased to be such at the date
of its issue. The provisions of this Section 6.02 shall be subject to any
inconsistent or contrary agreement at the time between the Corporation and any
transfer agent or registrar.
Section 6.03. TRANSFER. Transfers of Shares shall be made on the
Share register or transfer books of the Corporation upon surrender of the
certificate therefor, endorsed by the person named in the certificate or by
an attorney lawfully constituted in writing. No transfer shall be made
inconsistent with the provisions of the Uniform Commercial Code, 13 Pa.
C.S.A. Section 8101 et seq., and its amendments and supplements.
Section 6.04. RECORD HOLDER OF SHARES. The Corporation shall be
entitled to treat the person in whose name any Share or Shares of the
Corporation stand on the books of the Corporation as the absolute owner
thereof, and shall not be bound to recognize any equitable or other claim to,
or interest in, such Share or Shares on the part of any other person.
Section 6.05. LOST, DESTROYED OR MUTILATED CERTIFICATES. The holder of
any Shares of the Corporation shall immediately notify the Corporation of any
loss, destruction or mutilation of the certificates therefor, and the Board of
Directors may, in their discretion, cause a new certificate or certificates to
be issued to such holder, in case of mutilation of the certificate, upon the
surrender of the mutilated certificate or, in case of loss or destruction of
the certificate, upon satisfactory proof of such loss or destruction and, if
the Board of Directors shall so determine, the deposit of a bond in such form
and in such sum, and with such surety or sureties, as it may direct.
ARTICLE VII
-----------
Indemnification of Directors, Officers and
Other Authorized Representatives.
Section 7.01. SCOPE OF INDEMNIFICATION.
(a) GENERAL RULE. The Corporation shall indemnify an indemnified
representative against any liability incurred in connection with any proceeding
in which the indemnified representative may be involved as a party or
otherwise by reason of the fact that such person is or was serving in an
indemnified capacity, including, without limitation, liabilities resulting
from any actual or alleged breach or neglect of duty, error, misstatement or
misleading statement, negligence, gross negligence or act giving rise to
strict or products liability, except;
(1) where such indemnification is expressly prohibited by
applicable law;
(2) where the conduct of the indemnified representative has
been finally determined pursuant to Section 7.06 or otherwise;
(i) to constitute willful misconduct or
recklessness within the meaning of 15 Pa C.S. Section 513(b)
and 1746(b) and 42 Pa. C.S. Section 8365(b) or any
superseding provision of law sufficient in the
circumstances to bar indemnification
against liabilities arising from the conduct; or
17
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(ii) to be based upon or attributable to the receipt
by the indemnified representative from the Corporation of a
personal benefit to which the indemnified representative is
not legally entitled; or
(3) to the extent such indemnification has been finally
determined in a final adjudication pursuant to Section 7.06 to be
otherwise unlawful.
(b) PARTIAL PAYMENT. If an indemnified representative is entitled to
indemnification in respect of a portion, but not all, of any liabilities to
which such person may be subject, the Corporation shall indemnify such
indemnified representative to the maximum extent for such portion of the
liabilities.
(c) PRESUMPTION. The termination of a proceeding by judgment, order,
settlement or conviction or upon a plea of NOLO CONTENDRE or its equivalent
shall not of itself create a presumption that the indemnified representative is
not entitled to indemnification.
(d) DEFINITIONS. For purposes of this Article:
(1) "indemnified capacity" means any and all past, present
and future service by an indemnified representative in one or more
capacities as a Director, officer, employee or agent of the
Corporation, or, at the request of the Corporation, as a director,
officer, employee, agent, fiduciary or Director of another
corporation, partnership, joint venture, Corporation, employee benefit
plan or other entity or enterprise;
(2) "indemnified representative" means any and all Directors
and officers of the Corporation and any other person designated as an
indemnified representative by the Board of Directors (which may, but
need not, include any person serving at the request of the
Corporation, as a director, officer, employee, agent, fiduciary or
Director of another corporation, partnership, joint venture,
Corporation, employee benefit plan or other entity or enterprise);
(3) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed with
respect to an employee benefit plan, or cost or expense, of any nature
(including, without limitation, attorneys' fees and disbursements);
and
(4) "proceeding" means any threatened, pending or completed
action, suit, appeal or other proceeding of any nature, whether civil,
criminal, administrative or investigative, whether formal or informal,
and whether brought by or in the right of the Corporation, a class of
its security holders or otherwise.
Section 7.02. PROCEEDING INITIATED BY INDEMNIFIED REPRESENTATIVE.
Notwithstanding any other provision of this Article, the Corporation shall not
indemnify under this Article an indemnified representative for any liability
incurred in a proceeding initiated (which shall not be deemed to include
counter-claims or affirmative defenses) or participated in as an intervenor or
AMICUS CURIAE by the person seeking indemnification unless such initiation of
or participation in the proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors in office.
This section does not apply to reimbursement of expenses incurred in
successfully prosecuting or defending
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an arbitration under Section 7.06 or otherwise successfully prosecuting or
defending the rights of an indemnified representative granted by or pursuant to
this Article.
Section 7.03. ADVANCING EXPENSES. The Corporation shall pay the
expenses (including attorneys' fees and disbursements) incurred in good faith
by an indemnified representative in advance of the final disposition of a
proceeding described in Section 7.01 or the initiation of or participation in
which is authorized upon receipt of an undertaking by or on behalf of the
indemnified representative to repay the amount if it is ultimately determined
that such person is not entitled to be indemnified by the Corporation pursuant
to this Article. The financial ability of an indemnified representative to
repay an advance shall not be a prerequisite to the making of such advance.
Section 7.04. SECURING OF INDEMNIFICATION OBLIGATIONS. To further
effect, satisfy or secure the indemnification obligations provided herein or
otherwise, the Corporation may maintain insurance, obtain a letter of credit,
act as self insurer, create a reserve, Corporation, escrow, cash collateral or
other fund or account, enter into indemnification agreements, pledge or grant a
security interest in any assets or properties of the Corporation, or use any
other mechanism or arrangement whatsoever in such amounts, at such costs, and
upon such other terms and conditions as the Board of Directors shall deem
appropriate. Absent fraud, the determination of the Board of Directors with
respect to such amounts, costs, terms and conditions shall be conclusive
against all security holders, officers and Directors and shall not be subject
to challenge.
Section 7.05. PAYMENT OF INDEMNIFICATION. An indemnified
representative shall be entitled to indemnification within 30 days after a
written request for indemnification has been delivered to the Secretary of the
Corporation.
Section 7.06. ARBITRATION
(a) GENERAL RULE. Any dispute related to the right to indemnification,
contribution or advancement of expenses as provided under this Article, except
with respect to indemnification for liabilities arising under the Securities
Act of 1933 that the Corporation has undertaken to submit to a court for
adjudication, shall be decided only by arbitration in the metropolitan area in
which the principal executive offices of the Corporation are located at the
time, in accordance with the commercial arbitration rules then in effect of the
American Arbitration Association, before a panel of three arbitrators, one of
which shall be selected by the Corporation, the second of which shall be
selected by the indemnified representative and the third of whom shall be
selected by the other two arbitrators. In the absence of the American
Arbitration Association, or if for any reason arbitration rules of the American
Arbitration Association cannot be initiated, or if one of the parties fails or
refuses to select an arbitrator or if the arbitrators selected by the
Corporation and the indemnified representative cannot agree on the selection of
the third arbitrator within 30 days after such time as the Corporation and the
indemnified representative have each been notified of the selection of the
other's arbitrator, the necessary arbitrator or arbitrators shall be selected
by the presiding judge of the court of general jurisdiction in such
metropolitan area.
(b) BURDEN OF PROOF. The party or parties challenging the right of an
indemnified representative to the benefits of this Article shall have the
burden of proof.
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(c) EXPENSES. The Corporation shall reimburse an indemnified
representative for the expenses (including attorney's fees and disbursements)
incurred in successfully prosecuting or defending such arbitration.
(d) EFFECT. Any award entered by the arbitrators shall be final,
binding and nonappealable and judgement may be entered thereon by any party in
accordance with applicable law in any court of competent jurisdiction, except
that the Corporation shall be entitled to interpose as a defense in any such
judicial enforcement proceeding any prior final judicial determination adverse
to the indemnified representative under Section 7.01(a)(2) in a proceeding not
directly involving indemnification under this Article. This arbitration
provision shall be specifically enforceable.
Section 7.07. CONTRIBUTION. If the indemnification provided for in
this Article or otherwise is unavailable for any reason in respect of any
liability or portion thereof, the Corporation shall contribute to the
liabilities to which the indemnified representative may be subject in such
proportion as is appropriate to reflect the intent of this Article or
otherwise.
Section 7.08. MANDATORY INDEMNIFICATION OF DIRECTORS, OFFICERS. ETC.
Without limiting the other provisions of this Article VII, to the extent that
an authorized representative of the Corporation has been successful on the
merits or otherwise in defense of any action or proceeding referred to in 15
Pa. C.S.A. Sections 1741 or 1742 or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including
attorneys' fees and disbursements) actually and reasonably incurred by such
person in connection therewith.
Section 7.09. CONTRACT RIGHTS; AMENDMENT OR REPEAL. All rights under
this Article shall be deemed a contract between the Corporation and the
indemnified representative pursuant to which the Corporation and each
indemnified representative intend to be legally bound. Any repeal, amendment or
modification hereof shall be prospective only and shall not affect any rights
or obligations then existing.
Section 7.10. SCOPE OF ARTICLE. The rights granted by this Article
shall not be deemed exclusive of any other rights to which those seeking
indemnification, contribution or advancement of expenses may be entitled under
any statute, agreement, vote of Shareholders or disinterested Directors or
otherwise both as to action in an indemnified capacity and as to action in any
other capacity. The indemnification, contribution and advancement of expenses
provided by or granted pursuant to this Article shall continue as to a person
who has ceased to be an indemnified representative in respect of matters
arising prior to such time, and shall inure to the benefit of the heirs,
executors, administrators and personal representatives of such a person.
Section 7.11. RELIANCE ON PROVISIONS. Each person who shall act as an
indemnified representative of the Corporation shall be deemed to be doing so in
reliance upon the rights provided by this Article.
Section 7.12. INTERPRETATION. The provisions of this Article are
intended to constitute Bylaws authorized by 15 Pa. C.S.A. Section 513 and 1746
and 42 Pa. C.S.A. Section 8365.
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ARTICLE VIII
------------
Miscellaneous
Section 8.01. CORPORATE SEAL. The Corporation shall have a corporate
seal in the form of a circle containing the name of the Corporation, the year of
incorporation and such other details as may be approved by the board of
directors.
Section 8.02. CHECKS. All checks, notes, bills of exchange or other
orders in writing shall be signed by the President, any Vice President or the
Treasurer and by such other or additional person or persons as the Board of
Directors or any person authorized by resolution of the Board of Directors may
from time to time designate.
Section 8.03. CONTRACTS.
(a) GENERAL RULE. Except as otherwise required by applicable law in the
case of transactions that require action by the Shareholders, the Board of
Directors may authorize any officer or agent to enter into any contract or to
execute or deliver any instrument on behalf of the Corporation, and such
authority may be general or confined to specific instances.
(b) STATUTORY FORM OF EXECUTION OF INSTRUMENTS. Any note, mortgage,
evidence of indebtedness, contract or other document, or any assignment or
endorsement thereof, executed or entered into between the Corporation and any
other person, when signed by one or more officers or agents having actual or
apparent authority to sign it, or by the President or Vice President and
Secretary or Assistant Secretary or Treasurer or Assistant Treasurer of the
Corporation, shall be held to have been properly executed for and on behalf of
the Corporation, without prejudice to the rights of the Corporation against any
person who shall have executed the instrument in excess of his or her actual
authority.
Section 8.04. INTERESTED DIRECTORS OR OFFICERS; QUORUM.
(a) GENERAL RULE. A contract or transaction between the Corporation and
one or more of its Directors or officers or between the Corporation and another
corporation, partnership, joint venture, trust or other enterprise in which one
or more of its directors or officers are directors or officers or have a
financial or other interest, shall not be void or voidable solely for that
reason, or solely because the Board of Directors or officer is present at or
participates in the meeting of the Director that authorizes the contract or
transaction, or solely because his, her or their votes are counted for that
purpose, if;
(1) the material facts as to the relationship or interest and
as to the contract or transaction are disclosed or are known to the
Board of Directors and the Board authorize the contract or transaction
by the affirmative votes of a majority of the disinterested Directors
even though the disinterested Directors are less than a quorum;
(2) the material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are
known to the Shareholders entitled to vote thereon and the contract or
transaction is specifically approved in good faith by vote of those
Shareholders; or
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<PAGE> 26
(3) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified by the Board of
Directors or the Shareholders.
(b) QUORUM. Common or interested Directors may be counted in
determining the presence of a quorum at a meeting of the Board which authorizes
a contract or transaction specified in subsection (a).
Section 8.05. DEPOSITS. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, Corporation
companies or other depositories as the Board of Directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by such
one or more officers or employees as the Board of Directors shall from time to
time determine.
Section 8.06. CORPORATE RECORDS.
(a) REQUIRED RECORDS. The Corporation shall keep complete and accurate
books and records of account, minutes of the proceedings of the incorporators,
Shareholders and Directors and a Share register giving the names and addresses
of all Shareholders and the number and class of Shares held by each. The Share
register shall be kept at either the registered office of the Corporation in
Pennsylvania or at its principal place of business wherever situated or at the
office of its registrar or transfer agent. Any books, minutes or other records
may be in written form or any other form capable of being converted into written
form within a reasonable time.
(b) RIGHT OF INSPECTION. Every Shareholder shall, upon written verified
demand stating the purpose thereof, have a right to examine, in person or by
agent or attorney, during the usual hours for business for any proper purpose,
the Share register, books and records of account, and records of the proceedings
of the settlor, Shareholders and Directors and to make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably related to the
interest of the person as a Shareholder. In every instance where an attorney or
other agent is the person who seeks the right of inspection, the demand shall be
accompanied by a verified power of attorney or other writing that authorizes the
attorney or other agent to so act on behalf of the Shareholder. The demand shall
be directed to the Corporation at its registered office in Pennsylvania or at
its principal place of business wherever situated.
Section 8.07. FINANCIAL REPORTS. Unless otherwise agreed between the
Corporation and a Shareholder, the Corporation shall furnish to its Shareholders
annual financial statements, including at least a balance sheet as of the end of
each fiscal year and a statement of income and expenses for the fiscal year. The
financial statements shall be prepared on the basis of generally accepted
accounting principles, if the Corporation prepared financial statements for the
fiscal year on that basis for any purpose, and may be consolidated statements of
the Corporation and one or more of its subsidiaries. The financial statements
shall be mailed by the Corporation to each of its Shareholders entitled thereto
within 120 days after the close of each fiscal year and, after the mailing and
upon written request, shall be mailed by the Corporation to any Shareholder or
beneficial owner entitled thereto to whom a copy of the most recent annual
financial statements has not previously been mailed. Statements that are audited
or reviewed by a public accountant shall be accompanies by the report of the
accountant; and in other cases, each copy shall be accompanied by a statement of
the person in charge of the financial records of the Corporation;
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<PAGE> 27
(1) Stating his reasonable belief as to whether or not the financial
statements were prepared in accordance with generally accepted accounting
principles and, if not, describing the basis of presentation.
(2) Describing any material respects in which the financial statements
were not prepared on a basis consistent with those prepared for the previous
year.
Section 8.08. AMENDMENT OF BYLAWS. These Bylaws may be amended or
repealed, or new Bylaws may be adopted, either (i) by vote of the Shareholders
at any duly organized annual or special meeting of Shareholders, or (ii) with
respect to those matters that are not by statute committed expressly to the
Shareholders and regardless of whether the Shareholders have previously adopted
or approved the bylaw being amended or repealed, by vote of a majority of the
board of directors in office at any regular or special meeting of the directors.
Any change in these Bylaws shall take effect when adopted unless otherwise
provided in the resolution effecting the change. See Section 2.03(b) (relating
to notice of action by Shareholders on Bylaws).
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<PAGE> 1
Exhibit 3.15
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CETIFICATE OF
INCORPORATION OF "WERNER FINANCIAL INC.", FILED IN THIS OFFICE ON THE THIRTIETH
DAY OF MARCH, A.D. 1995, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL - GREAT SEAL OF THE STATE OF DELAWARE - 1847-1907]
/s/ Edward J. Freel
[SEAL - SECRETARY'S OFFICE] -------------------------------------
[DELAWARE] Edward J. Freel, Secretary of State
AUTHENTICATION: 7461168
Date: 04-04-95
2495781 8100
950071439
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
WERNER FINANCIAL INC.
---------------
FIRST, The name of this corporation shall be:
WERNER FINANCIAL INC.
SECOND, Its registered office in the State of Delaware is to be located
at 1105 North Market Street, Suite 1300, in the city of Wilmington, County of
New Castle and its registered agent at such address is DELAWARE CORPORATE
MANAGEMENT, INC.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which this corporation is
authorized to issue is:
Three thousand (3,000) shares of common stock at a par value of ($.01) per
share.
FIFTH. The name and address of the incorporator is as follows:
Wendy A. Meikle
Suite A
109 Woodfield Drive
Greenville, PA 16125
SIXTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
SEVENTH. No director shall be personally liable to the corporation or
its stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director
shall be liable to the extent provided by applicable law, (i) for breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which
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involve intentional misconduct or a knowing violation of law, (iii) pursuant to
Section 174 of the Delaware General Corporation Law or (iv) for any transaction
from which the director derived an improper personal benefit. No amendment to
or repeal of this Article SEVENTH shall apply to or have any effect on the
liability or alleged liability of any director of the corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment.
EIGHTH. The effective date of this filing shall be April 1, 1995.
/s/ Wendy A. Meikle
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Wendy A. Meikle
Incorporator
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Exhibit 3.16
BY-LAWS
of
WERNER FINANCIAL INC.
(A Delaware corporation)
Amended and Restated May 14, 1997
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INDEX
BY-LAWS
ARTICLE I
STOCKHOLDERS ............................ 1
Section 1.01. Annual Meetings .......................................... 1
Section 1.02. Special Meetings ......................................... 1
Section 1.03. Notice of Annual and Special Meetings .................... 1
Section 1.04. Quorum ................................................... 1
Section 1.05. Voting ................................................... 2
Section 1.06. Procedure at Stockholders' Meetings ...................... 2
Section 1.07. Action Without Meeting ................................... 2
ARTICLE II
DIRECTORS .............................. 2
Section 2.01. Number, Election and Term of Office ...................... 2
Section 2.02. Chairman of the Board .................................... 3
Section 2.03. Annual Meeting ........................................... 3
Section 2.04. Regular Meetings ......................................... 3
Section 2.05. Special Meetings ......................................... 3
Section 2.06. Notice of Annual and Special Meetings .................... 3
Section 2.07. Quorum and Manner of Acting .............................. 3
Section 2.08. Action Without Meeting ................................... 4
Section 2.09. Participation by Conference Telephone .................... 4
Section 2.10. Resignations ............................................. 4
Section 2.11. Removal of Directors ..................................... 4
Section 2.12. Vacancies ................................................ 4
Section 2.13. Compensation of Directors ................................ 4
Section 2.14. Committees ............................................... 4
Section 2.15. Personal Liability of Directors .......................... 5
ARTICLE III
OFFICERS AND EMPLOYEES ....................... 5
Section 3.01. Executive Officers ....................................... 5
Section 3.02. Additional Officers; Other Agents and Employees .......... 5
Section 3.03. The President ............................................ 5
Section 3.04. The Vice Presidents ...................................... 5
Section 3.05. The Secretary and Assistant Secretaries .................. 6
Section 3.06. The Treasurer and Assistant Treasurers ................... 6
Section 3.07. Vacancies ................................................ 6
Section 3.08. Delegation of Duties ..................................... 6
Section 3.09. Personal Liability of Officers, Employees and Agents ..... 6
ARTICLE IV
SHARES OF CAPITAL STOCK ....................... 7
Section 4.01. Share Certificates ....................................... 7
Section 4.02. Transfer of Shares ....................................... 7
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Section 4.03. Transfer Agents and Registrars ........................... 7
Section 4.04. Lost, Stolen, Destroyed or Mutilated Certificates ........ 7
Section 4.05. Regulations Relating to Shares ........................... 7
Section 4.06. Holders of Record ........................................ 7
Section 4.07. Fixing of Record Date .................................... 8
ARTICLE V
LOANS, NOTES, CHECKS,
CONTRACTS AND OTHER INSTRUMENTS ................... 8
Section 5.01. Notes, Checks, etc. ...................................... 8
Section 5.02. Execution of Instruments Generally ....................... 8
Section 5.03. Proxies in Respect of Stock or Other Securities or Other
Corporations ......................................... 8
ARTICLE VI
GENERAL PROVISIONS ......................... 9
Section 6.01. Offices .................................................. 9
Section 6.02. Corporate Seal ........................................... 9
Section 6.03. Fiscal Year .............................................. 9
ARTICLE VII
VALIDATION OF CERTAIN CONTRACTS ................... 9
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS .............. 9
ARTICLE IX
AMENDMENTS ............................. 10
INDEX
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WERNER FINANCIAL INC.
By-Laws
ARTICLE I
STOCKHOLDERS
SECTION 1.01. ANNUAL MEETINGS. Annual meetings of the stockholders
shall be held at such place, either within or without the State of Delaware,
and at such time and date as the Board of Directors shall determine and as set
forth in the notice of the meeting.
SECTION 1.02. SPECIAL MEETINGS. Special meetings of the stockholders
may be called at any time, for the purpose or purposes set forth in the call,
by the Chairman of the Board, the President, the Board of Directors or the
holders of at least one-fifth of all the shares outstanding and entitled to
vote thereat, by delivering a written request to the Secretary. At any time,
upon the written request of any person or persons who have duly called a
special meeting, it shall be the duty of the Secretary to fix the date of the
meetings, to be held not more than 75 days after receipt of the request, and to
give due notice thereof. Special meetings shall be held at such place, either
within or without the State of Delaware, and at such time and date as the Board
of Directors shall determine and as set forth in the notice of the meeting.
SECTION 1.03. NOTICE OF ANNUAL AND SPECIAL MEETINGS. Except as
otherwise expressly required by law, notice of each meeting of stockholders,
whether annual or special, shall be given at least 5 and not more than 60 days
prior to the date on which the meeting is to be held to each stockholder of
record entitled to vote thereat by delivery of a notice thereof to him
personally or by sending a copy thereof through the mail or by
telecommunication equipment, charges prepaid, to his address appearing on the
records of the Corporation. Each such notice shall specify the place, day and
hour of the meeting and, in the case of a special meeting, shall briefly state
the purpose or purposes for which the meeting is called. A written waiver of
notice, signed by the person or persons entitled to such notice, whether before
or after the date and time fixed for the meeting shall be deemed the equivalent
of such notice. Neither the business to be transacted at nor the purpose of the
meeting need be specified in a waiver of notice of such meeting.
SECTION 1.04. QUORUM. A stockholders' meeting duly called shall not be
organized for the transaction of business unless a quorum is present. At any
meeting the presence in person or by proxy of stockholder entitled to cast at
least a majority of the votes which all stockholders are entitled to cast on
the particular matter shall constitute a quorum for the purpose of considering
such matter, except as otherwise expressly provided by law or by the
Certificate of Incorporation or By-Laws of the Corporation. The stockholders
present at a duly organized meeting can continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave
less than a quorum. If a meeting cannot be organized because a quorum has not
attended, those present may adjourn the meeting from time to time to such time
(not more than 30 days after the next previous adjourned meeting) and place as
they may determine, without notice other than by announcement at the meeting of
the time and place of the adjourned meeting; and in the case of any meeting
called for the election of directors, those who attend the second of such
adjourned meetings, although entitled to cast less than a majority of the votes
entitled to be cast on any matter to be considered at the meeting, shall
nevertheless constitute a quorum for the purpose of electing directors.
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SECTION 1.05. VOTING. At every meeting of stockholders, each holder of
record of issued and outstanding stock of the Corporation entitled to vote at
such meeting shall be entitled to vote in person or by proxy and, except where
a date has been fixed as the record date for the determination of stockholders
entitled to notice of or to vote at such meeting, no holder of record of a
share of stock which has been transferred on the books of the Corporation
within 10 days next preceding the date of such meeting shall be entitled to
notice of or to vote at such meeting in respect of such share so transferred.
Resolutions of the stockholders shall be adopted, and any action of the
stockholders at a meeting upon any matter shall be taken and be valid, only if
at least a majority of the votes cast with respect to such resolutions or
matter are cast in favor thereof, except as otherwise expressly provided by law
or by the Certificate of Incorporation or By-Laws of the Corporation. The
Chairman of the Board (if one has been elected and is present) shall be
chairman, and the Secretary (if present) shall act as secretary, at all
meetings of the stockholders. In the absence of the Chairman of the Board, the
President shall be chairman; and in the absence of both of them, the chairman
shall be designated by the Board of Directors or if not so designated shall be
elected by the stockholders present; and in the absence of the Secretary, an
Assistant Secretary shall act as secretary of the meeting.
SECTION 1.06. PROCEDURE AT STOCKHOLDERS' MEETINGS. The organization of
each meeting of the stockholders, the order of business thereat and all matters
relating to the manner of conducting the meetings shall be determined by the
chairman of the meeting, whose decisions may be overruled only by majority vote
(which shall not be by ballot) of the stockholders present and entitled to vote
at the meeting in person or by proxy. Meetings shall be conducted in a manner
designed to accomplish the business of the meeting in a prompt and orderly
fashion and to be fair and equitable to all stockholders, but it shall not be
necessary to follow Roberts' Rules of Order or any other manual of
parliamentary procedure.
SECTION 1.07. ACTION WITHOUT MEETING. Any action required or permitted
to be taken at any annual or special meeting of stockholders, or any action
which may be taken at any annual or special meeting, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, 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 such written consent is
filed with the minutes of proceedings of the stockholders. 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.
ARTICLE II
DIRECTORS
SECTION 2.01. NUMBER. ELECTION AND TERM OF OFFICE. The number of
directors which shall constitute the full Board of Directors shall be
determined by resolution of the board of directors or by the stockholders at
the annual meeting provided, however, that in no event shall the number of
directors be less than three or more than eleven. Each director shall hold
office for the term for which he is elected and thereafter until his successor
is duly elected or until his prior death, resignation or removal. Directors
need not be stockholders.
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SECTION 2.02. CHAIRMAN OF THE BOARD. The Board of Directors shall
elect a Chairman of the Board. The Chairman when present shall preside at all
meetings of the shareholders and of the Board of Directors.
SECTION 2.03. ANNUAL MEETING. Annual Meetings of the Board of
Directors shall be held each year at the same place as and immediately after
the annual meeting of stockholders, or at such other place and time as shall
theretofore have been determined by the Board. At its regular annual meeting,
the Board of Directors shall organize itself and elect the officers of the
Corporation for the ensuing year, and may transact any other business.
SECTION 2.04. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such intervals and at such time and place as shall
from time to time be determined by the Board. After there has been such
determination and notice thereof has been once given to each person then a
member of the Board of Directors, regular meetings may be held at such
intervals and time and place without further notice being given.
SECTION 2.05. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called at any time by the Board, by the Chairman of the Board,
by the President or by any two directors to be held on such day and at such
time and place as shall be specified by the person or persons calling the
meeting.
SECTION 2.06. NOTICE OF ANNUAL AND SPECIAL MEETINGS. Except as
otherwise expressly required by law, notice of the annual meeting of the Board
of Directors need not be given. Except as otherwise expressly required by law,
notice of every special meeting of the Board of Directors specifying the place,
date and time thereof shall be given to each director either by being mailed on
at least the third day prior to the date of the meeting or by being sent by
telecommunications equipment or given personally or by telephone at least 24
hours prior to the time of the meeting. A written waiver of notice of a special
meeting, signed by the person or persons entitled to such notice, whether
before or after the date and time stated therein fixed for the meeting, shall
be deemed the equivalent of such notice, and attendance of a director at a
meeting shall constitute a waiver of notice of such meeting except when the
director attends the meeting for the express purpose of objecting, when he
enters the meeting, to the transaction of any business because the meeting is
not lawfully called or convened. Neither the business to be transacted at nor
the purpose of the meeting need be specified in a waiver of notice of such
meeting.
SECTION 2.07. QUORUM AND MANNER OF ACTING. At all meetings of the
Board of Directors, except as otherwise expressly provided by law or by the
Certificate of Incorporation or By-Laws of the Corporation, the presence of a
majority of the full Board shall be necessary and sufficient to constitute a
quorum for the transaction of business. If a quorum is not present at any
meeting, the meeting may be adjourned from time to time by a majority of the
directors present until a quorum as aforesaid shall be present, but notice of
the time and place to which such a meeting is adjourned shall be given to any
directors not present either by being sent by telecommunications equipment or
given personally or by telephone at least 8 hours prior to the date of
reconvening. Resolutions of the Board of Directors shall be adopted, and any
action of the Board at a meeting upon any matter shall be taken and be valid,
only with the affirmative vote of at least a majority of the directors present
at the meeting, except as otherwise provided herein. The Chairman of the Board
(if one has been elected and is present) shall be chairman, and the Secretary
(if present) shall act as secretary, at all meetings of the Board. In the
absence of the Chairman of the Board, the President shall be chairman, and in
the absence of both of them the directors present shall select a member of the
Board of Directors to be chairman; and in the absence of the Secretary and
Assistant Secretary, the chairman of the meeting shall designate any person to
act as secretary of the meeting.
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SECTION 2.08. ACTION WITHOUT MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting if a consent in writing, setting forth
the actions so taken, shall be signed by all members of the Board or such
committees, as the case may be, and such written consent is filed with the
minutes of the Board or committee.
SECTION 2.09. PARTICIPATION BY CONFERENCE TELEPHONE. Members of the
Board of Directors of the Corporation, or any committee designated by the
Board, may participate in a meeting of the Board or committee by means of
conference telephone or similar communications equipment by which all persons
participating in the meeting can hear each other, and participation in a
meeting by such means shall constitute presence in person at such meeting.
SECTION 2.10. RESIGNATIONS. A director may resign by submitting his
written resignation to the Chairman of the Board (if one has been elected) or
the Secretary. Unless otherwise specified therein, the resignation of a
director need not be accepted to make it effective and shall be effective
immediately upon its receipt by such officer or as otherwise specified therein.
If the resignation of a director specifies that it shall be effective at some
time later than receipt, until that time the resigning director shall be
competent to act on all matters before the Board of Directors, including
filling the vacancy caused by such resignation.
SECTION 2.11. REMOVAL OF DIRECTORS. The entire Board of Directors or
any individual director may be removed at any time for cause or without cause
by the holders of a majority of the shares then entitled to vote at an election
of directors. The vacancy or vacancies caused in the Board of Directors by such
removal may but need not be filled by such stockholders at the same meeting or
at a special meeting of the stockholders called for that purpose.
SECTION 2.12. VACANCIES. Any vacancy that shall occur in the Board of
Directors by reason of death, resignation, removal, increase in the number of
directors or any other cause whatever shall, unless filled as provided in
Section 2.11 of this Article II, be filled by a majority of the then members of
the Board, whether or not a quorum, and each person so elected shall be a
director until he or his successor is elected by the stockholders at a meeting
called for the purpose of electing directors, or until his prior death,
resignation or removal.
SECTION 2.13. COMPENSATION OF DIRECTORS. The Corporation may allow
compensation to its directors for their services, as determined from time to
time by resolution adopted by the Board of Directors.
SECTION 2.14. COMMITTEES. The Board of Directors may, by resolution
adopted by a majority of the full Board, designate one or more committees
consisting of directors to have and exercise such authority of the Board in the
management of the business and affairs of the Corporation as the resolution of
the Board creating such committee may specify and as is otherwise permitted 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. In the absence or disqualification of any member
of such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another director to act at the meeting in the
place of such absent or disqualified member.
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SECTION 2.15. PERSONAL LIABILITY OF DIRECTORS.
(a) To the fullest extent that the laws of the State of Delaware, as
the same exist or may hereafter be amended, permit elimination of the personal
liability of directors, no director of this Corporation shall be personally
liable to this Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director.
(b) The provisions of this Section 2.15 shall be deemed to be a
contract with each director of this Corporation who serves as such at any time
while this Section 2.15 is in effect, and each such director shall be deemed to
be serving as such in reliance on the provisions of this Section 2.15. Any
amendment or repeal of this Section 2.15 or adoption of any By-Law of this
Corporation or other provision of the Certificate of Incorporation of this
Corporation which has the effect of increasing director liability shall operate
prospectively only and shall not affect any action taken, or any failure to
act, by a director of this Corporation prior to such amendment, repeal, By-Law
or other provision becoming effective.
ARTICLE III
OFFICERS AND EMPLOYEES
SECTION 3.01. EXECUTIVE OFFICERS. The Executive Officers of the
Corporation shall be the President, a Secretary and a Treasurer, and may
include one or more Vice Presidents as the Board of Directors may from time to
time determine, all of whom shall be elected by the Board of Directors. Any two
or more offices may be held by the same person. Each Executive Officer shall
hold office until the next succeeding annual meeting of the Board of Directors
and thereafter until his successor is duly elected and qualifies, or until his
earlier death, resignation or removal.
SECTION 3.02. ADDITIONAL OFFICERS; OTHER AGENTS AND EMPLOYEES. The
Board of Directors may from time to time appoint or hire such additional
officers, assistant officers, agents, employees and independent contractors as
the Board deems advisable; and the Board or the President shall prescribe their
duties, conditions of employment and compensation. Subject to the power of the
Board of Directors, the President may employ from time to time such other
agents, employees, and independent contractors as he may deem advisable for the
prompt and orderly transaction of the business of the Corporation, and he may
prescribe their duties and the conditions of their employment, fix their
compensation and dismiss them, without prejudice to their contract rights, if
any.
SECTION 3.03. THE PRESIDENT. Subject to the control of the Board of
Directors, the President shall have general policy supervision of and general
management and executive powers over all the property, business, operations and
affairs of the Corporation, and shall see that the policies and programs
adopted or approved by the Board are carried out. The President shall exercise
such further powers and duties as from time to time may be prescribed in these
By-Laws or by the Board of Directors.
SECTION 3.04. THE VICE PRESIDENTS. The Vice Presidents may be given by
resolution of the Board of Directors general executive powers, subject to the
control of the President, concerning one or more or all segments of the
operations of the Corporation. The Vice Presidents shall exercise such further
powers and duties as from time to time may be prescribed in these By-Laws or by
the Board of Directors or by the President. At the request of the President or
in his absence or disability, the senior Vice President shall exercise all the
powers and duties of the President.
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SECTION 3.05. THE SECRETARY AND ASSISTANT SECRETARIES. It shall be the
duty of the Secretary (a) to keep or cause to be kept an original or duplicate
record of the proceedings of the stockholders and the Board of Directors, and a
copy of the Certificate of Incorporation and of the By-Laws; (b) to attend to
the giving of notices of the Corporation as may be required by law or these
By-Laws; (c) to be custodian of the corporate records and of the seal of the
Corporation and see that the seal is affixed to such documents as may be
necessary or advisable; (d) to have charge of the stock books of the
Corporation, and a share register, giving the names of the stockholders in
alphabetical order, and showing their respective addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the shares, and the date of cancellation of every certificate surrendered for
cancellation; and (e) to exercise all powers and duties as may be prescribed by
the Board of Directors or by the President from time to time. The Secretary by
virtue of his office shall be an Assistant Treasurer. The Assistant Secretaries
shall assist the Secretary in the performance of his duties and shall also
exercise such further powers and duties as from time to time may be assigned to
them by the Board of Directors, the President or the Secretary. At the
direction of the Secretary or in his absence or disability, an Assistant
Secretary shall perform the duties of the Secretary.
SECTION 3.06. THE TREASURER AND ASSISTANT TREASURERS. The Treasurer
shall have custody of all the funds and securities of the Corporation. He shall
collect all moneys due the Corporation and deposit such moneys to the credit of
the Corporation in such banks, trust companies, or other depositories as may
have been duly designated by the Board of Directors. He shall endorse for
collection on behalf of the Corporation checks, notes, drafts and other
documents, and may sign and deliver receipts, vouchers and releases of liens
evidencing payments made to the Corporation. Subject to Section 5.01 of these
By-Laws, he shall cause to be disbursed the funds of the Corporation by payment
in cash or by checks or drafts upon the authorized depositories of the
Corporation. He shall have charge of the books and accounts of the Corporation.
He shall perform all acts incident to the office of Treasurer and such other
duties as may be assigned to him by the Board of Directors. The Treasurer by
virtue of his office shall be an Assistant Secretary. The Assistant Treasurers
shall assist the Treasurer in the performance of his duties and shall also
exercise such further powers and duties as from time to time may be assigned to
them by the Board of Directors, the President or the Treasurer. At the
direction of the Treasurer or in his absence or disability, an Assistant
Treasurer shall perform the duties of the Treasurer.
SECTION 3.07. VACANCIES. Vacancy in any office or position by reason
of death, resignation, removal, disqualification, disability or other cause,
shall be filled in the manner provided in this Article III for regular election
or appointment to such office.
SECTION 3.08. DELEGATION OF DUTIES. The Board of Directors may in its
discretion delegate from the time being the powers and duties, or any of them,
of any officer to any other person whom it may selection.
SECTION 3.09. PERSONAL LIABILITY OF OFFICERS, EMPLOYEES AND AGENTS.
The Corporation shall indemnify its officers, employees and agents to the full
extent permitted by Section 145 of the Delaware General Corporation Law, as
amended from time to time, or any successor provision of Delaware law.
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ARTICLE IV
SHARES OF CAPITAL STOCK
SECTION 4.01. SHARE CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors may from time to time prescribe, signed by the
President or any Vice President and by the Treasurer or any Assistant Treasurer
or the Secretary or any Assistant Secretary. The signatures of such officers
may be facsimiles. Each such certificate shall set forth the name of the
registered holder thereof, the number and class of shares and the designation
of the series, if any, which the certificate represents. The Board of Directors
may, if it so determines, direct that certificates for shares of stock of the
Corporation be signed by a transfer agent or registered by a registrar or both,
in which case such certificates shall not be valid until so signed or
registered.
In the case of any officer of the Corporation who shall have signed,
or whose facsimile signature shall have been used on, any certificate for
shares of stock of the Corporation shall cease to be such officer, whether
because of death, resignation, removal or otherwise, before such certificate
shall have been delivered by the Corporation, such certificate shall
nevertheless be deemed to have been adopted by the Corporation and may be
issued and delivered as though the person who signed such certificate or whose
facsimile signature shall have been used thereon had not ceased to be such
officer.
SECTION 4.02. TRANSFER OF SHARES. Transfer of shares of stock of the
Corporation shall be made only on the books of the Corporation by the
registered holder thereof or by his attorney thereunto authorized by an
instrument duly executed and filed with the Corporation, and on surrender of
the certificate or certificates for such shares properly endorsed or
accompanied by properly executed stock powers and evidence of the payment of
all taxes imposed upon such transfer. Except as provided in Section 4.04 of
this Article IV, every certificate surrendered for transfer shall be canceled
and no new certificate or certificates shall be issued in exchange for any
existing certificate until such existing certificate shall have been so
cancelled .
SECTION 4.03. TRANSFER AGENTS AND REGISTRARS. The Board of Directors
may appoint any one or more qualified banks, trust companies or other
corporations organized under any law of any state of the United States or under
the laws of the United States as agent or agents for the Corporation in the
transfer of the stock of the Corporation and likewise may appoint any one or
more such qualified banks, trust companies or other corporations as registrar
or registrars of the stock of the Corporation.
SECTION 4.04. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. New
certificates for shares of stock may be issued to replace certificates lost,
stolen, destroyed or mutilated upon such terms and conditions, which may but
need not include the giving of a satisfactory bond or other indemnity, as the
Board of Directors may from time to time determine.
SECTION 4.05. REGULATIONS RELATING TO SHARES. The Board of Directors
shall have power and authority to make such rules and regulations not
inconsistent with these By-Laws or with law as it may deem expedient concerning
the issue, transfer and registration of certificates representing shares of
stock of the Corporation.
SECTION 4.06. HOLDERS OF RECORD. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder and
owner in fact thereof and 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
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or not it shall have express or other notice thereof, except as otherwise
expressly provided by the laws of the State of Delaware.
SECTION 4.07. FIXING OF RECORD DATE. The Board of Directors may fix a
time, not less than 10 or more than 60 days prior to the date of any meeting of
stockholders, or the date fixed for the payment of any dividend or
distribution, or the date for the allotment of rights, or the date when any
change or conversion or exchange of shares will be made or go into effect, as a
record date for the determination of the stockholders entitled to notice of, or
to vote at, any such meeting, or entitled to receive payment of any such
dividend or distribution, or to receive any such allotment of rights, or to
exercise the rights in respect to any such change, conversion or exchange of
shares. In such case, only such stockholders as shall be stockholders of record
on the date so fixed shall be entitled to notice of, or to vote at, such
meeting or to receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any shares on the books of the Corporation after any record date
fixed as aforesaid.
ARTICLE V
LOANS, NOTES, CHECKS,
CONTRACTS AND OTHER INSTRUMENTS
SECTION 5.01. NOTES, CHECKS, ETC. All notes, drafts, acceptances,
checks, endorsements (other than for deposit) and all evidences of indebtedness
of the Corporation whatsoever shall be signed by such officers or agents and
shall be subject to such requirements as to countersignature or other
conditions as the Board of Directors from time to time may designate. Facsimile
signatures on checks may be used unless prohibited by the Board of Directors.
SECTION 5.02. EXECUTION OF INSTRUMENTS GENERALLY. Except as provided
in Section 5.01 of this Article V, all contracts and other instruments
requiring execution by the Corporation may be executed and delivered by the
President, any Vice President or the Treasurer, and authority to sign any such
contracts or instruments, which may be general or confined to specific
instances, may be conferred by the Board of Directors upon any other person or
persons. Any person having authority to sign on behalf of the Corporation may
delegate, from time to time, by instrument in writing, all or any part of such
authority to any person or person if authorized so to do by Board of Directors.
SECTION 5.03. PROXIES IN RESPECT OF STOCK OR OTHER SECURITIES OR OTHER
CORPORATIONS. Unless otherwise provided by the Board of Directors, the
President may from time to time appoint an attorney or attorneys or an agent or
agents of the Corporation to exercise in the name and on behalf of the
Corporation the powers and rights which the Corporation may have as the holder
of stock or other securities in any other corporation to vote or consent in
respect of such stock or other securities, may instruct the person or persons
so appointed as to the manner of exercising such powers and rights and may
execute or cause to be executed in the name and on behalf of the Corporation
and under its corporate seal or otherwise all such written proxies or other
instruments as he may deem necessary or proper in order that the Corporation
may exercise its said powers and rights.
8
<PAGE> 12
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01. OFFICES. The registered office of the Corporation shall
be at 1105 North Market Street, Suite 1300, Wilmington, Delaware. The
Corporation may have other offices, within or without the State of Delaware, at
such place or places as the Board of Directors may from time to time determine
or the business of the Corporation may require.
SECTION 6.02. CORPORATE SEAL. The Board of Directors shall prescribe
the form of a suitable corporate seal, which shall contain the full name of the
Corporation and the year and state of incorporation. Such seal may be used by
causing it or a facsimile or reproduction thereof to be affixed to or placed
upon the document to be sealed.
SECTION 6.03. FISCAL YEAR. Unless otherwise determined by the Board of
Directors, the fiscal year of the Corporation shall be the calendar year.
ARTICLE VII
VALIDATION OF CERTAIN CONTRACTS
SECTION 7.01. No contract or other transaction between the Corporation
and another person shall be invalidated or otherwise adversely affected by the
fact that any one or more stockholders, directors or officers of the
Corporation -
(i) is pecuniarily or otherwise interested in, or is a stockholder,
director, officer, or member of, such other person, or
(ii) is a party to, or is in any other way pecuniarily or otherwise
interested in, the contract or other transaction, or
(iii) is in any way connected with any person pecuniarily or otherwise
interested in such contract or other transaction, provided the fact of such
interest shall be disclosed or known to the Board of Directors or the
stockholders, as the case may be, and in any action of the stockholders or of
the Board authorizing or approving any such contract or other transaction, any
and every stockholder or director may be counted in determining the existence
of a quorum with like force and effect as though he were not so interested, or
were not such a stockholder, director, member or officer, or were not such a
party, or were not so connected. Such director, stockholder or officer shall
not be liable to account to the Corporation for any profit realized by him from
or through any such contract or transaction approved or authorized as
aforesaid. As used herein, the term "person" includes a corporation,
partnership, firm, association or other legal entity.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 8.01. To the maximum extent provided by applicable law, no
director shall be personally liable to the Corporation or its stockholders for
monetary damages for any breach of fiduciary duty by such director as a
director. The foregoing sentence shall not eliminate or limit the liability of
a director, (i) for breach of the director's duty of loyalty of the Corporation
or its stockholders, (ii) for acts or
9
<PAGE> 13
omissions not in good faith or which involve intentional misconduct of a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article VIII shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment.
Directors and officers of the Corporation shall be indemnified as of
right to the fullest extent now or hereafter permitted by law in connection
with any actual or threatened civil, criminal, administrative or investigative
action, suit or proceeding (whether brought by or in the name of the
Corporation or otherwise) arising out of their service to the Corporation or to
another organization at the request of the Corporation. Persons who are not
directors or officers of the Corporation may be similarly indemnified in
respect of such service to the extent authorized at any time by the Board of
Directors of the Corporation. The Corporation may purchase and maintain
insurance to protect itself and any such director, officer or other person
against any liability asserted against him and incurred by him in respect of
such service whether or not the Corporation would have the power to indemnify
him against such liability by law or under the provisions of this Article. The
provisions of this Article shall be applicable to actions, suits or proceedings
commenced after the adoption hereof, whether arising from acts or omissions
occurring before or after the adoption hereof, and to directors, officers and
other persons who have ceased to render such service, and shall inure to the
benefit of the heirs, executors and administrators of the directors, officers
and other persons referred to in this Article.
ARTICLE IX
AMENDMENTS
SECTION 9.01. These By-Laws may be amended, altered and repealed, and
new By-Laws may be adopted, by the stockholders or the Board of Directors of
the Corporation at any regular or special meeting. No provision of these
By-laws shall vest any property or contract right in any stockholder.
10
<PAGE> 14
********************************************************************************
THESE BY-LAWS WERE AMENDED AND RESTATED AT A MEETING OF THE BOARD OF
DIRECTORS ON 6/7/82, AMENDED (ART. VI) BY THE DIRECTORS ON 6/6/84,
AMENDED (ART. VI) BY THE SHAREHOLDERS ON 3/27/87, AMENDED AND RESTATED
AT THE ANNUAL MEETING OF THE SHAREHOLDERS ON MARCH 22, 1994 BY ADDING
SECTION 4 TO ARTICLE IV AND AMENDED AND RESTATED AT THE ANNUAL MEETING
OF THE BOARD OF DIRECTORS ON MARCH 11, 1997 (REVISIONS TO ARTICLES II
AND III).
********************************************************************************
BY-LAWS
of
WERNER HOLDING CO. (PA), INC.
<PAGE> 1
Exhibit 3.17
220036
AZ. CORP COMMISSION FOR THE STATE
OF AZ. FILED
DEC 29 2:38 P.M. '89
APPR /s/ ILLEGIBLE
-------------------------------
DATE APPR 1/3/90 FILED__________
TERM_______________________________
DATE_____________ TIME___________
ARTICLES OF INCORPORATION
OF
R.D. ARIZONA LADDER CORP.
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day associated ourselves together
for the purpose of forming a corporation under and pursuant to the laws of the
State of Arizona, and for that purpose hereby adopt the following Articles of
Incorporation:
ARTICLE I
The name of the Corporation is R.D. ARIZONA LADDER CORP.
ARTICLE II
The purpose for which this corporation is organized is the
transaction of any or all lawful business for which corporations may be
incorporated under the laws of the State of Arizona, as they may be amended from
time to time.
ARTICLE III
The corporation initially intends to conduct the business of manufacturing.
ARTICLE IV
The corporation shall have the authority to issue One Hundred Thousand
(100,000) shares of common stock at no par value.
The capital stock of this corporation shall be paid in at such time or
times, as the Board of Directors may designate, in cash, real or personal
property, services, leases, options to purchase, or any other valuable rights or
thing for the uses and purposes of this corporation and all shares of the
capital stock when issued in exchange therefor, shall thereupon and thereby
become fully paid, the same as though paid for in cash at par, and shall be
nonassessable forever. The judgement of the Directors honestly exercised as to
the value of any real or personal
1
<PAGE> 2
property, services, leases, options to purchase, or any other valuable thing or
right acquired in exchange for capital stock, shall be conclusive.
The shareholders of the corporation shall have pre-emptive rights as to
any new or existing classes of stock issued by the corporation.
No holder of shares of common stock of this corporation shall sell or
transfer any such shares, except for gifts or testamentary dispositions to a
spouse, children, grandchildren or parents, without first offering such shares
on identical terms and conditions to the other holders of issued and outstanding
common stock of the corporation. Each stockholder shall have sixty (60) days
after receiving notice of such offer within which to accept it. Each stockholder
shall have the right to purchase an amount of stock equal to the ratio of the
stock standing in his name as shown on the books of the corporation to the
aggregate amount of stock standing in the names of all the stockholders
exercising their right to purchase. The stockholders, as a group, may not accept
less than all of the stock offered. References shall be made to the foregoing
restrictions on the face of each and every stock certificate representing shares
of common stock of the corporation.
ARTICLE V
The initial Board of Directors shall consist of one (1) director but
the number of Directors shall, from time to time, be designated by the bylaws of
the corporation, and said officers and directors need not be stockholders. The
person who is to serve as director until the first annual meeting of
shareholders or until her successors are elected and qualify is:
Eric J. Werner
93 Werner road
Greenway,PA 16125
ARTICLE VI
The corporation shall indemnify any person who incurs expenses by
reason of the fact he or she is or was an officer, director, employee or agent
of the corporation. This indemnification shall be mandatory in all circumstances
in which indemnification is permitted by law.
ARTICLE VII
The private property of the incorporators, directors, officers and
stockholders of this corporation shall be exempt from liability for the
corporation debts and obligations.
ARTICLE VIII
The name and address of the statutory agent of the corporation is
Prentice Hall Corporation system, 7037 N. 11th Street, Phoenix, Arizona 85020.
2
<PAGE> 3
ARTICLE IX
The incorporators of this corporation are:
Catherine S. Wagner Diane P. Karch
7037 N. 11th Street 7037 N. 11th Street
Phoenix, AZ 85020 Phoenix, AZ 85020
The powers and duties of the incorporators cease upon the filing of
these Articles of Incorporation at the Arizona Corporation Commission.
IN WITNESS WHEREOF, we, the undersigned, have hereunto signed our names this
29th day of December, 1989.
/s/ Catherine S. Wagner
-------------------------------------
Catherine S. Wagner
/s/ Diane P. Karch
--------------------------------------
Diane P. Karch
3
<PAGE> 1
Exhibit 3.18
BY-LAWS
of
R.D. ARIZONA LADDER CORP.
(an Arizona Corporation)
Amended and Restated May 15, 1997
<PAGE> 2
BY-LAWS
ARTICLE I - OFFICES
1. The known place of business of the corporation shall be at 93
Werner Road, Greenville, Pennsylvania, and the name of its statutory agent is
2. The corporation may also have offices at such other places as the
Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II - SEAL
1. The corporation seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Arizona."
ARTICLE III - SHAREHOLDERS' MEETING
1. Meetings of the shareholders shall be held at the known place of
business of the corporation or at such other place or places, either within or
without the State of Arizona, as may from time to time be selected.
2. The annual meeting of the shareholders shall be held on the second
Tuesday of April in each year if not a legal holiday, and if a legal holiday,
then on the next secular day following at 10:00 o'clock A.M., when they shall
elect a Board of Directors, and transact such other business as may properly be
brought before the meeting. If the annual meeting is not held within any
thirteen-month period, the Superior Court of the County of the known place of
business of the corporation may, on the application of any shareholder, order a
meeting to be held.
3. Special meeting of the shareholders may be called by the Board of
Directors, the holders of not fewer than one-tenth of all the shares entitled
to vote at the meeting, or such other persons as may be authorized in the
Articles of Incorporation.
4. A majority of the shares entitled to vote, represented in person or
by proxy shall constitute a quorum at a meeting of shareholders. All shares
represented and entitled to vote on any single subject matter which may be
brought before the meeting shall be counted for the purposes of a quorum. Only
those shares entitled to vote on a particular subject matter shall be counted
for the
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<PAGE> 3
purposes of voting on that subject matter. Business may be conducted once a
quorum is present and may continue until adjournment of the meeting
notwithstanding the withdrawal or temporary absence of sufficient shares to
reduce the number present to less than a quorum. Unless the vote of a greater
number or voting by classes is required by The Arizona Business Corporation
Act, the affirmative vote of the majority of the shares then represented at the
meeting and entitled to vote on the subject matter shall be the act of the
shareholders; provided, however, that if the shares then represented are less
than required to constitute a quorum, the affirmative vote must be such as
would constitute a majority if a quorum were present; provided further, the
affirmative vote of a majority of the shares then present is sufficient in all
cases to adjourn a meeting.
5. Written notice stating the place, day and hour of the meeting and,
in case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than ten nor more than fifty days before
the date of the meeting, either personally or by mail, by an officer of the
corporation at the direction of the person or persons calling the meeting, to
each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when mailed to the shareholder at his
address as it appears on the stock transfer books of the corporation. When a
meeting is adjourned to another time or 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 shareholder of record entitled to vote at the
meeting.
6. The officer or agent having charge of the stock transfer books for
shares of the corporation shall make a complete record of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each.
Such record shall be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting for the purposes thereof.
7. Failure to comply with the requirements of this section shall not
affect the validity of any action taken at such meeting.
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<PAGE> 4
8. An officer or agent having charge of the stock transfer books who
shall fail to prepare the record of shareholders, or produce and keep it open
for inspection at the meeting, as provided in this section, shall be liable to
any shareholder suffering damage on account of such failure, to the extent of
such damage.
9. Each outstanding share or fraction thereof, regardless of class,
shall be entitled to one vote or corresponding fraction thereof on each matter
submitted to a vote at a meeting of shareholders, except as may be otherwise
provided.
10. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy. 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 share itself or an interest in the corporation generally. A
proxy is not revoked by the death or incapacity of the maker unless, before the
vote is counted or quorum is determined, written notice of the death or
incapacity is given to the corporation.
At each election for directors, every shareholder entitled to vote at
such election shall have the right to vote in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected
and for whose election he has a right to vote, or to cumulate his votes by
giving one candidate as many votes as the number of such directors multiplied
by the number of his shares shall equal, or by distributing such votes on the
same principle among any number of such candidates.
11. A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee shall be entitled to vote the shares so
transferred.
12. Whenever any notice is required to be given to any shareholder or
director of this corporation, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be equivalent to the giving of such notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when
-3-
<PAGE> 5
the person attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
13. In order that the corporation may determine the shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of shares or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty nor less than ten days before
the date of such meeting, nor more than sixty days nor less than ten days prior
to any such other action.
1. If no record date is fixed:
The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at
four o'clock in the afternoon on the day before the day on
which notice is given, or, if notice is waived, at the
commencement of the meeting.
2. The record date for determining shareholders entitled to
express consent to corporate action in writing without
meeting shall be the time of the day on which the first
written consent is served on the corporation.
3. A determination of shareholders of record entitled to notice
of or to vote at a meeting of shareholders shall apply to any
adjournment of the meeting; provided, however, that the Board
of Directors may fix a new record date for the adjourned
meeting and further provided that the adjournment or
adjournments do not exceed thirty days in the aggregate.
14. Unless otherwise provided in the Articles of Incorporation, a
majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders, but in no event shall a
quorum consist of less than one-third of the shares entitled to vote at the
meeting. All shares represented and entitled to vote on any single subject
matter which may be brought before the meeting shall be counted for the
purposes of a quorum. Only those shares entitled to vote on a particular
subject matter shall be counted for the purposes of voting on that subject
matter. Business may be conducted once a quorum is present and may continue
until adjournment of the meeting notwithstanding the withdrawal or temporary
absence of sufficient
-4-
<PAGE> 6
shares to reduce the number present to less than a quorum. Unless the vote of a
greater number or voting by classes is required by law, the affirmative vote of
the majority of the shares then represented at the meeting and entitled to vote
on the subject matter shall be the act of the shareholders; provided, however,
that if the shares then represented are less than required to constitute a
quorum, the affirmative vote must be such as would constitute a majority if a
quorum were present; provided, further, the affirmative vote of a majority of
the shares then present is sufficient in all cases to adjourn a meeting.
15. Any action required to be taken at a meeting of the shareholders
of the corporation or any action which may be taken at a meeting of
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, is signed by all of the shareholders entitled to
vote with respect to the subject matter thereof.
ARTICLE IV - DIRECTORS
1. The business of this corporation shall be managed by its Board of
Directors, three in number. The Directors need not be residents of the State or
shareholders in the corporation. At the first annual meeting of shareholders
and at each annual meeting thereafter, the shareholders shall elect directors
to hold office until the next succeeding annual meeting. Each director shall
hold office until his successor is elected and qualified, or until his earlier
resignation or removal. Any director may resign at any time upon written notice
to the corporation. Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining directors, though
not less than a quorum, or by a sole remaining director, and any director so
chosen shall hold office until the next election of directors when his
successor is elected and qualified. Any newly created directorship shall be
deemed a vacancy. Unless otherwise provided in the Articles of Incorporation,
when one or more directors shall resign from the Board, effective at a future
time, a majority of the directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective,
and each director so chosen shall hold office as herein provided in the filling
of other vacancies. If at any time, by reason of death or resignation or other
cause, the corporation should have no directors in office, then any officer or
any shareholder or an executor, administrator,
-5-
<PAGE> 7
trustee or guardian of a shareholder, or other fiduciary entrusted with like
responsibility for the person or estate of a shareholder, may call a special
meeting of shareholders.
2. In addition to the powers and authorities by these By-Laws
expressly conferred upon them, the Board may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the Articles or by these By-Laws directed or required to be exercised or done
by the shareholders.
3. The Board of Directors shall elect a Chairman of the Board. The
Chairman when present shall preside at all meetings of the Shareholders and of
the Board of Directors.
4. Meetings of the Board of Directors, regular or special, may be held
either within or without this State, and may be held by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting.
5. Each newly elected Board may meet at such place and time as shall
be fixed by the shareholders at the meeting at which such directors are elected
and no notice shall be necessary to the newly elected directors in order
legally to constitute the meeting, or they may meet at such place and time as
may be fixed by the consent in writing of all the directors.
6. Regular meetings of the Board shall be held without notice at the
known place of business of the corporation, or at such other time and place as
shall be determined by the Board.
7. Special meetings of the Board may be called by the President on two
days' notice to each director, either personally or by mail or by telegram;
special meetings shall be called by the President or Secretary in like manner
and on like notice on the written request of a majority of the directors in
office.
8. A majority of the directors in office shall be necessary to
constitute a quorum for the transaction of business, and the acts of a majority
of the directors present at a meeting at which a quorum is present shall be the
acts of the Board of Directors. Any action which may be taken at a meeting of
the directors may be taken without a meeting if a consent or consents in
writing, setting forth the action so taken, shall be signed by all of the
directors and shall be filed with the Secretary of the corporation.
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<PAGE> 8
9. Directors as such, shall not receive any stated salary for their
services, but by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board PROVIDED, that nothing herein contained shall be construed
to preclude any director from serving the corporation in any other capacity and
receiving compensation therefor.
10. The Board of Directors, by resolution adopted by a majority of the
full Board of Directors, may designate from among its members an executive
committee and one or more other committees each of which, to the extent
provided in such resolution or in the Articles of Incorporation or these
By-Laws, shall have and may exercise all the authority of the Board of
Directors, but no such committee shall have the authority of the Board of
Directors in reference to the following matters:
1. The submission to shareholders pursuant to the requirement of this
chapter of any action that requires shareholders' authorization or approval
under this chapter.
2. The filling of vacancies on the Board of Directors or in any
committee of the Board of Directors.
3. The amendment or repeal of the By-Laws, or the adoption of new
By-Laws.
4. The fixing of compensation of directors for serving on the Board or
on any committee of the Board of Directors.
11. The Board of Directors, with or without cause, may dissolve any
such committee or remove any member thereof at any time. The designation of any
such committee and the delegation thereto of authority shall not operate to
relieve the Board of Directors, or any member thereof, of any responsibility
imposed by law.
ARTICLE V - OFFICERS
1. The officers of the corporation shall consist of a President, one
or more Vice Presidents as may be prescribed by these By-Laws, a Secretary, and
a Treasurer, each of whom shall be elected by the Board of Directors at such
time and in such manner as may be prescribed by the Board. Such other officers
and assistant officers and agents as may be deemed necessary may be elected or
appointed by the Board of Directors. Any two or more offices may be held by the
same
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<PAGE> 9
person, except the offices of President and Secretary. All officers and agents
of the corporation, as between themselves and the corporation, shall have such
authority and perform such duties in the management of the corporation as may
be determined by resolution of the Board of Directors not inconsistent with
these By-Laws.
2. The salaries of all officers and agents of the corporation shall be
fixed by the Board of Directors.
3. The officers of the corporation shall hold office for one year and
until their successors are chosen and have qualified. Any officer or agent
elected or appointed by the Board may be removed by the Board of Directors
whenever in its judgment the best interests of the corporation will be served
thereby.
4. The President shall preside at all meetings of the shareholders and
directors; he shall have general and active management of the business of the
corporation, shall see that all orders and resolutions of the Board are carried
into effect, subject, however, to the right of the directors to delgate any
specific powers, except such as may be by statute exclusively conferred on the
President, to any other officer or officers of the corporation. He shall
execute bonds, mortgages and other contracts requiring a seal, under the seal
of the corporation. He shall be EX-OFFICIO a member of all committees, and
shall have the general powers and duties of supervision and management usually
vested in office of the President of a corporation.
5. The Secretary shall attend all sessions of the Board and all
meetings of the shareholders and act as clerk thereof, and record all the votes
of the corporation and the minutes of all its transactions in a book to be kept
for that purpose; and shall perform like duties for all committees of the Board
of Directors when required. He shall give, or cause to be given, notice of all
meetings of the shareholders and of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors or President,
and under whose supervision he shall be. He shall keep in safe custody the
corporate seal of the corporation, and when authorized by the Board, affix the
same to any instrument requiring it.
6. The Treasurer shall have custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation, and shall keep the moneys
of the corporation in a separate account to the credit of the corporation. He
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<PAGE> 10
shall disburse the funds of the corporation as may be ordered by the Board,
taking proper vouchers for such disbursements, and shall render to the
President and directors, at the regular meetings of the Board, or whenever they
may require it, an account of all his transactions as Treasurer and of the
financial condition of the corporation.
ARTICLE VI - VACANCIES
1. If the office of any officer or agent, one or more, becomes vacant
for any reason, the Board of Directors may choose a successor or successors,
who shall hold office for the unexpired term in respect of which such vacancy
occurred.
2. Any vacancy occurring in the Board of Directors may be filled by
the affirmative vote of a majority of the remaining directors though not less
than a quorum, or by a sole remaining director, and any director so chosen
shall hold office until the next election of directors when his successor is
elected and qualified. Any newly created directorship shall be deemed a
vacancy. When one or more directors shall resign from the Board, effective at a
future time, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as herein provided in
the filling of other vacancies. If at any time, by reason of death or
resignation or other cause, a corporation should have no directors in office,
then any officer or any shareholder or an executor, administrator, trustee or
guardian of a shareholder, or other fiduciary entrusted with like
responsibility for the person or estate of a shareholder may call a special
meeting of shareholders.
ARTICLE VII - BOOKS AND RECORDS
1. The corporation shall keep correct and complete books and records
of account and shall keep minutes of the poceedings of its shareholders and
Board of Directors and committees thereof. The corporation shall keep at its
statutory agent's office, or its known place of business, or at the office of
its transfer agent or registrar, a record of its shareholders, giving the names
and addresses of all shareholders and the number and class of the shares held
by each. Books, records,
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and minutes shall be written form or in any other form capable of being
converted into written form within a reasonable time.
2. Any person who shall have been a holder of record of shares or of a
voting trust beneficial interest therefor at least six months immediately
preceding his demand or shall be the holder of record of, or the holder of
record of a voting trust beneficial interest for, at least five per cent of all
the oustanding shares of the corporation, upon written demand stating the
purpose thereof, shall have the right to examine, in person, or by agent or
attorney, at any reasonable time or times, for any proper purpose the
corporation's relevant books and records of accounts, minutes, and record of
shareholders and to make copies or extracts therefrom.
ARTICLE VIII - SHARE CERTIFICATES, DIVIDENDS, ETC.
1. The share certificates of the corporation shall be numbered and
registered in the share ledger and transfer books of the corporation as they
are issued. They shall bear the corporate seal and shall be signed by the
2. Transfer of shares shall be made on the books of the corporation
upon surrender of the certificates therefor, endorsed by the person named in
the certificate or by attorney, lawfully constituted in writing. No transfer
shall be made which is inconsistent with law.
3. In the event that a share certificate shall be lost, destroyed or
mutilated, a new certificate may be issued therefor upon such terms and
indemnity to the corporation as the Board of Directors may prescribe.
4. The Board of Directors may declare and pay dividends upon the
outstanding shares of the corporation, from time to time and to such extent as
they deem advisable, in the manner and upon the terms and conditions provided
by statute and the Articles of Incorporation.
5. Before payment of any dividend, there may be set aside out of the
net profits of the corporation such sum or sums as the directors, from time to
time, in their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the directors shall
think conducive to the interests of the corporation, and the directors may
abolish any such reserve in the manner in which it was created.
-10-
<PAGE> 12
ARTICLE IX - MISCELLANEOUS PROVISIONS
1. All checks or demands for money and notes of the corporation shall
be signed by such officer or officers as the Board of Directors may from time
to time designate.
2. The fiscal year of the corporation shall begin on the first day of
3. Whenever written notice is required to be given to any person, it
may be given to such person, either personally or by sending a copy thereof
through the mail, or by telegram, charges prepaid, to his address appearing on
the books of the corporation, or supplied by him to the corporation for the
purpose of notice. If the notice is sent by mail or by telegraph, it shall be
deemed to have been given to the person entitled thereto when deposited in the
United States mail or with a telegraph office for transmission to such person.
Such notice shall specify the place, day and hour of the meeting and, in the
case of a special meeting of shareholders, the general nature of the business
to be transacted.
4. Any payments made to an officer or employee of the corporation such
as a salary, commission, bonus, interest, rent, travel or entertainment expense
incurred by him, which shall be disallowed in whole or in part as a deductible
expense by the Internal Revenue Service, shall be reimbursed by such officer or
employee to the corporation to the full extent of such disallowance. It shall
be the duty of the directors, as a Board, to enforce payment of each such
amount disallowed. In lieu of payment by the officer or employee, subject to
the determination of the directors, proportionate amounts may be withheld from
his future compensation payments until the amount owed to the corporation has
been recovered.
ARTICLE X - ANNUAL STATEMENT
1. The President and Board of Directors shall present at each annual
meeting a full and complete statement of the business and affairs of the
corporation for the preceding year. Such statement shall be prepared and
presented in whatever manner the Board of Directors shall deem advisable and
need not be verified by a certified public accountant.
2. If the corporation has more than ten shareholders, it shall cause a
financial report of the corporation to be delivered or mailed to its
shareholders of record at least once in each year.
-11-
<PAGE> 13
Such report shall be distributed to shareholders within four months after the
end of the fiscal year of the corporation and shall include the year end
balance sheet and statement of income.
ARTICLE XI - AMENDMENTS
The original By-Laws of this corporation may be adopted by the
incorporators, or by the initial Board of Directors. The power to alter, amend
or repeal the By-Laws or adopt new By-Laws, subject to repeal or change by
action of the shareholders, shall be vested in the Board of Directors.
-12-
<PAGE> 1
Exhibit 3.19
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "WIP TECHNOLOGIES, INC.", FILED IN THIS OFFICE ON THE
TWENTIETH DAY OF DECEMBER, A.D. 1995, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[STATE SEAL OF THE STATE OF DELAWARE]
[SECRETARY'S OFFICE SEAL OF
THE STATE OF DELAWARE] /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2574024 8100 AUTHENTICATION:
950302139 7764295
DATE:
12-22-95
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
WIP TECHNOLOGIES, INC.
----------------------------
FIRST. The name of this corporation shall be:
WIP Technologies, Inc.
SECOND. Its registered office in the State of Delaware is to be located
at 1105 North Market Street, Suite 1300, in the city of Wilmington, County of
New Castle and its registered agent at such address is DELAWARE CORPORATE
MANAGEMENT, INC.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which this corporation is
authorized to issue is:
Three thousand (3,000) shares of common stock at a par value of ($.O1)
per share.
FIFTH. The name and address of the incorporator is as follows:
Wendy A. Meikle
Suite A
109 Woodfield Drive
Greenville, PA 16125
SIXTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
SEVENTH. No director shall be personally liable to the corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law, (i) for breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal
<PAGE> 3
benefit. No amendment to or repeal of this Article SEVENTH shall apply to or
have any effect on the liability or alleged liability of any director of the
corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment.
/s/ Wendy A. Meikle
----------------------------------------
Wendy A. Meikle
Incorporator
<PAGE> 1
Exhibit 3.20
BY-LAWS
of
WIP TECHNOLOGIES, INC.
(A Delaware corporation)
Amended and Restated May 14, 1997
<PAGE> 2
INDEX
BY-LAWS
ARTICLE I
STOCKHOLDERS ............................ 1
Section 1.01. Annual Meetings .......................................... 1
Section 1.02. Special Meetings ......................................... 1
Section 1.03. Notice of Annual and Special Meetings .................... 1
Section 1.04. Quorum ................................................... 1
Section 1.05. Voting ................................................... 2
Section 1.06. Procedure at Stockholders' Meetings ...................... 2
Section 1.07. Action Without Meeting ................................... 2
ARTICLE II
DIRECTORS .............................. 2
Section 2.01. Number, Election and Term of Office ...................... 2
Section 2.02. Chairman of the Board .................................... 3
Section 2.03. Annual Meeting ........................................... 3
Section 2.04. Regular Meetings ......................................... 3
Section 2.05. Special Meetings ......................................... 3
Section 2.06. Notice of Annual and Special Meetings .................... 3
Section 2.07. Quorum and Manner of Acting .............................. 3
Section 2.08. Action Without Meeting ................................... 4
Section 2.09. Participation by Conference Telephone .................... 4
Section 2.10. Resignations ............................................. 4
Section 2.11. Removal of Directors ..................................... 4
Section 2.12. Vacancies ................................................ 4
Section 2.13. Compensation of Directors ................................ 4
Section 2.14. Committees ............................................... 4
Section 2.15. Personal Liability of Directors .......................... 5
ARTICLE III
OFFICERS AND EMPLOYEES ....................... 5
Section 3.01. Executive Officers ....................................... 5
Section 3.02. Additional Officers; Other Agents and Employees .......... 5
Section 3.03. The President ............................................ 5
Section 3.04. The Vice Presidents ...................................... 5
Section 3.05. The Secretary and Assistant Secretaries .................. 6
Section 3.06. The Treasurer and Assistant Treasurers ................... 6
Section 3.07. Vacancies ................................................ 6
Section 3.08. Delegation of Duties ..................................... 6
Section 3.09. Personal Liability of Officers, Employees and Agents ..... 6
ARTICLE IV
SHARES OF CAPITAL STOCK ....................... 7
Section 4.01. Share Certificates ....................................... 7
Section 4.02. Transfer of Shares ....................................... 7
<PAGE> 3
Section 4.03. Transfer Agents and Registrars ........................... 7
Section 4.04. Lost, Stolen, Destroyed or Mutilated Certificates ........ 7
Section 4.05. Regulations Relating to Shares ........................... 7
Section 4.06. Holders of Record ........................................ 7
Section 4.07. Fixing of Record Date .................................... 8
ARTICLE V
LOANS, NOTES, CHECKS,
CONTRACTS AND OTHER INSTRUMENTS ................... 8
Section 5.01. Notes, Checks, etc ....................................... 8
Section 5.02. Execution of Instruments Generally ....................... 8
Section 5.03. Proxies in Respect of Stock or Other Securities
or Other Corporations .................................. 8
ARTICLE VI
GENERAL PROVISIONS ......................... 9
Section 6.01. Offices .................................................. 9
Section 6.02. Corporate Seal ........................................... 9
Section 6.03. Fiscal Year .............................................. 9
ARTICLE VII
VALIDATION OF CERTAIN CONTRACTS ................... 9
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS .............. 9
ARTICLE IX
AMENDMENTS ..............................10
INDEX
<PAGE> 4
WIP TECHNOLOGIES, INC.
By-Laws
ARTICLE I
STOCKHOLDERS
SECTION 1.01. ANNUAL MEETINGS. Annual meetings of the stockholders
shall be held at such place, either within or without the State of Delaware,
and at such time and date as the Board of Directors shall determine and as set
forth in the notice of the meeting.
SECTION 1.02. SPECIAL MEETINGS. Special meetings of the stockholders
may be called at any time, for the purpose or purposes set forth in the call,
by the Chairman of the Board, the President, the Board of Directors or the
holders of at least one-fifth of all the shares outstanding and entitled to
vote thereat, by delivering a written request to the Secretary. At any time,
upon the written request of any person or persons who have duly called a
special meeting, it shall be the duty of the Secretary to fix the date of the
meetings, to be held not more than 75 days after receipt of the request, and to
give due notice thereof. Special meetings shall be held at such place, either
within or without the State of Delaware, and at such time and date as the Board
of Directors shall determine and as set forth in the notice of the meeting.
SECTION 1.03. NOTICE OF ANNUAL AND SPECIAL MEETINGS. Except as
otherwise expressly required by law, notice of each meeting of stockholders,
whether annual or special, shall be given at least 5 and not more than 60 days
prior to the date on which the meeting is to be held to each stockholder of
record entitled to vote thereat by delivery of a notice thereof to him
personally or by sending a copy thereof through the mail or by
telecommunication equipment, charges prepaid, to his address appearing on the
records of the Corporation. Each such notice shall specify the place, day and
hour of the meeting and, in the case of a special meeting, shall briefly state
the purpose or purposes for which the meeting is called. A written waiver of
notice, signed by the person or persons entitled to such notice, whether before
or after the date and time fixed for the meeting shall be deemed the equivalent
of such notice. Neither the business to be transacted at nor the purpose of the
meeting need be specified in a waiver of notice of such meeting.
SECTION 1.04. QUORUM. A stockholders' meeting duly called shall not be
organized for the transaction of business unless a quorum is present. At any
meeting the presence in person or by proxy of stockholder entitled to cast at
least a majority of the votes which all stockholders are entitled to cast on
the particular matter shall constitute a quorum for the purpose of considering
such matter, except as otherwise expressly provided by law or by the
Certificate of Incorporation or By-Laws of the Corporation. The stockholders
present at a duly organized meeting can continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave
less than a quorum. If a meeting cannot be organized because a quorum has not
attended, those present may adjourn the meeting from time to time to such time
(not more than 30 days after the next previous adjourned meeting) and place as
they may determine, without notice other than by announcement at the meeting of
the time and place of the adjourned meeting; and in the case of any meeting
called for the election of directors, those who attend the second of such
adjourned meetings, although entitled to cast less than a majority of the votes
entitled to be cast on any matter to be considered at the meeting, shall
nevertheless constitute a quorum for the purpose of electing directors.
1
<PAGE> 5
SECTION 1.05. VOTING. At every meeting of stockholders, each holder of
record of issued and outstanding stock of the Corporation entitled to vote at
such meeting shall be entitled to vote in person or by proxy and, except where
a date has been fixed as the record date for the determination of stockholders
entitled to notice of or to vote at such meeting, no holder of record of a
share of stock which has been transferred on the books of the Corporation
within 10 days next preceding the date of such meeting shall be entitled to
notice of or to vote at such meeting in respect of such share so transferred.
Resolutions of the stockholders shall be adopted, and any action of the
stockholders at a meeting upon any matter shall be taken and be valid, only if
at least a majority of the votes cast with respect to such resolutions or
matter are cast in favor thereof, except as otherwise expressly provided by law
or by the Certificate of Incorporation or By-Laws of the Corporation. The
Chairman of the Board (if one has been elected and is present) shall be
chairman, and the Secretary (if present) shall act as secretary, at all
meetings of the stockholders. In the absence of the Chairman of the Board, the
President shall be chairman; and in the absence of both of them, the chairman
shall be designated by the Board of Directors or if not so designated shall be
elected by the stockholders present; and in the absence of the Secretary, an
Assistant Secretary shall act as secretary of the meeting.
SECTION 1.06. PROCEDURE AT STOCKHOLDERS' MEETINGS. The organization of
each meeting of the stockholders, the order of business thereat and all matters
relating to the manner of conducting the meetings shall be determined by the
chairman of the meeting, whose decisions may be overruled only by majority vote
(which shall not be by ballot) of the stockholders present and entitled to vote
at the meeting in person or by proxy. Meetings shall be conducted in a manner
designed to accomplish the business of the meeting in a prompt and orderly
fashion and to be fair and equitable to all stockholders, but it shall not be
necessary to follow Roberts' Rules of Order or any other manual of
parliamentary procedure.
SECTION 1.07. ACTION WITHOUT MEETING. Any action required or permitted
to be taken at any annual or special meeting of stockholders, or any action
which may be taken at any annual or special meeting, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, 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 such written consent is
filed with the minutes of proceedings of the stockholders. 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.
ARTICLE II
DIRECTORS
SECTION 2.01. NUMBER, ELECTION AND TERM OF OFFICE. The number of
directors which shall constitute the full Board of Directors shall be
determined by resolution of the board of directors or by the stockholders at
the annual meeting provided, however, that in no event shall the number of
directors be less than three or more than eleven. Each director shall hold
office for the term for which he is elected and thereafter until his successor
is duly elected or until his prior death, resignation or removal. Directors
need not be stockholders.
2
<PAGE> 6
SECTION 2.02. CHAIRMAN OF THE BOARD. The Board of Directors shall
elect a Chairman of the Board. The Chairman when present shall preside at all
meetings of the shareholders and of the Board of Directors.
SECTION 2.03. ANNUAL MEETING. Annual Meetings of the Board of
Directors shall be held each year at the same place as and immediately after
the annual meeting of stockholders, or at such other place and time as shall
theretofore have been determined by the Board. At its regular annual meeting,
the Board of Directors shall organize itself and elect the officers of the
Corporation for the ensuing year, and may transact any other business.
SECTION 2.04. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such intervals and at such time and place as shall
from time to time be determined by the Board. After there has been such
determination and notice thereof has been once given to each person then a
member of the Board of Directors, regular meetings may be held at such
intervals and time and place without further notice being given.
SECTION 2.05. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called at any time by the Board, by the Chairman of the Board,
by the President or by any two directors to be held on such day and at such
time and place as shall be specified by the person or persons calling the
meeting.
SECTION 2.06. NOTICE OF ANNUAL AND SPECIAL MEETINGS. Except as
otherwise expressly required by law, notice of the annual meeting of the Board
of Directors need not be given. Except as otherwise expressly required by law,
notice of every special meeting of the Board of Directors specifying the place,
date and time thereof shall be given to each director either by being mailed on
at least the third day prior to the date of the meeting or by being sent by
telecommunications equipment or given personally or by telephone at least 24
hours prior to the time of the meeting. A written waiver of notice of a special
meeting, signed by the person or persons entitled to such notice, whether
before or after the date and time stated therein fixed for the meeting, shall
be deemed the equivalent of such notice, and attendance of a director at a
meeting shall constitute a waiver of notice of such meeting except when the
director attends the meeting for the express purpose of objecting, when he
enters the meeting, to the transaction of any business because the meeting is
not lawfully called or convened. Neither the business to be transacted at nor
the purpose of the meeting need be specified in a waiver of notice of such
meeting.
SECTION 2.07. QUORUM AND MANNER OF ACTING. At all meetings of the
Board of Directors, except as otherwise expressly provided by law or by the
Certificate of Incorporation or By-Laws of the Corporation, the presence of a
majority of the full Board shall be necessary and sufficient to constitute a
quorum for the transaction of business. If a quorum is not present at any
meeting, the meeting may be adjourned from time to time by a majority of the
directors present until a quorum as aforesaid shall be present, but notice of
the time and place to which such a meeting is adjourned shall be given to any
directors not present either by being sent by telecommunications equipment or
given personally or by telephone at least 8 hours prior to the date of
reconvening. Resolutions of the Board of Directors shall be adopted, and any
action of the Board at a meeting upon any matter shall be taken and be valid,
only with the affirmative vote of at least a majority of the directors present
at the meeting, except as otherwise provided herein. The Chairman of the Board
(if one has been elected and is present) shall be chairman, and the Secretary
(if present) shall act as secretary, at all meetings of the Board. In the
absence of the Chairman of the Board, the President shall be chairman, and in
the absence of both of them the directors present shall select a member of the
Board of Directors to be chairman; and in the absence of the Secretary and
Assistant Secretary, the chairman of the meeting shall designate any person to
act as secretary of the meeting.
3
<PAGE> 7
SECTION 2.08. ACTION WITHOUT MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting if a consent in writing, setting forth
the actions so taken, shall be signed by all members of the Board or such
committees, as the case may be, and such written consent is filed with the
minutes of the Board or committee.
SECTION 2.09. PARTICIPATION BY CONFERENCE TELEPHONE. Members of the
Board of Directors of the Corporation, or any committee designated by the
Board, may participate in a meeting of the Board or committee by means of
conference telephone or similar communications equipment by which all persons
participating in the meeting can hear each other, and participation in a
meeting by such means shall constitute presence in person at such meeting.
SECTION 2.10. RESIGNATIONS. A director may resign by submitting his
written resignation to the Chairman of the Board (if one has been elected) or
the Secretary. Unless otherwise specified therein, the resignation of a
director need not be accepted to make it effective and shall be effective
immediately upon its receipt by such officer or as otherwise specified therein.
If the resignation of a director specifies that it shall be effective at some
time later than receipt, until that time the resigning director shall be
competent to act on all matters before the Board of Directors, including
filling the vacancy caused by such resignation.
SECTION 2.11. REMOVAL OF DIRECTORS. The entire Board of Directors or
any individual director may be removed at any time for cause or without cause
by the holders of a majority of the shares then entitled to vote at an election
of directors. The vacancy or vacancies caused in the Board of Directors by such
removal may but need not be filled by such stockholders at the same meeting or
at a special meeting of the stockholders called for that purpose.
SECTION 2.12. VACANCIES. Any vacancy that shall occur in the Board of
Directors by reason of death, resignation, removal, increase in the number of
directors or any other cause whatever shall, unless filled as provided in
Section 2.11 of this Article II, be filled by a majority of the then members of
the Board, whether or not a quorum, and each person so elected shall be a
director until he or his successor is elected by the stockholders at a meeting
called for the purpose of electing directors, or until his prior death,
resignation or removal.
SECTION 2.13. COMPENSATION OF DIRECTORS. The Corporation may allow
compensation to its directors for their services, as determined from time to
time by resolution adopted by the Board of Directors.
SECTION 2.14. COMMITTEES. The Board of Directors may, by resolution
adopted by a majority of the full Board, designate one or more committees
consisting of directors to have and exercise such authority of the Board in the
management of the business and affairs of the Corporation as the resolution of
the Board creating such committee may specify and as is otherwise permitted 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. In the absence or disqualification of any member
of such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another director to act at the meeting in the
place of such absent or disqualified member.
4
<PAGE> 8
SECTION 2.15. PERSONAL LIABILITY OF DIRECTORS.
(a) To the fullest extent that the laws of the State of Delaware, as
the same exist or may hereafter be amended, permit elimination of the personal
liability of directors, no director of this Corporation shall be personally
liable to this Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director.
(b) The provisions of this Section 2.15 shall be deemed to be a
contract with each director of this Corporation who serves as such at any time
while this Section 2.15 is in effect, and each such director shall be deemed to
be serving as such in reliance on the provisions of this Section 2.15. Any
amendment or repeal of this Section 2.15 or adoption of any By-Law of this
Corporation or other provision of the Certificate of Incorporation of this
Corporation which has the effect of increasing director liability shall operate
prospectively only and shall not affect any action taken, or any failure to
act, by a director of this Corporation prior to such amendment, repeal, By-Law
or other provision becoming effective.
ARTICLE III
OFFICERS AND EMPLOYEES
SECTION 3.01. EXECUTIVE OFFICERS. The Executive Officers of the
Corporation shall be the President, a Secretary and a Treasurer, and may
include one or more Vice Presidents as the Board of Directors may from time to
time determine, all of whom shall be elected by the Board of Directors. Any two
or more offices may be held by the same person. Each Executive Officer shall
hold office until the next succeeding annual meeting of the Board of Directors
and thereafter until his successor is duly elected and qualifies, or until his
earlier death, resignation or removal.
SECTION 3.02. ADDITIONAL OFFICERS; OTHER AGENTS AND EMPLOYEES. The
Board of Directors may from time to time appoint or hire such additional
officers, assistant officers, agents, employees and independent contractors as
the Board deems advisable; and the Board or the President shall prescribe their
duties, conditions of employment and compensation. Subject to the power of the
Board of Directors, the President may employ from time to time such other
agents, employees, and independent contractors as he may deem advisable for the
prompt and orderly transaction of the business of the Corporation, and he may
prescribe their duties and the conditions of their employment, fix their
compensation and dismiss them, without prejudice to their contract rights, if
any.
SECTION 3.03. THE PRESIDENT. Subject to the control of the Board of
Directors, the President shall have general policy supervision of and general
management and executive powers over all the property, business, operations and
affairs of the Corporation, and shall see that the policies and programs
adopted or approved by the Board are carried out. The President shall exercise
such further powers and duties as from time to time may be prescribed in these
By-Laws or by the Board of Directors.
SECTION 3.04. THE VICE PRESIDENTS. The Vice Presidents may be given by
resolution of the Board of Directors general executive powers, subject to the
control of the President, concerning one or more or all segments of the
operations of the Corporation. The Vice Presidents shall exercise such further
powers and duties as from time to time may be prescribed in these By-Laws or by
the Board of Directors or by the President. At the request of the President or
in his absence or disability, the senior Vice President shall exercise all the
powers and duties of the President.
5
<PAGE> 9
SECTION 3.05. THE SECRETARY AND ASSISTANT SECRETARIES. It shall be the
duty of the Secretary (a) to keep or cause to be kept an original or duplicate
record of the proceedings of the stockholders and the Board of Directors, and a
copy of the Certificate of Incorporation and of the By-Laws; (b) to attend to
the giving of notices of the Corporation as may be required by law or these
By-Laws; (c) to be custodian of the corporate records and of the seal of the
Corporation and see that the seal is affixed to such documents as may be
necessary or advisable; (d) to have charge of the stock books of the
Corporation, and a share register, giving the names of the stockholders in
alphabetical order, and showing their respective addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the shares, and the date of cancellation of every certificate surrendered for
cancellation; and (e) to exercise all powers and duties as may be prescribed by
the Board of Directors or by the President from time to time. The Secretary by
virtue of his office shall be an Assistant Treasurer. The Assistant Secretaries
shall assist the Secretary in the performance of his duties and shall also
exercise such further powers and duties as from time to time may be assigned to
them by the Board of Directors, the President or the Secretary. At the
direction of the Secretary or in his absence or disability, an Assistant
Secretary shall perform the duties of the Secretary.
SECTION 3.06. THE TREASURER AND ASSISTANT TREASURERS. The Treasurer
shall have custody of all the funds and securities of the Corporation. He shall
collect all moneys due the Corporation and deposit such moneys to the credit of
the Corporation in such banks, trust companies, or other depositories as may
have been duly designated by the Board of Directors. He shall endorse for
collection on behalf of the Corporation checks, notes, drafts and other
documents, and may sign and deliver receipts, vouchers and releases of liens
evidencing payments made to the Corporation. Subject to Section 5.01 of these
By-Laws, he shall cause to be disbursed the funds of the Corporation by payment
in cash or by checks or drafts upon the authorized depositories of the
Corporation. He shall have charge of the books and accounts of the Corporation.
He shall perform all acts incident to the office of Treasurer and such other
duties as may be assigned to him by the Board of Directors. The Treasurer by
virtue of his office shall be an Assistant Secretary. The Assistant Treasurers
shall assist the Treasurer in the performance of his duties and shall also
exercise such further powers and duties as from time to time may be assigned to
them by the Board of Directors, the President or the Treasurer. At the
direction of the Treasurer or in his absence or disability, an Assistant
Treasurer shall perform the duties of the Treasurer.
SECTION 3.07. VACANCIES. Vacancy in any office or position by reason
of death, resignation, removal, disqualification, disability or other cause,
shall be filled in the manner provided in this Article III for regular election
or appointment to such office.
SECTION 3.08. DELEGATION OF DUTIES. The Board of Directors may in its
discretion delegate from the time being the powers and duties, or any of them,
of any officer to any other person whom it may selection.
SECTION 3.09. PERSONAL LIABILITY OF OFFICERS, EMPLOYEES AND AGENTS.
The Corporation shall indemnify its officers, employees and agents to the full
extent permitted by Section 145 of the Delaware General Corporation Law, as
amended from time to time, or any successor provision of Delaware law.
6
<PAGE> 10
ARTICLE IV
SHARES OF CAPITAL STOCK
SECTION 4.01. SHARE CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors may from time to time prescribe, signed by the
President or any Vice President and by the Treasurer or any Assistant Treasurer
or the Secretary or any Assistant Secretary. The signatures of such officers
may be facsimiles. Each such certificate shall set forth the name of the
registered holder thereof, the number and class of shares and the designation
of the series, if any, which the certificate represents. The Board of Directors
may, if it so determines, direct that certificates for shares of stock of the
Corporation be signed by a transfer agent or registered by a registrar or both,
in which case such certificates shall not be valid until so signed or
registered.
In the case of any officer of the Corporation who shall have signed,
or whose facsimile signature shall have been used on, any certificate for
shares of stock of the Corporation shall cease to be such officer, whether
because of death, resignation, removal or otherwise, before such certificate
shall have been delivered by the Corporation, such certificate shall
nevertheless be deemed to have been adopted by the Corporation and may be
issued and delivered as though the person who signed such certificate or whose
facsimile signature shall have been used thereon had not ceased to be such
officer.
SECTION 4.02. TRANSFER OF SHARES. Transfer of shares of stock of the
Corporation shall be made only on the books of the Corporation by the
registered holder thereof or by his attorney thereunto authorized by an
instrument duly executed and filed with the Corporation, and on surrender of
the certificate or certificates for such shares properly endorsed or
accompanied by properly executed stock powers and evidence of the payment of
all taxes imposed upon such transfer. Except as provided in Section 4.04 of
this Article IV, every certificate surrendered for transfer shall be canceled
and no new certificate or certificates shall be issued in exchange for any
existing certificate until such existing certificate shall have been so
cancelled.
SECTION 4.03. TRANSFER AGENTS AND REGISTRARS. The Board of Directors
may appoint any one or more qualified banks, trust companies or other
corporations organized under any law of any state of the United States or under
the laws of the United States as agent or agents for the Corporation in the
transfer of the stock of the Corporation and likewise may appoint any one or
more such qualified banks, trust companies or other corporations as registrar
or registrars of the stock of the Corporation.
SECTION 4.04. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. New
certificates for shares of stock may be issued to replace certificates lost,
stolen, destroyed or mutilated upon such terms and conditions, which may but
need not include the giving of a satisfactory bond or other indemnity, as the
Board of Directors may from time to time determine.
SECTION 4.05. REGULATIONS RELATING TO SHARES. The Board of Directors
shall have power and authority to make such rules and regulations not
inconsistent with these By-Laws or with law as it may deem expedient concerning
the issue, transfer and registration of certificates representing shares of
stock of the Corporation.
SECTION 4.06. HOLDERS OF RECORD. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder and
owner in fact thereof and 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
7
<PAGE> 11
or not it shall have express or other notice thereof, except as otherwise
expressly provided by the laws of the State of Delaware.
SECTION 4.07. FIXING OF RECORD DATE. The Board of Directors may fix a
time, not less than 10 or more than 60 days prior to the date of any meeting of
stockholders, or the date fixed for the payment of any dividend or
distribution, or the date for the allotment of rights, or the date when any
change or conversion or exchange of shares will be made or go into effect, as a
record date for the determination of the stockholders entitled to notice of, or
to vote at, any such meeting, or entitled to receive payment of any such
dividend or distribution, or to receive any such allotment of rights, or to
exercise the rights in respect to any such change, conversion or exchange of
shares. In such case, only such stockholders as shall be stockholders of record
on the date so fixed shall be entitled to notice of, or to vote at, such
meeting or to receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any shares on the books of the Corporation after any record date
fixed as aforesaid.
ARTICLE V
LOANS, NOTES, CHECKS,
CONTRACTS AND OTHER INSTRUMENTS
SECTION 5.01. NOTES. CHECKS, ETC. All notes, drafts, acceptances,
checks, endorsements (other than for deposit) and all evidences of indebtedness
of the Corporation whatsoever shall be signed by such officers or agents and
shall be subject to such requirements as to countersignature or other
conditions as the Board of Directors from time to time may designate. Facsimile
signatures on checks may be used unless prohibited by the Board of Directors.
SECTION 5.02. EXECUTION OF INSTRUMENTS GENERALLY. Except as provided
in Section 5.01 of this Article V, all contracts and other instruments
requiring execution by the Corporation may be executed and delivered by the
President, any Vice President or the Treasurer, and authority to sign any such
contracts or instruments, which may be general or confined to specific
instances, may be conferred by the Board of Directors upon any other person or
persons. Any person having authority to sign on behalf of the Corporation may
delegate, from time to time, by instrument in writing, all or any part of such
authority to any person or person if authorized so to do by Board of Directors.
SECTION 5.03. PROXIES IN RESPECT OF STOCK OR OTHER SECURITIES OR OTHER
CORPORATIONS. Unless otherwise provided by the Board of Directors, the
President may from time to time appoint an attorney or attorneys or an agent or
agents of the Corporation to exercise in the name and on behalf of the
Corporation the powers and rights which the Corporation may have as the holder
of stock or other securities in any other corporation to vote or consent in
respect of such stock or other securities, may instruct the person or persons
so appointed as to the manner of exercising such powers and rights and may
execute or cause to be executed in the name and on behalf of the Corporation
and under its corporate seal or otherwise all such written proxies or other
instruments as he may deem necessary or proper in order that the Corporation
may exercise its said powers and rights.
8
<PAGE> 12
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01. OFFICES. The registered office of the Corporation shall
be at 1105 North Market Street, Suite 1300, Wilmington, Delaware. The
Corporation may have other offices, within or without the State of Delaware, at
such place or places as the Board of Directors may from time to time determine
or the business of the Corporation may require.
SECTION 6.02. CORPORATE SEAL. The Board of Directors shall prescribe
the form of a suitable corporate seal, which shall contain the full name of the
Corporation and the year and state of incorporation. Such seal may be used by
causing it or a facsimile or reproduction thereof to be affixed to or placed
upon the document to be sealed.
SECTION 6.03. FISCAL YEAR. Unless otherwise determined by the Board of
Directors, the fiscal year of the Corporation shall be the calendar year.
ARTICLE VII
VALIDATION OF CERTAIN CONTRACTS
SECTION 7.01. No contract or other transaction between the Corporation
and another person shall be invalidated or otherwise adversely affected by the
fact that any one or more stockholders, directors or officers of the
Corporation -
(i) is pecuniarily or otherwise interested in, or is a stockholder,
director, officer, or member of, such other person, or
(ii) is a party to, or is in any other way pecuniarily or otherwise
interested in, the contract or other transaction, or
(iii) is in any way connected with any person pecuniarily or otherwise
interested in such contract or other transaction, provided the fact of such
interest shall be disclosed or known to the Board of Directors or the
stockholders, as the case may be, and in any action of the stockholders or of
the Board authorizing or approving any such contract or other transaction, any
and every stockholder or director may be counted in determining the existence
of a quorum with like force and effect as though he were not so interested, or
were not such a stockholder, director, member or officer, or were not such a
party, or were not so connected. Such director, stockholder or officer shall
not be liable to account to the Corporation for any profit realized by him from
or through any such contract or transaction approved or authorized as
aforesaid. As used herein, the term "person" includes a corporation,
partnership, firm, association or other legal entity.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 8.01. To the maximum extent provided by applicable law, no
director shall be personally liable to the Corporation or its stockholders for
monetary damages for any breach of fiduciary duty by such director as a
director. The foregoing sentence shall not eliminate or limit the liability of
a director, (i) for breach of the director's duty of loyalty of the Corporation
or its stockholders, (ii) for acts or
9
<PAGE> 13
omissions not in good faith or which involve intentional misconduct of a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article VIII shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment.
Directors and officers of the Corporation shall be indemnified as of
right to the fullest extent now or hereafter permitted by law in connection
with any actual or threatened civil, criminal, administrative or investigative
action, suit or proceeding (whether brought by or in the name of the
Corporation or otherwise) arising out of their service to the Corporation or to
another organization at the request of the Corporation. Persons who are not
directors or officers of the Corporation may be similarly indemnified in
respect of such service to the extent authorized at any time by the Board of
Directors of the Corporation. The Corporation may purchase and maintain
insurance to protect itself and any such director, officer or other person
against any liability asserted against him and incurred by him in respect of
such service whether or not the Corporation would have the power to indemnify
him against such liability by law or under the provisions of this Article. The
provisions of this Article shall be applicable to actions, suits or proceedings
commenced after the adoption hereof, whether arising from acts or omissions
occurring before or after the adoption hereof, and to directors, officers and
other persons who have ceased to render such service, and shall inure to the
benefit of the heirs, executors and administrators of the directors, officers
and other persons referred to in this Article.
ARTICLE IX
AMENDMENTS
SECTION 9.01. These By-Laws may be amended, altered and repealed, and
new By-Laws may be adopted, by the stockholders or the Board of Directors of
the Corporation at any regular or special meeting. No provision of these
By-laws shall vest any property or contract right in any stockholder.
10
<PAGE> 1
Exhibit 3.21
STATE OF DELAWARE
[STATE SEAL]
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF ARDEE INVESTMENT CO., INC. FILED IN THIS OFFICE ON THE
THIRTY-FIRST DAY OF AUGUST, A.D. 1988 AT 9 0'CLOCK A.M.
|||||||||||
[STATE SEAL]
DEPARTMENT OF STATE
OFFICE OF THE SECRETARY OF STATE /s/ Michael Harkins
1835 1793 1970 ---------------------------------------
DELAWARE Michael Harkins, Secretary of State
882440099
AUTHENTICATION: |844918
DATE: 08/31/1988
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
ARDEE INVESTMENT CO., INC.
THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, does hereby certify as follows:
ARTICLE I
---------
The name of the Corporation is Ardee Investment Co., Inc.
ARTICLE II
----------
The registered office of the Corporation in the State of Delaware is
located at 229 South State Street, in the City of Dover, County of Kent. The
name of the Corporation's registered agent in the State of Delaware at such
address is The Prentice-Hall Corporation System, Inc.
ARTICLE III
-----------
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
<PAGE> 3
ARTICLE IV
----------
The total number of shares of stock which the Corporation shall have
authority to issue is three thousand (3,000) shares of Common Stock, with a par
value of $.01 per share.
ARTICLE V
---------
Election of directors need not be by ballot unless the By-Laws of the
Corporation shall so provide.
ARTICLE VI
----------
In furtherance and not in limitation of the power conferred upon the
Board of Directors by law, the Board of Directors shall have power to make,
adopt, alter, amend and repeal, from time to time, the By-Laws of the
Corporation, subject to the right of the stockholders entitled to vote with
respect thereto to alter and repeal By-Laws made by the Directors.
ARTICLE VII
-----------
The incorporator of the Corporation is Frank T. Guadagnino, whose
mailing address is Box 2009, Pittsburgh, Pennsylvania 15230.
ARTICLE VIII
------------
Personal Liability of Directors
-------------------------------
1. To the fullest extent that the laws of the State of Delaware, as
the same exist or may hereafter be amended, permit
-2-
<PAGE> 4
elimination of the personal liability of directors, no director of this
Corporation shall be personally liable to this Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director.
2. The provisions of this Article VIII shall be deemed to be a
contract with each director of this Corporation who serves as such at any time
while this Article VIII is in effect, and each such director shall be deemed to
be serving as such in reliance on the provisions of this Article VIII. Any
amendment or repeal of this Article VIII or adoption of any By-Law of this
Corporation or other provision of the Certificate of Incorporation of this
Corporation which has the effect of increasing director liability shall operate
prospectively only and shall not affect any action taken, or any failure to
act, by a director of this Corporation prior to such amendment, repeal, By-Law
or other provision becoming effective.
ARTICLE IX
----------
Indemnification of, and Advancement of
Expenses to, Directors, Officers and Others.
--------------------------------------------
1. RIGHT TO INDEMNIFICATION. Except as prohibited by law, every
director and officer of the Corporation shall be entitled as of right to be
indemnified by the Corporation against all expenses and liability (as those
terms are defined below in this Paragraph 1) incurred by such person in
connection with any actual or threatened claim, action, suit or proceeding,
whether
-3-
<PAGE> 5
civil, criminal, administrative, investigative or other, or whether brought by
or against such person or by or in the right of the Corporation or otherwise, in
which such person may be involved, as a party or otherwise, by reason of such
person being or having been a director or officer of the Corporation or a
subsidiary of the Corporation or by reason of the fact that such person is or
was serving at the request of the Corporation as a director, officer, employee,
fiduciary or other representative of another corporation, partnership, joint
venture, trust, employee benefit plan or other entity (such claim, action, suit
or proceeding hereinafter being referred to as "Action"); provided, however,
that no such right to indemnification shall exist with respect to an Action
brought by an indemnitee (as defined below) against the Corporation (an
"Indemnitee Action") except as provided in the last sentence of this Paragraph
1. Persons who are not directors or officers of the corporation may be similarly
indemnified in respect of service to the Corporation or a subsidiary of the
Corporation or to another such entity at the request of the Corporation to the
extent the Board of Directors of the Corporation at any time designates any of
such persons as entitled to the benefits of this Article IX. As used in this
Article IX, "indemnitee" includes each director and officer of the Corporation
and each other person designated by the Board of Directors of the Corporation as
entitled to the benefits of this Article IX; "expenses" means all expenses
actually and reasonably incurred, including fees and expenses of counsel
selected by an indemnitee; and "liability" means all liability incurred,
-4-
<PAGE> 6
including the amounts of any judgments, excise taxes, fines or penalties and
any amounts paid in settlement. An indemnitee shall be entitled to be
indemnified pursuant to this Article against expenses incurred in connection
with an Indemnitee Action if (i) the Indemnitee Action is instituted under
paragraph 3 of this Article IX and the indemnitee is successful in whole or in
part in such Indemnitee Action, (ii) the indemnitee is successful in whole or
in part in another Indemnitee Action for which expenses are claimed or (iii) the
indemnification for expenses is included in a settlement of, or is awarded by
a court in, such other Indemnitee Action.
2. RIGHT TO ADVANCEMENT OF EXPENSES. Every indemnitee shall be
entitled as of right to have the expenses of the indemnitee in defending any
Action or in bringing and pursuing any Indemnitee Action under Paragraph 3 of
this Article IX paid in advance by the Corporation prior to final disposition
of the Action or Indemnitee Action, provided that the Corporation receives a
written undertaking by or on behalf of the indemnitee to repay the amount
advanced if it should ultimately be determined that the indemnitee is not
entitled to be indemnified for the expenses.
3. RIGHT OF INDEMNITEE TO BRING ACTION. If a written claim for
indemnification under Paragraph 1 of this Article IX or for advancement of
expenses under Paragraph 2 of this Article IX is not paid in full by the
Corporation within 30 days after the
-5-
<PAGE> 7
claim has been received by the Corporation, the indemnitee may at any time
thereafter bring an Indemnitee Action to recover the unpaid amount of the claim
and, if successful in whole or in part, the indemnitee shall also be entitled to
be paid the expense of bringing and pursuing such Indemnitee Action. The only
defense to an Indemnitee Action to recover on a claim for indemnification under
Paragraph 1 of this Article IX shall be that the conduct of the indemnitee was
such that under Delaware law the Corporation is prohibited from indemnifying the
indemnitee for the amount claimed, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel and stockholders) to have made a
determination prior to the commencement of such Indemnitee Action that
indemnification of the indemnitee is proper in the circumstances, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel or stockholders) that the conduct of the indemnitee was such that
indemnification is prohibited by Delaware law, shall be a defense to such
Indemnitee Action or create a presumption that the conduct of the indemnitee was
such that indemnification is prohibited by Delaware law. The only defense to an
Indemnitee Action to recover on a claim for advancement of expenses under
Paragraph 2 of this Article IX shall be failure by the indemnitee to provide the
undertaking required by Paragraph 2 of this Article IX.
-6-
<PAGE> 8
4. FUNDING AND INSURANCE. The Corporation may create a trust fund,
grant a security interest, cause a letter of credit to be issued or use other
means (whether or not similar to the foregoing) to ensure the payment of all
sums required to be paid by the Corporation to effect indemnification as
provided in this Article IX. The Corporation may purchase and maintain
insurance to protect itself and any indemnitee against any expenses or
liability incurred by the indemnitee in connection with any Action, whether or
not the Corporation would have the power to indemnify the indemnitee against the
expenses or liability by law or under the provisions of this Article IX.
5. NON-EXCLUSIVITY; NATURE AND EXTENT OF RIGHTS. The rights to
indemnification and advancement of expenses provided for in this Article IX
shall (i) not be deemed exclusive of any other rights, whether now
existing or hereafter created to which any indemnitee may be entitled under any
agreement, provision in the Certificate of Incorporation or By-Laws of the
Corporation, vote of stockholders or disinterested directors or otherwise, (ii)
be deemed to create contractual rights in favor of each indemnitee who serves
at any time while this Article IX is in effect (and each such indemnitee shall
be deemed to be serving in reliance on the provisions of this Article IX),
(iii) continue as to each indemnitee who has ceased to have the status
pursuant to which the indemnitee was entitled or was designated as entitled to
indemnification under this Article IX and insure to the benefit of the heirs
and legal representatives of each indemnitee and (iv) be
-7-
<PAGE> 9
applicable to Actions commenced after this Article IX becomes effective, whether
arising from acts or omissions occurring before or after this Article IX becomes
effective. Any amendment or repeal of this Article IX or adoption of any By-Law
of this Corporation or other provision of the Certificate of Incorporation of
this Corporation which has the effect of limiting in any way the rights to
indemnification or advancement of expenses provided for in this Article IX shall
operate prospectively only and shall not affect any action taken, or any failure
to act, by an indemnitee prior to such amendment, repeal, By-Law or other
provision effective.
6. PARTIAL INDEMNITY. If an indemnitee is entitled under any provision
of this Article IX to indemnification by the Corporation for some or a portion
of the expenses or liability incurred by the indemnitee in the preparation
investigation, defense, appeal or settlement of any Action or Indemnitee
Action but not, however, for the total amount thereof, the Corporation shall
indemnify the indemnitee for the portion of such expenses or liability to which
the indemnitee is entitled.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 30th day
of August, 1988.
/s/ Frank T. Guadagnino
---------------------------------------
Frank T. Guadagnino, Incorporator
-8-
<PAGE> 1
Exhibit 3.22
BY-LAWS
of
ARDEE INVESTMENT CO., INC.
(A Delaware corporation)
Amended and Restated May 14, 1997
<PAGE> 2
INDEX
BY-LAWS
ARTICLE I
STOCKHOLDERS ......................... 1
Section 1.01. Annual Meetings ..................................... 1
Section 1.02. Special Meetings .................................... 1
Section 1.03. Notice of Annual and Special Meetings ............... 1
Section 1.04. Quorum .............................................. 1
Section 1.05. Voting .............................................. 2
Section 1.06. Procedure at Stockholders' Meetings ................. 2
Section 1.07. Action Without Meeting .............................. 2
ARTICLE II
DIRECTORS ........................... 2
Section 2.01. Number, Election and Term of Office ................. 2
Section 2.02. Chairman of the Board ............................... 3
Section 2.03. Annual Meeting ...................................... 3
Section 2.04. Regular Meetings .................................... 3
Section 2.05. Special Meetings .................................... 3
Section 2.06. Notice of Annual and Special Meetings ............... 3
Section 2.07. Quorum and Manner of Acting ......................... 3
Section 2.08. Action Without Meeting .............................. 4
Section 2.09. Participation by Conference Telephone ............... 4
Section 2.10. Resignations ........................................ 4
Section 2.11. Removal of Directors ................................ 4
Section 2.12. Vacancies ........................................... 4
Section 2.13. Compensation of Directors ........................... 4
Section 2.14. Committees .......................................... 4
Section 2.15. Personal Liability of Directors ..................... 5
ARTICLE III
OFFICERS AND EMPLOYEES .................... 5
Section 3.01. Executive Officers .................................. 5
Section 3.02. Additional Officers; Other Agents and Employees ..... 5
Section 3.03. The President ....................................... 5
Section 3.04. The Vice Presidents ................................. 5
Section 3.05. The Secretary and Assistant Secretaries ............. 6
Section 3.06. The Treasurer and Assistant Treasurers .............. 6
Section 3.07. Vacancies ........................................... 6
Section 3.08. Delegation of Duties ................................ 6
Section 3.09. Personal Liability of Officers, Employees
and Agents ........................................ 6
ARTICLE IV
SHARES OF CAPITAL STOCK .................... 7
Section 4.01. Share Certificates .................................. 7
Section 4.02. Transfer of Shares .................................. 7
<PAGE> 3
Section 4.03. Transfer Agents and Registrars ...................... 7
Section 4.04. Lost, Stolen, Destroyed or Mutilated Certificates ... 7
Section 4.05. Regulations Relating to Shares ...................... 7
Section 4.06. Holders of Record ................................... 7
Section 4.07. Fixing of Record Date ............................... 8
ARTICLE V
LOANS, NOTES, CHECKS,
CONTRACTS AND OTHER INSTRUMENTS ................ 8
Section 5.01. Notes, Checks, etc. ................................. 8
Section 5.02. Execution of Instruments Generally .................. 8
Section 5.03. Proxies in Respect of Stock or Other Securities
or Other Corporations ........................... 8
ARTICLE VI
GENERAL PROVISIONS ...................... 9
Section 6.01. Offices ............................................. 9
Section 6.02. Corporate Seal ...................................... 9
Section 6.03. Fiscal Year ......................................... 9
ARTICLE VII
VALIDATION OF CERTAIN CONTRACTS ................ 9
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS ...........10
ARTICLE IX
AMENDMENTS ...........................10
INDEX
<PAGE> 4
ARDEE INVESTMENT CO., INC.
By-Laws
ARTICLE I
STOCKHOLDERS
SECTION 1.01. ANNUAL MEETINGS. Annual meetings of the stockholders
shall be held at such place, either within or without the State of Delaware,
and at such time and date as the Board of Directors shall determine and as set
forth in the notice of the meeting.
SECTION 1.02. SPECIAL MEETINGS. Special meetings of the stockholders
may be called at any time, for the purpose or purposes set forth in the call,
by the Chairman of the Board, the President, the Board of Directors or the
holders of at least one-fifth of all the shares outstanding and entitled to
vote thereat, by delivering a written request to the Secretary. At any time,
upon the written request of any person or persons who have duly called a
special meeting, it shall be the duty of the Secretary to fix the date of the
meetings, to be held not more than 75 days after receipt of the request, and to
give due notice thereof. Special meetings shall be held at such place, either
within or without the State of Delaware, and at such time and date as the Board
of Directors shall determine and as set forth in the notice of the meeting.
SECTION 1.03. NOTICE OF ANNUAL AND SPECIAL MEETINGS. Except as
otherwise expressly required by law, notice of each meeting of stockholders,
whether annual or special, shall be given at least 5 and not more than 60 days
prior to the date on which the meeting is to be held to each stockholder of
record entitled to vote thereat by delivery of a notice thereof to him
personally or by sending a copy thereof through the mail or by
telecommunication equipment, charges prepaid, to his address appearing on the
records of the Corporation. Each such notice shall specify the place, day and
hour of the meeting and, in the case of a special meeting, shall briefly state
the purpose or purposes for which the meeting is called. A written waiver of
notice, signed by the person or persons entitled to such notice, whether before
or after the date and time fixed for the meeting shall be deemed the equivalent
of such notice. Neither the business to be transacted at nor the purpose of the
meeting need be specified in a waiver of notice of such meeting.
SECTION 1.04. QUORUM. A stockholders' meeting duly called shall not be
organized for the transaction of business unless a quorum is present. At any
meeting the presence in person or by proxy of stockholder entitled to cast at
least a majority of the votes which all stockholders are entitled to cast on
the particular matter shall constitute a quorum for the purpose of considering
such matter, except as otherwise expressly provided by law or by the
Certificate of Incorporation or By-Laws of the Corporation. The stockholders
present at a duly organized meeting can continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave
less than a quorum. If a meeting cannot be organized because a quorum has not
attended, those present may adjourn the meeting from time to time to such time
(not more than 30 days after the next previous adjourned meeting) and place as
they may determine, without notice other than by announcement at the meeting of
the time and place of the adjourned meeting; and in the case of any meeting
called for the election of directors, those who attend the second of such
adjourned meetings, although entitled to cast less than a majority of the votes
entitled to be cast on any matter to be considered at the meeting, shall
nevertheless constitute a quorum for the purpose of electing directors.
1
<PAGE> 5
SECTION 1.05. VOTING. At every meeting of stockholders, each holder of
record of issued and outstanding stock of the Corporation entitled to vote at
such meeting shall be entitled to vote in person or by proxy and, except where
a date has been fixed as the record date for the determination of stockholders
entitled to notice of or to vote at such meeting, no holder of record of a
share of stock which has been transferred on the books of the Corporation
within 10 days next preceding the date of such meeting shall be entitled to
notice of or to vote at such meeting in respect of such share so transferred.
Resolutions of the stockholders shall be adopted, and any action of the
stockholders at a meeting upon any matter shall be taken and be valid, only if
at least a majority of the votes cast with respect to such resolutions or
matter are cast in favor thereof, except as otherwise expressly provided by law
or by the Certificate of Incorporation or ByLaws of the Corporation. The
Chairman of the Board (if one has been elected and is present) shall be
chairman, and the Secretary (if present) shall act as secretary, at all
meetings of the stockholders. In the absence of the Chairman of the Board, the
President shall be chairman; and in the absence of both of them, the chairman
shall be designated by the Board of Directors or if not so designated shall be
elected by the stockholders present; and in the absence of the Secretary, an
Assistant Secretary shall act as secretary of the meeting.
SECTION 1.06. PROCEDURE AT STOCKHOLDERS' MEETINGS. The organization of
each meeting of the stockholders, the order of business thereat and all matters
relating to the manner of conducting the meetings shall be determined by the
chairman of the meeting, whose decisions may be overruled only by majority vote
(which shall not be by ballot) of the stockholders present and entitled to vote
at the meeting in person or by proxy. Meetings shall be conducted in a manner
designed to accomplish the business of the meeting in a prompt and orderly
fashion and to be fair and equitable to all stockholders, but it shall not be
necessary to follow Roberts' Rules of Order or any other manual of
parliamentary procedure.
SECTION 1.07. ACTION WITHOUT MEETING. Any action required or permitted
to be taken at any annual or special meeting of stockholders, or any action
which may be taken at any annual or special meeting, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, 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 such written consent is
filed with the minutes of proceedings of the stockholders. 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.
ARTICLE II
DIRECTORS
SECTION 2.01. NUMBER, ELECTION AND TERM OF OFFICE. The number of
directors which shall constitute the full Board of Directors shall be
determined by resolution of the board of directors or by the stockholders at
the annual meeting provided, however, that in no event shall the number of
directors be less than three or more than eleven. Each director shall hold
office for the term for which he is elected and thereafter until his successor
is duly elected or until his prior death, resignation or removal. Directors
need not be stockholders.
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<PAGE> 6
SECTION 2.02. CHAIRMAN OF THE BOARD. The Board of Directors shall
elect a Chairman of the Board. The Chairman when present shall preside at all
meetings of the shareholders and of the Board of Directors.
SECTION 2.03. ANNUAL MEETING. Annual Meetings of the Board of
Directors shall be held each year at the same place as and immediately after
the annual meeting of stockholders, or at such other place and time as shall
theretofore have been determined by the Board. At its regular annual meeting,
the Board of Directors shall organize itself and elect the officers of the
Corporation for the ensuing year, and may transact any other business.
SECTION 2.04. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such intervals and at such time and place as shall
from time to time be determined by the Board. After there has been such
determination and notice thereof has been once given to each person then a
member of the Board of Directors, regular meetings may be held at such
intervals and time and place without further notice being given.
SECTION 2.05. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called at any time by the Board, by the Chairman of the Board,
by the President or by any two directors to be held on such day and at such
time and place as shall be specified by the person or persons calling the
meeting.
SECTION 2.06. NOTICE OF ANNUAL AND SPECIAL MEETINGS. Except as
otherwise expressly required by law, notice of the annual meeting of the Board
of Directors need not be given. Except as otherwise expressly required by law,
notice of every special meeting of the Board of Directors specifying the place,
date and time thereof shall be given to each director either by being mailed on
at least the third day prior to the date of the meeting or by being sent by
telecommunications equipment or given personally or by telephone at least 24
hours prior to the time of the meeting. A written waiver of notice of a special
meeting, signed by the person or persons entitled to such notice, whether
before or after the date and time stated therein fixed for the meeting, shall
be deemed the equivalent of such notice, and attendance of a director at a
meeting shall constitute a waiver of notice of such meeting except when the
director attends the meeting for the express purpose of objecting, when he
enters the meeting, to the transaction of any business because the meeting is
not lawfully called or convened. Neither the business to be transacted at nor
the purpose of the meeting need be specified in a waiver of notice of such
meeting.
SECTION 2.07. QUORUM AND MANNER OF ACTING. At all meetings of the
Board of Directors, except as otherwise expressly provided by law or by the
Certificate of Incorporation or By-Laws of the Corporation, the presence of a
majority of the full Board shall be necessary and sufficient to constitute a
quorum for the transaction of business. If a quorum is not present at any
meeting, the meeting may be adjourned from time to time by a majority of the
directors present until a quorum as aforesaid shall be present, but notice of
the time and place to which such a meeting is adjourned shall be given to any
directors not present either by being sent by telecommunications equipment or
given personally or by telephone at least 8 hours prior to the date of
reconvening. Resolutions of the Board of Directors shall be adopted, and any
action of the Board at a meeting upon any matter shall be taken and be valid,
only with the affirmative vote of at least a majority of the directors present
at the meeting, except as otherwise provided herein. The Chairman of the Board
(if one has been elected and is present) shall be chairman, and the Secretary
(if present) shall act as secretary, at all meetings of the Board. In the
absence of the Chairman of the Board, the President shall be chairman, and in
the absence of both of them the directors present shall select a member of the
Board of Directors to be chairman; and in the absence of the Secretary and
Assistant Secretary, the chairman of the meeting shall designate any person to
act as secretary of the meeting.
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<PAGE> 7
SECTION 2.08. ACTION WITHOUT MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting if a consent in writing, setting forth
the actions so taken, shall be signed by all members of the Board or such
committees, as the case may be, and such written consent is filed with the
minutes of the Board or committee.
SECTION 2.09. PARTICIPATION BY CONFERENCE TELEPHONE. Members of the
Board of Directors of the Corporation, or any committee designated by the
Board, may participate in a meeting of the Board or committee by means of
conference telephone or similar communications equipment by which all persons
participating in the meeting can hear each other, and participation in a
meeting by such means shall constitute presence in person at such meeting.
SECTION 2.10. RESIGNATIONS. A director may resign by submitting his
written resignation to the Chairman of the Board (if one has been elected) or
the Secretary. Unless otherwise specified therein, the resignation of a
director need not be accepted to make it effective and shall be effective
immediately upon its receipt by such officer or as otherwise specified therein.
If the resignation of a director specifies that it shall be effective at some
time later than receipt, until that time the resigning director shall be
competent to act on all matters before the Board of Directors, including
filling the vacancy caused by such resignation.
SECTION 2.11. REMOVAL OF DIRECTORS. The entire Board of Directors or
any individual director may be removed at any time for cause or without cause
by the holders of a majority of the shares then entitled to vote at an election
of directors. The vacancy or vacancies caused in the Board of Directors by such
removal may but need not be filled by such stockholders at the same meeting or
at a special meeting of the stockholders called for that purpose.
SECTION 2.12. VACANCIES. Any vacancy that shall occur in the Board of
Directors by reason of death, resignation, removal, increase in the number of
directors or any other cause whatever shall, unless filled as provided in
Section 2.11 of this Article II, be filled by a majority of the then members of
the Board, whether or not a quorum, and each person so elected shall be a
director until he or his successor is elected by the stockholders at a meeting
called for the purpose of electing directors, or until his prior death,
resignation or removal.
SECTION 2.13. COMPENSATION OF DIRECTORS. The Corporation may allow
compensation to its directors for their services, as determined from time to
time by resolution adopted by the Board of Directors.
SECTION 2.14. COMMITTEES. The Board of Directors may, by resolution
adopted by a majority of the full Board, designate one or more committees
consisting of directors to have and exercise such authority of the Board in the
management of the business and affairs of the Corporation as the resolution of
the Board creating such committee may specify and as is otherwise permitted 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. In the absence or disqualification of any member
of such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another director to act at the meeting in the
place of such absent or disqualified member.
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<PAGE> 8
SECTION 2.15. PERSONAL LIABILITY OF DIRECTORS.
(a) To the fullest extent that the laws of the State of Delaware, as
the same exist or may hereafter be amended, permit elimination of the personal
liability of directors, no director of this Corporation shall be personally
liable to this Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director.
(b) The provisions of this Section 2.15 shall be deemed to be a
contract with each director of this Corporation who serves as such at any time
while this Section 2.15 is in effect, and each such director shall be deemed to
be serving as such in reliance on the provisions of this Section 2.15. Any
amendment or repeal of this Section 2.15 or adoption of any By-Law of this
Corporation or other provision of the Certificate of Incorporation of this
Corporation which has the effect of increasing director liability shall operate
prospectively only and shall not affect any action taken, or any failure to
act, by a director of this Corporation prior to such amendment, repeal, By-Law
or other provision becoming effective.
ARTICLE III
OFFICERS AND EMPLOYEES
SECTION 3.01. EXECUTIVE OFFICERS. The Executive Officers of the
Corporation shall be the President, a Secretary and a Treasurer, and may
include one or more Vice Presidents as the Board of Directors may from time to
time determine, all of whom shall be elected by the Board of Directors. Any two
or more offices may be held by the same person. Each Executive Officer shall
hold office until the next succeeding annual meeting of the Board of Directors
and thereafter until his successor is duly elected and qualifies, or until his
earlier death, resignation or removal.
SECTION 3.02. ADDITIONAL OFFICERS; OTHER AGENTS AND EMPLOYEES. The
Board of Directors may from time to time appoint or hire such additional
officers, assistant officers, agents, employees and independent contractors as
the Board deems advisable; and the Board or the President shall prescribe their
duties, conditions of employment and compensation. Subject to the power of the
Board of Directors, the President may employ from time to time such other
agents, employees, and independent contractors as he may deem advisable for the
prompt and orderly transaction of the business of the Corporation, and he may
prescribe their duties and the conditions of their employment, fix their
compensation and dismiss them, without prejudice to their contract rights, if
any.
SECTION 3.03. THE PRESIDENT. Subject to the control of the Board of
Directors, the President shall have general policy supervision of and general
management and executive powers over all the property, business, operations and
affairs of the Corporation, and shall see that the policies and programs
adopted or approved by the Board are carried out. The President shall exercise
such further powers and duties as from time to time may be prescribed in these
By-Laws or by the Board of Directors.
SECTION 3.04. THE VICE PRESIDENTS. The Vice Presidents may be given by
resolution of the Board of Directors general executive powers, subject to the
control of the President, concerning one or more or all segments of the
operations of the Corporation. The Vice Presidents shall exercise such further
powers and duties as from time to time may be prescribed in these By-Laws or by
the Board of Directors or by the President. At the request of the President or
in his absence or disability, the senior Vice President shall exercise all the
powers and duties of the President.
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SECTION 3.05. THE SECRETARY AND ASSISTANT SECRETARIES. It shall be the
duty of the Secretary (a) to keep or cause to be kept an original or duplicate
record of the proceedings of the stockholders and the Board of Directors, and a
copy of the Certificate of Incorporation and of the By-Laws; (b) to attend to
the giving of notices of the Corporation as may be required by law or these
By-Laws; (c) to be custodian of the corporate records and of the seal of the
Corporation and see that the seal is affixed to such documents as may be
necessary or advisable; (d) to have charge of the stock books of the
Corporation, and a share register, giving the names of the stockholders in
alphabetical order, and showing their respective addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the shares, and the date of cancellation of every certificate surrendered for
cancellation; and (e) to exercise all powers and duties as may be prescribed by
the Board of Directors or by the President from time to time. The Secretary by
virtue of his office shall be an Assistant Treasurer. The Assistant Secretaries
shall assist the Secretary in the performance of his duties and shall also
exercise such further powers and duties as from time to time may be assigned to
them by the Board of Directors, the President or the Secretary. At the
direction of the Secretary or in his absence or disability, an Assistant
Secretary shall perform the duties of the Secretary.
SECTION 3.06. THE TREASURER AND ASSISTANT TREASURERS. The Treasurer
shall have custody of all the funds and securities of the Corporation. He shall
collect all moneys due the Corporation and deposit such moneys to the credit of
the Corporation in such banks, trust companies, or other depositories as may
have been duly designated by the Board of Directors. He shall endorse for
collection on behalf of the Corporation checks, notes, drafts and other
documents, and may sign and deliver receipts, vouchers and releases of liens
evidencing payments made to the Corporation. Subject to Section 5.01 of these
By-Laws, he shall cause to be disbursed the funds of the Corporation by payment
in cash or by checks or drafts upon the authorized depositories of the
Corporation. He shall have charge of the books and accounts of the Corporation.
He shall perform all acts incident to the office of Treasurer and such other
duties as may be assigned to him by the Board of Directors. The Treasurer by
virtue of his office shall be an Assistant Secretary. The Assistant Treasurers
shall assist the Treasurer in the performance of his duties and shall also
exercise such further powers and duties as from time to time may be assigned to
them by the Board of Directors, the President or the Treasurer. At the
direction of the Treasurer or in his absence or disability, an Assistant
Treasurer shall perform the duties of the Treasurer.
SECTION 3.07. VACANCIES. Vacancy in any office or position by reason
of death, resignation, removal, disqualification, disability or other cause,
shall be filled in the manner provided in this Article III for regular election
or appointment to such office.
SECTION 3.08. DELEGATION OF DUTIES. The Board of Directors may in its
discretion delegate from the time being the powers and duties, or any of them,
of any officer to any other person whom it may selection.
SECTION 3.09. PERSONAL LIABILITY OF OFFICERS, EMPLOYEES AND AGENTS.
The Corporation shall indemnify its officers, employees and agents to the full
extent permitted by Section 145 of the Delaware General Corporation Law, as
amended from time to time, or any successor provision of Delaware law.
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<PAGE> 10
ARTICLE IV
SHARES OF CAPITAL STOCK
SECTION 4.01. SHARE CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to a certificate or certificates, to be in such
form as the Board of Directors may from time to time prescribe, signed by the
President or any Vice President and by the Treasurer or any Assistant Treasurer
or the Secretary or any Assistant Secretary. The signatures of such officers
may be facsimiles. Each such certificate shall set forth the name of the
registered holder thereof, the number and class of shares and the designation
of the series, if any, which the certificate represents. The Board of Directors
may, if it so determines, direct that certificates for shares of stock of the
Corporation be signed by a transfer agent or registered by a registrar or both,
in which case such certificates shall not be valid until so signed or
registered.
In the case of any officer of the Corporation who shall have signed,
or whose facsimile signature shall have been used on, any certificate for
shares of stock of the Corporation shall cease to be such officer, whether
because of death, resignation, removal or otherwise, before such certificate
shall have been delivered by the Corporation, such certificate shall
nevertheless be deemed to have been adopted by the Corporation and may be
issued and delivered as though the person who signed such certificate or whose
facsimile signature shall have been used thereon had not ceased to be such
officer.
SECTION 4.02. TRANSFER OF SHARES. Transfer of shares of stock of the
Corporation shall be made only on the books of the Corporation by the
registered holder thereof or by his attorney thereunto authorized by an
instrument duly executed and filed with the Corporation, and on surrender of
the certificate or certificates for such shares properly endorsed or
accompanied by properly executed stock powers and evidence of the payment of
all taxes imposed upon such transfer. Except as provided in Section 4.04 of
this Article IV, every certificate surrendered for transfer shall be canceled
and no new certificate or certificates shall be issued in exchange for any
existing certificate until such existing certificate shall have been so
cancelled.
SECTION 4.03. TRANSFER AGENTS AND REGISTRARS. The Board of Directors
may appoint any one or more qualified banks, trust companies or other
corporations organized under any law of any state of the United States or under
the laws of the United States as agent or agents for the Corporation in the
transfer of the stock of the Corporation and likewise may appoint any one or
more such qualified banks, trust companies or other corporations as registrar
or registrars of the stock of the Corporation.
SECTION 4.04. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. New
certificates for shares of stock may be issued to replace certificates lost,
stolen, destroyed or mutilated upon such terms and conditions, which may but
need not include the giving of a satisfactory bond or other indemnity, as the
Board of Directors may from time to time determine.
SECTION 4.05. REGULATIONS RELATING TO SHARES. The Board of Directors
shall have power and authority to make such rules and regulations not
inconsistent with these By-Laws or with law as it may deem expedient concerning
the issue, transfer and registration of certificates representing shares of
stock of the Corporation.
SECTION 4.06. HOLDERS OF RECORD. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder and
owner in fact thereof and 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
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<PAGE> 11
or not it shall have express or other notice thereof, except as otherwise
expressly provided by the laws of the State of Delaware.
SECTION 4.07. FIXING OF RECORD DATE. The Board of Directors may fix a
record date which does not precede the date on which the resolution fixing such
record date is adopted,
(a) in order to determine the stockholders entitled to notice of or to
vote at any meeting of stockholders provided such record date is not less than
ten or more than sixty days prior to the date of any such meeting; and
(b) in order to determine the stockholders entitled to consent to
corporate action in writing without a meeting provided such record date is not
more than ten days after the date on which the resolution fixing such record
date is adopted; and
(c) in order to determine the stockholders entitled to receive payment
of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change
conversion or exchange of stock, or for the purpose of any other lawful action,
provided such record date is not more than sixty days prior to such action.
In such case, only such stockholders as shall be stockholders of
record on the date so fixed shall be entitled to notice of, or to vote at, such
meeting or to receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any shares on the books of the Corporation after any record date
fixed as aforesaid.
ARTICLE V
LOANS, NOTES, CHECKS,
CONTRACTS AND OTHER INSTRUMENTS
SECTION 5.01. NOTES, CHECKS, ETC. All notes, drafts, acceptances,
checks, endorsements (other than for deposit) and all evidences of indebtedness
of the Corporation whatsoever shall be signed by such officers or agents and
shall be subject to such requirements as to countersignature or other
conditions as the Board of Directors from time to time may designate. Facsimile
signatures on checks may be used unless prohibited by the Board of Directors.
SECTION 5.02. EXECUTION OF INSTRUMENTS GENERALLY. Except as provided
in Section 5.01 of this Article V, all contracts and other instruments
requiring execution by the Corporation may be executed and delivered by the
President, any Vice President or the Treasurer, and authority to sign any such
contracts or instruments, which may be general or confined to specific
instances, may be conferred by the Board of Directors upon any other person or
persons. Any person having authority to sign on behalf of the Corporation may
delegate, from time to time, by instrument in writing, all or any part of such
authority to any person or person if authorized so to do by Board of Directors.
SECTION 5.03. PROXIES IN RESPECT OF STOCK OR OTHER SECURITIES OR OTHER
CORPORATIONS. Unless otherwise provided by the Board of Directors, the
President may from time to time appoint an attorney or attorneys or an agent or
agents of the Corporation to exercise in the name and on behalf of the
Corporation the powers and rights which the Corporation may have as the holder
of stock or other securities in any other corporation to vote or consent in
respect of such stock or other securities, may instruct the person or persons
8
<PAGE> 12
so appointed as to the manner of exercising such powers and rights and may
execute or cause to be executed in the name and on behalf of the Corporation
and under its corporate seal or otherwise all such written proxies or other
instruments as he may deem necessary or proper in order that the Corporation
may exercise its said powers and rights.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01. OFFICES. The registered office of the Corporation shall
be at 1105 North Market Street, Suite 1300, Wilmington, Delaware. The
Corporation may have other offices, within or without the State of Delaware, at
such place or places as the Board of Directors may from time to time determine
or the business of the Corporation may require.
SECTION 6.02. CORPORATE SEAL. The Board of Directors shall prescribe
the form of a suitable corporate seal, which shall contain the full name of the
Corporation and the year and state of incorporation. Such seal may be used by
causing it or a facsimile or reproduction thereof to be affixed to or placed
upon the document to be sealed.
SECTION 6.03. FISCAL YEAR. Unless otherwise determined by the Board of
Directors, the fiscal year of the Corporation shall be the calendar year.
ARTICLE VII
VALIDATION OF CERTAIN CONTRACTS
SECTION 7.01. No contract or other transaction between the Corporation
and another person shall be invalidated or otherwise adversely affected by the
fact that any one or more stockholders, directors or officers of the
Corporation -
(i) is pecuniarily or otherwise interested in, or is a stockholder,
director, officer, or member of, such other person, or
(ii) is a party to, or is in any other way pecuniarily or otherwise
interested in, the contract or other transaction, or
(iii) is in any way connected with any person pecuniarily or otherwise
interested in such contract or other transaction, provided the fact of such
interest shall be disclosed or known to the Board of Directors or the
stockholders, as the case may be, and in any action of the stockholders or of
the Board authorizing or approving any such contract or other transaction, any
and every stockholder or director may be counted in determining the existence
of a quorum with like force and effect as though he were not so interested, or
were not such a stockholder, director, member or officer, or were not such a
party, or were not so connected. Such director, stockholder or officer shall
not be liable to account to the Corporation for any profit realized by him from
or through any such contract or transaction approved or authorized as
aforesaid. As used herein, the term "person" includes a corporation,
partnership, firm, association or other legal entity.
9
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ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 8.01. To the maximum extent provided by applicable law, no
director shall be personally liable to the Corporation or its stockholders for
monetary damages for any breach of fiduciary duty by such director as a
director. The foregoing sentence shall not eliminate or limit the liability of
a director, (i) for breach of the director's duty of loyalty of the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct of a knowing violation of law, (iii) pursuant to
Section 174 of the Delaware General Corporation Law or (iv) for any transaction
from which the director derived an improper personal benefit. No amendment to
or repeal of this Article VIII shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment.
Directors and officers of the Corporation shall be indemnified as of
right to the fullest extent now or hereafter permitted by law in connection
with any actual or threatened civil, criminal, administrative or investigative
action, suit or proceeding (whether brought by or in the name of the
Corporation or otherwise) arising out of their service to the Corporation or to
another organization at the request of the Corporation. Persons who are not
directors or officers of the Corporation may be similarly indemnified in
respect of such service to the extent authorized at any time by the Board of
Directors of the Corporation. The Corporation may purchase and maintain
insurance to protect itself and any such director, officer or other person
against any liability asserted against him and incurred by him in respect of
such service whether or not the Corporation would have the power to indemnify
him against such liability by law or under the provisions of this Article. The
provisions of this Article shall be applicable to actions, suits or proceedings
commenced after the adoption hereof, whether arising from acts or omissions
occurring before or after the adoption hereof, and to directors, officers and
other persons who have ceased to render such service, and shall inure to the
benefit of the heirs, executors and administrators of the directors, officers
and other persons referred to in this Article.
ARTICLE IX
AMENDMENTS
SECTION 9.01. These By-Laws may be amended, altered and repealed, and
new By-Laws may be adopted, by the stockholders or the Board of Directors of
the Corporation at any regular or special meeting. No provision of these
By-laws shall vest any property or contract right in any stockholder.
10
<PAGE> 1
Exhibit 3.23
<TABLE>
<S> <C> <C>
BCA-2.10 (Rev. Jul 1984) File #
----------------------------
Submit in Duplicate JIM EDGAR This Space For Use by
- ---------------------------------- Secretary of State
Payment must be made by Certified Secretary of State Date
Check, Cashiers' Check or a Money State of Illinois
Order, payable to "Secretary of License Fee $
State". ARTICLES OF INCORPORATION Franchise Tax $
Filing Fee $
DO NOT SEND CASH!
Clerk
- ----------------------------------- ------------------------------
</TABLE>
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned incorporator(s) hereby adopt the following Articles of
Incorporation.
ARTICLE ONE The name of the corporation is Olympus Properties, Inc.
-----------------------------------------
(Shall contain the word "corporation",
"company", "incorporated",
-----------------------------------------------------------------------
"limited", or an abbreviation thereof)
ARTICLE TWO The name and address of the initial registered agent and its
registered office are:
Registered Agent The Prentice-Hall Corporate System, Inc.
----------------------------------------------------
First Name Middle Name Last Name
Registered Office 33 North LaSalle Street, Suite 1925
----------------------------------------------------
Number Street Suite # (A.P.O. Box alone
is not acceptable)
Chicago 60602 Cook
----------------------------------------------------
City Zip Code County
ARTICLE THREE THE PURPOSE OR PURPOSES FOR WHICH THE CORPORATION IS ORGANIZED
ARE:
IF NOT SUFFICIENT SPACE TO COVER THIS POINT, ADD ONE OR MORE
SHEETS OF THIS SIZE.
To engage in any lawful businesses, including but not limited to the
acquisition, maintenance, operation and management of real property,
for which a corporation may be organized under the Business Corporation
Act of the State of Illinois
ARTICLE FOUR Paragraph 1: The authorized shares shall be:
CLASS *PAR VALUE PER SHARE NUMBER OF SHARES AUTHORIZED
------------------------------------------------------------------------
Common $0.01 3,000
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
Paragraph 2: The preferences, qualifications, limitations,
restrictions and the special or relative rights in respect of the
shares of each class are:
IF NOT SUFFICIENT SPACE TO COVER THIS POINT, ADD ONE OR MORE SHEETS OF
THIS SIZE.
ARTICLE FIVE The number of shares to be issued initially, and the consideration
to be received by the corporation therefor, are:
*PAR VALUE NUMBER OF SHARES CONSIDERATION TO BE
CLASS PER SHARE PROPOSED TO BE ISSUED RECEIVED THEREFOR
------------------------------------------------------------------------
Common $0.01 1,000 $ 50,000.00
------------------------------------------------------------------------
$
------------------------------------------------------------------------
$
------------------------------------------------------------------------
$
------------------------------------------------------------------------
TOTAL $ 50,000.00
=====================
* A declaration as to a "par value" is optional. This space may be marked
"n/a" when no reference to a par value is desired.
<PAGE> 2
ARTICLE SIX OPTIONAL
The number of directors constituting the initial board of directors of
the corporation is______________________, and the names and addresses
of the persons who are to serve as directors until the first annual
meeting of shareholders or until their successors be elected and
qualify are:
Name Residential Address
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
ARTICLE SEVEN OPTIONAL
(a) It is estimated that the value of all property to be owned by
the corporation for the following year wherever located will
be: $_____________________
(b) It is estimated that the value of the property to be located
within the State of Illinois during the following year will
be: $_____________________
(c) It is estimated that the gross amount of business which will
be transacted by the corporation during the following year
will be $_____________________
(d) It is estimated that the gross amount of business which will
be transacted from places of business in the State of Illinois
during the following year will be: $_____________________
ARTICLE EIGHT OTHER PROVISIONS
Attach a separate sheet of this size for any other provision to be
included in the Articles of Incorporation, e.g., authorizing
pre-emptive rights; denying cumulative voting; regulating internal
affairs; voting majority requirements; fixing a duration other than
perpetual; etc.
NAMES & ADDRESSES OF INCORPORATORS
The undersigned incorporator(s) hereby declare(s), under penalties of
perjury, that the statements made in the foregoing Articles of Incorporation are
true.
Dated August , 19 88
-------------------- ---
SIGNATURES AND NAMES POST OFFICE ADDRESS
1. /s/ Maureen B. Farrell 1. 30 N. LaSalle Street
----------------------------------- -----------------------------------
Signature Street
Maureen B. Farrell Chicago, IL 60602
----------------------------------- -----------------------------------
Name (please print) City/Town State Zip
2.
----------------------------------- -----------------------------------
Signature Street
----------------------------------- -----------------------------------
Name (please print) City/Town State Zip
3.
----------------------------------- -----------------------------------
Signature Street
----------------------------------- -----------------------------------
Name (please print) City/Town State Zip
(SIGNATURES MUST BE IN INK ON ORIGINAL DOCUMENT. CARBON COPY, XEROX OR RUBBER
STAMP SIGNATURES MAY ONLY BE USED ON CONFORMED COPIES)
NOTE: If a corporation acts as incorporator, the name of the corporation and the
state of incorporation shall be shown and the execution shall be by its
President or Vice-president and verified by him, and attested by its Secretary
or an Assistant Secretary.
FORM BCA-2.10
File No._______________________________________________________________________
================================================================================
ARTICLES OF INCORPORATION
FEE SCHEDULE
The following fees are required to be paid at the time of issuing the
Certificate of Incorporation: FILING FEE $75.00; INITIAL LICENSE FEE OF 1/20th
of 1% of the consideration to be received for initial issued shares (see Art.
5), MINIMUM $.50; INITIAL FRANCHISE TAX OF 1/10th of 1% of the consideration to
be received for initial issued shares (see Art. 5), MINIMUM $25.00.
EXAMPLES OF TOTAL DUE
Consideration to be Received TOTAL DUE*
================================================================================
up to $1,000 $100.50
- --------------------------------------------------------------------------------
$ 5,000 $102.50
- --------------------------------------------------------------------------------
$ 10,000 $105.00
- --------------------------------------------------------------------------------
$ 25,000 $112.50
- --------------------------------------------------------------------------------
$ 50,000 $150.00
- --------------------------------------------------------------------------------
$100,000 $225.00
- --------------------------------------------------------------------------------
*INCLUDES FILING FEE + LICENSE FEE + FRANCHISE TAX
RETURN TO:
Corporation Department
Secretary of State
Springfield, Illinois 62756
Telephone (217) 782-6961
================================================================================
C-162.8
<PAGE> 1
Exhibit 3.24
BY-LAWS
of
OLYMPUS PROPERTIES, INC.
(an Illinois corporation)
Amended and Restated May 15, 1997
<PAGE> 2
BY-LAWS
of
OLYMPUS PROPERTIES. INC.
------------------------
ARTICLE I
Offices
-------
The corporation shall continuously maintain in the State of Illinois a
registered office and a registered agent whose office is identical with such
registered office, and may have other offices within or without the state.
ARTICLE II
Shareholders
------------
Section 1 - Annual Meeting
- --------------------------
An annual meeting of the shareholders shall be held on such date and
at such time as the board of directors shall provide by resolution, or if not
so provided, on the third Thursday in March, of each year for the purpose of
electing directors and for the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting shall be a legal
holiday, such meeting shall be held on the next succeeding business day.
Section 2 - Special Meetings
- ----------------------------
Special meetings of the shareholders may be called either by the
chairman of the board, by the president, by the board of directors or by the
holders of not less than one-fifth of all the outstanding shares of the
corporation entitled to vote, for the purpose of purposes stated in the call of
the meeting.
Section 3 - Place of Meeting
- ----------------------------
The board of directors may designate any place 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 is otherwise
called, the place of meeting shall be at the offices of the corporation.
-1-
<PAGE> 3
Section 4 - Notice of Meetings
- ------------------------------
Written notice stating the place, date, and hour of the meeting, and
in the case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than ten nor more than sixty days before
the date of the meeting, or in the case of a merger, consolidation, share
exchange, dissolution or sale, lease or exchange of assets not less than twenty
nor more than sixty days before the meeting, either personally or by mail, by
or at the direction of the president, or the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the shareholder at his
address as it appears on the records of the corporation, with first class
postage thereon prepaid. When a meeting is adjourned to another time or 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.
Section 5 - Fixing of Record Date
- ---------------------------------
For the purpose of determining the shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or to receive
payment of any dividend, or other distribution or allotment of any rights, or
to exercise any rights in respect of any change, conversion or exchange of
shares or for the purpose of any other lawful action, the board of directors of
the corporation may fix in advance a record date which shall not be more than
sixty days and not less then ten days, or in the case of a merger,
consolidation, share exchange, dissolution or sale, lease or exchange of assets
not less than twenty days, before the date of such shareholders meeting. If no
record date is fixed, the record date for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders shall be the date
on which notice of the meeting in mailed, and the record date for the
determination of shareholders for any other purpose shall be the date on which
the board of directors adopts the resolution relating thereto. A determination
of shareholders of record entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of the meeting.
Section 6 - Quorum
- ------------------
The holders of a majority of the outstanding shares of the corporation
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at any meeting of shareholders; provided that if less than a majority of
the outstanding shares are represented at said meeting, a majority of the
shares so represented may adjourn the meeting at any time without further
notice. If a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting shall be the act of the shareholders, unless
the vote of a greater number or voting by classes is required by the Business
Corporation Act, the articles of incorporation or these by-laws. At any
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the original meeting.
Withdrawal of shareholders from any meeting shall not cause failure of a duly
constituted quorum at that meeting.
-2-
<PAGE> 4
Section 7 - Proxies
- -------------------
Each shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy, but no such proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy.
Section 8 - Voting of Shares
- ----------------------------
Each outstanding share, regardless of class, shall be entitled to one
vote upon each matter submitted to vote at a meeting of shareholders; provided,
however, that the articles of incorporation may limit voting rights or provide
special voting rights as to any class or deny voting rights or provide special
voting rights as to any class or classes or series of shares of the
corporation.
Section 9 - Voting of Shares by Certain Holders
- -----------------------------------------------
Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the by-laws of such
corporation may prescribe, or, in the absence of such provision, as the board
of directors of such corporation may determine.
Shares standing in the name of a deceased person, a minor ward or a
person under legal disability may be voted by his administrator, executor,
court appointed guardian, or conservator. Shares standing in the name of a
trustee may be voted by him, either in person or by proxy.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority to do so
is contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote any shares so transferred.
Any number of shareholders may create a voting trust for the purpose
of conferring upon a trustee or trustees the right to vote or otherwise
represent their shares, for a period not to exceed ten years, by entering into
a written voting trust agreement specifying the terms and conditions of the
voting trust, and by transferring their shares to such trustee or trustees for
the purpose of the agreement. Any such trust agreement shall not become
effective until a counterpart of the agreement is deposited with the
corporation at its registered office. The counterpart of the voting trust
agreement so deposited with the corporation shall be subject to the same right
of examination by a shareholder of the corporation, in person or by agent or
attorney, as are the books and records of the corporation, and shall be subject
to examination by any holder of a beneficial interest in the voting trust,
either in person or by agent or attorney, at any reasonable time for any proper
purpose.
-3-
<PAGE> 5
Shares of its own stock belonging to the corporation shall not be
voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time, but
shares of its own stock held by it in a fiduciary capacity may be voted and
shall be counted in determining the total number of outstanding shares entitled
to vote at any given time.
Section 10 - Cumulative Voting
- ------------------------------
In all elections for directors, every shareholder who holds voting
stock shall have the right to vote, in person or by proxy, the number of shares
owned by him, for as many persons as there are directors to be elected, or to
cumulate said shares, and give one candidate as many votes as the number of
directors multiplied by the number of his shares shall equal, or to distribute
them on the same principle among as many candidates as he shall see fit.
Section 11 - Inspectors
- -----------------------
At any meeting of shareholders, the presiding officer may, or upon the
request of any shareholder shall, appoint one or more persons as inspectors for
such meeting.
Such inspectors shall ascertain and report the number of shares
represented at the meeting, based upon their determination of the validity and
effect of proxies; count all votes and report the results; and do such other
acts as are proper to conduct the election and voting with impartiality and
fairness to all the shareholders.
Each report of an inspector shall be in writing and signed by him or
by a majority of them if there be more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall be
the report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
Section 12 - Informal Action by Shareholders
- --------------------------------------------
Any action required to be taken at a meeting of the shareholders, or
any other action which may be taken at a meeting of the shareholders, may be
taken without a meeting if a consent in writing setting forth the action so
taken shall be signed (i) by the holders of outstanding shares 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 voting, or (ii) by all of the shareholders entitled to vote with
respect to the subject matter thereof. If such consent is signed by less than
all of the shareholders entitled to vote, then such consent shall become
effective only in at least five days prior to the execution of the consent a
notice in writing is delivered to all the shareholders entitled to vote with
respect to the subject matter thereof and, after the effective date of the
consent, prompt notice of the corporation taking action without a meeting by
less then unanimous written consent shall be given in writing to those
shareholders who have not consented to such action in writing.
-4-
<PAGE> 6
Section 13 -Voting by Ballot
- ----------------------------
Voting on any question or in any election may be by voice unless the
presiding officer shall order or any shareholder shall demand that voting be by
ballot.
ARTICLE III
Board of Directors
------------------
Section 1 - General Powers
- --------------------------
The business of the corporation shall be managed by its board of
directors.
Section 2 - Number, Tenure and Qualifications
- ---------------------------------------------
The number of directors of the corporation shall be not less than
three or more than eight, which maximum number shall not exceed the minimum by
more than 5. The exact number of directors may be fixed from time to time by
the then incumbent directors or the shareholders without further amendment to
these by-laws. Each director shall hold office until the next annual meeting of
shareholders or until his successor shall have been elected and qualified.
Directors need not be residents or Illinois or shareholders of the corporation.
The number of directors may be increased or decreased from time to time by the
amendment of this section, but no decrease shall have the effect of shortening
the term of any incumbent director.
Section 3 - The Chairman of the Board
- -------------------------------------
The Board of Directors shall elect a Chairman of the Board. The
Chairman when present shall preside at all meetings of the Shareholders and of
the Board of Directors.
Section 4 - Regular Meetings
- ----------------------------
A regular meeting of the board of directors shall be held without
notice other than this by-law, immediately after the annual meeting of
shareholders. The board of directors may provide, by resolution, the time and
place for the holding of additional regular meetings without notice other than
such resolution.
Section 5 - Special Meetings
- ----------------------------
Special meetings of the board of directors may be called by or at the
request of chairman of the Board, the president or any one director. The person
or persons authorized to call special meetings of the board of directors may
fix any place as the place for holding any special meeting of the board of
directors called by them.
-5-
<PAGE> 7
Section 6 - Notice
- ------------------
Notice of any special meeting shall be given at least two days
previous thereto by written notice to each director at his business address. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail so addressed, with first class postage thereon prepaid. If
notice be given by telegram, such notice shall be deemed to be delivered when
the telegram is delivered to the telegram company. The attendance of a director
at any meeting shall constitute a waiver of notice of such meeting, except
where a director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need by specified in the
notice or waiver of notice of such meeting.
Section 7 - Quorum
- ------------------
A majority of the number of directors fixed by these by-laws shall
constitute a quorum for transaction of business at any meeting of the board of
directors, provided that if less than a majority of such number of directors
are present at said meeting, a majority of the directors present may adjourn
the meeting at any time without further notice.
Section 8 - Manner of Acting
- ----------------------------
The act of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the board of directors, unless the act
of a greater number is required by statute, these by-laws, or the articles of
incorporation.
Section 9 - Vacancies
- ---------------------
Any vacancy occurring in the board of directors and any directorship
to be filled by reason of an increase in the number of directors, may be filled
by election at an annual meeting or at a special meeting of the shareholders
called for that purpose.
Section 10 - Removal
- --------------------
One or more of the directors may be removed, with or without cause, at
a meeting of the shareholders by the affirmative vote of the holders of a
majority of the outstanding shares then entitled to vote at an election of
directors; provided that no director shall be removed at a meeting of
shareholders unless the notice of such meeting shall state that a purpose of
the meeting is to vote upon the removal of one or more directors named in the
notice.
-6-
<PAGE> 8
Section 11 - Action Without a Meeting
- -------------------------------------
Unless specifically prohibited by the articles of incorporation or
these by-laws, any action required to be taken at a meeting of the board of
directors, or any other action which may be taken at a meeting of the board of
directors, or of any committee thereof may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all
the directors entitled to vote with respect to the subject matter thereof, or
by all the members of such committee, as the case may be. Any such consent
signed by all the directors or all the members of the committee shall have the
same effect as a unanimous vote, and may be stated as such in any document
filed with the Secretary of State or with anyone else.
Section 12 - Compensation
- -------------------------
The board of directors, by the affirmative vote of a majority of
directors then in office, and irrespective of any personal interest of any of
its members, shall have authority to establish reasonable compensation of all
directors for services to the corporation as directors, officers, or otherwise.
By resolution of the board of directors, the directors may be paid their
expenses, if any, for attending meetings of the board. No such payment
previously mentioned in this section shall preclude any director from serving
the corporation in any other capacity and receiving compensation therefor.
Section 13 - Presumption of Assent
- ----------------------------------
A director of the corporation who is present at a meeting of the board
of directors at which action on any corporate matter is taken shall be
conclusively presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 14 - Committees
- -----------------------
The board of directors, by resolution adopted by a majority of the
directors, may create one or more committees appointing two or more directors
to constitute each committee, which committees, to the extent specified in such
resolution, shall have and exercise the authority of the board of directors,
except as otherwise required by law. Members of committees shall serve at the
pleasure of the board of directors. Vacancies in the membership of any
committee shall be filled by action of the board of directors. The committees
shall keep regular minutes of their proceedings and shall report the same to
the board when required.
-7-
<PAGE> 9
ARTICLE IV
Officers
--------
Section 1 - Number
- ------------------
The officers of the corporation shall be a president, one or more
vice-presidents, a treasurer, a secretary, and such other officers as may be
elected or appointed by the board of directors. Any two or more offices may be
held by the same person.
Section 2 - Election and Term of Office
- ---------------------------------------
The officers of the corporation shall be elected annually by the board
of directors at the first meeting of the board of directors held after each
annual meeting of shareholders. If the election of officers shall not be held
at such meeting, such election shall be held as soon thereafter as conveniently
may be. Vacancies may be filled or new offices created and filled at any
meeting of the board of directors. Each officer shall hold officer until his
successor shall have been duly elected and shall have qualified or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided. Election of an officer shall not of itself create
contract rights.
Section 3 - Removal
- -------------------
Any officer elected or appointed by the board of directors may be
removed by the board of directors whenever in its judgment the best interests
of the corporation would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
Section 4 - President
- ---------------------
Subject to the control of the board of directors, the President shall
have general and active management of the day-to-day business of the
corporation. The president may sign and execute all instruments in the name of
the corporation.
Section 6 - The Vice-Presidents
- -------------------------------
The vice-president (or in the event there be more than one
vice-president, each of the vice-presidents) shall assist the president in the
discharge of his duties as the president may direct and shall perform such
other duties as from time to time may be assigned to him by the president or by
the board of directors. In the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
board of directors or by the president if the board of directors has not made
such a designation, or in the absence of any designation, then in the order of
seniority of tenure as vice-president) shall perform the duties of the
president, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the president. Except in those instances in
-8-
<PAGE> 10
which the authority to execute is expressly delegated to another officer or
agent of the corporation or a different mode of execution is expressly
prescribed by the board of directors or these by-laws, the vice-president (or
each of them if there are more than one) may execute for the corporation
certificates for its shares and any contracts, deeds, mortgages, bonds or other
instruments which the board of directors has authorized to be executed, and he
may accomplish such execution either under or without the seal of the
corporation and either individually or with the secretary, any assistant
secretary, or any other officer thereunto authorized by the board of directors,
according to the requirements of the form of the instrument.
Section 7 - The Treasurer
- -------------------------
The treasurer shall be the chief financial officer of the corporation.
He shall (a) have charge of and be responsible for the maintenance of adequate
books of account for the corporation; (b) have charge and custody of all funds
and securities of the corporation, and be responsible for such funds and
securities and for the receipt and disbursement thereof; and (c) perform all
the duties incident to the office of treasurer and such other duties as from
time to time may be assigned to him by the president or by the board of
directors. If required by the board of directors, the treasurer shall give a
bond for the faithful discharge of his duties in such sum and with such surety
or sureties as the board of directors may determine.
Section 8 - The Secretary
- -------------------------
The secretary shall (a) record the minutes of the shareholders' and
the board of directors' meetings in one or more books provided for that
purpose; (b) see that all notices are duly given in accordance with the
provisions of these by-laws or as required by law; (c) be custodian of the
corporate records; (d) keep a register of the post-office address of each
shareholder which shall be furnished to the secretary by such shareholder; (e)
sign with the president, or a vice-president, or any other officer thereunto
authorized by the board of directors, certificates for shares of the
corporation, the issue of which shall have been authorized by the board of
directors, and any contracts, deeds, mortgages, bonds or other instruments
which the board of directors has authorized to be executed, according to the
requirements of the form of the instrument, except when a different mode of
execution is expressly prescribed by the board of directors or these by-laws;
(f) have general charge of the stock transfer books of the corporation; and (g)
perform all duties incident to the office of secretary and such other duties as
from time to time may be assigned to him by president or by the board of
directors.
Section 9 - Assistant Treasurers and Assistant Secretaries
- ----------------------------------------------------------
The assistant treasurers and assistant secretaries shall perform such
duties as shall be assigned to them by the treasurer or the secretary,
respectively, or by the president or the board of directors. The assistant
secretaries may sign with the president, or a vice-president, or any other
officer thereunto authorized by the board of directors, certificates for shares
of the corporation, the issue of which shall have been authorized by the board
of directors, and any contracts, deeds, mortgages,
-9-
<PAGE> 11
bonds, or other instruments which the board of directors has authorized to be
executed, according to the requirements of the form of the instrument, except
when a different mode of execution is expressly prescribed by the board of
directors or these by-laws. In addition, each and every officer shall be deemed
to be an assistant secretary. The assistant treasurers shall respectively, if
required by the board of directors, give bonds for the faithful discharge of
their duties in such sums and with such sureties as the board of directors
shall determine.
Section 10 - Salaries
- ---------------------
The salaries of the officers shall be fixed from time to time by the
board of directors and no officer shall be prevented from receiving such salary
by reason of the fact that he is also a director of the corporation.
ARTICLE V
Contracts, Loans, Checks and Deposits
-------------------------------------
Section 1 - Contracts
- ---------------------
The board of directors may authorize any officer or officers, agent or
agents, to enter into any contract or 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 2 - 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 of directors. Such authority may be general or confined
to specific instances.
Section 3 - Checks, Drafts, etc.
- --------------------------------
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the corporation and in
such manner as shall from time to time be determined by resolution of the board
of directors.
Section 4 - Deposits
- --------------------
All funds of the corporation not otherwise employed shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies or other depositaries as the board of directors may select.
-10-
<PAGE> 12
ARTICLE VI
Certificates for Shares and Their Transfer
------------------------------------------
Section 1 - Certificates for Shares
- -----------------------------------
Corporate shares may be represented by certificates or may be
uncertificated shares. In the event the corporation issues certificates
representing shares of the corporation, such certificates shall be signed by
the president or a vice-president or by such officer as shall be designated by
resolution of the board of directors and by the secretary or an assistant
secretary. If both of the signatures of the officers are by facsimile, each
certificate shall be manually signed by or on behalf of a duly authorized
transfer agent or clerk. Each certificate representing shares shall be
consecutively numbered or otherwise identified, and shall also state the name
of the person to whom issued, the number and class of shares (with designation
of series, if any), the date of issue, and that the corporation is organized
under Illinois law. If the corporation has authorized shares of more than one
class or of series within a class, certificates shall also contain such
information or statement as may be required by law. No certificate shall be
issued for any share until such share is fully paid. Within a reasonable time
after the issuance of uncertificated shares, the corporation shall send to the
registered owner of such shares a written notice containing the information
required to be set forth on certificates.
The name and address of each shareholder, the number and class of
shares held and the date on which the certificates for the shares, if any, were
issued shall be entered on the books of the corporation. The person in whose
names shares stand on the books of the corporation shall be deemed the owner
thereof for all purposes as regards the corporation.
Section 2 - Lost Certificates
- -----------------------------
If a certificate representing shares has allegedly been lost or
destroyed the board of directors may in its discretion, except as may be
required by law, direct that a new certificate be issued upon such
indemnification and other reasonable requirements as it may impose.
Section 3 - Transfers of Shares
- -------------------------------
Transfers of shares of the corporation shall be recorded on the books
of the corporation and, except in the case of a lost or destroyed certificate,
shall be made on surrender for cancellation of the certificate for such shares
if certificates have been issued. A certificate presented of transfer must be
duly endorsed and accompanied by proper guaranty of signature and other
appropriate assurances that the endorsement is effective.
-11-
<PAGE> 13
ARTICLE VII
Fiscal Year
-----------
The fiscal year of the corporation shall be fixed by resolution of the
board of directors.
ARTICLE VIII
Dividends
---------
The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its articles of incorporation.
ARTICLE IX
Seal
----
The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Illinois." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced, provided that the affixing of the corporate seal to an
instrument shall not give the instrument additional force or effect, or change
the construction thereof, and the use of the corporate seal is not mandatory.
ARTICLE X
Waiver of Notice
----------------
Whenever any notice is required to be given under the provisions of
these by-laws or under the provisions of the articles of incorporation or under
the provisions of the Business Corporation Act of the State of Illinois, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
ARTICLE XI
Amendments
----------
The power to make, alter, amend, or repeal the by-laws of the
corporation shall be vested in the board of directors, unless reserved to the
shareholders by the articles of incorporation. The by-laws may contain any
provisions for the regulation and management of the affairs of the corporation
not inconsistent with law or the articles of incorporation.
-12-
<PAGE> 14
ARTICLE XII
Indemnification
---------------
Each present or former director, officer, agent and employee of the
corporation and each person who, at the request of the corporation, serves or
served another corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise in any such capacity, and the heirs and personal
representatives of each of the foregoing, shall be indemnified by the
corporation to the fullest extent permitted by law against all expenses,
including without limitation, amounts of judgments, fines, settlement payments,
attorneys' and accountants' fees, and costs of litigation, which shall
necessarily or reasonably be incurred by him in connection with any claim,
action, suit or proceeding, whether civil, criminal, administrative or
investigative, and any appeal relating thereto, to which he was, is or shall be
a party, or with which he may be threatened, by reason of his being or having
been a director, officer, agent or employee of the corporation or such other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, whether or not he continues to be such at the time of incurring
such expenses. Such indemnification may include without limitation the purpose
of insurance and advancement of any expenses, upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay any such
advance, unless it shall ultimately be determined that he is entitled to be
indemnified as authorized in these by-laws.
In the event the corporation has paid indemnity or has advanced
expenses to a director, officer, agent or employee, the corporation shall
report the indemnification or advance in writing to the shareholders with or
before the notice of the next shareholders meeting.
The indemnification provided by these by-laws shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any agreement, vote of shareholders or disinterested directors
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
-13-
<PAGE> 1
Exhibit 3.25
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
ROOM 308, NORTH OFFICE BUILDING
HARRISBURG, PENNSYLVANIA 17120
DECEMBER 26, 1989
PHOENIX MANAGEMENT SERVICE, INC.
THE CORPORATION BUREAU IS HAPPY TO SEND YOU YOUR FILED DOCUMENT. PLEASE
NOTE THE FILE DATE AND THE SECRETARY OF THE COMMONWEALTH'S SIGNATURE, INDICATING
YOUR EFFECTIVE DATE OF FILING. UNDER CURRENT LAW, CERTIFICATES ARE NO LONGER
REQUIRED TO BE ISSUED. THE CORPORATION BUREAU IS HERE TO SERVE YOU AND WANT TO
THANK YOU FOR DOING BUSINESS IN PENNSYLVANIA.
ENTITY NUMBER: 1543456
MICROFILM NUMBER: 08985
0348-0349
ALDER COHEN & GRIGSBY ESQS
ATTN: FRANK J. RAUKTIS
625 LIBERTY AVE 2900 CNG TOWER
PGH PA 15222-0000
<PAGE> 2
FILED IN THE DEPARTMENT OF STATE ON DEC 26 1989
/s/ Christopher A. ???
----------------------------------------
Secretary of the Commonwealth
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
ARTICLES OF INCORPORATION
DOMESTIC BUSINESS CORPORATION 1543456 8985 348
In compliance with the requirements of 15 Pa. C.S. Section 1306
(relating to articles of incorporation), the undersigned, desiring to be
incorporated as a business corporation, hereby certify that:
1. The name of the corporation is
PHOENIX MANAGEMENT SERVICES, INC.
2. The address of its registered office in this Commonwealth is
93 Werner Road
Greenville, Pennsylvania 16125 (43)
3. The corporation is incorporated under the Pennsylvania Business
Corporation law of 1988 (15 Pa. C.S. Section 1101 et seq.), as the same may be
amended.
4. The aggregate number of shares which the corporation shall have
authority to issue is 1,000 shares, no par value.
<PAGE> 3
8985 349
5. The name and address of the incorporator are:
Frank J. Rauktis
c/o ALDER COHEN & GRIGSBY, P.C.
2900 CNG Tower
625 Liberty Avenue
Pittsburgh, PA 15222
6. To the fullest extent permitted by law, no director of the
corporation shall be personally liable for monetary damages for any action
taken, or any failure to take any action.
7. These Articles of Incorporation and the date of filing hereof are to
be effective on January 1, 1990.
IN TESTIMONY WHEREOF, the incorporator has signed these Articles of
Incorporation this 21st day of December, 1989.
/s/ Frank J. Rauktis
---------------------------------
Frank J. Rauktis
<PAGE> 1
Exhibit 3.26
BY-LAWS
of
PHOENIX MANAGEMENT SERVICES, INC.
(a Pennsylvania corporation)
Amended and Restated May 15, 1997
<PAGE> 2
INDEX TO BY-LAWS
----------------
Section Page
- ------- ----
ARTICLE I
Section 1.01. Registered office ...................................1
Section 1.02. Other offices .......................................1
Section 1.03. Fiscal year .........................................1
ARTICLE II
Section 2.01. Manner of giving notice .............................1
Section 2.02. Notice of meetings of board of directors ............2
Section 2.03. Notice of meetings of shareholders ..................2
Section 2.04. Waiver of notice ....................................2
Section 2.05. Modification of proposal contained in notice 3
Section 2.06. Exception to requirement of notice ..................3
Section 2.07. Use of conference telephone and similar equipment ...3
ARTICLE III
Section 3.01. Place of meeting ....................................4
Section 3.02. Annual meeting ......................................4
Section 3.03. Special meeting .....................................4
Section 3.04. Quorum and adjournment ..............................4
Section 3.05. Action by shareholders ..............................5
Section 3.06. Organization ........................................6
Section 3.07 Voting rights of shareholders .......................6
Section 3.08 Voting and other action by proxy ....................7
Section 3.09 Voting by fiduciaries and pledgees ..................7
Section 3.10. Voting by joint holders of shares ...................8
Section 3.11. Voting by corporations ..............................8
Section 3.12. Determination of shareholders of record .............8
Section 3.13. Voting lists ........................................9
Section 3.14. Judges of election ..................................9
Section 3.15. Consent of shareholders in lieu of meeting .........10
Section 3.16. Minors as security holders .........................10
ARTICLE IV
Section 4.01. Powers; personal liability .........................11
Section 4.02. Qualifications and selection of directors ..........12
Section 4.03. Number of term of office ...........................13
Section 4.04. Vacancies ..........................................13
Section 4.05. Removal of directors ...............................13
Section 4.06. The chairman of the board ..........................14
Section 4.07. Place of meetings ..................................14
Section 4.08. Organization of meetings ...........................14
Section 4.09. Regular meeting ....................................14
<PAGE> 3
Section 4.10. Special meeting ....................................14
Section 4.11. Quorum of and action by directors ..................14
Section 4.12. Executive and other committees .....................14
Section 4.13. Compensation .......................................15
ARTICLE V
Section 5.01. Officers generally .................................16
Section 5.02. Election and term of office ........................16
Section 5.03. Subordinate officers, committees and agents ........16
Section 5.04. Removal of officers and agents .....................17
Section 5.05. Vacancies ..........................................17
Section 5.06. Authority ..........................................17
Section 5.07. The president ......................................17
Section 5.08. The secretary ......................................17
Section 5.09. The treasurer ......................................17
Section 5.10. Salaries ...........................................18
ARTICLE VI
Section 6.01. Share certificates .................................18
Section 6.02. Issuance ...........................................18
Section 6.03. Transfer ...........................................18
Section 6.04. Record holder of shares ............................18
Section 6.05. Lost, destroyed or mutilated certificates ..........19
ARTICLE VII
Section 7.01. Scope of indemnification ...........................19
Section 7.02. Proceedings initiated by indemnified
representatives ...............................20
Section 7.03. Advancing expenses .................................21
Section 7.04. Securing of indemnification obligations ............21
Section 7.05. Payment of indemnification .........................21
Section 7.06. Arbitration ........................................21
Section 7.07. Contribution .......................................22
Section 7.08. Mandatory indemnification of directors,
officers, etc .................................22
Section 7.09. Contract rights; amendment or repeal ...............22
Section 7.10. Scope of Article ...................................22
Section 7.11 . Reliance on provisions .............................22
Section 7.12. Interpretation .....................................23
ARTICLE VIII
Section 8.01. Corporate seal .....................................23
Section 8.02. Checks .............................................23
Section 8.03. Contracts ..........................................23
Section 8.04. Interested directors or officers; quorum ...........23
Section 8.05. Deposits ...........................................24
Section 8.06. Corporate records ..................................24
Section 8.07. Financial reports ..................................25
Section 8.08. Amendment of bylaws ................................25
<PAGE> 4
PHOENIX MANAGEMENT SERVICES, INC.
By-Laws
ARTICLE I
---------
Offices and Fiscal Year
Section 1.01. REGISTERED OFFICE. The registered office of the
corporation in Pennsylvania shall be at 93 Werner Road, Greenville,
Pennsylvania, until otherwise established by an amendment of the articles or by
the board of directors and a record of such change is filed with the Department
of State in the manner provided by law.
Section 1.02. OTHER OFFICES. The corporation may also have offices at
such other places within or without Pennsylvania as the board of directors may
from time to time appoint or the business of the corporation may require.
Section 1.03. FISCAL YEAR. The fiscal year of the corporation shall
begin on the 1st day of January in each year.
ARTICLE II
Notice - Waivers - Meetings Generally
Section 2.01. MANNER OF GIVING NOTICE.
(a) GENERAL RULE. Whenever written notice is required to be given to
any person under the provisions of the Business Corporation Law or by the
articles or these bylaws, it may be given to the person either personally or by
sending a copy thereof by first class or express mail, postage prepaid, or by
telegram (with messenger service specified), telex or TWX (with answerback
received) or courier service, charges prepaid, or by telecopier, to the address
(or to the telex, TWX, telecopier or telephone number) of the person appearing
on the books of the corporation or, in the case of directors, supplied by the
director to the corporation for the purpose of notice. If the notice is sent by
mail, telegraph or courier service, it shall be deemed to have given to the
person entitled thereto when deposited in the United States mail or with a
telegraph office or courier service for delivery to that person or, in the case
of telex or TWX, when dispatched or, in the case of telecopier, when received.
A notice of meeting shall specify the place, day and hour of the meeting and
any other information required by any other provision of the Business
Corporation Law, the articles or these bylaws.
-1-
<PAGE> 5
(b) ADJOURNED SHAREHOLDER MEETINGS. When a meeting of shareholders is
adjourned, it shall not be necessary to give any notice of the adjourned
meeting or of the business to be transacted at an adjourned meeting, other than
by announcement at the meeting at which the adjournment is taken, unless the
board fixes a new record date for the adjourned meeting.
Section 2.02. NOTICE OF MEETINGS OF BOARD OF DIRECTORS. Notice of
regular meeting of the board of directors need not be given. Notice of every
special meeting of the board of directors shall be given to each director by
telephone or in writing at least 24 hours (in the case of notice by telephone,
telex, TWX or telecopier) or 48 hours (in the case of notice by telegraph,
courier service or express mail) or five days (in the case of notice by first
class mail) before the time at which the meeting is to be held. Every such
notice shall state the time and place of the meeting. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
board need be specified in a notice of the meeting.
Section 2.03. NOTICE OF MEETINGS OF SHAREHOLDERS.
(a) GENERAL RULE. Written notice of every meeting of the shareholders
shall be given by, or at the direction of, the secretary to each shareholder of
record entitled to vote at the meeting at least:
(1) ten days prior to the day named for a meeting called to
consider a fundamental transaction under 15 Pa.C.S. Chapter
19; or
(2) five days prior to the day named for the meeting in any
other case.
If the secretary neglects or refuses to give notice of a meeting, the person or
persons calling the meeting may do so. In the case of a special meeting of
shareholders, the notice shall specify the general nature of the business to be
transacted.
(b) NOTICE OF ACTION BY SHAREHOLDERS ON BYLAWS. In the case of a
meeting of shareholders that has as one of its purposes action on the bylaws,
written notice shall be given to each shareholder that the purpose, or one of
the purposes, of the meeting is to consider the adoption, amendment or repeal
of the bylaws. There shall be included in, or enclosed with, the notice a copy
of the proposed amendment or a summary of the changes to be effected thereby.
Section 2.04. WAIVER OF NOTICE.
(a) WRITTEN WAIVER. Whenever any written notice is required to be
given under the provisions of the Business Corporation Law, the articles or
these bylaws, a waiver thereof in writing, signed by the person or persons
entitled to the notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of the notice. Except as otherwise required
by this subsection, neither the business to be transacted at, nor the purpose
of, a meeting need be specified
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<PAGE> 6
in the waiver of notice of the meeting. In the case of a special meeting of
shareholders, the waiver of notice shall specify the general nature of the
business to be transacted.
(b) WAIVER BY ATTENDANCE. Attendance of a person at any meeting shall
constitute a waiver of notice of the meeting except where a person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting was not lawfully called
or convened.
Section 2.05. MODIFICATION OF PROPOSAL CONTAINED IN NOTICE. Whenever
the language of a proposed resolution is included in a written notice of a
meeting required to be given under the provisions of the Business Corporation
Law or the articles or these bylaws, the meeting considering the resolution may
without further notice adopt it with such clarifying or other amendments as do
not enlarge its original purpose.
Section 2.06. EXCEPTION TO REQUIREMENT OF NOTICE.
(a) GENERAL RULE. Whenever any notice or communication is required to
be given to any person under the provisions of the Business Corporation Law or
by the articles or these bylaws or by the terms of any agreement or other
instrument or a condition precedent to taking any corporate action and
communication with that person is then unlawful, the giving of the notice or
communication to that person shall not be required.
(b) SHAREHOLDERS WITHOUT FORWARDING ADDRESSES. Notice or other
communications shall not be sent to any shareholder with whom the corporation
has been unable to communicate for more than 24 consecutive months because
communications to the shareholder are returned unclaimed or the shareholder has
otherwise failed to provide the corporation with a current address. Whenever
the shareholders provides the corporation with a current address, the
corporation shall commence sending notices and other communications to the
shareholder in the same manner as to other shareholders.
Section 2.07. USE OF CONFERENCE TELEPHONE AND SIMILAR EQUIPMENT. One
or more persons may participate in a meeting of the board of directors or the
shareholders of the corporation by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at the meeting.
-3-
<PAGE> 7
ARTICLE III
-----------
Shareholders
Section 3.01. PLACE OF MEETING. All meetings of the shareholders of
the corporation shall be held at the registered office of the corporation
unless another place is designated by the board of directors in the notice of a
meeting.
Section 3.02. ANNUAL MEETING. The board of directors may fix the date
and time of the annual meeting of the shareholders, but if no such date and
time is fixed by the board, the meeting for any calendar year shall be held on
the second Monday of April in such year, if not a legal holiday under the laws
of Pennsylvania, and, if a legal holiday, then on the next succeeding business
day, not a Saturday, at 10:00 o'clock A.M., and at said meeting the
shareholders then entitled to vote shall elect directors and shall transact
such other business as may properly be brought before the meeting. If the
annual meeting shall not have been called and held within six months after the
designated time, any shareholder may call the meeting at any time thereafter.
Section 3.03. SPECIAL MEETINGS.
(a) CALL OF SPECIAL MEETINGS. Special meetings of the shareholders may
be called at any time:
(1) by the board of directors; or
(2) unless otherwise provided in the articles, by
shareholders entitled to cast at least 20% of the votes that
all shareholders are entitled to cast at the particular
meeting.
(b) FIXING OF TIME FOR MEETING. At any time, upon written request of
any person who has called a special meeting, it shall be the duty of the
secretary to fix the time of the meeting which shall be held not more than 60
days after the receipt of the request. If the secretary neglects or refuses to
fix the time of the meeting, the person or persons calling the meeting may do
so.
Section 3.04. QUORUM AND ADJOURNMENT.
(a) GENERAL RULE. A meeting of shareholders of the corporation duly
called shall not be organized for the transaction of business unless a quorum
is present. The presence of shareholders entitled to cast at least a majority
of the votes that all shareholders are entitled to cast on a particular matter
to be acted upon at the meeting shall constitute a quorum for the purposes of
consideration and action on the matter. Shares of the corporation owned,
directly or indirectly, by it and controlled, directly or indirectly, by the
board of directors of this corporation, as such, shall not be counted in
determining the total number of outstanding shares for quorum purposes at any
given time.
-4-
<PAGE> 8
(b) WITHDRAWAL OF A QUORUM. The shareholders present at a duly
organized meeting can continue to do business until adjournment notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.
(c) ADJOURNMENT FOR LACK OF QUORUM. If a meeting cannot be organized
because a quorum has not attended, those present may, except as provided in the
Business Corporation Law, adjourn the meeting to such time and place as they
may determine.
(d) ADJOURNMENTS GENERALLY. Any meeting at which directors are to be
elected shall be adjourned only from day to day, or for such longer periods not
exceeding 15 days each as the shareholders present and entitled to vote shall
direct, until the directors have been elected. Any other regular or special
meeting may be adjourned for such period as the shareholders present and
entitled to vote shall direct.
(e) ELECTING DIRECTORS AT ADJOURNED MEETING. Those shareholders
entitled to vote who attend a meeting called for the election of directors that
has been previously adjourned for lack of a quorum, although less than a quorum
as fixed in this section, shall nevertheless constitute a quorum for the
purpose of electing directors.
(f) OTHER ACTION IN ABSENCE OF QUORUM. Those shareholders entitled to
vote who attend a meeting of shareholders that has been previously adjourned
for one or more periods aggregating at least 15 days because of an absence of a
quorum, although less than a quorum as fixed in this section, shall
nevertheless constitute a quorum for the purpose of acting upon any matter set
forth in the notice of the meeting in the notice states that those shareholders
who attend the adjourned meeting shall nevertheless constitute a quorum for the
purpose of acting upon the matter.
Section 3.05. ACTION BY SHAREHOLDERS.
(a) GENERAL RULE. Except as otherwise provided in the Business
Corporation Law or the articles or these bylaws, whenever any corporate action
is to be taken by vote of the shareholders of the corporation, it shall be
authorized by a majority of the votes cast at a duly organized meeting of
shareholders by the holders of shares entitled to vote thereon.
(b) INTERESTED SHAREHOLDERS. Any merger or other transaction
authorized under 15 Pa.C.S. Subchapter 19C between the corporation or
subsidiary thereof and a shareholder of this corporation, or any voluntary
liquidation authorized under 15 Pa.C.S. Subchapter 19F in which a shareholder
is treated differently from other shareholders of the same class (other than
any dissenting shareholders), shall require the affirmative vote of the
shareholders entitled to cast at least a majority of the votes that all
shareholders other than the interested shareholder are entitled to cast with
respect to the transaction, without counting the vote of the interested
shareholder. For the purposes of the preceding sentence, interested shareholder
shall include the shareholder who is a party to the transaction or who is
treated differently from other shareholders and any person, or group of
persons, that is acting jointly or in concert with the interested shareholder
and any person who, directly or
-5-
<PAGE> 9
indirectly, controls, is controlled by or is under common control with the
interested shareholder. An interested shareholder shall not include any person
who, in good faith and not for the purpose of circumventing this subsection, is
an agent, bank, broker, nominee or trustee for one or more other persons, to
the extent that the other person or persons are not interested shareholders.
(c) EXCEPTIONS. Subsection (b) shall not apply to a transaction:
(1) that has been approved by a majority vote of the board of
directors without counting the vote of directors who:
(i) are directors or officers of, or have a material
equity interest in, the interested shareholder; or
(ii) were nominated for election as a director by
the interested shareholder, and first elected as a director,
within 24 months of the date of the vote on the proposed
transaction; or
(2) in which the consideration to be received by the
shareholders for shares of any class of which shares are owned by the
interested shareholder is not less than the highest amount paid by the
interested shareholder in acquiring shares of the same class.
(d) ADDITIONAL APPROVALS. The approvals required by subsection (b)
shall be in addition to, and not in lieu of, any other approval required by the
Business Corporation Law, the articles or these bylaws, or otherwise.
Section 3.06. ORGANIZATION. At every meeting of the shareholders, the
chairman of the board, if there be one, or, in the case of vacancy in office or
absence of the chairman of the board, one of the following officers present in
the order stated: the vice chairman of the board, if there be one, the
president, the vice presidents in their order of rank and seniority, or a
person chosen by vote of the shareholders present, shall act as chairman of the
meeting. The secretary or, in the absence of the secretary, an assistant
secretary, or, in the absence of both the secretary and assistant secretaries,
a person appointed by the chairman of the meeting, shall act as secretary.
Section 3.07. VOTING RIGHTS OF SHAREHOLDERS. Unless otherwise provided
in the articles, every shareholder of the corporation shall be entitled to one
vote for every share standing in the name of the shareholder on the books of
the corporation.
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<PAGE> 10
Section 3.08. VOTING AND OTHER ACTION BY PROXY.
(a) GENERAL RULE.
(1) Every shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person to act for the
shareholder by proxy.
(2) The presence of, or vote or other action at a meeting of
shareholders, or the expression of consent or dissent to corporate
action in writing, by a proxy of a shareholder shall constitute the
presence of, or vote or action by, or written consent or dissent of
the shareholder.
(3) Where two or more proxies of a shareholder are present,
the corporation shall, unless otherwise expressly provided in the
proxy, accept as the vote of all shares represented thereby the vote
cast by a majority of them and, if a majority of the proxies cannot
agree whether the shares represented shall be voted or upon the manner
of voting the shares, the voting of the shares shall be divided
equally among those persons.
(b) MINIMUM REQUIREMENTS. Every proxy shall be executed in writing by
the shareholder or by the duly authorized attorney-in-fact of the shareholder
and filed with the secretary of the corporation. A proxy, unless coupled with
an interest, shall be revocable at will, notwithstanding any other agreement or
any provision in the proxy to the contrary, but the revocation of a proxy shall
not be effective until written notice thereof has been given to the secretary
of the corporation. An unrevoked proxy shall not be valid after three years
from the date of its execution unless a longer time is expressly provided
therein. A proxy shall not be revoked by the death or incapacity of the maker
unless, before the vote is counted or the authority is exercised, written
notice of the death or incapacity is given to the secretary of the corporation.
(c) EXPENSES. Unless otherwise restricted in the articles, the
corporation shall pay the reasonable expenses of solicitation of votes, proxies
or consents of shareholders by or on behalf of the board of directors or its
nominees for election to the board, including solicitation by professional
proxy solicitors and otherwise.
Section 3.09. VOTING BY FIDUCIARIES AND PLEDGEES. Shares of the
corporation standing in the name of a trustee or other fiduciary and shares
held by an assignee for the benefit of creditors or by a receiver may be voted
by the trustee, fiduciary, assignee or receiver. A shareholder whose shares are
pledged shall be entitled to vote the shares until the shares have been
transferred into the name of the pledgee, or a nominee of the pledgee, but
nothing in this section shall affect the validity of a proxy given to a pledgee
or nominee.
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<PAGE> 11
Section 3.10. VOTING BY JOINT HOLDERS OF SHARES.
(a) GENERAL RULE. Where shares of the corporation are held jointly or
as tenants in common by two or more persons, as fiduciaries or otherwise:
(1) if only one or more of such persons is present in person
or by proxy, all of the shares standing in the names of such persons
shall be deemed to be represented for the purpose of determining a
quorum and the corporation shall accept as the vote of all the shares
the vote cast by a joint owner or a majority of them; and
(2) if the persons are equally divided upon whether the
shares held by them shall be voted or upon the manner of voting the
shares, the voting of the shares shall be divided equally among the
persons without prejudice to the rights of the joint owners or the
beneficial owners thereof among themselves.
(b) EXCEPTION. If there has been filed with the secretary of the
corporation a copy, certified by an attorney at law to be correct, of the
relevant portions of the agreement under which the shares are held or the
instrument by which the trust or estate was created or the order of court
appointing them or of an order of court directing the voting of the shares, the
persons specified as having such voting power in the document latest in date of
operative effect so filed, and only those persons, shall be entitled to vote
the shares but only in accordance therewith.
Section 3.11. VOTING BY CORPORATIONS.
(a) VOTING BY CORPORATE SHAREHOLDERS. Any corporation that is a
shareholder of this corporation may vote by any of its officers or agents, or
by proxy appointed by any officer or agent, unless some other person, by
resolution of the board of directors of the other corporation or a provision of
its articles or bylaws, a copy of which resolution or provision certified to be
correct by one of its officers has been filed with the secretary of this
corporation, is appointed its general or special proxy in which case that
person shall be entitled to vote the share.
(b) CONTROLLED SHARES. Shares of this corporation owned, directly or
indirectly, by it and controlled, directly or indirectly, by the board of
directors of this corporation, as such, shall not be voted at any meeting and
shall not be counted in determining the total number of outstanding shares for
voting purposes at any given time.
Section 3.12. DETERMINATION OF SHAREHOLDERS OF RECORD.
(a) FIXING RECORD DATE. The board of directors may fix a time prior to
the date of any meeting of shareholders as a record date for the determination
of the shareholders entitled to notice of, or to vote at, the meeting, which
time, except in the case of an adjourned meeting, shall be not more than 90
days prior to the date of the meeting of shareholders. Only shareholders of
record on the date fixed shall be so entitled notwithstanding any transfer of
shares on the books of the
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<PAGE> 12
corporation after any record date fixed as provided in this subsection. The
board of directors may similarly fix a record date for the determination of
shareholders of record for any other purpose. When a determination of
shareholders of record has been made as provided in this section for purposes
of a meeting, the determination shall apply to any adjournment thereof unless
the board fixes a new record date for the adjourned meeting.
(b) DETERMINATION WHEN A RECORD DATE IS NOT FIXED. If a record date is
not fixed:
(1) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the
close of business on the day next preceding the day on which notice is
given or, if notice is waived, at the close of business on the day
immediately preceding the day on which the meeting is held.
(2) The record date for determining shareholders entitled to
express consent or dissent to corporate action in writing without a
meeting, when prior action by the board of directors is not necessary,
shall be the close of business on the day on which the first written
consent or dissent is filed with the secretary of the corporation.
(3) The record date for determining shareholders for any
other purpose shall be at the close of business on the day on which
the board of directors adopts the resolution relating thereto.
Section 3.13. VOTING LISTS.
(a) GENERAL RULE. The officer or agent having charge of the transfer
books for shares of the corporation shall make a complete list of the
shareholders entitled to vote at any meeting of shareholders, arranged in
alphabetical order, with the address of and the number of shares held by each.
The list shall be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting for the purposes thereof.
(b) EFFECT OF LIST. Failure to comply with the requirements of this
section shall not affect the validity of any action taken at a meeting prior to
a demand at the meeting by any shareholder entitled to vote thereat to examine
the list. The original share register or transfer book, or a duplicate thereof
kept in this Commonwealth, shall be prima facie evidence as to who are the
shareholders entitled to examine the list or share register or transfer book or
to vote at any meeting of shareholders.
Section 3.14. JUDGES OF ELECTION.
(a) APPOINTMENT. In advance of any meeting of shareholders of the
corporation, the board of directors may appoint judges of election, who need
not be shareholders, to act at the meeting or any adjournment thereof. Ifjudges
of election are not so appointed, the presiding officer
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of the meeting may, and on the request of any shareholder shall, appoint judges
of election at the meeting. The number ofjudges shall be one or three. A person
who is a candidate for office to be filled at the meeting shall not act as a
judge.
(b) VACANCIES. In case any person appointed as ajudge fails to appear
or fails or refuses to act, the vacancy may be filled by appointment made by
the board of directors in advance of the convening of the meeting or at the
meeting by the presiding officer thereof.
(c) DUTIES. The judges of election shall determine the number of
shares outstanding and voting power of each, the shares represented at the
meeting, the existence of a quorum, the authenticity, validity and effect of
proxies, receive votes or ballots, hear and determine all challenges and
questions in any way arising in connection with the right to vote, count and
tabulate all votes, determine the result and do such acts as may be proper to
conduct the election or vote with fairness to all shareholders. The judges of
election shall perform their duties impartially, in good faith, to the best of
their ability and as expeditiously as is practical. If there are three judges
of election, the decision, act or certificate of a majority shall be effective
in all respects as the decision, act or certificate of all.
(d) REPORT. On request of the presiding officer of the meeting, or of
any shareholder, the judges shall make a report in writing of any challenge or
question or matter determined by them, and execute a certificate of any fact
found by them. Any report or certificate made by them shall be prima facie
evidence of the facts stated therein.
Section 3.15. CONSENT OF SHAREHOLDERS IN LIEU OF MEETING. Any action
required or permitted to be taken at a meeting of the shareholders or of a
class of shareholders may be taken without a meeting if, prior or subsequent to
the action, a consent or consents thereto by all of the shareholders who would
be entitled to vote at a meeting for such purpose shall be filed with the
secretary of the corporation.
Section 3.16. MINORS AS SECURITY HOLDERS. The corporation may treat a
minor who holds shares or obligations of the corporation as having capacity to
receive and to empower others to receive dividends, interest, principal and
other payments or distributions, to vote or express consent or dissent and to
make elections and exercise rights relating to such shares or obligations
unless, in the case of payments or distributions on shares, the corporate
officer responsible for maintaining the list of shareholders or the transfer
agent of the corporation or, in the case of payments or distributions on
obligations, the treasurer or paying officer or agent has received written
notice that the holder is a minor.
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ARTICLE IV
----------
Board of Directors
Section 4.01. POWERS; PERSONAL LIABILITY.
(a) GENERAL RULE. Unless otherwise provided by statute, all powers
vested by law in the corporation shall be exercised by or under the authority
of, and the business and affairs of the corporation shall be managed under the
direction of, the board of directors.
(b) STANDARD OF CARE; JUSTIFIABLE RELIANCE. A director shall stand in
a fiduciary relation to the corporation and shall perform his or her duties as
a director, including duties as a member of any committee of the board upon
which the director may serve, in good faith, in a manner the director
reasonably believes to be in the best interests of the corporation and with
such care, including reasonable inquiry, skill and diligence, as a person of
ordinary prudence would use under similar circumstances. In performing his or
her duties, a director shall be entitled to rely in good faith on information,
opinions, reports or statements, including financial statements and other
financial data, in each case prepared or presented by any of the following:
(1) One or more officers of employees of the corporation whom
the director reasonably believes to be reliable and competent in the matters
presented.
(2) Counsel, public accountants or other persons as to matters
which the director reasonably believes to be within the professional or expert
competence of such person.
(3) A committee of the board upon which the director does not
serve, duly designated in accordance with law, as to matters within its
designated authority, which committee the director reasonably believes to merit
confidence.
A director shall not be considered to be acting in good faith if the director
has knowledge concerning the matter in question that would cause his or her
reliance to be unwarranted.
(c) CONSIDERATION OF FACTORS. In discharging the duties of their
respective positions, the board of directors, committees of the board and
individual directors may, in considering the best interests of the corporation,
consider the effects of any action upon employees, upon suppliers and customers
of the corporation and upon communities in which offices or other
establishments of the corporation are located, and all other pertinent
factors. The consideration of those factors shall not constitute a violation of
subsection (b).
(d) PRESUMPTION. Absent breach of fiduciary duty, lack of good faith or
self-dealing, actions taken as a director or any failure to take any action
shall be presumed to be in the best interests of the corporation.
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(e) PERSONAL LIABILITY OF DIRECTORS.
(1) A director shall not be personally liable, as such, for
monetary damages for any action taken, or any failure to take any
action, unless:
(i) the director has breached or failed to perform
the duties of his or her office under this section; and
(ii) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness.
(2) The provisions of paragraph (1) shall not apply to the
responsibility or liability of a director pursuant to any criminal
statute, or the liability of a director for the payment of taxes
pursuant to Local, State or Federal Law.
(f) NOTATION OF DISSENT. A director who is present at a meeting of the
board of directors, or of a committee of the board, at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his or her dissent is entered in the minutes of the meeting or
unless the director files a written dissent to the action with the secretary of
the meeting before the adjournment thereof or transmits the dissent in writing
to the secretary of the corporation immediately after the adjournment of the
meeting. The right to dissent shall not apply to a director who voted in favor
of the action. Noting in this section shall bar a director from asserting that
minutes of the meeting incorrectly omitted his or her dissent if, promptly upon
receipt of a copy of such minutes, the director notifies the secretary, in
writing, of the asserted omission or inaccuracy.
Section 4.02. QUALIFICATIONS AND SELECTION OF DIRECTORS.
(a) QUALIFICATIONS. Each director of the corporation shall be a natural
person of full age who need not be a resident of Pennsylvania or a shareholder
of the corporation.
(b) ELECTION OF DIRECTORS. Except as otherwise provided in these
bylaws, directors of the corporation shall be elected by the shareholders. In
elections for directors, voting need not be by ballot, except upon demand made
by a shareholder entitled to vote at the election and before the voting begins.
The candidates receiving the highest number of votes from each class or group
of classes, if any, entitled to elect directors separately up to the number of
directors to be elected by the class or group of classes shall be elected. If
at any meeting of shareholders, directors of more than one class are to be
elected, each class of directors shall be elected in a separate election.
(c) CUMULATIVE VOTING. Unless the articles provide for straight voting,
in each election of directors every shareholder entitled to vote shall have the
right to multiply the number of votes to which the shareholder may be entitled
by the total number of directors to be elected in the same election by the
holders of the class or classes of shares of which his or her shares are a part
and the
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shareholder may cast the whole number of his or her votes for one candidate or
may distribute them among two or more candidates.
Section 4.03. NUMBER AND TERM OF OFFICE.
(a) NUMBER. The board of directors shall consist of such number of
directors as may be determined from time to time by resolution of the board of
directors.
(b) TERM OF OFFICE. Each director shall hold office until the
expiration of the term for which he or she was selected and until a successor
has been selected and qualified or until his or her earlier death, resignation
or removal. A decrease in the number of directors shall not have the effect of
shortening the term of any incumbent director.
(c) RESIGNATION. Any director may resign at any time upon written
notice to the corporation. The resignation shall be effective upon receipt
thereof by the corporation or at such subsequent time as shall be specified in
the notice of resignation.
Section 4.04. VACANCIES.
(a) GENERAL RULE. Vacancies in the board of directors, including
vacancies resulting from an increase in the number of directors, may be filled
by a majority vote of the remaining members of the board though less than a
quorum, or by a sole remaining director, and each person so selected shall be a
director to serve for the balance of the unexpired term, and until a successor
has been selected and qualified or until his or her earlier death, resignation
or removal.
(b) ACTION BY RESIGNED DIRECTORS. When one or more directors resign
from the board effective at a future date, the directors then in office,
including those who have so resigned, shall have power by the applicable vote
to fill the vacancies, the vote thereon to take effect when the resignations
become effective.
Section 4.05. REMOVAL OF DIRECTORS.
(a) REMOVAL BY THE SHAREHOLDERS. The entire board of directors, or any
class of the board, or any individual director may be removed from office
without assigning any cause by the vote of shareholders, or of the holders of a
class or series of shares, entitled to elect directors, or the class of
directors. In case the board or a class of the board of any one or more
directors are so removed, new directors may be elected at the same meeting. The
board of directors may be removed at any time with or without cause by the
unanimous vote or consent of shareholders entitled to vote thereon.
(b) REMOVAL BY THE BOARD. The board of directors may declare vacant the
office of a director who has been judicially declared of unsound mind or who
has been convicted of an offense punishable by imprisonment for a term of more
than one year or if, within 60 days after notice of his
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or her selection, the director does not accept the office either in writing or
by attending a meeting of the board of directors.
Section 4.06. THE CHAIRMAN OF THE BOARD. The board of directors shall
elect a chairman of the board. The chairman when present shall preside at all
meetings of the shareholders and of the board of directors.
Section 4.07. PLACE OF MEETINGS. Meetings of the board of directors may
be held at such place within or without Pennsylvania as the board of directors
may from time to time appoint or as may be designated in the notice of the
meeting.
Section 4.08. ORGANIZATION OF MEETINGS. At every meeting of the board
of directors, the chairman of the board, if there be one, or, in the case of a
vacancy in the office or absence of the chairman of the board, one of the
following officers present in the order stated: the vice chairman of the board,
if there be one, the president, the vice presidents in their order of rank and
seniority, or a person chosen by a majority of the directors present, shall act
as chairman of the meeting. The secretary or, in the absence of the secretary,
an assistant secretary, or, in the absence of the secretary and the assistant
secretaries, any person appointed by the chairman of the meeting, shall act as
secretary.
Section 4.09. REGULAR MEETINGS. Regular meetings of the board of
directors shall be held at such time and place as shall be designated from time
to time by resolution of the board of directors.
Section 4.10. SPECIAL MEETINGS. Special meetings of the board of
directors shall be held whenever called by the chairman or by two or more of
the directors.
Section 4.11. QUORUM OF AND ACTION BY DIRECTORS.
(a) GENERAL RULE. A majority of the directors in office of the
corporation shall be necessary to constitute a quorum for the transaction of
business and the acts of a majority of the directors present and voting at a
meeting at which a quorum is present shall be the acts of the board of
directors.
(b) ACTION BY WRITTEN CONSENT. Any action required or permitted to be
taken at a meeting of the directors may be taken without a meeting if, prior or
subsequent to the action, a consent or consents thereto by all of the directors
in office is filed with the secretary of the corporation.
Section 4.12 EXECUTIVE AND OTHER COMMITTEES.
(a) ESTABLISHMENT AND POWERS. The board of directors may, by
resolution adopted by a majority of the directors in office, establish one or
more committees to consist of one or more
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directors of the corporation. Any committee, to the extent provided in the
resolution of the board of directors, shall have and may exercise all of the
powers and authority of the board of directors except that a committee shall
not have any power or authority as to the following:
(1) The submission to shareholders of any action requiring
approval of shareholders under the Business Corporation Law.
(2) The creation or filling of vacancies in the board of
directors.
(3) The adoption, amendment or repeal of these bylaws.
(4) The amendment or repeal of any resolution of the board
that by its terms is amendable or repealable only by the board.
(5) Action on matters committed by a resolution of the board
of directors to another committee of the board.
(b) ALTERNATE COMMITTEE MEMBERS. The board 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 or for the purposes of any
written action by the committee. In the absence or disqualification of a member
and alternate member or members of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another director to act at the
meeting in the place of the absent or disqualified member.
(c) TERM. Each committee of the board shall serve at the pleasure of
the board.
(d) COMMITTEE PROCEDURES. The term "board of directors" or "board",
when used in any provision of these bylaws relating to the organization or
procedures of or the manner of taking action by the board of directors, shall
be construed to include and refer to any executive or other committee of the
board.
Section 4.13 COMPENSATION. The board of directors shall have the
authority to fix the compensation of directors for their services as directors
and a director may be a salaried officer of the corporation.
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ARTICLE V
---------
Officers
Section 5.01. OFFICERS GENERALLY.
(a) NUMBER, QUALIFICATIONS AND DESIGNATION. The officers of the
corporation shall be a president, a secretary, a treasurer, and such other
officers as may be elected in accordance with the provisions of Section 5.03.
Officers may but need not be directors or shareholders of the corporation. The
president and secretary shall be natural persons of full age. The treasurer may
be a corporation, but if a natural person shall be of full age. Any number of
offices may be held by the same person.
(b) RESIGNATIONS. Any officer may resign at any time upon written
notice to the corporation. The resignation shall be effective upon receipt
thereof by the corporation or at such subsequent time as may be specified in
the notice of resignation.
(c) BONDING. The corporation may secure the fidelity of any or all of
its officers by bond or otherwise.
(d) STANDARD OF CARE. Except as otherwise provided in the articles, an
officer shall perform his or her duties as an officer in good faith, in a
manner he or she reasonably believes to be in the best interests of the
corporation and with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances. A person who so performs his or her duties shall not be liable
by reason of having been an officer of the corporation.
Section 5.02. ELECTION AND TERM OF OFFICE. The officers of the
corporation, except those elected by delegated authority pursuant to Section
5.03, shall be elected annually be the board of directors, and each such
officer shall hold office for a term of one year and until a successor has been
selected and qualified or until his or her earlier death, resignation or
removal.
Section 5.03. SUBORDINATE OFFICERS, COMMITTEES AND AGENTS. The board of
directors may from time to time elect such other officers and appoint such
committees, employees or other agents as the business of the corporation may
require, including one or more assistant secretaries, and one or more assistant
treasurers, each of whom shall hold office for such period, have such
authority, and perform such duties as are provided in these bylaws or as the
board of directors may from time to time determine. The board of directors may
delegate to any officer or committee the power to elect subordinate officers
and to retain or appoint employees or other agents, or committees thereof and
to prescribe the authority and duties of such subordinate officers, committees,
employees or other agents.
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Section 5.04. REMOVAL OF OFFICERS AND AGENTS. Any officer or agent of
the corporation may be removed by the board of directors with or without cause.
The removal shall be without prejudice to the contract rights, if any, of any
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
Section 5.05. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause, shall be filled by
the board of directors or by the officer or committee to which the power to
fill such office has been delegated pursuant to Section 5.03, as the case may
be, and if the office is one for which these bylaws prescribe a term, shall be
filled for the unexpired portion of the term.
Section 5.06. AUTHORITY. All officers of the corporation, as between
themselves and the corporation, shall have such authority and perform such
duties in the management of the corporation as may be provided by or pursuant
to resolutions or orders of the board of directors or in the absence of
controlling provisions in the resolutions or orders of the board of directors,
as may be determined by or pursuant to these bylaws.
Section 5.07. THE PRESIDENT. The president shall have general
supervision over the business and operations of the corporation, subject
however, to the control of the board of directors. The president shall sign,
execute, and acknowledge, in the name of the corporation, deeds, mortgages,
bonds, contracts or other instruments authorized by the board of directors,
except in cases where the signing and execution thereof shall be expressly
delegated by the board of directors, or by these bylaws, to some other officer
or agent of the corporation; and, in general, shall perform all duties incident
to the office of president and such other duties as from time to time may be
assigned by the board of directors.
Section 5.08. THE SECRETARY. The secretary or an assistant secretary
shall attend all meetings of the shareholders and of the board of directors and
shall record all the votes of the shareholders and of the directors and the
minutes of the meetings of the shareholders and of the board of directors and
of committees of the board in a book or books to be kept for that purpose;
shall see that notices are given and records and reports properly kept and
filed by the corporation as required by law; shall be the custodian of the seal
of the corporation and see that it is affixed to all documents to be executed
on behalf of the corporation under its seal; and, in general shall perform all
duties incident to the office of secretary, and such other duties as may from
time to time be assigned by the board of directors or the president.
Section 5.09. THE TREASURER. The treasurer or an assistant treasurer
shall have or provide for the custody of the funds or other property of the
corporation; shall collect and receive or provide for the collection and
receipt of moneys earned by or in any manner due to or received by the
corporation; shall deposit all funds in his or her custody as treasurer in such
banks or other places of deposit as the board of directors may from time to
time designate; shall, whenever so required by the board of directors, render
an account showing all transactions as treasurer and financial condition
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of the corporation; and, in general, shall discharge such other duties as may
from time to time be assigned by the board of directors or the president.
Section 5.10. SALARIES. The salaries of the officers elected by the
board of directors shall be fixed from time to time by the board of directors
or by such officer as may be designated by resolution of the board. The
salaries or other compensation of any other officers, employees and other
agents shall be fixed from time to time by the officer or committee to which
the power to elect such officers or to retain or appoint such employees or
other agents has been delegated pursuant to Section 5.03. No officer shall be
prevented from receiving such salary or other compensation by reason of the
fact that the officer is also a director of the corporation.
ARTICLE VI
----------
Certificates of Stock, Transfer, Etc.
Section 6.01. SHARE CERTIFICATES. Certificates for shares of the
corporation shall be in such form as approved by the board of directors, and
shall state that the corporation is incorporated under the laws of
Pennsylvania, the name of the person to whom issued, and the number and class
of shares and the designation of the series (if any) that the certificate
represents. The share register or transfer books and blank share certificates
shall be kept by the secretary or by any transfer agent or registrar designated
by the board of directors for that purpose.
Section 6.02. ISSUANCE. The share certificates of the corporation shall
be numbered and registered in the share register or transfer books of the
corporation as they are issued. They shall be signed by the president or a vice
president and by the secretary or an assistant secretary or the treasurer or an
assistant treasurer, and shall bear the corporate seal, which may be a
facsimile, engraved or printed; but where such certificate is signed by a
transfer agent or a registrar the signature of any corporate officer upon such
certificate may be a facsimile, engraved or printed. In case any officer who
has signed, or whose facsimile signature has been placed upon, any share
certificate shall have ceased to be such officer because of death, resignation
or otherwise, before the certificate is issued, it may be issued with the same
effect as if the officer had not ceased to be such at the date of its issue.
The provisions of this Section 6.02 shall be subject to any inconsistent or
contrary agreement at the time between the corporation and any transfer agent
or registrar.
Section 6.03. TRANSFER. Transfers of shares shall be made on the share
register or transfer books of the corporation upon surrender of the certificate
therefor, endorsed by the person named in the certificate or by an attorney
lawfully constituted in writing. No transfer shall be made inconsistent with
the provisions of the Uniform Commercial Code, 13 Pa.C.S. Sections 8101 et seq.,
and its amendments and supplements.
Section 6.04. RECORD HOLDER OF SHARES. The corporation shall be
entitled to treat the person in whose name any share or shares of the
corporation stand on the books of the corporation as the
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absolute owner thereof, and shall not be bound to recognize any equitable or
other claim to, or interest in, such share or shares on the part of any other
person.
Section 6.05. LOST, DESTROYED OR MUTILATED CERTIFICATES. The holder of
any shares of the corporation shall immediately notify the corporation of any
loss, destruction or mutilation of the certificate therefor, and the board of
directors may, in its discretion, cause a new certificate or certificates to be
issued to such holder, in case of mutilation of the certificate, upon the
surrender of the mutilated certificate or, in case of loss or destruction of
the certificate, upon satisfactory proof of such loss or destruction and, if
the board of directors shall so determine, the deposit of a bond in such form
and in such sum, and with such surety or sureties, as it may direct.
ARTICLE VII
-----------
Indemnification of Directors, Officers and Other Authorized Representatives
Section 7.01. SCOPE OF INDEMNIFICATION.
(a) GENERAL RULE. The corporation shall indemnify an indemnified
representative against any liability incurred in connection with any proceeding
in which the indemnified representative may be involved as a party or otherwise
by reason of the fact that such person is or was serving in an indemnified
capacity, including, without limitation, liabilities resulting from any actual
or alleged breach or neglect of duty, error, misstatement or misleading
statement, negligence, gross negligence or act giving rise to strict or
products liability, except:
(1) where such indemnification is expressly prohibited by
applicable law;
(2) where the conduct of the indemnified representative has
been finally determined pursuant to Section 7.06 or otherwise:
(i) to constitute willful misconduct or recklessness
within the meaning of 15 Pa.C.S. Sections 513(b) and 1746(b)
and 42 Pa.C.S. Section 8365(b) or any superseding provision
of law sufficient in the circumstances to bar indemnification
against liabilities arising from the conduct; or
(ii) to be based upon or attributable to the receipt
by the indemnified representative from the corporation of a
personal benefit to which the indemnified representative is
not legally entitled; or
(3) to the extent such indemnification has been finally
determined in a final adjudication pursuant to Section 7.06 to be
otherwise unlawful.
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(b) PARTIAL PAYMENT. If an indemnification representative is entitled
to indemnification in respect of a portion, but not all, of any liabilities to
which such person may be subject, the corporation shall indemnify such
indemnified representative to the maximum extent for such portion of the
liabilities.
(c) PRESUMPTION. The termination of a proceeding by judgment, order,
settlement or conviction or upon a plea of nolo contendere or its equivalent
shall not of itself create a presumption that the indemnified representative is
not entitled to indemnification.
(d) DEFINITIONS. For purposes of this Article:
(1) "indemnified capacity" means any and all past,
present and future service by an indemnified representative
in one or more capacities as a director, officer, employee or
agent of the corporation, or, at the request of the
corporation, as a director, officer, employee, agent,
fiduciary or trustee or another corporation, partnership,
joint venture, trust, employee benefit plan or other entity
or enterprise;
(2) "indemnified representative" means any and all
directors and officers of the corporation and any other
person designated as an indemnified representative by the
board of directors of the corporation (which may, but need
not, include any person serving at the request of the
corporation, as a director, officer, employee, agent,
fiduciary or trustee of another corporation, partnership,
joint venture, trust, employee benefit plan of other entity
or enterprise);
(3) "liability" means any damage, judgment, amount
paid in settlement, fine, penalty, punitive damages, excise
tax assessed with respect to an employee benefit plan, or
cost or expense, of any nature (including, without
limitation, attorneys' fees and disbursements); and
(4) "proceeding" means any threatened, pending or
completed action, suit, appeal or other proceeding of any
nature, whether civil, criminal, administrative or
investigative, whether formal or informal, and whether
brought by or in the right of the corporation, a class of its
security holders or otherwise.
Section 7.02. PROCEEDINGS INITIATED BY INDEMNIFIED REPRESENTATIVES.
Notwithstanding any other provision of this Article, the corporation shall not
indemnify under this Article an indemnified representative for any liability
incurred in a proceeding initiated (which shall not be deemed to include
counter-claims or affirmative defenses) or participated in as an intervenor or
amicus curiae by the person seeking indemnification unless such initiation of
or participation in the proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors in office.
This section does not apply to reimbursement of expenses incurred in
successfully prosecuting or defending an arbitration under Section 7.06 or
otherwise successfully
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prosecuting or defending the rights of an indemnified representative granted by
or pursuant to this Article.
Section 7.03. ADVANCING EXPENSES. The corporation shall pay the
expenses (including attorneys' fees and disbursements) incurred in good faith
by an indemnified representative in advance of the final disposition of a
proceeding described in Section 7.01 or the initiation of or participation in
which is authorized pursuant to Section 7.02 upon receipt of an undertaking by
or on behalf of the indemnified representative to repay the amount if it is
ultimately determined pursuant to Section 7.06 that such person is not entitled
to be indemnified by the corporation pursuant to this Article. The financial
ability of an indemnified representative to repay an advance shall not be a
prerequisite to the making of such advance.
Section 7.04. SECURING OF INDEMNIFICATION OBLIGATIONS. To further
effect, satisfy or secure the indemnification obligations provided herein or
otherwise, the corporation may maintain insurance, obtain a letter of credit,
act as selfinsurer, create a reserve, trust, escrow, cash collateral or other
fund or account, enter into indemnification agreements, pledge or grant a
security interest in any assets or properties of the corporation, or use any
other mechanism or arrangement whatsoever in such amounts, at such costs, and
upon such other terms and conditions as the board of directors shall deem
appropriate. Absent fraud, the determination of the board of directors with
respect to such amounts, costs, terms and conditions shall be conclusive
against all security holders, officers and directors and shall not be subject
to voidability.
Section 7.05. PAYMENT OF INDEMNIFICATION. An indemnified representative
shall be entitled to indemnification within 30 days after a written request for
indemnification has been delivered to the secretary of the corporation.
Section 7.06. ARBITRATION.
(a) GENERAL RULE. Any dispute related to the right to indemnification,
contribution or advancement of expenses as provided under this Article, except
with respect to indemnification for liabilities arising under the Securities
Act of 1933 that the corporation has undertaken to submit to a court for
adjudication, shall be decided only by arbitration in the metropolitan area in
which the principal executive offices of the corporation are located at the
time, in accordance with the commercial arbitration rules then in effect of the
American Arbitration Association, before a panel of three arbitrators, one of
whom shall be selected by the corporation, the second of whom shall be selected
by the indemnified representative and the third of whom shall be selected by
the other two arbitrators. In the absence of the American Arbitration
Association, or if for any reason arbitration under the arbitration rules of
the American Arbitration Association cannot be initiated, or if one of the
parties fails or refuses to select an arbitrator or if the arbitrators selected
by the corporation and the indemnified representative cannot agree on the
selection of the third arbitrator within 30 days after such time as the
corporation and the indemnified representative have each been notified of the
selection of the other's arbitrator, the necessary arbitrator or arbitrators
shall be selected by the presiding judge of the court of general jurisdiction
in such metropolitan area.
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<PAGE> 25
(b) BURDEN OF PROOF. The party or parties challenging the right of an
indemnified representative to the benefits of this Article shall have the
burden of proof.
(c) EXPENSES. The corporation shall reimburse an indemnified
representative for the expenses (including attorneys' fees and disbursements)
incurred in successfully prosecuting or defending such arbitration.
(d) EFFECT. Any award entered by the arbitrators shall be final,
binding and nonappealable and judgment may be entered thereon by any party in
accordance with applicable law in any court of competent jurisdiction, except
that the corporation shall be entitled to interpose as a defense in any such
judicial enforcement proceeding any prior final judicial determination adverse
to the indemnified representative under Section 7.0l(a)(2) in a proceeding not
directly involving indemnification under this Article. This arbitration
provision shall be specifically enforceable.
Section 7.07. CONTRIBUTION. If the indemnification provided for in this
Article or otherwise is unavailable for any reason in respect of any liability
or portion thereof, the corporation shall contribute to the liabilities to
which the indemnified representative may be subject in such proportion as is
appropriate to reflect the intent of this Article or otherwise.
Section 7.08. MANDATORY INDEMNIFICATION OF DIRECTORS, OFFICERS, ETC. To
the extent that an authorized representative of the corporation has been
successful on the merits or otherwise in defense of any action or proceeding
referred to in 15 Pa.C.S. Sections 1741 or 1742 or in defense of any claim,
issue or matter therein, such person shall be indemnified against expenses
(including attorneys' fees and disbursements) actually and reasonably incurred
by such person in connection therewith.
Section 7.09 CONTRACT RIGHTS; AMENDMENT OR REPEAL. All rights under
this Article shall be deemed a contract between the corporation and the
indemnified representative pursuant to which the corporation and each
indemnified representative intend to be legally bound. Any repeal, amendment or
modification hereof shall be prospective only and shall not affect any rights
or obligations then existing.
Section 7.10. SCOPE OF ARTICLE. The rights granted by this Article
shall not be deemed exclusive of any other rights to which those seeking
indemnification, contribution or advancement of expenses may be entitled under
any statute, agreement, vote of shareholders or disinterested directors or
otherwise both as to action in an indemnified capacity and as to action in any
other capacity. The indemnification, contribution and advancement of expenses
provided by or granted pursuant to this Article shall continue as to a person
who has ceased to be an indemnified representative in respect of matters
arising prior to such time, and shall inure to the benefit of the heirs,
executors, administrators and personal representatives of such a person.
Section 7.11. RELIANCE OF PROVISIONS. Each person who shall act as an
indemnified representative of the corporation shall be deemed to be doing so in
reliance upon the rights provided by this Article.
-22-
<PAGE> 26
Section 7.12 INTERPRETATION. The provisions of this Article are
intended to constitute bylaws authorized by 15 Pa.C.S. Sections 513 and 1746
and 42 Pa.C.S. Section 8365.
ARTICLE VIII
------------
Miscellaneous
Section 8.01 CORPORATE SEAL. The corporation shall have a corporate
seal in the form of a circle containing the name of the corporation, the year
of incorporation and such other details as may be approved by the board of
directors.
Section 8.02 CHECKS. All checks, notes, bills of exchange or other
orders in writing shall be signed by such person or persons as the board of
directors or any person authorized by resolution of the board of directors may
from time to time designate.
Section 8.03. CONTRACTS.
(a) GENERAL RULE. Except as otherwise provided in the Business
Corporation Law in the case of transactions that require action by the
shareholders, the board of directors may authorize any officer or agent to
enter into any contract or to execute or deliver any instrument on behalf of
the corporation, and such authority may be general or confined to specific
instances.
(b) STATUTORY FORM OF EXECUTION OF INSTRUMENTS. Any note, mortgage,
evidence of indebtedness, contract or other document, or any assignment or
endorsement thereof, executed or entered into between the corporation and any
other person, when signed by one or more officers or agents having actual or
apparent authority to sign it, or by the president or vice president and
secretary or assistant secretary or treasurer or assistant treasurer of the
corporation, shall be held to have been properly executed for an in behalf of
the corporation, without prejudice to the rights of the corporation against any
person who shall have executed the instrument in excess of his or her actual
authority.
Section 8.04. INTERESTED DIRECTORS OR OFFICERS; QUORUM.
(a) GENERAL RULE. A contract or transaction between the corporation and
one or more of its directors or officers or between the corporation and another
corporation, partnership, joint venture, trust or other enterprise in which one
or more of its directors or officers are directors or officers or have a
financial or other interest, shall not be void or voidable solely for that
reason, or solely because the director or officer is present at or participates
in the meeting of the board of directors that authorizes the contact or
transaction, or solely because his, her or their votes are counted for that
purpose, it:
-23-
<PAGE> 27
(1) the material facts as to the relationship or interest and
as to the contract or transaction are disclosed or are known to the
board of directors and the board authorizes the contract or
transaction by the affirmative votes of a majority of the
disinterested directors even though the disinterested directors are
less than a quorum;
(2) the material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are
known to the shareholders entitled to vote thereon and the contract or
transaction is specifically approved in good faith by vote of those
shareholders; or
(3) the contract or transaction is fair as to the corporation
as of the time it is authorized, approved or ratified by the board of
directors or the shareholders.
(b) QUORUM. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board which authorizes
a contract or transaction specified in subsection (a).
Section 8.05. DEPOSITS. All funds of the corporation shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies or other depositaries as the board of directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by
such one or more officers or employees as the board of directors shall from
time to time determine.
Section 8.06. CORPORATE RECORDS.
(a) REQUIRED RECORDS. The corporation shall keep complete and accurate
books and records of account, minutes of the proceedings of the incorporators,
shareholders and directors and a share register giving the names and addresses
of all shareholders and the number and class of shares held by each. The share
register shall be kept at either the registered office of the corporation in
Pennsylvania or at is principal place of business wherever situated or at the
office of its registrar or transfer agent. Any books, minutes or other records
may be in written form or any other form capable of being converted into
written form within a reasonable time.
(b) RIGHT OF INSPECTION. Every shareholder shall, upon written verified
demand stating the purpose thereof, have right to examine, in person or by
agent or attorney, during the usual hours for business for any proper purpose,
the share register, books and records of account, and records of the
proceedings of the incorporators, shareholders and directors and to make copies
or extracts therefrom. A proper purpose shall mean a purpose reasonably related
to the interest of the person as a shareholder. In every instance where an
attorney or other agent is the person who seeks the right of inspection, the
demand shall be accompanied by a verified power of attorney or other writing
that authorizes the attorney or other agent to so act on behalf of the
shareholder. The demand shall be directed to the corporation at its registered
office in Pennsylvania or at its principal place of business wherever situated.
-24-
<PAGE> 28
Section 8.07. FINANCIAL REPORTS. Unless otherwise agreed between the
corporation and a shareholder, the corporation shall furnish to its
shareholders annual financial statements, including at least a balance sheet as
of the end of each fiscal year and a statement of income and expenses for the
fiscal year. The financial statements shall be prepared on the basis of
generally accepted accounting principals, if the corporation prepares financial
statements for the fiscal year on that basis for any purpose, and may be
consolidated statements of the corporation and one or more of its subsidiaries.
The financial statements shall be mailed by the corporation to each of its
shareholders entitled thereto within 120 days after the close of each fiscal
year and, after the mailing and upon written request, shall be mailed by the
corporation to any shareholder or beneficial owner entitled thereto to whom a
copy of the most recent annual financial statements has not previously been
mailed. Statements that are audited or reviewed by a public accountant shall be
accompanied by the report of the accountant; in other cases, each copy shall be
accompanied by a statement of the person in charge of the financial records of
the corporation;
(1) Stating his reasonable belief as to whether or not the
financial statements were prepared in accordance with generally
accepted accounting principles and, if not, describing the basis of
presentation.
(2) Describing any material respects in which the financial
statements were not prepared on a basis consistent with those prepared
for the previous year.
Section 8.08. AMENDMENT OF BYLAWS. These bylaws may be amended or
repealed, or new bylaws may be adopted, either (i) by vote of the shareholders
at any duly organized annual or special meeting of shareholders, or (ii) with
respect to those matters that are not by statute committed expressly to the
shareholders and regardless of whether the shareholders have previously adopted
or approved the bylaw being amended or repealed, by vote of a majority of the
board of directors of the corporation in office at any regular or special
meeting of directors. Any change in these bylaws shall take effect when adopted
unless otherwise provided in the resolution effecting the change. See Section
2.03(b) (relating to notice of action by shareholders on bylaws).
-25-
<PAGE> 1
Exhibit 4.1
================================================================================
WERNER HOLDING CO. (DE), INC.
10% Senior Subordinated Notes due 2007
----------
INDENTURE
Dated as of November 24, 1997
----------
IBJ SCHRODER BANK & TRUST COMPANY,
Trustee
================================================================================
<PAGE> 2
Page
----
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions...............................................2
SECTION 1.02. Other Definitions........................................33
SECTION 1.03. Incorporation by Reference
of Trust Indenture Act...............................34
SECTION 1.04. Rules of Construction....................................35
ARTICLE II
The Securities
--------------
SECTION 2.01. Form and Dating..........................................36
SECTION 2.02. Execution and Authentication.............................37
SECTION 2.03. Registrar and Paying Agent...............................38
SECTION 2.04. Paying Agent To Hold Money in Trust......................39
SECTION 2.05. Securityholder Lists.....................................40
SECTION 2.06. Transfer and Exchange....................................40
SECTION 2.07. Replacement Securities...................................41
SECTION 2.08. Outstanding Securities...................................42
SECTION 2.09. Temporary Securities.....................................43
SECTION 2.10. Cancelation..............................................43
SECTION 2.11. Defaulted Interest.......................................43
SECTION 2.12. CUSIP Numbers............................................44
SECTION 2.13. Book-Entry Provisions for
U.S. Global Securities..............................44
SECTION 2.14. Special Transfer Provisions..............................45
ARTICLE III
Redemption
----------
SECTION 3.01. Notices to Trustee.......................................48
SECTION 3.02. Selection................................................48
SECTION 3.03. Notice...................................................49
SECTION 3.04. Effect of Notice of Redemption...........................50
SECTION 3.05. Deposit of Redemption Price..............................50
SECTION 3.06. Securities Redeemed in Part..............................50
SECTION 3.07. Optional Redemption......................................50
SECTION 3.08. No Sinking Fund..........................................52
SECTION 3.09. Repurchase Offers........................................52
i
<PAGE> 3
Page
----
ARTICLE IV
Covenants
---------
SECTION 4.01. Payment of Securities....................................56
SECTION 4.02. Reports..................................................56
SECTION 4.03. Incurrence of Indebtedness and
Issuance of Preferred Stock.........................56
SECTION 4.04. Restricted Payments......................................60
SECTION 4.05. Dividend and Other Payment
Restrictions Affecting
Restricted Subsidiaries.............................63
SECTION 4.06. Asset Sales..............................................65
SECTION 4.07. Transactions with Affiliates.............................67
SECTION 4.08. Change of Control........................................69
SECTION 4.09. Compliance Certificate...................................69
SECTION 4.10. [INTENTIONALLY OMITTED]..................................69
SECTION 4.11. Liens....................................................69
SECTION 4.12. Additional Security Guarantees...........................69
SECTION 4.13. Business Activities......................................70
SECTION 4.14. No Senior Subordinated Debt..............................71
ARTICLE V
Successor Company
-----------------
SECTION 5.01. Merger, Consolidation or Sale of All
or Substantially All Assets of the
Company.............................................71
SECTION 5.02. Merger, Consolidation or Sale of All
or Substantially All Assets of a
Guarantor...........................................72
ARTICLE VI
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default and Remedies...........................73
SECTION 6.02. Acceleration.............................................75
SECTION 6.03. Other Remedies...........................................76
SECTION 6.04. Waiver of Past Defaults..................................76
SECTION 6.05. Control by Majority......................................76
SECTION 6.06. Limitation on Suits......................................77
SECTION 6.07. Rights of Holders to
Receive Payment.....................................77
SECTION 6.08. Collection Suit by Trustee...............................78
SECTION 6.09. Trustee May File Proofs
of Claim............................................78
ii
<PAGE> 4
Page
----
SECTION 6.10. Priorities...............................................78
SECTION 6.11. Undertaking for Costs....................................79
SECTION 6.12. Waiver of Stay or Extension
Laws................................................79
ARTICLE VII
Trustee
-------
SECTION 7.01. Duties of Trustee........................................79
SECTION 7.02. Rights of Trustee........................................81
SECTION 7.03. Individual Rights of Trustee.............................82
SECTION 7.04. Trustee's Disclaimer.....................................82
SECTION 7.05. Notice of Defaults.......................................82
SECTION 7.06. Reports by Trustee to Holders............................83
SECTION 7.07. Compensation and Indemnity...............................83
SECTION 7.08. Replacement of Trustee...................................84
SECTION 7.09. Successor Trustee by Merger..............................86
SECTION 7.10. Eligibility; Disqualification............................86
SECTION 7.11. Preferential Collection of Claims
Against Company.....................................86
ARTICLE VIII
Discharge of Indenture; Defeasance
----------------------------------
SECTION 8.01. Legal Defeasance and Covenant
Defeasance..........................................87
SECTION 8.02. Conditions to Legal or Covenant
Defeasance..........................................88
SECTION 8.03. Deposited Money and Government
Securities to be Held in Trust;
Other Miscellaneous Provisions......................90
SECTION 8.04. Repayment to Company.....................................91
SECTION 8.05. Reinstatement............................................91
SECTION 8.06. Satisfaction and Discharge of
Indenture...........................................92
ARTICLE IX
Amendments
----------
SECTION 9.01. Without Consent of Holders...............................93
SECTION 9.02. With Consent of Holders..................................94
SECTION 9.03. Compliance with Trust
Indenture Act.......................................95
iii
<PAGE> 5
Page
----
SECTION 9.04. Revocation and Effect of Consents and
Waivers.............................................95
SECTION 9.05. Notation on or Exchange
of Securities.......................................96
SECTION 9.06. Trustee To Sign Amendments..............................96
SECTION 9.07. Payment for Consent.....................................96
ARTICLE X
Subordination
-------------
SECTION 10.01. Agreement To Subordinate................................97
SECTION 10.02. Liquidation, Dissolution,
Bankruptcy..........................................97
SECTION 10.03. Default on Senior Indebtedness..........................98
SECTION 10.04. Acceleration of Payment
of Securities.......................................99
SECTION 10.05. When Distribution Must
Be Paid Over........................................99
SECTION 10.06. Subrogation.............................................99
SECTION 10.07. Relative Rights.........................................99
SECTION 10.08. Subordination May Not Be
Impaired by Company................................100
SECTION 10.09. Rights of Trustee and
Paying Agent.......................................100
SECTION 10.10. Distribution or Notice to
Representative.....................................100
SECTION 10.11. Article X Not To Prevent
Events of Default or Limit
Right To Accelerate................................101
SECTION 10.12. Trust Moneys Not Subordinated..........................101
SECTION 10.13. Trustee Entitled To Rely...............................101
SECTION 10.14. Trustee to Effectuate
Subordination......................................102
SECTION 10.15. Trustee Not Fiduciary for Holders
of Senior Indebtedness.............................102
SECTION 10.16. Reliance by Holders of Senior
Indebtedness on Subordination
Provisions.........................................102
SECTION 10.17. Trustee's Compensation
Not Prejudiced.....................................102
ARTICLE XI
Security Guarantees
-------------------
SECTION 11.01. Security Guarantees....................................103
iv
<PAGE> 6
Page
----
SECTION 11.02. Limitation on Liability................................105
SECTION 11.03. Successors and Assigns.................................106
SECTION 11.04. No Waiver..............................................106
SECTION 11.05. Modification...........................................106
ARTICLE XII
Subordination of the Security Guarantees
----------------------------------------
SECTION 12.01. Agreement To Subordinate...............................107
SECTION 12.02. Liquidation, Dissolution,
Bankruptcy.........................................107
SECTION 12.03. Default on Senior Indebtedness
of a Guarantor.....................................107
SECTION 12.04. Demand for Payment.....................................109
SECTION 12.05. When Distribution Must Be
Paid Over..........................................109
SECTION 12.06. Subrogation............................................109
SECTION 12.07. Relative Rights........................................109
SECTION 12.08. Subordination May Not Be
Impaired by a Guarantor............................110
SECTION 12.09. Rights of Trustee and
Paying Agent.......................................110
SECTION 12.10. Distribution or Notice to
Representative.....................................110
SECTION 12.11. Article XII Not To Prevent
Events of Default or Limit
Right To Accelerate................................111
SECTION 12.12. Trustee Entitled To Rely...............................111
SECTION 12.13. Trustee to Effectuate
Subordination......................................111
SECTION 12.14. Trustee Not Fiduciary for Holders
of Senior Indebtedness of a
Guarantor..........................................112
SECTION 12.15. Reliance by Holders of Senior
Indebtedness of a Guarantor on
Subordination Provisions...........................112
ARTICLE XIII
Miscellaneous
-------------
SECTION 13.01. Trust Indenture Act Controls...........................112
SECTION 13.02. Notices................................................112
SECTION 13.03. Communication by Holders with Other
Holders............................................113
SECTION 13.04. Certificate and Opinion as to
Conditions Precedent...............................114
v
<PAGE> 7
Page
----
SECTION 13.05. Statements Required in Certificate
or Opinion.........................................114
SECTION 13.06. When Securities Disregarded............................114
SECTION 13.07. Rules by Trustee, Paying Agent and
Registrar..........................................115
SECTION 13.08. Legal Holidays.........................................115
SECTION 13.09. Governing Law..........................................115
SECTION 13.10. No Recourse Against Others.............................115
SECTION 13.11. Successors.............................................115
SECTION 13.12. Multiple Originals.....................................115
SECTION 13.13. Table of Contents; Headings............................116
Exhibit A - Form of Initial Security
Exhibit B - Form of Exchange Security
Exhibit C - Form of Private Exchange Security
Exhibit D - Form of Transferee Letter of Representation
Exhibit E - Form of Supplemental Indenture
Exhibit F - Form of Certificate to be Delivered in
Connection with Transfers Pursuant to
Rule 144A
Exhibit G - Form of Certificate to be Delivered in
Connection with Transfers pursuant to
Regulation S
vi
<PAGE> 8
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- -------
310(a)(1) ................................................ 7.10
(a)(2) ................................................ 7.10
(a)(3) ................................................ N.A.
(a)(4) ................................................ N.A.
(b) ................................................ 7.08; 7.10
(c) ................................................ N.A.
311(a) ................................................ 7.11
(b ................................................ 7.11
(c) ................................................ N.A.
312(a) ................................................ 2.05
(b) ................................................ 13.03
(c) ................................................ 13.03
313(a) ................................................ 7.06
(b)(1) ................................................ N.A.
(b)(2) ................................................ 7.06
(c) ................................................ 13.02
(d) ................................................ 7.06
314(a) ................................................ 4.02; 4.09
(b) ................................................ N.A.
(c)(1) ................................................ 13.04
(c)(2) ................................................ 13.04
(c)(3) ................................................ 13.04
(d) ................................................ N.A.
(e) ................................................ 13.05
(f) ................................................ N.A.
315(a) ................................................ 7.01
(b) ................................................ 7.05; 13.02
(c) ................................................ 7.01
(d) ................................................ 7.0
(e) ................................................ 6.11
316(a)(last
sentence) ................................................ 13.06
(a)(1)(A) ................................................ 6.05
(a)(1)(B) ................................................ 6.04
(a)(2) ................................................ N.A.
(b) ................................................ 6.07317
(a)(1) ................................................ 6.08
(a)(2) ................................................ 6.09
(b) ................................................ 2.04
318(a) ................................................ 13.01
N.A. means Not Applicable.
- ---------------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
vii
<PAGE> 9
INDENTURE dated as of November 24, 1997,
among WERNER HOLDING CO. (DE), INC., a Delaware
corporation (the "Company"), WERNER HOLDING CO. (PA),
INC., a Pennsylvania corporation, WERNER CO., a
Pennsylvania corpora tion, GOLD MEDAL LADDER COMPANY,
a Pennsylvania corporation, KENTUCKY LADDER COMPANY,
a Pennsylvania corporation, FLORIDA LADDER COMPANY, a
Florida corporation, WERNER MANAGEMENT CO., a
Pennsylvania corporation, WERNER FINANCIAL INC., a
Delaware corporation, R.D. ARIZONA LADDER CORP., an
Arizona corporation, WIP TECHNOLOGIES, INC., a
Delaware corporation, ARDEE INVESTMENT CO., INC., a
Delaware corporation, OLYMPUS PROPERTIES, INC., an
Illinois corporation, PHOENIX MANAGEMENT SERVICES,
INC., a Pennsylvania corporation, as guarantors
(collectively, the "Initial Guarantors"), and IBJ
SCHRODER BANK & TRUST COMPANY, a New York banking
corporation (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of (i) the
Company's 10% Senior Subordinated Notes due 2007 issued on the date hereof, (ii)
any Additional Securities (as defined herein) that may be issued on any other
Issue Date (all such Securities in clauses (i) and (ii) being referred to
collectively as the "Initial Securities"), (iii) if and when issued as provided
in a Registration Rights Agreement of the Company's 10% Senior Subordinated
Notes due 2007 issued in a Registered Exchange Offer (as defined below) in
exchange for any Initial Securities (the "Exchange Securities") and (iv), if and
when issued as provided in a Registration Rights Agreement, the Private Exchange
Securities (as defined) issued in a Private Exchange Offer (as defined) (the
"Private Exchange Securities", and together with the Initial Securities and any
Exchange Securities issued hereunder, the "Securities"). Except as otherwise
provided herein, the Securities will be limited to $270,000,000 in aggregate
principal amount outstanding, of which $135,000,000 in aggregate principal
amount will be initially issued on the date hereof. Subject to the conditions
set forth herein, the Company may issue up to an additional $135,000,000
aggregate principal amount of Securities.
<PAGE> 10
2
ARTICLE I
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including Indebtedness Incurred in connection with, or in contemplation of, such
other Person's merging with or into or becoming a Restricted Subsidiary of such
specified Person (provided such Person is not formed for the purpose of
Incurring such Indebtedness and is engaged in a bona fide business prior to
Incurring such Indebtedness or has material assets other than cash), and (ii)
Indebtedness secured by a Lien encumbering any asset acquired by such specified
Person.
"Additional Securities" shall mean up to $135,000,000 in
aggregate principal amount of Initial Securities initially issued subsequent to
the date hereof pursuant to Article II and in compliance with Section 4.03.
"Affiliate" of any specified Person means (i) any other
Person, directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person, (ii) any other Person that
owns, directly or indirectly, 5% or more of such specified Person's Voting Stock
or (iii) any Person who is a director or officer (a) of such Person, (b) of any
Subsidiary of such Person or (c) of any Person described in clause (i) or (ii)
above. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by agreement or otherwise.
"Applicable Premium" means, with respect to a Security at any
redemption date, the greater of (i) 1.0% of the principal amount of such
Security or (ii) the excess of (A) the present value at such time of (1) the
redemption price of such Security at November 15, 2002 (such redemption price
being set forth in the tables in Section 3.07) plus (2) all required interest
payments due on such Security through November 15, 2002 (excluding accrued but
unpaid
<PAGE> 11
3
interest), computed using a discount rate equal to the Treasury Rate plus 75
basis points, over (B) the principal amount of such Security, if greater.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including by way of a sale and leaseback)
(PROVIDED that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole will be governed by Section 5.01 or 5.02 and not by the
provisions of Section 4.06), and (ii) the issue or sale by the Company or any of
its Restricted Subsidiaries of Equity Interests of any of the Company's
Subsidiaries (other than director's qualifying shares), in the case of either
clause (i) or (ii), whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $1.0 million or (b)
for net proceeds in excess of $1.0 million. Notwithstanding the foregoing, (1)
the following will not be Asset Sales: (i) a transfer of assets by the Company
to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to
another Restricted Subsidiary, (ii) an issuance of Equity Interests by a
Restricted Subsidiary to the Company or to another Restricted Subsidiary, (iii)
a contribution, transfer or other disposition of Receivables in connection with
a Receivables Facility PROVIDED consideration in an amount at least equal to
the fair market value of such Receivables is received, directly or indirectly,
by the Company or any of its Restricted Subsidiaries, PROVIDED FURTHER that all
the net cash proceeds of any Receivables Facility are remitted to the Company or
any Restricted Subsidiary, (iv) a Restricted Payment or Permitted Investment
that is permitted by Section 4.04 (including any formation of or contribution of
assets to a joint venture), (v) leases or subleases, in the ordinary course of
business, to third parties of real property owned in fee or leased by the
Company or its Subsidiaries, (vi) a disposition, in the ordinary course of
business, of a lease of real property, (vii) any disposition of property of the
Company or any of its Subsidiaries that, in the reasonable judgment of the
Company, has become uneconomic, obsolete or worn out, (viii) any disposition of
property or assets (including any disposition of inventory and any licensing
agreements) in the ordinary course of business, other than in connection with a
Receivables Facility, (ix) the sale of Cash Equivalents, Permitted Insurance
Company Investments and Investment Grade Securities, (x) any exchange of like
property pursuant to Section 1031 of the Code, and (xi) any sale of life
insurance policies to certain management personnel pursuant to the
Recapitalization Agreement in an
<PAGE> 12
4
approximate amount not to exceed $2.0 million; and (2) subject to clause
(1)(iii), the term "Asset Sale" shall include a contribution or other transfer
of Receivables to, or a disposition of Receivables by, an Unrestricted
Subsidiary in connection with a Receivables Facility of the Company and its
Restricted Subsidiaries.
"Board of Directors" means, with respect to any Person, the
Board of Directors of such Person, or any authorized committee of the Board of
Directors of such Person.
"Business Day" means a day other than a Saturday, Sunday or
other day on which banking institutions in New York State are authorized or
required by law to close.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any similar participation in profits and losses or equity of a
Person.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than one year from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of one year or less from
the date of acquisition, bankers' acceptances with maturities not exceeding one
year and overnight bank deposits, in each case with any commercial bank or
trust company having capital and surplus in excess of $300 million, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above, (v) commercial paper having the highest rating obtainable from
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings
Services, a division of the McGraw-Hill Companies, Inc. ("S&P") and in each case
maturing within one year after
<PAGE> 13
5
the date of acquisition, (vi) investment funds investing 95% of their assets in
securities of the types described in clauses (ii) through (v) above, (vii)
readily marketable direct obligations issued by any state of the United States
of America or any political subdivision thereof having one of the two highest
rating categories obtainable from either Moody's or S&P and (viii) Indebtedness
with a rating of "A" or higher from S&P or "A2" or higher from Moody's.
"Change of Control" means such time as:
(i) prior to the earlier to occur of (A) the first public
offering of Voting Stock of the Company or (B) the first public
offering of Voting Stock of Holding, the Initial Control Group ceases
to be the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, of more than 50% of the
total voting power of the Voting Stock of the Company or Holding,
whether as a result of the issuance of securities of the Company or
Holding, as the case may be, any merger, consolidation, liquidation or
dissolution of the Company or Holding, as the case may be, any direct
or indirect transfer of securities by the Initial Control Group or
otherwise (for purposes of this clause (i) and clause (ii) below, the
Initial Control Group shall be deemed to beneficially own any Voting
Stock of an entity (the "specified entity") held by any other entity
(the "parent entity") so long as the Initial Control Group beneficially
owns (as so defined), directly or indirectly, in the aggregate a
majority of the voting power of the Voting Stock of the parent entity;
(ii) following the first public offering of Voting Stock of
the Company or Holding, as the case may be, (A) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act), other
than one or more members of the Initial Control Group, is or becomes
the beneficial owner (as defined in clause (i) above, except that such
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 40% of the total voting power of the Voting
Stock of the Company or Holding, as the case may be, and (B) the
Initial Control Group "beneficially owns" (as defined in clause (i)
above), directly or indirectly, in the aggregate a lesser percentage of
the total voting power of the Voting Stock of the Company or Holding,
as the
<PAGE> 14
6
case may be, than such other person and does not have the right or
ability by voting power, contract or otherwise to elect or designate
for election a majority of the board of directors of the Company or
Holding, as the case may be, (for purposes of this clause (ii), such
other person shall be deemed to beneficially own any Voting Stock of a
specified entity held by a parent entity, if such other person
"beneficially owns" (as defined in clause (i) above), directly or
indirectly, in the aggregate more than 40% of the voting power of the
Voting Stock of such parent entity and the Initial Control Group
"beneficially owns" (as defined in clause (i) above), directly or
indirectly, in the aggregate a lesser percentage of the voting power of
the Voting Stock of such parent entity and does not have the right or
ability by voting power, contract or otherwise to elect or designate
for election a majority of the board of directors of such parent
entity); or
(iii) any person other than the Initial Control Group, (A)(I)
nominates one or more individuals for election to the Board of
Directors of the Company or Holding, as the case may be and (II)
solicits proxies, authorization or consents in connection therewith and
(B) such number of nominees elected to serve on the Board of Directors
in such election and all previous elections after the Closing Date
represents a majority of the Board of Directors of the Company or
Holding, as the case may be, following such election.
"Closing Date" shall mean November 24, 1997.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commodity Hedging Agreements" means any futures contract or
other similar agreement or arrangement designed to protect the Company or any
Subsidiary against fluctuations in commodities prices.
"Company" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period (A) plus,
to the extent deducted in computing such Consolidated Net Income, (i) Fixed
Charges
<PAGE> 15
7
and the amortization of debt issuance costs, commissions, fees and expenses of
such Person and its Restricted Subsidiaries for such period, (ii) provision for
taxes based on income or profits (including franchise taxes) of such Person and
its Restricted Subsidiaries for such period, (iii) depreciation and amortization
expense, including amortization of inventory write-up under APB 16, amortization
of intangibles (including goodwill and the non-cash costs of Interest Rate
Agreements, Commodity Hedging Agreements or Currency Agreements, license
agreements and non-competition agreements), non-cash amortization of Capital
Lease Obligations, and organization costs, (iv) non-cash expenses related to the
amortization of management fees paid on or prior to the Closing Date, (v)
expenses and charges related to any equity offering or Incurrence of
Indebtedness permitted to be Incurred by this Indenture (including any such
expenses or charges relating to the Recapitalization), (vi) the amount of any
restructuring charge or reserve, (vii) unrealized gains and losses from hedging,
foreign currency or commodities translations and transactions, (viii) expenses
consisting of internal software development costs that are expensed during the
period but could have been capitalized in accordance with GAAP, (ix) any
write-downs, write-offs, and other non-cash charges and expenses (excluding
insurance reserves), (x) the amount of any minority interest expense of
Restricted Subsidiaries, and (xi) costs of surety bonds in connection with
financing activities, and (B) minus (x) non-cash items increasing such
Consolidated Net Income for such period and (y) any cash payment or expense
(excluding cash payments on account of insurance claims) for which a reserve or
charge of the kind described in the clause (vi), (ix) or (x) above was taken
previously during such period.
"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 Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted Subsidiary of
such Person, (ii) the Net Income of any Restricted Subsidiary (other than an
Insurance Subsidiary) shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Restricted Subsidiary of
that Net Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
<PAGE> 16
8
prohibited by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders unless such
restriction with respect to the payment of dividends has been permanently
waived, (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) the cumulative effect of a change in accounting principles shall
be excluded (effected either through cumulative effect adjustment or a
retroactive application, in each case, in accordance with GAAP), (v) to the
extent deducted in determining Net Income, the fees, expenses and other costs
Incurred in connection with the Recapitalization, including payments to
management contemplated by the Recapitalization Agreement, in each case, to the
extent that such fee, expense or cost was disclosed in the Offering Memorandum,
shall be excluded, (vi) any unrealized gains or losses with respect to
Investments held in the insurance business of any Restricted Subsidiary shall be
excluded and (vii) with respect to periods prior to the Closing Date,
Consolidated Net Income shall include (without duplication) (A) all adjustments
relating to MIICA investment income (loss) reflected in the calculation of
EBITDA set forth in note (d) in the Notes to Unaudited Pro Forma Condensed
Consolidated Statements of Operations set forth in "Unaudited Pro Forma
Condensed Consolidated Financial Statements" of the Offering Memorandum and (B)
all adjustments relating to reductions in management compensation,
non-recurring expenses, MIICA investment income, non-recurring employee
separation charges and non-recurring private company expenses, in each case
reflected in the calculation of Adjusted EBITDA set forth in footnote (a) to the
"Summary Historical and Pro Forma Financial Information" of the Offering
Memorandum.
"Credit Facilities" means, with respect to the Company, one or
more debt facilities (including the New Credit Facility) or commercial paper
facilities with banks, insurance companies or other institutional lenders
providing for revolving credit loans, term loans, notes, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from or issue securities to such lenders against such
receivables) or letters of credit or other credit facilities, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.
<PAGE> 17
9
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement to which the
Company or any Subsidiary is a party or of which it is a beneficiary.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"Definitive Securities" means Securities that are in the form
of Exhibit A, Exhibit B or Exhibit C attached hereto that do not include the
Global Securities Legend therein.
"Depository" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section 2.03
as the Depository with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depository" shall mean or include such successor.
"Designated Senior Debt" means (i) any Indebtedness
outstanding under the New Credit Facility and (ii) any other Senior Indebtedness
permitted under this Indenture the principal amount of which is $10.0 million or
more and that has been designated by the Company or any Guarantor as "Designated
Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event (other than as a result
of a Change of Control), matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Securities mature; PROVIDED, HOWEVER, that if such Capital
Stock is issued to any plan for the benefit of employees of the Company or its
Subsidiaries or by any such plan to such employees, such Capital Stock shall not
constitute Disqualified Stock solely because it may be required to be
repurchased by the Company in order to satisfy applicable statutory or
regulatory obligations.
"Domestic Subsidiary" means any Restricted Subsidiary of the
Company other than a Foreign Subsidiary.
"Equity Interests" means Capital Stock and all
warrants, options or other rights to acquire Capital Stock
<PAGE> 18
10
(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 Restricted Subsidiaries (other than Indebtedness under the New Credit
Facility) in existence on the Closing Date, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) the consolidated interest expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges Incurred in respect of letter
of credit or bankers' acceptance financings or any Receivables Facility, and net
payments (if any) pursuant to Hedging Obligations relating to Interest Rate
Agreements or Currency Agreements with respect to Indebtedness, excluding,
however, (A) amortization of debt issuance costs, commissions, fees and
expenses, (B) customary commitment, administrative and transaction fees and
charges) and (C) expenses attributable to letters of credit or similar
arrangements supporting insurance certificates issued to customers in the
ordinary course of business, (ii) the consolidated interest expense of such
Person and its Restricted Subsidiaries that was capitalized during such period,
(iii) any interest expense on Indebtedness of another Person that is Guaranteed
by such Person or one of its Restricted Subsidiaries or secured by a Lien on
assets of such Person or one of its Restricted Subsidiaries (whether or not or,
in the case of Indebtedness of a Foreign Subsidiary, at any time after such,
Guarantee or Lien is called upon), (iv) all dividend payments, whether or not in
cash, on any series of Preferred Stock of any Restricted Subsidiary of such
Person, (v) all dividend payments, whether or not in cash, on any series of
Preferred Stock of such person other than dividend payments or accruals payable
solely in Equity Interests (other than Disqualified Stock) of such Person, in
each case, on a consolidated basis and in accordance with GAAP and (vi)
commissions, discounts and other fees and charges Incurred in connection with a
Receivables Facility of the Company or any Restricted Subsidiary.
<PAGE> 19
11
"Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the Company or
any of its Restricted Subsidiaries Incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues Preferred Stock
subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such Incurrence, assumption, 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 reference
period. For purposes of making the computation referred to above, Investments in
Restricted Subsidiaries, acquisitions, dispositions, mergers and consolidations
that have been made by the Company or any of its Restricted Subsidiaries during
the four-quarter reference period or subsequent to such reference period and on
or prior to the Calculation Date, and discontinued operations determined in
accordance with GAAP on or prior to the Calculation Date, shall be given effect
on a PRO FORMA basis assuming that all such Investments in Restricted
Subsidiaries, acquisitions, dispositions, mergers and consolidations or
discontinued operations (and the reduction or increase of any associated fixed
charge obligations and the change in Consolidated Cash Flow resulting therefrom)
had occurred on the first day of the four-quarter reference period. If since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Investment in a
Restricted Subsidiary, acquisition, disposition, merger or consolidation or
determined a discontinued operation, that would have required adjustment
pursuant to this definition, then the Fixed Charge Coverage Ratio shall be
calculated giving PRO FORMA effect thereto for such period as if such
Investment, acquisition, disposition, merger or consolidation or discontinued
operations had occurred at the beginning of the applicable four-quarter period.
For purposes of this definition, whenever PRO FORMA effect is to be given to a
transaction, the PRO FORMA calculations shall be made in good faith by a
responsible financial or accounting officer of the Company. If any Indebtedness
to which PRO FORMA effect is given bears interest at a floating rate, the
interest expense on such Indebtedness shall be calculated as if the
<PAGE> 20
12
rate in effect on the Calculation Date had been the applicable interest rate
for the entire period (taking into account any Interest Rate Agreement in effect
on the Calculation Date). Interest on a Capital Lease Obligation shall be deemed
to accrue at an interest rate reasonably determined by a responsible financial
or accounting officer of the Company to be the rate of interest implicit in such
Capital Lease Obligation in accordance with GAAP. Interest on Indebtedness that
may optionally be determined at an interest rate based upon a factor of a prime
or similar rate, a eurocurrency interbank offered rate, or other rate, shall be
deemed to have been based upon the rate actually chosen, or, if none, then based
upon such optional rate chosen as the Company may designate.
"Foreign Subsidiary" means any Subsidiary of the Company
formed under the laws of any jurisdiction other than the United States or any
political subdivision thereof substantially all of the assets of which are
located outside of the United States or that conducts substantially all of its
business outside of the United States.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time, including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession. All ratios and computations based on GAAP
contained in this Indenture shall be computed in conformity with GAAP as in
effect as of the Closing Date.
"Global Security" means a Security that is in the form of
Exhibit A, Exhibit B or Exhibit C hereto that includes the Global Securities
Legend therein.
"Global Securities Legend" means the legend set forth in the
first paragraph of Exhibit A hereto.
"Government Notes" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"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 letters of credit and reimbursement
<PAGE> 21
13
agreements in respect thereof), of all or any part of any Indebtedness.
"Guarantors" means the Initial Guarantors and any other
Restricted Subsidiary of the Company that executes a supplemental indenture
pursuant to Section 4.12, and their respective successors and assigns, in each
case until released from its Security Guarantee in accordance with the terms of
this Indenture.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under Interest Rate Agreements, Currency Agreements
or Commodity Hedging Agreements.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holding" means Werner Holding Co. (PA), Inc.
"Incur", "Incurring" and "Incurred" means to, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise become directly
or indirectly liable, contingently or otherwise; PROVIDED, HOWEVER, that any
Indebtedness or Capital Stock of a Person existing at the time such Person
becomes a subsidiary (whether by merger, consolidation, acquisition or
otherwise) shall be deemed to be incurred by such Subsidiary at the time it
becomes a Subsidiary.
"Indebtedness" means, with respect to any Person (without
duplication), (i) any indebtedness of such Person, whether or not contingent, in
respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease Obligations or
the balance deferred and unpaid of the purchase price of any property, which
purchase price is due more than six months after the date of placing such
property in service or taking delivery thereof, or representing any 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, (ii) all
indebtedness under clause (i) of other Persons secured by a Lien on any asset of
such Person (whether or not such indebtedness is assumed by such Person) and
(iii) to the extent not otherwise included, the
<PAGE> 22
14
Guarantee by such Person of any indebtedness under clause (i) of any other
Person; PROVIDED, HOWEVER, that Indebtedness shall not include (a) any servicing
or guarantee of servicing obligations with respect to Receivables, (b)
obligations of the Company or any of its Restricted Subsidiaries arising from
agreements of the Company or a Restricted Subsidiary providing for
indemnification, adjustment of purchase price or similar obligations, in each
case, Incurred or assumed in connection with the disposition of any business,
assets or a Subsidiary, other than Guarantees of Indebtedness Incurred by any
Person acquiring all or any portion of such business, assets or a Subsidiary for
the purpose of financing such acquisition; PROVIDED, HOWEVER, that (x) such
obligations are not reflected on the balance sheet of the Company or any
Restricted Subsidiary (contingent obligations referred to in a footnote to
financial statements and not otherwise reflected on the balance sheet will not
be deemed to be reflected on such balance sheet for purposes of this clause (x))
and (y) the maximum assumable liability in respect of all such obligations shall
at no time exceed the gross proceeds including noncash proceeds (the fair market
value of such noncash proceeds being measured at the time received and without
giving effect to any subsequent changes in value) actually received by the
Company and its Restricted Subsidiaries in connection with such disposition; or
(c) obligations in respect of performance and surety bonds and completion
guarantees provided by the Company or any Restricted Subsidiary in the ordinary
course of business. The amount of any Indebtedness outstanding as of any date
shall be (i) the accreted value thereof, in the case of any Indebtedness that
does not require current payments of interest, and (ii) the principal amount
thereof in the case of any other Indebtedness.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Initial Control Group" means Investcorp, its Affiliates,
members of the Management Group, the investors who are the initial holders of
the Capital Stock of Holding following the Recapitalization, any Person acting
in the capacity of an underwriter or initial purchaser in connection with a
public or private offering of the Company's or Holding's Capital Stock, any
employee benefit plan of Holding, the Company or any of its Subsidiaries or any
participant therein, a trustee or other fiduciary holding securities under any
such employee benefit plan or any Permitted Transferee of any of the foregoing
Persons.
<PAGE> 23
15
"Initial Purchasers" means Chase Securities Inc., Donaldson
Lufkin & Jenrette Securities Corporation and Goldman, Sachs & Co.
"Insurance Subsidiary" means MIICA and its Subsidiaries that
are engaged in the insurance business or any business incidental thereto.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, repurchase agreement, futures contract
or other financial agreement or arrangement designed to protect the Company or
any Subsidiary against fluctuations in interest rates.
"Investcorp" means certain affiliates of INVESTCORP S.A.
"Investment Grade Securities" means (i) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof (other than Cash Equivalents), (ii) debt
securities or debt instruments with a rating of BBB- or higher by S&P or Baa3 or
higher by Moody's or the equivalent of such rating by such rating organization,
or, if no rating of S&P or Moody's then exists, the equivalent of such rating by
any other nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among the Company and
its Subsidiaries, and (iii) investments in any fund that invests exclusively in
investments of the type described in clauses (i) and (ii) which fund may also
hold immaterial amounts of cash pending investment and/or distribution.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including Guarantees of Indebtedness or other
obligations, but excluding advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of such
Person), advances or capital contributions (excluding commission, travel,
payroll, entertainment, relocation and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company such that, after
giving effect to any such sale or
<PAGE> 24
16
disposition, such Person is no longer a Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of Section 4.04.
"Investors" shall mean Investcorp and certain other
international investors organized by Investcorp.
"Issue Date" means the date on which any Initial Securities
are originally issued.
"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 or any
lease in the nature thereof); PROVIDED that in no event shall an operating lease
be deemed to constitute a Lien.
"Liquidated Damages" shall have the meaning set forth in a
Registration Rights Agreement.
"Management Group" means the senior management of the Company
or the Restricted Subsidiaries of the Company.
"MIICA" means Manufacturers Indemnity and Insurance Company of
America or any successor thereto.
"New Credit Facility" means the Credit Agreement dated as of
November 24, 1997, among the Company and the financial institutions named
therein, and any related notes, collateral documents, letters of credit and
Guarantees, including any appendices, exhibits or schedules to any of the
foregoing (as the same may be in effect from time to time), in each case, as
such agreements may be amended, modified, supplemented or restated from time to
time, or refunded, refinanced, restructured, replaced, renewed, repaid or
extended from time to time (whether with the original agents and lenders or
other agents or lenders or otherwise, and whether provided under the original
credit agreement or other credit agreements or otherwise).
"Net Income" means, with respect to any Person and any period,
the net income (or loss) of such Person for such period, determined in
accordance with GAAP and before any reduction in respect of Preferred Stock
dividends, excluding, however, (i) any extraordinary or non-recurring gains
<PAGE> 25
17
or losses or charges and gains or losses or charges from the sale of assets
outside the ordinary course of business, together with any related provision for
taxes on such gain or loss or charges and (ii) deferred financing costs written
off in connection with the early extinguishment of Indebtedness; PROVIDED,
HOWEVER, that Net Income shall be deemed to include any increases during such
period to shareholder's equity of such Person attributable to tax benefits from
net operating losses and the exercise of stock options that are not otherwise
included in Net Income for such period.
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale (including legal, accounting and investment banking fees, and
brokerage and sales commissions) and any relocation expenses Incurred as a
result thereof, taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), amounts applied to the repayment of principal, premium (if any)
and interest on Indebtedness that is not subordinated to the Securities required
(other than required by clause (a) of the second paragraph of Section 4.06) to
be paid as a result of such transaction, all distributions and other payments
required to be made to minority interest holders in Subsidiaries or joint
ventures as a result of such Asset Sale, and any deduction of appropriate
amounts to be provided by the Company as a reserve in accordance with GAAP
against any liabilities associated with the asset disposed of in such
transaction and retained by the Company after such sale or other disposition
thereof, including pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with such transaction.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any of its Restricted Subsidiaries (a) provides credit support
of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor
or otherwise); and (ii) no default with respect to which (including any rights
that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness (other than the Securities being offered
hereby) of the Company or
<PAGE> 26
18
any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries; PROVIDED that, notwithstanding
the foregoing, the Company and any of its other Subsidiaries that sell
Receivables to the Person Incurring such Indebtedness shall be allowed to
provide such representations, warranties, covenants and indemnities as are
customarily required in such transactions so long as no such representations,
warranties, covenants or indemnities constitute a Guarantee of payment or
recourse against credit losses.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages, Guarantees and other liabilities
payable under the documentation governing any Indebtedness, in each case
whether now or hereafter existing, renewed or restructured, whether or not from
time to time decreased or extinguished and later increased, created or Incurred,
whether or not arising on or after the commencement of a proceeding under Title
11, U.S. Code or any similar federal or state law for the relief of debtors
(including post-petition interest) and whether or not allowed or allowable as a
claim in any such proceeding.
"Offering Memorandum" shall mean the offering memorandum dated
November 14, 1997, relating to the sale of $135,000,000 aggregate principal
amount of the Initial Securities.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary, or any Assistant Secretary of
the Company.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee.
"Pari Passu Indebtedness" means any Indebtedness of the
Company or any Guarantor that ranks PARI PASSU with the Securities or the
Security Guarantee of such Guarantor, as applicable.
<PAGE> 27
19
"Payment" means, with respect to the Securities, any payment,
whether in cash or other assets or property, of interest, principal (including
redemption price and purchase price), premium, Liquidated Damages or any other
amount on, of or in respect of the Securities, any other acquisition of
Securities and any deposit into the trust described in Article VIII. The verb
"pay" has a correlative meaning.
"Permitted Business" means the climbing equipment, extruded
products and fabricated products businesses and any other business reasonably
related, complementary or incidental to any of those businesses (including any
related insurance business).
"Permitted Insurance Company Investments" means Investments in
(a) Cash Equivalents; (b) Investment Grade Securities; and (c) other types of
debt and equity securities, real estate or other Investments; PROVIDED,
HOWEVER, that (i) the aggregate amount of all Permitted Insurance Company
Investments referred to in clause (c) shall not, at the time any such Investment
is made, exceed 40% of all outstanding Permitted Insurance Company Investments,
and (ii) MIICA shall at all times have an investment policy approved from time
to time by the Board of Directors of the Company or MIICA pursuant to which all
Permitted Insurance Company Investments shall be required to be made.
"Permitted Investments" means (a) any Investment in the
Company or in a Restricted Subsidiary (including in any Equity Interests of a
Restricted Subsidiary); (b) any Investment in Cash Equivalents or Investment
Grade Securities; (c) any Investment 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 Restricted Subsidiary or (ii) such Person, in one transaction or a
series of substantially concurrent related transactions, is merged, consolidated
or amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary; (d)
any securities received or other Investments made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.06 or in connection with any other disposition of
assets not constituting an Asset Sale; (e) any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock) of
the Company or Holding; (f) any Investments relating to a Receivables
Subsidiary; (g) loans or advances to employees (or guarantees of third party
loans to employees) in the ordinary course of business; (h) stock,
<PAGE> 28
20
obligations or securities received in satisfaction of judgments or settlement of
debts; (i) receivables owing to the Company or any Restricted Subsidiary, if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms (including such
concessionary terms as the Company or such Restricted Subsidiary deems
reasonable); (j) any Investment existing on the Closing Date; (k) Investments in
Interest Rate Agreements, Currency Agreements and Commodity Hedging Agreements
otherwise permitted under this Indenture; (l) any transaction to the extent it
constitutes an Investment that is permitted and made in accordance with Section
4.07(b)(13); (m) any Investment in a Permitted Business having an aggregate fair
market value, taken together with all other Investments made pursuant to this
clause (m) that are at that time outstanding, not to exceed 15.0% 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); (n) Permitted Insurance Company Investments; and
(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 10.0% 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).
"Permitted Junior Securities" shall mean debt or equity
securities of the Company, any Guarantor or any successor corporation to the
Company or such Guarantor issued pursuant to a plan of reorganization or
readjustment of the Company or such Guarantor that are subordinated to the
payment of all then outstanding Senior Indebtedness of the Company or such
Guarantor, as applicable, at least to the same extent that (i), in the case of
the Company, the Securities are subordinated to the payment of all Senior
Indebtedness of the Company on the Closing Date, and (ii) in the case of such
Guarantor, that the Security Guarantee of such Guarantor is subordinated to the
payment of Senior Indebtedness of such Guarantor on the Closing Date, so long as
(i) the effect of the use of this defined term in Article X and XII is not to
cause the Securities or the Security Guarantee, as applicable, to be treated as
part of (a) the same class of claims as the Senior Indebtedness of the Company
or such Guarantor, as applicable, or (b) any class of claims PARI PASSU with, or
senior to, the Senior Indebtedness of the Company or such Guarantor, as
applicable, for any payment or distribution in any case or proceeding or similar
event relating to the liquidation,
<PAGE> 29
21
insolvency, bankruptcy, dissolution, winding up or reorganization of the Company
or such Guarantor and (ii) to the extent that any Senior Indebtedness of the
Company or such Guarantor, as applicable, outstanding on the date of
consummation of any such plan of reorganization or readjustment are not paid in
full in cash on such date, either (a) the holders of any such Senior
Indebtedness not so paid in full in cash have consented to the terms of such
plan of reorganization or readjustment or (b) such holders receive securities
which constitute Senior Indebtedness of the Company or such Guarantor, as
applicable, and which have been determined by the relevant court to constitute
satisfaction in full in money or money's worth of any Senior Indebtedness of the
Company or such Guarantor, as applicable, not paid in full in cash.
"Permitted Liens" means (i) Liens securing Senior Indebtedness
of the Company or a Restricted Subsidiary that was permitted by the terms of
this Indenture to be Incurred; (ii) Liens in favor of the Company or any
Restricted Subsidiary; (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 a Restricted Subsidiary, as the case may be; (iv) Liens on property
existing at the time of acquisition thereof by the Company or any Restricted
Subsidiary of the Company, PROVIDED that such Liens were in existence prior to
the contemplation of such acquisition and do not extend to any assets other than
those acquired; (v) Liens to secure the performance of bids, tenders, trade or
government contracts (other than for borrowed money), leases, licenses,
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature Incurred in the ordinary course of business; (vi)
without limitation of clause (i), Liens to secure Indebtedness (including
Capital Lease Obligations) permitted by Section 4.03(b)(iv) covering only the
assets acquired with such Indebtedness; (vii) Liens existing on the Closing
Date; (viii) 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, PROVIDED that any reserve or other appropriate provision as shall
be required in conformity with GAAP shall have been made therefor; (ix) Liens on
Receivables to reflect sales of Receivables to and by a Receivables Subsidiary
pursuant to a Receivables Facility or securing Indebtedness permitted by Section
4.03(b)(ix); (x), Liens Incurred in the ordinary
<PAGE> 30
22
course of business of the Company or any Restricted Subsidiary of the Company
with respect to obligations that do not exceed $5.0 million 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 Restricted Subsidiary; (xi)
carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business in respect of
obligations that are not yet due or that are bonded or that are being contested
in good faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of the Company or such Restricted
Subsidiary, as the case may be, in accordance with GAAP; (xii) pledges or
deposits in connection with workmen's compensation, unemployment insurance and
other social security legislation; (xiii) easements (including reciprocal
easement agreements), rights-of-way, building, zoning and similar restrictions,
utility agreements, covenants, reservations, restrictions, encroachments,
changes, and other similar encumbrances or title defects Incurred pursuant to
this Indenture, or leases or subleases granted to others, in the ordinary course
of business, that do not in the aggregate materially detract from the aggregate
value of the properties of the Company and its Subsidiaries, taken as a whole,
or in the aggregate materially interfere with or adversely affect in any
material respect the ordinary conduct of the business of the Company and its
Subsidiaries on the properties subject thereto, taken as a whole; (xiv) Liens on
goods (and the proceeds thereof) and documents of title and the property
covered thereby securing Indebtedness in respect of commercial letters of
credit; (xv) (A) mortgages, liens, security interests, restrictions,
encumbrances or any other matters of record that have been placed by any
developer, landlord or other third party on property over which the Company or
any Restricted Subsidiary of the Company has easement rights or on any real
property leased by the Company on the Closing Date and subordination or similar
agreements relating thereto and (B) any condemnation or eminent domain
proceedings affecting any real property; (xvi) leases or subleases to third
parties; (xvii) Liens in connection with workmen's compensation obligations and
general liability exposure of the Company and its Restricted Subsidiaries;
(xviii) Liens arising by reason of a judgment, decree or court order, to the
extent not otherwise resulting in an Event of Default; (xix) Liens securing
Hedging Obligations entered into in the ordinary
<PAGE> 31
23
course of business; (xx) without limitation of clause (i), Liens securing
Permitted Refinancing Indebtedness permitted to be Incurred pursuant to this
Indenture or amendments or renewals of Liens that were permitted to be Incurred
pursuant to this Indenture, PROVIDED, in each case, that such Liens do not
extend to an additional property or asset; and (xxi) Liens that secure
Indebtedness of a Person existing at the time such Person becomes a Restricted
Subsidiary of the Company, PROVIDED that such Liens do not extend to any assets
other than those of the Person that became a Restricted Subsidiary of the
Company.
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
Incurred in compliance with Section 4.03; PROVIDED that: (i) the principal
amount (or accreted value, if applicable) of such Permitted Refinancing
Indebtedness does not exceed the principal amount of (or accreted value, if
applicable), plus accrued interest on, the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of reasonable premium
and fees and expenses Incurred in connection therewith); (ii) in the case of
term Indebtedness, principal payments required under such Permitted Refinancing
Indebtedness have a Stated Maturity no earlier than the Stated Maturity of those
under the Indebtedness being refinanced and such Permitted Refinancing
Indebtedness has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Securities, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Securities on terms at least as
favorable to the Holders of Securities as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is Incurred either by the
Company or by its Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Permitted Transferee" means, with respect to any Person, (i)
any other Person, directly or indirectly, controlling or controlled by or under
direct or indirect
<PAGE> 32
24
common control with such specified Person, (ii) the spouse, former spouse,
lineal descendants, heirs, executors, administrators, testamentary trustees,
legatees or beneficiaries of any such Person, (iii) a trust, the beneficiaries
of which, or a corporation or partnership or limited liability company, the
stockholders, general or limited partners or members of which, include only such
Person or his or her spouse, lineal descendants or heirs, in each case to whom
such Person has transferred the beneficial ownership of any securities of the
Company or Holding and (iv) any investment fund or investment entity that is a
subsidiary of such Person or a Permitted Transferee of such Person.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
that is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security that is due or overdue or is
to become due at the relevant time.
"Private Exchange" shall have the meaning set forth in a
Registration Rights Agreement.
"Private Exchange Securities" means Securities of the Company
to be delivered in a Private Exchange pursuant to a Registration Rights
Agreement.
"Purchase Agreement" means (i) with respect to the Initial
Securities issued on the date hereof, the Purchase Agreement dated November 14,
1997, for the purchase of $135,000,000 principal amount of Initial Securities
among the Company, the Initial Guarantors and the Initial Purchasers as such
agreement may be amended, modified, or supplemented from time to time in
accordance with the terms thereof and (ii) with respect to any Additional
Securities, any purchase or underwriting agreement entered into by the Company,
any Guarantors and the initial purchasers or underwriters with respect thereto,
as such agreement may be
<PAGE> 33
25
amended, modified or supplemented from time to time in accordance with the terms
thereof.
"Recapitalization" shall mean the recapitalization of Holding
pursuant to the Recapitalization Agreement.
"Recapitalization Agreement" shall mean that certain
Recapitalization Agreement by and between Holding and the Investors, dated
October 8, 1997, as amended and restated on October 27, 1997.
"Receivables" means, collectively, (a) the Indebtedness and
other obligations owed to the Company or any of its Subsidiaries (before giving
effect to any sale or transfer thereof pursuant to a Receivables Facility),
whether constituting an account, chattel paper, an instrument, a document or
general intangible, arising in connection with the sale of goods, insurance
and/or services by the Company or such Subsidiary, including the obligation to
pay any late fees, interest or other finance charges with respect thereto (each
of the foregoing, collectively, an "Account Receivable"), (b) all of the
Company's or such Subsidiary's interest in the goods (including returned goods),
if any, the sale of which gave rise to any Account Receivable, and all insurance
contracts with respect thereto, (c) all other security interests or Liens and
property subject thereto from time to time, if any, purporting to secure payment
of any Account Receivable, together with all financing statements and security
agreements describing any collateral securing such Account Receivable, (d) all
Guarantees, insurance and other agreements or arrangements of whatever character
from time to time supporting or securing payment of any Account Receivable,
(e) all contracts, invoices, books and records of any kind related to any
Account Receivable, (f) all cash collections in respect of, and cash proceeds
of, any of the foregoing and any and all lockboxes, lockbox accounts, collection
accounts, concentration accounts and similar accounts in or into which such
collections and cash proceeds are now or hereafter deposited, collected or
concentrated, and (g) all proceeds of any of the foregoing.
"Receivables Facility" means, with respect to any Person, any
Receivables securitization or factoring program pursuant to which such Person
receives proceeds pursuant to a sale, pledge or other encumbrance of its
Receivables. A Receivables Facility involving the sale, pledge or other
encumbrance of Receivables of, and the direct or indirect receipt of the
proceeds thereof by, the Company or any Restricted Subsidiary thereof shall
constitute a Receivables
<PAGE> 34
26
Facility of the "Company" and/or its "Restricted Subsidiaries" whether or not as
part of such securitization or factoring program such Receivables are initially
contributed or otherwise transferred to an Unrestricted Subsidiary of the
Company (and then resold or encumbered by such Unrestricted Subsidiary).
"Receivables Financing Amount" means at any date, with respect
to any Receivables Facility of any Person that does not represent an Incurrence
of Indebtedness, the sum on such date of (a) the aggregate uncollected balances
of Accounts Receivable (as defined in the definition of "Receivables")
transferred ("Transferred Receivables") in such Receivables Facility plus (b)
the aggregate amount of all collections of Transferred Receivables theretofore
received by such Person but not yet remitted to the purchaser, net of all
reserves and holdbacks retained by or for the benefit of the purchaser and net
of any interest retained by such Person and reasonable costs and expenses
(including fees and commissions and taxes other than income taxes) Incurred by
such Person in connection therewith and not payable to any Affiliate of such
Person.
"Receivables Subsidiary" means any Subsidiary created
primarily to purchase or finance the receivables of the Company and/or its
Subsidiaries pursuant to a Receivables Facility, so long as it: (a) has no
Indebtedness other than Non-Recourse Debt and (b) is a Person with respect to
which neither the Company nor any of its other Subsidiaries has any direct
obligation to maintain or preserve such Person's financial condition or to cause
such Person to achieve any specified levels of operating results other than to
act as servicer of Receivables. If, at any time, such Receivables Subsidiary
would fail to meet the foregoing requirements as a Receivables Subsidiary, it
shall thereafter cease to be a Receivables Subsidiary for purposes of this
Indenture and any Indebtedness of such Receivables Subsidiary shall be deemed to
be Incurred by a Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be Incurred as of such date under Section 4.03,
the Company shall be in default of such covenant).
"Registration Rights Agreement" means (i) with respect to the
Initial Securities issued on the date hereof, the Registration Rights Agreement
dated November 24, 1997, among the Company, the Initial Guarantors and the
Initial Purchasers, as such agreement may be amended, modified, or supplemented
from time to time in accordance with the terms thereof and (ii) with respect to
any Additional Securities,
<PAGE> 35
27
any registration rights agreement entered into among the Company, any Guarantors
and the relevant initial purchasers or underwriters, as the same may be amended,
modified or supplemented from time to time in accordance with the terms thereof.
"Registered Exchange Offer" shall mean an offer made by the
Company pursuant to a Registration Rights Agreement and under an effective
registration statement under the Securities Act to exchange Exchange Securities
for outstanding Initial Securities substantially identical in all material
respects to such Initial Securities (except for the differences provided for
therein) .
"Representative" means any agent or representative in respect
of any Designated Senior Debt; provided 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 holder of a
majority in outstanding principal amount of such Designated Senior Debt.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Securities Legend" means the legend set forth in
the second and third paragraphs of Exhibit A hereto.
"Restricted Subsidiary" of a Person means any Subsidiary of
the referent Person that is not an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company
or any Guarantor secured by a Lien.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities" has the meaning stated in the recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture. For all purposes of this Indenture, the term "Securities"
shall include any Exchange Securities and any Private Exchange Securities to be
issued and exchanged for any Initial Securities pursuant to a Registration
Rights Agreement and this Indenture. From and after the issuance of any
<PAGE> 36
28
Additional Securities (but not for purposes of determining whether such issuance
is permitted hereunder), "Securities" shall include such Additional Securities
for purposes of this Indenture and all Exchange Securities and Private Exchange
Securities from time to time issued with respect to any Initial Securities that
constitute such Additional Securities. All Securities, including any such
Additional Securities, shall vote together as one series of Securities under
this Indenture.
"Securities Custodian" or "Custodian" means the custodian with
respect to any Global Security (as appointed by the Depository), or any
successor entity thereto covered in 2.03.
"Security Guarantee" shall mean any Guarantee of the
Securities by any Guarantor pursuant to Article XI.
"Senior Indebtedness" means (i) all Indebtedness of the
Company or any Guarantor outstanding under the New Credit Facility and all
Hedging Obligations with respect thereto, (ii) any other Indebtedness (including
Acquired Debt) permitted to be Incurred by the Company or any Guarantor pursuant
to Section 4.03, unless the instrument under which such Indebtedness is Incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Securities or the relevant Security Guarantee and (iii) all
Obligations with respect to the foregoing. Notwithstanding anything to the
contrary in the foregoing, Senior Indebtedness will not include (v) any
liability for federal, state, local or other taxes owed or owing by the Company,
(w) any Indebtedness of the Company or any Guarantor to any of its Subsidiaries
or other Affiliates (other than Indebtedness under any Credit Facility to any
such Affiliate), (x) any trade payables, (y) that portion of Indebtedness
Incurred in violation of Section 4.03 (but as to any such Indebtedness under any
Credit Facility, no such violation shall be deemed to exist for purposes of this
clause (y) if the lenders have obtained a representation from a financial
Officer of the Company to the effect that the issuance of such Indebtedness does
not violate such covenant) or (z) any Indebtedness or obligation of the Company
or any Guarantor which is expressly subordinated in right of payment to any
other Indebtedness or obligation of the Company or such Guarantor, as
applicable, including any Subordinated Indebtedness.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article I, Rule 1-02 of Regulation S-X,
promulgated pursuant to the
<PAGE> 37
29
Securities Act, as such regulation is in effect on the Closing Date.
"Specified Affiliate Payments" means: (i) the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of the Company or any Restricted Subsidiary of the Company, or amounts paid to
Holding on account of any such acquisition or retirement for value of any Equity
Interests of Holding, held by any future, present or former employee, director,
officer or consultant of Holding or the Company (or any of its Restricted
Subsidiaries) pursuant to any management equity subscription agreement, stock
option agreement, put agreement, stockholder agreement or similar agreement that
may be in effect from time to time; PROVIDED that the aggregate price paid for
all such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $3.0 million in any calendar year (with unused amounts in any calendar
year being carried over to succeeding calendar years subject to a maximum amount
of repurchases, redemptions or other acquisitions pursuant to this clause
(i) (without giving effect to the immediately following proviso) of $10.0
million in any calendar year) and no payment default on Senior Indebtedness or
the Securities shall have occurred and be continuing; PROVIDED FURTHER that such
amount in any calendar year may be increased by an amount not to exceed (A) the
cash proceeds received by the Company (including by way of capital contribution)
since the Closing Date from the sale of Equity Interests of Holding or the
Company to employees, directors, officers or consultants of Holding, the Company
or their respective Subsidiaries that occurs in such calendar year (it being
understood that such cash proceeds shall be included in Section 4.04(a)(3)(ii))
plus (B) the cash proceeds from key man life insurance policies received by the
Company and its Restricted Subsidiaries in such calendar year (including
proceeds from the sale of such policies to the person insured thereby); and
PROVIDED FURTHER that cancelation of Indebtedness owing to the Company from
employees, directors, officers or consultants of the Company or any of its
Subsidiaries in connection with a repurchase of Equity Interests of the Company
will not be deemed to constitute a Restricted Payment; (ii) repurchases of
Equity Interests deemed to occur upon exercise of stock options or warrants as a
result of the payment of all or a portion of the exercise price of such options
or warrants with Equity Interests; (iii) payments by the Company or Holding to
members of management of the Company and its Subsidiaries in connection with the
Recapitalization to the extent disclosed in the Offering Memorandum;
(iv) payments or other transactions permitted under Section 4.07(b)(8) and (11);
<PAGE> 38
30
and (v) dividends, other distributions or other amounts paid by the Company to
Holding (A) in amounts equal to amounts required for Holding to pay franchise
taxes and other expenses required to maintain its corporate existence and
provide for other operating costs of up to $750,000 per fiscal year or (B) to
pay, or reimburse Holding for, the costs, fees and expenses incident to a
registration of any of the Capital Stock of Holding for a primary offering under
the Securities Act, so long as the net proceeds (after payments of additional
contingent amounts then due and payable pursuant to Section 1.1(b) of the
Recapitalization Agreement) of such offering (if it is completed) are
contributed to, or otherwise used for the benefit of, the Company.
"Stated Maturity" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the date
scheduled for the payment thereof.
"Subordinated Indebtedness" means any Indebtedness of the
Company or any Guarantor (whether outstanding on the Closing Date or thereafter
Incurred) that is subordinate or junior in right of payment to the Securities or
the applicable Security Guarantee pursuant to written agreement.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantors" means any Subsidiary of the Company
which Guarantees the Securities pursuant to Article XI.
<PAGE> 39
31
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of this Indenture.
"Total Assets" means, at any time, the total consolidated
assets of the Company and its Restricted Subsidiaries at such time. For the
purposes of Section 4.03(b)(iv), Total Assets shall be determined giving PRO
FORMA effect to the lease, acquisition, construction or improvement of the
assets being leased, acquired, constructed or improved with the proceeds of the
relevant Indebtedness.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the Restricted Securities Legend.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two Business Days prior
to the redemption date (or, if such Statistical Release is no longer published,
any publicly available source or similar market data)) most nearly equal to the
period from the redemption date to November 15, 2002, PROVIDED, HOWEVER, that if
the period from the redemption date to November 15, 2002 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the redemption date to November 15, 2002
is less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
<PAGE> 40
32
"Unrestricted Subsidiary" means (i) any Receivables Subsidiary
in existence on the Closing Date, (ii) any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution,
and (iii) any Subsidiary of an Unrestricted Subsidiary; but in the case of any
Subsidiary referred to in clause (ii) (or any Subsidiary of any such Subsidiary)
only to the extent that such Subsidiary: (a) except in the case of a Foreign
Subsidiary, has no Indebtedness other than Non-Recourse Debt; (b) is not party
to any agreement, contract, arrangement or understanding with the Company or any
Restricted Subsidiary of the Company unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to the Company or
such Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; (c) except in the case of a
Foreign Subsidiary, is a Person with respect to which neither the Company nor
any of its Restricted Subsidiaries has any direct or indirect obligation (x) to
subscribe for additional Equity Interests or (y) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any specified
levels of operating results; and (d) has not Guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or any of
its Restricted Subsidiaries. Any such designation by the Board of Directors
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions and was permitted by Section 4.04. If, at any time, any Unrestricted
Subsidiary referred to in clause (ii) of the first sentence of this definition
(or any Subsidiary thereof) would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be Incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
Incurred as of such date under Section 4.03, the Company shall be in default of
such covenant). The Board of Directors of the Company may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED that such
designation shall be deemed to be an Incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under Section 4.03, calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference
<PAGE> 41
33
period, and (ii) no Default or Event of Default would be in existence following
such designation.
"U.S. Government Obligations"" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the Company's option.
"Voting Stock" of any Person as of any date means the Capital
Stock of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding 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 (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
---- ----------
"Accredited Investors" .... 2.01(b)
"Affiliate Transaction" ... 4.07
"Asset Sale Offer" ........ 4.06
"Agent Members" ........... 2.13(a)
"automatic stay" .......... 8.02(f)
"Bankruptcy Law" .......... 6.01
"Blockage Notice" ......... 10.03
"Change of Control Offer" . 3.09(a)
"Change of Control Payment" 4.08(a)
"Covenant Defeasance" ..... 8.01(c)
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"covenant defeasance option" ....... 8.01(b)
"CUSIP" ............................ 2.12
"Custodian" ........................ 6.01
"estate" ........................... 8.02(f)
"Event of Default" ................. 6.01
"Excess Proceeds" .................. 4.06
"Excess Proceeds Offer" ............ 3.09(a)
"Guaranteed Obligations" ........... 11.01
"Guarantor payment default" ........ 12.03
"Guarantor non-payment default" .... 12.03
"Guarantor Payment Blockage Notice" 12.03
"IAI" .............................. 2.01(b)
"IAI Global Security" .............. 2.01(b)
"Indemnified Party" ................ 7.07
"Legal Defeasance" ................. 8.01(b)
"legal defeasance option" .......... 8.01(b)
"Legal Holiday" .................... 13.08
"non-payment default" .............. 10.03
"Notice of Default" ................ 6.01
"Offer" ............................ 4.06
"Offer Amount" ..................... 3.09(a)
"Offer Period" ..................... 3.09(a)
"Offshore Securities Exchange Date" 2.01(c)
"Option of Holder to Elect Purchase" 3.09
"outstanding" ...................... 8.01(b)
"pay the Securities" ............... 10.03
"Paying Agent" ..................... 2.03
"Payment Blockage Notice" .......... 10.03
"Payment Blockage Period" .......... 10.03
"payment default" .................. 10.03
"Permitted Indebtedness" ........... 4.03(b)
"Physical Securities" .............. 2.01(c)
"protected purchaser" .............. 2.07
"Purchase Date" .................... 3.09(a)
"QIB" .............................. 2.01(b)
"QIB Global Security" .............. 2.01(b)
"qualified institutional buyers" ... 2.01(b)
"Registrar" ........................ 2.03
"Regulation S" ..................... 2.01(b)
"Regulation S Global Security" ..... 2.01(b)
"Repurchase Offer" ................. 3.09(a)
"Restricted Payments" .............. 4.04(a)
"Rule 144A" ........................ 2.01(b)
"Specified Affiliate Payments" ..... 4.04(a)
"Successor Company" ................ 5.01
"Trustee" .......................... 8.03
"U.S. Global Securities" ........... 2.01(b)
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST
INDENTURE ACT. This Indenture is subject to the mandatory
<PAGE> 43
35
provisions of the TIA, which are incorporated by reference in and made a part of
this Indenture. The following TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Security holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.04. RULES OF CONSTRUCTION. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the Company dated such date
prepared in accordance with GAAP and accretion of principal on
<PAGE> 44
36
such security shall be deemed to be the Incurrence of
Indebtedness; and
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with
respect to such Preferred Stock, whichever is greater.
ARTICLE II
The Securities
--------------
SECTION 2.01. FORM AND DATING. (a) The Initial Securities
issued on the date hereof and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A, which is hereby incorporated in and
expressly made a part of this Indenture, and as otherwise provided in this
Article II. Any Exchange Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit B, which is hereby
incorporated in and expressly made a part of this Indenture, and as otherwise
provided in this Article II. Any Private Exchange Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit C,
which is hereby incorporated in and expressly made a part of this Indenture, and
as otherwise provided in this Article II. Any Additional Securities shall be
issued in the form of either (i) Exhibit A, if such Security is a Transfer
Restricted Security, or (ii) Exhibit B, if such Security is not a Transfer
Restricted Security. The Securities may have notations, legends or endorsements
required by law, stock exchange rule, agreements to which the Company or any
Guarantor is subject, if any, or usage (provided that any such notation, legend
or endorsement is in a form acceptable to the Company). Each Security shall be
dated the date of its authentication. The terms of the Securities set forth in
Exhibit A, Exhibit B and Exhibit C are part of the terms of this Indenture. The
Securities shall be issuable only in registered form without coupons and only in
denominations of $1,000 and integral multiples thereof.
(b) The Initial Securities issued on the date hereof are being
offered and sold by the Company pursuant to the Purchase Agreement. The Initial
Securities will be offered and sold by the Initial Purchasers only (i) to
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act ("Rule 144A")) ("QIBs") and (ii) in
<PAGE> 45
37
reliance on Regulation S under the Securities Act ("Regulation S"). Initial
Securities in the form of Additional Securities may be issued and sold as
provided in the related Purchase Agreement. After such initial offers and sales,
Initial Securities that are Transfer Restricted Securities may be transferred
to, among others, QIBS, in reliance on Regulation S and to institutional
"Accredited Investors" (within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act) ("IAIs") in accordance with certain transfer
restrictions. Initial Securities that are Transfer Restricted Securities shall
be issued initially in the form of several permanent Global Securities (with
separate CUSIP numbers) substantially in the form set forth in Exhibit A
deposited with the Trustee, as Securities Custodian, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. One or more
such Global Securities shall represent the Initial Securities sold to QIBs
(collectively, the "QIB Global Security"). One or more such Global Securities
shall represent the Initial Securities sold pursuant to Regulation S
(collectively, the "Regulation S Global Security"). One or more such Global
Securities shall represent any Initial Securities issued or subsequently
transferred to IAIs (collectively, the "IAI Global Security" and, together with
the QIB Global Security, the "U.S. Global Securities"). The aggregate principal
amount of each Global Security may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as Securities Custodian.
Transfers of Initial Securities between QIBs and IAIs and to or by purchasers
pursuant to Regulation S shall be represented by appropriate increases and
decreases to the respective amounts of the appropriate Global Securities, as
more fully provided in Section 2.14.
(c) Except as otherwise provided in the related Purchase
Agreement, Initial Securities offered and sold other than as described in the
preceding two paragraphs, if any, shall be issued in the form of permanent
certificated Securities in registered form in substantially the form set forth
in Exhibit A attached hereto without the Global Securities Legend (the "Physical
Securities").
SECTION 2.02. EXECUTION AND AUTHENTICATION. One or more
Officers of the Company shall sign the Securities by manual or facsimile
signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
<PAGE> 46
38
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate and make available for delivery
upon a written order of the Company signed by two of its Officers (1) Initial
Securities for original issue on the date hereof in an aggregate principal
amount of $135,000,000, (2) subject to Section 4.03, Additional Securities in an
aggregate principal amount of up to $135,000,000 and (3) (A) Exchange Securities
for issue only in a Registered Exchange Offer, and (B) Private Exchange
Securities for issue only in a Private Exchange, in the case of each of (A) and
(B) pursuant to a Registration Rights Agreement and for Initial Securities for a
like principal amount of Initial Securities exchanged pursuant thereto. Such
order shall specify the amount of the Securities to be authenticated, the date
on which the original issue of Securities is to be authenticated and whether the
Securities are to be Initial Securities, Additional Securities, Exchange
Securities or Private Exchange Securities. The aggregate principal amount of
Securities outstanding at any time may not exceed $270,000,000 except as
provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Any such appointment
shall be evidenced by an instrument signed by a Trust Officer of the Trustee, a
copy of which shall be furnished to the Company. Unless limited by the terms of
such appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. After any such appointment, each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as any Registrar, Paying
Agent or agent for service of notices and demands.
SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
<PAGE> 47
39
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such
and shall be entitled to appropriate compensation therefor pursuant to Section
7.07. Either the Company or any domestically organized Wholly Owned Restricted
Subsidiary may act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
The Company initially appoints The Depository Trust Company to
act as Depository with respect to the Global Securities, and the Trustee shall
initially be the Securities Custodian with respect to the Global Securities.
The Company may remove any Registrar or Paying Agent upon
written notice to such Registrar or Paying Agent and to the Trustee, PROVIDED
that no such removal shall become effective until (1) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by the Company and such successor Registrar or Paying Agent, as the case may be,
and delivered to the Trustee or (2) notification to the Trustee that the Trustee
shall serve as Registrar or Paying Agent until the appointment of a successor in
accordance with clause (1) above. The Registrar or Paying Agent may resign at
any time upon not less than three Business Days' prior written notice to the
Company; PROVIDED, HOWEVER, that the Trustee may resign as Paying Agent or
Registrar only if the Trustee also resigns as Trustee in accordance with Section
7.08.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. Prior to
each due date of the principal and interest on any Security, the Company shall
deposit with the Paying Agent (or if the Company or a permitted Wholly Owned
Restricted Subsidiary is acting as Paying Agent, segregate and hold in trust for
the benefit of the Persons entitled thereto) a sum sufficient to pay such
principal and interest when so becoming due. The Company shall require each
Paying Agent (other than the Trustee) to agree in writing that the Paying Agent
shall hold in trust for the benefit of Securityholders or the Trustee all money
held by the Paying
<PAGE> 48
40
Agent for the payment of principal of or interest on the Securities and shall
notify the Trustee in writing of any default by the Company in making any such
payment within one Business Day thereof. If the Company or a permitted Wholly
Owned Restricted Subsidiary acts as Paying Agent, it shall segregate the money
held by it as Paying Agent and hold it as a separate trust fund. The Company at
any time may require a Paying Agent to pay all money held by it to the Trustee
and to account for any funds disbursed by the Paying Agent. Upon complying with
this Section, the Paying Agent shall have no further liability for the money
delivered to the Trustee.
Any money deposited with any Paying Agent, or then held by the
Company or a permitted Wholly Owned Restricted Subsidiary in trust for the
payment of principal or interest on any Security and remaining unclaimed for two
years after such principal and interest has become due and payable shall be paid
to the Company at its request, or, if then held by the Company or a permitted
Wholly Owned Restricted Subsidiary, shall be discharged from such trust; and the
Securityholders shall thereafter, as general unsecured creditors, look only to
the Company for payment thereof, and all liability of the Paying Agent with
respect to such money, and all liability of the Company or such permitted Wholly
Owned Restricted Subsidiary as trustee thereof, shall thereupon cease.
SECTION 2.05. SECURITYHOLDER LISTS. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Securityholders. If the Trustee is
not the Registrar, the Company shall furnish, or cause the Registrar to furnish,
to the Trustee, in writing at least five Business Days before each interest
payment date and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Securityholders.
SECTION 2.06. TRANSFER AND EXCHANGE. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of Section 8-401 of
the Uniform Commercial Code are met. When Securities are presented to the
Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the
<PAGE> 49
41
exchange as requested if the same requirements are met. To permit registration
of transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Securities at the Registrar's or co-registrar's request. The
Company may require payment of a sum sufficient to pay all taxes, assessments or
other governmental charges in connection with any transfer or exchange pursuant
to this Section. The Company shall not be required to make, and the Registrar
need not register, transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion thereof
not to be redeemed) or transfers or exchanges of any Securities for a period of
15 days before a selection of Securities to be redeemed.
Prior to the due presentation for registration of transfer of
any Security, the Company, the Guarantors, the Trustee, the Paying Agent, the
Registrar or any co-registrar may deem and treat the Person in whose name a
Security is registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and accrued and unpaid interest and Liquidated
Damages, if any, on such Security and for all other purposes whatsoever, whether
or not such Security is overdue, and none of the Company, the Trustee, the
Paying Agent, the Registrar or any co-registrar shall be affected by notice to
the contrary.
Any Holder of a Global Security shall, by acceptance of such
Global Security, agree that transfers of beneficial interests in such Global
Security may be effected only through a book-entry system maintained by (i) the
Holder of such Global Security (or its agent) or (ii) any holder of such
beneficial interest, and that ownership of a beneficial interest in such Global
Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant
to this Section 2.06 will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
SECTION 2.07. REPLACEMENT SECURITIES. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i)
satisfies the Company or the Trustee within a reasonable time after he has
notice of
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42
such loss, destruction or wrongful taking and the Registrar does not register a
transfer prior to receiving such notification, (ii) makes such request to the
Company or the Trustee prior to the Security being acquired by a protected
purchaser as defined in Section 8-303 of the Uniform Commercial Code (a
"protected purchaser") and (iii) satisfies any other reasonable requirements of
the Trustee and the Company including evidence of the destruction, loss or theft
of the Security. If required by the Trustee or the Company, such Holder shall
furnish an indemnity bond sufficient in the judgment of the Trustee to protect
the Company, the Trustee, the Paying Agent, the Registrar and any co-registrar
from any loss that any of them may suffer if a Security is replaced. The Company
and the Trustee may charge the Holder for their expenses in replacing a Security
including the payment of a sum sufficient to cover any tax or other governmental
charge that may be required. In the event any such mutilated, lost, destroyed or
wrongfully taken Security has become or is about to become due and payable, the
Company in its discretion may pay such Security instead of issuing a new
Security in replacement thereof.
Every replacement Security is an additional obligation of the
Company.
The provisions of this Section 2.07 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.08. OUTSTANDING SECURITIES. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancelation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a protected purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, and the Paying Agent is not prohibited from
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43
paying such money to the Securityholders on that date pursuant to the terms of
this Indenture, then on and after that date such Securities (or portions
thereof) cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. TEMPORARY SECURITIES. Until Definitive
Securities and Global Securities are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Securities. Temporary Securities
shall be substantially in the form of Definitive Securities but may have
variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate Definitive Securities and deliver them in exchange for temporary
Securities upon surrender of such temporary Securities at the office or agency
of the Company, without charge to the Holder.
SECTION 2.10. CANCELATION. The Company at any time may deliver
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancelation and deliver canceled Securities to the Company pursuant to written
direction by an Officer of the Company. The Company may not issue new Securities
to replace Securities they have redeemed, paid or delivered to the Trustee for
cancelation. The Trustee shall not authenticate Securities in place of canceled
Securities other than pursuant to the terms of this Indenture.
SECTION 2.11. DEFAULTED INTEREST. If the Company defaults in a
payment of interest on the Securities, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail or cause to be
mailed to each Securityholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
The Company may make payment of any defaulted interest in any
other lawful manner not inconsistent with the requirements (if applicable) of
any securities exchange on which the Securities may be listed, and upon such
notice
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44
as may be required by such exchange, if, after notice given by the Company to
the Trustee of the proposed payment pursuant to this paragraph, such manner of
payment shall be deemed practicable by the Trustee.
SECTION 2.12. CUSIP NUMBERS. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; PROVIDED, HOWEVER, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 2.13. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITIES. (a)
Each Global Security initially shall (i) be registered in the name of the
Depository for such Global Security or the nominee of such Depository and (ii)
be delivered to the Trustee as the initial Securities Custodian for such
Depository. Beneficial interests in Global Securities may be held indirectly
through members of or participants in ("Agent Members") the Depository
(including Cedel and Euroclear in the case of the Regulation S Global Security).
Agent Members shall have no rights under this Indenture with
respect to any Global Security held on their behalf by the Depository, or the
Trustee as Securities Custodian, or under such Global Security, 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 such Global Security for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or shall impair, as between the Depository and its
Agent Members, the operation of customary practices governing the exercise of
the rights of a Holder of any Security.
(b) Transfers of a Global Security shall be limited to
transfers of such Global Security in whole, but not in part, to the Depository,
its successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and procedures
of the Depository (and Agent Member, if applicable) and the provisions of
Section 2.14. The Trustee
<PAGE> 53
45
shall register the transfer of Physical Securities to all beneficial owners in
exchange for their beneficial interests in a Global Security if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for such Global Security or the Depository ceases to be a clearing
agency registered under the Exchange Act, at a time when the Depository is
required to be so registered in order to act as Depository, and in each case a
successor Depository is not appointed by the Company within 90 days of such
notice or, (ii) the Company executes and delivers to the Trustee and Registrar
an Officers' Certificate stating that such Global Security shall be so
exchangeable or (iii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depository to permit such transfers.
Notwithstanding the previous sentence, in no event shall Physical Securities be
delivered to investors who purchased Securities in reliance on Regulation S
prior to the day that is forty days after the Issue Date with respect to such
Securities.
(c) The registered holder of a Global Security may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action that a Holder
is entitled to take under this Indenture or the Securities.
SECTION 2.14. SPECIAL TRANSFER PROVISIONS. Unless and until a
Transfer Restricted Security is transferred or exchanged under an effective
registration statement under the Securities Act, the following provisions shall
apply:
(a) TRANSFERS TO NON-QIB IAI'S. Unless otherwise specified in
the relevant Purchase Agreement, the minimum amount of Securities that may be
purchased by an IAI that is not a QIB is $250,000. The following provisions
shall apply with respect to the registration of any proposed transfer of a
Transfer Restricted Security to any IAI that is not a QIB (other than pursuant
to Regulation S):
(i) The Registrar shall register the transfer of any Transfer
Restricted Security by a Holder if (x) the requested transfer is (I) at
least two years after the later of (A) the Issue Date with respect to
such Transfer Restricted Security and (B) the date such Transfer
Restricted Security was acquired from an affiliate of the Company and
(II) at least three months after the last date such Holder was an
affiliate of the Company or (y) the proposed transferee has delivered
to
<PAGE> 54
46
the Registrar a letter substantially in the form set forth in Exhibit D
hereto.
(ii) If the proposed transferee is an Agent Member and the
Transfer Restricted Security to be transferred consists of a beneficial
interest in the QIB Global Security or the Regulation S Global
Security, upon receipt by the Registrar of (x) the letter, if any,
required by paragraph (i) above and (y) instructions given in
accordance with the Depository's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the IAI Global Security in
an amount equal to the principal amount of the beneficial interest in
the QIB Global Security or the Regulation S Global Security to be so
transferred and the Registrar shall reflect on its books and records
the date and an appropriate decrease in the principal amount of such
QIB Global Security or Regulation S Global Security.
(b) TRANSFERS TO QIBS. The following provisions shall apply
with respect to the registration of any proposed transfer of a Transfer
Restricted Security to a QIB (other than pursuant to Regulation S):
(i) The Registrar shall register the transfer of a Transfer
Restricted Security by a Holder if (x) the requested transfer is(I) at
least two years after the later of (A) the Issue Date with respect to
such Transfer Restricted Security and (B) the date such Transfer
Restricted Security was acquired from an affiliate of the Company and
(II) at least three months after the last date such Holder was an
affiliate of the Company or (y) such transfer is being made by a
proposed transferor who has provided the Registrar with a letter
substantially in the form set forth in Exhibit F hereto.
(ii) If the proposed transferee is an Agent Member and the
Transfer Restricted Security to be transferred consists of an interest
in the IAI Global Security or the Regulation S Global Security, upon
receipt by the Registrar of (x) the letter, if any, required by
paragraph (i) above and (y) instructions given in accordance with the
Depositary's and the Registrar's procedures therefor, the Registrar
shall reflect on its books and records the date and an increase in the
principal amount of the QIB Global Security in an amount equal to the
principal amount of
<PAGE> 55
47
the beneficial interest in the IAI Global Security or the Regulation S
Global Security to be so transferred, and the Registrar shall reflect
on its books and records the date and an appropriate decrease in the
principal amount of such IAI Global Security or Regulation S Global
Security.
(c) TRANSFERS PURSUANT TO REGULATION S. The following
provisions shall apply with respect to registration of any proposed transfer of
a Transfer Restricted Security pursuant to Regulation S:
(i) The Registrar shall register any proposed transfer of a
Transfer Restricted Security by a Holder if (x) the requested transfer
is at least two years after the Issue Date with respect to such
Transfer Restricted Security and at least three months after the last
date such Holder was an affiliate of the Company or (y) upon receipt of
a letter substantially in the form set forth in Exhibit G hereto from
the proposed transferor.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in a U.S. Global Security, upon receipt by the
Registrar of (x) the letter, if any, required by paragraph (i) above
and (y) instructions in accordance with the Depositary's and the
Registrar's procedures therefor, the Registrar shall reflect on its
books and records the date and an increase in the principal amount of
the Regulation S Global Security in an amount equal to the principal
amount of the beneficial interest in such U.S. Global Security to be
transferred, and the Registrar shall reflect on its books and records
the date and an appropriate decrease in the principal amount of the
applicable U.S. Global Security.
(d) RESTRICTED SECURITIES LEGEND. Upon the transfer, exchange
or replacement of Securities not bearing the Restricted Securities Legend, the
Registrar shall deliver Securities that do not bear the Restricted Securities
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Restricted Securities Legend, the Registrar shall deliver only Securities that
bear the Restricted Securities Legend unless either (i) the circumstances
contemplated by paragraph (a)(i)(x), (b)(i)(x) or (c)(i)(x) of this Section
exist or (ii) there is delivered to the Registrar an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on
<PAGE> 56
48
transfer are required in order to maintain compliance with the provisions of the
Securities Act.
(e) GENERAL. By its acceptance of any Security bearing the
Restricted Securities Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in the
Restricted Securities Legend and agrees that it shall transfer such Security
only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to this Section 2.14. 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 III
Redemption
----------
SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to
redeem Securities pursuant to Section 3.07, it shall notify the Trustee in
writing of the redemption date, the principal amount of Securities to be
redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for
in this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein. If fewer than all the
Securities are to be redeemed, the record date relating to such redemption shall
be selected by the Company and given to the Trustee, which record date shall be
not fewer than 15 days after the date of notice to the Trustee. Any such notice
may be canceled 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. If less than all of the Securities
are to be redeemed at any time, selection of Securities for redemption will be
made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Securities are listed, or, if
the Securities are not so listed, on a pro rata basis, by lot or by such method
as the Trustee shall
<PAGE> 57
49
deem fair and appropriate; PROVIDED that no Securities of $1,000 or less shall
be redeemed in part. If any Security is to be redeemed in part only, the notice
of redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. On and after the redemption date,
interest ceases to accrue on Securities or portions of them called for
redemption.
SECTION 3.03. NOTICE. Notices of redemption shall be mailed by
first class mail at least 30 but not more than 60 days before the redemption
date to each Holder of Securities to be redeemed at its registered address.
Notices of redemption may not be conditional. The Trustee shall notify the
Company promptly of the Securities or portions of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the certificate numbers and principal amounts of the
particular Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on Securities
(or portion thereof) called for redemption ceases to accrue on and
after the redemption date;
(7) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed;
(8) the CUSIP number, if any, printed on the
Securities being redeemed; and
<PAGE> 58
50
(9) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request (which may be revoked at any time in
writing prior to the time at which the Trustee shall have given such notice to
the Holders), the Trustee shall give the notice of redemption in the Company's
name and at the Company's expense. In such event, the Company shall provide the
Trustee with the information required by this Section.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest and Liquidated Damages, if
any, to the redemption date; PROVIDED that if the redemption date is after a
regular record date and on or prior to the interest payment date, the accrued
interest shall be payable to the Securityholder of the redeemed Securities
registered on the relevant record date. If mailed in the manner herein, the
notice shall be conclusively presumed to have been given whether or not the
Holder receives such notice. Failure to give notice or any defect in the notice
to any Holder shall not affect the validity of the notice to any other Holder.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. Prior to 10:00 a.m.
on the redemption date, the Company shall deposit with the Paying Agent (or, if
the Company or a Wholly Owned Restricted Subsidiary is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the redemption price of and
accrued interest and Liquidated Damages, if any, on all Securities to be
redeemed on the redemption date other than Securities or portions of Securities
called for redemption that have been delivered by the Company to the Trustee for
cancelation.
SECTION 3.06. SECURITIES REDEEMED IN PART. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
SECTION 3.07. OPTIONAL REDEMPTION. (a) Except as set forth in
Section 3.07(b) or (c), the Securities may not be redeemed prior to November 15,
2002. Thereafter, the
<PAGE> 59
51
Securities will be subject to redemption at any time at the option of the
Company, in whole or in part, at the redemption prices (expressed as percentages
of principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the applicable redemption date, (subject
to the right of Holders on the relevant record date to receive interest due on
the relevant interest payment date), if redeemed during the twelve-month period
beginning on November 15 of the years indicated below:
<TABLE>
<CAPTION>
Redemption
Period Price
- ------ ----------
<S> <C>
2002 105.000%
2003 103.333%
2004 101.667%
2005 and thereafter 100.000%
</TABLE>
(b) In addition, at any time and from time to time, prior to
November 15, 2000, the Company may redeem up to 35% of the sum of (i) the
original aggregate principal amount of Securities (other than any Additional
Securities) and (ii) the original aggregate principal amount of any Additional
Securities at a redemption price of 110% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
redemption date, (subject to the right of Holders on the relevant record date to
receive interest due on the relevant interest payment date), with the net cash
proceeds of a public offering of common stock of the Company or Holding;
PROVIDED that at least 65% of the sum of (i) the original aggregate principal
amount of Securities (other than any Additional Securities) and (ii) the
original aggregate principal amount of any Additional Securities remains
outstanding immediately after the occurrence of such redemption; and PROVIDED
FURTHER that such redemption shall occur within 60 days of the date of the
closing of such public offering.
(c) At any time on or prior to November 15, 2002, the
Securities may be redeemed as a whole but not in part at the option of the
Company upon the occurrence of a Change of Control, at a redemption price equal
to 100% of the principal amount thereof plus the Applicable Premium as of, and
accrued but unpaid interest and Liquidated Damages, if any, to, the redemption
date, subject to the right of Holders on the relevant record date to receive
interest due on the relevant interest payment date. In no event may any such
redemption occur more than 90 days after the occurrence of such Change of
Control.
<PAGE> 60
52
SECTION 3.08. NO SINKING FUND. There shall be no sinking fund
for the payment of principal on the Securities to the Securityholders.
SECTION 3.09. REPURCHASE OFFERS. (a) In the event that the
Company shall be required to commence an offer to all Holders to purchase
Securities (a "Repurchase Offer") pursuant to Section 4.06 hereof (an "Excess
Proceeds Offer") or pursuant to Section 4.08 hereof (a "Change of Control
Offer") the Company shall follow the procedures specified in this Section 3.09:
(i) Within 30 days after (A) a Change of Control (unless (1)
the Company is not required to make such offer pursuant to Section 4.08(b) or
(2) all Securities have been called for redemption pursuant to Section 3.07(c))
or (B) the Company is required to make an Asset Sale Offer pursuant to Section
4.06, the Company shall (x) commence a Repurchase Offer, which shall remain open
for a period of at least 20 Business Days following its commencement (the "Offer
Period") and (y) send, by first class mail, a notice to the Trustee and each of
the Holders which shall contain all instructions and materials necessary to
enable such Holders to tender Securities pursuant to such Repurchase Offer. The
notice, which shall govern the terms of the Repurchase Offer, shall describe the
transaction or transactions that constitute the Change of Control or Asset Sale
requiring an Asset Sale Offer, as the case may be, and shall state:
(A) that the Repurchase Offer is being made pursuant to this
Section 3.09 and Section 4.06 or 4.08, as the case may be, as
applicable;
(B) the principal amount of Securities required to be
purchased pursuant to Section 4.06, in case of an Excess Proceeds
Offer, or that the Company is required to offer to purchase all of the
outstanding principal amount of Securities, in the case of a Change of
Control Offer (such amount, the "Offer Amount"), the purchase price
and, that on the date specified in such notice (the "Purchase Date"),
which date shall be no earlier than 30 days and no later than 60 days
from the date such notice is mailed, the Company shall repurchase all
Securities validly tendered and not withdrawn pursuant to this Section
3.09 and Section 4.06 or 4.08, as applicable;
(C) that any Security not tendered or accepted for payment
shall continue to accrue interest;
<PAGE> 61
53
(D) that, unless the Company defaults in making such payment,
Securities accepted for payment pursuant to the Repurchase Offer shall
cease to accrue interest after the Purchase Date;
(E) that Holders electing to have a Security purchased
pursuant to a Repurchase Offer may elect to have all or any portion of
such Security purchased;
(F) that Holders electing to have a Security purchased
pursuant to any Repurchase Offer shall be required to surrender the
Security, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Security, or such other customary documents of
surrender and transfer as the Company may reasonably request, duly
completed, or transfer by book-entry transfer, to the Company, the
Depository, or the Paying Agent at the address specified in the notice
prior to the Purchase Date;
(G) that Holders shall be entitled to withdraw their election
if the Company, the Depository or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Security the Holder
delivered for purchase and a statement that such Holder is withdrawing
its election to have such Security purchased;
(H) that, in the case of an Excess Proceeds Offer, if the
aggregate principal amount of Securities surrendered by Holders thereof
exceeds the Offer Amount, the Company shall select the Securities to be
purchased on a PRO RATA basis (based upon the outstanding principal
amount thereof), with such adjustments as may be deemed appropriate by
the Company so that only Securities in denominations of $1,000, or
integral multiples thereof, shall be purchased;
(I) that Holders whose Securities are purchased only in part
shall be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered (or transferred by
book-entry transfer); and
(J) the CUSIP number, if any, printed on the Securities being
repurchased and that no representation is made as to the correctness or
accuracy of the CUSIP
<PAGE> 62
54
number, if any, listed in such notice or printed on the Securities.
(ii) On (or at the Company's election, before) the Purchase
Date, the Company shall, (A) to the extent lawful, accept for payment, on a PRO
RATA basis to the extent necessary in the case of an Excess Proceeds Offer, the
Securities or portions thereof tendered pursuant to the Repurchase Offer and not
theretofore withdrawn, or if Securities aggregating less than the Offer Amount
have been tendered, all Securities tendered, and shall deliver to the Trustee an
Officers' Certificate stating that such Securities or portions thereof were
accepted for payment by the Company in accordance with the terms of this Section
3.09, (B) deposit with the Paying Agent an amount equal to the payment required
in respect of all Securities or portions thereof so tendered and (C) deliver or
cause to be delivered to the Trustee the Securities so accepted together with an
Officers' Certificate stating the aggregate principal amount of Securities or
portions thereof being purchased by the Company. The Company, the Depository or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the Change of Control Payment or the payment due to each
respective Holder in respect of the Excess Proceeds Offer, as applicable, with
respect to the Securities tendered by such Holder and accepted by the Company
for purchase, and the Company shall promptly issue a new Security, and the
Trustee, upon written request from the Company, shall authenticate and mail or
deliver such new Security to such Holder, in a principal amount equal to any
unpurchased portion of the Securities so surrendered, PROVIDED that each such
new Security shall be in a principal amount of $1,000 or an integral multiple
thereof. Any Security not so accepted shall be promptly mailed or delivered by
the Company to the Holder thereof. On the Purchase Date, all Securities
purchased by the Company shall be delivered to the Trustee for cancelation. All
Securities or portions thereof purchased pursuant to the Repurchase Offer will
be canceled by the Trustee. The Company shall publicly announce the results of
the Repurchase Offer on or as soon as practicable after the Purchase Date, but
in no case more than five Business Days thereafter.
If the Company complies with the provisions of the preceding
paragraph, on and after the Purchase Date interest shall cease to accrue on the
Securities or the portions of Securities repurchased. If a Security is
repurchased on or after an interest record date but on or prior to the related
<PAGE> 63
55
interest payment date, then any accrued and unpaid interest shall be paid to the
Person in whose name such Security was registered at the close of business on
such record date. If any Security called is not repurchased upon surrender
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the Purchase Date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Securities and
in Section 4.01 hereof.
(b) The Company shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations to
the extent such laws and regulations are applicable in connection with the
Repurchase Offer. To the extent that the provisions of any applicable securities
laws or regulations conflict with provisions of this Section 3.09, the Company
shall comply with such securities laws and regulations and shall not be deemed
to have breached its obligations under this Section by virtue thereof.
(c) Prior to complying with the provisions of this Section
3.09, but in any event within 90 days following a Change of Control Offer or
Asset Sale Offer, as applicable, the Company shall either repay all outstanding
Senior Indebtedness of the Company or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Indebtedness of the Company to
permit the repurchase of Securities required by this Section 3.09 and Section
4.06 or 4.08, as applicable.
(d) Once notice of repurchase is mailed in accordance with
this Section 3.09, all Securities validly tendered and not withdrawn (or, in the
case of an Excess Proceeds Offer, if the Company is not required to repurchase
all of such Securities then the pro rata portion of such Securities that the
Company may be required to purchase pursuant to Section 3.02 and/or 4.06 hereof,
as applicable) become irrevocably due and payable on the Purchase Date at the
purchase price specified herein. A notice of repurchase may not be conditional.
(e) Other than as specifically provided in this Section 3.09
or Section 4.06 or 4.08, as applicable, any purchase pursuant to this Section
3.09 shall be made pursuant to the provisions of Sections 3.02 and 3.06 hereof.
<PAGE> 64
56
ARTICLE IV
Covenants
---------
SECTION 4.01. PAYMENT OF SECURITIES. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Unless otherwise
specified in the relevant Purchase Agreement, principal and interest shall be
considered paid on the date due if on such date the Trustee or the Paying Agent
(but only if other than the Company or a Wholly Owned Restricted Subsidiary)
holds by 11:00 a.m., New York City time, in accordance with this Indenture
available funds sufficient to pay all principal and interest then due and the
Trustee or the Paying Agent, as the case may be, is not prohibited from paying
such money to the Securityholders on that date pursuant to the terms of this
Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. REPORTS. Notwithstanding that the Company may
not be required to remain subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, to the extent permitted by the Exchange Act, the
Company shall file with the SEC, and provide, within 15 days after the Company
is required to file the same with the SEC, the Trustee and the Holders with the
annual reports and the information, documents and other reports that are
specified in Sections 13 and 15(d) of the Exchange Act. In the event the Company
is not permitted to file such reports, documents and information with the SEC,
the Company will provide substantially similar information to the Trustee and
the Holders, as if the Company were subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act. The Company also shall comply with the
other provisions of TIA ss. 314(a).
SECTION 4.03. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
PREFERRED STOCK. (a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness
(including Acquired Debt) and the Company will not issue any Disqualified Stock
and shall not permit any of its Restricted Subsidiaries to issue any shares of
Preferred Stock; PROVIDED, HOWEVER, that the Company and its Restricted
Subsidiaries may Incur Indebtedness (including
<PAGE> 65
57
Acquired Debt) or issue shares of Disqualified Stock and the Company's
Restricted Subsidiaries may issue Preferred Stock, if the Fixed Charge Coverage
Ratio for the Company's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is Incurred or such Disqualified Stock or
Preferred Stock is issued would have been at least 1.75 to 1, if such
Indebtedness is Incurred or such Disqualified Stock or Preferred Stock is issued
on or prior to November 30, 1999, and 2.00 to 1, if such Indebtedness is
Incurred or such Disqualified Stock or Preferred Stock is issued thereafter, in
each case, 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 Disqualified Stock or Preferred Stock had been issued, as the
case may be, at the beginning of such four-quarter period.
(b) Notwithstanding Section 4.03(a), the following Incurrences
of Indebtedness are permitted (collectively, "Permitted Indebtedness"):
(i) the Incurrence by the Company or any of its Restricted
Subsidiaries of term and revolving Indebtedness and letters of credit
(with letters of credit being deemed to have a principal amount equal
to the undrawn face amount thereof) under Credit Facilities; PROVIDED
that the aggregate principal amount of all Indebtedness outstanding
pursuant to this Section 4.03(b)(i) after giving effect to such
Incurrence does not exceed an amount equal to $250.0 million;
(ii) the Incurrence by the Company and its Restricted
Subsidiaries of Existing Indebtedness;
(iii) the Incurrence by the Company of Indebtedness
represented by the Securities (other than any Additional Securities)
and by the Subsidiary Guarantors of Indebtedness represented by the
Security Guarantees;
(iv) the Incurrence by the Company or any of its Restricted
Subsidiaries of (A) Acquired Debt or (B) Indebtedness (including
Capital Lease Obligations) for the purpose of financing or refinancing
all or any part of the lease, purchase price or cost of construction or
improvement of any property (real or personal) or other assets that are
used or useful in the business of the Company or such Restricted
<PAGE> 66
58
Subsidiary (whether through the direct purchase of assets or the
Capital Stock of any Person owning such assets and whether such
Indebtedness is owed to the seller or Person carrying out such
construction or improvement or to any third party), in an aggregate
principal amount for all Indebtedness Incurred pursuant to this Section
4.03(b)(iv), at the date of such Incurrence (including all Permitted
Refinancing Indebtedness Incurred to refund, refinance or replace any
other Indebtedness Incurred pursuant to this Section 4.03(b)(iv)) not
to exceed an amount equal to 10.0% of Total Assets; PROVIDED that, in
the case of Indebtedness exceeding $2.0 million Incurred pursuant to
this Section 4.03(b)(iv), such Indebtedness exists at the date of such
purchase or transaction or is created within 180 days thereafter;
(v) the Incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness) permitted to be
Incurred by this Section 4.03(b);
(vi) the Incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company
and any of its Restricted Subsidiaries, including any Indebtedness
arising in connection with a Receivables Facility; PROVIDED, HOWEVER,
that (A) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than the
Company or a Restricted Subsidiary and (B) any sale or other transfer
of any such Indebtedness to a Person that is not either the Company or
a Restricted Subsidiary shall be deemed, in each case, to constitute an
Incurrence of such Indebtedness by the Company or such Restricted
Subsidiary, as the case may be, that was not permitted by this Section
4.03(b)(vi);
(vii) the Incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are Incurred (A) for the
purpose of fixing or hedging interest rate risk with respect to any
floating rate Indebtedness that is permitted by this Section 4.03 to be
outstanding or (B) for the purpose of fixing or hedging currency
exchange rate risk or commodity price risk Incurred in the ordinary
course of business;
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(viii) the Guarantee by the Company or any of the Subsidiary
Guarantors of Indebtedness of the Company or a Restricted Subsidiary of
the Company that was permitted to be Incurred by another provision of
this Section 4.03;
(ix) the Incurrence of Indebtedness secured by or financing
Receivables (including any such Indebtedness under the Credit
Facilities), PROVIDED that the aggregate principal amount of such
Indebtedness Incurred pursuant to this Section 4.03(b)(ix) does not, at
any time, exceed an amount equal to $75.0 million less the aggregate
Receivable Financing Amount of all Receivables Facilities of the
Company and its Restricted Subsidiaries;
(x) the Incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness under (or constituting reimbursement
obligations with respect to) letters of credit, surety bonds or similar
instruments issued in connection with the ordinary course of a
Permitted Business, including letters of credit in respect of workers'
compensation claims, self-insurance, and insurance written by MIICA in
connection with a Permitted Business; PROVIDED, HOWEVER, that upon the
drawing of such letters of credit or other instrument, such obligations
are reimbursed within 30 days following such drawing;
(xi) the Incurrence by Foreign Subsidiaries of Indebtedness
for working capital purposes, and by the Company or any of its
Restricted Subsidiaries of Guarantees of Indebtedness of Foreign
Subsidiaries or foreign joint ventures, PROVIDED that the aggregate
principal amount of such Indebtedness and of the Indebtedness so
Guaranteed at any time outstanding does not exceed 5% of Total Assets;
and
(xii) the Incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness (which may comprise
Indebtedness under the New Credit Facility) in an aggregate principal
amount (or accreted value, as applicable) at any time outstanding
pursuant to this Section 4.03(b)(xii) not to exceed an amount equal to
$35.0 million.
For purposes of determining compliance with this Section 4.03,
in the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Indebtedness described in clauses (i) through
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(xii) above or is entitled to be Incurred pursuant to Section 4.03(a), the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this Section 4.03 and such item of Indebtedness will
be treated as having been Incurred pursuant to only one of such clauses or
pursuant to Section 4.03(a); PROVIDED that all outstanding Indebtedness under
the New Credit Facility immediately following the Recapitalization shall be
deemed to have been Incurred pursuant to Sections 4.03(b)(i) and/or 4.03(b)(ix).
Accrual of interest and the accretion of accreted value will not be deemed to be
an Incurrence of Indebtedness for purposes of this Section 4.03.
SECTION 4.04. RESTRICTED PAYMENTS. (a) The Company shall not,
and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly: (i) declare or pay any dividend or make any other payment or
distribution (including any payment in connection with any merger or
consolidation) on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock)); (ii) purchase, redeem or
otherwise acquire or retire for value (including in connection with any merger
or consolidation) any Equity Interests of the Company or Holding (or any
Restricted Subsidiary held by Persons other than the Company or another
Restricted Subsidiary); (iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Subordinated Indebtedness, except (A) a payment of interest or principal at
Stated Maturity and (B) the purchase, repurchase or other acquisition or
retirement of Indebtedness in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of purchase, repurchase or other acquisition or retirement; or
(iv) make any Restricted Investment (all such payments and other actions set
forth in Sections 4.04(a)(i) through 4.04(a)(iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(2) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable four-quarter period,
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have been permitted to Incur at least $1.00 of additional Indebtedness
pursuant to Section 4.03(a);
(3) such Restricted Payment, together with (without
duplication) the aggregate amount of all other Restricted Payments made
by the Company and its Restricted Subsidiaries after the Closing Date
(excluding Restricted Payments permitted by Sections 4.04(b)(ii),
4.04(b)(iii), 4.04(b)(iv), 4.04(b)(v) (other than clauses (i) and
(v)(A) of the definition of "Specified Affiliate Payments") and
4.04(b)(vi) but including all other Restricted Payments permitted by
Section 4.04(b)), is less than the sum (without duplication) of:
(i) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period) from
the beginning of the fiscal quarter during which the Closing
Date occurs to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less
100% of such deficit); plus
(ii) 100% of the aggregate net cash proceeds received
by the Company from the issue or sale (other than to a
Subsidiary) of, or from capital contributions with respect to,
Equity Interests of the Company (other than Disqualified
Stock), in either case after the Closing Date; plus
(iii) the aggregate principal amount (or accreted
value, if less) of Indebtedness of the Company or any
Restricted Subsidiary issued since the Closing Date (other
than to a Restricted Subsidiary) that has been converted into
Equity Interests (other than Disqualified Stock) of the
Company; plus
(iv) 100% of the aggregate net cash received by the
Company or a Restricted Subsidiary of the Company since the
Closing Date from (A) Restricted Investments, whether through
interest payments, principal payments, dividends or other
distributions and payments, or the sale or other disposition
(other than to the Company or a Restricted Subsidiary) thereof
made by the Company and its Restricted Subsidiaries or (B) a
cash
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dividend from, or the sale (other than to the Company or a
Restricted Subsidiary) of the stock of, an Unrestricted
Subsidiary; and plus
(v) upon the redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary, the fair market value
of the Investments of the Company and its Restricted
Subsidiaries (other than such Subsidiary) in such Subsidiary.
(b) The provisions of Section 4.04(a) shall not prohibit:
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration such payment
would have complied with the provisions of this Section 4.04;
(ii) the redemption, repurchase, retirement, defeasance or
other acquisition of Equity Interests or Subordinated Indebtedness of
the Company, in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary
of the Company) of, Equity Interests of, or a capital contribution to,
the Company (other than any Disqualified Stock); PROVIDED, that the
amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from Section 4.04(a)(3)(ii);
(iii) the defeasance, redemption, repurchase, retirement or
other acquisition of Subordinated Indebtedness made by an exchange for,
or with the net cash proceeds from, an Incurrence of Permitted
Refinancing Indebtedness;
(iv) the payment of any dividend by a Restricted
Subsidiary of the Company to the holders of its common
Equity Interests on a pro rata basis;
(v) to the extent constituting Restricted
Payments, the Specified Affiliate Payments;
(vi) the payment of dividends, other distributions or other
amounts by the Company to Holding in amounts equal to amounts required
for Holding to pay Federal, state and local income taxes to the extent
such income taxes are attributable to the income of the Company and its
Subsidiaries; and
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(vii) Restricted Payments in an aggregate amount not
to exceed $10.0 million.
The Board of Directors may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if such designation would not cause a Default.
For purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated, to the extent they do not constitute Permitted
Investments at the time such Subsidiary became an Unrestricted Subsidiary, will
be deemed to be Restricted Payments made at the time of such designation and
will reduce the amount available for Restricted Payments under Section 4.04(a).
The amount of such outstanding Investments will be equal to the portion of the
fair market value of the net assets of any Subsidiary of the Company at the time
that such Subsidiary is designated an Unrestricted Subsidiary that is
represented by the interest of the Company and its Restricted Subsidiaries in
such Subsidiary, in each case as determined in good faith by the Board of
Directors of the Company. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall
be the fair market value on the date of the Restricted Payment of the asset(s)
or securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined in
good faith by the Board of Directors of the Company. For the avoidance of doubt,
it is expressly agreed that no payment or other transaction permitted by Section
4.07(b)(5), (6), (9) or (10) shall be considered a Restricted Payment for
purposes of, or otherwise restricted by, this Indenture.
SECTION 4.05. DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES. The Company shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or restriction
on the ability of any Restricted Subsidiary to (i)(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, or (b) pay any Indebtedness owed to the Company or
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64
any of its Restricted Subsidiaries, (ii) make loans or advances to the Company
or any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of:
(1) Existing Indebtedness;
(2) this Indenture, the Securities and the Security
Guarantees;
(3) any agreement or other instrument of a Person acquired by
the Company or any of its Restricted Subsidiaries as in effect at the
time of such acquisition (but not created 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;
(4) purchase money obligations (including Capital Lease
Obligations) for property acquired in the ordinary course of business
that impose restrictions of the nature described in clause (iii) above
on the property so acquired;
(5) restrictions created in connection with any Receivables
Facility that, in the good faith determination of the Board of
Directors or senior management of the Company, are necessary or
advisable to effect such Receivables Facility;
(6) in the case of clause (iii) above, any encumbrance or
restriction (1) that restricts in a customary manner the subletting,
assignment, or transfer of any property or asset that is subject to a
lease, license or similar contract, (2) by virtue of any transfer of,
agreement to transfer, option or right with respect to, or Lien on, any
property or assets of the Company or any Restricted Subsidiary not
otherwise prohibited by this Indenture or (3) contained in security
agreements or mortgages securing Indebtedness to the extent such
encumbrance or restrictions restrict the transfer of the property
subject to such security agreements or mortgages;
(7) contracts for the sale of assets, including any
restriction with respect to a Restricted Subsidiary
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imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets
of such Restricted Subsidiary pending the closing of such sale or
disposition;
(8) contractual encumbrances or restrictions in effect on the
Closing Date, including pursuant to the New Credit Facility and its
related documentation;
(9) restrictions on cash or other deposits or net worth
imposed by leases, credit agreements or other agreements entered into
in the ordinary course of business;
(10) customary provisions in joint venture agreements and
other similar agreements;
(11) any encumbrances or restrictions created with respect to
Senior Indebtedness of the Company or its Restricted Subsidiaries or
Indebtedness of Foreign Subsidiaries or Insurance Subsidiaries
permitted to be Incurred subsequent to the Closing Date pursuant to
Section 4.03; and
(12) any encumbrances or restrictions of the type referred to
in clauses (i), (ii) and (iii) above imposed by any amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings of the contracts, instruments
or obligations referred to in clauses (1) through (12) above, provided
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are, in the good
faith judgment of the Company, no more restrictive with respect to such
dividend and other payment restrictions than those contained in the
dividend or other payment restrictions prior to such amendment,
modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.
SECTION 4.06. ASSET SALES. The Company shall not, and shall
not permit any of its Restricted Subsidiaries to, consummate an Asset Sale
unless (i) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the fair
market value of the assets or Equity Interests issued or sold or otherwise
disposed of and (ii) at least 75% of the consideration therefor received by the
Company or such Restricted Subsidiary is in the form of cash or Cash
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66
Equivalents; PROVIDED that the amount of (x) any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent balance sheet), of the
Company or any Restricted Subsidiary (other than liabilities that are by their
terms subordinated to the Securities or, in the case of liabilities of a
Restricted Subsidiary, the Security Guarantee of such Subsidiary) that are
assumed by the transferee of any such assets and (y) any securities, notes or
other obligations received by the Company or any such Restricted Subsidiary from
such transferee that are converted by the Company or such Restricted Subsidiary
into cash (to the extent of the cash received) within 180 days after receipt,
shall be deemed to be cash for purposes of this provision; PROVIDED FURTHER,
HOWEVER, that clause (ii) above shall not apply to any sale of Equity Interests
of or other Investments in Unrestricted Subsidiaries.
Within 360 days after the receipt of any Net Proceeds from an
Asset Sale, the Company may apply such Net Proceeds, at its option, (a) to repay
Senior Indebtedness or Pari Passu Indebtedness (other than Indebtedness owed to
Holding, the Company or a Subsidiary of the Company, and provided that if the
Company shall so reduce Pari Passu Indebtedness, it will equally and ratably
make an Asset Sale Offer (in accordance with the procedures set forth in Section
3.09 for an Asset Sale Offer) to all Holders), (b) to invest in properties and
assets that will be used or useful in the business of the Company or any of its
Subsidiaries or (c) to the acquisition of a controlling interest in another
business, the making of a capital expenditure or the acquisition of other
assets, in each case, in the same or a similar line of business as the Company
was engaged in on the Closing Date. Pending the final application of any such
Net Proceeds, the Company may temporarily reduce borrowings under a Credit
Facility or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company shall (i) make an offer to all
Holders of Securities, and (ii) prepay, purchase or redeem (or make an offer to
do so) any other Pari Passu Indebtedness of the Company in accordance with
provisions requiring the Company to prepay, purchase or redeem such Indebtedness
with the proceeds from any Asset Sales (or offer to do so), PRO RATA in
proportion to the respective principal amounts of the Securities and such other
Indebtedness required to be prepaid, purchased or
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redeemed or tendered for, in the case of the Securities pursuant to such offer
(an "Asset Sale Offer") to purchase the maximum principal amount of Securities
that may be purchased out of such PRO RATA portion of the Excess Proceeds, at an
offer price in cash in an amount equal to 100% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date of purchase, in accordance with the procedures set forth in Section 3.09.
To the extent that the aggregate principal amount of Securities tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use any remaining Excess Proceeds for general corporate purposes. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
SECTION 4.07. TRANSACTIONS WITH AFFILIATES. (a) The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, make any
payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is
on terms that are no less favorable to the Company or the relevant Restricted
Subsidiary than those that would have been obtained in a comparable transaction
by the Company or such Restricted Subsidiary with an unrelated Person and (ii)
the Company delivers to the Trustee (a) with respect to any Affiliate
Transaction entered into after the Closing Date involving aggregate
consideration in excess of $3.0 million, a resolution of the Board of Directors
set forth in an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate Transaction has been
approved by a majority of the members of the Board of Directors and (b) with
respect to any Affiliate Transaction involving aggregate consideration in excess
of $10.0 million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an investment banking,
appraisal or accounting firm of national standing.
(b) The provisions of Section 4.07(a) shall not prohibit (and
the following shall not be deemed to be Affiliate Transactions): (1) the
provision of administrative or management services by the Company or any of its
officers to any of its Restricted Subsidiaries in the ordinary course of
business, (2) any employment agreement, collective bargaining agreement,
employee benefit plan, related trust
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agreement or any similar arrangement heretofore or hereafter entered into in the
ordinary course of business, (3) transactions between or among the Company
and/or its Restricted Subsidiaries, (4) Restricted Payments that are permitted
by Section 4.04, (5) payment of compensation to employees, officers, directors
or consultants in the ordinary course of business, (6) maintenance in the
ordinary course of business (and payments required thereby) of benefit programs,
or arrangements for employees, officers or directors, including vacation plans,
health and life insurance plans, deferred compensation plans, directors' and
officers' indemnification agreements and retirement or savings plans and similar
plans, (7) loans or advances to employees (or guarantees of third party loans to
employees) in the ordinary course of business, (8) sales of Receivables to a
Receivables Subsidiary, (9) the payment of annual management, consulting and
advisory fees and related expenses to Investcorp and its Affiliates (whether or
not such Persons are Affiliates of the Company), (10) payments by the Company or
any of its Restricted Subsidiaries to Investcorp and its Affiliates (whether or
not such Persons are Affiliates of the Company) made for any financial advisory,
financing, underwriting or placement services or in respect of other investment
banking activities, including in connection with acquisitions or divestitures,
which payments are approved by the Board of Directors of the Company in good
faith, (11) any tax sharing agreement as in effect on the Closing Date and any
other agreement as in effect on the Closing Date (including the Recapitalization
Agreement) or any amendment thereto (so long as any such amendment is not
disadvantageous to the Holders in any material respect) or any transaction
contemplated thereby (including distributions by the Company to Holding to
effect the Recapitalization), (12) the payment of all fees and expenses related
to the Recapitalization, (13) transactions with customers, clients, suppliers,
or purchasers or sellers of goods or services, in each case in the ordinary
course of business and otherwise in compliance with the terms of this Indenture
which are fair to the Company or its Restricted Subsidiaries, or are on terms at
least as favorable as might reasonably have been obtained at such time from an
unaffiliated party, in each case in the reasonable determination of the Board of
Directors of the Company or the senior management thereof, and (14) Indebtedness
permitted by Section 4.03(b)(vi) or to the extent such Indebtedness is on terms
that are no less favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction with an
unrelated Person, Section 4.03(b)(xii).
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SECTION 4.08. CHANGE OF CONTROL. (a) Upon the occurrence of a
Change of Control, unless all Securities have been called for redemption
pursuant to Section 3.07, each Holder of Securities shall have the right to
require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of such Holder's Securities pursuant to a Change of
Control Offer made pursuant to Section 3.09 at an offer price in cash (the
"Change of Control Payment") equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any,
to the date of purchase.
(b) The Company shall not be required to make a Change of
Control Offer upon a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in Section 3.09 applicable to a Change of Control Offer
made by the Company and purchases all Securities validly tendered and not
withdrawn under such Change of Control Offer.
SECTION 4.09. COMPLIANCE CERTIFICATE. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default and whether or not the signers know of any Default
that occurred during such period. If they do have such knowledge, the
certificate shall describe the Default, its status and what action the Company
is taking or proposes to take with respect thereto. The Company also shall
comply with Section 314(a)(4) of the TIA.
SECTION 4.10. [INTENTIONALLY OMITTED]
SECTION 4.11. LIENS. The Company shall not, and shall not
permit any of its Restricted Subsidiaries to, create, Incur, assume or otherwise
cause or suffer to exist or become effective any Lien of any kind securing
Indebtedness or trade payables (other than Permitted Liens) upon any of their
property or assets, now owned or hereafter acquired, unless all payments due
under this Indenture and the Securities are secured on an equal and ratable
basis with the obligations so secured until such time as such obligations are no
longer secured by a Lien.
SECTION 4.12. ADDITIONAL SECURITY GUARANTEES. All current and
future Subsidiaries of the Company other than Foreign Subsidiaries, Insurance
Subsidiaries and
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Subsidiaries that have been properly designated as Unrestricted Subsidiaries in
accordance with this Indenture for so long as they continue to constitute
Unrestricted Subsidiaries, will be Guarantors in accordance with the terms of
this Indenture. Notwithstanding the foregoing, if any Foreign Subsidiary or
Insurance Subsidiary that is a Restricted Subsidiary shall Guarantee any
Indebtedness of the Company, Holding or any Domestic Subsidiary while the
Securities are outstanding, then such Foreign Subsidiary or Insurance
Subsidiary, as the case may be, shall become a Guarantor and shall execute and
deliver to the Trustee a supplemental indenture substantially in the form of
Exhibit E pursuant to which such Subsidiary shall Guarantee payment of the
Securities pursuant to Article XI. If the Company or any of its Restricted
Subsidiaries shall acquire or create another Subsidiary, other than an Insurance
Subsidiary or a Foreign Subsidiary or entity that is designated an Unrestricted
Subsidiary, after the date hereof or designate an Unrestricted Subsidiary to be
a Restricted Subsidiary, then such newly acquired, created or designated
Subsidiary, shall execute and deliver to the Trustee a supplemental indenture
substantially in the form of Exhibit E pursuant to which such Subsidiary shall
Guarantee payment of the Securities pursuant to Article XI.
SECTION 4.13. BUSINESS ACTIVITIES. The Company shall not, and
shall not permit any of its Restricted Subsidiaries to, engage in any business
other than Permitted Businesses, except to such extent as is not material to the
Company and its Restricted Subsidiaries taken as a whole. Holding will not
engage in any business other than managing its investment in the Company and any
business incidental or reasonably related thereto. For the avoidance of doubt,
and without limitation, it is expressly agreed that (i) except for the
immediately preceding sentence, none of the provisions of this Article IV shall
apply to Holding and (ii) none of (a) the Incurrence of Indebtedness or the
issuance of Capital Stock by Holding, entering into agreements incidental or
related thereto, the application of the proceeds of any such Incurrence or
issuance consistent with the first preceding sentence, and compliance by Holding
with the terms of any such agreements, (b) the making of Restricted Payments by
Holding, (c) the payment by Holding of taxes, wages and other liabilities, (d)
the preparation by Holding of financial statements and other reports, or (e)
compliance by Holding with the terms of the Recapitalization Agreement or the
stockholders agreement referred to in the Offering Memorandum shall be
considered a violation of this Section 4.13.
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SECTION 4.14. NO SENIOR SUBORDINATED DEBT. The Company shall
not Incur any Indebtedness that is expressly subordinate in right of payment to
any Senior Indebtedness and senior in any respect in right of payment to the
Securities and no Guarantor shall Incur any Indebtedness that is expressly
subordinate in right of payment to any Senior Indebtedness and senior in any
respect in right of payment to the Security Guarantees.
ARTICLE V
Successor Company
-----------------
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ALL OR
SUBSTANTIALLY ALL ASSETS OF THE COMPANY. The Company shall not consolidate or
merge with or into (whether or not the Company is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to another Person unless:
(i) the Company is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made 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 the Company) or the Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the obligations of the Company under the Securities and this
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee;
(iii) immediately after such transaction no Default
or Event of Default exists; and
(iv) except in the case of a merger of the Company with or
into a Wholly Owned Restricted Subsidiary of the Company, the Company or the
Person formed by or surviving any such consolidation or merger (if other than
the Company), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, either
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(x) be permitted to Incur at least $1.00 of additional Indebtedness pursuant to
Section 4.03(a) or (y) have a Fixed Charge Coverage Ratio at least equal to the
Fixed Charge Coverage Ratio of the Company for such four-quarter reference
period.
Notwithstanding clauses (iii) and (iv) above, (a) any
Restricted Subsidiary may consolidate with, merge into or transfer all or part
of its properties and assets to the Company, and (b) the Company may merge with
an Affiliate incorporated solely for the purpose of reincorporating the Company
in another jurisdiction.
SECTION 5.02. MERGER, CONSOLIDATION OR SALE OF ALL OR
SUBSTANTIALLY ALL ASSETS OF A GUARANTOR. No Guarantor may consolidate with or
merge with or into (whether or not such Guarantor is the surviving Person)
another Person (other than the Company or another Guarantor) unless, subject to
the provisions of Section 11.02(b):
(i) the Person formed by or surviving any such consolidation
or merger (if other than such Guarantor) assumes all the obligations of
such Guarantor under the Securities and this Indenture pursuant to a
supplemental indenture in form and substance reasonably satisfactory to
the Trustee;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists; and
(iii) the Company will, at the time of such transaction and
after giving PRO FORMA effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, either
(x) be permitted to Incur at least $1.00 of additional Indebtedness
pursuant to Section 4.03(a) or (y) have a Fixed Charge Coverage Ratio
at least equal to the actual Fixed Charge Coverage Ratio for such
four-quarter reference period.
Notwithstanding the foregoing clauses (ii) and (iii) above,
(a) any Restricted Subsidiary may consolidate with, merge into or transfer all
or part of its properties and assets to any Subsidiary Guarantor and (b) any
Guarantor may merge with an Affiliate incorporated solely for the purpose of
reincorporating such Guarantor in another jurisdiction.
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ARTICLE VI
Defaults and Remedies
---------------------
SECTION 6.01. EVENTS OF DEFAULT AND REMEDIES.
An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest on, or
Liquidated Damages with respect to, any Security when the same becomes
due and payable, whether or not such payment shall be prohibited by
Article X, and such default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon declaration or otherwise,
whether or not such payment shall be prohibited by Article X;
(3) the Company fails to comply with Section 5.01 or the
Guarantors fail to comply with Section 5.02;
(4) the Company fails to comply with Section 4.03, 4.04, 4.05,
4.06, 4.07, 4.08, 4.11, 4.12, 4.13 or 4.14 and such failure continues
for 30 days after receipt by the Company of a Notice of Default.
(5) the Company fails to comply with any of its agreements in
the Securities or this Indenture (other than those referred to in (1),
(2), (3) or (4) above) and such failure continues for 60 days after
receipt by the Company of a Notice of Default;
(6) Indebtedness of the Company or any Restricted Subsidiary
that is a Significant Subsidiary is not paid within any applicable
grace period after final maturity or the acceleration by the holders
thereof because of a default and the total amount of such Indebtedness
unpaid or accelerated exceeds $20,000,000 or its foreign currency
equivalent at the time;
(7) the Company or any Restricted Subsidiary that is a
Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
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(C) consents to the appointment of a Custodian of it
or for any substantial part of its property;
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws
relating to insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Restricted Subsidiary that is a Significant Subsidiary in an
involuntary case;
(B) appoints a Custodian of the Company or any
Restricted Subsidiary that is a Significant Subsidiary or for
any substantial part of its property; or
(C) orders the winding up or liquidation of the
Company or any Restricted Subsidiary that is a Significant
Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree relating thereto remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess
of $20,000,000 or its foreign currency equivalent at the time is
entered against the Company or any Restricted Subsidiary that is a
Significant Subsidiary and is not discharged, waived or stayed and
either (A) an enforcement proceeding has been commenced by any creditor
upon such judgment or decree or (B) there is a period of 60 days
following the entry of such judgment or decree during which such
judgment or decree is not discharged, waived or the execution thereof
stayed; or
(10) except as permitted by this Indenture, any Security
Guarantee by Holding or a Guarantor that is a Significant Subsidiary
shall be held in any judicial proceeding to be unenforceable and
invalid or shall cease for any reason 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 its obligations under this Indenture or any
Security Guarantee.
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The foregoing shall constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, UNITED STATES CODE,
or any similar federal or state law for the relief of debtors. For purposes of
this Section, the term "Custodian" means any receiver, trustee, assignee,
liquidator, custodian or similar official under any Bankruptcy Law.
A Default under clause (4) or (5) is not an Event of Default
until the Trustee or the Holders of at least 25% in aggregate principal amount
of the outstanding Securities notify the Company in writing by registered or
certified mail, return receipt requested, of the Default and the Company does
not cure such Default within the time specified in clauses (4) or (5) after
receipt of such notice. Such notice must specify the Default, demand that it be
remedied and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, forthwith upon any
Officer becoming aware thereof, written notice in the form of an Officers'
Certificate of any Event of Default under clause (6) and any event that with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02. ACCELERATION. If an Event of Default (other than
an Event of Default specified in Section 6.01(a)(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company in
writing, or the Holders of at least 25% in aggregate principal amount of the
outstanding Securities by notice in writing to the Company, may declare the
principal of and accrued but unpaid interest on all the Securities to be due and
payable. Upon such a declaration, such principal and interest shall be due and
payable immediately; PROVIDED, HOWEVER, that if upon such declaration there are
any amounts outstanding under the New Credit Facility and the amounts thereunder
have not been accelerated, such amounts shall be due and payable upon the
earlier of the time such amounts are accelerated or five Business Days after
receipt by the Company and the Representative of the lenders under the New
Credit Facility of such declaration. If an Event of Default
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specified in Section 6.01(a)(7) or (8) with respect to the Company occurs, the
principal of and interest on all the Securities shall IPSO FACTO become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Securityholders. The Holders of a majority in aggregate
principal amount of the Securities by written notice to the Trustee may, on
behalf of all the Holders, rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Defaults or Events of Default have been cured or waived except nonpayment of
principal or interest that has become due because of such acceleration. 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 to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative (to the
extent permitted by law).
SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a
majority in aggregate principal amount of the Securities then outstanding by
written notice to the Trustee may on behalf of the Holders of all of the
Securities waive any existing Default or Event of Default and its consequences
except (i) a continuing Default or Event of Default in the payment of interest
on, or the principal of, the Securities or (ii) a Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Securityholder affected. When a Default is waived, it is deemed cured and ceases
to exist and any Event of Default arising therefrom shall be deemed to have been
cured and waived for every purpose under this Indenture, but no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any consequent right.
SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority
in aggregate principal amount of the Securities may direct the time, method and
place of
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conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee by this Indenture.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture or, subject to Section 7.01, that the Trustee determines is
unduly prejudicial to the rights of other Securityholders or would involve the
Trustee in personal liability; PROVIDED, HOWEVER, that the Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
SECTION 6.06. LIMITATION ON SUITS. Except to enforce the right
to receive payment of principal, premium (if any), interest or Liquidated
Damages when due, a Securityholder may not pursue any remedy with respect to
this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in aggregate principal amount
of the Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in aggregate principal amount of
the Securities do not give the Trustee a direction inconsistent with
the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and Liquidated Damages and interest on the
Securities held by such Holder, on or after the respective
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due dates expressed in the Securities, or to bring suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of
Default specified in Section 6.01(a)(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.07.
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 and the Securityholders
allowed in any judicial proceedings relative to the Company, any Subsidiary or
any Guarantor, their creditors or their property and, unless prohibited by law
or applicable regulations, may vote on behalf of the Holders in any election of
a trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
SECTION 6.10. PRIORITIES. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to the holders of Senior Indebtedness to the extent
required by Article X;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, and any Liquidated
Damages without preference or priority of any kind, according to the
amounts due and payable on the Securities for principal, any Liquidated
Damages and interest, respectively; and
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FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Trustee shall mail to each Securityholder and the Company
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS. Neither the
Company nor any Guarantor (to the extent they may lawfully do so) shall at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Company and each Guarantor (to the extent that they
may lawfully do so) hereby expressly waive all benefit or advantage of any such
law, and shall not hinder, delay or impede the execution of any power herein
granted to the Trustee, but shall suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE VII
Trustee
-------
SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
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(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of Section
7.01(b);
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise
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Incur financial liability in the performance of any of its duties hereunder or
in the exercise of any of its rights or powers, if it shall have reasonable
grounds to believe that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. RIGHTS OF TRUSTEE. Subject to Section 7.01: (a)
The Trustee may rely on any document believed by it to be genuine and to have
been signed or presented by the proper person. The Trustee need not investigate
any fact or matter stated in any such document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; PROVIDED, HOWEVER, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other paper or document unless requested in writing to do so
by the Holders of not less than a majority in principal amount of the Securities
at the time outstanding, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or
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matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney.
(g) The Trustee shall not be required to give any note, bond
or surety in respect of the execution of the trusts and powers under this
Indenture.
(h) The permissive rights of the Trustee to take any action
enumerated in this Indenture shall not be construed as a duty to take such
action.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS. If a Default occurs and is
continuing and if it is actually known to the Trustee, the Trustee shall mail to
each Securityholder at the expense of the Company notice of the Default within
the earlier of 90 days after it occurs or 30 days after it is known to a Trust
Officer or written notice of it is received by the Trustee. Except in the case
of a Default in payment of principal or premium (if any), interest or Liquidated
Damages on any Security, the Trustee may withhold the notice if and so long as a
committee of its trust officers in good faith determines that withholding the
notice is in the interests of Securityholders. Notwithstanding anything to the
contrary expressed in this Indenture, the Trustee shall not be deemed to have
knowledge of any Default or Event of Default hereunder, except in the case of an
Event of Default under Section 6.01(a) and (b) hereof (provided that the Trustee
is Paying Agent), unless and until a Trust Officer receives written notice
thereof at its Corporate Trust
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Office specified in Section 13.02, from the Company or a Holder that such
Default or Event of Default has occurred.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. The Trustee shall
transmit to the Holders such reports concerning the Trustee and its actions
under this Indenture as may be required pursuant to the TIA at the times and in
the manner provided pursuant thereto. To the extent that any such report is
required by the TIA with respect to any 12-month period, such report shall cover
the 12-month period ending December 31 and shall be transmitted by the next
succeeding March 1.
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall
pay to the Trustee from time to time such compensation as is agreed to in
writing by the Trustee and Company for the Trustee's services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket disbursements, advances and expenses
Incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. The Company and each Guarantor, jointly but
not severally, shall indemnify the Trustee and its officers, directors,
shareholders, agents and employees (each, an "Indemnified Party") for and hold
each Indemnified Party harmless against any and all loss, liability or expense
(including reasonable attorneys' fees) Incurred by them without negligence or
bad faith on their part arising out of or in connection with the acceptance or
administration of this Indenture or the Securities and the performance of their
duties hereunder, including the cost and expense of enforcing this Indenture
against the Company (including this Section 7.07), and defending itself against
any claim (whether asserted by a Holder or any other person) The Trustee and its
officers, directors, shareholders, agents and employees in its capacity as
Paying Agent, Registrar, Custodian and agent for service of notice and demands
shall have the full benefit of the foregoing indemnity as well as all other
benefits, rights and
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privileges accorded to the Trustee in this Indenture when acting in such other
capacity. The Trustee shall notify the Company of any claim for which it may
seek indemnity promptly upon obtaining actual knowledge thereof; PROVIDED that
any failure so to notify the Company shall not relieve the Company or any
Subsidiary Guarantor of its indemnity obligations hereunder. The Company shall
defend the claim and the Indemnified Party shall provide reasonable cooperation
at the Company's expense in the defense. Such Indemnified Parties may have
separate counsel and the Company shall pay the fees and expenses of such
counsel; PROVIDED that the Company shall not be required to pay such fees and
expenses if it assumes such Indemnified Parties' defense and, in such
Indemnified Parties' reasonable judgment, there is no conflict of interest
between the Company and such parties in connection with such defense. The
Company need not reimburse any expense or indemnify against any loss, liability
or expense Incurred by an Indemnified Party through such party's own wilful
misconduct, negligence or bad faith. The Company need not pay any settlement
made without its consent (which consent shall not be unreasonably withheld).
To secure the Company's payment obligations in this Section
and all other obligations to the Trustee pursuant to this Indenture, including
all fees, expenses, and rights to indemnification, the Trustee shall have a lien
on all money or property held or collected by the Trustee other than money or
property held in trust to pay principal of and interest and any Liquidated
Damages on particular Securities. Such lien shall survive the satisfaction and
discharge of this Indenture and the resignation or removal of the Trustee. The
Trustee's right to receive payment of any amounts due under this Indenture shall
not be subordinated to any other indebtedness of the Company and the Securities
shall be subordinate to the Trustee's rights to receive such payment.
The Company's payment obligations pursuant to this Section
shall survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any Bankruptcy Law or the resignation or
removal of the Trustee. When the Trustee Incurs expenses after the occurrence of
a Default specified in Section 6.01(a)(7) or (8) with respect to the Company,
the expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign
at any time by so notifying the Company
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in writing. The Holders of a majority in principal amount of the Securities may
remove the Trustee by so notifying the Trustee and the Company in writing and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of at least 10% in aggregate principal amount of the Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
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SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee, PROVIDED, that such Person shall be
qualified and eligible under this Article VII.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall
at all times satisfy the requirements of TIA ss. 310(a). The Trustee 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. The Trustee shall comply with
TIAss. 310(b); PROVIDED, HOWEVER, that there shall be excluded from the
operation of TIA ss. 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shalL be subject to TIA Section 311(a) to the extent indicated
therein.
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ARTICLE VIII
Discharge of Indenture; Defeasance
----------------------------------
SECTION 8.01. LEGAL DEFEASANCE AND COVENANT DEFEASANCE. (a)
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.01(b) or 8.01(c) hereof be applied to all outstanding
Securities upon compliance with the conditions set forth below in this Article
VIII.
(b) Upon the Company's exercise under Section 8.01(a) hereof
of the option applicable to this Section 8.01(b), the Company and each Guarantor
shall, subject to the satisfaction of the conditions set forth in Section 8.02
hereof, be deemed to have been discharged from their obligations with respect to
all outstanding Securities and any Security Guarantee on the date the conditions
set forth below are satisfied (hereinafter, "Legal Defeasance"). For this
purpose, Legal Defeasance means that the Company and each Guarantor shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Securities and any Security Guarantee, which Securities and
Security Guarantees shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.03 hereof and the other Sections of this Indenture
referred to in (i) and (ii) below, and to have satisfied all their other
obligations under such Securities and this Indenture (and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (i) the rights of Holders of
outstanding Securities to receive solely from the trust fund described in
Article VIII hereof, as more fully set forth in such Article, payments in
respect of the principal of, premium, if any, and interest and Liquidated
Damages, if any, on such Securities when such payments are due, (ii) the
Company's obligations with respect to the Securities under Sections 2.03, 2.04,
2.05, 2.06, 2.07, 2.09, 7.07 and 7.08, which shall survive until the Securities
have been paid in full (thereafter, the Company's obligations in Section 7.07
shall survive), and (iii) this Article VIII. Subject to compliance with this
Article VIII, the Company may exercise its option under this Section 8.01(b)
notwithstanding the prior exercise of its option under Section 8.01(c) hereof.
(c) Upon the Company's exercise under Section 8.01(a) hereof
of the option applicable to this
<PAGE> 96
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Section 8.01(c), the Company and each Guarantor shall, subject to the
satisfaction of the conditions set forth in Section 8.02 hereof, be released
from their obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08,
4.09, 4.11, 4.12, 4.13, 4.14, 5.01(iv) and 5.02(iii) hereof with respect to the
outstanding Securities on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Securities shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration of act of Holders (and the consequences of any
thereof) in connection with such Sections, but shall continue to be deemed
"outstanding" for all the other purposes hereunder (it being understood that
such Securities and the related Security Guarantees shall not be deemed
outstanding for accounting purposes). For this purpose, Covenant Defeasance
means that, with respect of any term, condition or limitation set forth in any
such Section, whether directly or indirectly, by reason of any reference
elsewhere herein to any such Section or by reason of any reference in any such
Section to any other provision herein or in any other document and such omission
to comply shall not constitute a Default or an Event of Default under Section
6.01 hereof, but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby. In addition, upon the Company's
exercise under Section 8.01(a) hereof of the option applicable to this Section
8.01(c) hereof, subject to the satisfaction of the conditions set forth in
Section 8.02, Sections 6.01(4), 6.01(5) (with respect to compliance with Section
4.09 only), 6.01(6), 6.01(7) (with respect to Subsidiaries of the Company only),
6.01(8) (with respect to Subsidiaries of the Company only), 6.01(9) or 6.01(10)
shall not constitute Events of Default.
SECTION 8.02. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The
following shall be the conditions to the application of either Section 8.01(b)
or 8.01(c) hereof to the outstanding Securities:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in United States dollars,
U.S. Government Obligations, or a combination thereof, in such amounts
as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay the principal of, premium and
Liquidated Damages, if any,
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89
and interest on the outstanding Securities on the stated date for
payment thereof or on the applicable redemption date, as the case may
be;
(b) in the case of an election under Section 8.01(b) hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel
in the United States reasonably acceptable to the Trustee confirming
that (A) the Company has received from, or there has been published by,
the Internal Revenue Service a ruling or (B) since the date hereof,
there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders of the outstanding Securities
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 an election under Section 8.01(c) hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel
in the United States, subject to customary assumptions and exclusions,
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Securities 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 (i) on the date of such deposit (other than a Default or
Event of Default resulting from the Incurrence of Indebtedness (or the
grant of any Lien securing such borrowing) all or a portion of the
proceeds of which will be used to defease the Securities pursuant to
this Article VIII concurrently with such Incurrence) or (ii) insofar as
Sections 6.01(a)(7) or 6.01(a)(8) hereof is concerned, at any time in
the period ending on the 91st day after the date of the deposit
pursuant to Section 8.02(a);
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any
material agreement or
<PAGE> 98
90
instrument (other than this Indenture) to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion
of Counsel, subject to customary assumptions and exclusions, to the
effect that after the 91st day following the deposit pursuant to
Section 8.02(a), the trust funds will not be part of any "estate"
formed by the bankruptcy or reorganization of the Company or subject to
the "automatic stay" under the Bankruptcy Code, or in the case of a
covenant defeasance, will be subject to a first priority lien in favor
of the Trustee for the benefit of the Holders;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders over any other
creditors of the Company or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company; and
(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, subject to customary
assumptions and exclusions, each stating that all conditions precedent
provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.03. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 8.04 hereof,
all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively for
purposes of this Section 8.03, the "Trustee") pursuant to Section 8.02 hereof in
respect of the outstanding Securities shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may determine, to
the Holders of such Securities of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
Anything in this Article VIII to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company
<PAGE> 99
91
any money or U.S. Government Obligations held by it as provided in Section 8.02
hereof which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under Section 8.02(a) hereof), are
in excess of the amount thereof that would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.04. REPAYMENT TO COMPANY. Any money deposited with
the Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on any Security and remaining unclaimed for two years after such principal,
premium and Liquidated Damages, if any, or interest has become due and payable
shall be paid to the Company on its request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company, cause to be published once, in the New York Times
(national edition) and the Wall Street Journal (national edition), notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such notification or
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
SECTION 8.05. REINSTATEMENT. If the Trustee or Paying Agent is
unable to apply any United States dollars or U.S. Government Obligations in
accordance with this Article VIII by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article VIII until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with this Article VIII;
PROVIDED, HOWEVER, that, if the Company or any Guarantor makes any payment of
principal of, premium and Liquidated Damages, if any, or interest on any
Security following the reinstatement of its obligations, the Company or any
Guarantor, as the case may be, shall be subrogated to the rights of the Holders
of such
<PAGE> 100
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Securities to receive such payment from the money held by the Trustee or Paying
Agent.
SECTION 8.06. SATISFACTION AND DISCHARGE OF INDENTURE. Upon
the request of the Company, this Indenture will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Securities, as expressly provided for herein or pursuant hereto), the Company
and the Guarantors will be discharged from their obligations under the
Securities and the Security Guarantees, and the Trustee, at the expense of the
Company, will execute proper instruments acknowledging satisfaction and
discharge of the Indenture when:
(a) either (i) all the Securities theretofore authenticated
and delivered (other than mutilated, destroyed, lost or stolen
Securities that have been replaced or paid and Securities that have
been subject to defeasance under this Article VIII) have been delivered
to the Trustee for cancelation or (ii) all Securities not theretofore
delivered to the Trustee for cancelation (A) have become due and
payable, (B) will become due and payable at maturity within one year or
(C) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by
the Trustee in the name, and at the expense, of the Company, and the
Company, in the case of (A), (B) or (C) above, has irrevocably
deposited or caused to be deposited with the Trustee funds in trust for
such purpose in an amount sufficient to pay and discharge, without the
need to reinvest any proceeds thereof, the entire Indebtedness on such
Securities not theretofore delivered to the Trustee for cancelation,
for principal (and premium, if any, on) and interest on the Securities
to the date of such deposit (in the case of Securities that have become
due and payable) or to the Stated Maturity or redemption date, as the
case may be;
(b) the Company has paid or caused to be paid all sums payable
under the Indenture by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided in this Indenture relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the
<PAGE> 101
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Trustee under Section 7.07 and, if money shall have been deposited with the
Trustee pursuant to clause (a)(ii) of this Section, the obligations of the
Trustee under Section 8.06 and Section 2.04 shall survive.
ARTICLE IX
Amendments
----------
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The
Company, the Guarantors and the Trustee may amend this
Indenture or the Securities without notice to or consent of
any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Securities in addition to or
in place of certificated Securities (provided that the uncertificated
Securities are issued in registered form for purposes of Section 163(f)
of the Code, or in a manner such that the uncertificated Securities are
described in Section 163(f)(2)(B) of the Code);
(3) to provide for the assumption of the Company's or any
Guarantor's obligations to Holders of Securities in the case of a
merger, consolidation or sale of assets;
(4) to release any Security Guarantee in accordance with the
provisions of this Indenture;
(5) to provide for additional Guarantors;
(6) to make any change that would provide any additional
rights or benefits to the Holders of Securities or that does not
adversely affect the legal rights under this Indenture of any such
Holder;
(7) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA; or
(8) to make any change to Article II, Section 4.01 or the
Exhibits hereto that applies only to Additional Securities (other than
a change relating to other provisions of this Indenture incorporated or
referenced in Article II, Section 4.01 or any such Exhibit).
<PAGE> 102
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An amendment under this Section may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness (or
any group or representative thereof authorized to give a consent) consent to
such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.02. WITH CONSENT OF HOLDERS. The Company, the
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to any Securityholder but with the written consent of the Holders of at
least a majority in principal amount of the Securities. However, without the
consent of each Securityholder affected, an amendment may not:
(i) reduce the principal amount of Securities whose Holders
must consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of
any Security, reduce any premium payable upon optional redemption of the
Securities or otherwise alter the provisions with respect to the redemption or
repurchase of the Securities (other than provisions relating to Sections 4.06,
4.08 and 3.09);
(iii) reduce the rate of or change the time for payment of
interest or any Liquidated Damages, if any, on any Security;
(iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Securities (except a
rescission of acceleration of the Securities by the Holders of at least a
majority in aggregate principal amount of the Securities and a waiver of the
payment default that resulted from such acceleration);
(v) make any Security payable in money other than
that stated in the Securities;
(vi) impair the rights of Holders of Securities to receive
payments of principal of or premium, if any, or interest or Liquidated Damages
on the Securities;
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95
(vii) make any change to Section 6.04 or 6.07 or this Section
9.02;
(viii) except for releases of Guarantors as permitted by
Section 11.02, make any change to the Security Guarantees in any manner that
adversely affects the rights of the Holders; or
(ix) make any change to Article X that adversely affects the
rights of any Holders under Article X.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness (or
any group or representative thereof authorized to give a consent) consent to
such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives written notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder.
Except if otherwise specified in such amendment or waiver, an amendment or
waiver becomes effective once the requisite number of consents are received by
the Company or the Trustee.
<PAGE> 104
96
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS. The Trustee shall
sign any amendment authorized pursuant to this Article IX if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture that
such amendment is the legal, valid and binding obligation of the Company and the
Guarantors enforceable against them in accordance with its terms, subject to
customary exceptions, and complies with the provisions hereof (including Section
9.03).
SECTION 9.07. PAYMENT FOR CONSENT. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
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the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
Subordination
-------------
SECTION 10.01. AGREEMENT TO SUBORDINATE. The Company agrees,
and each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the Securities is subordinated in right of payment, to the extent
and in the manner provided in this Article X, to the prior payment in full in
cash or Cash Equivalents of all existing and future Senior Indebtedness of the
Company and that the subordination is for the benefit of and enforceable by the
holders of Senior Indebtedness of the Company. The Securities shall in all
respects rank PARI PASSU with all other Pari Passu Indebtedness of the Company
and only Indebtedness of the Company that is Senior Indebtedness shall rank
senior to the Securities in accordance with the provisions set forth herein. For
purposes of these subordination provisions, the Indebtedness evidenced by the
Securities is deemed to include the Liquidated Damages payable pursuant to the
provisions set forth in the Securities and the applicable Registration Rights
Agreement. All provisions of this Article X shall be subject to Section 10.12.
SECTION 10.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any
payment or distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities, the holders of Senior Indebtedness of the Company shall
be entitled to receive payment in full, in cash or Cash Equivalents, of all
Obligations due in respect of such Senior Indebtedness (including interest after
the commencement of any such proceeding at the rate specified in the applicable
Senior Indebtedness, whether or not allowed or allowable in such proceeding)
before the Holders of Securities will be entitled to receive any payment with
respect to the Securities, and until all Obligations with respect to such Senior
Indebtedness are paid in full, in cash or Cash Equivalents, any payment or
distribution to which the Holders of Securities would be entitled shall be made
to the holders of such Senior Indebtedness (except that Holders of Securities
may receive and retain (i) Permitted
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Junior Securities and (ii) payments made from the trust described in Article
VIII so long as, on the date or dates the respective amounts were paid into the
trust, such payments were made with respect to the Securities without violating
this Article X).
SECTION 10.03. DEFAULT ON SENIOR INDEBTEDNESS. The Company
shall not make any payment or distribution upon or in respect of the Securities
(except from the trust described in Article VIII) if (i) a default in the
payment of any Obligations with respect to Designated Senior Debt of the Company
occurs and is continuing (a "payment default") or any other default on
Designated Senior Debt of the Company occurs and the maturity of such Designated
Senior Debt is accelerated in accordance with its terms or (ii) a default, other
than a payment default, occurs and is continuing with respect to Designated
Senior Debt of the Company that permits holders of the Designated Senior Debt of
the Company as to which such default relates to accelerate its maturity (a
"non-payment default") and, in the case of this clause (ii) only, the Trustee
receives a notice of such default (a "Payment Blockage Notice") from a
Representative for, or the holders of a majority of the outstanding principal
amount, of any such issue of Designated Senior Debt of the Company. Payments on
the Securities may and shall be resumed (a) in the case of a payment default,
upon the date on which such default is cured or waived and, in the case of
Designated Senior Debt of the Company that has been accelerated, such
acceleration has been rescinded, and (b) in case of a non-payment default, the
earlier of the date on which such non-payment default is cured or waived or 179
days after the date on which the applicable Payment Blockage Notice is received,
unless the maturity of any Designated Senior Debt of the Company has been
accelerated. No new period of payment blockage may be commenced on account of
any non-payment default unless and until 360 days have elapsed since the initial
effectiveness of the immediately prior Payment Blockage Notice. No non-payment
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee (it being acknowledged that (x) any action of the
Company or any of its Subsidiaries occurring subsequent to delivery of a Payment
Blockage Notice that would give rise to any Event of Default pursuant to any
provision under which an Event of Default previously existed (or was continuing
at the time of delivery of such Payment Blockage Notice) shall constitute a new
Event of Default for this purpose and (y) any breach of a financial covenant
giving rise to a non-payment default for a period ending subsequent to the date
of delivery of respective Payment
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Blockage Notice shall constitute a new event of default for this purpose) shall
be, or be made, the basis for a subsequent Payment Blockage Notice unless such
default shall have been cured or waived for a period of not less than 90 days.
SECTION 10.04. ACCELERATION OF PAYMENT OF SECURITIES. If
payment of the Securities is accelerated because of an Event of Default, the
Company shall promptly notify the Representative of the lenders under the New
Credit Facility of the acceleration. If any Indebtedness under the New Credit
Facility is outstanding, the Company may not make any payment on account of such
accelerated Securities until five Business Days after such holders of such
Indebtedness receive notice of such acceleration and, thereafter, may pay the
Securities only if this Article X otherwise permits payment at that time.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a
distribution is made to Securityholders that because of this Article X should
not have been made to them, the Securityholders who receive such distribution
shall hold it in trust for holders of Senior Indebtedness of the Company and pay
it over to them as their interests may appear.
SECTION 10.06. SUBROGATION. After all Senior Indebtedness of
the Company is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness of the Company to receive distributions applicable to Senior
Indebtedness of the Company. A distribution made under this Article X to holders
of Senior Indebtedness of the Company which otherwise would have been made to
Securityholders is not, as between the Company and Securityholders, a payment by
the Company on Senior Indebtedness of the Company.
SECTION 10.07. RELATIVE RIGHTS. This Article X defines the
relative rights of Securityholders and holders of Senior Indebtedness of the
Company. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default,
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subject to the rights of holders of Senior Indebtedness of the Company
to receive distributions otherwise payable to Securityholders.
SECTION 10.08. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Company or by its failure to comply with
this Indenture.
SECTION 10.09. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding Section 10.03, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives written notice satisfactory to it that payments
may not be made under this Article X. The Company, the Registrar or
co-registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness of the Company may give the notice; PROVIDED, HOWEVER, that, if an
issue of Senior Indebtedness of the Company has a Representative, only the
Representative may give the notice. The Trustee shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself or itself to
be a holder of any Senior Indebtedness of the Company (or a Representative of
such holder) to establish that such notice has been given by a holder of such
Senior Indebtedness of the Company or Representative thereof.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of the Company with the same rights it would have if it were
not Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article X with respect to any Senior Indebtedness of the Company which may
at any time be held by it, to the same extent as any other holder of Senior
Indebtedness of the Company; and nothing in Article VII shall deprive the
Trustee of any of its rights as such holder. Nothing in this Article X shall
apply to claims of, or payments to, the Trustee under or pursuant to Section
7.07.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of the
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101
Company, the distribution may be made and the notice given to their
Representative (if any).
SECTION 10.11. ARTICLE X NOT TO PREVENT EVENTS OF DEFAULT OR
LIMIT RIGHT TO ACCELERATE. The failure to make a payment pursuant to the
Securities by reason of any provision in this Article X shall not be construed
as preventing the occurrence of a Default. Nothing in this Article X shall have
any effect on the right of the Securityholders or the Trustee to accelerate the
maturity of the Securities.
SECTION 10.12. TRUST MONEYS NOT SUBORDINATED. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article VIII by the Trustee
for the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Indebtedness or subject to the
restrictions set forth in this Article X, and none of the Securityholders shall
be obligated to pay over any such amount to the Company or any holder of Senior
Indebtedness of the Company or any other creditor of the Company.
SECTION 10.13. TRUSTEE ENTITLED TO RELY. Upon any payment or
distribution pursuant to this Article X, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representative for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness of the Company and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article X. In the event that
the Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Senior Indebtedness of the Company to
participate in any payment or distribution pursuant to this Article X, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness of the
Company held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article X, and, if such
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102
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article X.
SECTION 10.14. TRUSTEE TO EFFECTUATE SUBORDINATION. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of the Company as provided in this Article X and appoints
the Trustee as attorney-in-fact for any and all such purposes.
SECTION 10.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS. With respect to the holders of Senior Indebtedness of the Company,
the Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article X. The Trustee shall
not be deemed to owe any fiduciary or other duty to the holders of Senior
Indebtedness of the Company and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Securityholders or the Company or any
other Person, money or assets to which any holders of Senior Indebtedness of the
Company shall be entitled by virtue of this Article X or otherwise.
SECTION 10.16. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON
SUBORDINATION PROVISIONS. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness of the Company, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
SECTION 10.17. TRUSTEE'S COMPENSATION NOT PREJUDICED. Nothing
in this Article shall apply to amounts due to the Trustee pursuant to other
sections of this Indenture.
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ARTICLE XI
Security Guarantees
-------------------
SECTION 11.01. SECURITY GUARANTEES. Each Guarantor hereby
jointly and severally unconditionally and irrevocably guarantees as a primary
obligor and not merely as a surety, to each Holder and to the Trustee and its
successors and assigns (a) the full and punctual payment of principal of,
premium, if any, and interest and Liquidated Damages, if any, on the Securities
when due, whether at maturity, by acceleration, by redemption or otherwise,
subject to any applicable grace period, and all other monetary obligations of
the Company under this Indenture (including obligations to the Trustee) and the
Securities and (b) the full and punctual performance within applicable grace
periods of all other obligations of the Company whether for expenses,
indemnification or otherwise under this Indenture and the Securities (all of the
foregoing being hereinafter collectively called the "Guaranteed Obligations").
Each Guarantor further agrees that the Guaranteed Obligations may be extended or
renewed, in whole or in part, without notice or further assent from each such
Guarantor, and that each such Guarantor shall remain bound under this Article XI
notwithstanding any extension or renewal of any Guaranteed Obligation.
Each Guarantor waives presentation to, demand of, payment from
and protest to the Company of any of the Guaranteed Obligations and also waives
notice of protest for nonpayment. Each Guarantor waives notice of any default
under the Securities or the Guaranteed Obligations. The obligations of each
Guarantor hereunder shall not be affected by (a) the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any right or remedy
against the Company or any other Person under this Indenture, the Securities or
any other agreement or otherwise; (b) any extension or renewal of any Guaranteed
Obligations; (c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the Securities or any other agreement;
(d) the release of any security held by any Holder or the Trustee for the
Guaranteed Obligations or any of them; (e) the failure of any Holder or Trustee
to exercise any right or remedy against any other guarantor of the Guaranteed
Obligations; or (f) any change in the ownership of such Guarantor, except as
provided in Section 11.02(b).
Each Guarantor further agrees that its Security Guarantee
herein constitutes a Guarantee of payment,
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performance and compliance when due (and not a guarantee of collection) and
waives any right to require that any resort be had by any Holder or the Trustee
to any security held for payment of the Guaranteed Obligations.
The obligations of each Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Guaranteed Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of each Guarantor herein shall
not be discharged or impaired or otherwise affected by the failure of any Holder
or the Trustee to assert any claim or demand or to enforce any remedy under this
Indenture, the Securities or any other agreement, by any waiver or modification
of any thereof, by any default, failure or delay, willful or otherwise, in the
performance of the Guaranteed Obligations, or by any other act or thing or
omission or delay to do any other act or thing which may or might in any manner
or to any extent vary the risk of any Guarantor or would otherwise operate as a
discharge of any Guarantor as a matter of law or equity.
Each Guarantor further agrees that its Security Guarantee
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal of or interest on any
Guaranteed Obligation is rescinded or must otherwise be restored by any Holder
or the Trustee upon the bankruptcy or reorganization of the Company or
otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of or interest, premium or Liquidated Damages, if any, on any Guaranteed
Obligation when and as the same shall become due, whether at maturity, by
acceleration, by redemption or otherwise, or to perform or comply with any other
Guaranteed Obligation, each Guarantor hereby promises to and shall, upon receipt
of written demand by the Trustee, forthwith pay, or cause to be paid, in cash,
to the Holders or the Trustee an amount equal to the sum of (i) the unpaid
principal amount of such Guaranteed Obligations, (ii) accrued and unpaid
interest, premium and Liquidated Damages, if any, on such Guaranteed Obligations
(but only to the extent not prohibited by law) and (iii) all other
<PAGE> 113
105
monetary Guaranteed Obligations of the Company to the Holders and the Trustee.
Each Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any Guaranteed
Obligations guaranteed hereby until payment in full of all Guaranteed
Obligations. Each Guarantor further agrees that, as between it, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
Guaranteed Obligations guaranteed hereby may be accelerated as provided in
Article VI for the purposes of any Security Guarantee herein, notwithstanding
any stay, injunction or other prohibition preventing such acceleration in
respect of the Guaranteed Obligations guaranteed hereby, and (y) in the event of
any declaration of acceleration of such Guaranteed Obligations as provided in
Article VI, such Guaranteed Obligations (whether or not due and payable) shall
forthwith become due and payable by such Guarantor for the purposes of this
Section.
Each Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees and expenses) Incurred by the
Trustee or any Holder in enforcing any rights under this Section.
SECTION 11.02. LIMITATION ON LIABILITY. (a) Any term or
provision of this Indenture to the contrary notwithstanding, the maximum,
aggregate amount of the obligations guaranteed hereunder by any Guarantor shall
not exceed the maximum amount that can be guaranteed (after giving effect to all
its Guarantees of Indebtedness under the New Credit Facility) without rendering
this Indenture, as it relates to any Guarantor, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
(b) This Guarantee as to any Subsidiary Guarantor shall
terminate and be of no further force or effect upon (i) the designation (in
accordance with the provisions of this Indenture) of such Subsidiary Guarantor
as an Unrestricted Subsidiary or (ii) the sale or other disposition of all of
the assets of such Subsidiary Guarantor in accordance with the terms of this
Indenture, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the Capital Stock of any Subsidiary Guarantor then held by
the Company and its Restricted Subsidiaries; PROVIDED that the Net Proceeds of
such sale or other disposition are applied in accordance with Section 4.06, to
the extent such Section is applicable
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106
to such disposition, or (iii) the sale or other disposition of Capital Stock of
any Subsidiary Guarantor if (A) as a result of such disposition, such Person
ceases to be a Subsidiary of the Company and (B) the Net Proceeds of such sale
are applied in accordance with Section 4.06, to the extent such Section is
applicable to such disposition. If the Security Guarantee of any Subsidiary
Guarantor terminates pursuant to the foregoing provisions, such Person shall
cease to be a Subsidiary, a Guarantor or otherwise a party to this Indenture
and, upon request by the Company, the Trustee shall execute appropriate
instruments acknowledging such termination and the release of such Person from
its obligations hereunder.
SECTION 11.03. SUCCESSORS AND ASSIGNS. This Article XI shall
be binding upon each Guarantor and its successors and assigns and shall enure to
the benefit of the successors and assigns of the Trustee and the Holders and, in
the event of any transfer or assignment of rights by any Holder or the Trustee,
the rights and privileges conferred upon that party in this Indenture and in the
Securities shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
SECTION 11.04. NO WAIVER. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article XI shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article XI
at law, in equity, by statute or otherwise.
SECTION 11.05. MODIFICATION. No modification, amendment or
waiver of any provision of this Article XI, nor the consent to any departure by
any Guarantor therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Trustee, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.
No notice to or demand on any Guarantor in any case shall entitle such Guarantor
to any other or further notice or demand in the same, similar or other
circumstances.
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107
ARTICLE XII
Subordination of the Security Guarantees
----------------------------------------
SECTION 12.01. AGREEMENT TO SUBORDINATE. Each Guarantor
agrees, and each Securityholder by accepting a Security agrees, that such
Guarantor's obligations under its Security Guarantee are subordinated in right
of payment, to the extent and in the manner provided in this Article XII, to the
prior payment in full in cash or Cash Equivalents of all existing and future
Senior Indebtedness of such Guarantor and that the subordination is for the
benefit of and enforceable by the holders of Senior Indebtedness of such
Guarantor. The obligations of a Guarantor under this Article XII shall in all
respects rank PARI PASSU with all other Pari Passu Indebtedness of such
Guarantor, and only Indebtedness of such Guarantor that is Senior Indebtedness
shall rank senior to the obligations of such Guarantor in this Article XII in
accordance with the provisions set forth herein.
SECTION 12.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any
payment or distribution to creditors of any Guarantor in a liquidation or
dissolution of such Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Guarantor or its property,
an assignment for the benefit of creditors or any marshaling of such Guarantor's
assets and liabilities, the holders of Senior Indebtedness of such Guarantor
shall be entitled to receive payment in full, in cash or Cash Equivalents, of
all Obligations due in respect of such Senior Indebtedness (including interest
after the commencement of any such proceeding at the rate specified in the
applicable Senior Indebtedness, whether or not allowed or allowable in such
proceeding) before the Holders of Securities will be entitled to receive any
payment with respect to the Security Guarantee and until all Obligations with
respect to such Senior Indebtedness are paid in full, in cash or Cash
Equivalents, any payment or distribution to which the Holders of Securities
would be entitled shall be made to the holders of such Senior Indebtedness
(except that Holders of Securities may receive and retain (i) Permitted Junior
Securities and (ii) payments made from the trust described in Article VII so
long as, on the date or dates the respective amounts were paid into the trust,
such payments were made with respect to the Securities without violating this
Article XII).
SECTION 12.03. DEFAULT ON SENIOR INDEBTEDNESS OF A GUARANTOR.
A Guarantor shall not make any payment or
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distribution upon or in respect of its Security Guarantee if (i) a default in
the payment of any Obligations with respect to Designated Senior Debt of such
Guarantor occurs and is continuing (a "Guarantor payment default") or any other
default on Designated Senior Debt of such Guarantor occurs and the maturity of
such Designated Senior Debt of such Guarantor is accelerated in accordance with
its terms or (ii) a default, other than a Guarantor payment default, occurs and
is continuing with respect to Designated Senior Debt of such Guarantor that
permits holders of the Designated Senior Debt of such Guarantor as to which such
default relates to accelerate its maturity (a "Guarantor non-payment default")
and, in the case of this clause (ii) only, the Trustee receives a notice of such
default (a "Guarantor Payment Blockage Notice") from a Representative for, or
the holders of a majority of the outstanding principal amount of, any issue of
Designated Senior Debt of such Guarantor. Payments on the Security Guarantee of
such Guarantor may and shall be resumed (a) in the case of a Guarantor payment
default, upon the date on which such default is cured or waived and, in the case
of Designated Senior Debt of such Guarantor that has been accelerated, such
acceleration has been rescinded, and (b) in case of a Guarantor non-payment
default, the earlier of the date on which such Guarantor non-payment default is
cured or waived or 179 days after the date on which the applicable Guarantor
Payment Blockage Notice is received, unless the maturity of any Designated
Senior Debt of such Guarantor has been accelerated. No new period of payment
blockage may be commenced on account of any Guarantor non-payment default unless
and until 360 days have elapsed since the initial effectiveness of the
immediately prior Guarantor Payment Blockage Notice. No Guarantor non-payment
default that existed or was continuing on the date of delivery of any Guarantor
Payment Blockage Notice to the Trustee (it being acknowledged that (x) any
action of such Guarantor or any of its Subsidiaries occurring subsequent to
delivery of a Guarantor Payment Blockage Notice that would give rise to any
event of default pursuant to any provision under which an event of default
previously existed (or was continuing at the time of delivery of such Guarantor
Payment Blockage Notice) shall constitute a new event of default for this
purpose and (y) any breach of a financial covenant giving rise to a Guarantor
non-payment default for a period ending subsequent to the date of delivery of
respective Guarantor Payment Blockage Notice shall constitute a new event of
default for this purpose) shall be, or be made, the basis for a subsequent
Guarantor Payment Blockage Notice unless such default shall have been cured or
waived for a period of not less than 90 days.
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SECTION 12.04. DEMAND FOR PAYMENT. If payment of the
Securities is accelerated because of an Event of Default and a demand for
payment is made on a Guarantor pursuant to Article XI, the Trustee shall
promptly notify the Company, and the Company shall promptly (and in no event
more than five Business Days after receipt of such notice) notify the
Representative of the lenders under the New Credit Facility of the acceleration.
If any Indebtedness under the New Credit Facility is outstanding, such Guarantor
may not pay its Obligations under its Security Guarantee until five Business
Days after the holders of such Indebtedness receive notice of such demand and,
thereafter, may pay its Obligations under its Security Guarantee only if this
Article XII otherwise permits payment at that time.
SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a
distribution is made to Securityholders that because of this Article XII should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness of the relevant
Guarantor and pay it over to them as their interests may appear.
SECTION 12.06. SUBROGATION. After all Senior Indebtedness of a
Guarantor is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness of such Guarantor to receive distributions applicable to Senior
Indebtedness of such Guarantor. A distribution made under this Article XII to
holders of Senior Indebtedness of such Guarantor which otherwise would have been
made to Securityholders is not, as between such Guarantor and Securityholders, a
payment by such Guarantor on Senior Indebtedness of such Guarantor.
SECTION 12.07. RELATIVE RIGHTS. This Article XII defines the
relative rights of Securityholders and holders of Senior Indebtedness of a
Guarantor. Nothing in this Indenture shall:
(1) impair, as between a Guarantor and Securityholders, the
obligation of a Guarantor which is absolute and unconditional, to pay
its Obligations under its Security Guarantee to the extent set forth in
Article XI; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a default by a Guarantor under its
Obligations under its Security Guarantee, subject to the rights of
holders of Senior
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Indebtedness of such Guarantor to receive distributions otherwise
payable to Securityholders.
SECTION 12.08. SUBORDINATION MAY NOT BE IMPAIRED BY A
GUARANTOR. No right of any holder of Senior Indebtedness of a Guarantor to
enforce the subordination of the Obligations under the Security Guarantee of
such Guarantor shall be impaired by any act or failure to act by such Guarantor
or by its failure to comply with this Indenture.
SECTION 12.09. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding Section 12.03, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article XII. A Guarantor, the Registrar or co-registrar, the
Paying Agent, a Representative or a holder of Senior Indebtedness of a Guarantor
may give the notice; PROVIDED, HOWEVER, that, if an issue of Senior Indebtedness
of a Guarantor has a Representative, only the Representative may give the
notice. The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself or itself to be a holder of any Senior
Indebtedness of a Guarantor (or a Representative of such holder) to establish
that such notice has been given by a holder of such Senior Indebtedness or
Representative thereof.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of a Guarantor with the same rights it would have if it were
not Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article XII with respect to any Senior Indebtedness of a Guarantor which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness of such Guarantor; and nothing in Article VII shall deprive the
Trustee of any of its rights as such holder. Nothing in this Article XII shall
apply to claims of, or payments to, the Trustee under or pursuant to Section
7.07.
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of a
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111
Guarantor, the distribution may be made and the notice given to their
Representative (if any).
SECTION 12.11. ARTICLE XII NOT TO PREVENT EVENTS OF DEFAULT OR
LIMIT RIGHT TO ACCELERATE. The failure of a Guarantor to make a payment on any
of its Obligations under its Security Guarantee by reason of any provision in
this Article XII shall not be construed as preventing the occurrence of a
default by such Guarantor under its Security Guarantee. Nothing in this Article
XII shall have any effect on the right of the Securityholders or the Trustee to
make a demand for payment on a Guarantor pursuant to Article XII.
SECTION 12.12. TRUSTEE ENTITLED TO RELY. Upon any payment or
distribution pursuant to this Article XII, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of a Guarantor for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness of a Guarantor and other Indebtedness of a Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article XII. In the event that
the Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Senior Indebtedness of a Guarantor to
participate in any payment or distribution pursuant to this Article XII, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness of such
Guarantor held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article XII, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment. The
provisions of Sections 7.01 and 7.02 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article XI.
SECTION 12.13. TRUSTEE TO EFFECTUATE SUBORDINATION. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take
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112
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination between the Securityholders and the holders of Senior Indebtedness
of each of the Guarantors as provided in this Article XII and appoints the
Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.14. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS OF A GUARANTOR. The Trustee shall not be deemed to owe any
fiduciary or other duty to the holders of Senior Indebtedness of a Guarantor and
shall not be liable to any such holders if it shall mistakenly pay over or
distribute to Securityholders or the relevant Guarantor or any other Person,
money or assets to which any holders of Senior Indebtedness of such Guarantor
shall be entitled by virtue of this Article XII or otherwise.
SECTION 12.15. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF A
GUARANTOR ON SUBORDINATION PROVISIONS. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder of
any Senior Indebtedness of a Guarantor, whether such Senior Indebtedness was
created or acquired before or after the issuance of the Securities, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of Senior Indebtedness shall be deemed conclusively to have relied on
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness.
ARTICLE XIII
Miscellaneous
-------------
SECTION 13.01. TRUST INDENTURE ACT CONTROLS. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02. NOTICES. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Werner Holding Co. (DE), Inc.
1105 North Market Street, Suite 1300
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113
Wilmington, Delaware 19899
Attention of: Eric J. Werner, with copies to:
Christopher J. Stadler
Investcorp International Inc.
280 Park Avenue, 37 West
New York, NY 10017
Gibson, Dunn & Crutcher, LLP
200 Park Avenue
New York, NY 10166
Attn: Joerg H. Esdorn, Esq.
if to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
telecopier no.: (212) 858-2952
Attention of: Corporate Trust Administration
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be made in compliance with Section 313(c) of the TIA and mailed to the
Securityholder at the Securityholder's address as it appears on the registration
books of the Registrar and shall be sufficiently given if so mailed within the
time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Guarantors, the Trustee, the Registrar and anyone
else shall have the protection of TIA Section 312(c).
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SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, at the request of the
Trustee the Company shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 13.05 hereof) stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 13.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
To the extent applicable, the Company shall comply with the provisions of
Section 314(c)(3) of the TIA.
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 13.06. WHEN SECURITIES DISREGARDED. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver
<PAGE> 123
115
or consent, Securities owned by the Company or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company shall be disregarded and deemed not to be outstanding,
except that, for the purpose of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Securities
which the Trustee actually knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 13.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 13.08. LEGAL HOLIDAYS. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to
be open in the State of New York. If a payment date is a Legal Holiday, payment
shall be made on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period. If a regular record date is a
Legal Holiday, the record date shall not be affected.
SECTION 13.09. GOVERNING LAW. THIS INDENTURE AND
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 13.10. NO RECOURSE AGAINST OTHERS. A director,
officer, incorporator, employee, stockholder or Affiliate as such, of the
Company or any Guarantor shall not have any liability for any obligations of the
Company or any Guarantor under the Securities or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Securityholder waives and releases all such
liability. The waiver and release shall be part of the consideration for the
issue of the Securities.
SECTION 13.11. SUCCESSORS. All agreements of the Company and
each Guarantor in this Indenture and the Securities shall bind their successors.
All agreements of the Trustee in this Indenture shall bind its successors.
SECTION 13.12. MULTIPLE ORIGINALS. The parties may sign any
number of copies of this Indenture. Each
<PAGE> 124
116
signed copy shall be an original, but all of them together represent the same
agreement. One signed copy is enough to prove this Indenture.
SECTION 13.13. TABLE OF CONTENTS; HEADINGS. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
WERNER HOLDING CO. (DE), INC.,
by /s/
---------------------------
Name:
Title:
WERNER HOLDING CO. (PA), INC.,
by /s/
---------------------------
Name:
Title:
WERNER CO.,
by /s/
---------------------------
Name:
Title:
GOLD MEDAL LADDER COMPANY,
by /s/
---------------------------
Name:
Title:
<PAGE> 125
117
KENTUCKY LADDER COMPANY,
by /s/
---------------------------
Name:
Title:
FLORIDA LADDER COMPANY,
by /s/
---------------------------
Name:
Title:
WERNER MANAGEMENT CO.,
by /s/
---------------------------
Name:
Title:
WERNER FINANCIAL INC.,
by /s/
---------------------------
Name:
Title:
R.D. ARIZONA LADDER CORP.,
by /s/
---------------------------
Name:
Title:
WIP TECHNOLOGIES, INC.,
by /s/
---------------------------
Name:
Title:
<PAGE> 126
118
ARDEE INVESTMENT CO., INC.,
by /s/
---------------------------
Name:
Title:
OLYMPUS PROPERTIES, INC.,
by /s/
---------------------------
Name:
Title:
PHOENIX MANAGEMENT SERVICES,
INC.,
by /s/
---------------------------
Name:
Title:
IBJ SCHRODER BANK & TRUST
COMPANY, as Trustee,
by /s/
---------------------------
Name:
Title:
<PAGE> 127
EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY]
[GLOBAL SECURITIES LEGEND]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR 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. 1/
[RESTRICTED SECURITIES LEGEND]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES
FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED PRIOR TO THE LATER OF (X) TWO YEARS AFTER THE LATER OF (I)
THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (II) THE DATE THIS
SECURITY WAS ACQUIRED FROM AN AFFILIATE OF THE COMPANY OR (Y) THREE MONTHS AFTER
THE LAST DATE THAT THIS SECURITY WAS OWNED BY ANY AFFILIATE OF THE COMPANY, IN
EITHER CASE OTHER THAN (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
- --------
1 This paragraph should only be added if the security is issued in global
form.
<PAGE> 128
2
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION
S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN
THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A TRANSACTION INVOLVING A
MINIMUM PRINCIPAL AMOUNT OF $250,000 FOR SUCH SECURITIES FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
THE CASE OF ANY OF THE FOREGOING CLAUSES (A) THROUGH (F), A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE COMPANY AND THE TRUSTEE. THIS LEGEND WILL
BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE LATER OF (X) TWO YEARS AFTER
THE LATER OF (I) THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (II)
THE DATE THIS SECURITY WAS ACQUIRED FROM AN AFFILIATE OF THE COMPANY OR (Y)
THREE MONTHS AFTER THE LAST DATE THAT THIS SECURITY WAS OWNED BY ANY AFFILIATE
OF THE COMPANY.
WERNER HOLDING CO. (DE), INC.
10% SENIOR SUBORDINATED NOTE DUE 2007
No. ___ CUSIP No.
$___________
WERNER HOLDING CO. (DE), INC., a Delaware corporation (the
"Company"), promises to pay to ______________ ,or registered assigns, the
principal sum of ___________ on November 15, 2007.
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
<PAGE> 129
3
Additional provisions of this Security are set forth on the
other side of this Security.
Dated:
WERNER HOLDING CO. (DE), INC.,
by
-------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
IBJ SCHRODER BANK & TRUST COMPANY
as Trustee, certifies that
this is one of the Securities [Seal]
referred to in the Indenture,
by
-------------------------------
Authorized Signatory
<PAGE> 130
4
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
10% Senior Subordinated Note due 2007
1. INTEREST
WERNER HOLDING CO. (DE), INC., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Security at
the rate per annum shown above and shall pay Liquidated Damages, if any, payable
pursuant to the relevant Registration Rights Agreement.
The Company will pay interest and Liquidated Damages, if any,
semiannually on May 15 and November 15 of each year. Interest on the Securities
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from [the Issue Date with respect to this Security].
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 at the rate borne by
the Securities, and it shall pay interest on overdue installments of interest at
the same rate to the extent lawful.
2. METHOD OF PAYMENT
The Company will pay interest (except defaulted interest) on
and Liquidated Damages, if any, in respect of the Securities to the Persons who
are registered holders of Securities at the close of business on the May 1 or
November 1 next preceding the interest payment date even if Securities are
canceled after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money or by wire transfer of federal funds.
3. PAYING AGENT AND REGISTRAR
Initially, IBJ SCHRODER BANK & TRUST COMPANY (the "Trustee")
will act as Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar
<PAGE> 131
5
or co-registrar without notice to the Holders. The Company or any domestically
organized Wholly Owned Restricted Subsidiary may act as Paying Agent, Registrar
or co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as
of November 24, 1997 (the "Indenture"), among the Company, the Guarantors and
the Trustee. The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture
(the "Act"). Terms defined in the Indenture and not defined herein have the
meanings ascribed thereto in the Indenture. The Securities are subject to all
such terms, and Securityholders are referred to the Indenture and the Act for a
statement of those terms.
The Securities are unsecured senior subordinated obligations
of the Company and are limited to $270,000,000 in aggregate principal amount
outstanding, of which $135,000,000 in aggregate principal amount will be
initially issued on the Closing Date. Subject to the conditions set forth in the
Indenture, the Company may issue up to an additional $135,000,000 aggregate
principal amount of Additional Securities. This Security is one of the Initial
Securities referred to in the Indenture. The Securities include the Initial
Securities, the Additional Securities and any Exchange Securities and Private
Exchange Securities issued in exchange for the Initial Securities pursuant to
the Indenture. The Initial Securities, the Additional Securities, the Exchange
Securities and the Private Exchange Securities are treated as a single class of
securities under the Indenture. The Indenture imposes certain limitations on the
Incurrence of Indebtedness by the Company and its Restricted Subsidiaries; the
payment of dividends and other payments by the Company and its Restricted
Subsidiaries; Investments; sales of assets of the Company and Restricted
Subsidiaries; certain transactions with Affiliates; the lines of business in
which Holding and the Company and its Restricted Subsidiaries may operate;
Liens; and consolidations, mergers and transfers of all or substantially all of
the Company's or a Guarantor's assets. In addition, the Indenture prohibits
certain restrictions on distributions from Restricted Subsidiaries.
<PAGE> 132
6
5. OPTIONAL REDEMPTION
Except as set forth in the next two paragraphs, the Securities
may not be redeemed at the Company's option prior to November 15, 2002.
Thereafter, the Securities will be subject to redemption at any time at the
option of the Company, in whole or in part, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, (subject to the right of Holders on the relevant record date to receive
interest due on the relevant interest payment date), if redeemed during the
twelve-month period beginning on November 15 of the years indicated below:
<TABLE>
<CAPTION>
Redemption
Period Price
- ------ ----------
<S> <C>
2002 105.000%
2003 103.333%
2004 101.667%
2005 and thereafter 100.000%
</TABLE>
In addition, at any time and from time to time, prior to
November 15, 2000, the Company may redeem up to 35% of the sum of (i) the
original aggregate principal amount of Securities (other than Additional
Securities) and (ii) the original aggregate principal amount of any Additional
Securities at a redemption price of 110% of the principal amount thereof, plus
the accrued and unpaid interest and Liquidated Damages thereon, if any, to the
redemption date, (subject to the right of Holders on the relevant record date to
receive interest due on the relevant interest payment date), with the net cash
proceeds of a public offering of common stock of the Company or Holding;
provided that at least 65% of the sum of (i) the original aggregate principal
amount of Securities (other than Additional Securities) and (ii) the original
aggregate principal amount of any Additional Securities remains outstanding
immediately after the occurrence of such redemption; and provided, further, that
such redemption shall occur within 60 days of the date of the closing of such
public offering.
At any time on or prior to November 15, 2002, the Securities
may be redeemed as a whole but not in part at the option of the Company upon the
occurrence of a Change of Control, at a redemption price equal to 100% of the
principal amount thereof plus the Applicable Premium as of, and accrued but
unpaid interest and Liquidated Damages,
<PAGE> 133
7
if any, to, the redemption date, subject to the right ofHolders on the relevant
record date to receive interest due on the relevant interest payment date. In no
event may any such redemption occur more than 90 days after the occurrence of
such Change of Control.
6. NOTICE OF REDEMPTION
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at its registered address all in accordance
with the Indenture. If less than all of the Securities are to be redeemed at any
time, selection of Securities for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Securities are listed, or, if the Securities are not so
listed, on a pro rata basis, by lot or by such method as the Trustee shall deem
fair and appropriate; PROVIDED that no Securities of $1,000 or less shall be
redeemed in part. If money sufficient to pay the redemption price of and accrued
interest (if any) on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. REPURCHASE AT THE OPTION OF THE HOLDER
Upon a Change of Control, any Holder of Securities will have
the right, subject to certain conditions set forth in the Indenture, to cause
the Company to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest and Liquidated Damages thereon, (if
any) to the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date that is on or prior to the date of repurchase) as provided in, and subject
to the terms of, the Indenture.
<PAGE> 134
8
8. SUBORDINATION
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid before the Securities may be
paid. The Company agrees, and each Securityholder by accepting a Security
agrees, to the subordination provisions contained in the Indenture and
authorizes the Trustee to give it effect and appoints the Trustee as
attorney-in-fact for such purpose.
9. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay
any taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
10. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the
owner of it for all purposes.
11. UNCLAIMED MONEY
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
<PAGE> 135
9
12. DISCHARGE AND DEFEASANCE
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
13. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any past default or noncompliance with any provision of the Indenture
(other than payment of principal, premium, if any, Liquidated Damages, if any,
and interest) may be waived with the consent of the Holders of a majority in
principal amount then outstanding of the Securities. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Securities in addition to or in place of certificated Securities
(provided that the uncertificated Securities are issued in registered form for
purposes of Section 163(f) of the Code, or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the Code), to
provide for the assumption of the Company's or any Guarantor's obligations to
Holders of Securities in the case of a merger, consolidation or sale of assets,
to release any Security Guarantee in accordance with the provisions of the
Indenture, to provide for additional Guarantors, to make any change that would
provide any additional rights or benefits to the Holders of Securities or that
does not adversely affect the legal rights under this Indenture of any such
Holder, to comply with requirements of the SEC in order to effect or maintain
the qualification of the Indenture under the TIA or to provide for the issuance
of Additional Securities in compliance with Article II and Section 4.03 of the
Indenture.
<PAGE> 136
10
14. DEFAULTS AND REMEDIES
Under the Indenture, an Event of Default occurs if: (i) the
Company defaults in any payment of interest on, or Liquidated Damages with
respect to, any Security when the same becomes due and payable, whether or not
such payment shall be prohibited by Article X of the Indenture, and such default
continues for a period of 30 days; (ii) the Company defaults in the payment of
the principal of any Security when the same becomes due and payable at its
Stated Maturity, upon optional redemption, upon declaration or otherwise,
whether or not such payment shall be prohibited by Article X of the Indenture;
(iii) the Company fails to comply with other covenants and agreements in the
Indenture, subject to applicable grace periods as set forth in the Indenture;
(iv) certain accelerations (including failure to pay within any grace period
after final maturity) of other Indebtedness of the Company or any Restricted
Subsidiary that is a Significant Subsidiary occur if the amount accelerated (or
so unpaid) exceeds $20,000,000 or its foreign currency equivalent; (v) certain
events of bankruptcy, insolvency or reorganization with respect to the Company
and any Restricted Subsidiary which is a Significant Subsidiary; (vi) certain
judgments or decrees for the payment of money in excess of $20,000,000 or its
foreign currency equivalent against the Company or any Restricted Subsidiary
that is a Significant Subsidiary; and (vii) except as is permitted by the
Indenture, a Security Guarantee by Holding or a Guarantor that is a Significant
Subsidiary shall be held in any judicial proceeding to be unenforceable or
invalid or shall for any reason cease to be in full force and effect (other than
in accordance with its terms) or any Guarantor denies or disaffirms its
obligations under the Indenture or its Security Guarantee. If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Securities may declare all the Securities to be due and
payable within five days after notice is given pursuant to the Indenture.
Certain events of bankruptcy or insolvency are Events of Default that will
result in the Securities being due and payable immediately.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may with hold from Securityholders notice of any continuing
Default
<PAGE> 137
11
(except a Default in payment of principal, premium, if any, or interest)
if and so long as a committee of its Trust Officers in good faith determines
that withholding notice is in the interest of the Holders.
15. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
16. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS
No director, officer, employee, incorporator, stockholder or
Affiliate of the Company, as such, will have any liability for any obligations
of the Company under the Securities, the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. No director,
officer, employee, incorporator, stockholder or Affiliate of any of the
Guarantors, as such, will have any liability for any obligations of the
Guarantors under the Security Guarantees, the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of Securities and Security Guarantees by accepting a Security and a
Security Guarantee waives and releases all such liabilities. The waiver and
release are part of the consideration for issuance of the Securities and the
Security Guarantees.
17. GOVERNING LAW
THE SECURITIES 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 LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
<PAGE> 138
12
18. AUTHENTICATION
This Security shall not be valid until an authorized
signatory of the Trustee (or an authenticating agent) manually signs the
certificate of authentication on the other side of this Security.
19. ABBREVIATIONS
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
20. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and have directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE SECURITY HOLDER A COPY OF THE INDENTURE WHICH
HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
WERNER HOLDING CO. (DE), INC.
1105 NORTH MARKET STREET, SUITE 1300
WILMINGTON, DELAWARE 19899
ATTENTION OF SECRETARY
<PAGE> 139
13
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ________________________ agent to transfer this Security
on the books of the Company. The agent may substitute another to act for him.
Date: Your Signature:
------------------ ----------------------------------------
Signature Guarantee:
------------------------------------------------------------
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
<PAGE> 140
14
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
Reference is hereby made to that certain Indenture dated November 24, 1997 (the
"Indenture") between Werner Holding Company (DE), Inc., as Issuer (the
"Company"), the Initial Guarantors (as defined therein) and IBJ Schroder Bank &
Trust Company, as trustee (the "Trustee"). Capitalized terms used but not
defined herein shall have the meanings set forth in the Indenture.
This certificate relates to $_________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
[ ] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depository a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated
above);
[ ] has requested the Trustee by written order to exchange
or register the transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the periods referred to in Rule
144(k) under the Securities Act, the undersigned confirms that such Securities
are being transferred in accordance with its terms:
CHECK ONE BOX BELOW:
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration
statement under the Securities Act of
1933; or
(3) [ ] inside the United States to a "qualified
institutional buyer" (as defined in Rule
144A under the Securities Act of 1933) that
purchases for its own account or for the
account of a qualified institutional buyer
to whom notice is
<PAGE> 141
15
given that such transfer is being made in
reliance on Rule 144A under the Securities
Act, in each case pursuant to and in
compliance with Rule 144A under the
Securities Act of 1933; or
(4) [ ] outside the United States in an offshore
transaction within the meaning of Regulation
S under the Securities Act in compliance
with Rule 904 under the Securities Act of
1933; or
(5) [ ] to an institutional "accredited
investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act
of 1933) that has furnished to the
Trustee a signed letter containing
certain representations and agreements
(the form of which letter is attached to
the Indenture as Exhibit D and which may
be obtained from the Trustee); or
(6) [ ] pursuant to another available exemption
from registration provided by Rule 144 under
the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Securities evidenced by this certificate
in the name of any person other than the registered holder
thereof; PROVIDED, HOWEVER, that if box (4), (5) or (6) is
checked, the Trustee may require, prior to registering any
such transfer of the Securities, such legal opinions,
certifications and other information as the Company has
reasonably requested to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities
Act of 1933, such as the exemption provided by Rule 144 under
such Act.
------------------------
Signature
Signature Guarantee:
-----------------------------------------------------------
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
<PAGE> 142
16
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933 ("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 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.
Dated:
----------------------------- ----------------------------------
NOTICE: To be executed by
an executive officer
<PAGE> 143
17
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase Custodian
</TABLE>
<PAGE> 144
18
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box:
[ ] 4.06 Asset Sale [ ] 4.08 Change of Control
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture,
state the amount: $______.
Date: Your Signature:
--------------------- -----------------------------------
(Sign exactly as your name appears
on the other side of the Security)
------------------
Tax I.D. number
Signature Guarantee:
-----------------------------------------------------------
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
<PAGE> 145
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
[Global Securities Legend]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR 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. 2/
WERNER HOLDING CO. (DE), INC.
10% SENIOR SUBORDINATED NOTE DUE 2007
No. __ CUSIP No. _________
$
WERNER HOLDING CO. (DE), INC., a Delaware corporation (the
"Company"), promises to pay to _________________ , or registered assigns, the
principal sum of $___________ on November 15, 2007.
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
- --------
2 This paragraph should only be added if the Security is issued in global
form.
<PAGE> 146
2
Additional provisions of this Security are set forth on the
other side of this Security.
Dated:
WERNER HOLDING CO. (DE), INC.,
by
--------------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
IBJ SCHRODER BANK & TRUST
COMPANY, as Trustee,
certifies that this is [Seal]
one of the Securities
referred to in the
Indenture,
by
-------------------------------
Authorized Signatory
<PAGE> 147
3
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
10% Senior Subordinated Note due 2007
1. INTEREST
WERNER HOLDING CO. (DE), INC., a Delaware corporation (the
"Company") promises to pay interest on the principal amount of this Security at
the rate per annum shown above.
The Company will pay interest semiannually on May 15 and
November 15 of each year. Interest on the Securities will accrue from the most
recent date to which interest has been paid on the Initial Security for which
this Exchange Security was issued or, if no interest has been paid, from [the
Issue Date with respect to this Security]. 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 at the rate borne by the Securities, and it shall pay
interest on overdue installments of interest at the same rate to the extent
lawful.
2. METHOD OF PAYMENT
The Company will pay interest (except defaulted interest) on
and, if any, in respect of the Securities to the Persons who are registered
holders of Securities at the close of business on the May 1 or November 1 next
preceding the interest payment date even if Securities are canceled after the
record date and on or before the interest payment date. Holders must surrender
Securities to a Paying Agent to collect principal payments. The Company will pay
principal and interest in money of the United States that at the time of payment
is legal tender for payment of public and private debts. However, the Company
may pay principal and interest by check payable in such money or by wire
transfer of federal funds.
3. PAYING AGENT AND REGISTRAR
Initially, IBJ SCHRODER BANK & TRUST COMPANY (the "Trustee")
will act as Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar
<PAGE> 148
4
or co-registrar without notice to the Holders. The Company or any domestically
organized Wholly Owned Restricted Subsidiary may act as Paying Agent, Registrar
or co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as
of November 24, 1997 (the "Indenture"), among the Company, the Guarantors and
the Trustee. The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the
Indenture (the "Act"). Terms defined in the Indenture and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are subject
to all such terms, and Securityholders are referred to the Indenture and the
Act for a statement of those terms.
The Securities are unsecured senior subordinated obligations
of the Company and are limited to $270,000,000 in aggregate principal amount
outstanding, of which $135,000,000 in aggregate principal amount will be
initially issued on the Closing Date. Subject to the conditions set forth in the
Indenture, the Company may issue up to an additional $135,000,000 aggregate
principal amount of Additional Securities. The Indenture imposes certain
limitations on the Incurrence of Indebtedness by the Company and its Restricted
Subsidiaries; the payment of dividends and other payments by the Company and its
Restricted Subsidiaries; Investments; sales of assets of the Company and
Restricted Subsidiaries; certain transactions with Affiliates; the lines of
business in which Holding and the Company and its Restricted Subsidiaries may
operate; Liens; and consolidations, mergers and transfers of all or
substantially all of the Company's or a Guarantor's assets. In addition, the
Indenture prohibits certain restrictions on distributions from Restricted
Subsidiaries.
5. OPTIONAL REDEMPTION
Except as set forth in the next two paragraphs, the Securities
may not be redeemed at the Company's option prior to November 15, 2002.
Thereafter, the Securities will be subject to redemption at any time at the
option of the Company, in whole or in part, at the redemption prices (expressed
as percentages of principal amount) set forth
<PAGE> 149
5
below plus accrued and unpaid interest thereon, if any, to the applicable
redemption date, (subject to the right of Holders on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed during
the twelve-month period beginning on November 15 of the years indicated below:
<TABLE>
<CAPTION>
Redemption
Period Price
- ------ ----------
<S> <C>
2002 105.000%
2003 103.333%
2004 101.667%
2005 and thereafter 100.00%
</TABLE>
In addition, at any time and from time to time, prior to
November 15, 2000, the Company may redeem up to 35% of the sum of (i) the
original aggregate principal amount of Securities (other than Additional
Securities) and (ii) the original aggregate principal amount of any Additional
Securities at a redemption price of 110% of the principal amount thereof, plus
the accrued and unpaid interest thereon, if any, to the redemption date,
(subject to the right of Holders on the relevant record date to receive interest
due on the relevant interest payment date), with the net cash proceeds of a
public offering of common stock of the Company or Holding; provided that at
least 65% of the sum of (i) the original aggregate principal amount of
Securities (other than Additional Securities) and (ii) the original aggregate
principal amount of any Additional Securities remains outstanding immediately
after the occurrence of such redemption; and provided, further, that such
redemption shall occur within 60 days of the date of the closing of such public
offering.
At any time on or prior to November 15, 2002, the Securities
may be redeemed as a whole but not in part at the option of the Company upon the
occurrence of a Change of Control, at a redemption price equal to 100% of the
principal amount thereof plus the Applicable Premium as of, and accrued but
unpaid interest and, if any, to, the redemption date, subject to the right of
Holders on the relevant record date to receive interest due on the relevant
interest payment date. In no event may any such redemption occur more than 90
days after the occurrence of such Change of Control.
<PAGE> 150
6
6. NOTICE OF REDEMPTION
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at its registered address all in accordance
with the Indenture. If less than all of the Securities are to be redeemed at any
time, selection of Securities for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Securities are listed, or, if the Securities are not so
listed, on a pro rata basis, by lot or by such method as the Trustee shall deem
fair and appropriate; PROVIDED that no Securities of $1,000 or less shall be
redeemed in part. If money sufficient to pay the redemption price of and accrued
interest (if any) on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. REPURCHASE AT THE OPTION OF THE HOLDER
Upon a Change of Control, any Holder of Securities will have
the right, subject to certain conditions set forth in the Indenture, to cause
the Company to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest thereon, (if any) to the date of
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date that is on or
prior to the date of repurchase) as provided in, and subject to the terms of,
the Indenture.
8. SUBORDINATION
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid before the Securities may be
paid. The Company agrees, and each Securityholder by accepting a Security
agrees, to the subordination provisions contained in the Indenture and
authorizes the Trustee to
<PAGE> 151
7
give it effect and appoints the Trustee as attorney-in-fact for such purpose.
9. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay
any taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
10. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the
owner of it for all purposes.
11. UNCLAIMED MONEY
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
12. DISCHARGE AND DEFEASANCE
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
<PAGE> 152
8
13. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any past default or noncompliance with any provision of the Indenture
(other than payment of principal, premium, if any, and interest) may be waived
with the consent of the Holders of a majority in principal amount then
outstanding of the Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Company and the
Trustee may amend the Indenture or the Securities to cure any ambiguity, defect
or inconsistency, to provide for uncertificated Securities in addition to or in
place of certificated Securities (provided that the uncertificated Securities
are issued in registered form for purposes of Section 163(f) of the Code, or in
a manner such that the uncertificated Securities are described in Section
163(f)(2)(B) of the Code), to provide for the assumption of the Company's or any
Guarantor's obligations to Holders of Securities in the case of a merger,
consolidation or sale of assets, to release any Security Guarantee in accordance
with the provisions of the Indenture, to provide for additional Guarantors, to
make any change that would provide any additional rights or benefits to the
Holders of Securities or that does not adversely affect the legal rights under
this Indenture of any such Holder, to comply with requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the TIA or
to provide for the issuance of Additional Securities in compliance with Article
II and Section 4.03 of the Indenture.
14. DEFAULTS AND REMEDIES
Under the Indenture, an Event of Default occurs if: (i) the
Company defaults in any payment of interest on, or with respect to, any Security
when the same becomes due and payable, whether or not such payment shall be
prohibited by Article X of the Indenture, and such default continues for a
period of 30 days; (ii) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at its Stated Maturity, upon
optional redemption, upon declaration or otherwise, whether or not such payment
shall be prohibited by Article X of the Indenture; (iii) the Company fails to
comply with other covenants and agreements in the Indenture, subject to
applicable grace periods as set forth in the Indenture;
<PAGE> 153
9
(iv) certain accelerations (including failure to pay within any grace period
after final maturity) of other Indebtedness of the Company or any Restricted
Subsidiary that is a Significant Subsidiary occur if the amount accelerated (or
so unpaid) exceeds $20,000,000 or its foreign currency equivalent; (v) certain
events of bankruptcy, insolvency or reorganization with respect to the Company
and any Restricted Subsidiary which is a Significant Subsidiary; (vi) certain
judgments or decrees for the payment of money in excess of $20,000,000 or its
foreign currency equivalent against the Company or any Restricted Subsidiary
that is a Significant Subsidiary; and (vii) except as is permitted by the
Indenture, a Security Guarantee by Holding or a Guarantor that is a Significant
Subsidiary shall be held in any judicial proceeding to be unenforceable or
invalid or shall for any reason cease to be in full force and effect (other than
in accordance with its terms) or any Guarantor denies or disaffirms its
obligations under the Indenture or its Security Guarantee. If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Securities may declare all the Securities to be due and
payable within five days after notice is given pursuant to the Indenture.
Certain events of bankruptcy or insolvency are Events of Default that will
result in the Securities being due and payable immediately.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of principal, premium, if any, or interest)
if and so long as a committee of its Trust Officers in good faith determines
that withholding notice is in the interest of the Holders.
15. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may other wise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
<PAGE> 154
10
16. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator, stockholder or
Affiliate of the Company, as such, will have any liability for any obligations
of the Company under the Securities, the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. No director,
officer, employee, incorporator, stockholder or Affiliate of any of the
Guarantors, as such, will have any liability for any obligations of the
Guarantors under the Security Guarantees, the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of Securities and Security Guarantees by accepting a Security and a
Security Guarantee waives and releases all such liabilities. The waiver and
release are part of the consideration for issuance of the Securities and the
Security Guarantees.
17. GOVERNING LAW
THE SECURITIES 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 LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
18. AUTHENTICATION
This Security shall not be valid until an authorized
signatory of the Trustee (or an authenticating agent) manually signs the
certificate of authentication on the other side of this Security.
19. ABBREVIATIONS
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
<PAGE> 155
11
20. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and have directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH
HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
WERNER HOLDING CO. (DE), INC.
1105 NORTH MARKET STREET, SUITE 1300
WILMINGTON, DELAWARE 19899
ATTENTION OF SECRETARY
<PAGE> 156
12
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint _________________ agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
Date: Your Signature:
----------------- -----------------------------------------
Signature Guarantee:
-----------------------------------------------------------
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
<PAGE> 157
13
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase Custodian
</TABLE>
<PAGE> 158
14
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box:
[ ] 4.06 Asset Sale [ ] 4.08 Change of Control
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture,
state the amount: $ .
Date: Your Signature:
-------------- -------------------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
-----------------------------------------------------------
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
<PAGE> 159
EXHIBIT C
[FORM OF FACE OF PRIVATE EXCHANGE SECURITY]
[GLOBAL SECURITIES LEGEND]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR 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. 3/
[RESTRICTED SECURITIES LEGEND]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES
FOR THE BENEFIT OF THE COMPANY THAT HIS SECURITY MAY NOT BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED PRIOR TO THE LATER OF (X) TWO YEARS AFTER THE LATER OF (I)
THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (II) THE DATE THIS
SECURITY WAS ACQUIRED FROM AN AFFILIATE OF THE COMPANY OR (Y) THREE MONTHS AFTER
THE LAST DATE THAT THIS SECURITY WAS OWNED BY ANY AFFILIATE OF THE COMPANY, IN
EITHER CASE OTHER THAN (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES
- --------
3 This paragraph should only be added if the security is issued in global
form.
<PAGE> 160
2
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A TRANSACTION INVOLVING A MINIMUM PRINCIPAL
AMOUNT OF $250,000 FOR SUCH SECURITIES FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE
(D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF ANY OF THE
FOREGOING CLAUSES (A) THROUGH (F), A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE COMPANY AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE LATER OF (X) TWO YEARS AFTER THE LATER OF (I)
THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (II) THE DATE THIS
SECURITY WAS ACQUIRED FROM AN AFFILIATE OF THE COMPANY OR (Y) THREE MONTHS AFTER
THE LAST DATE THAT THIS SECURITY WAS OWNED BY ANY AFFILIATE OF THE COMPANY.
WERNER HOLDING CO. (DE), INC.
10% SENIOR SUBORDINATED NOTE DUE 2007
No. ___ CUSIP No.
$_______
WERNER HOLDING CO. (DE), INC., a Delaware corporation (the
"Company"), promises to pay to _______________, or registered assigns, the
principal sum of ___________ on November 15, 2007.
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
<PAGE> 161
3
Additional provisions of this Security are set forth on the
other side of this Security.
Dated:
WERNER HOLDING CO. (DE), INC.,
by
------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
IBJ SCHRODER BANK & TRUST COMPANY
as Trustee, certifies that
this is one of the Securities [Seal]
referred to in the Indenture,
by
-----------------------------
Authorized Signatory
<PAGE> 162
4
[FORM OF REVERSE SIDE OF PRIVATE EXCHANGE SECURITY]
10% Senior Subordinated Note due 2007
1. INTEREST
WERNER HOLDING CO. (DE), INC., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Security at
the rate per annum shown above and shall pay Liquidated Damages, if any, payable
pursuant to the relevant Registration Rights Agreement, (Capitalized terms used
herein and not defined herein have the meanings used in the Indenture).
The Company will pay interest and Liquidated Damages, if any,
semiannually on May 15 and November 15 of each year. Interest on the Securities
will accrue from the most recent date to which interest has been paid on the
Initial Security for which this Private Exchange Security was issued or, if no
interest has been paid, from [the Issue Date with respect to this Security].
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 at the rate borne by
the Securities, and it shall pay interest on overdue installments of interest at
the same rate to the extent lawful.
2. METHOD OF PAYMENT
The Company will pay interest (except defaulted interest) on
and Liquidated Damages, if any, in respect of the Securities to the Persons who
are registered holders of Securities at the close of business on the May 1 or
November 1 next preceding the interest payment date even if Securities are
canceled after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money or by wire transfer of federal funds.
3. PAYING AGENT AND REGISTRAR
Initially, IBJ SCHRODER BANK & TRUST COMPANY (the "Trustee")
will act as Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar
<PAGE> 163
5
or co-registrar without notice to the Holders. The Company or any domestically
organized Wholly Owned Restricted Subsidiary may act as Paying Agent, Registrar
or co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as
of November 24, 1997 (the "Indenture"), among the Company, the Guarantors and
the Trustee. The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture
(the "Act"). Terms defined in the Indenture and not defined herein have the
meanings ascribed thereto in the Indenture. The Securities are subject to all
such terms, and Securityholders are referred to the Indenture and the Act for a
statement of those terms.
The Securities are unsecured senior subordinated obligations
of the Company and are limited to $270,000,000 in aggregate principal amount
outstanding, of which $135,000,000 in aggregate principal amount will be
initially issued on the Closing Date. Subject to the conditions set forth in the
Indenture, the Company may issue up to an additional $135,000,000 aggregate
principal amount of Securities. This Security is one of the Initial Securities
referred to in the Indenture. The Securities include the Initial Securities, the
Additional Securities and any Exchange Securities and Private Exchange
Securities issued in exchange for the Initial Securities pursuant to the
Indenture. The Initial Securities, the Additional Securities, the Exchange
Securities and the Private Exchange Securities are treated as a single class of
securities under the Indenture. The Indenture imposes certain limitations on the
Incurrence of Indebtedness by the Company and its Restricted Subsidiaries; the
payment of dividends and other payments by the Company and its Restricted
Subsidiaries; Investments; sales of assets of the Company and Restricted
Subsidiaries; certain transactions with Affiliates; the lines of business in
which Holding and the Company and its Restricted Subsidiaries may operate;
Liens; and consolidations, mergers and transfers of all or substantially all of
the Company's or a Guarantor's assets. In addition, the Indenture prohibits
certain restrictions on distributions from Restricted Subsidiaries.
<PAGE> 164
6
5. OPTIONAL REDEMPTION
Except as set forth in the next two paragraphs, the Securities
may not be redeemed at the Company's option prior to November 15, 2002.
Thereafter, the Securities will be subject to redemption at any time at the
option of the Company, in whole or in part, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, (subject to the right of Holders on the relevant record date to receive
interest due on the relevant interest payment date), if redeemed during the
twelve-month period beginning on November 15 of the years indicated below:
<TABLE>
<CAPTION>
Redemption
Period Price
- ------ ----------
<S> <C>
2002 105.000%
2003 103.333%
2004 101.667%
2005 and thereafter 100.000%
</TABLE>
In addition, at any time and from time to time, prior to
November 15, 2000, the Company may redeem up to 35% of the sum of (i) the
original aggregate principal amount of Securities (other than Additional
Securities) and (ii) the original aggregate principal amount of any Additional
Securities at a redemption price of 110% of the principal amount thereof, plus
the accrued and unpaid interest and Liquidated Damages thereon, if any, to the
redemption date, (subject to the right of Holders on the relevant record date to
receive interest due on the relevant interest payment date), with the net cash
proceeds of a public offering of common stock of the Company or Holding;
provided that at least 65% of the sum of (i) the original aggregate principal
amount of Securities (other than Additional Securities) and (ii) the original
aggregate principal amount of any Additional Securities remains outstanding
immediately after the occurrence of such redemption; and provided, further, that
such redemption shall occur within 60 days of the date of the closing of such
public offering.
At any time on or prior to November 15, 2002, the Securities
may be redeemed as a whole but not in part at the option of the Company upon the
occurrence of a Change of Control, at a redemption price equal to 100% of the
principal amount thereof plus the Applicable Premium as of, and accrued but
unpaid interest and Liquidated Damages, if
<PAGE> 165
7
any, to, the redemption date, subject to the right of Holders on the relevant
record date to receive interest due on the relevant interest payment date. In no
event may any such redemption occur more than 90 days after the occurrence of
such Change of Control.
6. NOTICE OF REDEMPTION
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at its registered address all in accordance
with the Indenture. If less than all of the Securities are to be redeemed at any
time, selection of Securities for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Securities are listed, or, if the Securities are not so
listed, on a pro rata basis, by lot or by such method as the Trustee shall deem
fair and appropriate; PROVIDED that no Securities of $1,000 or less shall be
redeemed in part. If money sufficient to pay the redemption price of and accrued
interest (if any) on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. REPURCHASE AT THE OPTION OF THE HOLDER
Upon a Change of Control, any Holder of Securities will have
the right, subject to certain conditions set forth in the Indenture, to cause
the Company to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest and Liquidated Damages thereon, (if
any) to the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date that is on or prior to the date of repurchase) as provided in, and subject
to the terms of, the Indenture.
<PAGE> 166
8
8. SUBORDINATION
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness
of the Company must be paid before the Securities may be paid. The Company
agrees, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give it effect and appoints the Trustee as attorney-in-fact for such purpose.
9. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay
any taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
10. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the
owner of it for all purposes.
11. UNCLAIMED MONEY
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
<PAGE> 167
9
12. DISCHARGE AND DEFEASANCE
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
13. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any past default or noncompliance with any provision of the Indenture
(other than payment of principal, Liquidated Damages, if any, and interest) may
be waived with the consent of the Holders of a majority in principal amount then
outstanding of the Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Company and the
Trustee may amend the Indenture or the Securities to cure any ambiguity, defect
or inconsistency, to provide for uncertificated Securities in addition to or in
place of certificated Securities (provided that the uncertificated Securities
are issued in registered form for purposes of Section 163(f) of the Code, or in
a manner such that the uncertificated Securities are described in Section
163(f)(2)(B) of the Code), to provide for the assumption of the Company's or any
Guarantor's obligations to Holders of Securities in the case of a merger,
consolidation or sale of assets, to release any Security Guarantee in accordance
with the provisions of the Indenture, to provide for additional Guarantors, to
make any change that would provide any additional rights or benefits to the
Holders of Securities or that does not adversely affect the legal rights under
this Indenture of any such Holder, to comply with requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the TIA or
to provide for the issuance of Additional Securities in compliance with Article
II and Section 4.03 of the Indenture.
<PAGE> 168
10
14. DEFAULTS AND REMEDIES
Under the Indenture, an Event of Default occurs if: (i) the
Company defaults in any payment of interest on, or Liquidated Damages with
respect to, any Security when the same becomes due and payable, whether or not
such payment shall be prohibited by Article X of the Indenture, and such default
continues for a period of 30 days; (ii) the Company defaults in the payment of
the principal of any Security when the same becomes due and payable at its
Stated Maturity, upon optional redemption, upon declaration or otherwise,
whether or not such payment shall be prohibited by Article X of the Indenture;
(iii) the Company fails to comply with other covenants and agreements in the
Indenture, subject to applicable grace periods as set forth in the Indenture;
(iv) certain accelerations (including failure to pay within any grace period
after final maturity) of other Indebtedness of the Company or any Restricted
Subsidiary that is a Significant Subsidiary occur if the amount accelerated (or
so unpaid) exceeds $20,000,000 or its foreign currency equivalent; (v) certain
events of bankruptcy, insolvency or reorganization with respect to the Company
and any Restricted Subsidiary which is a Significant Subsidiary; (vi) certain
judgments or decrees for the payment of money in excess of $20,000,000 or its
foreign currency equivalent against the Company or any Restricted Subsidiary
that is a Significant Subsidiary; and (vii) except as is permitted by the
Indenture, a Security Guarantee by Holding or a Guarantor that is a Significant
Subsidiary shall be held in any judicial proceeding to be unenforceable or
invalid or shall for any reason cease to be in full force and effect (other than
in accordance with its terms) or any Guarantor denies or disaffirms its
obligations under the Indenture or its Security Guarantee. If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Securities may declare all the Securities to be due and
payable within five days after notice is given pursuant to the Indenture.
Certain events of bankruptcy or insolvency are Events of Default that will
result in the Securities being due and payable immediately.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default
<PAGE> 169
11
(except a Default in payment of principal, premium, if any, or interest)
if and so long as a committee of its Trust Officers in good faith determines
that withholding notice is in the interest of the Holders.
15. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
16. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator, stockholder or
Affiliate of the Company, as such, will have any liability for any obligations
of the Company under the Securities, the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. No director,
officer, employee, incorporator, stockholder or Affiliate of any of the
Guarantors, as such, will have any liability for any obligations of the
Guarantors under the Security Guarantees, the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of Securities and Security Guarantees by accepting a Security and a
Security Guarantee waives and releases all such liabilities. The waiver and
release are part of the consideration for issuance of the Securities and the
Security Guarantees.
17. GOVERNING LAW
THE SECURITIES 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 LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
<PAGE> 170
12
18. AUTHENTICATION
This Security shall not be valid until an authorized
signatory of the Trustee (or an authenticating agent) manually signs the
certificate of authentication on the other side of this Security.
19. ABBREVIATIONS
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
20. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and have directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH
HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
WERNER HOLDING CO. (DE), INC.
1105 NORTH MARKET STREET, SUITE 1300
WILMINGTON, DELAWARE 19899
ATTENTION OF SECRETARY
<PAGE> 171
13
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ____________________ agent to transfer this Security on
the books of the Company. The agent may substitute another to act for him.
Date: Your Signature:
----------------- -----------------------------------------
Signature Guarantee:
-----------------------------------------------------------
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
<PAGE> 172
14
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
Reference is hereby made to that certain Indenture dated November 24, 1997 (the
"Indenture") between Werner Holding Company (DE), Inc., as Issuer (the
"Company"), the Initial Guarantors (as defined therein) and IBJ Schroder Bank &
Trust Company, as trustee (the "Trustee"). Capitalized terms used but not
defined herein shall have the meanings set forth in the Indenture.
This certificate relates to $_________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
[ ] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depository a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated
above);
[ ] has requested the Trustee by written order to exchange
or register the transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act, the undersigned confirms that such Securities
are being transferred in accordance with its terms:
CHECK ONE BOX BELOW:
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration
statement under the Securities Act of
1933; or
(3) [ ] inside the United States to a "qualified
institutional buyer" (as defined in Rule
144A under the Securities Act of 1933) that
purchases for its own account or for the
account of a qualified institutional buyer
to whom notice is
<PAGE> 173
15
given that such transfer is being made in
reliance on Rule 144A under the Securities
Act, in each case pursuant to and in
compliance with Rule 144A under the
Securities Act of 1933; or
(4) [ ] outside the United States in an offshore
transaction within the meaning of Regulation
S under the Securities Act in compliance
with Rule 904 under the Securities Act of
1933; or
(5) [ ] to an institutional "accredited
investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act
of 1933) that has furnished to the
Trustee a signed letter containing
certain representations and agreements
(the form of which letter is attached to
the Indenture as Exhibit D and which may
be obtained from the Trustee); or
(6) [ ] pursuant to another available exemption
from registration provided by Rule 144 under
the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Securities evidenced by this certificate
in the name of any person other than the registered holder
thereof; PROVIDED, HOWEVER, that if box (4), (5) or (6) is
checked, the Trustee may require, prior to registering any
such transfer of the Securities, such legal opinions,
certifications and other information as the Company has
reasonably requested to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not
subject to, the registration
<PAGE> 174
16
requirements of the Securities Act of 1933, such as the
exemption provided by Rule 144 under such Act.
------------------------
Signature
Signature Guarantee:
----------------------------------------------------------
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
<PAGE> 175
17
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933 ("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 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.
Dated:
------------------------- ----------------------------------------
NOTICE: To be executed by
an executive officer
<PAGE> 176
18
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase Custodian
</TABLE>
<PAGE> 177
19
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box:
[ ] 4.06 Asset Sale [ ] 4.08 Change of Control
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture,
state the amount: $____________.
Date: Your Signature:
------------------ --------------------------------------
(Sign exactly as your name appears
on the other side of the Security)
------------------
Tax I.D. number
Signature Guarantee:
-----------------------------------------------------
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
<PAGE> 178
EXHIBIT D
[Form of Transferee Letter of Representation]
Werner Holding Co. (DE), Inc.
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Dear Ladies and Gentlemen:
This certificate is delivered to request a transfer of $
__________ principal amount of the 10% Senior Subordinated Notes due 2007 (the
"Securities") of Werner Holding Co. (DE), Inc. (the "Company").
Upon transfer, the Securities would be registered in the name
of the new beneficial owner as follows:
Name:
-------------------------------------
Address:
---------------------------------
Taxpayer ID Number:
-----------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended
(the "Securities Act")) purchasing for our own account or for the account of
such an institutional "accredited investor" at least $250,000 principal amount
of the Securities, and we are acquiring the Securities not with a view to, or
for offer or sale in connection with, any distribution in violation of the
Securities Act. We have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risk of our investment in
the Securities and invest in or purchase securities similar to the Securities in
the normal course of our business. We and any accounts for which we are acting
are each able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered
under the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf of
any investor account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to the later of the date which is two
years after (X) the later of (A) the date of original issue or (B)
<PAGE> 179
2
the date on which this Security was acquired from an affiliate of the Company or
(Y) the date that is three months after the last date on which the Company or
any affiliate of the Company was the owner of such Securities (or any
predecessor thereto) only (a) to the Company, (b) pursuant to a registration
statement which has been declared effective under the Securities Act, (c) in a
transaction complying with the requirements of Rule 144A under the Securities
Act, to a person we reasonably believe is a qualified institutional buyer under
Rule 144A (a "QIB") that purchases for its own account or for the account of a
QIB and to whom notice is given that the transfer is being made in reliance on
Rule 144A, (d) pursuant to offers and sales that occur outside the United States
within the meaning of Regulation S under the Securities Act or (e) to an
institutional "accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act that is purchasing for its own account or
for the account of such an institutional "accredited investor", in each case in
a transaction involving a minimum principal amount of Securities of $250,000 or
(f) pursuant to any other available exemption from the registration requirements
of the Securities Act, subject in each of the foregoing cases to any requirement
of law that the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and in
compliance with any applicable state securities laws. If any resale or other
transfer of the Securities is proposed to be made pursuant to clause (e) above
prior to the later of the date which is two years after (X) the later of (A) the
date of original issue or (B) the date on which this Security was acquired from
an affiliate of the Company or (Y) the date that is three months after the last
date on which the Company or any affiliate of the Company was the owner of such
Securities (or any predecessor thereto), the transferor shall deliver a letter
from the transferee substantially in the form of this letter to the Company and
the Trustee, which shall provide, among other things, that the transferee is an
institutional "accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act and that it is acquiring such Securities for
investment purposes and not for distribution in violation of the Securities Act.
Each purchaser acknowledges that the Company and the Trustee reserve the right
prior to any offer, sale or other transfer prior to the later of the date which
is two years after (X) the later of (A) the date of original issue or (B) the
date on which this Security was acquired from an affiliate of the Company or (Y)
the date that is three months after the last date on which the Company or any
affiliate of the Company was the
<PAGE> 180
3
owner of such Securities (or any predecessor thereto) of the Securities pursuant
to clause (d), (e) or (f) above to require the delivery of an opinion of
counsel, certifications and/or other information satisfactory to the Company and
the Trustee.
TRANSFEREE:
------------------------------
BY
--------------------------------------
<PAGE> 181
EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental
Indenture"), dated as of [ ], among [NEW GUARANTOR]
(the "New Subsidiary Guarantor"), a subsidiary of
Werner Holding Co. (DE), Inc. (or its successor), a
Delaware corporation (the "Company"), THE COMPANY,
the existing guarantors (the "Existing Guarantors")
under the indenture referred to below, and IBJ
SCHRODER BANK & TRUST COMPANY, a New York banking
corporation, as trustee under the indenture referred
to below (the "Trustee").
W I T N E S S E T H
WHEREAS the Company and the Existing Guarantors have
heretofore executed and delivered to the Trustee an indenture (the "Indenture"),
dated as of November 24, 1997, providing for the issuance of an aggregate
principal amount of up to $270,000,000 of 10% Senior Subordinated Notes due 2007
(the "Securities");
WHEREAS Section 4.12 of the Indenture provides that the
Company is required to cause the New Guarantor to execute and deliver to the
Trustee a supplemental indenture pursuant to which the New Subsidiary Guarantor
shall unconditionally guarantee all of the Company's obligations under the
securities pursuant to a Security Guarantee on the terms and conditions set
forth herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the
Trustee, the Company and the Existing Guarantors are authorized to execute and
deliver this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the New Guarantor, the Company and the Existing Guarantors and the Trustee
mutually covenant and agree for the equal and ratable benefit of the holders of
the Securities as follows:
1. DEFINITIONS. (a) Capitalized terms used
herein without definition shall have the meanings assigned
to them in the Indenture.
<PAGE> 182
2
(b) For all purposes of this Supplemental Indenture, except as
otherwise herein expressly provided or unless the context otherwise requires:
(i) the terms and expressions used herein shall have the same meanings as
corresponding terms and expressions used in the Indenture; and (ii) the words
"herein," "hereof" and "hereby" and other words of similar import used in this
Supplemental Indenture refer to this Supplemental Indenture as a whole and not
to any particular section hereof.
2. AGREEMENT TO GUARANTEE. The New Guarantor hereby agrees,
jointly and severally with all other Guarantors, to guarantee the Company's
obligations under the Securities on the terms and subject to the conditions set
forth in Article XI and Article XII of the Indenture and to be bound by all
other applicable provisions of the Indenture. Except as expressly amended
hereby, the Indenture is in all respects ratified and confirmed and all the
terms, conditions and provisions thereof shall remain in full force and effect.
This Supplemental Indenture shall form a part of the Indenture for all purposes,
and every holder of Securities heretofore or hereafter authenticated and
delivered shall be bound hereby.
3. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
4. TRUSTEE MAKES NO REPRESENTATION. The Trustee makes no representation as to
the validity or sufficiency of this Supplemental Indenture.
5. COUNTERPARTS. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
<PAGE> 183
3
6. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first above written.
[NEW SUBSIDIARY GUARANTOR],
by
--------------------------------
Name:
Title:
WERNER HOLDING CO. (DE) INC.,
by
--------------------------------
Name:
Title:
[Existing Guarantors],
by
--------------------------------
Name:
Title:
[ ], as
Trustee,
by
--------------------------------
Name:
Title:
<PAGE> 184
EXHIBIT F
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS PURSUANT TO RULE 144A]
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust Administration
Re: Werner Holding Co. (DE), Inc. (the "Company")
10% Senior Subordinated Notes due 2007 (the
"Securities").
Ladies and Gentlemen:
In connection with our proposed sale of $_______ aggregate
principal amount at maturity of the Securities, we hereby certify that such
transfer is being effected pursuant to and in accordance with Rule 144A ("Rule
144A") under the United States Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, we hereby further certify that the
Securities are being transferred to a person that we reasonably believe is
purchasing the Securities for its own account, or for one or more accounts with
respect to which such person exercises sole investment discretion, and such
person and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and
such Securities are being transferred in compliance with any applicable blue sky
securities laws of any state of the United States.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter
<PAGE> 185
2
or a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.
Very truly yours,
------------------------------
[Name of Transferor]
By:
---------------------------
Authorized Signature
<PAGE> 186
EXHIBIT G
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S]
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust Administration
Re: Werner Holding Co. (DE), Inc. (the "Company")
10% Senior Subordinated Notes due 2007 (the
"Securities").
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Securities was not made to a person in
the United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we
nor any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period
and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we
<PAGE> 187
2
confirm that such sale has been made in accordance with the applicable
provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
The Company and you are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
-------------------------------
[Name of Transferor]
by
----------------------------
Authorized Signatory
<PAGE> 1
Exhibit 10.2
SHAREHOLDER AGREEMENT
---------------------
THIS SHAREHOLDER AGREEMENT (this "Agreement") is entered into as of
November 24, 1997, by and among WERNER HOLDING CO. (PA), INC., a Pennsylvania
corporation (the "Company"), INVESTCORP INVESTMENT EQUITY LIMITED, a Cayman
Islands corporation ("IIEL"), the other holders of shares of Class D Common
Stock of the Company (IIEL and each such other holder individually a "Class D
Shareholder" and collectively the "Class D Shareholders") and the individuals
listed on the signature pages hereto (individually a "Designated Shareholder"
and collectively the "Designated Shareholders").
R E C I T A L S
A. The Company, the Class D Shareholders and certain other
international investors have entered into a Recapitalization Agreement (the
"Recapitalization Agreement"), dated as of October 8, 1997 and amended and
restated as of October 27, 1997, pursuant to which the Company will effect a
comprehensive recapitalization of the Company upon the terms and conditions set
forth therein (the "Recapitalization") and, among other things, amend and
restate the Articles of Incorporation of the Company to authorize 1,000 shares
of Class D Common Stock.
B. Pursuant to the Recapitalization Agreement, the Designated
Shareholders shall collectively, as of immediately after the closing of the
Recapitalization, retain ownership of approximately 1,042 shares of Class A
Common Stock and 8,746 shares of Class B Common Stock (the "Designated
Shareholders' Shares") and the Class D Shareholders shall collectively own 1,000
shares of Class D Common Stock.
C. This Agreement is being entered into pursuant to the terms and
conditions of the Recapitalization Agreement.
A G R E E M E N T
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration and intending to
be legally bound, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. A Person will be deemed to control a
corporation if such Person possesses, directly or indirectly, the power 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.
<PAGE> 2
"APPROVED SALE" means a transaction or a series of related
transactions which results in a BONA FIDE, unaffiliated change of economic
beneficial ownership of the Company or its business of greater than 50%
(disregarding for this purpose any disparate voting rights attributable to the
outstanding stock of the Company), whether pursuant to the sale of the stock of
the Company, the sale of the assets of the Company, or a merger or consolidation
(other than a sale of stock by a Class D Shareholder to (i) another Class D
Shareholder or affiliate thereof, or (ii) a non-U.S. entity with respect to
which a Class D Shareholder or Affiliate thereof has an administrative
relationship).
"ARTICLES OF INCORPORATION" means the Restated Articles of
Incorporation of the Company in effect as of immediately following the closing
of the Recapitalization, as such Articles may thereafter from time to time be
amended in accordance with applicable law and such Articles.
"CAUSE" when used in connection with the termination of
employment of a Designated Shareholder, has the meaning set forth in the
employment agreement between the Company and the Designated Shareholder, or if
there is no such employment agreement, means (a) conviction of the Designated
Shareholder for a felony, or the entry by the Designated Shareholder of a plea
of guilty or NOLO CONTENDERE to a felony, (b) the commission of an act of fraud
involving dishonesty for personal gain which is materially injurious to the
Company, (c) the willful and continued refusal by the Designated Shareholder to
substantially perform his duties with the Company (other than any such refusal
resulting from his incapacity due to mental illness or physical illness or
injury), after a demand for substantial performance is delivered to the
Designated Shareholder by the Company's Board of Directors, where such demand
specifically identifies the manner in which the Company's Board of Directors
believes that the Designated Shareholder has refused to substantially perform
his duties and the passage of a reasonable period of time for the Designated
Shareholder to comply with such demand or (d) the willful engaging by the
Designated Shareholder in gross misconduct materially and demonstrably injurious
to the Company or its Subsidiaries. For purposes of this paragraph, no act or
failure to act on the Designated Shareholder's part shall be considered
"willful" unless done, or omitted to be done, by the Designated Shareholder not
in good faith and without reasonable belief that his action or omission was in
the best interest of the Company or its Subsidiaries. Notwithstanding the
foregoing, with respect to termination for Cause arising out of conduct
described in clause (b), (c) or (d) above, a termination shall not be considered
for Cause for purposes of this Agreement unless there shall have been delivered
to the Designated Shareholder a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire Board of
Directors of the Company, at a meeting of such board called and held for that
purpose (after reasonable notice to the Designated Shareholder and an
opportunity for the Designated Shareholder, together with his counsel or other
advisors, to be heard at such meeting), finding that in the good faith opinion
of the board the Designated Shareholder had engaged in conduct described above
in clause (b), (c) or (d) of the first sentence of this paragraph and specifying
the particulars thereof in detail. Such a finding by the Board of Directors of
the Company is a prerequisite to a termination for Cause pursuant to clauses
(b), (c) or (d) above; PROVIDED, HOWEVER, that such a finding may be challenged,
by appropriate judicial process, on the merits (i.e., that Cause did not exist)
or on the basis that the board's finding was not made in good faith
2
<PAGE> 3
(provided that proof that Cause for termination existed shall be a complete
defense to any showing that the board's findings was not made in good faith).
"DISABILITY" has the meaning set forth in the employment
agreement between the Company and the Designated Shareholder, or if there is no
such employment agreement, means the failure by the Designated Shareholder to
render full-time employment services to the Company for an aggregate of ninety
(90) business days in any continuous period of six (6) months on account of
physical or mental disability.
"FAIR MARKET VALUE" means the value of a Repurchase Share, as
of the Termination Date, calculated pursuant to Section 5.
"FAMILY MEMBER" shall mean the Designated Shareholder's spouse
if living with the Designated Shareholder or the Designated Shareholder's issue.
"GOOD REASON" means, unless the Designated Shareholder shall
have consented in writing thereto, any of the following: (a) except as
specifically provided in the Designated Shareholder's employment agreement, if
any, the assignment to the Designated Shareholder of duties, or the assignment
of the Designated Shareholder to a position, constituting a material diminution
in the Designated Shareholder's role, responsibilities or authority compared
with his role, responsibilities or authority on the Date hereof; (b) a reduction
by the Company in the Designated Shareholder's bonus opportunities or base
salary as in effect on the Date hereof or as the same may be increased from time
to time; (c) unless such reduction or other action is agreed to by the members
of the Board of Directors of the Company nominated pursuant to Section 4(iii)
hereof, any material reduction in the level of benefits (including participation
in any bonus plan) to which the Designated Shareholder is entitled under one or
more employee benefit plans on the Date hereof, or the taking of any action by
the Company which would adversely affect the Designated Shareholder's accrued
benefits under any such employee benefit plans or deprive the Designated
Shareholder of any material fringe benefit enjoyed by the Designated Shareholder
on the Date hereof; (d) a demand by the Company to the Designated Shareholder to
relocate to any place that exceeds a fifty (50) mile radius beyond the location
at which the Designated Shareholder performed his duties on the Date hereof; or
(e) any material breach of the Employment Agreement, dated as of November 24,
1997, between the Designated Shareholder and Werner Management, Co. on the part
of Werner Management Co.
"INITIAL PUBLIC OFFERING" shall have the meaning ascribed to
that term in the Articles of Incorporation.
"INVESTCORP INVESTORS" means Investcorp Bank E.C. and its
Affiliates and any other investor with whom Investcorp Bank E.C. or any
Affiliate thereof has an administrative relationship including but not limited
to the Class D Shareholders.
"PERMITTED TRANSFEREE" shall mean (i) a Person acquiring
Designated Shareholders' Shares pursuant to Section 2, hereof, (ii) a Person
that is an Affiliate of either the Designated Shareholder or a Permitted
Transferee, or (iii) any recipient of the Shares who is (A) any Family Member of
the Designated Shareholder, (B) the trustee or trustees of a trust solely
(except for
3
<PAGE> 4
remote contingent interests) for the benefit of the Designated Shareholder
and/or one or more Family Members, (C) a foundation created or established by
the Designated Shareholder, (D) a charitable remainder trust for the benefit of
Shareholder and/or one or more Family Members and/or designated charities, (E) a
partnership of which the Designated Shareholder or a Family Member owns all of
the partnership interests, (F) the executor, administrator personal
representative of the estate of the Designated Shareholder, or (G) any guardian,
trustee or conservator appointed with respect to the assets of the Designated
Shareholder; PROVIDED, that in the case of any such transfer for such transfer
to be permitted and for such transferee to be a "Permitted Transferee", the
transferee shall execute an agreement to be bound by the terms of this
Agreement.
"PERSON" means an individual, limited or general partnership,
joint venture, limited liability company, corporation, trust, estate,
unincorporated organization, other entity or a government or any department or
agency thereof.
"TRANSACTION PRICE" means $2,421.29 per share of Class A
Common Stock and Class B Common Stock of the Company (as such amount may be
adjusted to reflect stock splits, stock dividends or similar transactions).
"RETIREMENT" has the meaning set forth in the employment
agreement between the Company and the Designated Shareholder, or if there is no
such employment agreement, means the Designated Shareholder's retirement from
employment with the Company in accordance with the Company's normal retirement
policy generally applicable to its salaried employees.
"TERMINATION DATE" means the date on which the Designated
Shareholder ceases to be employed by the Company for any reason.
Certain other terms are defined elsewhere in this Agreement.
SECTION 2. RIGHT TO CAUSE SALE.
(a) If, after the Initial Public Offering, the Investcorp Investors
determine to sell, in one transaction or a series of related transactions, 85%
or more in the aggregate of their respective equity interests in the Company (a
"Section 2 Transaction") to a purchaser who is not an Investcorp Investor or to
a group of purchasers who are not Investcorp Investors (the "Section 2
Purchaser"), then IIEL shall have the right, in its sole discretion, to require
the Designated Shareholders and any Person who became a Permitted Transferee
prior to the Initial Public Offering, to the extent they then beneficially own
any equity interest in the Company acquired directly or indirectly from a
Designated Shareholder, to sell all of their remaining equity interests in the
Company as a part of the Section 2 Transaction at the same price and on the same
terms and conditions as are applicable to the other Investcorp Investors
participating in such Section 2 Transaction; PROVIDED that (i) no holder of
Designated Shareholders' Shares shall be required to make any representation or
warranty or undertake any liability in connection with such Section 2
Transaction other than representations and warranties as to its ownership and
authority to transfer the Designated Shareholders' Shares, free and clear of all
liens and encumbrances and in compliance with all applicable laws; (ii) such
sale transaction has been structured so that all
4
<PAGE> 5
holders of then outstanding equity securities of the Company are given the
opportunity to participate pro-rata in such sale transaction; and (iii) that
such right to require the Designated Shareholders and any such Permitted
Transferee to sell their remaining equity interests in the Company shall be
available only so long as the equity interests in the Company beneficially held
by Investcorp Investors represent an aggregate equity position in the Company
equal to or greater than 80% of the aggregate equity position that Investcorp
Investors beneficially held as of immediately after the closing of the
Recapitalization.
(b) In the event that IIEL exercises its right to require the
Designated Shareholders and any Permitted Transferee to sell their remaining
equity interests in the Company in a Section 2 Transaction, IIEL will cause the
Designated Shareholders and any such Permitted Transferee to receive written
notice thereof (a "Section 2 Notice") not less than 20 days prior to the
scheduled closing date of the Section 2 Transaction. The Section 2 Notice shall
state the following: (1) the name and address of the Section 2 Purchaser, (ii)
the number of shares of each class of capital stock to be sold in the Section 2
Transaction, (iii) the amount and form of consideration to be paid for such
shares, (iv) a summary of the material terms and conditions of the Section 2
Transaction, (v) that the conditions to the right of IIEL to require the sale of
such remaining equity interests in the Company in the Section 2 Transaction have
been satisfied, (vi) that the Section 2 Purchaser has agreed to purchase such
remaining equity interests in the Company as a part of the Section 2
Transaction, and (vii) the name and address of the person to whom the holders of
such remaining interests should send their stock certificates and with whom the
holders of such remaining interests should otherwise communicate with respect to
the Section 2 Transaction. Upon receipt of a Section 2 Notice, the Designated
Shareholders and each such Permitted Transferee shall take all steps necessary
to facilitate the prompt closing of the Section 2 Transaction.
(d) Without limiting any rights or remedies available to any party
hereto against the Designated Shareholders and any such Permitted Transferee for
any breach of this Section 2, it is expressly agreed that the Section 2
Purchaser and the Company shall each have the right to enforce the rights of
IIEL under this Section 2 and to seek any available remedies against the
Designated Shareholders and any such Permitted Transferee for breach of this
Section 2.
SECTION 3. RIGHT TO PARTICIPATE IN FUTURE FINANCINGS.
In the event that, during the period beginning immediately after the
closing of the Recapitalization and ending on but not including the Initial
Public Offering, the Company intends to engage in a New Equity Financing (as
defined below), it shall (i) provide all holders of equity securities of the
Company with written notice of such intention at least 20 days prior to the
scheduled closing of the New Equity Financing, describing the type of equity
securities to be issued, the price and the number or amount thereof, and the
general terms upon which the Company proposes to effect such issuance and (ii)
take steps as are necessary to enable all such persons to participate, at their
option, as a purchaser in such New Equity Financing such that all such persons,
through the exercise of such option, would maintain their percentage interest in
the outstanding equity securities of the Company on a fully diluted basis. For
purposes hereof, a "New Equity Financing" means the issuance by the Company of
new equity securities of the Company, or securities convertible into, or
exercisable or exchangeable for, such equity
5
<PAGE> 6
securities other than (i) any issuance of equity securities at the fair market
value for such securities as determined in good faith by the Board of Directors
of the Company or (ii) issuances of equity securities in connection with (x)
stock incentive or compensation plans approved by the Board of Directors of the
Company or (y) business acquisitions by the Company.
SECTION 4. BOARD OF DIRECTORS.
During the period beginning immediately after the closing of the
Recapitalization and ending on but not including the Initial Public Offering,
the Class D Shareholders and the Designated Shareholders shall (unless otherwise
agreed to by a majority in interest of the Class D Shareholders on one hand and
a majority in interest of the Designated Shareholders on the other hand) vote
all equity securities of the Company owned by such Class D Shareholders and
Designated Shareholders in whatever manner is necessary to ensure that at all
times (i) a majority of the then total number of authorized members of the Board
of Directors of the Company shall consist of persons who were nominated by the
Class D Shareholders, (ii) the Chief Executive Officer of the Company is a
member of the Board of Directors of the Company and (iii) a number of directors
equal to one-third of the authorized number of directors (rounded to the nearest
whole number) less one shall consist of persons whom were nominated by a
majority-in-interest of the Designated Shareholders, PROVIDED, HOWEVER, that in
any event one member of the Board of Directors of the Company shall be a person
who was nominated by a majority-in-interest of the Designated Shareholders.
SECTION 5. REPURCHASE OF DESIGNATED SHAREHOLDERS SHARES.
(a) In the event that a Designated Shareholder ceases to be employed by
the Company for any reason prior to an Initial Public Offering or an Approved
Sale, the Company, during the sixty (60) days following the Termination Date
(the "Repurchase Period"), shall have a one-time right to purchase from the
Designated Shareholder that number of shares of Class A Common Stock and Class B
Common Stock of the Company set forth opposite such Designated Shareholder's
name on Schedule A hereto, as adjusted for any stock split, stock dividend or
similar transaction (the "Repurchase Shares"). The purchase price for each
Repurchase Share shall equal Fair Market Value, or, if the Designated
Shareholder resigns without Good Reason (other than as a result of death,
disability or retirement) prior to January 1, 2001 or is terminated for Cause at
any time, the lower of Fair Market Value or the Transaction Price. If the
Company elects to purchase the Repurchase Shares, it shall notify the Designated
Shareholder at or before the end of the Repurchase Period of such election and
the purchase price shall be paid in cash at a time set by the Company (the
"Repurchase Date") which date shall be within thirty (30) days after the end of
the Repurchase Period, provided that the Designated Shareholder has presented to
the Company a stock certificate evidencing the Repurchase Shares duly endorsed
for transfer (the "Endorsed Certificate"). If the Designated Shareholder fails
to deliver the Endorsed Certificate, the Repurchase Shares represented thereby
shall be deemed to have been purchased upon (i) the payment by the Company of
the purchase price to the Designated Shareholder or his or her permitted
transferee or (ii) notice to the Designated Shareholder or such permitted
transferee that the Company is holding the purchase price for the account of the
Designated Shareholder or such permitted transferee, and upon such payment or
notice the Designated
6
<PAGE> 7
Shareholder and such permitted transferee will have no further rights in or to
such Repurchase Shares.
(b) If the Designated Shareholder's employment by the Company is
terminated prior to an Initial Public Offering or an Approved Sale (i) by the
Company without Cause or by the Designated Shareholder for any reason; (ii) due
to the Designated Shareholder's Retirement, death or Disability; or (iii) by the
Company with Cause after January 1, 2001, the Designated Shareholder or his or
her representative, during the 120 days following the Termination Date, shall
have a one-time right to require Stepup Limited, a Cayman Islands corporation
("Stepup") to purchase all, but not less than all, of the Repurchase Shares,
unless, by the thirtieth (30) day after Stepup and the Company have received
notice of the Designated Shareholder's election to exercise his put right to
Stepup, the Company has notified the Designated Shareholder and Stepup of its
election, exercisable at the discretion of the Company, to purchase the
Repurchase Shares on the same terms as such Repurchase Shares were offered to
Stepup, in which case such Repurchase Shares will be acquired by the Company.
The purchase price shall be at Fair Market Value, unless the employment of the
Designated Shareholder is terminated for any reason other than Retirement,
death, or Disability prior to January 1, 2001 and the Designated Shareholder
exercises his put right prior to such date, in which case the purchase price
will be the lower of Fair Market Value or the Transaction Price. The purchase
price shall be paid in cash on the thirtieth (30th) day after Stepup and the
Company have received notice of the Designated Shareholder's election to
exercise his put right (the "Put Date"), provided that Stepup or the Company, as
the case may be, need not pay the purchase price until such later time that the
Designated Shareholder presents to the Company the Endorsed Certificate.
(c) The Fair Market Value of Repurchase Shares to be purchased by the
Company or Stepup, as the case may be, hereunder shall be determined in good
faith by the Company's Board of Directors. The Board of Directors shall make its
determination of Fair Market Value annually (the "Annual Valuation") promptly
after the completion of the Company's audited financial statements for the year
then completed and such determination shall remain in effect until the Board of
Directors makes the next Annual Valuation. Notwithstanding the foregoing, if the
Board of Directors or an investment banker or appraiser appointed by the Company
makes a determination of Fair Market Value subsequent to an Annual Valuation,
such subsequent determination shall supersede the Annual Valuation then in
effect and shall establish the Fair Market Value until the next Annual
Valuation. The Fair Market Value shall be based on an assumed sale of 100% of
the outstanding capital stock of the Company (without reduction for minority
interest or lack of liquidity of the Repurchase Shares or similar discount) and
determined in a manner consistent with the manner in which the purchase price to
be paid by the Investcorp Investors pursuant to the Recapitalization Agreement
dated as of October 8, 1997 and as amended and restated as of October 27, 1997
among the Company and the other parties thereto was determined. If such
determination of the Fair Market Value is challenged by the Designated
Shareholder, a mutually acceptable investment banker or appraiser shall
establish the Fair Market Value as of the date of valuation referenced in the
Annual Valuation or a subsequent determination. The investment banker's or
appraiser's determination shall be conclusive and binding on the Company and the
Designated Shareholder. The Company shall bear all costs incurred in connection
with the services of such investment banker or appraiser unless the Fair Market
Value established by such investment banker or appraiser is less than 115% of
the
7
<PAGE> 8
determination challenged by the Designated Shareholder, in which case the
Designated Shareholder shall promptly pay or reimburse the Company for such
costs (up to a maximum amount of $20,000.00). If the Designated Shareholder and
the Company cannot agree upon an investment banker or appraiser, they shall each
choose an investment banker or appraiser and the two shall choose a third
investment banker or appraiser who shall establish the Fair Market Value.
Notwithstanding the foregoing, the Company shall obtain valuation of all of its
common stock at least once annually for purposes of the Designated Shareholder's
estate and gift planning; provided, however, that such valuation is not binding
on the Board of Directors for purposes of determining Fair Market Value.
(d) The Designated Shareholder shall not be considered to have ceased
to be employed by the Company for purposes of this Agreement if he or she
continues to be employed by the Company or a Subsidiary, or by a company of
which the Company is a Subsidiary.
8
<PAGE> 9
(e) This Section shall be binding on and enforceable against any Person
who is a Permitted Transferee of any Designated Shareholder, and for purposes of
this Section, the rights and obligations relating to the Designated
Shareholders' Shares shall extend as well to shares of capital stock of the
Company owned by Permitted Transferees of a Designated Shareholder and, unless
the context otherwise requires, each reference to Designated Shareholder in this
Section shall also encompass Permitted Transferees of any Designated
Shareholder. Any stock certificates issued to evidence shares of Class A Common
Stock or Class B Common Stock owned by the Designated Shareholders shall bear a
legend referring to this Agreement and the restrictions contained herein.
SECTION 6. FORM S-8 REGISTRATION STATEMENT
The Company will as expeditiously as practicable in connection with the
effectiveness of the registration statement implementing the Initial Public
Offering file with the United States Securities and Exchange Commission a
registration statement on Form S-8 registering shares of the Company's capital
stock subject to options held under the Company's then existing employee stock
option plan or plans.
SECTION 7. CONTROL OVER SHARES
Each Designated Shareholder represents and agrees that they are the
record owner of or have executory, administrative or custodial control over the
number of shares of the Company's Class A and Class B Common Stock set opposite
such Shareholder's name on Exhibit A hereto. Except for matters that would not
impair the ability of the Designated Shareholder to fulfill the Shareholder's
obligations under this Agreement, the Designated Shareholder has sole and
unqualified voting power with respect to such shares and agrees to take any
necessary steps to obtain the instruments and/or documentation to implement the
executory, administrative or custodial control required to fulfill such
Designated Shareholder's obligations under this Agreement.
SECTION 8. MISCELLANEOUS.
(a) NOTICES. All notices, instructions and other communications in
connection with this Agreement shall be in writing and may be given by (i)
personal delivery, (ii) sent by certified mail, return receipt requested,
postage prepaid, or (iii) delivery by a nationally recognized overnight courier,
to the parties at the addresses of each as set forth on the signature pages to
this Agreement (or at such other address as the Company may specify in a notice
to the other parties or as any other party may specify in a notice to the
Company and the other parties). Notices shall be deemed to have been given (A)
when actually delivered personally, (B) the next business day if sent by
overnight courier (with proof of delivery), and (C) on the fifth day after
mailing by certified mail.
(b) NO WAIVER. No course of dealing and no delay on the part of any
party hereto in exercising any right, power or remedy conferred by this
Agreement shall operate as a waiver thereof or otherwise prejudice such party's
rights, powers and remedies conferred by this
9
<PAGE> 10
Agreement or shall preclude any other or further exercise thereof or the
exercise of any other right, power and remedy.
(c) BINDING EFFECT; ASSIGNABILITY. This Agreement shall be binding upon
and, except as otherwise provided herein, shall inure to the benefit of the
respective parties and their permitted successors and assigns, including,
without limitation, Permitted Transferees to the extent specifically provided
for herein. This Agreement shall not be assignable except as otherwise
specifically provided herein; PROVIDED that IIEL's rights under Section 2 and
Section 3 hereof may be exercised by IIEL or any Affiliate of IIEL.
(d) AMENDMENT AND WAIVER. This Agreement may not be amended, modified
or supplemented, and no waiver or consent to departures from the provisions
hereof shall bind any party who has not given such waiver or consent, unless any
such amendment, modification, supplement , waiver or consent is consented to in
writing by at least a majority in interest of the Designated Shareholder's and
the Company.
(e) GOVERNING LAW; SERVICE OF PROCESS. This Agreement shall be
construed both as to validity and performance in accordance with, and governed
by, the laws of the Commonwealth of Pennsylvania applicable to agreements to be
performed in Pennsylvania, without regard to principles of conflict of laws of
such jurisdiction or any other jurisdiction. Each of the parties hereto
irrevocably consents to the jurisdiction and venue of any state or federal court
situated in the Commonwealth of Pennsylvania, and further consents to the
service of any and all process in any action or proceeding arising out of or
relating to this Agreement by the mailing of copies of such process to such
party at its address pursuant to Section 8(a) hereof.
(f) 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, and all signatures need not appear
on any one counterpart.
(g) HEADINGS; SECTIONS. All headings and captions in this Agreement are
for purposes of reference only and shall not be construed to limit or affect the
substance of this Agreement. All references to Section in this Agreement refer
to Sections of this Agreement, unless the context otherwise expressly provides.
(h) ENTIRE AGREEMENT. This Agreement contains, and is intended as, a
complete statement of all the terms of the arrangements between the parties with
respect to the matters provided for, supersedes any previous agreements and
understandings between the parties with respect to those matters.
(i) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired in any way thereby.
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<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Shareholder
Agreement as of the date first above written.
WERNER HOLDING CO. (PA), INC., a
Pennsylvania corporation
By: /s/
-----------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
--------------------------
INVESTCORP INVESTMENT EQUITY LIMITED, a Cayman
Islands corporation
By: /s/
-----------------------------------
Name:
Title:
Address:
--------------------------
--------------------------
--------------------------
OTHER CLASS D SHAREHOLDERS
--------------------------
BALLET LIMITED, a Cayman Islands corporation
By: /s/
-----------------------------------
Name:
Address:
--------------------------
--------------------------
--------------------------
DENARY LIMITED, a Cayman Islands corporation
By: /s/
-----------------------------------
Name:
Address:
--------------------------
--------------------------
--------------------------
11
<PAGE> 12
GLEAM LIMITED, a Cayman Islands corporation
By: /s/
-----------------------------------
Name:
Address:
--------------------------
--------------------------
--------------------------
HIGHLANDS LIMITED, a Cayman Islands corporation
By: /s/
-----------------------------------
Name:
Address:
--------------------------
--------------------------
--------------------------
NOBLE LIMITED, a Cayman Islands corporation
By: /s/
-----------------------------------
Name:
Address:
--------------------------
--------------------------
--------------------------
OUTRIGGER LIMITED, a Cayman Islands corporation
By: /s/
-----------------------------------
Name:
Address:
--------------------------
--------------------------
--------------------------
QUILL LIMITED, a Cayman Islands corporation
By: /s/
-----------------------------------
Name:
Address:
--------------------------
--------------------------
--------------------------
12
<PAGE> 13
RADIAL LIMITED, a Cayman Islands corporation
By: /s/
-----------------------------------
Name:
Address:
--------------------------
--------------------------
--------------------------
SHORELINE LIMITED, a Cayman Islands corporation
By: /s/
-----------------------------------
Name:
Address:
--------------------------
--------------------------
--------------------------
ZINNIA LIMITED, a Cayman Islands corporation
By: /s/
-----------------------------------
Name:
Address:
--------------------------
--------------------------
--------------------------
Accepted and agreed to for
purposes of Section 5 only:
STEPUP LIMITED, a Cayman Islands corporation
By: /s/
-----------------------------------
Name:
Address:
--------------------------
--------------------------
--------------------------
13
<PAGE> 14
DESIGNATED SHAREHOLDERS
-----------------------
/s/ Donald M. Werner
------------------------
Donald M. Werner
/s/
Howard L. Solot
------------------------
Howard L. Solot
/s/ Bruce D. Werner
------------------------
Bruce D. Werner
/s/ Michael E. Werner
------------------------
Michael E. Werner
/s/ Craig R. Werner
------------------------
Craig R. Werner
/s/ Eric J. Werner
------------------------
Eric J. Werner
/s/ Michael J. Solot
------------------------
Michael J. Solot
14
<PAGE> 15
SCHEDULE A
<TABLE>
<CAPTION>
SHAREHOLDER NUMBER OF NUMBER OF
----------- --------- ---------
CLASS A CLASS B
------- -------
SHARES SHARES
------ ------
<S> <C> <C>
Donald M. Werner 84.6176 167.7492
Howard L. Solot 84.5832 331.1411
Bruce D. Werner 9.5639 286.2985
Michael E. Werner 36.6797 522.5990
Craig R. Werner 10.7219 261.3347
Eric J. Werner 10.0714 353.8212
Michael J. Solot 9.9324 164.2720
</TABLE>
15
<PAGE> 1
Exhibit 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement ("this Agreement") is made and entered into
as of November 24, 1997 (the "Effective Date"), by and between Werner Management
Co., a Pennsylvania corporation (the "Company"), and [DONALD M. WERNER, HOWARD
L. SOLOT, ERIC J. WERNER, MICHAEL E. WERNER, CRAIG R. WERNER, MICHAEL J. SOLOT,
BRUCE D. WERNER] ("Executive").
The Company hereby agrees to employ Executive, and Executive hereby
accepts such employment, on the terms and conditions hereinafter set forth.
1. POSITION.
From the Effective Date until the termination of Executive's employment
hereunder (the "Period of Employment"), Executive shall serve in the capacity
indicated on Schedule 1 hereto, and shall have the normal duties and
responsibilities commensurate with such position. During the Period of
Employment, Executive will (a) during normal business hours, devote his full
time and exclusive attention to, and use his best efforts to advance, the
business and welfare of the Company, and (b) not engage in any other employment
activities for any direct or indirect remuneration without the concurrence of
the Board, provided, however, Executive may serve on corporate, charitable and
community boards so long as such activities do not unreasonably interfere with
the performance of his duties under this Agreement and provided that any such
activities are approved in advance by the Board, which approval will not be
unreasonably withheld, and provided further that the Executive may continue to
serve on any corporate, industry association, charitable or community boards on
which he serves as of the date of this Agreement.
2. PLACE AND TERM OF EMPLOYMENT.
(a) Executive's office shall be at the location set forth on Schedule 1
attached hereto.
(b) Subject to Section 6 hereunder, the term of this Agreement shall be
three (3) years commencing on the date hereof.
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<PAGE> 2
3. COMPENSATION.
3.1 BASE SALARY. During the period running from November 24, 1997
through December 31, 1997, the Company shall pay Executive a per annum Base
Salary indicated on Schedule 1 attached hereto payable in accordance with the
standard policies of the Company and subject to payroll deductions as may be
necessary or customary in respect of the Company's salaried employees in
general. Effective as of January 1, 1998, the Company shall pay Executive the
per annum Base Salary indicated on Schedule 1 attached hereto during the Period
of Employment payable in accordance with the standard policies of the Company
and subject to payroll deductions as may be necessary or customary in respect of
the Company's salaried employees in general. Thereafter Executive's Base Salary
hereunder shall be subject to annual review by the Board, provided that the
level of such Base Salary shall not be subject to reduction.
3.2 PERFORMANCE BASED COMPENSATION. In addition to the Base Salary provided for
in Section 3.1 hereof, commencing on January 1, 1998, Executive shall be
eligible to receive an annual cash bonus based upon the extent to which Werner
Holding Co. (PA), Inc.'s ("Holdings") consolidated Earnings Before Interest,
Taxes, Depreciation and Amortization ("EBITDA"), as defined in EXHIBIT 1 hereto,
equals or exceeds the percentages of target annual EBITDA with respect to such
fiscal year in accordance with the chart set forth below, in an amount equal to
a percentage of the "Bonus Amount" set forth in Schedule 1 hereto, provided,
however, that at the discretion of the Board, such bonus may be subject to
upward or downward adjustment in accordance with chart set forth below:
<TABLE>
<CAPTION>
Percentage of Target % of Bonus (Subject Range In Which Target % of Bonus
EBITDA Target Achieved to Board Adjustment) May Be Adjusted at
Discretion of the Board
<S> <C> <C>
Less than 85% 0% 0%
85% or above, but below 90% 20% 10% - 30%
90% or above, but below 95% 50% 40% - 60%
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
Percentage of Target % of Bonus (Subject Range In Which Target % of Bonus
EBITDA Target Achieved to Board Adjustment) May Be Adjusted at
Discretion of the Board
<S> <C> <C>
95% or above, but below 100% 75% 65% - 85%
100% 100% 90% - 110%
</TABLE>
For Holdings' fiscal year ending in 1998, the EBITDA target shall be $75.4
million. The EBITDA targets for the 1999, 2000, 2001 and 2002 fiscal years are
set out in Exhibit 2, attached. For the fiscal years thereafter, the EBITDA
target shall be set by the Company's Board of Directors as part of its annual
budgeting process.
Executive shall also be eligible to receive an additional annual cash
bonus at the discretion of the Board based upon the Board's evaluation of
Executive's performance for each fiscal year of Holdings during the Period of
Employment.
4. BENEFITS.
During the Period of Employment, Executive shall be entitled to
participate in all benefit plans and programs maintained by the Company which
are available to its executive officers or employees generally, including any
and all perquisites, provided that, subject to Section 5.4 of the
Recapitalization Agreement dated October 8, 1997 and amended October 27, 1997 by
and among the Company and certain investor clients of Investcorp S.A., (i)
Executive's right to participate in such plans and programs shall not affect the
Company's right to amend or terminate the general applicability of such plans
and programs, and (ii) Executive acknowledges that he shall have no vested
rights under or to participate in any such plan or program except as expressly
provided under the terms thereof. During the two year period following the
Effective Date, the Company shall provide the Executive with the benefits
described on Exhibit 3 hereto, provided, however, the benefits so described may
be amended or terminated upon the approval of the members of the Board nominated
pursuant to Section 4(iii) of the Shareholder Rights Agreement dated as of the
date hereof among the Company, the Executive, Investcorp Investment Equity
Limited, the other holders of shares of Class D Common Stock of the
3
<PAGE> 4
Company and the other individuals party thereto. The Company shall provide
Executive with office space, stenographic assistance and such other facilities
and services as shall be suitable to Executive's position and adequate for the
performance of his duties hereunder.
5. EXPENSES; TAXES.
Upon presentation of acceptable substantiation therefor, the Company
will pay or reimburse Executive for such reasonable travel, entertainment and
other expenses as he may incur during the Period of Employment in connection
with the performance of his duties hereunder. Federal, state and local income
taxes shall be withheld on all cash and in-kind payments made by the Company to
Executive in accordance with applicable tax laws and regulations.
6. TERMINATION OF EMPLOYMENT.
The provisions of this Section 6 shall apply upon termination of
Executive's employment hereunder. In connection with any termination of
Executive's employment hereunder, Executive or his beneficiaries shall be
entitled to receive, pro-rated as appropriate, earned but unpaid Base Salary,
unreimbursed amounts pursuant to Section 5 hereof, and unpaid and unreimbursed
payments and benefits under, and in accordance with the terms of, applicable
benefit plans and programs, said payments being collectively referred to as
Standard Termination Payments.
6.1 FOR CAUSE OR NOT FOR GOOD REASON. If the Company terminates
Executive's employment for Cause (as hereinafter defined) or if Executive
terminates his employment other than for Good Reason (as defined in Section
6.3), the Company's obligations to compensate Executive shall in all respects
cease as of the date of such termination, except for Standard Termination
Payments. Termination of Executive's employment for "Cause" shall mean
termination by the Company because Executive:
(i) has been convicted of a felony, or has entered a plea of
guilty or NOLO CONTENDERE to a felony;
(ii) has committed an act of fraud involving dishonesty for
personal gain which is materially injurious to the Company;
4
<PAGE> 5
(iii) has willfully and continually refused to substantially
perform his duties with the Company (other than any such refusal resulting from
his incapacity due to mental illness or physical illness or injury), after a
demand for substantial performance has been delivered to the Executive by the
Board, where such demand specifically identifies the manner in which the Board
believes that the Executive has refused to substantially perform his duties and
the passage of a reasonable period of time for Executive to comply with such
demand; or
(iv) has willfully engaged in gross misconduct materially and
demonstrably injurious to the Company or its subsidiaries.
For purposes of this paragraph, no act or failure to act on
the Executive's part shall be considered "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company or its subsidiaries.
Notwithstanding the foregoing, with respect to termination for Cause arising out
of conduct described in clause (ii), (iii) or (iv) above, a termination shall
not be considered for Cause for purposes of this Agreement unless there shall
have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire Board, at a
meeting of the Board called and held for that purpose (after reasonable notice
to the Executive and an opportunity for the Executive, together with his counsel
or other advisors, to be heard at such meeting), finding that in the good faith
opinion of the Board the Executive had engaged in conduct described in clause
(ii), (iii) or (iv) above and specifying the particulars thereof in detail. Such
a finding by the Board of Directors of the Company is a prerequisite to a
termination for Cause pursuant to clauses (ii), (iii) or (iv) above; PROVIDED,
HOWEVER, that such a finding may be challenged, by appropriate judicial process,
on the merits (i.e., that Cause did not exist) or on the basis that the Board's
finding was not made in good faith (provided that proof that Cause for
termination existed shall be a complete defense to any showing that the Board's
findings were not made in good faith).
If the Executive terminates his employment other than for Good Reason,
the Executive must provide the Company with thirty (30) days written notice
prior to such termination.
5
<PAGE> 6
6.2 UPON DEATH OR PERMANENT DISABILITY. If Executive's employment is
terminated as a result of death or Permanent Disability (as hereinafter
defined), the Company's obligation to compensate Executive shall in all respects
cease as of the date of such termination, except for Standard Termination
Payments including all applicable disability benefits. The Company may terminate
Executive's employment hereunder attributable to the "Permanent Disability" of
Executive if Executive becomes physically or mentally incapacitated or disabled
so that he is unable to perform for the Company substantially the same services
as he performed prior to incurring such incapacity or disability (the Company,
at its option and expense, is entitled to retain a physician reasonably
acceptable to Executive to confirm the existence of such incapacity or
disability, and the determination of such physician shall be binding upon the
Company and Executive), and such incapacity or disability exists for an
aggregate of six (6) calendar months in any twelve (12) calendar month period.
6.3 NOT FOR CAUSE OR FOR GOOD REASON. If (i) Executive's employment is
terminated by the Company for a reason other than Cause, Executive's death or
Executive's Permanent Disability, or (ii) Executive terminates his employment
for Good Reason (as hereinafter defined), the Company's obligation to compensate
Executive shall in all respects cease as of the date of such termination, except
(a) for Standard Termination Payments, (b) that the Company will pay to
Executive a lump sum amount equal the sum of (1) twelve (12) months of the
Executive's Base Salary in effect at the time of such termination and (2) the
bonus that the Executive received (or earned but did not receive) for the fiscal
year immediately preceding the fiscal year in which his employment terminated,
and (c) that the Company will, for a period of twelve (12) months following said
date of termination, provide Executive with retirement benefits and welfare
(including any life insurance, hospitalization, medical and disability)
benefits, substantially similar to those provided to Executive as of the date of
termination, provided that such welfare benefits shall be discontinued to the
extent Executive receives similar benefits from subsequent employment. For
purposes of this Agreement, "Good Reason" shall mean (1) except as specifically
provided herein, the assignment to the Executive of duties, or the assignment of
the Executive to a position, constituting a material diminution in the
Executive's role, responsibilities or authority compared with his role,
responsibilities or authority with the Company or its affiliates on the
Effective Date; (2) a reduction by the Company in the
6
<PAGE> 7
Executive's bonus opportunities or, except as specifically provided herein, base
salary as in effect on the Effective Date or as the same may be increased from
time to time; (3) unless the members of the Board appointed pursuant to Section
4(iii) of the Shareholder Agreement dated as of the date hereof agree to such
reduction or other action, any material reduction in the level of benefits
(including participation in any bonus plan) to which the Executive is entitled
under one or more employee benefit plans on the Effective Date, or the taking of
any action by the Company which would adversely affect the Executive's accrued
benefits under any such employee benefit plans or deprive the Executive of any
material fringe benefit enjoyed by the Executive on the Effective Date; (4) a
demand by the Company to the Executive to relocate to any place that exceeds a
fifty (50) mile radius beyond the location at which the Executive performed the
Executive's duties on the Effective Date; or (5) any material breach by the
Company of any provision of this Agreement.
6.4 RELEASE AND SATISFACTION. At the time of termination of Executive's
employment, Executive and the Company agree to execute mutual releases whereby
(a) Executive will release, relinquish and forever discharge the Company and any
director, officer, employee, shareholder, controlling person or agent of the
Company from any and all claims, damages, losses, costs, expenses, liabilities
or obligations, whether known or unknown (other than any such claims, damages
losses, costs, expenses, liabilities or obligations arising under (i) any
indemnification arrangement of the Company with respect to Executive, (ii) any
employee benefit plan or program (whether or not tax-qualified) covering
Executive, (iii) any stock purchase or stock option plan or agreement to which
the Company and Executive are parties (or any document executed in connection
therewith) or (iv) this Agreement, to the extent the Company or any such person
has continuing obligations pursuant to the express provisions hereof following
such termination), which Executive has incurred or suffered or may incur or
suffer as a result of Executive's employment by the Company or the termination
of such employment, and (b) the Company will release, relinquish and forever
discharge Executive and his heirs, successors and assigns from any and all
claims, damages, losses, costs, expenses, liability or obligations, whether
known or unknown (except as set forth in Section 6.5 hereof and other than any
such claims, damages, losses, costs, expenses, liabilities or obligations
arising under any of the arrangements or agreements referred to in clauses (i)
through (iii) in the preceding clause (a) of
7
<PAGE> 8
this Section 6.4 or under this Agreement to the extent Executive or any such
person has continuing obligations pursuant to the express provisions hereof
following such termination), which the Company has incurred or suffered or may
incur or suffer as a result of the Company's employment of Executive or the
termination of such employment.
6.5 EFFECT ON THIS AGREEMENT. The termination of Executive's employment
shall not affect the continuing operation and effect of Sections 6.4 and 7
hereof, nor affect any obligation of the Company to make payments pursuant to
Section 6 hereof, which shall continue in full force and effect upon the Company
and Executive, and its and his heirs, successors and assigns. Nothing in Section
6.1 or 6.4 hereof shall be deemed to operate or shall operate as a release,
settlement or discharge of any liability of Executive to the Company (a) from
any act or omission by Executive enumerated in Section 6.1 which constituted a
reason for termination of Executive's employment for Cause or (b) in connection
with any amount Executive owes to the Company pursuant to a loan or other
advance.
6.6 MITIGATION. Executive shall not be required to mitigate the amount
of any payment provided for under this Agreement by seeking other employment or
otherwise nor will any payments provided for herein be subject to offset in
respect of any claims which the Company may have against Executive and, except
as specifically provided herein, the amount of any payment or benefit provided
for in this Agreement shall not be reduced by any compensation earned or
benefits received by Executive as the result of employment by a future employer,
by offset against any amount claimed to be owed by him to the Company, or
otherwise.
7. NON-COMPETITION; NON-DISCLOSURE OF PROPRIETARY INFORMATION, SURRENDER
OF RECORDS; INVENTIONS AND PATENTS.
7.1 NON-COMPETITION
(a) Executive acknowledges that in the course of his
employment with the Company he will become familiar with the trade secrets and
other confidential information of the Company and its subsidiaries and that his
services will be of special, unique and extraordinary value to the Company.
Therefore, Executive agrees that, during the Period of Employment and for two
years thereafter (the "Noncompete Period"), he shall not directly or indirectly
own,
8
<PAGE> 9
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 any of its subsidiaries (i) which relates to (A) the manufacturing or sale of
climbing equipment or (B) aluminum extrusion or (ii) which is commenced by the
Company or any of its subsidiaries after the Effective Date and as of the date
of termination constitutes or will constitute a material portion of the
Company's overall future business within the United States and any other
geographical area in which the Company or any of its subsidiaries engage in such
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 of its subsidiaries to leave the employ of such
person, or in any way interfere with the employee relationship between the
Company or any of its subsidiaries and any employee thereof, (ii) hire any
person who was an employee of the Company or any subsidiary of the Company at
any time during the Employment Period (other than individuals who have not been
employed by the Company or any subsidiary of the Company for a period of at
least one year prior to employment by Executive directly or indirectly through
another entity), or (iii) induce or attempt to induce any customer, supplier,
licensee or other person having a business relationship with the Company or any
of its subsidiaries (A) which relates to (x) the manufacturing or sale of
climbing equipment or (y) aluminum extrusion or (B) which is commenced by the
Company or any of its subsidiaries after the Effective Date and as of the date
of termination constitutes or will constitute a material portion of the
Company's overall future business to cease doing business with the Company or
such subsidiaries, or interfere materially with the relationship between any
such customer, supplier, licensee or other person having a business relationship
with the Company or any of its subsidiaries.
7.2 PROPRIETARY INFORMATION. Executive agrees that he shall not use for
his own purpose or for the benefit of any person or entity other than the
Company or its shareholders or affiliates, nor otherwise disclose to any
individual or entity at any time while he is employed by
9
<PAGE> 10
the Company or thereafter any proprietary information of the Company unless such
disclosure (a) has been authorized by the Board, (b) is in the good faith
judgment of Executive required in the course of Executive's employment
hereunder, (c) is in the course of such individual's or entity's employment or
retention by the Company, or (d) is required by law, a court of competent
jurisdiction or a governmental or regulatory agency. For purposes of this
Agreement, the term "proprietary information" shall mean: (a) the name or
address of any customer, supplier or affiliate of the Company or any information
concerning the transactions or relations of any customer, supplier or affiliate
of the Company or any of its shareholders; (b) any information concerning any
product, technology or procedure employed by the Company, but not generally
known to its customers, suppliers or competitors, or under development by or
being tested by the Company, but not at the time offered generally to customers
or suppliers; (c) any information relating to the marketing methods, sales
margins, discounts, rebates, supplier incentives, or the like, the capital
structure, or results of any business plan of the Company; (d) any information
contained in the Company's policies and procedures or employees' manual; (e) any
inventions, innovations, trade secrets or other items covered by Section 7.4
below; and (f) any other information which the Board has determined by
resolution and communicated to Executive to be confidential or proprietary.
However, proprietary information shall not include any information that is or
becomes generally known to the public other than through actions of Executive in
violation of Sections 7.1, 7.2 or 7.3 hereof.
7.3 CONFIDENTIALITY AND SURRENDER OF RECORDS. Executive agrees that,
while he is employed by the Company or at any time thereafter, he shall not
except as required by law give any "confidential records" (as hereinafter
defined) to, or permit any inspection or copying of confidential records by, any
individual or entity other than in the course of such individual's or entity's
employment or retention by the Company or as required by law, a court of
competent jurisdiction, or a governmental or regulatory agency, nor shall he
retain any of the same following termination of this employment, without the
prior approval of the Board. For purposes hereof, "confidential records" means
all correspondence, memoranda, files, manuals, financial, operating or marketing
records, magnetic tape, or electronic or other media of any kind which may be in
Executive's possession or under his control or accessible to him which contain
any proprietary information as defined in Section 7.2 above.
10
<PAGE> 11
7.4 INVENTIONS AND PATENTS. Executive agrees that all inventions,
innovations, trade secrets, patents and processes in any way relating, directly
or indirectly, to the Company's or its subsidiaries' businesses developed by him
alone or in conjunction with others at any time during his employment by the
Company shall belong to the Company. Executive will use his best efforts to
perform all actions reasonably requested by the Board to establish and confirm
such ownership by the Company.
7.5 DEFINITION OF COMPANY. For purposes of this Section 7, the term
"Company" shall include Holdings and any and all of its subsidiaries, ventures
or affiliates (including the Company and any and all of its subsidiaries,
ventures or affiliates) whether currently existing or hereafter formed.
7.6 ENFORCEMENT. The parties hereto agree that the duration and area
for which the covenants set forth in Section 7 are to be effective are
reasonable. In the event that any court or arbitrator determines that the time
period or the area, or both of them, are unreasonable and that any of the
covenants are to that extent unenforceable, the parties hereto agree that such
covenants will remain in full force and effect, first, for the greatest time
period, and second, in the greatest geographical area that would not render them
unenforceable. The parties intend that this Agreement will be deemed to be a
series of separate covenants, one for each and every county of each and every
state of the United States of America. Executive agrees that damages are an
inadequate remedy for any breach of the covenants in this Section 7 and that the
Company will, whether or not it is pursuing any potential remedies at law, be
entitled to equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or threatened breach
of this Agreement.
8. MISCELLANEOUS.
8.1 NOTICE. Any notice required or permitted to be given hereunder
shall be deemed sufficiently given if sent by registered or certified mail,
postage prepaid, addressed to the addressee at his or its address last provided
the sender in writing by the addressee for purposes of receiving notices
hereunder or, unless or until such address shall be so furnished, to the address
11
<PAGE> 12
indicated opposite his or its signature to this Agreement. Each party may also
provide notice by sending the other party a facsimile at a number provided by
such other party.
8.2 MODIFICATION AND NO WAIVER OF BREACH. No waiver or modification of
this Agreement shall be binding unless it is in writing signed by the parties
hereto. No waiver by a party of a breach hereof by the other party shall be
deemed to constitute a waiver of a future breach, whether of a similar or
dissimilar nature, except to the extent specifically provided in any written
waiver under this Section 8.2.
8.3 GOVERNING LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the Commonwealth of Pennsylvania,
and all questions relating to the validity and performance hereof and remedies
hereunder shall be determined in accordance with such law.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.
8.5 CAPTIONS. The captions used herein are for ease of reference only
and shall not define or limit the provisions hereof.
8.6 ENTIRE AGREEMENT. This Agreement together with any agreement, plans
or other documents implementing the terms of this Agreement constitute the
entire agreement between the parties hereto relating to the matters encompassed
hereby and supersede any prior oral or written agreements provided, however,
that the Company acknowledges the cash payments due Executive pursuant to the
Employee Protection Agreement between Executive and the Company.
8.7 ASSIGNMENT. The rights of the Company under this Agreement may,
without the consent of Executive, be assigned by the Company, in its sole and
unfettered discretion, to any person, firm, corporation or other business entity
which at any time, whether by purchase, merger, or otherwise, directly or
indirectly, acquires all or substantially all of the stock, assets or business
of the Company.
12
<PAGE> 13
8.8 NON-TRANSFERABILITY OF INTEREST. None of the rights of Executive to
receive any form of compensation payable pursuant to this Agreement shall be
assignable or transferable except through a testamentary disposition or by the
laws of descent and distribution upon the death of Executive. Any attempted
assignment, transfer, conveyance, or other disposition (other than as aforesaid)
of any interest in the rights of Executive to receive any form of compensation
to be made by the Company pursuant to this Agreement shall be void.
8.9 ARBITRATION. Any dispute, claim or controversy arising out of or
relating to this Agreement, or the breach, termination or validity hereof, shall
be finally settled by arbitration in accordance with the then-prevailing
Commercial Arbitration Rules of the American Arbitration Association, as
modified herein ("Rules"). There shall be one arbitrator who shall be jointly
selected by the parties. If the parties have not jointly agreed upon an
arbitrator within twenty days of respondent's receipt of claimant's notice of
intention to arbitrate, either party may request the American Arbitration
Association to furnish the parties with a list of names from which the parties
shall jointly select an arbitrator. If the parties have not agreed upon an
arbitrator within ten days of the transmittal date of the list, then each party
shall have an additional five days in which to strike any names objected to,
number the remaining names in order of preference, and return the list to the
American Arbitration Association, which shall then select an arbitrator in
accordance with Rule 13 of the Rules. The place of arbitration shall be
Pittsburgh, Pennsylvania. By agreeing to arbitration, the parties hereto do not
intend to deprive any court of its jurisdiction to issue a pre-arbitral
injunction, pre-arbitral attachment or other order in aid of arbitration. The
arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Sections
1-16. Judgment upon the award of the arbitrator may be entered in any court of
competent jurisdiction. Each party shall bear its or his own costs and expenses
in any such arbitration and one-half of the arbitrator's fees and expenses.
13
<PAGE> 14
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first written above.
WERNER MANAGEMENT CO.,
a Pennsylvania Corporation.
By:
--------------------------------
Name:
-----------------------------
Address for Notices: Title:
----------------------------
93 Werner Road
Greenville, PA 16125-9499
Attention: Eric Werner
With a copy to: Consented and Agreed to for
the purposes of guaranteeing the
obligations of the Company under
Sections 3, 6.2, and 6.3:
Investcorp International Inc.
280 Park Avenue, 37th Floor WERNER HOLDING CO. (PA), INC., a
New York, NY 10017 Pennsylvania Corporation.
Attention: Chris Stadler
By:
--------------------------------
Name:
-----------------------------
Title:
----------------------------
EXECUTIVE
----------------------------------
Address for Notices:
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
14
<PAGE> 15
SCHEDULE 1
----------
<TABLE>
<CAPTION>
TITLE LOCATION OF BASE SALARY BASE SALARY BONUS AMOUNT
OFFICE (11/24/97-12/31/97) 1/1/98-11/24/00 AS A
PERCENTAGE
OF BASE SALARY
<S> <C> <C> <C> <C>
DMW: Chairman of the Greenville, Pa. $420,000.00 406,000.00 90%
Board; President; CEO
HLS: Vice Chairman of the Greenville, Pa. 417,500.00 385,000.00 90%
Board; Senior Vice President
EJW: Secretary, Vice Greenville, Pa. 217,500.00 183,000.00 60%
President; General Counsel
MEW: Vice President Franklin Park, Ill. 217,500.00 234,000.00 70%
CRW: Vice President Franklin Park, Ill. 217,500.00 187,000.00 60%
MJS: Vice President Franklin Park, Ill. 200,000.00 167,000.00 60%
BDW: Vice President Franklin Park, Ill. 217,500.00 181,000.00 60%
</TABLE>
15
<PAGE> 16
EXHIBIT 1
---------
EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") is defined as Consolidated Net Income (loss) of the Company and its
subsidiaries as it would appear on a statement of income (loss), which shall (i)
exclude or be adjusted otherwise for all acquisitions and additional equity
contributions to the extent such acquisitions and/or equity contributions
materially change target EBITDA for any particular Fiscal Year, (ii) reflect a
reduction for all management and employment bonuses payable with respect to the
Fiscal Year of the Company prepared in accordance with U.S. GAAP consistently
applied and (iii) be adjusted for any material Board approved amendment to the
capital expenditure plan: plus (minus) the following amounts, to the extent such
amounts are otherwise taken into account in determining EBITDA (prior to
adjustment):
1. Any provision (benefit) for taxes (including franchise taxes)
deducted (added) in calculating such consolidated net income (loss); plus
2. Any interest expense (net of interest income), deducted in
calculating such consolidated net income (loss); plus
3. Amortization expenses deducted in calculating consolidated net
income (loss); plus
4. Depreciation expense deducted in calculating consolidated net income
(loss); plus
5. Management fees paid to Investcorp; plus (minus)
6. Any unusual losses (gains) deducted (added) in calculating
consolidated net income (loss). (Unusual items are intended to include
transactions considered outside the ordinary course of business. EBITDA will be
adjusted to eliminate the effects, if any, of such
16
<PAGE> 17
transactions, the intent being to calculate EBITDA as if such transactions had
not occurred; plus (minus)
7. Any compensation expense (income) deducted (added) in calculating
consolidated net income (loss) attributable to transactions involving equity
securities of the Company or its subsidiaries.
The Executive and his representative shall be provided reasonable
opportunity to review the computation of EBITDA and reasonable access to the
data and information supporting much computation, but the Board's determination
shall be conclusive and binding.
17
<PAGE> 18
EXHIBIT 2
---------
EBITDA Targets for Fiscal Years 1998-2002
FISCAL YEAR EBITDA TARGET
(IN MILLIONS OF DOLLARS)
1998 $ 75.4
1999 $ 93.9
2000 $118.4
2001 $134.8
2002 $146.9
18
<PAGE> 19
EXHIBIT 3
---------
LIST OF CURRENT EMPLOYEE BENEFITS
Term Life Insurance
Other Life Insurance (after 10 Years of Service)
Travel Insurance
Supplemental Pension Plan
Personal Financial Planning Program
Tax Planning and Preparation
Estate Planning
Officers' Salary Continuation Plan
Officers'/Directors' Health and Dental Insurance Continuation Plan
Company Car
Vacation
Laptop Computer
Cellular Telephone
Internet E-Mail and Web Surfing Account
Annual Supplemental Physical Reimbursement
19
<PAGE> 1
Exhibit 10.4
WERNER HOLDING CO. (PA), INC.
STOCK INCENTIVE PLAN
l. ESTABLISHMENT AND PURPOSE OF THE PLAN. This Management
Stock Incentive Plan (the "Plan") is established by Werner Holding Co. (PA),
Inc., a Pennsylvania corporation (the "Company"), as of November 24, 1997. The
Plan is designed to enable the Company to attract, retain and motivate
directors, members of the management and certain other officers and key
employees the Company, and its subsidiaries, by providing for or increasing
their proprietary interest in the Company. The Plan provides for the grant of
options ("Options") that qualify as incentive stock options ("Incentive Stock
Options") under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), as well as Options that do not so qualify ("Non-Qualified
Options"), for the grant of stock appreciation rights ("Stock Appreciation
Rights") and for the sale or grant of restricted stock ("Restricted Stock").
2. STOCK SUBJECT TO PLAN. The number of shares of stock that
may be subject to Options or Stock Appreciation Rights granted hereunder plus
the number of shares of stock that may be granted or sold as Restricted Stock
hereunder shall not in the aggregate exceed 7,600 shares of the Company's Class
C Common Stock (the "Shares"), subject to adjustment under Section 13 hereof;
provided further that the number of Shares that a Participant (as hereinafter
defined) may receive pursuant to the Plan shall in no event exceed 2,500 in any
year. The Shares that may be subject to Options granted and Restricted Stock
sold or granted under the Plan may be authorized and unissued Shares or Shares
reacquired by the Company and held as treasury stock.
Shares that are subject to the unexercised portions of any
Options that expire, terminate or are canceled, and Shares that are subject to
any Stock Appreciation Rights that expire, terminate or are canceled, and Shares
of Restricted Stock that are reacquired by the Company pursuant to the
restrictions thereon, shall again be available for the grant of Options or Stock
Appreciation Rights and the sale or grant of Restricted Stock under the Plan. If
a Stock Appreciation Right is exercised, any Option or portion thereof that is
surrendered in connection with such exercise shall terminate and the Shares
theretofore subject to the Option or portion thereof shall not be available for
further use under the Plan.
3. SHARES SUBJECT TO ARTICLES OF INCORPORATION. All Shares
issuable under Options or Stock Appreciation Rights and all Shares of Restricted
Stock sold or granted pursuant to this Plan shall be subject to the terms and
restrictions contained in the Articles of Incorporation of the Company. A copy
of the Articles of Incorporation shall be delivered to the recipient of an
Option, Stock Appreciation Right or Restricted Stock at the time of grant or
issuance.
4. ADMINISTRATION OF THE PLAN. The Plan shall be administered
by a committee (the "Committee") appointed by the Board of Directors (the
"Board") of the
<PAGE> 2
Company. If no persons are designated by the Board to serve on the Committee,
the Plan shall be administered by the Board and all references herein to the
Committee shall refer to the Board. The Board shall have the discretion to add,
remove or replace members of the Committee, and shall have the sole authority to
fill vacancies on the Committee; provided that one member of the Committee shall
be a member of the Board appointed pursuant to Section 4(iii) of the Shareholder
Agreement (the "Shareholder Agreement") by and among the Company, the holders of
Class D Common Stock of the Company, and the Designated Shareholders, as such
term is defined in the Shareholder Agreement.
All actions of the Committee shall be authorized by a majority
vote thereof at a duly called meeting. The Committee shall have the sole
authority, in its absolute discretion, to adopt, amend, and rescind such rules
and regulations as, in its opinion, may be advisable in the administration of
the Plan, to construe and interpret the Plan, the rules and regulations, and the
agreements and other instruments evidencing Options and Stock Appreciation
Rights granted and Restricted Stock sold or granted under the Plan, and to make
all other determinations deemed necessary or advisable for the administration of
the Plan. All decisions, determinations, and interpretations of the Committee
shall be final and conclusive upon the Participants, as hereinafter defined.
Notwithstanding the foregoing, any dispute arising under any Agreement (as
defined below) shall be resolved pursuant to the dispute resolution mechanism
set forth in such Agreement.
Subject to the express provisions of the Plan, the Committee
shall determine the number of Shares subject to grants or sales and the terms
thereof, including the provisions relating to the exercisability of Options and
Stock Appreciation Rights, lapse and non-lapse restrictions upon the Shares
obtained or obtainable under the Plan and the termination and/or forfeiture of
Options and Stock Appreciation Rights and Restricted Stock under the Plan. The
terms upon which Options and Stock Appreciation Rights are granted and
Restricted Stock is sold or granted shall be evidenced by a written agreement,
executed by the Company and the Participant (each, an "Agreement"), containing
such terms and conditions as may be approved by the Committee; provided that
such terms and conditions are not inconsistent with the express conditions of
the Plan.
5. ELIGIBILITY. Persons who shall be eligible for grants of
Options or Stock Appreciation Rights or sales or grants of Restricted Stock
hereunder shall be those directors, officers and employees of the Company or a
subsidiary of the Company who are members of a select group of directors,
management and other key employees that the Committee may from time to time
designate to participate under the Plan ("Participants") through grants of
Non-Qualified Options, Incentive Stock Options and, if applicable, Stock
Appreciation Rights, and/or through sales or grants of Restricted Stock.
6. TERMS AND CONDITIONS OF OPTIONS. No Incentive Stock Option
shall be granted for a term of more than ten years and no Non-Qualified Option
shall be granted for a term of more than ten years and thirty days. Options may,
in the discretion of the Committee, be granted with associated Stock
Appreciation Rights or be amended so as to provide for associated Stock
Appreciation Rights. The Agreement may contain such other terms,
2
<PAGE> 3
provisions, and conditions as may be determined by the Committee as long as such
terms, conditions and provisions are not inconsistent with the Plan. The
Committee shall designate as such those Options intended to be eligible to
qualify and be treated as Incentive Stock Options and, correspondingly, those
Options not intended to be eligible to qualify and be treated as Incentive Stock
Options.
7. EXERCISE PRICE OF OPTIONS. The exercise price for each
Non-Qualified Option granted hereunder shall be set forth in the Agreement. For
so long as required under Section 422 of the Code and the regulations
promulgated thereunder (or any successor statute or rules), the exercise price
of any Option intended to be eligible to qualify and be treated as an Incentive
Stock Option shall not be less than the fair market value of the Shares on the
date such Incentive Stock Option is granted, except that if such Incentive Stock
Option is granted to a Participant who on the date of grant is treated under
Section 424(d) of the Code as owning stock (not including stock purchasable
under outstanding options) possessing more than ten percent of the total
combined voting power of all classes of the Company's stock, the exercise price
shall not be less than one hundred ten percent (110%) of the fair market value
of the Shares on the date such Incentive Stock Option is granted.
The fair market value of Shares for the purposes of this Plan
shall be determined by the Board, whose valuation shall be binding upon each
Optionee.
Payment for Shares purchased upon exercise of any Option
granted hereunder shall be in cash at the time of exercise, except that, if
either the Agreement so provides or the Committee so permits, and if the Company
is not then prohibited from doing so, such payment may be made in whole or in
part with surrendered or withheld shares of stock of the same class as the stock
then subject to the Option. The Committee also may on an individual basis permit
payment or agree to permit payment by such other alternative means as may be
lawful, including by delivery of an executed exercise notice together with
irrevocable instructions to a broker promptly to deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price.
8. NON-TRANSFERABILITY. Unless provided otherwise in the
Agreement, any Option granted under this Plan shall by its terms be
nontransferable by the Participant other than by will or the laws of descent and
distribution (in which case such descendant or beneficiary shall be subject to
all terms of the Plan applicable to Participants) and is exercisable during the
Participant's lifetime only by the Participant or by the Participant's guardian
or legal representative.
9. INCENTIVE STOCK OPTIONS. The provisions of the Plan are
intended to satisfy the requirements set forth in Section 422 of the Code and
the regulations promulgated thereunder (including the aggregate fair market
value limits set forth in Section 422(d) of the Code) with respect to Incentive
Stock Options granted under the Plan. For so long as required under Section 422
of the Code and the regulations promulgated thereunder (or any successor statute
or rules), during the term of the Plan, the aggregate fair market value of the
Shares with respect to which Incentive Stock Options are first exercisable by a
Participant
3
<PAGE> 4
during any calendar year shall not exceed $100,000. For the purpose of this
Section 9, the fair market value of the Shares shall be determined at the time
the Incentive Stock Option is granted.
10. STOCK APPRECIATION RIGHTS. The Committee may, under such
terms and conditions as it deems appropriate, grant to any Participant selected
by the Committee Stock Appreciation Rights, which may or may not be associated
with Options. Upon exercise of a Stock Appreciation Right, the Participant shall
be entitled to receive payment of an amount equal to the excess of the fair
market value, as defined by the Committee, of the underlying Shares on the date
of exercise over the Stock Appreciation Right's exercise price. Such payment may
be made in additional Shares valued at their fair market value on the date of
exercise or in cash, or partly in Shares and partly in cash, as the Committee
may designate. The Committee may require that any Stock Appreciation Right shall
be subject to the condition that the Committee may at any time in its absolute
discretion not allow the exercise of such Stock Appreciation Right.
11. RESTRICTED STOCK. The Committee may sell or grant
Restricted Stock under the Plan (either independently or in connection with the
exercise of Options or Stock Appreciation Rights under the Plan) to Participants
selected by the Committee. The Committee shall in each case determine the number
of Shares of Restricted Stock to be sold or granted, the price at which such
Shares are sold, if applicable, and the terms and duration of the restrictions
to be imposed upon those Shares.
12. INVESTMENT REPRESENTATION. Each Agreement may contain an
agreement that, upon demand by the Committee for such a representation, the
optionee shall deliver to the Committee at the time of any exercise of an Option
a written representation that the Shares to be acquired upon such exercise are
to be acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation prior to
the delivery of any Shares issued upon exercise of an Option and prior to the
expiration of the option period shall be a condition precedent to the right of
the optionee or such other person to purchase any Shares.
13. ADJUSTMENTS. In the event of any one or more
reorganizations, recapitalizations, stock splits, reverse stock splits, stock
dividends, extraordinary dividends, or distributions, or similar events, an
appropriate adjustment shall be made in the number, exercise or sale price
and/or type of shares or securities for which Options or Stock Appreciation
Rights may thereafter be granted and Restricted Stock may thereafter be sold or
granted under the Plan. The Committee also shall designate the appropriate
changes that shall be made in Options or Stock Appreciation Rights, or rights to
purchase Restricted Stock under the Plan, so as to preserve the value of any
such Options, Stock Appreciation Rights or Restricted Stock. Any such adjustment
in outstanding Options shall be made without changing the aggregate exercise
price applicable to the unexercised portions of such Options. Any such
adjustments in outstanding rights to purchase Restricted Stock shall be made
without changing the aggregate purchase price of such Restricted Stock.
4
<PAGE> 5
14. DURATION OF PLAN. Options may not be granted and
Restricted Stock may not be sold or granted under the Plan after November 24,
2007.
15. AMENDMENT AND TERMINATION OF THE PLAN. Subject to the
Section 5.4 of the Recapitalization Agreement, dated as of October 8, 1997 and
amended and restated as of October 27, 1997 (the "Recapitalization Agreement")
between the Company and the Investors set forth on Schedule 1 to the
Recapitalization Agreement, the Board may at any time amend, suspend or
terminate the Plan. The Committee may amend the Plan or any Agreement issued
hereunder to the extent necessary for any Option or Stock Appreciation Right
granted or Restricted Stock sold or granted under the Plan to comply with
applicable tax or securities laws. If the Board determines that the approval of
such action by the stockholders of the Company is advisable or necessary for
compliance with applicable securities law, tax law, stock exchange requirement
or other applicable federal or state law, no such action of the Board or the
Committee shall be permitted unless taken with or ratified by such approval.
No Option or Stock Appreciation Right may be granted or
Restricted Stock sold or granted during any suspension of the Plan or after the
termination of the Plan. No amendment, suspension or termination of the Plan or
of any Agreement issued hereunder shall, without the consent of the affected
holder of such Option or Stock Appreciation Right or Restricted Stock, adversely
alter or otherwise impair any rights or obligations in any Option or Stock
Appreciation Right or Restricted Stock theretofore granted or sold to such
holder under the Plan.
16. NATURE OF PLAN. This Plan is intended to qualify as a
compensatory benefit plan within the meaning of Rule 701 under the Act. This
Plan is intended to constitute an unfunded arrangement for a select group of
directors, management and other key employees.
17. CANCELLATION OF OPTIONS. Any Option granted under the Plan
may be canceled at any time with the consent of the holder and a new Option may
be granted to such holder in lieu thereof.
18. WITHHOLDING TAXES. Whenever Shares are to be issued with
respect to the exercise of Options or amounts are to be paid or income earned
with respect to Stock Appreciation Rights or Restricted Stock under the Plan,
the Committee in its discretion may require the Participant to remit to the
Company, prior to the delivery of any certificate or certificates for such
Shares or the payment of any such amounts, all or any part of the amount
determined in the Committee's discretion to be sufficient to satisfy federal,
state and local withholding tax obligations (the "Withholding Obligation") that
the Company or its counsel determines may arise with respect to such exercise,
issuance or payment. Pursuant to a procedure established by the Committee or as
set forth in the Agreement, the Participant may (i) request the Company to
withhold delivery of a sufficient number of Shares or a sufficient amount of the
Participant's compensation or (ii) deliver a sufficient number of
previously-issued Shares, to satisfy the Withholding Obligation.
5
<PAGE> 6
EXHIBIT
-------
EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
(A) (B) (C)
Cumulative
Fiscal Year Minimum Target Target
----------- ------- ------ ------
<S> <C> <C> <C>
l998 60,320 75,400 75,400
l999 75,120 93,900 169,300
2000 94,720 118,400 287,700
2001 107,840 134,800 422,500
2002 117,520 146,900 569,400
</TABLE>
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") is defined as Consolidated Net Income (loss) of the Company and its
subsidiaries as it would appear on a statement of income (loss), which shall (i)
exclude or be adjusted otherwise for all acquisitions and additional equity
contributions to the extent such acquisitions and/or equity contributions
materially change target EBITDA for any particular Fiscal Year,(ii) reflect a
reduction for all management and employment bonuses payable with respect to the
Fiscal Year of the Company prepared in accordance with U.S. GAAP, consistently
applied and (iii) be adjusted for any material Board approved amendment to the
capital expenditure plan; plus (minus), to the extent such amounts are otherwise
taken into account in determining EBITDA (prior to adjustment), the following:
1. Any provision (benefit) for taxes (including
franchise taxes) deducted (added) in calculating such
consolidated net income (loss); plus
2. Any interest expense (net of interest income),
deducted in calculating such consolidated net income
(loss); plus
3. Amortization expenses deducted in calculating
consolidated net income (loss); plus
4. Depreciation expense deducted in calculating
consolidated net income (loss); plus
5. Management fees paid to Investcorp; plus (minus)
6. Any unusual losses (gains) deducted (added) in
calculating consolidated net income (loss). (Unusual
items are intended to include transactions considered
outside the ordinary course of business. EBITDA will
be adjusted to eliminate the effects, if any, of
<PAGE> 7
such transactions, the intent being to calculate
EBITDA as if such transactions had not occurred.);
plus (minus)
7. Any compensation expense (income) deducted (added) in
calculating consolidated net income (loss)
attributable to transactions involving equity
securities of the Company or its subsidiaries.
The Participant and his or her representative shall be
provided reasonable opportunity to review the computation of EBITDA and
reasonable access to the data and information supporting such computation, but
the Board's determination shall be conclusive and binding.
2
<PAGE> 1
Exhibit 10.5
STOCK OPTION AGREEMENT
PURSUANT TO THE
WERNER HOLDING CO. (PA), INC.
STOCK INCENTIVE PLAN
THIS STOCK OPTION AGREEMENT (this "Agreement") is made as of November
__, 1997 (the "Effective Date"), between Werner Holding Co. (PA), Inc., a
Pennsylvania corporation (the "Company"), and ____________ (the "Optionee").
R E C I T A L S
- - - - - - - -
A. The Company has adopted the Werner Holding Co. (PA) Inc. Stock
Incentive Plan (the "Plan"), a copy of which is attached hereto as Exhibit __.
B. The Company desires to grant the Optionee the opportunity to acquire
a proprietary interest in the Company to encourage the Optionee's contribution
to the success and progress of the Company.
C. In accordance with the Plan, the Committee (as defined in the Plan)
has as of the Effective Date granted to the Optionee a non-qualified option to
purchase shares of Class C Stock, $0.01 par value, of the Company (the "Class C
Stock") subject to the terms and conditions of the Plan and this Agreement.
AGREEMENTS
----------
1. DEFINITIONS. Capitalized terms used herein shall have the following
meanings:
"Act" is defined in Section 10(a).
"Agreement" means this Stock Option Agreement.
"Annual Valuation" is defined in Section 9(e).
"Approved Sale" means a transaction or a series of related
transactions which results in a BONA FIDE, unaffiliated change of economic
beneficial ownership of the Company or its business of greater than 50%
(disregarding for this purpose any disparate voting rights attributable to the
outstanding stock of the Company), whether pursuant to the sale of the stock of
the Company, the sale of the assets of the Company, or a merger or consolidation
(other than a sale of stock by an Initial Stockholder to (i) another Initial
Stockholder or affiliate thereof, or (ii) a non-U.S. entity with respect to
which an Initial Stockholder or affiliate thereof has an administrative
relationship).
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"Articles of Incorporation" means the Restated Articles of
Incorporation of the Company setting forth the rights, preferences and
privileges of and restrictions on the Class C Stock.
"Cause," when used in connection with the termination of
employment of the Optionee, has the meaning set forth in the employment
agreement between the Company and the Optionee, or if there is no such
employment agreement, means (a) conviction of the Optionee for a felony, or the
entry by the Optionee of a plea of guilty or NOLO CONTENDERE to a felony, (b)
the commission of an act of fraud involving dishonesty for personal gain which
is materially injurious to the Company, (c) the willful and continued refusal by
the Optionee to substantially perform his duties with the Company (other than
any such refusal resulting from his incapacity due to mental illness or physical
illness or injury), after a demand for substantial performance is delivered to
the Optionee by the Company's Board of Directors, where such demand specifically
identifies the manner in which the Company's Board of Directors believes that
the Optionee has refused to substantially perform his duties and the passage of
a reasonable period of time for the Optionee to comply with such demand or (d)
the willful engaging by the Optionee in gross misconduct materially and
demonstrably injurious to the Company or its Subsidiaries. For purposes of this
paragraph, no act or failure to act on the Optionee's part shall be considered
"willful" unless done, or omitted to be done, by the Optionee not in good faith
and without reasonable belief that his action or omission was in the best
interest of the Company or its Subsidiaries. Notwithstanding the foregoing, with
respect to termination for Cause arising out of conduct described in clause (b),
(c) or (d) above, a termination shall not be considered for Cause for purposes
of this Agreement unless there shall have been delivered to the Optionee a copy
of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire Board of Directors of the Company, at a meeting of
such board called and held for that purpose (after reasonable notice to the
Optionee and an opportunity for the Optionee, together with his counsel or other
advisors, to be heard at such meeting), finding that in the good faith opinion
of the board the Optionee had engaged in conduct described above in clause (b),
(c) or (d) of the first sentence of this paragraph and specifying the
particulars thereof in detail. Such a finding by the Board of Directors of the
Company is a prerequisite to a termination for Cause pursuant to clauses (b),
(c) or (d) above; PROVIDED, HOWEVER, that such a finding may be challenged, by
appropriate judicial process, on the merits (i.e., that Cause did not exist) or
on the basis that the board's finding was not made in good faith (provided that
proof that Cause for termination existed shall be a complete defense to any
showing that the board's findings was not made in good faith).
"Class C Stock" is defined in recital C.
"Closing Date" means the date on which occurs the closing of
the recapitalization of the Company pursuant to the Recapitalization Agreement
dated as of October 8, 1997 and amended as of October 27, 1997 by and between
the Company and the Investors, as such term is defined herein.
"Company" is defined in the preamble.
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"Disability" has the meaning set forth in the employment
agreement between the Company and the Optionee, or if there is no such
employment agreement, means the failure by the Optionee to render full-time
employment services to the Company for an aggregate of ninety (90) business days
in any continuous period of six (6) months on account of physical or mental
disability.
"EBITDA" is defined in Section 3(a).
"Effective Date" is defined in the preamble.
"Endorsed Certificate" is defined in Section 9(a).
"Exercise Price" is defined in Section 2.
"Fair Market Value" means the value of a Share, as of the
Termination Date, calculated pursuant to Section 9(e).
"Fiscal Year" means the fiscal year of the Company.
"Good Reason" means, unless the Optionee shall have consented
in writing thereto, any of the following:
(a) except as specifically provided in the Optionee's
employment agreement, if any, the assignment to the Optionee of duties,
or the assignment of the Optionee to a position, constituting a
material diminution in the Optionee's role, responsibilities or
authority compared with his role, responsibilities or authority on the
Effective Date;
(b) a reduction by the Company in the Optionee's
bonus opportunities or base salary as in effect on the Effective Date
or as the same may be increased from time to time;;
(c) unless the members of the Board appointed
pursuant to section 4(iii) of the Shareholder Agreement dated as of
November 24, 1997 agree to such reduction or other action, any material
reduction in the level of benefits (including participation in any
bonus plan) to which the Optionee is entitled under one or more
employee benefit plans on the Effective Date, or the taking of any
action by the Company which would adversely affect the Optionee's
accrued benefits under any such employee benefit plans or deprive the
Optionee of any material fringe benefit enjoyed by the Optionee on the
Effective Date;
(d) a demand by the Company to the Optionee to
relocate to any place that exceeds a fifty (50) mile radius beyond the
location at which the Optionee performed his duties on the Effective
Date; or
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(e) any material breach of this Agreement on the part
of the Company.
"Initial Public Offering" means the sale of any of the common
stock of the Company pursuant to a registration statement that has been declared
effective under the Act, if as a result of such sale (i) the issuer becomes a
reporting company under Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended, and (ii) such stock is traded on the New York Stock Exchange
or the American Stock Exchange, or is quoted on the NASDAQ National Market
System or is traded or quoted on any other national stock exchange or national
securities system.
"Initial Stockholders" means the shareholders of the Company
who became shareholders as of the Closing Date (other than any such shareholders
who are also employees of the Company or were shareholders of the Company prior
to the Closing Date) and any transferees of such shareholders prior to an
Initial Public Offering or an Approved Sale.
"Investors" means those entities set forth on Schedule 1 of
the Recapitalization Agreement.
"Option" is defined in Section 2.
"Optionee" is defined in the preamble.
"Option Shares" is defined in Section 2.
"Plan" is defined in recital A.
"Put Date" is defined in Section 9(b).
"Repurchase" is defined in Section 9(a).
"Remaining Capital Stock" means the Company's capital stock
outstanding immediately prior to the Approved Sale other than the Company's
capital stock disposed of by stockholders of the Company as a result of such
Approved Sale in exchange for money or other property.
"Retirement" has the meaning set forth in the employment
agreement between the Company and the Optionee, or if there is no such
employment agreement, means the Optionee's retirement from employment with the
Company in accordance with the Company's normal retirement policy generally
applicable to its salaried employees.
"Shareholder Rights Agreement" is defined in Section 13.
"Stepup" is defined in Section 9(b).
"Subsidiary" means any joint venture, corporation, partnership
or other entity as to which the Company, whether directly or indirectly, has
more than 50% of the (i) voting rights or (ii) rights to capital or profits.
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<PAGE> 5
"Termination Date" means the date on which the Optionee ceases
to be employed by the Company for any reason.
2. GRANT OF OPTION. The Company grants to the Optionee the right and
option (the "Option") to purchase, on the terms and conditions hereinafter set
forth, all or any part of the number of shares of Class C Stock set forth below
the Optionee's signature below (the "Option Shares"), at the purchase price of
$2,421.29 per Share (as such amount may be adjusted, the "Exercise Price"), on
the terms and conditions set forth herein.
3. EXERCISABILITY.
(a) The Option shall become exercisable to the extent of the
one-fifth (1/5) of the number of Option Shares as of the end of each fiscal year
set forth on Exhibit 2 of this Agreement if the Company's Earnings before
Interest, Taxes, Depreciation and Amortization ("EBITDA"), as defined on Exhibit
2, equals or exceeds the Target annual EBITDA amount set forth in column (B) of
Exhibit 2 with respect to such fiscal year, provided further that, if the EBITDA
for a fiscal year equals at least ninety percent (90%) of the Target annual
EBITDA set forth in column B of Exhibit 2 for such year, the Option shall become
exercisable to the extent provided in column (B) of Exhibit 3 of this Agreement.
If for any fiscal year set forth on Exhibit 2 the Company's cumulative annual
EBITDA amount for that and the preceding fiscal years equals or exceeds the
Cumulative Target EBITDA amount set forth in column (C) of Exhibit 2 with
respect to such fiscal year, the Option shall become exercisable to the extent
that it would have become exercisable had the Company achieved its Target annual
EBITDA amounts for that and each of the preceding fiscal years; provided,
however, that notwithstanding the Company's cumulative EBITDA amount equaling or
exceeding the Cumulative Target EBITDA amount, the Option shall not become
exercisable (subject to Section 3(b)) as to any year in which the Company's
EBITDA does not equal or exceed the Minimum Level EBITDA amount set forth in
column (A) of Exhibit 2 with respect to such fiscal year.
(b) Notwithstanding Sections 3(a), (i) upon the occurrence of
an Initial Public Offering, in which case the schedule set forth in Section 3(a)
shall not apply to the extent that Options are not yet exercisable, the Optionee
shall have the right (A) to exercise one-third (1/3) of all unexercisable
Options on the first anniversary of the Initial Public Offering, provided that
the Optionee remains continuously employed by the Company through such
anniversary; (B) to exercise an additional one third (1/3) of all unexercisable
Options (as of the first anniversary) on the second anniversary of the Initial
Public Offering, provided that the Optionee remains continuously employed by the
Company through such anniversary; and (C) to exercise the remaining one-third
(1/3) of all unexercisable Options on the third anniversary of the Initial
Public Offering, provided that the Optionee remains continuously employed by the
Company through such anniversary; (ii) upon the occurrence of an Approved Sale,
in which case the schedule set forth in Section 3(a) shall not apply to the
extent that Options are not yet exercisable, the Optionee shall have the right
to exercise up to fifty percent (50%) of all unexercisable Options, provided,
and to the extent, that the Initial Stockholders receive a twenty percent (20%)
annual internal rate of return (calculated on a fully diluted basis) from the
Closing Date until the date of closing of the Approved Sale (taking into account
the Approved Sale), and shall have the right to exercise up to one-hundred
percent (100%) of all unexercisable Options if
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<PAGE> 6
the Initial Stockholders receive a thirty percent (30%) annual internal rate of
return (calculated on a fully diluted basis) from the Closing Date until the
date of closing of the Approved Sale (taking into account the Approved Sale),
and (iii) upon the seventh (7th) anniversary of the Effective Date, provided the
Optionee remains continuously employed by the Company through such anniversary,
any unexercisable Option shall immediately become fully exercisable.
4. EXPIRATION.
(a) Subject to Section 6(a), the exercisable portion of the
Option shall expire upon the thirtieth (30th) day following the seventh (7th)
anniversary of the Effective Date unless (i) at any time prior to the earlier of
an Approved Sale or January 1, 2001, the Optionee resigns without Good Reason,
in which case the exercisable portion of the option shall expire thirty (30)
days following the Termination Date, or (ii) the Optionee is terminated for
Cause from employment by the Company, in which case the exercisable portion of
the Option shall expire on the Termination Date, or (iii) in the event the
Optionee is terminated other than for Cause from employment by the Company and
the Company exercises the repurchase right pursuant to Section 9 hereof, or in
the event the Optionee or his or her representative exercises the put right
pursuant to Section 9 hereof, the exercisable portion of the Option shall expire
on the business day immediately preceding the Repurchase Date, the Put Date, or
the date on which the Company acquires any Option Shares pursuant to Section
9(c) hereof, as the case may be.
(b) The unexercisable portion of the Option shall expire on
the earlier to occur of (i) the Termination Date except in the case where the
employment of the Optionee is terminated without Cause, for Good Reason, or due
to Retirement, death or Disability, in which case the unexercisable portion of
the Option shall terminate on the thirtieth (30th) day following the date on
which the Optionee received notice of the EBITDA for the Fiscal Year during
which the Termination Date occurred, and a pro rata portion of the portion of
the Option scheduled to become exercisable in the year including the Termination
Date shall become exercisable as if the Optionee's employment had not been
terminated, such proration to be determined upon the number of days elapsed in
the year in which the Termination Date occurred, or (ii) except to the extent
provided in Section 3(b)(ii), an Approved Sale.
5. NONTRANSFERABILITY. Subject to Section 9 hereof, the Option shall
not be transferable by the Optionee except that the Optionee may transfer the
Option to (a) his or her spouse, child, estate, personal representative, heir or
successor (b) a trust for the benefit of the Optionee or his or her spouse,
child or heir, or (c) a partnership the partners of which consist solely of the
Optionee and/or his or her spouse, child, heir, and/or successor (each, a
"permitted transferee") and the Option is exercisable, during the Optionee's
lifetime, only by him or her or his or her spouse or child, or, in the event of
the Optionee's Disability, his or her guardian or legal representative. More
particularly (but without limiting the generality of the foregoing), the Option
may not be assigned, transferred (except as aforesaid), pledged or hypothecated
in any way (whether by operation of law or otherwise), and shall not be subject
to execution, attachment or similar process. Any assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof, and the levy of any attachment or similar process upon the Option that
would otherwise effect a change in the ownership of the Option, shall terminate
the Option; provided, however, that in the case of the involuntary levy of any
attachment or
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<PAGE> 7
similar involuntary process upon the Option, the Optionee shall have thirty
(30) days after notice thereof to cure such levy or process before the Option
terminates. This Agreement shall be binding on and enforceable against any
person who is a permitted transferee of the Option pursuant to the first
sentence of this Section.
6. EFFECT OF APPROVED SALE; ADJUSTMENTS.
(a) Subject to Section 6(b), in the event of an Approved Sale,
the unexercised portion of the Option shall terminate upon such Approved Sale,
provided that, unless the agreement or plan of merger effecting such Approved
Sale provides that the Optionee shall receive upon such Approved Sale, with
respect to the entire exercisable but unexercised portion of the Option, the
same consideration that the holders of the Class C Stock shall be entitled to
receive upon such Approved Sale, less the Exercise Price attributable to such
exercisable but unexercised portion, then the Optionee shall be given at least
thirty (30) days' prior notice of the proposed Approved Sale and shall be
entitled to exercise such exercisable but unexercised portion of the Option at
any time during such thirty (30) day period up to and until the close of
business on the day immediately preceding the date of consummation of such
Approved Sale and upon exercise of the Option the Option Shares shall be treated
in the same manner as the shares of any other holder of Class C Stock.
(b) Notwithstanding Section 6(a), if the shares of the Class C
Stock, or to the extent it affects the economic rights of the holders of the
Class C Stock, shares of Class D stock or Class E stock of the Company, are
changed into or exchanged for a different number or kind of shares or
securities, as the result of any one or more reorganizations, recapitalizations,
mergers, acquisitions, stock splits, reverse stock splits, stock dividends or
similar events, an appropriate adjustment shall be made in the number and kind
of shares or other securities subject to the Option, and the price for each
share or other unit of any securities subject to this Agreement, in accordance
with Section 13 of the Plan. No fractional interests shall be issued on account
of any such adjustment unless the Committee specifically determines to the
contrary; provided, however, that in lieu of fractional interests, the Optionee,
upon the exercise of the Option in whole or part, shall receive cash in an
amount equal to the amount by which the fair market value of such fractional
interests exceeds the Exercise Price attributable to such fractional interests.
7. EXERCISE OF THE OPTION. Prior to the expiration thereof, the
Optionee may exercise the exercisable portion of the Option from time to time in
whole or in part. Upon electing to exercise the Option, the Optionee shall
deliver to the Secretary of the Company a written and signed notice of such
election setting forth the number of Option Shares the Optionee has elected to
purchase and shall at the time of delivery of such notice tender cash or a
cashier's or certified bank check to the order of the Company for the full
Exercise Price of such Option Shares and any amount required pursuant to Section
16 hereof. Alternatively, if the Company is not at the time prohibited from
purchasing or acquiring shares of its capital stock, the Exercise Price may be
paid in whole or in part by delivery of shares of the Class C Stock owned by the
Optionee or by the Optionee directing the Company to withhold shares otherwise
issuable upon exercise. The value of any such shares delivered or withheld as
payment of the Exercise Price shall be such shares' fair market value as
determined by the Committee. The Committee further may, in its
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<PAGE> 8
discretion, permit payment of the Exercise Price in such form or in such manner
as may be permissible under the Plan and under any applicable law.
8. RESTRICTIONS ON TRANSFERS OF SHARES ISSUABLE UPON EXERCISE. Subject
to Section 9 hereof, prior to the earlier of (A) 180 days following an Initial
Public Offering or (B) an Approved Sale, the Option Shares shall not be
transferable or transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) except that the Optionee may transfer
the Option Shares (i) to a permitted transferee, as defined in Section 5 of this
Agreement, or (ii) [as permitted by the Articles of Incorporation]. This
Agreement shall be binding on and enforceable against any person who is a
permitted transferee of the Option Shares except a person who acquires the
Option Shares pursuant to (y) Section _ of the Articles of Incorporation or (z)
as part of the Initial Public Offering. The stock certificates issued to
evidence Option Shares upon exercise of the Option hereunder shall bear a legend
referring to this Agreement and the restrictions contained herein.
9. REPURCHASE OF OPTION SHARES.
(a) In the event that the Optionee ceases to be employed by
the Company for any reason prior to an Initial Public Offering or an Approved
Sale, the Company, during the sixty (60) days following the Termination Date
(the "Repurchase Period"), shall have a one-time right to purchase all, but not
less than all, of the Option Shares. The purchase price for each Option Share
shall equal Fair Market Value, or, if the Optionee resigns without Good Reason
prior to January 1, 2001 or is terminated for Cause at any time, the lower of
Fair Market Value or the Exercise Price. If the Company elects to purchase the
Option Shares, it shall notify the Optionee at or before the end of the
Repurchase Period of such election and the purchase price shall be paid in cash
at a time set by the Company (the "Repurchase Date") within thirty (30) days
after the end of the Repurchase Period, provided that the Optionee has presented
to the Company a stock certificate evidencing the Option Shares duly endorsed
for transfer (the "Endorsed Certificate"). If the Optionee fails to deliver the
Endorsed Certificate, the Option Shares represented thereby shall be deemed to
have been purchased upon (i) the payment by the Company of the purchase price to
the Optionee or his or her permitted transferee or (ii) notice to the Optionee
or such permitted transferee that the Company is holding the purchase price for
the account of the Optionee or such permitted transferee, and upon such payment
or notice the Optionee and such permitted transferee will have no further rights
in or to such Option Shares. If the Company does not purchase the Option Shares,
the restrictions on transfer thereof contained in Sections 5 and 8 of this
Agreement shall terminate and be of no further force and effect.
(b) If the Optionee's employment by the Company is terminated
prior to an Initial Public Offering or an Approved Sale (i) by the Company
without Cause or by the Optionee for any reason; (ii) due to the Optionee's
Retirement, death or Disability; or (iii) by the Company with Cause after
January 1, 2001, the Optionee or his or her representative, during the 120 days
following the Termination Date, shall have a one-time right to require Stepup
Limited, a Cayman Islands corporation ("Stepup") to purchase all, but not less
than all, of the Option Shares, unless, by the [thirtieth (30)] day after Stepup
and the Company have received notice of the Optionee's election to exercise his
put right to Stepup, the Company has notified the Optionee and Stepup of its
election, exercisable at the discretion of the Company, to purchase the Option
Shares on the
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<PAGE> 9
same terms as such Option Shares were offered to Stepup, in which case such
Option Shares will be acquired by the Company. The purchase price shall be at
Fair Market Value, unless the employment of the Optionee is terminated for any
reason other than Retirement, death, or Disability prior to January 1, 2001, in
which case the purchase price will be the lower of Fair Market Value or the
Exercise Price. The purchase price shall be paid in cash on the thirtieth (30th)
day after Stepup and the Company have received notice of the Optionee's election
to exercise his put right (the "Put Date"), provided that Stepup or the Company,
as the case may be, need not pay the purchase price until such later time that
the Optionee presents to the Company the Endorsed Certificate.
(c) In the event that at the Termination Date a portion of the
Option may subsequently become exercisable in accordance with Section 4(b)
hereof, by notice to the Optionee delivered during the Repurchase Period, the
Company may elect to purchase any Option Shares that may subsequently be
acquired by the Optionee upon such Option becoming exercisable, and the Optionee
may elect to put said shares to the Company by notice to such effect during the
120 day period following the Termination Date. If notice with respect to the
purchase or put of such Option Shares was delivered as provided in the first
sentence of this paragraph, the Option Shares acquired upon such exercise shall
be acquired by the Company on the thirty-first (31st) day following the date on
which the Optionee received the notice of the determination of the EBITDA for
the Fiscal Year during which the Termination Date occurred at Fair Market Value
calculated as of the relevant Termination Date.
(d) The Fair Market Value of Option Shares to be purchased by
the Company or Stepup, as the case may be, hereunder shall be determined in good
faith by the Company's Board of Directors. The Board of Directors shall make its
determination of Fair Market Value annually (the "Annual Valuation") promptly
after the completion of the Company's audited financial statements for the year
then completed and such determination shall remain in effect until the Board of
Directors makes the next Annual Valuation. Notwithstanding the foregoing, if the
Board of Directors or an investment banker or appraiser appointed by the Company
makes a determination of Fair Market Value subsequent to an Annual Valuation,
such subsequent determination shall supersede the Annual Valuation then in
effect and shall establish the Fair Market Value until the next Annual
Valuation. The Fair Market Value shall be based on an assumed sale of 100% of
the outstanding capital stock of the Company (without reduction for minority
interest or lack of liquidity of the Option Shares or similar discount) and
determined in a manner consistent with the manner in which the purchase price to
be paid by the Investors pursuant to the Recapitalization Agreement was
determined. If such determination of the Fair Market Value is challenged by the
Optionee, a mutually acceptable investment banker or appraiser shall establish
the Fair Market Value as of the date of valuation referenced in the Annual
Valuation or a subsequent determination. The investment banker's or appraiser's
determination shall be conclusive and binding on the Company and the Optionee.
The Company shall bear all costs incurred in connection with the services of
such investment banker or appraiser unless the Fair Market Value established by
such investment banker or appraiser is less than 115% of the determination
challenged by the Optionee, in which case the Optionee shall promptly pay or
reimburse the Company for such costs (up to a maximum amount of $_________). If
the Optionee and the Company cannot agree upon an investment banker or
appraiser, they shall each choose an investment banker or appraiser and the two
shall choose a
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<PAGE> 10
third investment banker or appraiser who shall establish the Fair Market Value.
Notwithstanding the foregoing, the Company shall obtain valuation of all of its
common stock at least once annually for purposes of the Optionee's estate and
gift planning; provided, however, that such valuation is not binding on the
Board of Directors for purposes of determining Fair Market Value.
(e) The Optionee shall not be considered to have ceased to be
employed by the Company for purposes of this Agreement if he or she continues to
be employed by the Company or a Subsidiary, or by a company of which the Company
is a Subsidiary.
10. COMPLIANCE WITH LEGAL REQUIREMENTS.
(a) No Option Shares shall be issued or transferred pursuant
to this Agreement unless and until all legal requirements applicable to such
issuance or transfer have, in the opinion of counsel to the Company, been
satisfied. Such requirements may include, but are not limited to, registering or
qualifying such Shares under any state or federal law, satisfying any applicable
law relating to the transfer of unregistered securities or demonstrating the
availability of an exemption from applicable laws, placing a legend on the
Shares to the effect that they were issued in reliance upon an exemption from
registration under the Securities Act of 1933, as amended (the "Act"), and may
not be transferred other than in reliance upon Rule 144 or Rule 701 promulgated
under the Act, if available, or upon another exemption from the Act, or
obtaining the consent or approval of any governmental regulatory body.
(b) The Optionee understands that the Company intends for the
offering and sale of Option Shares to be effected in reliance upon Rule 701 or
another available exemption from registration under the Act and intends to file
a Form 701 as appropriate, and that the Company is under no obligation to
register for resale the Option Shares issued upon exercise of the Option[,
subject to the Articles of Incorporation]. In connection with any such issuance
or transfer, the person acquiring the Option Shares shall, if requested by the
Company, provide information and assurances satisfactory to counsel to the
Company with respect to such matters as the Company reasonably may deem
desirable to assure compliance with all applicable legal requirements.
11. SUBJECT TO ARTICLES OF INCORPORATION. The Optionee acknowledges
that the Option Shares are subject to the terms of the Articles of
Incorporation.
12. NO INTEREST IN SHARES SUBJECT TO OPTION. Neither the Optionee
(individually or as a member of a group) nor any beneficiary or other person
claiming under or through the Optionee shall have any right, title, interest, or
privilege in or to any shares of stock allocated or reserved for the purpose of
the Plan or subject to this Agreement except as to such Option Shares, if any,
as shall have been issued to such person upon exercise of an Option or any part
thereof.
13. PLAN CONTROLS. The Option hereby granted is subject to, and the
Company and the Optionee agree to be bound by, all of the terms and conditions
of the Plan as the same may be amended from time to time in accordance with the
terms thereof, but no such amendment shall
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<PAGE> 11
be effective as to the Option without the Optionee's consent insofar as it may
adversely affect the Optionee's rights under this Agreement.
14. NOT AN EMPLOYMENT CONTRACT. Nothing in the Plan, in this Agreement
or any other instrument executed pursuant thereto shall confer upon the Optionee
any right to continue in the employ of the Company or any Subsidiary or shall
affect the right of the Company or any Subsidiary to terminate the employment of
the Optionee with or without Cause.
15. GOVERNING LAW. All terms of and rights under this Agreement shall
be governed by and construed in accordance with the internal laws of the
Commonwealth of Pennsylvania, without giving effect to principles of conflicts
of law.
16. TAXES. The Committee may, in its discretion, make such provisions
and take such steps as it may deem necessary or appropriate for the withholding
of all federal, state, local and other taxes required by law to be withheld with
respect to the issuance or exercise of the Option including, but not limited to,
deducting the amount of any such withholding taxes from any other amount then or
thereafter payable to the Optionee, requiring the Optionee to pay to the Company
the amount required to be withheld or to execute such documents as the Committee
deems necessary or desirable to enable it to satisfy its withholding
obligations, or any other means provided in the Plan; provided further that the
Optionee may satisfy all aforesaid withholding tax obligations by directing the
Company to withhold that number of Option Shares with an aggregate Fair Market
Value equal to the amount of all federal, state, local and other taxes required
to be withheld, or delivering to the Company such number of previously held
shares.
17. NOTICES. All notices, requests, demands and other communications
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given if personally delivered, telexed or telecopied to, or, if mailed,
when received by, the other party at the following addresses (or at such other
address as shall be given in writing by either party to the other):
If to the Company to:
Werner Holding Co. (PA), Inc.
93 Werner Road
Greenville, PA 16125
Attention: General Counsel
With a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue, 47th Floor
New York, New York 10166-0193
Attention: E. Michael Greaney, Esq.
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If to Stepup to:
Stepup Limited
P.O. Box 1111, West Wind Building
Grand Cayman, Cayman Islands B.W.I.
With a copy to:
Investcorp Management Services Limited
c/o Investcorp Bank E.C.
P.O. Box 5430
Manama, Bahrain
Attention: H. Richard Lukens, III
If to the Optionee to the address set forth below the Optionee's
signature below.
18. AMENDMENTS AND WAIVERS. This Agreement may be amended, and any
provision hereof may be waived, only by a writing signed by the party to be
charged.
19. ENTIRE AGREEMENT. This Agreement, together with the Plan, sets
forth the entire agreement and understanding between the parties as to the
subject matter hereof and supersedes all prior oral and written and all
contemporaneous oral discussions, agreements and understandings of any kind or
nature.
20. SEPARABILITY. In the event that any provision of this
Agreement is declared to be illegal, invalid or otherwise unenforceable by a
court of competent jurisdiction, such provision shall be reformed, if possible,
to the extent necessary to render it legal, valid and enforceable, or otherwise
deleted, and the remainder of this Agreement shall not be affected except to the
extent necessary to reform or delete such illegal, invalid or unenforceable
provision.
21. HEADINGS. The headings preceding the text of the sections
hereof are inserted solely for convenience of reference, and shall not
constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
22. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
23. FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement.
24. REMEDIES. In the event of a breach by any party to this
Agreement of its obligations under this Agreement, any party injured by such
breach, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, shall be entitled to specific performance of its
rights under this Agreement. The parties agree that the provisions of this
Agreement shall be specifically enforceable, it being agreed by the parties that
the remedy at law,
12
<PAGE> 13
including monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is hereby waived.
25. BINDING EFFECT. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective permitted successors
and assigns.
26. NO DILUTION. The Company hereby represents and warrants to the
Optionee that the Option Shares shall not be subject to dilution upon (i) the
conversion, pursuant to the terms of the Articles of Incorporation, of (A) any
of the Company's Class D Stock or Class E Stock, each with a par value of $0.01,
or (B) any of the Class C Stock, or (ii) the exercise of those certain warrants
issued by the Company on November __, 1997 entitling the holder thereof to
purchase shares of the Company's Class E Stock, $0.01 par value.
13
<PAGE> 14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
WERNER HOLDING CO. (PA), INC.
By:
---------------------------
Name:
Title:
-------------------------------
Address:
Number of Option Shares: _________
Accepted and agreed to for purposes
of Section 9(b) only:
STEPUP LIMITED
By:
------------------------------
Name:
Title:
14
<PAGE> 15
EXHIBIT [2]
EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION
(IN MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
(A) (B) (C)
Cumulative
Fiscal Year Minimum Target Target
----------- ------- ------ ------
<S> <C> <C> <C>
l998 60,240 75,300 75,300
l999 75,360 94,200 169,500
2000 95,440 119,300 288,800
2001 108,640 135,800 424,600
2002 118,480 148,100 572,700
</TABLE>
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") is defined as Consolidated Net Income (loss) of the Company and its
subsidiaries as it would appear on a statement of income (loss), which shall (i)
exclude or be adjusted otherwise for all acquisitions and additional equity
contributions to the extent such acquisitions and/or equity contributions
materially change target EBITDA for any particular Fiscal Year, and which shall
(ii) reflect a reduction for all management and employment bonuses payable with
respect to the Fiscal Year of the Company prepared in accordance with U.S. GAAP,
consistently applied; plus (minus), to the extent such amounts are otherwise
taken into account in determining EBITDA (prior to adjustment), (iii) be
adjusted for any material Board approved amendment to the capital expenditure
plan, the following:
1. Any provision (benefit) for taxes (including franchise taxes)
deducted (added) in calculating such consolidated net income
(loss); plus
2. Any interest expense (net of interest income), deducted in
calculating such consolidated net income (loss); (minus)
3. Costs charged against any purchase accounting reserves
established in connection with the acquisition; (minus)
4. The effects of the reversal of any excess purchase accounting
reserves established in connection with the acquisition; plus
5. Amortization expenses deducted in calculating consolidated net
income (loss); plus
6. Depreciation expense deducted in calculating
consolidated net income (loss); plus
15
<PAGE> 16
7. Management fees paid to Investcorp; plus (minus)
8. Any unusual losses (gains) deducted (added) in calculating
consolidated net income (loss). (Unusual items are intended to
include transactions considered outside the ordinary course of
business. EBITDA will be adjusted to eliminate the effects, if
any, of such transactions, the intent being to calculate
EBITDA as if such transactions had not occurred); plus (minus)
9. Any compensation expense (income) deducted (added) in
calculating consolidated net income (loss) attributable to
transactions involving equity securities of the Company or its
subsidiaries.
The Participant and his or her representative shall be provided
reasonable opportunity to review the computation of EBITDA and reasonable access
to the data and information supporting such computation and shall have the right
to challenge in good faith such computation.
16
<PAGE> 17
EXHIBIT 3
---------
SLIDING SCALE FOR EXERCISABILITY OF OPTIONS
-------------------------------------------
<TABLE>
<CAPTION>
(A) (B)
Portion of Applicable 1998 1999 2000 2001 2002
Percentage Option Shares ---- ---- ---- ---- ----
---------- Becoming Exercisable
--------------------
<S> <C> <C> <C> <C> <C> <C>
100% 100% 75.5 94.4 119.5 135.9 148.0
95% 75% 71.7 89.7 113.5 129.1 140.6
90% 50% 68.0 85.0 107.6 122.3 133.2
</TABLE>
17
<PAGE> 18
Exhibit 10.10
WERNER HOLDING CO. (PA), INC.
STOCK INCENTIVE PLAN
l. ESTABLISHMENT AND PURPOSE OF THE PLAN. This Management
Stock Incentive Plan (the "Plan") is established by Werner Holding Co. (PA),
Inc., a Pennsylvania corporation (the "Company"), as of November 24, 1997. The
Plan is designed to enable the Company to attract, retain and motivate
directors, members of the management and certain other officers and key
employees the Company, and its subsidiaries, by providing for or increasing
their proprietary interest in the Company. The Plan provides for the grant of
options ("Options") that qualify as incentive stock options ("Incentive Stock
Options") under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), as well as Options that do not so qualify ("Non-Qualified
Options"), for the grant of stock appreciation rights ("Stock Appreciation
Rights") and for the sale or grant of restricted stock ("Restricted Stock").
2. STOCK SUBJECT TO PLAN. The number of shares of stock that
may be subject to Options or Stock Appreciation Rights granted hereunder plus
the number of shares of stock that may be granted or sold as Restricted Stock
hereunder shall not in the aggregate exceed 7,600 shares of the Company's Class
C Common Stock (the "Shares"), subject to adjustment under Section 13 hereof;
provided further that the number of Shares that a Participant (as hereinafter
defined) may receive pursuant to the Plan shall in no event exceed 2,500 in any
year. The Shares that may be subject to Options granted and Restricted Stock
sold or granted under the Plan may be authorized and unissued Shares or Shares
reacquired by the Company and held as treasury stock.
Shares that are subject to the unexercised portions of any
Options that expire, terminate or are canceled, and Shares that are subject to
any Stock Appreciation Rights that expire, terminate or are canceled, and Shares
of Restricted Stock that are reacquired by the Company pursuant to the
restrictions thereon, shall again be available for the grant of Options or Stock
Appreciation Rights and the sale or grant of Restricted Stock under the Plan. If
a Stock Appreciation Right is exercised, any Option or portion thereof that is
surrendered in connection with such exercise shall terminate and the Shares
theretofore subject to the Option or portion thereof shall not be available for
further use under the Plan.
3. SHARES SUBJECT TO ARTICLES OF INCORPORATION. All Shares
issuable under Options or Stock Appreciation Rights and all Shares of Restricted
Stock sold or granted pursuant to this Plan shall be subject to the terms and
restrictions contained in the Articles of Incorporation of the Company. A copy
of the Articles of Incorporation shall be delivered to the recipient of an
Option, Stock Appreciation Right or Restricted Stock at the time of grant or
issuance.
4. ADMINISTRATION OF THE PLAN. The Plan shall be administered
by a committee (the "Committee") appointed by the Board of Directors (the
"Board") of the
<PAGE> 19
Company. If no persons are designated by the Board to serve on the Committee,
the Plan shall be administered by the Board and all references herein to the
Committee shall refer to the Board. The Board shall have the discretion to add,
remove or replace members of the Committee, and shall have the sole authority to
fill vacancies on the Committee; provided that one member of the Committee shall
be a member of the Board appointed pursuant to Section 4(iii) of the Shareholder
Agreement (the "Shareholder Agreement") by and among the Company, the holders of
Class D Common Stock of the Company, and the Designated Shareholders, as such
term is defined in the Shareholder Agreement.
All actions of the Committee shall be authorized by a majority
vote thereof at a duly called meeting. The Committee shall have the sole
authority, in its absolute discretion, to adopt, amend, and rescind such rules
and regulations as, in its opinion, may be advisable in the administration of
the Plan, to construe and interpret the Plan, the rules and regulations, and the
agreements and other instruments evidencing Options and Stock Appreciation
Rights granted and Restricted Stock sold or granted under the Plan, and to make
all other determinations deemed necessary or advisable for the administration of
the Plan. All decisions, determinations, and interpretations of the Committee
shall be final and conclusive upon the Participants, as hereinafter defined.
Notwithstanding the foregoing, any dispute arising under any Agreement (as
defined below) shall be resolved pursuant to the dispute resolution mechanism
set forth in such Agreement.
Subject to the express provisions of the Plan, the Committee
shall determine the number of Shares subject to grants or sales and the terms
thereof, including the provisions relating to the exercisability of Options and
Stock Appreciation Rights, lapse and non-lapse restrictions upon the Shares
obtained or obtainable under the Plan and the termination and/or forfeiture of
Options and Stock Appreciation Rights and Restricted Stock under the Plan. The
terms upon which Options and Stock Appreciation Rights are granted and
Restricted Stock is sold or granted shall be evidenced by a written agreement,
executed by the Company and the Participant (each, an "Agreement"), containing
such terms and conditions as may be approved by the Committee; provided that
such terms and conditions are not inconsistent with the express conditions of
the Plan.
5. ELIGIBILITY. Persons who shall be eligible for grants of
Options or Stock Appreciation Rights or sales or grants of Restricted Stock
hereunder shall be those directors, officers and employees of the Company or a
subsidiary of the Company who are members of a select group of directors,
management and other key employees that the Committee may from time to time
designate to participate under the Plan ("Participants") through grants of
Non-Qualified Options, Incentive Stock Options and, if applicable, Stock
Appreciation Rights, and/or through sales or grants of Restricted Stock.
6. TERMS AND CONDITIONS OF OPTIONS. No Incentive Stock Option
shall be granted for a term of more than ten years and no Non-Qualified Option
shall be granted for a term of more than ten years and thirty days. Options may,
in the discretion of the Committee, be granted with associated Stock
Appreciation Rights or be amended so as to provide for associated Stock
Appreciation Rights. The Agreement may contain such other terms,
2
<PAGE> 20
provisions, and conditions as may be determined by the Committee as long as such
terms, conditions and provisions are not inconsistent with the Plan. The
Committee shall designate as such those Options intended to be eligible to
qualify and be treated as Incentive Stock Options and, correspondingly, those
Options not intended to be eligible to qualify and be treated as Incentive Stock
Options.
7. EXERCISE PRICE OF OPTIONS. The exercise price for each
Non-Qualified Option granted hereunder shall be set forth in the Agreement. For
so long as required under Section 422 of the Code and the regulations
promulgated thereunder (or any successor statute or rules), the exercise price
of any Option intended to be eligible to qualify and be treated as an Incentive
Stock Option shall not be less than the fair market value of the Shares on the
date such Incentive Stock Option is granted, except that if such Incentive Stock
Option is granted to a Participant who on the date of grant is treated under
Section 424(d) of the Code as owning stock (not including stock purchasable
under outstanding options) possessing more than ten percent of the total
combined voting power of all classes of the Company's stock, the exercise price
shall not be less than one hundred ten percent (110%) of the fair market value
of the Shares on the date such Incentive Stock Option is granted.
The fair market value of Shares for the purposes of this Plan
shall be determined by the Board, whose valuation shall be binding upon each
Optionee.
Payment for Shares purchased upon exercise of any Option
granted hereunder shall be in cash at the time of exercise, except that, if
either the Agreement so provides or the Committee so permits, and if the Company
is not then prohibited from doing so, such payment may be made in whole or in
part with surrendered or withheld shares of stock of the same class as the stock
then subject to the Option. The Committee also may on an individual basis permit
payment or agree to permit payment by such other alternative means as may be
lawful, including by delivery of an executed exercise notice together with
irrevocable instructions to a broker promptly to deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price.
8. NON-TRANSFERABILITY. Unless provided otherwise in the
Agreement, any Option granted under this Plan shall by its terms be
nontransferable by the Participant other than by will or the laws of descent and
distribution (in which case such descendant or beneficiary shall be subject to
all terms of the Plan applicable to Participants) and is exercisable during the
Participant's lifetime only by the Participant or by the Participant's guardian
or legal representative.
9. INCENTIVE STOCK OPTIONS. The provisions of the Plan are
intended to satisfy the requirements set forth in Section 422 of the Code and
the regulations promulgated thereunder (including the aggregate fair market
value limits set forth in Section 422(d) of the Code) with respect to Incentive
Stock Options granted under the Plan. For so long as required under Section 422
of the Code and the regulations promulgated thereunder (or any successor statute
or rules), during the term of the Plan, the aggregate fair market value of the
Shares with respect to which Incentive Stock Options are first exercisable by a
Participant
3
<PAGE> 21
during any calendar year shall not exceed $100,000. For the purpose of this
Section 9, the fair market value of the Shares shall be determined at the time
the Incentive Stock Option is granted.
10. STOCK APPRECIATION RIGHTS. The Committee may, under such
terms and conditions as it deems appropriate, grant to any Participant selected
by the Committee Stock Appreciation Rights, which may or may not be associated
with Options. Upon exercise of a Stock Appreciation Right, the Participant shall
be entitled to receive payment of an amount equal to the excess of the fair
market value, as defined by the Committee, of the underlying Shares on the date
of exercise over the Stock Appreciation Right's exercise price. Such payment may
be made in additional Shares valued at their fair market value on the date of
exercise or in cash, or partly in Shares and partly in cash, as the Committee
may designate. The Committee may require that any Stock Appreciation Right shall
be subject to the condition that the Committee may at any time in its absolute
discretion not allow the exercise of such Stock Appreciation Right.
11. RESTRICTED STOCK. The Committee may sell or grant
Restricted Stock under the Plan (either independently or in connection with the
exercise of Options or Stock Appreciation Rights under the Plan) to Participants
selected by the Committee. The Committee shall in each case determine the number
of Shares of Restricted Stock to be sold or granted, the price at which such
Shares are sold, if applicable, and the terms and duration of the restrictions
to be imposed upon those Shares.
12. INVESTMENT REPRESENTATION. Each Agreement may contain an
agreement that, upon demand by the Committee for such a representation, the
optionee shall deliver to the Committee at the time of any exercise of an Option
a written representation that the Shares to be acquired upon such exercise are
to be acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation prior to
the delivery of any Shares issued upon exercise of an Option and prior to the
expiration of the option period shall be a condition precedent to the right of
the optionee or such other person to purchase any Shares.
13. ADJUSTMENTS. In the event of any one or more
reorganizations, recapitalizations, stock splits, reverse stock splits, stock
dividends, extraordinary dividends, or distributions, or similar events, an
appropriate adjustment shall be made in the number, exercise or sale price
and/or type of shares or securities for which Options or Stock Appreciation
Rights may thereafter be granted and Restricted Stock may thereafter be sold or
granted under the Plan. The Committee also shall designate the appropriate
changes that shall be made in Options or Stock Appreciation Rights, or rights to
purchase Restricted Stock under the Plan, so as to preserve the value of any
such Options, Stock Appreciation Rights or Restricted Stock. Any such adjustment
in outstanding Options shall be made without changing the aggregate exercise
price applicable to the unexercised portions of such Options. Any such
adjustments in outstanding rights to purchase Restricted Stock shall be made
without changing the aggregate purchase price of such Restricted Stock.
4
<PAGE> 22
14. DURATION OF PLAN. Options may not be granted and
Restricted Stock may not be sold or granted under the Plan after November 24,
2007.
15. AMENDMENT AND TERMINATION OF THE PLAN. Subject to the
Section 5.4 of the Recapitalization Agreement, dated as of October 8, 1997 and
amended and restated as of October 27, 1997 (the "Recapitalization Agreement")
between the Company and the Investors set forth on Schedule 1 to the
Recapitalization Agreement, the Board may at any time amend, suspend or
terminate the Plan. The Committee may amend the Plan or any Agreement issued
hereunder to the extent necessary for any Option or Stock Appreciation Right
granted or Restricted Stock sold or granted under the Plan to comply with
applicable tax or securities laws. If the Board determines that the approval of
such action by the stockholders of the Company is advisable or necessary for
compliance with applicable securities law, tax law, stock exchange requirement
or other applicable federal or state law, no such action of the Board or the
Committee shall be permitted unless taken with or ratified by such approval.
No Option or Stock Appreciation Right may be granted or
Restricted Stock sold or granted during any suspension of the Plan or after the
termination of the Plan. No amendment, suspension or termination of the Plan or
of any Agreement issued hereunder shall, without the consent of the affected
holder of such Option or Stock Appreciation Right or Restricted Stock, adversely
alter or otherwise impair any rights or obligations in any Option or Stock
Appreciation Right or Restricted Stock theretofore granted or sold to such
holder under the Plan.
16. NATURE OF PLAN. This Plan is intended to qualify as a
compensatory benefit plan within the meaning of Rule 701 under the Act. This
Plan is intended to constitute an unfunded arrangement for a select group of
directors, management and other key employees.
17. CANCELLATION OF OPTIONS. Any Option granted under the Plan
may be canceled at any time with the consent of the holder and a new Option may
be granted to such holder in lieu thereof.
18. WITHHOLDING TAXES. Whenever Shares are to be issued with
respect to the exercise of Options or amounts are to be paid or income earned
with respect to Stock Appreciation Rights or Restricted Stock under the Plan,
the Committee in its discretion may require the Participant to remit to the
Company, prior to the delivery of any certificate or certificates for such
Shares or the payment of any such amounts, all or any part of the amount
determined in the Committee's discretion to be sufficient to satisfy federal,
state and local withholding tax obligations (the "Withholding Obligation") that
the Company or its counsel determines may arise with respect to such exercise,
issuance or payment. Pursuant to a procedure established by the Committee or as
set forth in the Agreement, the Participant may (i) request the Company to
withhold delivery of a sufficient number of Shares or a sufficient amount of the
Participant's compensation or (ii) deliver a sufficient number of
previously-issued Shares, to satisfy the Withholding Obligation.
5
<PAGE> 23
EXHIBIT
-------
EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION
(IN THOUSANDS OF DOLLARS)
(A) (B) (C)
Cumulative
Fiscal Year Minimum Target Target
----------- -------- ------- -----------
l998 60,320 75,400 75,400
l999 75,120 93,900 169,300
2000 94,720 118,400 287,700
2001 107,840 134,800 422,500
2002 117,520 146,900 569,400
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") is defined as Consolidated Net Income (loss) of the Company and its
subsidiaries as it would appear on a statement of income (loss), which shall (i)
exclude or be adjusted otherwise for all acquisitions and additional equity
contributions to the extent such acquisitions and/or equity contributions
materially change target EBITDA for any particular Fiscal Year,(ii) reflect a
reduction for all management and employment bonuses payable with respect to the
Fiscal Year of the Company prepared in accordance with U.S. GAAP, consistently
applied and (iii) be adjusted for any material Board approved amendment to the
capital expenditure plan; plus (minus), to the extent such amounts are otherwise
taken into account in determining EBITDA (prior to adjustment), the following:
1. Any provision (benefit) for taxes (including
franchise taxes) deducted (added) in calculating such
consolidated net income (loss); plus
2. Any interest expense (net of interest income),
deducted in calculating such consolidated net income
(loss); plus
3. Amortization expenses deducted in calculating
consolidated net income (loss); plus
4. Depreciation expense deducted in calculating
consolidated net income (loss); plus
5. Management fees paid to Investcorp; plus (minus)
6. Any unusual losses (gains) deducted (added) in
calculating consolidated net income (loss). (Unusual
items are intended to include transactions considered
outside the ordinary course of business. EBITDA will
be adjusted to eliminate the effects, if any,
<PAGE> 24
of such transactions, the intent being to calculate
EBITDA as if such transactions had not occurred.);
plus (minus)
7. Any compensation expense (income) deducted
(added) in calculating consolidated net income (loss)
attributable to transactions involving equity
securities of the Company or its subsidiaries.
The Participant and his or her representative shall be
provided reasonable opportunity to review the computation of EBITDA and
reasonable access to the data and information supporting such computation, but
the Board's determination shall be conclusive and binding.
2
<PAGE> 1
Exhibit 10.10
MASTER REGISTRATION RIGHTS AGREEMENT
------------------------------------
THIS MASTER REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as
of November 24, 1997, by WERNER HOLDING CO. (PA), INC., a Pennsylvania
corporation (the "Company"), for the benefit of the Holders (as defined below).
R E C I T A L S
A. The Company is a party to a Recapitalization Agreement (the
"Recapitalization Agreement") dated as of October 8, 1997 and as amended and
restated as of October 27, 1997, pursuant to which the Company will effect a
comprehensive recapitalization of the Company. Such recapitalization will
consist of an amendment and restatement of the Company's Articles of
Incorporation, reclassification of the pre-recapitalization common shares into
redeemable and nonredeemable shares, issuance and sale of newly-authorized
shares to new investors, the closing of certain debt financings and the
redemption of all redeemable common shares, all as set forth in the
Recapitalization Agreement and related documents (the "Recapitalization").
B. As a part of the Recapitalization, the Company has agreed to grant
the registration rights set forth below to the shareholders of the Company as of
immediately following the closing of the Recapitalization.
A G R E E M E N T
In consideration of the Recapitalization Agreement and other agreements
referred to therein, as inducement for the closing of the Recapitalization
Agreement and such other agreements and for other good and valuable
consideration and intending to be legally bound hereby, the Company hereby
agrees as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. A Person will be deemed to control a
corporation if such Person possesses, directly or indirectly, the power 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.
"ARTICLES OF INCORPORATION" means the Amended and Restated
Articles of Incorporation of the Company in effect as of immediately following
the closing of the Recapitalization and as such Articles may thereafter from
time to time be amended in accordance with applicable law and such Articles.
"COMMISSION" means the U.S. Securities and Exchange Commission
and any successor federal agency having similar powers.
<PAGE> 2
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
or any successor law, as amended from time to time, including the various rules
and regulations issued pursuant to that Act or any successor law.
"HOLDERS" ,as of any date of determination, means the holders
of record of Registrable Securities other than any Persons to whom Registrable
Securities have been transferred who are not Permitted Assignees under Section
3(b) hereof.
"INITIAL PUBLIC OFFERING" shall have the meaning ascribed to
that term in the Articles of Incorporation.
"INVESTCORP INVESTORS," at any date of determination, means
all of the following who are then Holders: Investcorp Bank E.C. and its
Affiliates and any other investor with whom Investcorp Bank E.C. or any
Affiliate thereof has an administrative relationship.
"PERSON" means an individual, limited or general partnership,
joint venture, limited liability company, corporation, estate, trust,
unincorporated organization or other entity or a government or any department or
agency thereof.
"REGISTRABLE SECURITIES," as of any date of determination,
means (a) the shares of Class A, Class B, Class C, Class D and Class E Common
Stock of the Company outstanding immediately following the closing of the
Recapitalization, (b) any additional shares of capital stock of the Company
acquired prior to the Initial Public Offering by an Investcorp Investor or by
any Person who as of immediately following the closing of the Recapitalization
was a holder of record of Class A or Class B Common Stock of the Company, (c)
shares of capital stock of the Company purchased pursuant to the Company's 1997
Stock Loan Plan (and any shares issuable upon exercise of stock options granted
in lieu thereof) and (d) any shares of capital stock of the Company issued on
account of any of the foregoing in connection with any stock split or stock
dividend effected after the closing of the Recapitalization and equity
securities of any other issuer issued in exchange for any of the foregoing in
connection with any merger, consolidation, reorganization or recapitalization
effected after the closing of the Recapitalization. Notwithstanding the
foregoing, any particular Registrable Securities shall cease to be such when (i)
a registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities have been disposed
of in accordance with such registration statement, (ii) they shall have ceased
to be outstanding, or (iii) with respect to a particular Holder who holds less
than one half of one percent (1/2%) of the outstanding capital stock of the
Company, all such securities beneficially held by such Holder and its Affiliates
may be sold in compliance with Rule 144(k) under the Securities Act.
"REGISTRATION EXPENSES" means all expenses incident to the
Company's performance of or compliance with its obligations under Section 2
hereof including, without limitation, all Commission and any stock exchange
registration, listing, filing or NASD fees, all fees and expenses of complying
with securities or blue sky laws (including reasonable fees and disbursements of
counsel for the underwriters in connection with blue sky qualifications), all
word processing, duplicating and printing expenses, internal expenses of the
Company (including, without limitation, all salaries and expenses of its
officers and employees performing
2
<PAGE> 3
legal or accounting duties), all messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "comfort" letters
required by or incident to such performance and compliance, and any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities and the reasonable fees and expenses of any special experts retained
in connection with the requested registration, but excluding underwriting
discounts and commissions and fees of any counsel employed by any Seller (as
defined in Section 2(b) hereof) other than in-house counsel of the Company and
outside counsel employed by the Company for purposes of the registration.
"SECURITIES ACT" means the Securities Act of 1933, or any
successor law, as amended from time to time, including the various rules and
regulations issued pursuant to that Act or any successor law.
Certain other terms are defined elsewhere in this Agreement.
SECTION 2. REGISTRATION RIGHTS.
(a) DEMAND RIGHTS; IPO PARTICIPATION.
(i) At any time following 90 days after the occurrence of the
Initial Public Offering, Holders who are Investcorp Investors shall have the
right, exercisable for up to a total of four (4) effective registration
statements, to require the Company to register under the Securities Act such
number of Registrable Securities as such Holders shall designate for sale in a
written request to the Company (the "Demand Registration") PROVIDED, HOWEVER,
that (x) the number of Registrable Securities designated for sale by the
Investcorp Investors in any Demand Registration may not represent less than 2%
of the total number of shares of capital stock of the Company then outstanding
and (y) the Company may defer a Demand Registration for a single period not to
exceed 90 days, if the Board of Directors of the Company determines in the
exercise of its reasonable judgment that due to a pending or contemplated
acquisition, disposition or public offering it would be inadvisable to effect a
Demand Registration at such time.
(ii) The Company will not, without the written consent of a
majority in interest of the Investcorp Investors, include in any Demand
Registration securities for sale for the account of any Person (including the
Company) other than Investcorp Investors, except that the Company may include
securities held by other Holders having the contractual right to be so included
pursuant to this Agreement (subject to the applicable provisions of this
Agreement).
(iii) In addition to the Demand Registration rights granted to
the Investcorp Investors in this Section 2(a), Holders who are Investcorp
Investors shall, to the extent that any selling shareholders are to be included
in the Initial Public Offering as determined in good faith by the Board of
Directors of the Company after consultation with the managing underwriter of the
Initial Public Offering, have the right to include in such Initial Public
Offering (and the registration statement relating thereto) up to 80% of the
total selling shareholder shares to be so included and Holders who are not
Investcorp Investors shall have the right to include in such
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Initial Public Offering (and the registration statement relating thereto) up
to 20% of the total selling shareholders shares to be so included.
(b) PIGGYBACK REGISTRATION RIGHTS.
If at any time following the Initial Public Offering the
Company proposes to file a registration statement with respect to equity
securities of the Company (including without limitation pursuant to a Demand
Registration, but excluding any registration statement on Form S-8 or S-4 or
comparable successor forms or a registration statement relating to a dividend
reinvestment plan), which is available for use for Registrable Securities, under
the Securities Act, then the Company shall give written notice of such proposed
filing to each Holder at least 30 days before the anticipated filing date of
such registration statement, and such notice shall offer each Holder the
opportunity to include in such registration statement the Registrable Securities
then owned by such Holder, as such Holder may request in writing within 15 days
after receipt of the Company's notice (which request shall specify the number of
Registrable Securities to be included in such registration statement and the
intended method of disposition). Each Holder whose Registrable Securities are so
included in such registration is referred to herein individually as a "Seller"
and, collectively, all such included Holders as the "Sellers."
(c) REGISTRATION PROCEDURES. If and whenever the Company is required to
effect the registration of any Registrable Securities under the Securities Act
as provided in Section 2(a) or (b) hereof, the Company will as expeditiously as
practicable:
(i)(A) prepare and file with the Commission a registration
statement on the appropriate form which includes such Registrable Securities,
(B) promptly respond to all comments received with respect to such registration
statement and make and file all amendments thereto deemed necessary by the
Company's legal counsel, and (C) thereafter use its reasonable best efforts to
cause such registration statement to become effective at the earliest
practicable date;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement accurate and
effective and to comply with the provisions of the Act with respect to the
disposition of all Registrable Securities and other securities covered by such
registration statement until the earlier of such time as all of such Registrable
Securities have been disposed of by the Sellers thereof set forth in such
registration statement or for the longer of (A) nine months or (B) if the
Company is eligible to conduct a continuous secondary offering pursuant to Rule
415 under the Act, two years; and will furnish to each such Seller at least 2
business days prior to the filing thereof a copy of any amendment or supplement
to such registration statement or prospectus and shall not file any such
amendment or supplement to which any such Seller shall have reasonably objected
on the grounds that such amendment or supplement does not comply in all material
respects with the requirements of the Act or of the rules or regulations
thereunder;
(iii) furnish to each Seller of such Registrable Securities,
upon their request, one copy of such registration statement and of each such
amendment thereof and supplement
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thereto (in each case including all exhibits), such number of copies of the
prospectus included in such registration statement (including each preliminary
prospectus and any summary prospectus), in conformity with the requirements of
the Act, such documents, if any, incorporated by reference in such registration
statement or prospectus, and such other documents as such seller may reasonably
request;
(iv) use its reasonable best efforts to register or qualify
all Registrable Securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as each Seller shall
reasonably request, to keep such registration or qualification in effect for so
long as such registration statement remains in effect, and do any and all other
acts and things that may be necessary or advisable to enable such Seller to
consummate the disposition in such jurisdictions of its Registrable Securities
covered by such registration statement, except that the Company shall not for
any such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the requirements of
this subdivision (iv) be obligated to be so qualified, or to subject itself to
taxation in any such jurisdiction, or to consent to general service of process
in any such jurisdiction;
(v) if such registration statement relates to an underwritten
offering, obtain and furnish to each Seller a signed counterpart, addressed to
such Seller, of the legal opinions and accountants' comfort letters which are to
be delivered to the underwriters;
(vi) promptly notify each Seller whose Registrable Securities
are covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and the Company
shall promptly prepare a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing;
(vii) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its securities holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month of the first fiscal quarter after the
effective date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Act and Rule 158 thereunder;
(viii) if the Common Stock of the Company is listed on a
national securities exchange or quoted on NASDAQ, use its best efforts to comply
with the requirements of such exchange or NASDAQ to include shares of
Registrable Securities covered by such registration statement for listing on
each such securities exchange or for quotation on NASDAQ.
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The Company may require each Seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such Seller and the distribution of such securities as the Company may from time
to time reasonably request in writing and as shall be required by law or by the
Commission in connection with such registration.
(d) UNDERWRITING AGREEMENT. If requested by the underwriters for any
underwritten offering which includes pursuant to a registration covered by
Section 2(a) or (b) hereof, the Company will enter into an underwriting
agreement with such underwriters for such offering, such agreement to contain
representations and warranties by the Company and other terms and provisions not
inconsistent with this Section 2 as are customarily contained in underwriting
agreements with respect to secondary distributions, including, without
limitation, indemnities to the effect and to the extent provided in Section 2(g)
hereof, and the Company will cooperate with such Sellers to the end that the
conditions precedent to the obligations of such Sellers under such underwriting
agreement shall not include conditions that are not customary in underwriting
agreements with respect to secondary distributions and shall be otherwise
satisfactory to such Sellers. Sellers on whose behalf shares are to be
distributed by such underwriters shall be parties to any such underwriting
agreement and the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters, shall also
be made to and for the benefit of such Sellers. Such Sellers shall not be
required by the Company to make any representations or warranties to or
agreements with the Company or the underwriters other than reasonable
representations, warranties or agreements regarding such Sellers, such Sellers'
Registrable Securities and such Sellers' intended method or methods of
disposition and any other representation required by law.
(e) LOCK-UP. The rights granted to each Holder pursuant to this
Agreement are subject to the following:
(i) If and to the extent requested by the managing underwriter
in connection with the Initial Public Offering, such Holder shall agree in
writing that such Holder will not, without the consent of the managing
underwriter and except for shares included in the Initial Public Offering, if
any: (x) effect any public sale or distribution of any equity securities of the
Company, or any securities convertible into, or exercisable or exchangeable for,
any such equity securities for a period of 180 days following effectiveness of
the registration statement relating to such Offering or (y) effect any other
transfer of any of the foregoing during such 180 day period unless the
transferee agrees in writing to be bound by the terms and conditions of this
Section 2(e); and
(ii) If and to the extent requested by the managing
underwriter in connection with any other underwritten offering of equity
securities of the Company (whether for the account of the Company, selling
shareholders or both) which occurs within three (3) years following the
effectiveness of the Initial Public Offering, such Holder shall agree in writing
that such Holder will not, without the consent of the managing underwriter
(except for shares included in the Initial Public Offering, if any): (x) effect
any public sale or distribution of any equity securities of the Company, or any
securities convertible into, or exercisable or exchangeable for, any such equity
securities for a period of 90 days following effectiveness of the
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registration statement relating to such Offering or (y) effect any other
transfer of any of the foregoing during such 90 day period unless the transferee
agrees in writing to be bound by the terms and conditions of this Section 2(e).
Failure by a Holder to satisfy any of the foregoing conditions set forth in this
Section 2(e), after receipt of such a request from the Company, shall cause a
forfeiture of all registration rights of such Holder contained in this Agreement
with respect to the offering as to which such lock-up agreement was requested
and subsequent offerings.
(f) REGISTRATION EXPENSES. The Company agrees to pay, in connection
with each registration of Registrable Securities covered by Section 2(a) or 2(b)
hereof, all Registration Expenses.
(g) INDEMNIFICATION AND CONTRIBUTION.
(i) INDEMNIFICATION BY COMPANY. The Company agrees to
indemnify, to the full extent permitted by law, each Seller, and any of their
officers, directors, employees and partners, and each Person who controls such
Seller within the meaning of Section 15 of the Securities Act and Section 20(a)
of the Exchange Act (each a "Shareholder Indemnified Party") against any and all
losses, claims, damages, liabilities or expenses, joint or several
(collectively, "Damages") to which they or any of them may become subject: (i)
under the Securities Act, the Exchange Act, or otherwise, insofar as such
Damages (or actions in respect thereof) arise out of or are based upon any
untrue or alleged untrue statement of a material fact contained in any
registration statement, prospectus, preliminary prospectus or any amendment to
any of the foregoing, or arise out of or are 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 not misleading; or (ii) as a result of
or in connection with any violation of applicable Federal, state or foreign laws
or regulations (collectively, "Laws") by the Company (other than as a result of
any act committed by or omission of a Shareholder Indemnified Party without the
Company's approval) or any of the Company's employees, officers or directors in
connection with any such registration; PROVIDED, HOWEVER, that the Company will
not be liable if any such Damages arise out of or are based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of such Shareholder Indemnified Party in a signed
document stating that such information is specifically for use therein;
PROVIDED, FURTHER, that the foregoing indemnity is subject to the condition
that, insofar as it related to any untrue statement, alleged untrue statement,
omission or alleged omission made in a preliminary prospectus but eliminated or
remedied in the final prospectus (filed pursuant to Rule 424(b) under the
Securities Act), such indemnity shall not inure to the benefit of the Sellers
from whom the Person asserting any Damages purchased the Registrable Securities
which are the subject thereof, if copies of such final prospectus were delivered
to such Seller on a timely basis and such Seller did not deliver to such Person
the final prospectus with or prior to the written confirmation for the sale of
such Registrable Securities to such Person. In connection with an underwritten
offering, the Company will indemnify the underwriters thereof to the same extent
as provided above with respect to the indemnification of Shareholder Indemnified
Parties and use its reasonable best efforts to obtain a reciprocal and mutual
indemnity from the underwriters. Such indemnity shall remain in full
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<PAGE> 8
force and effect regardless of any investigation made by or on behalf of such
Shareholder Indemnified Party and shall survive any transfer by the same of the
Registrable Securities of the Sellers.
(ii) INDEMNIFICATION BY SELLERS. Each Seller will furnish to
the Company in writing such information and affidavits with respect to such
Seller as the Company reasonably requests for use in connection with any
registration statement or prospectus to be filed or used under this Agreement
and each of them, upon executing and delivering an underwriting agreement or
otherwise upon registration of the Registrable Securities pursuant to the terms
of this Agreement, shall agree to indemnify and hold harmless to the fullest
extent permitted by law, the Company, each person who signed the registration
statement, any underwriter, and each Person who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
(each, a "Company Indemnified Party" and, collectively with Shareholder
Indemnified Parties, the "Indemnified Parties") against joint or several Damages
to which they or any of them may become subject: (i) under the Securities Act,
the Exchange Act or otherwise, insofar as such Damages (or actions in respect
thereof) arise out of or are based upon any untrue or alleged untrue statement
of a material fact contained in any registration statement, prospectus,
preliminary prospectus or any amendment thereof or supplement thereto, or arise
out of or are 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 not misleading, in each case to the extent, but only to the extent, that
any Damages arise out of or are based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with information furnished in writing by such Seller or on
such Seller's behalf to the Company in a signed document stating that such
information is specifically for use therein; or (ii) as a result of or in
connection with any violation of applicable Laws by such Seller or any general
or limited partners, employees, officers or directors of such Seller in
connection with any such registration; provided that, as to any underwriter or
any person controlling any underwriter, the foregoing indemnity does not apply
to any Damages based upon any untrue statement, alleged untrue statement,
omission or alleged omission made in a preliminary prospectus but eliminated or
remedied in the final prospectus (filed pursuant to Rule 424(b) under the
Securities Act) if a copy of the final prospectus was not sent to or given by or
on behalf of any underwriter to such person asserting such Damages at or prior
to the written confirmation of the sale of the Registrable Securities as
required by the Securities Act. This indemnity will be in addition to any
liability which a Seller may otherwise have, including any under this Agreement.
Notwithstanding the foregoing, the liability of a Seller, except for any
liability resulting from the willful misconduct or intentional action of such
Seller, shall not exceed an amount equal to the proceeds realized by such Seller
of Registrable Securities sold as contemplated herein.
(iii) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after
receipt by an Indemnified Party under subsection (a) or (b) above of notice of
the commencement of any action, such Indemnified Party shall, if a claim in
respect thereof is to be made against the indemnifying party under such
subsection, notify each party against whom indemnification is to be sought in
writing at the commencement thereof (but the failure so to notify an
indemnifying party shall not relieve it from any liability which such party may
have under this Section 2(g) except to the extent that the indemnifying party
has been prejudiced in any material respect by
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such failure or from any liability which such party may have otherwise). In case
any such action is brought against any Indemnified Party, and the Indemnified
Party notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party, if any, so notified, with
counsel reasonably satisfactory to such Indemnified Party, and after notice from
the indemnifying party to such Indemnified Party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
Indemnified Party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. Notwithstanding the foregoing, the Indemnified Party shall have
the right to employ its counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Party unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying party in connection with the defense of such action, (ii) the
indemnifying party shall not have employed counsel to take charge of the defense
of such action within a reasonable time after notice of the commencement of the
action, or (iii) the named parties to any such action or proceeding (including
any impleaded parties) include both such Indemnified Party and the indemnifying
party, and such Indemnified Party has been advised in good faith by counsel that
there is a conflict of interest on the part of counsel employed by the
indemnifying party to represent such Indemnified Party (in which case, if such
Indemnified Party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party will not have the right to assume the defense of such action
or proceeding on behalf of such Indemnified Party; it being understood, however,
that the indemnifying party will not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for all
such Indemnified Parties). Anything in this subsection to the contrary
notwithstanding: (A) an indemnifying party shall not be liable for any
settlement of any claim or action effected without its written consent; and (B)
no indemnifying party shall, without the consent of the Indemnified Party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation.
(iv) CONTRIBUTION. In order to provide for contribution in
circumstances in which the indemnification provided for in this Section 2(g) is
for any reason held to be unavailable or is insufficient to hold harmless an
Indemnified Party, then the indemnifying party and the Indemnified Party shall
contribute to the aggregate Damages of the nature contemplated by such
indemnification provision (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting from Damages
suffered by the Indemnified Party any contribution received by the Indemnified
Party from Persons, other than the indemnifying party, who may also be liable
for contribution, including Persons who control the indemnifying party within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act) to which the indemnifying party, on the one hand, and the Indemnified
Party, on the other hand, may be subject, in such proportions as are appropriate
to reflect the relative fault of the indemnifying party, on the one hand, and
the Indemnified Party, on the other hand, in connection
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with the statements or omissions which resulted in Damages, as well as any other
relevant equitable considerations.
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 omission or alleged omission to state a material fact relates to
information supplied by a party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The parties agree that it would not be just and equitable if
contribution pursuant to this Section 2(g)(iv) was determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to above. Notwithstanding the foregoing,
(i) any underwriting agreement entered into pursuant hereto may provide that in
no case shall any underwriter (except as may be provided in any agreement among
underwriters) be liable or responsible for any amount in excess of the
underwriting discount applicable to the Registrable Securities purchased by such
underwriters, and (ii) 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. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this Section 2(g)(iv), notify such party or parties from
which contribution may be sought of any obligation it or they may have under
this Section 2(g)(iv) or otherwise. No party shall be liable for contribution
with respect to any action or claim settled without its consent, which consent
may not be unreasonably withheld or delayed. Notwithstanding the foregoing, the
liability of a Seller, except for any liability resulting from the willful
misconduct or intentional action of such Seller, shall not exceed an amount
equal to the proceeds realized by such Seller of the Registrable Securities sold
as contemplated herein.
(h) RULE 144 SALES.
(i) COMPLIANCE. The Company covenants that, to the extent that
it is subject to the reporting requirements of the Exchange Act, it will use its
reasonable best efforts to file the reports required to be filed by it under the
Exchange Act so as to enable any Holder to sell Registrable Securities without
registration pursuant to Rule 144 under the Securities Act.
(ii) COOPERATION WITH HOLDERS. In connection with any sale,
transfer or other disposition by any Holder of any Registrable Securities
pursuant to Rule 144 under the Securities Act, the Company shall, to the extent
permissible under applicable law, cooperate with such Holder to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any Securities Act legend, and enable
certificates for such Registrable Securities to be issued at least two business
days prior to any sale of such Registrable Securities for such number of shares
and registered in such names as the Holder may reasonably request upon ten (10)
business days prior notice. The Company's obligation set forth in the previous
sentence shall be subject to the delivery, if reasonably requested by the
Company or its transfer agent, by counsel to such Holder (which counsel shall be
reasonably acceptable to the Company and its transfer agent), in form and
substance reasonably satisfactory to the Company and its transfer agent, of an
opinion that such Securities Act legend need not appear on such certificate.
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(i) SELECTION OF MANAGING UNDERWRITER. In the event that a Demand
Registration is proposed to be effected through an underwritten offering, the
Holders participating therein who are Investcorp Investors shall have the right
to select the managing underwriter or underwriters. With respect to any other
registration statement covered by Section 2(a) or (b) hereof, the Company shall
select the managing underwriter or underwriters subject to the consent of a
majority in interest of the Sellers, which consent will not be unreasonably
withheld.
(j) UNDERWRITER CUTBACKS. Notwithstanding anything in this Agreement to
the contrary and in addition to any other limitations on rights to participate
in a registration statement hereunder:
(i) In the event that a registration statement covered by
Section 2(a) or (b) relates to an underwritten public offering, the number of
shares which may otherwise be includable therein for the account of members of
management of the Company (as such individuals are identified in good faith by
the Board of Directors of the Company) shall be limited in the aggregate to the
number which the managing underwriter advises the Board of Directors will not
adversely affect the marketing of the other shares included in such offering;
and
(ii) In the event that a registration statement covered by
Section 2(a) or (b) hereof relates to an underwritten offering (other than the
Initial Public Offering as to which Section 2(a)(iii) shall apply) and the
managing underwriter of such offering advises the Company in writing that the
total number of shares which are proposed to be included therein for the account
of selling shareholders is sufficiently large to affect adversely the marketing
of the shares in such offering, and as a result thereof the number of shares
proposed to be so included needs to be limited to a specified number of shares
(the "Maximum Number") then the following provisions shall apply to reduce the
number of such shares to the Maximum Number: FIRST, shares as to which the
holder thereof does not have the contractual registration right to have such
shares so included pursuant to this Agreement shall be excluded from such
registration statement; SECOND, to the extent necessary, additional shares held
by appropriate Holders shall be excluded so that (A) in the case of the first
underwritten offering completed subsequent to the Initial Public Offering, the
aggregate number of shares to be included in such registration and offering for
the account of Holders who are Investcorp Investors shall represent the lesser
of the shares requested to be included by the Investcorp Investors and 80% of
the Maximum Number and shares of Sellers who are not Investcorp Investors shall
be included in such registration and offering with respect to the remaining
percentage of the Maximum Number to the extent requested by such Sellers to be
included in such underwritten offering, and (B) in the case of subsequent
underwritten offerings, the aggregate number of shares to be included in such
registration and offering for the account of Holders who are Investcorp
Investors shall represent the lesser of the shares requested to be included by
the Investcorp Investors and 66 2/3% of the Maximum Number and shares of Sellers
who are not Investcorp Investors shall be included in such registration and
offering with respect to the remaining percentage of the Maximum Number to the
extent proposed to be included in such underwritten offering (PROVIDED, however,
that at and after such time as the Investcorp Investors have reduced their
investment in the Company such that Investcorp Investors hold less than 50% of
the equity securities of the Company obtained by Investcorp Investors in the
Recapitalization, the provisions of this Section 2(j)(ii)
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shall no longer apply and all Holders shall be entitled to pro rata
participation up to the Maximum Number.
SECTION 3. MISCELLANEOUS.
(a) NOTICES. All notices, instructions and other communications in
connection with this Agreement shall be in writing and may be given by (i)
personal delivery, (ii) sent by certified mail, return receipt requested,
postage prepaid, or (iii) delivery by a nationally recognized overnight courier
as follows: if to the Company at, 93 Werner Road, Greenville, Pennsylvania
16125, attention: Eric J. Werner, General Counsel, with a copy to Gibson, Dunn &
Crutcher LLP, 200 Park Avenue, NY, NY 10166, attention: E. Michael Greaney; if
to a Holder at the address of such Holder on the shareholder records of the
Company. Notices shall be deemed to have been given (A) when actually delivered
personally, (B) the next business day if sent by overnight courier (with proof
of delivery), and (C) on the fifth day after mailing by certified mail.
(b) ASSIGNABILITY. This Agreement may not be assigned by any Holder
under any circumstances except to a Permitted Assignee. As used herein,
"Permitted Assignee" means a Person to whom record ownership of Registrable
Securities is transferred by a Holder without violation or breach of the
Articles of Incorporation or any agreement restricting such transfer provided
that the transferring Holder shall give at least 10 days advance notice of such
transfer to the Company and provided further that, after giving effect to such
transfer, such Permitted Transferee holds no less than 100 shares of Class A,
Class B, Class C, Class D or Class E Common Stock of the Company (as such amount
may be adjusted to reflect any stock split, stock dividend or similar
transaction) and all the shares so held are subject to the terms and provisions
of this Agreement. This Agreement shall be binding upon the Company and its
successors and upon the successors and Permitted Assignees of the Holders.
(c) AMENDMENT AND WAIVER. The rights of the Holders and the obligations
the Company hereunder are subject to amendment upon and any non-compliance by
the Company may be waived by, the written consent of the Company and a majority
in interest of the Holders of Registrable Securities; provided that no such
amendment or waiver which materially and adversely affects Holders who are
Investcorp Investors shall be effective unless a majority in interest of the
Holders who are Investcorp Investors shall also give their consent thereto; and
provided further that no such amendment or waiver which materially and adversely
affects Holders who are not Investcorp Investors shall be effective unless a
majority in interest of the Holders who are not Investcorp Investors shall also
give their consent thereto. Any amendment satisfying the foregoing requirements,
as applicable, shall be binding upon all Holders.
(d) GOVERNING LAW. This Agreement shall be construed both as to
validity and performance in accordance with, and governed by, the laws of the
Commonwealth of Pennsylvania applicable to agreements to be performed in
Pennsylvania, without regard to principles of conflict of laws of such
jurisdiction or any other jurisdiction.
(e) HEADINGS; SECTIONS. All headings and captions in this Agreement are
for purposes of reference only and shall not be construed to limit or affect the
substance of this Agreement.
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All references to Section in this Agreement refer to Sections of this Agreement,
unless the context otherwise expressly provides.
(f) ENTIRE AGREEMENT. This Agreement contains, and is intended as, a
complete statement of all the terms of the arrangements provided for herein, and
supersedes any previous agreements and understandings with respect to such
arrangements.
(g) SEVERABILITY. The invalidity, illegality or unenforceability of one
or more of the provisions of this Agreement in any jurisdiction shall not affect
the validity, legality or enforceability of the remainder of this Agreement in
such jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction.
(h) SPECIFIC PERFORMANCE. The Company acknowledges and agrees that in
the event of any breach of this Agreement by the Company, the Holders would be
irreparably harmed and could not be made whole by monetary damages. Accordingly,
the Company hereby agrees that in addition to any other remedy to which the
Holders may be entitled at law or in equity, the Holders shall be entitled to
compel specific performance of this Agreement in any action instituted in any
court of the United States or any state thereof having subject matter
jurisdiction for such action.
Agreed to as of the date first above written.
WERNER HOLDING CO. (PA), INC., a
Pennsylvania corporation
By: /s/
----------------------------------
Name:
Title:
13
<PAGE> 1
Exhibit 10.11
WERNER HOLDING CO. (PA), INC.
1997 STOCK LOAN PLAN
--------------------
1. PURPOSE. The Werner Holding Co. (PA), Inc. 1997 Stock Loan Plan (the
"Plan") has been established by Werner Holding Co. (PA), Inc. (the "Company") to
secure for the Company and its shareholders the benefits arising from capital
ownership, and thereby entrepreneurial risk, by certain senior employees of the
Company and its subsidiaries who are and will be responsible for the future
growth and continued success of the Company or its subsidiaries. The Plan will
provide a means whereby such individuals, pursuant to loans made under the Plan,
may acquire shares of Class C Common Stock of the Company, par value $0.01 per
share ("Class C Stock"). The shares of Class C Stock to be available pursuant to
the Plan shall have an aggregate fair market value of no less than $2 million
($2,000,000).
2. ADMINISTRATION. The authority to manage and control the operation
and administration of the Plan shall be vested in a Committee (the "Committee")
consisting of two or more non-employee members of the Board of Directors of the
Company (the "Board") who are appointed by, and may be removed by, the Board;
provided that one member of the Committee shall be a member of the Board
appointed pursuant to Section 4(iii) of the Shareholder Agreement (the
"Shareholder Agreement") by and among the Company, the holders of Class D Common
Stock of the Company, and the Designated Shareholders, as such term is defined
in the Shareholder Agreement. Any interpretation of the Plan by the Committee
and any decision made by the Committee on any matter within its discretion is
final and binding on all persons. No member of the Committee shall be liable for
any action or determination made with respect to the Plan.
3. PARTICIPATION. The Committee shall determine and designate the
employees who will participate in the Plan ("Participants") from among members
of management (including employees who are also directors) who (a) were not
shareholders of the Company prior to the adoption of the Plan and (b) purchase
shares of Class C Stock of the Company (the "Purchased Shares") from Stepup
Limited, a Cayman Islands corporation ("Stepup") at any time prior to April 1,
1998.
4. PURCHASE LOANS. The Company may make a loan (a "Loan") to a
Participant in an amount that shall not exceed the sum of (1) fifty percent
(50%) of the purchase price of the Purchased Shares and (2) the amount of the
retention bonus, if any, payable to the Participant pursuant to the Employee
Protection Agreement, dated July 2, 1997, between the Company and the
Participant (the "Retention Bonus"), subject to the following:
(a) Each Loan shall be evidenced by a promissory note in such
form as the Committee shall approve; provided, that the note shall (i)
provide full recourse to the Participant, (ii) provide for interest at
a rate for each calendar year or part thereof equal to (a) the sum of
the interest accrued under the Company's revolving credit facility
during such period and the interest, discount or yield, accrued under
the Company's receivable facility during such period, divided by (b)
the sum of the average indebtedness outstanding on the Company's
revolving credit facility during such period (based on the daily
balances of such facility) and the average amount of indebtedness
incurred, or
<PAGE> 2
interests in receivables sold, pursuant to the Company's receivables
facility during such period (based on the daily balances of such
facility) payable in arrears on January 31, (iii) be secured by a
Pledge Agreement (described in subsection 5.1), and (iv) comply with
all applicable laws, regulations and rules of the Board of Governors of
the Federal Reserve System and any other governmental agency having
jurisdiction.
(b) Subject to the prepayment provisions of subsection 5.2 and
the acceleration provisions set forth in paragraphs (c) and (d) below,
each Loan shall mature on November 24, 2004 (the "Maturity Date"), at
which time all unpaid principal and interest shall be payable.
(c) The principal and interest outstanding under a Loan of a
Participant who retires on or after age 65 or whose employment with the
Company and its affiliates terminates by reason of his death or
Disability (as defined below) or terminates for a reason other than
Cause (as defined below), or who terminates his employment with the
Company for Good Reason (as defined below) will not become due and
payable until the Maturity Date of the Loan. All principal and interest
outstanding under a Loan with respect to any other Participant will
automatically become due and payable on the date the Participant's
employment with the Company and its affiliates terminates. "Disability"
has the meaning set forth in the employment agreement between the
Company and the Participant, or if there is no such employment
agreement, means the failure by the Participant to render full-time
employment services to the Company for an aggregate of sixty (60)
business days in any continuous period of six (6) months on account of
physical or mental disability.
(i) "Cause," when used in connection with the
termination of employment of the Participant, has the meaning set forth
in the employment agreement between the Company and the Participant, or
if there is no such employment agreement, means (A) conviction of the
Participant for a felony, or the entry by the Participant of a plea of
guilty or NOLO CONTENDERE to a felony, (B) the commission of an act of
fraud involving dishonesty for personal gain which is materially
injurious to the Company, (C) the willful and continued refusal by the
Participant to substantially perform his duties with the Company (other
than any such refusal resulting from his incapacity due to mental
illness or physical illness or injury), after a demand for substantial
performance is delivered to the Participant by the Company's Board of
Directors, where such demand specifically identifies the manner in
which the Company's Board of Directors believes that the Participant
has refused to substantially perform his duties and the passage of a
reasonable period of time for the Participant to comply with such
demand or (D) the willful engaging by the Participant in gross
misconduct materially and demonstrably injurious to the Company or any
of its subsidiaries. For purposes of this paragraph, no act or failure
to act on the Participant's part shall be considered "willful" unless
done, or omitted to be done, by the Participant not in good faith and
without reasonable belief that his action or omission was in the best
interest of the Company or its Subsidiaries. Notwithstanding the
foregoing, with respect to termination for Cause arising out of conduct
described in clause (B), (C) or (D) above, a termination shall not be
considered for Cause for purposes of this Plan unless there shall have
been delivered to the
2
<PAGE> 3
Participant a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters of the entire Board of Directors of the
Company, at a meeting of such board called and held for that purpose
(after reasonable notice to the Participant and an opportunity for the
Participant, together with his counsel or other advisors, to be heard
at such meeting), finding that in the good faith opinion of the board
the Participant had engaged in conduct described above in clause (B),
(C) or (D) of the first sentence of this paragraph and specifying the
particulars thereof in detail. Such a finding by the Board of Directors
of the Company is a prerequisite to a termination for Cause pursuant to
clauses (B), (C) or (D) above; PROVIDED, HOWEVER, that such a finding
may be challenged, by appropriate judicial process, on the merits
(i.e., that Cause did not exist) or on the basis that the board's
finding was not made in good faith (provided that proof that Cause for
termination existed shall be a complete defense to any showing that the
board's findings was not made in good faith).
(ii) "Good Reason" means, unless the Participant
shall have consented in writing thereto, any of the following: (A)
except as specifically provided in the Participant's employment
agreement, if any, the assignment to the Participant of duties, or the
assignment of the Participant to a position, constituting a material
diminution in the Participant's role, responsibilities or authority
compared with his role, responsibilities or authority on the Effective
Date, as such term is defined in the Management Stock Purchase
Agreement between the Participant and the Company (the "Management
Stock Purchase Agreement"); (B) a reduction by the Company in the
Participant's bonus opportunities or base salary as in effect on the
Effective Date, or as the same may be increased from time to time; (C)
unless the members of the Board appointed pursuant to section 4(iii) of
the Shareholder Agreement agree to such reduction or other action, any
material reduction in the level of benefits (including participation in
any bonus plan) to which the Participant is entitled under one or more
employee benefit plans on the Effective Date, or the taking of any
action by the Company which would adversely affect the Participant's
accrued benefits under any such employee benefit plans or deprive the
Participant of any material fringe benefit enjoyed by the Participant
on the Effective Date; (D) a demand by the Company to the Participant
to relocate to any place that exceeds a fifty (50) mile radius beyond
the location at which the Participant performed his duties on the
Effective Date; or (E) any material breach by the Company of the
Management Stock Purchase Agreement.
(d) The Company has the right to accelerate the principal and
interest due under the Loan if any of the following events occurs: (i)
the Participant defaults in the payment of any amount due under the
Loan and the default remains uncured for a period of ten (10) business
days after the date the Company gives the Participant notice of the
default, (ii) the Participant defaults under or breaches any other
covenant, representation or warranty under the Note, the Pledge
Agreement or any other agreement under the Plan and the default or
breach remains uncured for a period of thirty (30) days after the date
the Company gives the Participant notice of his default or breach,
(iii) the Participant applies for or consents to the appointment of a
receiver, trustee, custodian or liquidator of any of his property,
admits in writing his inability to pay his debts as they mature, makes
a general assignment as a bankrupt or insolvent or is the subject of an
order for relief
3
<PAGE> 4
under Chapter 7 or Chapter 13 of the United States Bankruptcy Code or
files a voluntary petition in bankruptcy or a petition or answer
seeking an arrangement with creditors to take advantage of any
bankruptcy, insolvency, readjustment or debt or liquidation law or
statute, or an answer admitting the material allegations of a petition
filed against him in any proceeding under any such law, or (iv) any
court of competent jurisdiction enters an order, judgment or decree,
without the application, approval or consent of the Participant,
approving a petition appointing a receiver, trustee, custodian or
liquidator of all or a substantial part of the assets of the
Participant, and such order, judgment or decree continues unstayed and
in effect for a period of thirty (30) days.
(e) If a Participant fails to make any payment required under
his Loan when due, the Company may foreclose on the Pledged Property
(as defined in subsection 5.1) and may otherwise enforce its rights
under the Plan and any Note or other agreement entered into under the
Plan.
(f) One-half of the Retention Bonus, if any, shall be
dedicated to repayment of the Loan; provided that, if there is no such
Retention Bonus, the Company will negotiate, on an individual basis,
alternative terms of repayment with the Participant. In addition, the
Company will negotiate on an individual basis the amount of principal
that each Participant will pay from his annual bonus, provided that
such amount shall not exceed the lesser of twenty percent (20%) of the
annual bonus and 1/14 of the original amount of principal of the Loan.
5. PLEDGE OF SHARES.
5.1 PLEDGE AGREEMENT. Each Participant shall enter into an
agreement with the Company in such form as the Committee shall approve
(the "Pledge Agreement") to pledge to the Company all of the Purchased
Shares (the "Pledged Shares"), any non-cash dividends or distributions
payable with respect to such shares and any securities or other
property (other than cash) payable in respect of or in exchange for
such shares pursuant to any merger, reorganization, consolidation,
recapitalization, exchange offer or other similar corporate transaction
("Related Property") and all proceeds thereof (collectively, the
"Pledged Property") to secure repayment of the Loan. Notwithstanding
the foregoing, in the event that the Committee determines that a
Participant would recognize a net increase in taxable income from the
receipt of any such dividends or distributions, the Committee may in
its discretion permit the Participant to retain a portion of the
dividends or distributions so as to be able to pay all or part of his
related increase in taxes.
(a) Certificates representing shares of stock that consist of
Pledged Property shall bear the following legend in addition to any
other legends that the Company may deem appropriate:
THIS CERTIFICATE AND THE SHARES OF STOCK AND ALL RIGHTS HEREBY
REPRESENTED ARE SUBJECT TO THE TERMS, CONDITIONS AND
RESTRICTIONS SET FORTH IN THE WERNER HOLDING CO. (PA), INC.
1997 STOCK LOAN
4
<PAGE> 5
PLAN AND ANY AGREEMENT UNDER THAT PLAN AND THE PLEDGE
AGREEMENT BETWEEN THE OWNER OF SUCH SHARES AND WERNER HOLDING
CO. (PA), INC. AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
ACCORDANCE WITH THE TERMS AND CONDITIONS OF SUCH PLAN AND
AGREEMENTS, COPIES OF WHICH ARE ON FILE AT THE OFFICES OF
WERNER HOLDING CO. (PA), INC.
(b) Any cash received upon an exchange or conversion of
Pledged Property shall be applied to reduce the outstanding Loan
balance (with accrued but unpaid interest being reduced first). Any
cash in excess of that applied against the outstanding Loan balance
shall be paid to the Participant.
5.2. PREPAYMENTS OF LOAN AND RELEASES FROM PLEDGE.
(a) A Participant may make voluntary prepayments on the Loan
at any time without penalty in such minimum amounts as the Committee
may determine, which shall be applied first to accrued but unpaid
interest, and then to principal.
(b) In the event that any cash dividend or distribution is
paid by the Company with respect to any Pledged Property relating to
the Loan, the Participant shall make a mandatory prepayment with
respect to the Loan equal to the amount of such dividend or
distribution, which shall be applied first to accrued but unpaid
interest under the Loan, then to principal. Notwithstanding the
foregoing, in the event that the Committee determines that a
Participant would recognize a net increase in taxable income from the
receipt of any such dividends or distributions after giving effect to
any deduction for the related payment under the Loan, the Committee may
in its discretion permit the Participant to retain a portion of the
dividends or distributions so as to be able to pay all or part of his
related increase in taxes.
(c) In the event that the Participant at any time desires to
obtain a release of all or part of any Pledged Property securing the
Loan, whether for the purpose of selling such Pledged Property or
otherwise, as a condition to the release, the Participant shall make
arrangements satisfactory to the Company for the prepayment by the
Participant of an amount equal to the higher of (i) a percentage of the
outstanding Loan balance as of the date of the release equal to the
percentage in value of the Pledged Property sought to be released and
(ii) a sufficient portion of the outstanding Loan balance so that the
amount of the outstanding Loan balance remaining unpaid after giving
effect to such payment does not exceed fifty percent (50%) of the fair
market value of the Pledged Property determined in good faith by the
Committee that will remain subject to the Pledge Agreement after giving
effect to the release, which shall be applied first to accrued but
unpaid interest under the Loan, then to principal.
(d) In the event of any prepayment of principal under the
Loan, the Company will release from the pledge under the Pledge
Agreement a portion of the Pledged Property equal to the percentage of
the outstanding principal balance so paid, provided,
5
<PAGE> 6
that (i) the Company will retain Pledged Property with an aggregate
fair market value determined in good faith by the Committee equal to at
least two hundred percent (200%) of the outstanding Loan balance as of
the date of the prepayment (after giving effect to the prepayment) and
(ii) to the extent any of the released Pledged Property is subject to
restriction under section 6, the Company will retain custody of the
property until the end of the Restricted Period (as defined below).
6. RESTRICTIONS ON SHARES. From the date of the purchase of the
Purchased Shares until the principal of the Loan and all unpaid interest thereon
is repaid in full (the "Restricted Period"):
(a) Purchased Shares may not be sold, assigned, transferred,
pledged or otherwise encumbered;
(b) the certificate representing such shares shall be
registered in the name of the Participant and shall be deposited with
the Company, together with a stock power (in such form as the Company
may determine); and
(c) the Participant shall be treated as a stockholder with
respect to the Purchased Shares, including the right to vote such
shares.
7. TRANSFERS AT TERMINATION OF RESTRICTED PERIOD. At the end of the
Restricted Period with respect to Purchased Shares, the certificate representing
such shares shall be transferred to the Participant (or the Participant's legal
representative or heir) free of all restrictions under this Agreement.
8. GENERAL.
8.1. EFFECTIVE DATE AND DURATION. The Plan will become
effective upon its approval by the Company's Board of Directors.
8.2. AGREEMENTS EVIDENCING PARTICIPATION. At the time of his
designation as a Participant, the Committee may require a Participant to enter
into one or more agreements with the Company in a form specified by the
Committee agreeing to the terms and conditions of the Plan and to such
additional terms and conditions, not inconsistent with the Plan, as the
Committee may in its discretion prescribe.
8.3. NONTRANSFERABILITY. Except as provided in the Management
Stock Purchase Agreement between the Company and the Participant, no right
provided under the Plan to any Participant may be transferred pledged or
assigned by the Participant (except, in the event of the Participant's death, by
will or the laws of descent and distribution), and the Company shall not be
required to recognize any attempted assignment of such rights by any
Participant. During a Participant's lifetime, purchases may be made only by him
or by his guardian or legal representative.
8.4. COMPLIANCE WITH APPLICABLE LAW AND WITHHOLDING. The
Company shall have the right to require a Participant to pay to the Company the
amount of any taxes that are
6
<PAGE> 7
required to be withheld with respect to a Participant's participation in the
Plan, including any such taxes required to be withheld in connection with (i)
the purchase by the Participant of any Purchased Shares, (ii) any dividend or
distribution in respect of the Purchased Shares or any Related Property, (iii)
any repayment of a Loan, (iv) the lapse of the Restricted Period, (v) any
release of Pledged Property or (vi) any sale of Purchased Shares or any Related
Property. To the extent permitted by the Committee, a Participant may elect to
have any distribution otherwise required to be made under the Plan to be
withheld to fulfill any tax withholding obligation.
8.5. NO EMPLOYMENT RIGHTS. The Plan does not constitute a
contract of employment, and participation in the Plan will not give any
Participant the right to be retained in the employ of the Company or an
affiliate or the right to continue as an officer or director of the Company or
any right or claim to any benefit under the Plan unless such right or claim has
specifically accrued under the terms of the Plan or the terms of any award under
the Plan.
8.6. GOVERNING LAW. The Plan and all determinations made and
actions taken thereunder, to the extent not otherwise governed by the laws of
the United States, shall be governed by the internal laws of the Commonwealth of
Pennsylvania and construed accordingly.
7
<PAGE> 1
Exhibit 10.12
WERNER HOLDING CO. (DE), INC.
------------------------------------
CREDIT AGREEMENT
dated as of November 24, 1997
------------------------------------
$320,000,000
Credit Facility
------------------------------------
BANKERS TRUST COMPANY,
as Administrative Agent and as Co-Arranger,
MERRILL LYNCH CAPITAL CORPORATION,
as Syndication Agent and as Co-Arranger,
THE CHASE MANHATTAN BANK,
as Documentation Agent,
and
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Co-Agent
<PAGE> 2
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1
DEFINITIONS ............................... 2
1.1 Defined Terms ................................................... 2
1.2 Other Definitional Provisions.................................... 37
SECTION 2
TERM LOANS ................................ 38
2.1 Term Loans ...................................................... 38
2.2 Repayment of Term Loans.......................................... 38
2.3 Use of Proceeds ................................................. 39
SECTION 3
AMOUNT AND TERMS OF
REVOLVING CREDIT COMMITMENTS ....................... 39
3.1 Revolving Credit Commitments..................................... 39
3.2 Commitment Fee .................................................. 40
3.3 Proceeds of Revolving Credit Loans............................... 40
3.4 Swing Line Commitment............................................ 40
3.5 Issuance of Letters of Credit.................................... 42
3.6 Participating Interests.......................................... 43
3.7 Procedure for Opening Letters of Credit.......................... 43
3.8 Payments in Respect of Letters of Credit......................... 43
3.9 Letter of Credit Fees............................................ 44
3.10 Letter of Credit Reserves....................................... 45
3.11 Further Assurances ............................................. 47
3.12 Obligations Absolute............................................ 47
3.13 Assignments .................................................... 47
3.14 Participations ................................................. 48
SECTION 4
AMOUNT AND TERMS OF
RECEIVABLES FINANCING COMMITMENTS .................... 48
4.1 Receivables Financing Commitments................................ 48
(i)
<PAGE> 3
Page
----
4.2 Commitment Fee .............................................. 49
4.3 Proceeds of Receivables Financing Loans...................... 49
SECTION 5
GENERAL PROVISIONS APPLICABLE TO LOANS ................. 49
5.1 Procedure for Borrowing....................................... 49
5.2 Conversion and Continuation Options........................... 50
5.3 Changes of Commitment Amounts................................. 51
5.4 Optional and Mandatory Prepayments; Repayments of Term
Loans....................................................... 52
5.5 Interest Rates and Payment Dates.............................. 61
5.6 Computation of Interest and Fees.............................. 62
5.7 Certain Fees ................................................. 62
5.8 Inability to Determine Interest Rate.......................... 62
5.9 Pro Rata Treatment and Payments............................... 63
5.10 Illegality .................................................. 66
5.11 Requirements of Law ......................................... 67
5.12 Indemnity ................................................... 70
5.13 Repayment of Loans; Evidence of Debt......................... 71
5.14 Replacement of Lenders....................................... 72
SECTION 6
REPRESENTATIONS AND WARRANTIES ..................... 73
6.1 Financial Condition .......................................... 73
6.2 No Change .................................................... 75
6.3 Corporate Existence; Compliance with Law...................... 75
6.4 Corporate Power; Authorization................................ 76
6.5 Enforceable Obligations....................................... 76
6.6 No Legal Bar ................................................. 77
6.7 No Material Litigation........................................ 77
6.8 Investment Company Act........................................ 78
6.9 Federal Regulation ........................................... 78
6.10 No Default .................................................. 78
6.11 Taxes ....................................................... 78
6.12 Subsidiaries; Immaterial Subsidiaries........................ 79
6.13 Ownership of Property; Liens................................. 79
6.14 ERISA ....................................................... 79
6.15 Collateral Documents......................................... 80
6.16 Copyrights, Patents, Permits, Trademarks and Licenses........ 81
6.17 Environmental Matters........................................ 82
(ii)
<PAGE> 4
Page
----
6.18 Accuracy and Completeness of Information...................... 83
SECTION 7
CONDITIONS PRECEDENT ........................... 83
7.1 Conditions to Initial Loans and Letters of Credit.............. 83
7.2 Conditions to All Loans and Letters of Credit.................. 90
SECTION 8
AFFIRMATIVE COVENANTS .......................... 91
8.1 Financial Statements .......................................... 91
8.2 Certificates; Other Information................................ 93
8.3 Payment of Obligations......................................... 95
8.4 Conduct of Business and Maintenance of Existence............... 95
8.5 Maintenance of Property; Insurance............................. 96
8.6 Inspection of Property; Books and Records; Discussions......... 96
8.7 Notices ....................................................... 96
8.8 Environmental Laws ............................................ 98
8.9 Additional Collateral.......................................... 99
SECTION 9
NEGATIVE COVENANTS ............................103
9.1 Indebtedness ..................................................103
9.2 Limitation on Liens ...........................................106
9.3 Limitation on Contingent Obligations...........................108
9.4 Prohibition of Fundamental Changes.............................110
9.5 Prohibition on Sale of Assets..................................110
9.6 Limitation on Investments, Acquisitions, Loans and Advances....113
9.7 Capital Expenditures ..........................................116
9.8 Interest Rate Agreements.......................................117
9.9 Debt to EBITDA ................................................117
9.10 Interest Coverage ............................................119
9.11 Minimum Consolidated EBITDA...................................120
9.12 Limitation on Dividends.......................................121
9.13 Transactions with Affiliates..................................122
9.14 Prepayments and Amendments of Subordinated Debt...............123
9.15 Limitation on Changes in Fiscal Year..........................123
9.16 Limitation on Business........................................123
9.17 Designated Senior Indebtedness................................124
9.18 Limitation on Issuance of Capital Stock.......................124
(iii)
<PAGE> 5
Page
----
SECTION 10
EVENTS OF DEFAULT ............................125
SECTION 11
THE AGENTS; THE ISSUING LENDER .....................129
11.1 Appointment .................................................129
11.2 Delegation of Duties.........................................129
11.3 Exculpatory Provisions.......................................130
11.4 Reliance by Co-Arrangers.....................................130
11.5 Notice of Default ...........................................131
11.6 Non-Reliance on Agents and Other Lenders.....................131
11.7 Indemnification .............................................132
11.8 Each Agent in its Individual Capacity........................132
11.9 Successor Administrative Agent...............................132
11.10 Issuing Lender as Issuer of Letters of Credit...............133
SECTION 12
MISCELLANEOUS ..............................133
12.1 Amendments and Waivers........................................133
12.2 Notices ......................................................135
12.3 No Waiver; Cumulative Remedies................................136
12.4 Survival of Representations and Warranties....................136
12.5 Payment of Expenses and Taxes.................................137
12.6 Successors and Assigns; Participations and Assignments........139
12.7 Set-off ......................................................144
12.8 Payments Pro Rata. ...........................................144
12.9 Counterparts. ................................................145
12.10 Governing Law; No Third Party Rights.........................145
12.11 Submission to Jurisdiction; Waivers..........................146
12.12 Releases ....................................................146
12.13 Interest ....................................................147
12.14 Special Indemnification......................................147
12.15 Permitted Payments and Transactions..........................148
12.16 Co-Arrangers; Administrative Agent...........................149
12.17 Certain Provisions Regarding Alabama Mortgaged Property......149
SCHEDULES
(iv)
<PAGE> 6
Schedule I List of Addresses for Notices; Lending Offices;
Commitment Amounts
Schedule II Pricing and Commitment Fee Grid
Schedule III Qualified Account Debtors
Schedule 6.11 Taxes
Schedule 6.12 Subsidiaries
Schedule 6.13 Fee and Leased Properties
Schedule 6.15(b) UCC Filing Offices
Schedule 6.16 Patents, Trademarks and Copyrights
Schedule 9.1(a) Existing Indebtedness
Schedule 9.2(h) Existing Liens
Schedule 9.3(d) Existing Contingent Obligations
EXHIBITS
EXHIBIT A-1 Form of B Term Loan Note
EXHIBIT A-2 Form of C Term Loan Note
EXHIBIT B Form of Revolving Credit Note
EXHIBIT C Form of Receivables Financing Note
EXHIBIT D Form of Swing Line Note
EXHIBIT E Form of Assignment and Acceptance
EXHIBIT F-1 Form of Company Security Agreement
EXHIBIT F-2 Form of Subsidiary Security Agreement
EXHIBIT G-1 Form of Holdings Guarantee
EXHIBIT G-2 Form of Subsidiary Guarantee
EXHIBIT H-1 Form of Company Pledge Agreement
EXHIBIT H-2 Form of Holdings/Subsidiary Pledge Agreement
EXHIBIT I Form of Subsection 5.11(d)(2) Certificate
EXHIBIT J-1 Form of Opinion of Gibson, Dunn & Crutcher LLP
EXHIBIT J-2 Form of Opinion of General Counsel to the Company
EXHIBIT K-1 Form of Holdings Closing Certificate
EXHIBIT K-2 Form of Company Closing Certificate
EXHIBIT K-3 Form of Subsidiaries Closing Certificate
EXHIBIT L Form of Mortgage
EXHIBIT M Form of Borrowing Base Certificate
EXHIBIT N Form of Letter of Credit Request
(v)
<PAGE> 7
CREDIT AGREEMENT, dated as of November 24, 1997, among WERNER HOLDING
CO. (DE), INC., a Delaware corporation (the "COMPANY"), the several lenders from
time to time parties hereto (the "LENDERS"), BANKERS TRUST COMPANY, as
administrative agent for the Lenders and as co-arranger (in such capacity, the
"ADMINISTRATIVE AGENT"), MERRILL LYNCH CAPITAL CORPORATION, as syndication agent
and as co-arranger (in such capacity, the "SYNDICATION AGENT" and, together with
the Administrative Agent, the "CO- ARRANGERS"), THE CHASE MANHATTAN BANK, as
documentation agent (in such capacity, the "DOCUMENTATION AGENT") and GOLDMAN
SACHS CREDIT PARTNERS, L.P., as co-agent (the "CO-AGENT", and together with the
Administrative Agent, the Syndication Agent and the Documentation Agent, the
"AGENTS").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Investcorp Investment Equity Limited ("IIEL"), an affiliate of
Investcorp, S.A., certain of its affiliated entities and other initial investors
(collectively, the "INVESTORS") and Werner Holding Co. (PA), Inc., a
Pennsylvania corporation ("Holdings") have entered into an Amended and Restated
Recapitalization Agreement, dated as of October 27, 1997, as amended (together
with any schedule (including those contained in the Company Disclosure Letter
thereto) attached thereto, as amended, supplemented or otherwise modified from
time to time, the "RECAPITALIZATION AGREEMENT"), which will effect a
recapitalization (the "Recapitalization") of Holdings;
WHEREAS, upon the consummation of the Recapitalization, the Investors
will own at least 66.7% of the common stock of Holdings and certain existing
shareholders and management (the "EXISTING SHAREHOLDERS") will own the remaining
portion of such common stock;
WHEREAS, Holdings and the Company intend to finance the
Recapitalization (including the refinancing of certain existing indebtedness)
and related premiums, fees and expenses from the following sources: (a)
$182,000,000 in common equity (consisting of a cash investment of at least
$122,700,000 from the Investors, with the balance consisting of retained common
equity equal to (x) in the case of existing management shareholders,
approximately $23,700,000 and (y) in the case of other existing shareholders,
approximately $35,600,000 (with the transactions described in this clause (a)
being hereinafter referred to as the "EQUITY CONTRIBUTION"); (b) $320,000,000
from the senior secured credit facilities provided for herein comprised of a
$90,000,000 B term loan facility, a $55,000,000 C term loan facility, a
$100,000,000 revolving credit facility and a $75,000,000 receivables financing
credit facility; and (c) $135,000,000 in gross cash proceeds from an issuance by
the
<PAGE> 8
Company of either (i) subordinated unsecured loans or (ii) senior subordinated
notes; and
WHEREAS, the Company has requested the Lenders to make loans and other
extensions of credit available to the Company to enable the Company to finance a
portion of the Recapitalization and for the other purposes set forth herein;
NOW, THEREFORE, the Company, the Administrative Agent, the Syndication
Agent, the Documentation Agent, the Co-Agent, the Issuing Lender and the Lenders
agree as follows:
SECTION 1
DEFINITIONS
-----------
1.1 DEFINED TERMS. As used in this Agreement, the terms defined
in the caption hereto shall have the meanings set forth therein, and the
following terms have the following meanings:
"ACQUIRED CAPITAL EXPENDITURES": as defined in subsection 9.7.
"ACQUIRED PERSON": as defined in subsection 9.7.
"ADDITIONAL MORTGAGE": as defined in subsection 8.9(f).
"ADJUSTED WORKING CAPITAL": at any time shall mean an amount
equal to the Consolidated Current Assets at such time minus
Consolidated Current Liabilities at such time.
"ADJUSTMENT DATE": as defined in the definition of Applicable
Margin.
"ADMINISTRATIVE AGENT": as defined in the preamble hereto.
"AFFECTED EURODOLLAR LOANS": as defined in subsection 5.4(b).
"AFFILIATE": of any Person (a) any Person (other than the
Company or a Wholly-Owned Subsidiary Guarantor) which, directly or
indirectly, is in control of, is controlled by, or is under common
control with such Person, or (b) any Person who is a director or
officer (i) of such Person, (ii) of any Subsidiary of such Person or
(iii) of any Person described in clause (a) above. For purposes of
this definition, control of a Person shall mean the power, direct or
indirect, (x) to vote 25% or more of the securities having ordinary
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<PAGE> 9
voting power for the election of directors of such Person,
whether by ownership of securities, contract, proxy or
otherwise, or (y) to direct or cause the direction of the
management and policies of such Person, whether by ownership of
securities, contract, proxy or otherwise.
"AGENTS": as defined in the preamble hereto.
"AGGREGATE UNUTILIZED COMMITMENT": with respect to any Lender at
any time shall mean the sum of (a) each Lender's Available Revolving
Credit Commitment at such time plus (b) such Lender's Available
Receivables Financing Commitment at such time.
"AGREEMENT": this Credit Agreement, as amended, supplemented or
modified from time to time.
"ALTERNATE BASE RATE": for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Base CD Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "PRIME RATE"
shall mean the rate of interest per annum publicly announced from time
to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City (the Prime Rate not being intended
to be the lowest rate of interest charged by the Administrative Agent
in connection with extensions of credit to debtors); and "BASE CD
RATE" shall mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) a fraction, the numerator of which is one
and the denominator of which is one minus the C/D Reserve Percentage
and (b) the C/D Assessment Rate; "THREE-MONTH SECONDARY CD RATE" shall
mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or,
if such day shall not be a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current
practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or, if such
rate shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New
York City received at approximately 10:00 A.M., New York City time, on
such day (or, if such day shall not be a Business Day, on the next
preceding Business Day) by the Administrative Agent from three New
York City negotiable certificate of deposit dealers of recognized
standing selected by it. Any change in the Alternate Base Rate due to
a change in the Prime Rate or the Base CD Rate shall be effective as
of the opening of business on the effective day of such change in the
Prime Rate or the Base CD Rate, respectively.
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<PAGE> 10
"ALTERNATE BASE RATE LOANS": Loans at such time as they are made
and/or being maintained at a rate of interest based upon the Alternate
Base Rate.
"APPLICABLE MARGIN": for B Term Loans, C Term Loans, Revolving
Credit Loans, Receivables Financing Loans and Swing Line Loans of the
Types set forth below, the rate per annum set forth under the relevant
column heading opposite such Loans below:
Alternate Base
Rate Eurodollar
Loans Loans
----- -----
B Term Loans 1.50% 2.50%
C Term Loans 1.75% 2.75%
Revolving Credit Loans 1.25% 2.25%
Receivables Financing Loans 0.50% (or, at 1.50% (or, at
any time on any time on
and after and after
May 31, 1998, May 31, 1998,
1.25%) 2.25%)
Swing Line Loans 1.25% Not applicable
; PROVIDED that the Applicable Margin with respect to B Term
Loans, C Term Loans, Revolving Credit Loans, Receivables
Financing Loans and Swing Line Loans will be adjusted on each
Adjustment Date (as defined below) to the applicable rate per
annum set forth in the pricing grid attached hereto as Schedule
II based on the Leverage Ratio as determined from the relevant
financial statements delivered pursuant to subsection 8.1(a) or
(b). Changes in the Applicable Margin resulting from changes in
the Leverage Ratio shall become effective on the date (the
"ADJUSTMENT DATE") on which such financial statements are
delivered to the Lenders (but in any event not later than the
50th day after the end of each of the first three quarterly
periods of each fiscal year or the 95th day after the end of
each fiscal year as the case may be) and shall remain in effect
until the next change to be effected pursuant to this
definition, PROVIDED that (a) the Applicable Margin shall be
initially the rate per annum set forth under the relevant column
heading above; (b) the first Adjustment Date shall not occur
until the later of (x) the date of delivery of financial
statements pursuant to subsection 8.1(b) for the fiscal quarter
ended March 31, 1998 or (y) May 31, 1998; (c) if for any reason
the financial statements required by
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<PAGE> 11
subsection 8.1(a) or (b), as the case may be, are not timely
delivered to the Lenders, the Leverage Ratio shall be (i) during
the period from the date upon which such financial statements
were required to be delivered until the date upon which they
actually are delivered, the Applicable Margin in effect
immediately prior to the date such financial statements were
due, and (ii) if such financial statements, when actually
delivered, would have required an increase in the Applicable
Margin over the Applicable Margin in effect immediately prior to
the date such financial statements were due, the Company shall
promptly following the delivery of such financial statements pay
to the Lenders and the Administrative Agent any additional
amounts of interest or fees which would have been payable on any
previous Interest Payment Date had such higher Applicable Margin
been in effect from the date such financial statements were
required to be delivered; and (d) if any Default or Event of
Default shall have occurred and be continuing on any Adjustment
Date, the Applicable Margins for the various Types and Tranches
of Loans shall in no event be reduced on such Adjustment Date
(from the Applicable Margins as in effect immediately before
such Adjustment Date).
"ASSET SALE": (i) any sale, sale-leaseback, or other
disposition by the Company or any Subsidiary restricted by
subsection 9.5 of any of its property or assets, including the
stock of any Subsidiary, except sales and dispositions permitted
by subsections 9.5(a), (b), (c), (f), (g), (h), (k) and (l),
(ii) any partial or complete liquidation of any Captive
Insurance Subsidiary (including by way of a return of excess
assets therefrom following any transfer of liabilities of the
respective Captive Insurance Subsidiary), including, without
limitation, as contemplated by subsection 9.5(j) and (iii) any
sale, sale-leaseback or other disposition of assets by Holdings.
"ASSIGNEE": as defined in subsection 12.6(c).
"ASSIGNMENT AND ACCEPTANCE": an assignment and acceptance
substantially in the form of Exhibit E.
"AVAILABLE RECEIVABLES FINANCING COMMITMENT": as to
any Lender, at any particular time, an amount equal to (a) the
amount of such Lender's Receivables Financing Commitment at such
time LESS (b) the aggregate unpaid principal amount at such time
of all Receivables Financing Loans made by such Lender pursuant
to subsection 4.1: collectively as to all the Lenders, the
"AVAILABLE RECEIVABLES FINANCING COMMITMENTS".
"AVAILABLE REVOLVING CREDIT COMMITMENT": as to any
Lender, at a particular time, an amount equal to (a) the amount
of such Lender's Revolving Credit Commitment at such time LESS
(b) the sum of (i) the aggregate unpaid
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<PAGE> 12
principal amount at such time of all Revolving Credit Loans made
by such Lender pursuant to subsection 3.1, (ii) such Lender's
Revolving Credit Commitment Percentage of the aggregate unpaid
principal amount at such time of all Swing Line Loans, PROVIDED
that for purposes of calculating the Revolving Credit
Commitments pursuant to subsection 3.2 the amount referred to in
this clause (ii) shall be zero, (iii) such Lender's L/C
Participating Interest in the aggregate amount available to be
drawn at such time under all outstanding Letters of Credit
issued by the Issuing Lender and (iv) such Lender's Revolving
Credit Commitment Percentage of the aggregate outstanding amount
of L/C Obligations; collectively, as to all the Lenders, the
"AVAILABLE REVOLVING CREDIT COMMITMENTS".
"B INSTALLMENT PAYMENT DATE": as defined in
subsection 5.4(e)(i).
"B MATURITY DATE": November 30, 2004.
"B TERM LOAN": as defined in subsection 2.1(a).
"B TERM LOAN COMMITMENT": as to any Lender, its
obligation to make a B Term Loan to the Company pursuant to
subsection 2.1(a) in an aggregate amount not to exceed the
amount set forth under such Lender's name in Schedule I opposite
the caption "B Term Loan Commitment" or in Schedule 1 to the
Assignment and Acceptance pursuant to which a Lender acquires
its B Term Loan Commitment, as the same may be adjusted pursuant
to subsection 12.6(c); collectively, as to all the Lenders, the
"B TERM LOAN COMMITMENTS".
"B TERM LOAN COMMITMENT PERCENTAGE": as to any Lender
at any time, the percentage of the aggregate B Term Loan
Commitments then constituted by such Lender's B Term Loan
Commitment.
"B TERM LOAN LENDER": Each Lender which has any
outstanding B Term Loans or a B Term Loan Commitment.
"B TERM LOAN NOTE": as defined in subsection 5.13(e).
"BANKRUPTCY CODE": Title I of the Bankruptcy Reform
Act of 1978, as amended and codified at Title 11 of the United
States Code.
"BASE AMOUNT": as defined in subsection 9.7.
"BOARD": the Board of Governors of the Federal
Reserve System, together with any successor.
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<PAGE> 13
"BORROWING BASE": shall mean, as at any date on which
the amount thereof is being determined, an amount equal to 80%
of Eligible Receivables on the date with respect to which the
most recent Borrowing Base Certificate was required to be
prepared.
"BORROWING BASE CERTIFICATE": shall have the meaning
provided in subsection 8.1(e).
"BORROWING BASE DEFICIENCY": shall mean, at any time,
the amount, if any, by which the sum of the aggregate principal
amount of Receivables Financing Loans then outstanding exceeds
the Borrowing Base then in effect.
"BORROWING DATE": any Business Day specified in a
notice pursuant to (a) subsection 3.4 or 5.1 as a date on which
the Company requests the Swing Line Lender or the Lenders to
make Loans hereunder or (b) subsection 3.5 as a date on which
the Company requests the Issuing Lender to issue a Letter of
Credit hereunder.
"BRIDGE COMMITMENT LETTER": the Commitment Letter and
term sheet thereto dated as of November 14, 1997 by and between
Investcorp Investment Equity Limited, on its behalf and on
behalf of certain of its affiliates and other investors and
The Chase Manhattan Bank, Chase Securities Inc., DLJ Bridge
Finance, Inc. and Goldman Sachs Credit Partners L.P.
"BRIDGE LOAN AGREEMENT": the Bridge Loan Agreement
that may be entered into pursuant to the Bridge Commitment
Letter among The Chase Manhattan Bank, Chase Securities Inc.,
DLJ Bridge Finance, Inc. and Goldman Sachs Credit Partners L.P.
and the Company, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its
terms and the terms of this Agreement.
"BRIDGE SUBORDINATED DEBT": the subordinated bridge
loans or exchange notes of the Company outstanding from time to
time pursuant to the Bridge Loan Agreement or the Indenture
contemplated thereby.
"BRIDGE SUBORDINATED DEBT DOCUMENTS": the Bridge Loan
Agreement and the notes evidencing the Bridge Subordinated Debt.
"BTCo": Bankers Trust Company, in its individual
capacity.
"BUSINESS DAY": with respect to Eurodollar Loans, a
day other than a Saturday, Sunday or other day on which
commercial banks in New York City or London are authorized or
required to close; for all other purposes under this
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<PAGE> 14
Agreement, a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or
required to close.
"C INSTALLMENT PAYMENT DATE": as defined in
subsection 5.4(e)(ii).
"C MATURITY DATE": November 30, 2005.
"C TERM LOAN": as defined in subsection 2.1(b).
"C TERM LOAN COMMITMENT": as to any Lender, its
obligation to make a C Term Loan to the Company pursuant to
subsection 2.1(b) in an aggregate amount not to exceed the
amount set forth under such Lender's name in Schedule I opposite
the caption "C Term Loan Commitment" or in Schedule 1 to the
Assignment and Acceptance pursuant to which a Lender acquires
its C Term Loan Commitment, as the same may be adjusted pursuant
to subsection 12.6(c); collectively, as to all the Lenders, the
"C TERM LOAN COMMITMENTS".
"C TERM LOAN COMMITMENT PERCENTAGE": as to any Lender
at any time, the percentage of the aggregate C Term Loan
Commitments then constituted by such Lender's C Term Loan
Commitment.
"C TERM LOAN LENDER": each Lender which has any
outstanding C Term Loans or a C Term Loan Commitment.
"C TERM LOAN NOTE": as defined in subsection 5.13(e).
"CAPITAL EXPENDITURES": for any period, all amounts
which would, in accordance with GAAP, be set forth as capital
expenditures (exclusive of any amount attributable to
capitalized interest) on the consolidated statement of cash
flows or other similar statement of the Company and its
Subsidiaries for such period and shall in any event include
expenditures in connection with acquisitions the Company elects
to be included as Capital Expenditures pursuant to subsection
9.6(g)(B) but shall exclude (x) any expenditures made with the
proceeds of condemnation or eminent domain proceedings affecting
real property or with insurance proceeds and (y) any
expenditures made in connection with subsection 9.5(i); PROVIDED
that, any Capital Expenditures financed with the proceeds of any
Indebtedness permitted hereunder (other than Indebtedness
incurred hereunder) shall be deemed to be a Capital Expenditure
only in the period in which, and by the amount which, any
principal of such Indebtedness is repaid.
"CAPITAL STOCK": any and all shares, interests,
participations or other equivalents (however designated) of
capital stock of a corporation, any and all
8
<PAGE> 15
equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any
of the foregoing.
"CAPTIVE INSURANCE SUBSIDIARY": MIICA and its
Subsidiaries and any other captive insurance subsidiary of the
Company.
"CASH EQUIVALENTS": (a) securities issued or directly
and fully guaranteed or insured by the United States or any
agency or instrumentality thereof having maturities of not more
than six months from the date of acquisition, (b) certificates
of deposit and eurodollar time deposits with maturities of one
year or less from the date of acquisition, bankers' acceptances
with maturities not exceeding one year and overnight bank
deposits, in each case with any Lender or with any domestic (in
the case of any investments, acquisitions or holdings by the
Company or its Domestic Subsidiaries) commercial bank or trust
company having capital and surplus in excess of $300,000,000,
(c) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses
(a) and (b) entered into with any financial institution meeting
the qualifications specified in clause (b) above, (d) commercial
paper having the highest rating obtainable from S&P or Moody's
and in each case maturing within one year after date of
acquisition; (e) investment funds investing 95% of their assets
in securities of the type described in clauses (a)-(d) above,
(f) readily marketable direct obligations issued by any state of
the United States or any political subdivision thereof having
one of the two highest rating categories obtainable from either
S&P or Moody's and (g) indebtedness with a rating of "A" or
higher from S&P or "A2" or higher from Moody's.
"C/D ASSESSMENT RATE": for any day the net annual
assessment rate (rounded upwards, if necessary, to the next
1/100 of 1%) determined by the Administrative Agent to be
payable on such day to the Federal Deposit Insurance Corporation
or any successor ("FDIC") for FDIC's insuring time deposits made
in Dollars at offices of the Administrative Agent in the United
States.
"C/D RESERVE PERCENTAGE": for any day as applied to
any Base CD Rate, that percentage (expressed as a decimal) which
is in effect on such day, as prescribed by the Board for
determining maximum reserve requirement for a Depositary
Institution (as defined in Regulation D of the Board) in respect
of new non-personal time deposits in Dollars having a maturity
of 30 days or more.
"CHANGE IN LAW": with respect to any Lender, the
adoption of, or change in, any law, rule, regulation, policy,
guideline or directive (whether or
9
<PAGE> 16
not having the force of law) or any change in the interpretation
or application thereof by any Governmental Authority having
jurisdiction over such Lender, in each case after the Closing
Date.
"CHANGE OF CONTROL": shall be considered to have
occurred if (i) at any time prior to an IPO by Holdings or the
Company, Investcorp or any of its Affiliates (PROVIDED that for
purposes of this definition only the reference to 25% in the
definition of Affiliate contained in subsection 1.1 shall be
deemed to be 51%) or Subsidiaries, any Person that is a member
of the senior management of the Company or Holdings, or any
entity the majority of the equity ownership interests of which
is owned by such senior management of the Company or Holdings,
shall cease to own, directly or indirectly, in the aggregate, at
least 51% of the issued and outstanding voting stock of
Holdings, free and clear of all Liens, (ii) at any time after an
IPO by Holdings or the Company, any Person (other than
Investcorp, any of its Affiliates or Subsidiaries, any Person
that is a member of the senior management of the Company or
Holdings, any entity the majority of the equity ownership
interests of which is owned by such senior management of the
Company or Holdings, any Person acting in the capacity of an
underwriter or, in the case of the Company, Holdings), whether
singly or in concert with one or more Persons, shall, directly
or indirectly, have acquired, or acquire the power (x) to vote
or direct the voting of 30% or more, on a fully diluted basis,
of the outstanding common stock of Holdings or the Company or
(y) to elect or designate for election a majority of the Board
of Directors of Holdings or the Company by voting power,
contract or otherwise, (iii) at any time (whether before or
after an IPO by Holdings), Holdings for any reason ceases to own
100% of the outstanding Capital Stock of the Company (other than
common (or other voting) stock of the Company sold pursuant to
an IPO of the Company) or (iv) a Liquidity Event (as defined in
Exhibit B to Holdings' Amended and Restated Articles of
Incorporation, as in effect on the Closing Date and as same may
be amended, modified or supplemented from time to time) shall
occur, except if the Liquidity Event occurs solely as a result
of an IPO by the Company or Holdings, in which the equity
securities sold by the Company or Holdings, as the case may be,
represent at least 10% of the equity securities of such issuer
outstanding at the conclusion of such IPO.
"CLOSING DATE": the date (which shall be on or prior
to January 31, 1998) on which the Lenders make their initial
Loans.
"CO-AGENT": as defined in the preamble hereto.
"CO-ARRANGERS": as defined in the preamble hereto.
10
<PAGE> 17
"CODE": the Internal Revenue Code of 1986, as amended
from time to time.
"COLLATERAL": all assets of the Credit Parties, now
owned or hereafter acquired, upon which a Lien is purported to
be created by any Security Document.
"COMMERCIAL L/C": a commercial documentary Letter of
Credit under which the Issuing Lender agrees to make payments in
Dollars for the account of the Company, on behalf of the Company
or a Subsidiary, in respect of obligations of the Company or
such Subsidiary in connection with the purchase of goods or
services in the ordinary course of business.
"COMMITMENT": as to any Lender at any time, such
Lender's Swing Line Commitment, B Term Loan Commitment, C Term
Loan Commitment, Revolving Credit Commitment and Receivables
Financing Commitment; collectively, as to all the Lenders, the
"COMMITMENTS".
"COMMITMENT PERCENTAGE": as to any Lender at any
time, its B Term Loan Commitment Percentage, C Term Loan
Commitment Percentage, Revolving Credit Commitment Percentage or
its Receivables Financing Commitment Percentage, as the context
may require.
"COMMONLY CONTROLLED ENTITY": an entity, whether or
not incorporated, which is under common control with the Company
within the meaning of Section 4001 of ERISA or is part of a
group which includes the Company and which is treated as a
single employer under Section 414(b) or (c) of the Code.
"COMPANY": as defined in the preamble hereto.
"COMPANY PLEDGE AGREEMENT": the Pledge Agreement,
substantially in the form of Exhibit H-1, to be made by the
Company in favor of the Administrative Agent, for the ratable
benefit of the Lenders, as the same may be amended, modified or
supplemented from time to time.
"COMPANY SECURITY AGREEMENT": the Company Security
Agreement, substantially in the form of Exhibit F-1, to be made
by the Company in favor of the Administrative Agent, for the
ratable benefit of the Lenders, as the same may be amended,
modified or supplemented from time to time.
"CONSOLIDATED CURRENT ASSETS": at a particular date,
all amounts (other than cash and Cash Equivalents) which would,
in conformity with GAAP, be
11
<PAGE> 18
included under current assets on a consolidated balance sheet of
the Company and its Subsidiaries as at such date, excluding any
current assets of Captive Insurance Subsidiaries.
"CONSOLIDATED CURRENT LIABILITIES": at a particular
date, all amounts which would, in conformity with GAAP, be
included under current liabilities on a consolidated balance
sheet of the Company and its Subsidiaries as at such date,
excluding (x) the current portion of long-term debt and the
entire outstanding principal amount of the Loans and (y) any
current liabilities of Captive Insurance Subsidiaries.
"CONSOLIDATED EBITDA": for any period, the
Consolidated Net Income of the Company and its Subsidiaries for
such period, PLUS (or MINUS, in the case of non-cash gains
described in clause (r) (to the extent such gains are included)
and clause (s) below), without duplication and to the extent
reflected as a charge (or gain) in the statement of such
Consolidated Net Income for such period, the sum of (a) total
income tax expense (including, without duplication, dividends or
distributions for taxes paid pursuant to subsection 9.12(f)),
(b) interest expense (including, for this purpose, Receivables
Facility Interest Expense, whether or not same would constitute
interest expense in accordance with GAAP), amortization or
writeoff of debt discount, debt issuance, warrant and other
equity issuance costs and commissions, discounts, redemption
premium and other fees and charges associated with the Loans,
letters of credit permitted hereunder, Financing Leases, the
Subordinated Debt or the acquisition or repayment of any debt
securities of the Company permitted hereunder, and net costs
associated with Interest Rate Agreements to which the Company is
a party in respect of the Loans (including commitment fees and
other periodic bank charges), (c) costs of surety bonds, (d)
depreciation and amortization expense, (e) amortization of
inventory write-up under APB 16, amortization of intangibles
(including, but not limited to, goodwill and costs of interest-
rate caps and the cost of non-competition agreements) and
organization costs, (f) non-cash amortization of Financing
Leases, (g) franchise taxes, (h) the fees, expenses and other
costs incurred in connection with the Recapitalization,
including payments to management of the Company or Holdings
contemplated by the Recapitalization Agreement, in each case, to
the extent that such fee, expense or cost was disclosed in the
Offering Memorandum, together with all other management fees
paid as contemplated by subsection 12.15 and charges related to
management fees prepaid in connection with the Recapitalization,
(i) all cash dividend payments (and non-cash dividend expenses)
on any series of preferred stock, (j) any expenses incurred in
connection with any merger, any acquisition or joint venture
permitted herein, (k) any other write-downs, write-offs,
minority interests and other non-cash charges or expenses, (l)
insurance reserves LESS cash payments
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<PAGE> 19
in respect of such reserves, (m) any non-cash restructuring
charge or reserve less cash payments in respect of such
reserves, (n) expenses and charges related to any equity
offering, (o) expenses consisting of internal software
development costs that are expensed during the period but could
have been capitalized in accordance with GAAP, (p)
securitization expense, (q) nonrecurring litigation or claim
settlement charges or expenses, (r) any unrealized gains or
losses with respect to Permitted Insurance Company Investments
held in any Captive Insurance Subsidiary shall be excluded, and
(s) losses or charges (or minus any gains) from the sale of
assets outside the ordinary course of business, together with
any related provisions for taxes on such gain or loss or
charges; PROVIDED that (i) the cumulative effect of a change in
accounting principles (effected either through cumulative effect
adjustment or a retroactive application) shall be excluded, (ii)
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, (iii) the impact of foreign currency and
hedging translations and transactions shall be excluded, and
(iv) all other extraordinary gains, losses and charges shall be
excluded; PROVIDED FURTHER, that Consolidated EBITDA for any
quarterly period that begins prior to the Closing Date shall be
determined as follows: (w) Consolidated EBITDA for the fiscal
quarter ended March 31, 1997 shall be deemed to be $11,100,000,
(x) Consolidated EBITDA for the fiscal quarter ended June 30,
1997 shall be deemed to be $18,400,000, (y) Consolidated EBITDA
for the fiscal quarter ended September 30, 1997 shall be deemed
to be $15,800,000, and (z) Consolidated EBITDA for the fiscal
quarter ended December 31, 1997 shall be deemed to be the
Consolidated EBITDA for such quarter as determined above (and
without regard to this proviso), adjusted by adding thereto
$2,600,000, representing adjustments for private company
expenses, normalized MIICA investment income and reductions in
management compensation.
"CONSOLIDATED FUNDED INDEBTEDNESS": at a particular
date, the sum of (x) all Indebtedness (other than Indebtedness
described in clauses (b), (c) or (f) of the definition of
"Indebtedness" included in this subsection 1.1), of the Company
and its Subsidiaries determined on a consolidated basis in
accordance with GAAP at such date and (y) without duplication of
amounts already included pursuant to preceding clause (x), the
aggregate amount of all Receivables Facility Attributed
Indebtedness then outstanding.
"CONSOLIDATED NET INCOME": for any period, net income
of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; PROVIDED that: (i)
the net income (but not loss) 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
dividends or distributions paid in cash to the Company or a
Wholly-Owned Subsidiary, (ii) net income of
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<PAGE> 20
any Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by
that Subsidiary of that net income is prohibited or not
permitted at the date of determination and (iii) Consolidated
Net Income shall be reduced by, without duplication, dividends
or distributions paid by the Company pursuant to subsections
9.12(e) and (f).
"CONTINGENT OBLIGATION": as to any Person, any
obligation of such Person guaranteeing or in effect guaranteeing
any Indebtedness ("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 (i)
for the purchase or payment of any such primary obligation or
(ii) 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 any such
primary obligation against loss in respect thereof; PROVIDED,
that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection 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 (based on the maximum reasonably
anticipated net liability in respect thereof as determined by
the Company in good faith) of the primary obligation or portion
thereof in respect of which such Contingent Obligation is made
or, if not stated or determinable, the maximum reasonably
anticipated net liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by the
Company in good faith.
"CONTRACTUAL OBLIGATION": as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or undertaking to which such Person is a
party or by which it or any of the property owned by it is
bound.
"CREDIT DOCUMENTS": the collective reference to this
Agreement, the Notes, the Pledge Agreements, the Security
Agreements, the Mortgages and the Guarantees.
"CREDIT PARTIES": the collective reference to
Holdings, the Company and each Subsidiary which may from time to
time be party to a Credit Document.
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<PAGE> 21
"DEFAULT": any of the events specified in Section 10,
whether or not any requirement for the giving of notice, the
lapse of time, or both, has been satisfied.
"DOCUMENTATION AGENT": as defined in the preamble
hereto.
"DOLLARS" and "$": dollars in lawful currency of the
United States.
"DOMESTIC SUBSIDIARY": any Subsidiary other than a
Foreign Subsidiary.
"ELIGIBLE RECEIVABLES": shall mean the total face
amount of the receivables of the Company and the Wholly-Owned
Subsidiary Guarantors which conform to the representations and
warranties with respect to receivables contained in the Security
Agreements (including, without limitation, that the
Administrative Agent shall have and maintain a first priority
perfected security interest in all such receivables), less any
returns, discounts, claims, credits and allowances of any nature
(whether issued, owing, granted or outstanding) and less
reserves taken by the Company or its respective Subsidiary with
respect to the receivables and excluding, without duplication,
(i) bill and hold (deferred shipment) transactions and progress
billings, (ii) contracts or sales to any Affiliate, (iii) all
receivables which have not been paid in full within 120 days
after the invoice date thereof or which have been disputed by
the account debtor, (iv) receivables of account debtors residing
or located outside the United States, (v) receivables of any
account debtor with respect to which any action or event of the
types described in subsection 10(f) has occurred, (vi)
receivables of any account debtor of which 15% or more of the
aggregate outstanding receivables of such account debtor owed to
the Company and Wholly-Owned Subsidiary Guarantors would be
excluded pursuant to clause (iii) hereof, (vii) to the extent
that the receivables of any account debtor exceed 10% (or, in
the case of a Qualified Account Debtor, 25%) of the total
outstanding receivables of all account debtors owed to the
Company and Wholly-Owned Subsidiary Guarantors, all receivables
of such account debtor in excess of such 10% (or 25%), (viii)
receivables with respect to which the Administrative Agent does
not have a valid, first priority and perfected security interest
and (ix) any receivable subject to a Lien (other than (x) Liens
granted to the Collateral Agent as contemplated hereunder and
(y) so long as the Collateral Agent maintains a first priority
perfected security interest in such receivables, junior liens
that are Permitted Liens as described in clauses (a) and (b) of
subsection 9.2).
"ENVIRONMENTAL LAWS": any and all foreign, Federal,
state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees
15
<PAGE> 22
or requirements of any Governmental Authority or requirements of
law (including, without limitation, common law) regulating or
imposing liability or standards of conduct concerning
environmental or public health protection matters, including,
without limitation, Hazardous Materials, as now or may at any
time hereafter be in effect.
"ENVIRONMENTAL PERMITS": any and all permits,
licenses, registrations, notifications, exemptions and any other
authorizations required under any Environmental Law.
"EQUITY CONTRIBUTION": as defined in the Recitals
hereto.
"ERISA": the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as
applied to a Eurodollar Loan, the aggregate (without
duplication) of the rates (expressed as a decimal fraction) of
reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves
under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in
Regulation D of such Board) maintained by a member bank of such
System.
"EURODOLLAR BASE RATE": with respect to each day
during each Interest Period pertaining to a Eurodollar Loan, the
rate per annum determined by the Administrative Agent to be the
arithmetic mean (rounded to the nearest 1/100th of 1%) of the
offered rates for deposits in Dollars with a term comparable to
such Interest Period that appears on the Telerate British
Bankers Association Interest Settlement Rates Page (as defined
below) at approximately 11:00 A.M., London time, on the second
full Business Day preceding the first day of such Interest
Period; PROVIDED that if there shall at any time no longer exist
a Telerate British Bankers Association Interest Settlement Rates
Page, "Eurodollar Base Rate" shall mean, with respect to each
day during each Interest Period pertaining to a Eurodollar Loan,
the rate per annum equal to the rate at which BTCo is offered
Dollar deposits at or about 10:00 A.M., New York City time, two
Business Days prior to the beginning of such Interest Period in
the interbank eurodollar market where the euro-dollar and
foreign currency and exchange operations in respect of its
Eurodollar Loans are then being conducted for delivery on the
first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of
its Eurodollar Loan to be outstanding during such Interest
Period. "TELERATE BRITISH BANKERS ASSOC. INTEREST SETTLEMENT
RATES PAGE" shall mean the display
16
<PAGE> 23
designated as Page 3750 on the Telerate System Incorporated
Service (or such other page as may replace such page on such
service for the purpose of displaying the rates at which Dollar
deposits are offered by leading banks in the London interbank
deposit market).
"EURODOLLAR LENDING OFFICE": as to any Lender the
office of such Lender which shall be making or maintaining
Eurodollar Loans.
"EURODOLLAR LOANS": Loans at such time as they are
made and/or being maintained at a rate of interest based upon a
Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during
each Interest Period pertaining to a Eurodollar Loan, a rate per
annum determined for such day in accordance with the following
formula (rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
____________________________________
1.00 - Eurocurrency Reserve Requirements
"EVENT OF DEFAULT": any of the events specified in
Section 10, PROVIDED that any requirement for the giving of
notice, the lapse of time, or both, has been satisfied.
"EXCESS CASH FLOW": for each Excess Cash Flow Period
of the Company the excess of (a) the sum of (i) Consolidated
EBITDA for such Excess Cash Flow Period plus (ii) the decrease,
if any, in Adjusted Working Capital from the first day of the
respective Excess Cash Flow Period to the last day of the
respective Excess Cash Flow Period, over (b) the sum, without
duplication, of (i) the aggregate amount actually paid by the
Company and its Subsidiaries in cash during such Excess Cash
Flow Period on account of capital expenditures or acquisitions
(other than capital expenditures made with the proceeds of
eminent domain or condemnation proceedings to the extent such
proceeds are not included in the determination of Consolidated
EBITDA for such Excess Cash Flow Period), (ii) the aggregate
amount of payments of principal in respect of any Indebtedness
during such Excess Cash Flow Period (other than any such
payments of principal (1) pursuant to subsections 5.4(c) and
(g), (2) in respect of any revolving credit or similar facility
to the extent that there is not an equivalent reduction in such
facility or (3) otherwise made with proceeds of asset sales or
refinancing Indebtedness), (iii) the increase, if any, in
Adjusted Working Capital from the first day of such Excess Cash
Flow Period to the last day of such Excess Cash Flow Period,
(iv) cash interest
17
<PAGE> 24
expense (including fees paid in connection with letters of
credit and surety bonds and commitment fees and other periodic
bank charges and including Receivables Facility Interest
Expense, whether or not same would constitute interest expense
in accordance with GAAP) of the Company and its consolidated
Subsidiaries (determined on a consolidated basis) for such
period, (v) the amount of taxes actually paid in cash by the
Company and its Subsidiaries for such Excess Cash Flow Period
(including, without limitation, any dividend or distribution
pursuant to subsection 9.12(f)) either during such Excess Cash
Flow Period or within a normal payment period thereof (PROVIDED
that any amount deducted pursuant to this clause (v) which was
not actually paid during the respective Excess Cash Flow Period
shall not again be deducted in determining Excess Cash Flow for
any other Excess Cash Flow Period of the Company), (vi) to the
extent added to Consolidated Net Income of the Company and its
Subsidiaries in calculating Consolidated EBITDA for such Excess
Cash Flow Period, the net cost of Interest Rate Agreements,
franchise taxes and management fees, (vii) without duplication
of amounts already deducted in determining Excess Cash Flow, the
amount of cash actually paid by the Company in connection with
clauses (b), (g), (h), (i), (j), (m), (n), (o), (p), (q) and
clauses (iii) and (iv) of the proviso in the definition of
Consolidated EBITDA during such Excess Cash Flow Period and
(viii) the amount of any cash actually paid in connection with
reserves other than insurance reserves established in accordance
with GAAP or, in the case of insurance reserves, the amount of
such reserves taken for that period minus the amount of cash
paid during such period, in respect of such reserves and (ix)
MIICA investment income for such period; PROVIDED, that to the
extent that Excess Cash Flow for any Excess Cash Flow Period (as
reduced by this proviso for negative Excess Cash Flow from the
prior Excess Cash Flow Period) is less than zero, the amount by
which Excess Cash Flow is less than zero shall reduce Excess
Cash Flow for the immediately succeeding fiscal year.
"EXCESS CASH FLOW PERIOD": means (i) the period
(taken as one accounting period) from the Closing Date and
ending on December 31, 1998 and (ii) each fiscal year of the
Company ended thereafter.
"EXISTING CREDIT AGREEMENTS": each of (i) the Amended
and Restated Senior Revolving Credit and Term Loan Agreement,
dated as of July 31, 1995, as amended, by and between National
City Bank, the lenders set forth therein, Werner Co., and
Olympus Properties, Inc. and (ii) the Amended and Restated Note
Purchase Agreement, dated as of October 1, 1991, as amended, by
and between Prudential Insurance Company of America, PRUCO Life
Insurance Company, Werner Co. (formerly, R.D. Werner Co., Inc.)
and Olympus Properties, Inc.
18
<PAGE> 25
"EXISTING SHAREHOLDERS": as defined in the Recitals
hereto.
"FACING FEE": As defined in subsection 3.9(b).
"FEE PROPERTY": as defined in subsection 6.13.
"FINANCING LEASE": (a) any lease of property, real or
personal, the obligations under which are capitalized on a
consolidated balance sheet of the Company and its consolidated
Subsidiaries and (b) any other such lease to the extent that the
then present value of any rental commitment thereunder should,
in accordance with GAAP, be capitalized on a balance sheet of
the lessee.
"FOREIGN SUBSIDIARY": any Subsidiary which is not
organized under the laws of the United States or any state
thereof or the District of Columbia.
"GAAP": generally accepted accounting principles in
the United States in effect from time to time.
"GOVERNMENTAL AUTHORITY": any nation or government,
any state or other political subdivision thereof or any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"GUARANTEES": the collective reference to the
Holdings Guarantee, the Subsidiary Guarantee and any guarantee
which may from time to time be executed and delivered by a
Subsidiary pursuant to subsection 8.9.
"GUARANTOR": Holdings and each Subsidiary Guarantor.
"HAZARDOUS MATERIALS": any hazardous materials,
hazardous wastes, hazardous pesticides or hazardous or toxic
substances, and any other material that may give rise to
liability under any Environmental Law, including, without
limitation, asbestos, petroleum, any other petroleum products
(including gasoline, crude oil or any fraction thereof),
polychlorinated biphenyls and urea-formaldehyde insulation.
"HIGHEST LAWFUL RATE": as defined in subsection
12.13.
"HOLDINGS": as defined in the Recitals hereto.
"HOLDINGS GUARANTEE": the Holdings Guarantee,
substantially in the form of Exhibit G-1, to be made by Holdings
in favor of the Administrative
19
<PAGE> 26
Agent for the ratable benefit of the Lenders, as same may be
amended, modified or supplemented from time to time.
"HOLDINGS/SUBSIDIARY PLEDGE AGREEMENT": the
Holdings/Subsidiary Pledge Agreement, substantially in the form
of Exhibit H-2, to be made by Holdings and each Subsidiary
Guarantor in favor of the Administrative Agent for the ratable
benefit of the Lenders, as the same may be amended, modified or
supplemented from time to time.
"IIEL": as defined in the Recitals hereto.
"IMMATERIAL SUBSIDIARY": shall mean any Subsidiary of
the Company that owns (and continues to own) no assets (other
than nominal assets) and does not (and continues not to) engage
in any substantive operations.
"INDEBTEDNESS": of a Person, at a particular date,
(a) all indebtedness of such Person for borrowed money or for
the deferred purchase price of property or services, (b) the
undrawn face amount of all letters of credit issued for the
account of such Person and, without duplication, all drafts and
demands drawn thereunder and unpaid reimbursement obligations
with respect thereto, (c) all liabilities (other than Lease
Obligations and liabilities in connection with reserves
established in accordance with GAAP) secured by any Lien on any
property owned by such Person, even though such Person has not
assumed or become liable for the payment thereof, (d) Financing
Leases, (e) indebtedness incurred in connection with any
Receivables Facility and (f) all indebtedness of such Person
arising under acceptance facilities, but excluding (i) trade and
other accounts payable and accrued expenses payable in the
ordinary course of business which are not overdue for a period
of more than 90 days or, if overdue for more than 90 days, as to
which a dispute exists and adequate reserves in conformity with
GAAP have been established on the books of such Person and (ii)
letters of credit supporting the purchase of goods in the
ordinary course of business and expiring no more than six months
from the date of issuance; PROVIDED that obligations in respect
of Interest Rate Agreements shall not be included in this
definition.
"INDUSTRIAL REVENUE BONDS": the industrial revenue
bonds, due 2015, in the initial aggregate principal amount of
$5,000,000, issued pursuant to the Trust Indenture, dated as of
September 1, 1990, between the County of Carroll, Kentucky and
Dai-Ichi Kangyo Trust Company of New York, as trustee.
"INSOLVENCY": with respect to any Multiemployer Plan,
the condition that such Plan is insolvent within the meaning of
Section 4245 of ERISA.
20
<PAGE> 27
"INSOLVENT": pertaining to a condition of Insolvency.
"INSTALLMENT PAYMENT DATE": means any B Installment
Payment Date or C Installment Payment Date.
"INTEREST COVERAGE RATIO": on the last day of any
fiscal quarter of the Company, the ratio of (a) Consolidated
EBITDA for the period of four fiscal quarters ending on such
day; to (b) cash interest expense (excluding (i) fees and
expenses payable on account of letters of credit, (ii) to the
extent included in interest expense in accordance with GAAP, net
costs associated with Interest Rate Agreements to which the
Company is party in respect of the Loans and other periodic bank
charges and amortization of debt discount (including discount of
liabilities and reserves established under APB 16) and (iii)
costs of debt issuance and interest expense on customer
deposits) for such period net of cash interest income, in each
case, for or during such period on a consolidated basis for the
Company and its Subsidiaries (for purposes of this definition,
"CASH INTEREST EXPENSE"); PROVIDED that for purposes of
preceding clause (b), (A) the cash interest component (and only
the cash interest component) of Receivables Facility Interest
Expense for such period shall be included as a component of Cash
Interest Expense (and shall be added thereto, to the extent not
already reflected therein), regardless of the treatment of
amounts constituting Receivables Facility Interest Expense under
GAAP; and (B) to the extent Cash Interest Expense is being
determined for any period that begins prior to the Closing Date,
the following rules shall apply: (y) Cash Interest Expense for
all fiscal quarters ended prior to the Closing Date shall be
deemed to be $7,500,000 and (z) Cash Interest Expense for the
fiscal quarter ended December 31, 1997 shall be deemed to be the
sum of (1) Cash Interest Expense for the period from (but
excluding) the Closing Date to and including the last day of
such fiscal quarter as determined above (and without regard to
this proviso) and (2) an amount equal to $4,402,174.
"INTEREST PAYMENT DATE": (a) as to Alternate Base
Rate Loans, the last day of each March, June, September and
December, commencing on the first such day to occur after any
Alternate Base Rate Loans are made or any Eurodollar Loans are
converted to Alternate Base Rate Loans, (b) as to any Eurodollar
Loan in respect of which the Company has selected an Interest
Period of one, two or three months, the last day of such
Interest Period and (c) as to any Eurodollar Loan in respect of
which the Company has selected a longer Interest Period than the
periods described in clause (b), the last day of each three
calendar month interval during such Interest Period and, in
addition, the last day of such Interest Period.
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<PAGE> 28
"INTEREST PERIOD": with respect to any Eurodollar
Loan:
(a) initially, the period commencing on,
as the case may be, the Borrowing Date or conversion
date with respect to such Eurodollar Loan and ending
one, two, three or six months thereafter (or, if and
when available to all the relevant Lenders, nine or
twelve months thereafter) as selected by the Company
in its notice of borrowing as provided in subsection
5.1 or its notice of conversion as provided in
subsection 5.2; and
(b) thereafter, each period commencing on
the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one,
two, three or six months thereafter (or, if and when
available to all the relevant Lenders, nine or twelve
months thereafter) as selected by the Company by
irrevocable notice to the Administrative Agent not
less than three Business Days prior to the last day
of the then current Interest Period with respect to
such Eurodollar Loan;
PROVIDED that the foregoing provisions relating to
Interest Periods are subject to the following:
(A) if any Interest Period would otherwise
end on a day which is not a Business Day, that
Interest Period shall be extended to the next
succeeding Business Day, unless the result of such
extension would be to carry such Interest Period into
another calendar month, in which event such Interest
Period shall end on the immediately preceding
Business Day;
(B) any Interest Period that would
otherwise extend beyond (i) in the case of an
Interest Period for a B Term Loan or C Term Loan, the
final B Installment Payment Date or C Installment
Payment Date, respectively, shall end on such B
Installment Payment Date or C Installment Payment
Date, as the case may be, or, if such B Installment
Payment Date or C Installment Payment Date, as the
case may be, shall not be a Business Day, on the next
preceding Business Day; (ii) in the case of any
Interest Period for a Revolving Credit Loan, the
Revolving Credit Termination Date shall end on the
Revolving Credit Termination Date, or if the
Revolving Credit Termination Date shall not be a
Business Day, on the next preceding Business Day; and
(iii) in the case of any Interest Period for a
Receivables Financing Loan, the Receivables Financing
Termination Date shall end on the Receivables
Financing Termination Date, or if the Receivables
Financing Termination Date shall not be a Business
Day, on the next preceding
22
<PAGE> 29
Business Day;
(C) if the Company shall fail to give
notice as provided above in clause (b), it shall be
deemed to have selected a conversion of a Eurodollar
Loan into an Alternate Base Rate Loan (which
conversion shall occur automatically and without need
for compliance with the conditions for conversion set
forth in subsection 5.2);
(D) any Interest Period that begins on the
last day of a calendar month (or on a day for which
there is no numerically corresponding day in the
calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar
month; and
(E) the Company shall select Interest
Periods so as not to require a prepayment (to the
extent practicable) or a scheduled payment of a
Eurodollar Loan during an Interest Period for such
Eurodollar Loan.
"INTEREST RATE AGREEMENT": any interest rate swap
agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement or arrangement.
"INVESTCORP": Investcorp S.A., a Luxembourg
corporation.
"INVESTMENT GRADE SECURITIES": (i) securities issued
or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (other than
Cash Equivalents), (ii) debt securities or debt instruments with
a rating of BBB- or higher by S&P or Baa3 by Moody's or the
equivalent of such rating by such rating organization, or if no
rating of S&P's or Moody's then exists, the equivalent of such
rating by any other nationally recognized securities rating
agency, but excluding any debt securities or instruments
constituting loans or advances among the Company and its
Subsidiaries and (iii) investments in any fund that invests
exclusively in investments of the type described in clauses (i)
and (ii) which fund may also hold immaterial amounts of cash
pending investment and/or distribution.
"INVESTORS": as defined in the Recitals hereto.
"IPO": any sale by the Company or Holdings through a
public offering of its common (or other voting) stock pursuant
to an effective registration statement (other than a
registration statement on Form S-4, S-8 or any successor or
similar form) filed under the Securities Act of 1933, as
amended.
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<PAGE> 30
"ISSUING LENDERS": BTCo and any of its Affiliates, as
issuer of the Letters of Credit; with respect to any Letter of
Credit, the term "Issuing Lender" shall mean the Issuing Lender
with respect to such Letter of Credit.
"L/C OBLIGATIONS": the obligations of the Company to
reimburse the Issuing Lender for any payments made by the
Issuing Lender under any Letter of Credit that have not been
reimbursed by the Company pursuant to subsection 3.8(a).
"L/C PARTICIPATING INTEREST": an undivided
participating interest in the face amount of each issued and
outstanding Letter of Credit.
"LEASE OBLIGATIONS": of the Company and its
Subsidiaries, as of the date of any determination thereof, the
rental commitments of the Company and its Subsidiaries
determined on a consolidated basis, if any, under leases for
real and/or personal property (net of rental commitments from
sub-leases thereof), excluding however, obligations under
Financing Leases.
"LEASED PROPERTIES": as defined in subsection 6.13.
"LENDERS": as defined in the preamble hereto.
"LETTER OF CREDIT REQUEST": as defined in subsection
3.5(a).
"LETTERS OF CREDIT": the collective reference to the
Commercial L/Cs and the Standby L/Cs; individually, a "LETTER OF
CREDIT".
"LEVERAGE RATIO": as defined in subsection 9.9;
PROVIDED that for purposes of calculating the Leverage Ratio on
any date, the cash and Cash Equivalent balances without
encumbrances (other than Liens permitted pursuant to subsection
9.2(f)) of the Company and the Wholly-Owned Subsidiary
Guarantors on such date shall be deducted from the amount of
Consolidated Funded Indebtedness on such date.
"LIEN": any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other
title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing,
and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction in respect
of any of the foregoing, except for the filing of financing
statements in connection with Lease Obligations incurred by the
Company or its Subsidiaries
24
<PAGE> 31
to the extent that such financing statements relate to the
property subject to such Lease Obligations).
"LOANS": the collective reference to the B Term Loans,
the C Term Loans, the Revolving Credit Loans, the Receivables
Financing Loans and the Swing Line Loans; individually, a "LOAN".
"MIICA" means Manufacturers Indemnity and Insurance
Company of America, a Colorado corporation, or any successor
thereto.
"MOODY'S": Moody's Investors Service, Inc.
"MORTGAGED PROPERTIES": (a) the Real Property
designated as "Mortgaged Property" on Schedule 6.13 and (b) any
fee Real Property covered by a Mortgage delivered pursuant to
subsection 8.9(f).
"MORTGAGES": as defined in subsection 8.9(e).
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"NET PROCEEDS": for any Person, the aggregate cash
proceeds received by such Person or its Subsidiaries in respect
of:
(a)(i) any issuance or borrowing of any debt
securities or loans by such Person or its Subsidiaries
other than debt or loans permitted to be incurred or
borrowed pursuant to (x) in the case of the Company and
its Subsidiaries, subsection 9.1 and (y) in the case of
Holdings, subsection 10(b) of the Holdings Guarantee,
or (ii) any issuance of Capital Stock of such Person
(excluding any such issuance to any Investor or any
Affiliate thereof);
(b) any Asset Sale;
(c) any cash received in respect of
substantially like-kind exchanges of property to the
extent provided in the proviso to subsection 9.5(e);
and
(d) any cash payments received in respect of
promissory notes delivered to Holdings or such
Subsidiary in respect of an Asset Sale;
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in each case net of (without duplication) (A) the amount required
to repay any Indebtedness (other than the Loans) secured by a Lien
on any assets of Holdings or a Subsidiary that are collateral for
any such debt securities or loans that are sold or otherwise
disposed of in connection with such Asset Sale, (B) the reasonable
expenses (including legal fees and brokers' and underwriters'
commissions, lenders fees or credit enhancement fees, in any case,
paid to third parties or, to the extent permitted hereby,
Affiliates) incurred in effecting such issuance or sale and (C)
any taxes reasonably attributable to such sale and reasonably
estimated by Holdings or such Subsidiary to be actually payable.
"NON-FUNDING LENDER": as defined in subsection 5.9(c).
"NOTES": the collective reference to the B Term Loan
Notes, the C Term Loan Notes, the Revolving Credit Notes, the
Receivables Financing Notes and the Swing Line Note; each of the
Notes, a "NOTE".
"OFFERING MEMORANDUM": the offering memorandum dated
November 14, 1997 with respect to the Senior Subordinated Notes.
"PARTICIPANTS": as defined in subsection 12.6(b).
"PARTICIPATING LENDER": any Lender with respect to its
L/C Participating Interest in each Letter of Credit.
"PAYMENT SHARING NOTICE": a written notice from the
Company or any Lender informing the Administrative Agent that an
Event of Default has occurred and is continuing and directing the
Administrative Agent to allocate payments thereafter received from
or on behalf of the Company in accordance with the provisions of
subsection 5.9.
"PBGC": the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any
successor.
"PERMANENT SUBORDINATED DEBT": (i) unsecured notes or
debentures of the Company, subordinated to the prior payment of
the Loans and the other obligations under the Credit Documents and
related Interest Rate Agreements, that may be issued by the
Company on the Closing Date, PROVIDED that (a) such notes or
debentures have terms which are as favorable to the Lenders as the
terms set forth in the Offering Memorandum, (b) no part of the
principal amount of any such notes or debentures shall have a
scheduled maturity date earlier than November 30, 2006, (c) unless
otherwise agreed to by the Required Lenders, (I) the subordination
provisions of which are as favorable to
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the Lenders as such provisions set forth in the Offering
Memorandum, (II) the terms and conditions thereof (including,
without limitation, subordination, covenant and events of default
provisions thereof but excluding any call protection provisions)
taken as a whole shall be at least as favorable to the Company and
the Lenders as such terms and conditions set forth in the Offering
Memorandum, and (III) the non-default cash interest rate thereon
shall not exceed 15% per annum and the total non-default interest
rate shall not exceed 16% per annum and (d) substantially final
drafts of the documentation governing any such notes or
debentures, showing the terms thereof, shall have been furnished
to the Co-Arrangers at least 5 days prior to the date of issuance
of such notes or debentures and (ii) unsecured notes or debentures
of the Company, subordinated to the prior payment of the Loans and
the other obligations under the Credit Documents and related
Interest Rate Agreements, that may be issued by the Company to
refinance previously issued Bridge Subordinated Debt or Permanent
Subordinated Debt, PROVIDED that (a) unless otherwise agreed to by
the Required Lenders, (I) no part of the principal amount of any
such notes or debentures shall have a scheduled amortization date
earlier then November 30, 2006 and (II) the interest rate and
subordination provisions shall be at least as favorable to the
Company and the Lenders as such provisions of refinanced Permanent
Subordinated Debt and the other terms and conditions thereof
(including, without limitation, the covenant and event of default
provisions thereof but excluding any call protection provisions)
taken as a whole shall be at least as favorable to the Company and
the Lenders as such refinanced Bridge Subordinated Debt or
Permanent Subordinated Debt, as the case may be, and (b) the
conditions contained in clause (i) (d) of this definition shall be
met.
"PERMITTED INSURANCE COMPANY INVESTMENTS" means
investments in (a) Cash Equivalents; (b) Investment Grade
Securities; (c) investments of MIICA existing on the Closing Date;
and (d) other types of debt and equity securities, real estate or
other investments; PROVIDED, HOWEVER, that (i) the aggregate
amount of all Permitted Insurance Company Investments referred to
in clause (d) shall not, at the time any such investment is made,
exceed 40% of all outstanding Permitted Insurance Company
Investments made after the Closing Date, and (ii) each Captive
Insurance Subsidiary shall at all times have an investment policy
approved from time to time by the Board of Directors of Holdings,
the Company or such Captive Insurance Subsidiary pursuant to which
all Permitted Insurance Company Investments shall be required to
be made.
"PERMITTED LIENS": Liens permitted to exist under
subsection 9.2.
"PERSON": an individual, partnership, corporation,
business trust, joint
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stock company, limited liability company, trust, unincorporated
association, joint venture, Governmental Authority or other entity
of whatever nature.
"PLAN": at a particular time, any employee benefit plan
which is covered by ERISA and in respect of which the Company or a
Commonly Controlled Entity is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"PLEDGE AGREEMENTS": the collective reference to the
Company Pledge Agreement, the Holdings/Subsidiary Pledge Agreement
and any pledge agreement from time to time executed and delivered
by the Company or any Subsidiary providing for the pledge of the
Capital Stock of any Subsidiary pursuant to subsection 8.9.
"PRO FORMA BALANCE SHEET": as defined in subsection
6.1(c).
"QUALIFIED ACCOUNT DEBTOR": the account debtors set
forth on Schedule III hereto and any other qualified account
debtor reasonably acceptable to the Co-Arrangers.
"QUALIFIED CAPITAL STOCK": of any Person shall mean any
capital stock of such Person which is not Disqualified Stock.
"REAL PROPERTY": each Fee Property and Leased Property
listed on Schedule 6.13, as well as any other real property or
leasehold interest owned, acquired or obtained by the Company
and/or its Subsidiaries after the Closing Date.
"RECAPITALIZATION": as defined in the Recitals hereto.
"RECAPITALIZATION AGREEMENT": as defined in the
Recitals hereto.
"RECEIVABLES FACILITY": one or more non-recourse
receivables facilities providing for the sale, encumbrance or
other disposition, at any time or from time to time, of all or a
portion of the accounts receivable of the Company or any of its
Subsidiaries, whether existing on the date of this Agreement or
hereafter arising, PROVIDED that (i) the terms and conditions of
each Receivables Facility shall be satisfactory to the
Co-Arrangers and (ii) in the case of the initial Receivables
Facility, (x) the amount of such initial Receivables Facility
shall in no event be less than the amount necessary to pay all
outstanding principal, accrued and unpaid interest, and penalties
and fees, if any, relating to the Receivables Financing Loans and
(y) on the date that such
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initial Receivables Facility is effected, the Receivables
Financing Commitments shall terminate pursuant to subsection
5.3(b) and all Receivables Financing Loans shall become due and
payable in full pursuant to subsection 5.4(g).
"RECEIVABLES FACILITY ASSETS": accounts receivable and
related ancillary rights, including, without limitation, any
security interests or guarantees securing the payment of such
receivables, of the Company or any of its Subsidiaries, whether
existing on the date hereof or hereafter arising, that are sold,
encumbered or disposed of at any time or from time to time in
connection with a Receivables Facility.
"RECEIVABLES FACILITY ATTRIBUTED INDEBTEDNESS": at any
time, the aggregate amount theretofore paid to the Company and/or
its Subsidiaries in respect of Receivables Facility Assets sold by
them pursuant to one or more Receivables Facilities, in each case
to the extent the respective Receivables Facility Assets have not
yet been repaid by the respective account debtor or repurchased by
the Company and/or its Subsidiaries (excluding any Receivables
SPV) (it being the intent of the parties that the amount of
Receivables Facility Attributed Indebtedness at any time
outstanding approximate as closely as possible the principal
amount of Indebtedness which would be outstanding at such time
under the Receivables Facilities if same were structured as a
secured lending agreement rather than a purchase agreement).
"RECEIVABLES FACILITY INTEREST EXPENSE": for any
period, shall mean all fees, service charges and other costs, as
well as all collections or other amounts retained by the
Receivables Financiers which are in excess of amounts paid to the
Company and its Subsidiaries for the purchase of receivables
pursuant to the Receivables Facilities.
"RECEIVABLES FINANCIERS": any purchaser or other entity
(excluding Holdings and its Subsidiaries) providing financing
pursuant to one or more Receivables Facilities.
"RECEIVABLES FINANCING COMMITMENT": as to any Lender,
its obligations to make Receivables Financing Loans to the Company
pursuant to subsection 4.1, in an aggregate amount not to exceed
the amount set forth under such Lender's name in Schedule I
opposite the caption "Receivables Financing Commitment" or in
Schedule 1 to the Assignment and Acceptance by which such Lender
acquired its Receivables Financing Commitment, as the same may be
reduced from time to time pursuant to subsections 5.3, 5.4(b) or
5.4(c) or adjusted pursuant to subsection 12.6(c); collectively,
as to all the Lenders, the "RECEIVABLES FINANCING COMMITMENTS".
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"RECEIVABLES FINANCING COMMITMENT PERCENTAGE": as to
any Lender at any time, the percentage of the aggregate
Receivables Financing Commitments then constituted by such
Lender's Receivables Financing Commitment.
"RECEIVABLES FINANCING COMMITMENT PERIOD": the period
from and including the Closing Date to but not including the
Receivables Financing Termination Date.
"RECEIVABLES FINANCING LENDER": any Lender with a
Receivables Financing Commitment.
"RECEIVABLES FINANCING LOAN" and "RECEIVABLES FINANCING
LOANS": as defined in subsection 4.1(a).
"RECEIVABLES FINANCING NOTE": As defined in subsection
5.13(e).
"RECEIVABLES FINANCING TERMINATION DATE": The earlier
of (a) November 30, 2003 and (b) such other earlier date as the
Receivables Financings Commitments shall terminate hereunder.
"RECEIVABLES SPV": a special purpose company
established by the Company or any of its Subsidiaries and so
existing solely for purposes of a Receivables Facility.
"RECOVERY EVENT": shall mean the receipt by Holdings or
any of its Subsidiaries of any cash insurance proceeds or
condemnation award payable (i) by reason of theft, loss, physical
destruction or damage or any other similar event with respect to
any property or assets of Holdings or any of its Subsidiaries and
(ii) under any policy of insurance required to be maintained under
subsection 8.5(b).
"REFUNDED SWING LINE LOANS": as defined in subsection
3.4(b).
"REGISTER": as defined in subsection 12.6(d).
"RELATED DOCUMENT": any agreement, certificate,
document or instrument relating to a Letter of Credit.
"REORGANIZATION": with respect to any Multiemployer
Plan, the condition that such Plan is in reorganization as such
term is used in Section 4241 of ERISA.
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"REPORTABLE EVENT": any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
thirty day notice is waived under subpart B of PBGC Reg.
Section 4042.
"REQUIRED LENDERS": at a particular time, the holders
of at least 51% of the sum of (i) the aggregate unpaid principal
amount of the Term Loans, if any, (ii) the Revolving Credit
Commitments or, if the Revolving Credit Commitments are
terminated, the aggregate unpaid principal amount of the Revolving
Credit Loans, and participations in Swing Line Loans and the
aggregate amount available to be drawn at such time under all
outstanding Letters of Credit and L/C Obligations and (iii) the
Receivables Financing Commitments or, if the Receivables Financing
Commitments are terminated, the aggregate unpaid principal amount
of the Receivables Financing Loans. The Term Loans, the Revolving
Credit Commitments and the Receivables Financing Commitments of
any Non-Funding Lender shall be disregarded in determining
Required Lenders at any time.
"REQUIREMENT OF LAW": as to any Person, the Articles or
Certificate of Incorporation and By-Laws or other organizational
or governing documents of such Person, and any law, treaty, rule
or regulation, order, or determination of an arbitrator or a court
or other Governmental Authority, in each case, applicable to or
binding upon such Person or any of its property or to which such
Person or any of its property is subject.
"RESPONSIBLE OFFICER": with respect to any Person, the
president, chief executive officer, the chief operating officer,
the chief financial officer, treasurer, controller or any vice
president of such Person.
"REVOLVING CREDIT COMMITMENT": as to any Lender, its
obligations to make Revolving Credit Loans to the Company pursuant
to subsection 3.1 and to purchase its L/C Participating Interest
in any Letter of Credit, in an aggregate amount not to exceed the
amount set forth under such Lender's name in Schedule I opposite
the caption "Revolving Credit Commitment" or in Schedule 1 to the
Assignment and Acceptance by which such Lender acquired its
Revolving Credit Commitment, as the same may be reduced from time
to time pursuant to subsection 5.3 or 5.4(c) or adjusted pursuant
to subsection 12.6(c); collectively, as to all the Lenders, the
"REVOLVING CREDIT COMMITMENTS".
"REVOLVING CREDIT COMMITMENT PERCENTAGE": as to any
Lender at any time, the percentage of the aggregate Revolving
Credit Commitments then constituted by such Lender's Revolving
Credit Commitment.
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"REVOLVING CREDIT COMMITMENT PERIOD": the period from
and including the Closing Date to but not including the Revolving
Credit Termination Date.
"REVOLVING CREDIT LENDER": any Lender with a Revolving
Credit Commitment.
"REVOLVING CREDIT LOAN" and "REVOLVING CREDIT LOANS":
as defined in subsection 3.1(a).
"REVOLVING CREDIT NOTE": as defined in subsection
5.13(e).
"REVOLVING CREDIT TERMINATION DATE": the earlier of (a)
November 30, 2003 and (b) such other earlier date as the Revolving
Credit Commitments shall terminate hereunder.
"SECURITY AGREEMENTS": the collective reference to the
Company Security Agreement, the Subsidiary Security Agreement and
any security agreement which may from time to time be executed and
delivered by a Subsidiary of the Company pursuant to subsection
8.9.
"SECURITY DOCUMENTS": the collective reference to the
Pledge Agreements, the Security Agreements and the Mortgages.
"SENIOR SUBORDINATED NOTES": the senior subordinated
notes (or any refinancing thereof permitted hereunder) which shall
be: (a) issued under the Indenture, dated as of even date herewith
between the Company and IBJ Schroder Bank & Trust Company, as
Trustee; and (b) shall have material terms and conditions as
described in the Offering Memorandum.
"SINGLE EMPLOYER PLAN": any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"S&P": Standard and Poor's Ratings Services, a division
of McGraw-Hill Companies, Inc.
"STANDARD SECURITIZATION UNDERTAKINGS" means
representations, warranties, covenants and indemnities entered
into by the Company and its Subsidiaries in connection with a
Receivables Facility in each case which are reasonably customary
in an off-balance sheet accounts receivable transaction (and which
do not amount to guarantees of repayment of amounts from time to
time outstanding pursuant to the respective Receivables Facility).
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"STANDBY L/C": an irrevocable letter of credit under
which the Issuing Lender agrees to make payments in Dollars for
the account of the Company, on behalf of the Company or any
Subsidiary in respect of obligations of the Company or such
Subsidiary incurred pursuant to contracts made or performances
undertaken or to be undertaken or like matters relating to
contracts to which the Company or such Subsidiary is or proposes
to become a party in the ordinary course of the Company's or such
Subsidiary's business, including, without limiting the foregoing,
for insurance purposes or in respect of advance payments or as bid
or performance bonds or for any other purpose for which a standby
letter of credit might customarily be issued.
"SUBORDINATED DEBT": collectively, the Bridge
Subordinated Debt and the Permanent Subordinated Debt.
"SUBSECTION 5.11(D)(2) CERTIFICATE": as defined in
subsection 5.11(d).
"SUBSIDIARY": as to any Person, a corporation,
partnership, limited liability company or other entity of which
shares of stock of each class or other interests having ordinary
voting power (other than stock or other interests having such
power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or
the management of which is otherwise controlled, by such Person or
by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries of such Person. A Subsidiary shall be
deemed wholly-owned by a Person who owns directly or indirectly
all of the voting shares of stock or other interests of such
Subsidiary having voting power under ordinary circumstances to
vote for directors or other managers of such corporation,
partnership or other entity, except for directors' qualifying
shares. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to
a Subsidiary or Subsidiaries of the Company.
"SUBSIDIARY GUARANTEE": the Subsidiary Guarantee,
substantially in the form of Exhibit G-2, to be made by certain
Domestic Subsidiaries of the Company (other than any Receivables
SPV, any Captive Insurance Subsidiary, any Immaterial Subsidiary,
so long as each remains as such, and any joint venture or other
Person in which (x) there are no investments by the Company or any
of its Subsidiaries as of the Closing Date and (y) all investments
by the Company or its Subsidiaries after the Closing Date are made
pursuant to subsection 9.6(h)) in favor of the Administrative
Agent for the ratable benefit of the Lenders, as the same may be
amended, modified or supplemented from time to time.
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"SUBSIDIARY GUARANTOR": at any time shall mean each
Subsidiary of the Company which is a party to a Guarantee.
"SUBSIDIARY SECURITY AGREEMENT": the Subsidiary
Security Agreement, substantially in the form of Exhibit F-2, to
be made by each Subsidiary Guarantor in favor of the
Administrative Agent for the ratable benefit of the Lenders, as
the same may be amended, modified or supplemented from time to
time.
"SUPERMAJORITY LENDERS": at a particular time, the
holders of at least 66-2/3% of the sum of (i) the aggregate unpaid
principal amount of the Term Loans, if any, (ii) the Revolving
Credit Commitments or, if the Revolving Credit Commitments are
terminated, the aggregate unpaid principal amount of the Revolving
Credit Loans, and participations in Swing Line Loans and the
aggregate amount available to be drawn at such time under all
outstanding Letters of Credit and L/C Obligations and (iii) the
Receivables Financing Commitments or, if the Receivables Financing
Commitments are terminated, the aggregate unpaid principal amount
of the Receivables Financing Loans. The Term Loans, the Revolving
Credit Commitments and the Receivables Financing Commitments of
any Non-Funding Lender shall be disregarded in determining
Supermajority Lenders at any time.
"SWING LINE COMMITMENT": the Swing Line Lender's
obligation to make Swing Line Loans pursuant to subsection 3.4.
"SWING LINE LENDER": BTCo in its capacity as lender of
the Swing Line Loans.
"SWING LINE LOANS": as defined in subsection 3.4(a).
"SWING LINE NOTE": as defined in subsection 5.13(e).
"SYNDICATION AGENT": as defined in the preamble hereto.
"SYNDICATION DATE": shall mean that date upon which the
Administrative Agent determines in its sole discretion (and
notifies the Company) that the primary syndication (and resultant
addition of institutions as Lenders pursuant to subsection 12.6)
has been completed.
"TERM LOAN" and "TERM LOANS": as defined in subsection
2.1(b).
"TOTAL TERM LOAN COMMITMENT": Collectively, as to all
the Lenders,
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the sum of the B Term Loan Commitments and C Term Loan
Commitments.
"TRANCHE": shall mean the respective facility and
commitments utilized in making any Loan hereunder, with there
being five separate Tranches on the Closing Date, I.E., B Term
Loans, C Term Loans, Revolving Credit Loans, Receivables Financing
Loans and Swing Line Loans.
"TRANSACTION": collectively, (i) the Recapitalization,
(ii) the Equity Contribution, (iii) the issuance of the
Subordinated Debt on the Closing Date, (iv) the incurrence of the
Loans on the Closing Date, and (v) the payment of fees and
expenses owing in connection with the foregoing.
"TRANSFEREE": as defined in subsection 12.6(f).
"TYPE": as to any Loan, its nature as an Alternate Base
Rate Loan or Eurodollar Loan.
"UNIFORM CUSTOMS": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, and any amendments thereof.
"UNITED STATES": the United States of America.
"WHOLLY-OWNED DOMESTIC SUBSIDIARY": shall mean each
Domestic Subsidiary which is also a Wholly-Owned Subsidiary.
"WHOLLY-OWNED FOREIGN SUBSIDIARY": shall mean each
Foreign Subsidiary which is also a Wholly-Owned Subsidiary.
"WHOLLY-OWNED SUBSIDIARY": each Subsidiary of the
Company which is wholly-owned by it, as provided in the second
sentence of the definition of Subsidiary contained herein.
"WHOLLY-OWNED SUBSIDIARY GUARANTOR": shall mean each
Subsidiary Guarantor which is also a Wholly-Owned Subsidiary.
1.2 OTHER DEFINITIONAL PROVISIONS. Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the Notes, any other Credit Document or any certificate or other
document made or delivered pursuant hereto.
As used herein and in the Notes, any other Credit Document and
any certificate or other document made or delivered pursuant hereto, accounting
terms
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relating to the Company and its Subsidiaries not defined in subsection 1.1 and
accounting terms partly defined in subsection 1.1 to the extent not defined,
shall have the respective meanings given to them under GAAP. To the extent
there are any changes in GAAP from the date of this Agreement, the financial
covenants set forth herein at the option of the Company will either (i)
continue to be determined in accordance with GAAP in effect on the Closing
Date, as applicable, or (ii) be adjusted or reset to reflect such changes in
GAAP, such adjustments or resets to be mutually agreed to by the Company and
the Co-Arrangers.
The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, subsection,
schedule and exhibit references are to this Agreement unless otherwise
specified.
The meanings given to terms defined herein shall be equally
applicable to the singular and plural forms of such terms.
SECTION 2
TERM LOANS
----------
2.1 TERM LOANS. (a) Subject to the terms and conditions hereof, each
Lender severally agrees to make a loan in Dollars (individually, a "B TERM
LOAN"; and collectively, the "B TERM LOANS") to the Company on the Closing
Date, which B Term Loans shall be (i) made and initially maintained as a single
borrowing of Alternate Base Rate Loans (subject to the option to convert such B
Term Loans pursuant to subsection 5.2) and (ii) in an aggregate principal
amount equal to such Lender's B Term Loan Commitment.
(b) Subject to the terms and conditions hereof, each Lender
severally agrees to make a loan in Dollars (individually, a "C TERM LOAN"; and
collectively, the "C TERM LOANS" and together with the B Term Loans, the "TERM
LOANS") to the Company on the Closing Date, which C Term Loans shall be (i)
made and initially maintained as a single borrowing of Alternate Base Rate
Loans (subject to the option to convert such C Term Loans pursuant to
subsection 5.2) and (ii) in an aggregate principal amount equal to such
Lender's C Term Loan Commitment.
2.2 REPAYMENT OF TERM LOANS. The Company shall repay the Term Loans
as provided in subsection 5.4(e).
2.3 USE OF PROCEEDS. The proceeds of the Term Loans shall be used
(a) to finance a portion of the cash consideration payable in the
Recapitalization and other payments pursuant to the Recapitalization Agreement
and to pay fees, expenses
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and financing costs in connection therewith, and (b) to refinance certain of
the existing Indebtedness of Holdings and its Subsidiaries.
SECTION 3
AMOUNT AND TERMS OF
REVOLVING CREDIT COMMITMENTS
----------------------------
3.1 REVOLVING CREDIT COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Lender severally agrees to the extent of its Revolving
Credit Commitment to extend credit to the Company from time to time on any
Borrowing Date during the Revolving Credit Commitment Period (i) by purchasing
an L/C Participating Interest in each Letter of Credit issued by the Issuing
Lender and (ii) by making loans in Dollars (individually, such a Loan is a
"REVOLVING CREDIT LOAN", and collectively such Loans are the "REVOLVING CREDIT
LOANS") to the Company from time to time. Notwithstanding the above (i) in no
event shall any Revolving Credit Loans be made, or Letter of Credit be issued,
if the aggregate amount of the Revolving Credit Loans to be made or Letter of
Credit to be issued would, after giving effect to the use of proceeds, if any,
thereof, exceed the aggregate Available Revolving Credit Commitments nor shall
any Letter of Credit be issued if after giving effect thereto the sum of the
undrawn amount of all outstanding Letters of Credit and the amount of all L/C
Obligations would exceed $30,000,000 and (ii) prior to the earlier of (x) the
35th day after the Closing Date and (y) the Syndication Date, the following
restrictions shall apply: (I) no Revolving Credit Loans may be incurred as
Eurodollar Loans prior to the fifth day after the Closing Date and (II) no more
than one Borrowing of Revolving Credit Loans may be incurred as Eurodollar
Loans, which Borrowing of Eurodollar Loans shall be incurred on the fifth day
after the Closing Date and have a one month Interest Period. During the
Revolving Credit Commitment Period, the Company may use the Revolving Credit
Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in
part, and reborrowing, all in accordance with the terms and conditions hereof,
and/or by having the Issuing Lender issue Letters of Credit, having such
Letters of Credit expire undrawn upon or if drawn upon, reimbursing the Issuing
Lender for such drawing, and having the Issuing Lender issue new Letters of
Credit.
(b) Each borrowing of Revolving Credit Loans pursuant to the
Revolving Credit Commitments shall be in an aggregate principal amount of the
lesser of (i) $1,000,000 or a whole multiple of $100,000 in excess thereof in
case of Alternate Base Rate Loans, and $2,000,000 or a whole multiple of
$1,000,000 in excess thereof, in the case of Eurodollar Loans and (ii) the
Available Revolving Credit Commitments, except that any borrowing of Revolving
Credit Loans to be made as Alternate Base Rate Loans and to be used solely to
pay a like amount of Swing Line Loans may be in the aggregate principal amount
of such Swing Line
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Loans.
3.2 COMMITMENT FEE. The Company agrees to pay to the Adminis-
trative Agent for the account of each Lender (other than any Non-Funding
Lender) a commitment fee from and including the Closing Date to and including
the later of the Revolving Credit Termination Date and the Receivables
Financing Termination Date, computed at the applicable rate (on each Adjustment
Date pursuant to the guidelines set forth in the definition of Applicable
Margin) per annum set forth on Schedule II on the average daily amount of the
Aggregate Unutilized Commitment of such Lender during the period for which
payment is made (whether or not the Company shall have satisfied the applicable
conditions to borrow or for the issuance of a Letter of Credit set forth in
Section 7); PROVIDED that from the Closing Date until the first Adjustment Date
the commitment fee shall be 0.50% per annum. Such commitment fee shall be
payable quarterly in arrears on the last day of each March, June, September and
December and on the later of the Revolving Credit Termination Date and the
Receivables Financing Termination Date, commencing on the later of (x) the
first such date to occur on or following the Closing Date (or, if earlier, the
later of the Revolving Credit Termination Date and the Receivables Financing
Termination Date) or (y) March 31, 1998.
3.3 PROCEEDS OF REVOLVING CREDIT LOANS. The Company shall use the
proceeds of Revolving Credit Loans (a) as set forth in subsection 2.3, (b) for
general corporate and working capital purposes of the Company and its
Subsidiaries and (c) to finance acquisitions permitted by subsection 9.6(g).
3.4 SWING LINE COMMITMENT. (a) Subject to the terms and conditions
hereof, the Swing Line Lender agrees, so long as the Administrative Agent has
not received (and forwarded to the Swing Line Lender if different than the
Administrative Agent) notice that a Default or Event of Default has occurred and
is continuing (in each case until such notice has been rescinded or the
Administrative Agent determines in good faith, and notifies the Swing Line
Lender, that all Defaults and/or Events of Default have been cured or waived),
to make swing line loans (individually, a "SWING LINE LOAN"; collectively, the
"SWING LINE LOANS") to the Company from time to time during the Revolving Credit
Commitment Period in an aggregate principal amount at any one time outstanding
not to exceed $10,000,000, PROVIDED that no Swing Line Loan may be made if the
aggregate principal amount of the Swing Line Loans to be made would exceed the
aggregate Available Revolving Credit Commitments at such time. Amounts borrowed
by the Company under this subsection 3.4 may be repaid and, through but
excluding the Revolving Credit Termination Date, reborrowed. All Swing Line
Loans shall be made as Alternate Base Rate Loans and shall not be entitled to be
converted into Eurodollar Loans. The Company shall give the Swing Line Lender
irrevocable notice (which notice must be received by the Swing Line Lender prior
to 1:00 p.m., New York City time) on the requested Borrowing Date
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specifying the amount of each requested Swing Line Loan, which shall be in an
aggregate minimum amount of $250,000 or a whole multiple of $100,000 in excess
thereof. The proceeds of each Swing Line Loan will be made available by the
Swing Line Lender to the Company by crediting the account of the Company at the
office of the Swing Line Lender with such proceeds. The proceeds of Swing Line
Loans may be used solely for the purposes referred to in subsection 3.3.
(b) The Swing Line Lender at any time in its sole and absolute dis-
cretion may, and on the fifteenth day (or if such day is not a Business Day, the
next Business Day) and last Business Day of each month shall, on behalf of the
Company (which hereby irrevocably directs the Swing Line Lender to act on its
behalf) request each Revolving Credit Lender, including the Swing Line Lender,
to make a Revolving Credit Loan in an amount equal to such Lender's Revolving
Credit Commitment Percentage of the amount of the Swing Line Loans (the
"REFUNDED SWING LINE LOANS") outstanding on the date such notice is given.
Unless any of the events described in paragraph (f) of Section 10 shall have
occurred (in which event the procedures of paragraph (c) of this subsection 3.4
shall apply) each such Lender shall make the proceeds of its Revolving Credit
Loan available to the Swing Line Lender for the account of the Swing Line Lender
at the office of the Swing Line Lender specified in subsection 12.2 (or such
other location as the Swing Line Lender may direct) prior to 12:00 noon (New
York City time) in funds immediately available on the Business Day next
succeeding the date such notice is given. The proceeds of such Revolving Credit
Loans shall be immediately applied to repay the Refunded Swing Line Loans.
(c) If prior to the making of a Revolving Credit Loan pursuant to
paragraph (b) of this subsection 3.4 one of the events described in paragraph
(f) of Section 10 shall have occurred, each Revolving Credit Lender will, on the
date such Loan was to have been made, purchase an undivided participating
interest in the Refunded Swing Line Loan in an amount equal to its Revolving
Credit Commitment Percentage of such Refunded Swing Line Loan. Each such Lender
will immediately transfer to the Swing Line Lender in immediately available
funds, the amount of its participation.
(d) Whenever, at any time after the Swing Line Lender has received
from any Revolving Credit Lender such Lender's participating interest in a
Refunded Swing Line Loan, the Swing Line Lender receives any payment on account
thereof, the Swing Line Lender will distribute to such Lender its participating
interest in such amount (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender's participating
interest was outstanding and funded) in like funds as received; PROVIDED that in
the event that such payment received by the Swing Line Lender is required to be
returned, such Lender will return to the Swing Line Lender any portion thereof
previously distributed by the Swing Line Lender to it in like funds as such
payment is required to be returned by the Swing Line Lender.
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(e) The obligations of each Revolving Credit Lender pursuant to sub-
sections 3.4(b) and 3.4(c) shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Lender may have
against the Swing Line Lender, the Company or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of an Event of Default; (iii) any
adverse change in the condition (financial or otherwise) of the Company; (iv)
any breach of this Agreement by the Company or any other Lender; or (v) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing.
3.5 ISSUANCE OF LETTERS OF CREDIT. (a) The Company may from time to
time request the Issuing Lender to issue a Standby L/C or a Commercial L/C by
delivering to the Issuing Lender, with a copy to the Administrative Agent, a
written request to issue in the form of Exhibit N (a "LETTER OF CREDIT
REQUEST"), together with the proposed form of such Letter of Credit (which shall
comply with the applicable requirements of this agreement) and such other
certificates, documents and other papers and information which the Issuing
Lender may reasonably request; PROVIDED that if the Issuing Lender informs the
Company that it is for any reason unable to open such Letter of Credit, the
Company may request any Lender to open such Letter of Credit upon the same terms
offered to the Issuing Lender and each reference to the Issuing Lender for
purposes of subsections 3.5 through 3.14, 7.1 and 7.2 shall be deemed to be a
reference to such issuing Lender.
(b) Each Standby L/C and Commercial L/C issued hereunder shall, among
other things, (i) be in such form requested by the Company as shall be
acceptable to the Issuing Lender in its reasonable discretion, (ii) be
denominated in Dollars and issued payable on a sight basis unless otherwise
agreed by the Issuing Lender in its sole discretion and (iii) have an expiry
date occurring not later than 365 days (or such longer duration as may be agreed
upon by the Issuing Lender) after the date of issuance of such Letter of Credit
and may be automatically extended for additional periods equal to the initial
term, but in no case shall any Letter of Credit have an expiry date occurring
later than ten days prior to the Revolving Credit Termination Date. To the
extent possible, each Letter of Credit shall be issued subject to the Uniform
Customs and/or to the extent not inconsistent therewith, the laws of the State
of New York. In the event that the Issuing Lender of any Commercial L/C is other
than the Administrative Agent, such Issuing Lender will send by facsimile
transmission to the Administrative Agent, promptly on the first Business Day of
each week, its daily aggregate Letter of Credit Stated Amount for Commercial
L/Cs for the previous week. The Administrative Agent shall deliver to each
Participating Lender, upon each calendar month end and upon each Letter of
Credit fee payment, a report setting forth for such period the daily aggregate
Stated Amount available to be drawn under the Commercial Letters of Credits
issued by all the Issuing Lenders during such
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period.
3.6 PARTICIPATING INTERESTS. Effective in the case of each Standby
L/C and Commercial L/C (if applicable) as of the date of the opening thereof,
the Issuing Lender agrees to allot and does allot, to itself and each other
Revolving Credit Lender, and each such Lender severally and irrevocably agrees
to take and does take in such Letter of Credit, an L/C Participating Interest in
a percentage equal to such Lender's Revolving Credit Commitment Percentage.
3.7 PROCEDURE FOR OPENING LETTERS OF CREDIT. Upon receipt of a Letter
of Credit Request from the Company, the Issuing Lender will process the request
in accordance with its customary procedures. If the format of the requested
Letter of Credit is reasonably acceptable to the Issuing Lender, the Issuing
Lender shall open such Letter of Credit, PROVIDED that such opening does not
violate the conditions of the applicable subsections of this agreement, by
issuing the original of such Letter of Credit to the beneficiary and furnishing
a copy to the Company. Promptly after the issuance of, or amendment to, any
Standby L/C, the Issuing Lender shall notify the Administrative Agent and each
Lender of such issuance or amendment.
3.8 PAYMENTS IN RESPECT OF LETTERS OF CREDIT. (a) The Company agrees
forthwith upon demand by the Issuing Lender (i) to reimburse the Issuing Lender
for any payment made by the Issuing Lender under any Letter of Credit issued for
the account of the Company and (ii) to pay interest on any unreimbursed portion
of any such payment from the date of such payment until reimbursement in full
thereof at a rate per annum equal to (A) on or prior to the date which is one
Business Day after the day on which the Issuing Lender demands reimbursement
from the Company for such payment, the Alternate Base Rate plus the Applicable
Margin for the Revolving Credit Loans and (B) thereafter, the Alternate Base
Rate plus the Applicable Margin for the Revolving Credit Loans plus 2%.
(b) In the event that the Issuing Lender makes a payment under any
Letter of Credit and is not reimbursed in full therefor forthwith upon demand of
the Issuing Lender, the Issuing Lender will promptly notify the Administrative
Agent which will promptly notify each other Revolving Credit Lender. Forthwith
upon its receipt of any such notice, each such other Lender will transfer to the
Administrative Agent for the account of the Issuing Lender, in immediately
available funds, an amount equal to such other Lender's PRO RATA share (based on
its Revolving Credit Commitment) of the L/C Obligation arising from such
unreimbursed payment.
(c) Whenever, at any time after the Issuing Lender has made a pay-
ment under any Letter of Credit and has received from any other Revolving Credit
Lender such other Lender's PRO RATA share of the L/C Obligation arising
therefrom, the Issuing Lender receives any reimbursement on account of such L/C
Obligation or
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any payment of interest on account thereof, the Issuing Lender will promptly
distribute to such other Lender its PRO RATA share thereof in like funds as
received; PROVIDED that in the event that the receipt by the Issuing Lender of
such reimbursement or such payment of interest (as the case may be) is required
to be returned, such other Lender will return to the Issuing Lender any portion
thereof previously distributed by the Issuing Lender to it in like funds as such
reimbursement or payment is required to be returned by the Issuing Lender.
3.9 LETTER OF CREDIT FEES. (a) In lieu of any letter of credit
commissions and fees provided for in any a Letter of Credit Request relating
to Standby or Commercial L/Cs (other than standard issuance, amendment and
payment fees), the Company agrees to pay the Administrative Agent, for the
account of the Issuing Lender and the Participating Lenders, with respect to
each Standby or Commercial L/C issued for the account of the Company, a Standby
or Commercial L/C fee, as the case may be, equal to the Applicable Margin for
Revolving Credit Loans which are Eurodollar Loans per annum on the daily amount
available to be drawn under each Standby L/C in the case of a Standby L/C and on
the maximum face amount of each Commercial L/C in the case of a Commercial L/C,
in either case, payable, in arrears, on the last day of each March, June,
September and December and on the date upon which the Revolving Loan Commitments
have terminated and such Letter of Credit has been terminated in accordance with
its terms. The Administrative Agent will disburse any Standby or Commercial L/C
fees received pursuant to this subsection 3.9(a) to the respective Lenders
promptly following the receipt of any such fees in the case of a Standby L/C
and, in the case of a Commercial L/C, following the end of the calendar month in
which such Commercial L/C fees were received. Notwithstanding the foregoing, the
Company agrees to pay, at the time of their incurrence, standard issuance,
amendment and payment fees to the Issuing Lender.
(b) In addition, the Company agrees to pay to the respective Issuing
Lender, for its own account, a facing fee in respect of each Standby or
Commercial L/C issued for its account hereunder (the "Facing Fee") for the
period from and including the date of issuance of such Standby or Commercial L/C
to and including the termination thereof, computed at a rate equal to 1/4 of 1%
per annum of the daily amount available to be drawn under such Standby or
Commercial L/C. Accrued Facing Fees with respect to each Letter of Credit shall
be due and payable quarterly in arrears on the last day of each March, June,
September and December and on the date upon which the Revolving Loan Commitments
have terminated and such Letter of Credit has been terminated in accordance with
its terms.
(c) For purposes of any payment of fees required pursuant to this
subsection 3.9, the Administrative Agent agrees to provide to the Company a
statement of any such fees to be so paid; PROVIDED that the failure by the
Administrative Agent to provide the Company with any such invoice shall not
relieve the Company of its
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obligation to pay such fees.
3.10 LETTER OF CREDIT RESERVES. (a) If any Change in Law shall either
(i) impose, modify, deem or make applicable any reserve, special deposit,
assessment or similar requirement against letters of credit issued by the
Issuing Lender or (ii) impose on the Issuing Lender any other condition
regarding this Agreement (with respect to Letters of Credit) or any Letter of
Credit, and the result of any event referred to in clause (i) or (ii) above
shall be to increase the cost of the Issuing Lender of issuing or maintaining
any Letter of Credit (which increase in cost shall be the result of the Issuing
Lender's reasonable allocation of the aggregate of such cost increases resulting
from such events), then, upon demand by the Issuing Lender, the Company shall
immediately pay to the Issuing Lender, from time to time as specified by the
Issuing Lender, additional amounts which shall be sufficient to compensate the
Issuing Lender for such increased cost, together with interest on each such
amount from the date demanded until payment in full thereof at a rate per annum
equal to the rate applicable to Alternate Base Rate Loans pursuant to subsection
5.5(b). The Company shall not be required to make any payments to the Issuing
Lender for any additional amounts pursuant to this subsection 3.10(a) unless the
Issuing Lender has given written notice to the Company of its intent to request
such payments prior to or within 60 days after the date on which the Issuing
Lender became entitled to claim such amounts. A certificate, setting forth in
reasonable detail the calculation of the amounts involved, submitted by the
Issuing Lender to the Company concurrently with any such demand by the Issuing
Lender, shall be conclusive, absent manifest error, as to the amount thereof.
(b) In the event that any Change in Law with respect to the Issuing
Lender shall, in the opinion of the Issuing Lender, require that any obligation
under any Letter of Credit be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be maintained by
the Issuing Lender or any corporation controlling the Issuing Lender, and such
Change in Law shall have the effect of reducing the rate of return on the
Issuing Lender's or such corporation's capital, as the case may be, as a
consequence of the Issuing Lender's obligations under such Letter of Credit to a
level below that which the Issuing Lender or such corporation, as the case may
be, could have achieved but for such Change in Law (taking into account the
Issuing Lender's or such corporation's policies, as the case may be, with
respect to capital adequacy) by an amount deemed by the Issuing Lender to be
material, then from time to time following notice by the Issuing Lender to the
Company of such Change in Law, within 15 days after demand by the Issuing
Lender, the Company shall pay to the Issuing Lender such additional amount or
amounts as will compensate the Issuing Lender or such corporation, as the case
may be, for such reduction. The Issuing Lender agrees that, upon the occurrence
of any event giving rise to the operation of paragraph (a) or (b) of this
subsection 3.10 with respect to the Issuing Lender, it will, if requested by the
Company and to the extent permitted by
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law or by the relevant Governmental Authority, endeavor in good faith to avoid
or minimize the increase in costs or reduction in payments resulting from such
event; PROVIDED that such avoidance or minimization can be made in such a manner
that the Issuing Lender, in its sole determination, suffers no economic, legal
or regulatory disadvantage. The Company shall not be required to make any
payments to the Issuing Lender for any additional amounts pursuant to this
subsection 3.10(b) unless the Issuing Lender has given written notice to the
Company of its intent to request such payments prior to or within 60 days after
the date on which the Issuing Lender became entitled to claim such amounts. A
certificate, in reasonable detail, setting forth the calculation of the amounts
involved, submitted by the Issuing Lender to the Company concurrently with any
such demand by the Issuing Lender, shall be conclusive, absent manifest error,
as to the amount thereof.
(c) The Company and each Participating Lender agree that the
provisions of the foregoing paragraphs (a) and (b) shall apply equally to each
Participating Lender in respect of its L/C Participating Interest in such Letter
of Credit, as if the references in such paragraphs and provisions referred to,
where applicable, such Participating Lender or, in the case of paragraph (b),
any corporation controlling such Participating Lender.
3.11 FURTHER ASSURANCES. The Company hereby agrees, from time to
time, to do and perform any and all acts and to execute any and all further
instruments reasonably requested by the Issuing Lender more fully to effect the
purposes of this Agreement and the issuance of Letters of Credit hereunder.
3.12 OBLIGATIONS ABSOLUTE. The payment obligations of the Company
under this Agreement with respect to the Letters of Credit shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including, without limitation,
the following circumstances:
(i) the existence of any claim, set-off, defense or other
right which the Company or any of its Subsidiaries may have at any
time against any beneficiary, or any transferee, of any Letter of
Credit (or any Persons for whom any such beneficiary or any such
transferee may be acting), the Issuing Lender, any Agent or any
Lender, or any other Person, whether in connection with this
Agreement, any Credit Document, the transactions contemplated herein,
or any unrelated transaction;
(ii) any statement or any other document presented under
any Letter of Credit proving to be forged, fraudulent or invalid or
any statement therein being untrue or inaccurate in any respect;
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(iii) payment by the Issuing Lender under any Letter of
Credit against presentation of a draft or certificate or other
document which does not comply with the terms of such Letter of
Credit or is insufficient in any respect, except where such payment
constitutes gross negligence or willful misconduct on the part of the
Issuing Lender; or
(iv) any other circumstances or happening whatsoever,
whether or not similar to any of the foregoing, except for any such
circumstances or happening constituting gross negligence or willful
misconduct on the part of the Issuing Lender.
3.13 ASSIGNMENTS. No Participating Lender's participation in any
Letter of Credit or any of its rights or duties hereunder shall be subdivided,
assigned or transferred (other than in connection with a transfer of part or all
of such Participating Lender's Revolving Credit Commitment in accordance with
subsection 12.6(c)) without the prior written consent of the Issuing Lender,
which consent will not be unreasonably withheld. Such consent may be given or
withheld without the consent or agreement of any other Participating Lender.
3.14 PARTICIPATIONS. The obligation of each Revolving Credit Lender
to purchase participating interests pursuant to subsection 3.6 shall be absolute
and unconditional and shall not be affected by any circumstance, including,
without limitation, (i) any set-off, counterclaim, recoupment, defense or other
right which such Lender may have against the Issuing Lender, the Company or any
other Person for any reason whatsoever; (ii) the occurrence or continuance of an
Event of Default; (iii) any adverse change in the condition (financial or
otherwise) of the Company; (iv) any breach of this Agreement by the Company or
any other Lender; or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
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SECTION 4
AMOUNT AND TERMS OF
RECEIVABLES FINANCING COMMITMENTS
---------------------------------
4.1 RECEIVABLES FINANCING COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Lender severally agrees to the extent of its Receivables
Financing Commitment to extend credit to the Company from time to time on any
Borrowing Date during the Receivables Financing Commitment Period by making
loans in Dollars (individually, such a Loan is a "RECEIVABLES FINANCING LOAN",
and collectively, such Loans are the "RECEIVABLES FINANCING LOANS") to the
Company from time to time. Notwithstanding the above, (i) in no event shall any
Receivables Financing Loans be made if the aggregate principal amount of the
Receivables Financing Loans to be made and then outstanding would, after giving
effect to the use of proceeds, if any, thereof, exceed that amount which equals
the lesser of (x) the Borrowing Base then in effect and (y) the aggregate
Available Receivables Financing Commitments and (ii) prior to the earlier of (x)
the 35th day after the Closing Date and (y) the Syndication Date, the following
restrictions shall apply: (I) no Receivables Financing Loans may be incurred as
Eurodollar Loans prior to the fifth day after the Closing Date and (II) no more
than one borrowing of Receivables Financing Loans may be incurred as Eurodollar
Loans, which borrowing of Eurodollar Loans shall be incurred on the fifth day
after the Closing Date and have a one month Interest Period. During the
Receivables Financing Commitment Period, the Company may use the Receivables
Financing Commitments by borrowing, prepaying the Receivables Financing Loans
in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof.
(b) Each borrowing of Receivables Financing Loans pursuant to the
Receivables Financing Commitments shall be in an aggregate principal amount of
the lesser of (i) $1,000,000 or a whole multiple of $100,000 in excess thereof
in the case of Alternate Base Rate Loans, and $1,000,000 or a whole multiple of
$100,000 in excess thereof, in the case of Eurodollar Loans and (ii) the
Available Receivables Financing Commitments.
4.2 COMMITMENT FEE. The Company agrees to pay to the Administrative
Agent, without duplication, the commitment fee in respect of the Available
Receivables Financing Commitment as set forth in subsection 3.2.
4.3 PROCEEDS OF RECEIVABLES FINANCING LOANS. The Company shall use
the proceeds of Receivables Financing Loans (a) as set forth in subsection 2.3,
(b) for general corporate and working capital purposes of the Company and its
Subsidiaries and (c) to finance acquisitions permitted by subsection 9.6(g).
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SECTION 5
GENERAL PROVISIONS APPLICABLE TO LOANS
--------------------------------------
5.1 PROCEDURE FOR BORROWING. (a) The Company may borrow under the
Commitments on any Business Day, PROVIDED that, with respect to any borrowing,
the Company shall give the Administrative Agent irrevocable notice (which notice
must be received by the Administrative Agent prior to 12:00 noon (or, with
respect to Swing Line Loans, 1:00 p.m.), New York City time, (i) three Business
Days prior to the requested Borrowing Date if all or any part of the Loans are
to be Eurodollar Loans and (ii) one Business Day prior to the requested
Borrowing Date (or, in the case of Swing Line Loans and, if the Closing Date
occurs on the date this Agreement is executed and delivered, Loans made on the
Closing Date, on the requested Borrowing Date) if the borrowing is to be solely
of Alternate Base Rate Loans) and specifying (A) the amount of the borrowing,
(B) whether such Loans are initially to be Eurodollar Loans or Alternate Base
Rate Loans or a combination thereof, (C) if the borrowing is to be entirely or
partly Eurodollar Loans, the length of the Interest Period for such Eurodollar
Loans and (D) whether the Loan is a B Term Loan, C Term Loan, Revolving Credit
Loan, Receivables Financing Loan or a Swing Line Loan. Upon receipt of such
notice the Administrative Agent shall promptly notify each Lender. Not later
than 12:00 noon, New York City time, on the Borrowing Date specified in such
notice, each Lender with a Commitment of the respective Tranche shall make
available to the Administrative Agent at the office of the Administrative Agent
specified in subsection 12.2 (or at such other location as the Administrative
Agent may direct) an amount in immediately available funds equal to the amount
of the Loan to be made by such Lender (except that proceeds of Swing Line Loans
will be made available to the Company in accordance with subsection 3.4(a)).
Loan proceeds received by the Administrative Agent hereunder shall promptly be
made available to the Company by the Administrative Agent's crediting the
account of the Company, at the office of the Administrative Agent specified in
subsection 12.2, with the aggregate amount actually received by the
Administrative Agent from the Lenders and in like funds as received by the
Administrative Agent.
(b) Any borrowing of Eurodollar Loans hereunder shall be in such
amounts and be made pursuant to such elections so that, after giving effect
thereto, (i) the aggregate principal amount of all Eurodollar Loans having the
same Interest Period shall not be less than $2,000,000 or a whole multiple of
$1,000,000 (or, solely in the case of Receivables Financing Loans, $1,000,000 or
a whole multiple of $100,000) in excess thereof and (ii) no more than twenty
Interest Periods shall be in effect at any one time.
5.2 CONVERSION AND CONTINUATION OPTIONS. (a) Subject to subsection
5.12, the Company may elect from time to time to convert Eurodollar Loans into
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Alternate Base Rate Loans by giving the Administrative Agent irrevocable notice
of such election, to be received by the Administrative Agent prior to 12:00
noon, New York City time, at least three Business Days prior to the proposed
conversion date. The Company may elect from time to time to convert all or a
portion of the Alternate Base Rate Loans (other than Swing Line Loans) then
outstanding to Eurodollar Loans by giving the Administrative Agent irrevocable
notice of such election, to be received by the Administrative Agent prior to
12:00 noon, New York City time, at least three Business Days prior to the
proposed conversion date, specifying the Interest Period selected therefor, and,
if no Default or Event of Default has occurred and is continuing, such
conversion shall be made on the requested conversion date or, if such requested
conversion date is not a Business Day, on the next succeeding Business Day,
PROVIDED that prior to the earlier of (i) the 35th day after the Closing Date
and (ii) the Syndication Date, conversions of Alternate Base Rate Loans into
Eurodollar Loans may only be made if the conversion is effective on the fifth
day after the Closing Date and otherwise in accordance with subsections 3.1(a)
and 4.1(a). Upon receipt of any notice pursuant to this subsection 5.2, the
Administrative Agent shall promptly notify each Lender thereof. All or any part
of the outstanding Loans (other than Swing Line Loans) may be converted as
provided herein, PROVIDED that partial conversions of Alternate Base Loans shall
be in the aggregate principal amount of $1,000,000 or a whole multiple of
$100,000 in excess thereof and the aggregate principal amount of the resulting
Eurodollar Loans of a given Tranche of Loans outstanding in respect of any one
Interest Period shall be at least $2,000,000 or a whole multiple of $1,000,000
(or, solely in the case of Receivables Financing Loans, $1,000,000 or a whole
multiple of $100,000) in excess thereof.
(b) Any Eurodollar Loans may be continued as such upon the expira-
tion of the then current Interest Period with respect thereto by the Company
giving notice to the Administrative Agent, in accordance with the applicable
provisions of the term "Interest Period" set forth in subsection 1.1, of the
length of the next Interest Period to be applicable to such Loans, PROVIDED that
no Eurodollar Loan may be continued as such (i) when any Event of Default has
occurred and is continuing and the Administrative Agent or the Required Lenders
have, by written notice to the Company, determined that such a continuation is
not appropriate, (ii) if, after giving effect thereto, subsection 5.1(b) would
be contravened or (iii) after the date that is one month prior to the Revolving
Credit Termination Date (in the case of continuations of Revolving Credit
Loans), the Receivables Financing Termination Date (in the case of continuations
of Receivables Financing Loans) or the final Installment Payment Date of the
respective Tranche of Term Loans.
5.3 CHANGES OF COMMITMENT AMOUNTS. (a) The Company shall have the
right, upon not less than three Business Days' notice to the Administrative
Agent, to terminate or from time to time to permanently reduce the Revolving
Credit Commitments and/or the Receivables Financing Commitments, subject to the
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following provisions:
(i) to the extent, if any, that the sum of the amount of
the Revolving Credit Loans, Swing Line Loans and L/C Obligations then
outstanding and the amounts available to be drawn under outstanding
Letters of Credit exceeds the amount of the Revolving Credit
Commitments as then reduced, the Company shall be required to make a
prepayment equal to such excess amount, the proceeds of which shall
be applied, FIRST, to payment of the Swing Line Loans then
outstanding, SECOND, to payment of the Revolving Credit Loans then
outstanding, THIRD, to payment of any L/C Obligations then
outstanding, and FOURTH, to cash collateralize any outstanding
Letters of Credit on terms reasonably satisfactory to the
Administrative Agent. Any such termination of the Revolving Credit
Commitments shall be accompanied by prepayment in full of the
Revolving Credit Loans, Swing Line Loans and L/C Obligations then
outstanding and by cash collateralization of any outstanding Letters
of Credit on terms reasonably satisfactory to the Administrative
Agent. Upon termination of the Revolving Credit Commitments, any
Letter of Credit then outstanding that has been fully cash
collateralized on terms reasonably satisfactory to the Administrative
Agent shall no longer be considered a "Letter of Credit" as defined
in subsection 1.1 and any L/C Participating Interests heretofore
granted by the Issuing Lender to the Lenders in such Letter of Credit
shall be deemed terminated (subject to automatic reinstatement in the
event that such cash collateral is returned and the Issuing Lender is
not fully reimbursed for any such L/C Obligations) but the Letter of
Credit fees payable under subsection 3.9 shall continue to accrue to
the Issuing Lender and the Participating Lenders (or, in the event of
any such automatic reinstatement, as provided in subsection 3.9) with
respect to such Letter of Credit until the expiry thereof (PROVIDED
that in lieu of paying, in respect of such fully cash collateralized
letter of credit, a Standby or Commercial L/C fee, as the case may
be, equal to the Applicable Margin for Revolving Credit Loans which
are Eurodollar Loans per annum, the Company shall pay to the
Administrative Agent an amount equal to .25% per annum); and
(ii) to the extent, if any, that the sum of all
Receivables Financing Loans exceed the amount of the Receivables
Financing Commitments as then reduced, the Company shall be required
to make a prepayment of Receivables Financing Loans equal to such
excess amount.
(b) On the first date (if any) after the Closing Date on which the
initial Receivables Facility becomes effective in accordance with its terms, the
Receivables Financing Commitments shall terminate in their entirety and all
outstanding Receivables Financing Loans shall be repaid in full.
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<PAGE> 56
(c) In the case of termination of the Revolving Credit Commitments
and/or Receivables Financing Commitments, as the case may be, interest accrued
and unpaid on the amount of any prepayment relating thereto and any unpaid
commitment fee accrued hereunder shall be paid on the date of such termination.
Any such partial reduction of the Revolving Credit Commitments and/or
Receivables Financing Commitments, as the case may be, shall be in an amount of
$2,000,000 or a whole multiple of $1,000,000 (or, solely in the case of
Receivables Financing Commitments, $1,000,000 or a whole multiple of $100,000)
in excess thereof and shall, in each case, reduce permanently the amount of the
Revolving Credit Commitments and/or Receivables Financing Commitments, as the
case may be, then in effect.
5.4 OPTIONAL AND MANDATORY PREPAYMENTS; REPAYMENTS OF TERM LOANS. (a)
Subject to subsection 5.12, the Company may at any time and from time to time
prepay Loans, in whole or in part, without premium or penalty, by giving
irrevocable notice to the Administrative Agent by 10:00 a.m., New York City
time, on the same Business Day (or, in the case of Swing Line Loans, by
irrevocable notice to the Administrative Agent by 12:00 noon, New York City
time, on the same Business Day) in the case of Alternate Base Rate Loans, and
three Business Days' irrevocable notice to the Administrative Agent in the case
of Eurodollar Loans specifying the date and amount of prepayment and whether the
prepayment is of Term Loans, Revolving Credit Loans or Receivables Financing
Loans. Upon receipt of such notice the Administrative Agent shall promptly
notify each Lender thereof. If such notice is given, the Company shall make such
prepayment, and the payment amount specified in such notice shall be due and
payable, on the date specified therein. Partial prepayments (i) of Term Loans
shall be in an aggregate principal amount equal to the lesser of (A) (I)
$2,000,000, or a whole multiple of $1,000,000 in excess thereof with respect to
Eurodollar Loans or (II) $1,000,000, or a whole multiple of $100,000 in excess
thereof with respect to Alternate Base Rate Loans and (B) the aggregate unpaid
principal amount of the respective Tranche of Term Loans, (ii) of Revolving
Credit Loans shall be in an aggregate principal amount equal to the lesser of
(A) (I) $1,000,000, or a whole multiple of $100,000 in excess thereof with
respect to Eurodollar Loans or (II) $1,000,000 or a whole multiple of $100,000
in excess thereof with respect to Alternate Base Rate Loans and (B) the
aggregate unpaid principal amount of the Revolving Credit Loans, as the case may
be, and (iii) of Receivables Financing Loans shall be in an aggregate principal
amount equal to the lesser of (A) (I) $2,000,000, or a whole multiple of
$1,000,000 in excess thereof with respect to Eurodollar Loans or (II) $1,000,000
or a whole multiple of $100,000 in excess thereof with respect to Alternate Base
Rate Loans and (B) the aggregate unpaid principal amount of the Receivables
Financing Loans, as the case may be. Prepayments of the Term Loans pursuant to
this subsection 5.4(a) shall be applied to the B Term Loans and the C Term Loans
on a PRO RATA basis (based on the then outstanding principal amount of B Term
Loans and C Term Loans) and each prepayment of principal of any Tranche of Term
Loans pursuant to this subsection 5.4(a) shall be applied
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<PAGE> 57
to reduce the then remaining installments of the respective Tranche of Term
Loans ratably according to the amounts of such installments of the respective
Tranche after giving effect to all prior reductions thereto.
(b) If any Borrowing Base Certificate shall disclose the existence of
a Borrowing Base Deficiency that exceeds 10% of the Borrowing Base then in
effect, the Company shall on the date of the delivery thereof in accordance with
subsection 8.1(e), repay the principal of Receivables Financing Loans in an
amount equal to such Borrowing Base Deficiency; PROVIDED, if at any time a
mandatory repayment of Receivables Financing Loans pursuant to this subsection
5.4(b) would result in the Company incurring breakage costs under subsection
5.12 as a result of Eurodollar Loans being prepaid (after all then outstanding
Receivables Financing Loans maintained as Alternate Base Rate Loans have been
repaid in full) other than on the last day of an Interest Period applicable
thereto (the "AFFECTED EURODOLLAR LOANS") and so long as no Default under
subsection 10(f) and no Event of Default is in existence, then the Company may,
upon notice to the Administrative Agent, deposit the amount of cash which would
otherwise be required to be applied to repay Affected Eurodollar Loans as a
result of the respective Borrowing Base Deficiency into a cash collateral
account established with the Administrative Agent (which cash collateral account
shall secure the repayment of the Affected Eurodollar Loans), with such cash to
be permitted to be invested in Cash Equivalents reasonably acceptable to the
Administrative Agent and thereafter applied to make mandatory repayments of then
outstanding Receivables Financing Loans in direct order as Interest Periods
applicable to the Affected Eurodollar Loans expire (although, to the extent a
subsequent Borrowing Base Certificate establishes that a Borrowing Base
Deficiency has been cured in whole or in part, any excess cash so held shall be
released to the Company).
(c) (i) If, subsequent to the Closing Date, Holdings or any of its
Subsidiaries (other than any Capital Stock issued by any joint venture or other
Person in which (x) there are no investments by the Company or any of its
Subsidiaries as of the Closing Date and (y) all investments by the Company or
its Subsidiaries after the Closing Date are made pursuant to Subsection 9.6(h))
shall issue any Capital Stock, 50% of the Net Proceeds thereof (excluding
amounts provided by the Investors or their Affiliates or by management employees
of such issuer) shall promptly, and in any event within two Business Days after
the date of receipt, be applied toward the prepayment of the Term Loans, the
reduction of the Revolving Credit Commitments and/or the reduction of the
Receivables Financing Commitments, as set forth in clause (vi) of this
subsection 5.4(c); PROVIDED that Net Proceeds of such issuance shall be deemed
to be Net Proceeds of such issuance for purposes of this subsection 5.4(c)(i)
only after deducting therefrom any cash proceeds therefrom actually applied to
the redemption of up to 35% of the Permanent Subordinated Debt under the "equity
clawback" provisions and the payment of any premium or penalties or accrued
interest with respect thereto. Notwithstanding the foregoing provisions of this
subsection
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5.4(c)(i), if at any time a mandatory repayment of Loans pursuant to this
subsection 5.4(c)(i) would result in the Company incurring breakage costs under
subsection 5.12 as a result of Affected Eurodollar Loans being prepaid (after
all then outstanding Alternate Base Rate Loans of the respective Tranche have
been repaid in full) other than on the last day of an Interest Period applicable
thereto, then the Company may, upon notice to the Administrative Agent,
initially deposit a portion (up to 100%) of the amount that otherwise would have
been paid in respect of such Affected Eurodollar Loans with the Administrative
Agent (which deposit must be equal in amount to the amount of such Affected
Eurodollar Loans not immediately repaid) to be held as security for the
obligations of the Company hereunder pursuant to a cash collateral arrangement
reasonably satisfactory to the Administrative Agent and the Company which shall
permit investments in Cash Equivalents reasonably satisfactory to the
Administrative Agent, with such cash collateral to be directly applied upon the
earlier of (x) the first occurrence (or occurrences) thereafter of the last day
of an Interest Period applicable to the relevant Affected Eurodollar Loans of
the respective Tranche or Tranches that were initially required to be repaid (or
such earlier date or dates as shall be requested by the Company) and (y) the
date which is 90 days after such initial deposit, to repay an aggregate
principal amount of such Loans equal to the Affected Eurodollar Loans not
initially repaid pursuant to this sentence.
(ii) If, subsequent to the Closing Date, Holdings or any of its
Subsidiaries shall incur or permit the incurrence of any Indebtedness (other
than Indebtedness permitted pursuant to subsection 9.1 (with respect to the
Company or any of its Subsidiaries) or the Holdings Guarantee (with respect to
Holdings)), 100% of the Net Proceeds thereof shall promptly, and in any event
within two Business Days after the date of receipt, be applied toward the
prepayment of the Term Loans, the reduction of the Revolving Credit Commitments
and/or the reduction of the Receivables Financing Commitments, as set forth in
clause (vi) of this subsection 5.4(c); PROVIDED that, notwithstanding anything
to the contrary contained above, 50% of the Net Proceeds of any Indebtedness
incurred pursuant to clause (C) of subsection 9.1(d)(ii) shall be applied as
otherwise required (for this purpose, ignoring the first parenthetical in this
clause (ii) and deeming the reference to "100%" contained above changed to
"50%") by this clause (ii).
(iii) If, subsequent to the Closing Date, Holdings or any of its
Subsidiaries shall receive Net Proceeds from any Asset Sale, such Net Proceeds
shall promptly, and in any event within two Business Days after the date of
receipt, be applied toward the prepayment of the Term Loans, the reduction of
the Revolving Credit Commitments and/or the reduction of the Receivables
Financing Commitments, as set forth in clause (vi) of this subsection 5.4(c);
PROVIDED that such Net Proceeds need not be applied to the prepayment of the
Term Loans, the reduction of the Revolving Credit Commitments and/or the
reduction of the Receivables Financing Commitments until the first date that the
aggregate amount of Net Proceeds received
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by Holdings and its Subsidiaries from one or more Asset Sales (which
have not yet been applied as otherwise required by this subsection 5.4(c)(iii))
exceed $2,000,000.
(iv) If for any Excess Cash Flow Period there shall be Excess Cash
Flow for such Excess Cash Flow Period, 50% of such Excess Cash Flow shall be
applied toward prepayment of the Term Loans, the reduction of the Revolving
Credit Commitments and/or the reduction of the Receivables Financing Commitments
as set forth in clause (vi) of this subsection 5.4(c). Each such prepayment
shall be made not later than 120 days after the end of such Excess Cash Flow
Period.
(v) If, subsequent to the Closing Date, Holdings or any of its
Subsidiaries shall receive any proceeds from any Recovery Event, 100% of such
proceeds (net of reasonable costs including, without limitation, legal costs and
expenses, and taxes incurred in connection with such Recovery Event) shall be
applied, within 10 days of the receipt thereof, toward the prepayment of the
Term Loans, the reduction of the Revolving Credit Commitments and/or the
reduction of the Receivables Financing Commitments as set forth in clause (vi)
of this subsection 5.4(c); PROVIDED that (x) so long as no Default or Event of
Default then exists and the proceeds of such single Recovery Event do not exceed
$10,000,000, such proceeds shall not be required to be so applied on such date
to the extent that the Company uses or commits to use such proceeds to replace
or restore any properties or assets in respect of which such proceeds were paid
or to purchase properties or assets for the Company or any of its Wholly-Owned
Subsidiary Guarantors within eighteen months following the date of such Recovery
Event and (y) so long as no Default or Event of Default then exists and to the
extent that (a) the amount of the proceeds of any single Recovery Event equals
or exceeds $10,000,000, then the entire amount of the proceeds of such Recovery
Event and not just the portion in excess of $10,000,000 shall, at the Company's
election, (I) be deposited with the Administrative Agent pursuant to a cash
collateral arrangement reasonably satisfactory to the Administrative Agent and
the Company whereby such proceeds shall be disbursed to the Company from time to
time as needed to pay actual costs incurred by it in connection with the
replacement or restoration of the respective properties or assets or the
purchase of their substantial equivalent(s) or (II) be applied to repay the
principal amount of Revolving Credit Loans so long as an equal amount of
Revolving Credit Commitment is then blocked, pursuant to arrangements reasonably
satisfactory to the Administrative Agent and the Company, PROVIDED that such
blocked Revolving Credit Commitment shall become available, subject to the terms
and conditions of this Agreement, as needed to pay actual costs incurred by in
connection with the replacement or restoration of the respective properties or
assets or the purchase of their substantial equivalent(s) and PROVIDED FURTHER,
that if all or any portion of such proceeds not required to be applied to the
repayment of Term Loans or reduction of Revolving Credit Commitments pursuant to
this subsection 5.4(c)(v) are either (A) not so used or committed to be so used
within eighteen months after the date of the respective Recovery Event or (B) if
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committed to be used within eighteen months after the date of receipt of such
proceeds and not so used within two and one-half years after the date of the
respective Recovery Event then, in either such case, such remaining portion not
used or committed to be used in the case of preceding clause (A) and not used in
the case of preceding clause (B) shall be applied on the date occurring eighteen
months after the date of the respective Recovery Event in the case of clause (A)
above or the date occurring two and one-half years after the date of the
respective Recovery Event in the case of clause (B) above toward the prepayment
of the Term Loans, the reduction of the Revolving Credit Commitments and/or the
reduction of the Receivables Financing Commitments as set forth in clause (vi)
of this subsection 5.4(c).
(vi) Prepayments made pursuant to subsections 5.4(c)(i), (ii), (iii),
(iv) or (v) shall be applied by the Company, FIRST, to the prepayment of the B
Term Loans and the C Term Loans on a PRO RATA basis (based on the then
outstanding principal amount of B Term Loans and C Term Loans), with each
prepayment of principal of any Tranche of Term Loans pursuant to this subsection
to be applied to reduce the then remaining installments of the respective
Tranche of Term Loans ratably according to the amounts of such installments of
the respective Tranche after giving effect to all prior reductions thereto,
SECOND, to reduce permanently the Revolving Credit Commitments and, THIRD, to
reduce permanently the Receivables Financing Commitments. Any such reduction of
the Revolving Credit Commitments shall be accompanied by prepayment of, FIRST,
the Swing Line Loans, SECOND, the Revolving Credit Loans and, THIRD, the L/C
Obligations to the extent, if any, that the sum of the aggregate outstanding
principal amount of Revolving Credit Loans, the aggregate outstanding principal
amount of all Swing Line Loans, the aggregate amount available to be drawn under
all outstanding Letters of Credit and the aggregate outstanding amount of all
L/C Obligations, in each case of all Lenders, exceeds the amount of the
aggregate Revolving Credit Commitments as so reduced, PROVIDED that if the
aggregate principal amount of Revolving Credit Loans, Swing Line Loans and L/C
Obligations then outstanding is less than the amount of such excess (because
Letters of Credit constitute a portion thereof), the Company shall, to the
extent of the balance of such excess, replace outstanding Letters of Credit
and/or deposit an amount in cash in a cash collateral account established for
the benefit of the Lenders. Any such reduction of the Receivables Financing
Commitments shall be accompanied by prepayment of Receivables Financing Loans to
the extent, if any, that the sum of the aggregate outstanding principal amount
of Receivables Financing Loans of all Lenders exceeds the amount of the
aggregate Receivables Financing Commitments as so reduced.
(d) The Company shall give the Administrative Agent (which shall
promptly notify each Lender) at least one Business Day's notice of each
prepayment or mandatory reduction pursuant to this subsection 5.4(c) setting
forth the date and amount thereof. Except as otherwise may be agreed by the
Company and the Re-
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<PAGE> 61
quired Lenders, and subject to subsection 5.4(c)(vi), any prepayment of Loans
pursuant to this subsection 5.4 shall be applied, FIRST, to any Alternate Base
Rate Loans of the respective Tranche then outstanding and the balance of such
prepayment, if any, to the Eurodollar Loans of the respective Tranche then
outstanding; PROVIDED that prepayments of Eurodollar Loans, if not on the last
day of the Interest Period with respect thereto, shall, at the Company's option,
be prepaid subject to the provisions of subsection 5.12 or the amount of such
prepayment (after application to any Alternate Base Rate Loans) shall be
deposited with the Administrative Agent as cash collateral for the Loans of the
respective Tranche on terms reasonably satisfactory to the Administrative Agent
and thereafter shall be applied in the order of the Interest Periods of the
respective Tranche next ending most closely to the date such prepayment is
required to be made and on the last day of each such Interest Period. After such
application, unless an Event of Default shall have occurred and be continuing,
any remaining interest earned on such cash collateral shall be paid to the
Company.
(e)(i) The B Term Loans shall be repaid in twenty-eight installments
on the dates set forth below (each such day, a "B INSTALLMENT PAYMENT DATE"),
commencing on March 31, 1998 in an aggregate amount equal to the amount
specified for each such B Installment Payment Date.
<TABLE>
<CAPTION>
B Installment Payment Date Installment Amount
- -------------------------- ------------------
<S> <C>
March 31, 1998 $225,000
June 30, 1998 $225,000
September 30, 1988 $225,000
December 31, 1998 $225,000
March 31, 1999 $225,000
June 30, 1999 $225,000
September 30, 1999 $225,000
December 31, 1999 $225,000
March 31, 2000 $225,000
June 30, 2000 $225,000
September 30, 2000 $225,000
December 31, 2000 $225,000
March 31, 2001 $225,000
June 30, 2001 $225,000
September 30, 2001 $225,000
</TABLE>
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<PAGE> 62
<TABLE>
<CAPTION>
B Installment Payment Date Installment Amount
- -------------------------- ------------------
<S> <C>
December 31, 2001 $225,000
March 31, 2002 $225,000
June 30, 2002 $225,000
September 30, 2002 $225,000
December 31, 2002 $225,000
March 31, 2003 $7,500,000
June 30, 2003 $7,500,000
September 30, 2003 $7,500,000
December 31, 2003 $7,500,000
March 31, 2004 $13,875,000
June 30, 2004 $13,875,000
September 30, 2004 $13,875,000
B Maturity Date $13,875,000
</TABLE>
(ii) The C Term Loans shall be repaid in thirty-two installments on
the dates set forth below (each such day, a "C INSTALLMENT PAYMENT DATE"),
commencing on March 31, 1998 in an aggregate amount equal to the amount
specified for each such C Installment Payment Date.
<TABLE>
<CAPTION>
B Installment Payment Date Installment Amount
- -------------------------- ------------------
<S> <C>
March 31, 1998 $137,500
June 30, 1998 $137,500
September 30, 1988 $137,500
December 31, 1998 $137,500
March 31, 1999 $137,500
June 30, 1999 $137,500
September 30, 1999 $137,500
December 31, 1999 $137,500
March 31, 2000 $137,500
June 30, 2000 $137,500
September 30, 2000 $137,500
</TABLE>
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<PAGE> 63
<TABLE>
<CAPTION>
B Installment Payment Date Installment Amount
- -------------------------- ------------------
<S> <C>
December 31, 2000 $137,500
March 31, 2001 $137,500
June 30, 2001 $137,500
September 30, 2001 $137,500
December 31, 2001 $137,500
March 31, 2002 $137,500
June 30, 2002 $137,500
September 30, 2002 $137,500
December 31, 2002 $137,500
March 31, 2003 $137,500
June 30, 2003 $137,500
September 30, 2003 $137,500
December 31, 2003 $137,500
March 31, 2004 $137,500
June 30, 2004 $137,500
September 30, 2004 $137,500
December 31, 2004 $137,500
March 31, 2005 $12,787,500
June 30, 2005 $12,787,500
September 30, 2005 $12,787,500
C Maturity Date $12,787,500
</TABLE>
(f) Amounts repaid on account of the Term Loans pursuant to this
subsection 5.4 or otherwise may not be reborrowed. Accrued interest on the
amount of any prepayments shall be paid on the Interest Payment Date next
succeeding (or occurring on the same date as) the date of any partial prepayment
and on the date on such prepayment in the case of a prepayment in full of the
Term Loans.
(g) On the first date (if any) after the Closing Date on which the
initial Receivables Facility becomes effective in accordance with its terms, the
then outstanding principal amount of the Receivables Financing Loans, if any,
shall become due and payable in full.
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5.5 INTEREST RATES AND PAYMENT DATES. (a) Eurodollar Loans shall bear
interest for each day during each Interest Period applicable thereto, commencing
on (and including) the first day of such Interest Period to, but excluding, the
last day of such Interest Period, on the unpaid principal amount thereof at a
rate per annum equal to the Eurodollar Rate determined for such Interest Period
plus the Applicable Margin.
(b) Alternate Base Rate Loans shall bear interest for the period from
and including the date such Loans are made to, but excluding, the maturity date
thereof, or to, but excluding, the conversion date if such Loans are earlier
converted into Eurodollar Loans on the unpaid principal amount thereof at a rate
per annum equal to the Alternate Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) the principal amount of any of the
Loans or (ii) any interest payable thereon shall not be paid when due (whether
at the stated maturity, by acceleration or otherwise) such Loan, if a Eurodollar
Loan, shall be converted into an Alternate Base Rate Loan at the end of the
then-current Interest Period for said Eurodollar Loan (which conversion shall
occur automatically and without need for compliance with the conditions for
conversion set forth in subsection 5.2), and any such overdue amount shall,
without limiting the rights of the Lenders under Section 10, bear interest
(which shall be payable on demand) at a rate per annum which is 2% plus the
Alternate Base Rate plus the Applicable Margin for the respective Tranche of
Loans (PROVIDED that if any Loan comes due during an Interest Period, then for
the remainder of such Interest Period such unpaid amounts in respect thereof
shall bear interest at a rate which is 2% in excess of the rate otherwise
applicable to such borrowings) from the date of such non-payment until paid in
full (as well after as before judgment).
(d) Except as otherwise expressly provided for in this subsection
5.5, interest shall be payable in arrears on each Interest Payment Date.
5.6 COMPUTATION OF INTEREST AND FEES. (a) All calculations of
interest and fees hereunder shall be calculated on the basis of a 360 day year
for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Company and the Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the Alternate Base Rate or the Eurocurrency Reserve Requirements shall
become effective as of the opening of business on the day on which such change
in the Alternate Base Rate is announced or such change in the Eurocurrency
Reserve Requirements becomes effective, as the case may be. The Administrative
Agent shall as soon as practicable notify the Company and the Lenders of the
effective date and the amount of each such change.
(b) Each determination of an interest rate by the Administrative
Agent
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pursuant to any provision of this Agreement shall be conclusive and binding on
the Company and the Lenders in the absence of manifest error. The Administrative
Agent shall, at the request of the Company or any Lender, deliver to the Company
or such Lender a statement showing the quotations used by the Administrative
Agent in determining the Eurodollar Rate.
5.7 CERTAIN FEES. The Company agrees to pay to the Administrative
Agent, for its own account, a non-refundable agent's fee in an amount previously
agreed to with the Administrative Agent, payable in advance on the Closing Date
and on each anniversary thereof.
5.8 INABILITY TO DETERMINE INTEREST RATE. In the event that the
Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Company) that (a) by reason of circumstances
affecting the interbank eurodollar market, adequate and reasonable means do not
exist for ascertaining the Eurodollar Rate for any Interest Period with respect
to (i) proposed Loans that the Company has requested be made as Eurodollar
Loans, (ii) any Eurodollar Loans that will result from the requested conversion
of all or part of the Alternate Base Rate Loans into Eurodollar Loans or (iii)
the continuation of any Eurodollar Loan as such for an additional Interest
Period, or (b) dollar deposits in the relevant amount and for the relevant
period with respect to any such Eurodollar Loan are not generally available to
the Lenders in their respective Eurodollar Lending Offices' interbank eurodollar
markets, the Administrative Agent shall forthwith give telecopy notice of such
determination, confirmed in writing, to the Company and the Lenders at least one
day prior to, as the case may be, the requested Borrowing Date, the conversion
date or the last day of such Interest Period. If such notice is given (i) any
requested Eurodollar Loans shall be made as Alternate Base Rate Loans, (ii) any
Alternate Base Rate Loans that were to have been converted to Eurodollar Loans
shall be continued as Alternate Base Rate Loans, and (iii) any outstanding
Eurodollar Loans shall be converted on the last day of the then current Interest
Period applicable thereto into Alternate Base Rate Loans. Until such notice has
been withdrawn by the Administrative Agent, no further Eurodollar Loans shall be
made and no Alternate Base Rate Loans shall be converted to Eurodollar Loans.
5.9 PRO RATA TREATMENT AND PAYMENTS. (a) Except to the extent
otherwise provided herein, each borrowing of Loans by the Company from the
Lenders and any reduction of the Commitments of the Lenders hereunder shall be
made PRO RATA according to the relevant Commitment Percentages of the Lenders
with respect to the Loans borrowed or the Commitments to be reduced.
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(b) Whenever any payment received by the Administrative Agent under
this Agreement or any Note or any other Credit Document is insufficient to pay
in full all amounts then due and payable to the Administrative Agent and the
Lenders under this Agreement:
(i) If the Administrative Agent has not received a Payment
Sharing Notice (or, if the Administrative Agent has received a
Payment Sharing Notice but the Event of Default specified in such
Payment Sharing Notice has been cured or waived in accordance with
the provisions of this Agreement), such payment shall be distributed
by the Administrative Agent and applied by the Administrative Agent
and the Lenders in the following order: FIRST, to the payment of fees
and expenses due and payable to the Administrative Agent under and in
connection with this Agreement and the other Credit Documents;
SECOND, to the payment of all expenses due and payable under
subsection 12.5, ratably among the Lenders in accordance with the
aggregate amount of such payments owed to each such Lender; THIRD, to
the payment of fees due and payable under subsections 3.2 and 3.9,
ratably among the Lenders in accordance with the Commitment
Percentage of each Lender of the Commitment for which such payment is
owed and, in the case of the Issuing Lender, the amount retained by
the Issuing Lender for its own account pursuant to subsection 3.9;
FOURTH, to the payment of interest then due and payable on the Loans
and the L/C Obligations ratably in accordance with the aggregate
amount of interest owed to each such Lender; and FIFTH, to the
payment of the principal amount of the Loans and the L/C Obligations
which is then due and payable ratably (subject to the provisions of
following clause (c), to the extent applicable) among the Lenders in
accordance with the aggregate principal amount owed to each such
Lender; or
(ii) If the Administrative Agent has received a Payment
Sharing Notice which remains in effect, all payments received by the
Administrative Agent under this Agreement or any Note shall be
distributed by the Administrative Agent and applied by the
Administrative Agent and the Lenders in the following order: FIRST,
to the payment of all amounts described in clauses "FIRST" through
"THIRD" of the foregoing clause (i) in the order set forth therein;
SECOND, to the payment of the interest accrued on all Loans and L/C
Obligations, regardless of whether any such amount is then due and
payable, ratably among the Lenders in accordance with the aggregate
accrued interest plus the aggregate principal amount of all Loans and
L/C Obligations then due and payable and owed to such Lender; and
THIRD, to the payment of the principal amount of all Loans and L/C
Obligations, regardless of whether any such amount is then due and
payable, ratably among the Lenders in accordance with the aggregate
principal amount owed to such Lender.
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(c) If any Lender (a "NON-FUNDING LENDER") has (x) failed to make a
Revolving Credit Loan or Receivables Financing Loan required to be made by it
hereunder, and the Administrative Agent has determined that such Lender is not
likely to make such Revolving Credit Loan or Receivables Financing Loan or (y)
given notice to the Company or the Administrative Agent that it will not make,
or that it has disaffirmed or repudiated any obligation to make, any Revolving
Credit Loan or Receivables Financing Loan, in each case by reason of the
provisions of the Financial Institutions Reform, Recovery and Enforcement Act of
1989, as amended, or otherwise, (i) any payment made on account of the principal
of the Revolving Credit Loans or Receivables Financing Loans, as the case may
be, outstanding shall be made as follows:
(A) in the case of any such payment made on any date when
and to the extent that in the determination of the Administrative
Agent the Company would be able under the terms and conditions hereof
to reborrow the amount of such payment under the Commitments and to
satisfy any applicable conditions precedent set forth in Section 7 to
such reborrowing, such payment shall be made on account of the
outstanding Revolving Credit Loans or Receivables Financing Loans, as
the case may be, held by the Lenders other than the Non-Funding
Lender PRO RATA according to the respective outstanding principal
amounts of the Revolving Credit Loans or Receivables Financing Loans,
as the case may be, of such Lenders; and
(B) otherwise, such payment shall be made on account of
the outstanding Revolving Credit Loans or Receivables Financing
Loans, as the case may be, held by the Lenders PRO RATA according to
the respective outstanding principal amounts of such Revolving Credit
Loans or Receivables Financing Loans, as the case may be; and
(C) any payment made on account of interest on the
Revolving Credit Loans or Receivables Financing Loans, as the case
may be, shall be made PRO RATA according to the respective amounts of
accrued and unpaid interest due and payable on the Revolving Credit
Loans or Receivables Financing Loans, as the case may be, with
respect to which such payment is being made. The Company agrees to
give the Administrative Agent such assistance in making any
determination pursuant to this subsection 5.9(c) as the
Administrative Agent may reasonably request. Any such determination
by the Administrative Agent shall be conclusive and binding on the
Lenders.
(d) All payments (including prepayments) to be made by the Company on
account of principal, interest and fees shall be made without set-off or
counterclaim and shall be made to the Administrative Agent, for the account of
the Lenders at the
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Administrative Agent's office located at 130 Liberty Street, New York, New York
10006 (or at such other office of the Administrative Agent located in New York
City as may be directed from time to time by the Administrative Agent in writing
to the Company), in lawful money of the United States and in immediately
available funds. The Administrative Agent shall promptly distribute such
payments in accordance with the provisions of this subsection 5.9 upon receipt
in like funds as received. If any payment hereunder (other than payments on
Eurodollar Loans) would become due and payable on a day other than a Business
Day, such payment shall become due and payable on the next succeeding Business
Day and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension. If any payment on a
Eurodollar Loan becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day (and with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension) unless the result of such extension would
be to extend such payment into another calendar month in which event such
payment shall be made on the immediately preceding Business Day.
(e) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount which would constitute its Commitment Percentage of such borrowing
available to the Administrative Agent, the Administrative Agent may assume that
such Lender is making such amount available to the Administrative Agent in
accordance with subsection 5.1 and the Administrative Agent may, in reliance
upon such assumption, make available to the Company a corresponding amount. If
such amount is not made available to the Administrative Agent by the required
time on the Borrowing Date therefor, such Lender shall pay to the Administrative
Agent, on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period until such Lender makes such
amount immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this subsection 5.9(e) shall be conclusive absent manifest error. If such
Lender's Commitment Percentage of such borrowing is not in fact made available
to the Administrative Agent by such Lender within three Business Days of such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to Alternate Base
Rate Loans hereunder (in lieu of any otherwise applicable interest), on demand,
from the Company, without prejudice to any rights which the Company or the
Administrative Agent may have against such Lender hereunder. Nothing contained
in this subsection 5.9 shall relieve any Lender which has failed to make
available its ratable portion of any borrowing hereunder from its obligation to
do so in accordance with the terms hereof.
(f) The failure of any Lender to make the Loan to be made by it on
any Borrowing Date shall not relieve any other Lender of its obligation, if any,
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under to make its Loan on such Borrowing Date, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on such Borrowing Date.
(g) All payments and optional prepayments (other than prepayments as
set forth in subsection 5.11 with respect to increased costs) of Eurodollar
Loans hereunder shall be in such amounts and be made pursuant to such elections
so that, after giving effect thereto, the aggregate principal amount of all
Eurodollar Loans with the same Interest Period shall not be less than $2,000,000
or a whole multiple of $1,000,000 (or, solely in the case of Receivables
Financing Loans, $1,000,000 or a whole multiple of $100,000) in excess thereof.
5.10 ILLEGALITY. Notwithstanding any other provision herein, if any
Change in Law occurring after the date hereof shall make it unlawful for any
Lender to make or maintain Eurodollar Loans as contemplated by this Agreement,
the commitment of such Lender hereunder to make Eurodollar Loans or to convert
all or a portion of Alternate Base Rate Loans into Eurodollar Loans shall
forthwith be suspended until such time, if any, as such illegality shall no
longer exist and such Lender's Loans then outstanding as Eurodollar Loans, if
any, shall be converted automatically to Alternate Base Rate Loans for the
duration of the respective Interest Periods (or, if permitted by applicable law,
at the end of such Interest Periods) and all payments of principal which would
otherwise be applied to such Eurodollar Loans shall be applied instead to such
Lender's Alternate Base Rate Loans. The Company hereby agrees to pay any Lender,
promptly upon its demand, any amounts payable pursuant to subsection 5.12 in
connection with any conversion in accordance with this subsection 5.10 (such
Lender's notice of such costs, as certified in reasonable detail as to such
amounts to the Company through the Administrative Agent, to be conclusive absent
manifest error).
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5.11 REQUIREMENTS OF LAW. (a) Subject to the penultimate sentence of
subsection 12.6(c), in the event that any Change in Law or compliance by any
Lender with any request or directive (whether or not having the force of law)
from any central bank or other Governmental Authority effective after the date
hereof:
(i) does or shall subject any such Lender or its
Eurodollar Lending Office to any tax of any kind whatsoever with
respect to this Agreement, any Note or any Eurodollar Loans made by
it, or change the basis of taxation of payments to such Lender or its
Eurodollar Lending Office of principal, the commitment fee, interest
or any other amount payable hereunder (except for (x) net income and
franchise taxes imposed on the net income of such Lender or its
Eurodollar Lending Office by the jurisdiction under the laws of which
such Lender is organized or any political subdivision or taxing
authority thereof or therein, or by any jurisdiction in which such
Lender's Eurodollar Lending Office is located or any political
subdivision or taxing authority thereof or therein, including changes
in the rate of tax on the overall net income of such Lender or such
Eurodollar Lending Office, and (y) taxes resulting from the
substitution of any such system by another system of taxation,
PROVIDED that the taxes payable by Lenders subject to such other
system of taxation are not generally charged to borrowers from such
Lenders having loans or advances bearing interest at a rate similar
to the Eurodollar Rate);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for
the account of, advances or loans by, or other credit extended by, or
any other acquisition of funds by, any office of such Lender which
are not otherwise included in the determination of the Eurodollar
Rate; or
(iii) does or shall impose on such Lender any other
condition; and the result of any of the foregoing is to increase the
cost to such Lender or its Eurodollar Lending Office of making,
converting, renewing or maintaining advances or extensions of credit
or to reduce any amount receivable hereunder, in each case, in
respect of its Loans, then, in any such case, the Company shall
promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender for such additional cost or
reduced amount receivable which such Lender deems to be material as
determined by such Lender with respect to such Loans, together with
interest on each such amount from the date demanded until payment in
full thereof at a rate per annum equal to the Alternate Base Rate
plus 1%.
(b) In the event that any Change in Law occurring after the date
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hereof shall, in the opinion of any Lender, require that any Commitment of such
Lender be treated as an asset or otherwise be included for purposes of
calculating the appropriate amount of capital to be maintained by such Lender or
any corporation controlling such Lender, and such Change in Law shall have the
effect of reducing the rate of return on such Lender's or such corporation's
capital, as the case may be, as a consequence of such Lender's obligations
hereunder to a level below that which such Lender or such corporation, as the
case may be, could have achieved but for such Change in Law (taking into account
such Lender's or such corporation's policies, as the case may be, with respect
to capital adequacy) by an amount deemed by such Lender to be material, then
from time to time following notice by such Lender to the Company of such Change
in Law as provided in paragraph (c) of this subsection 5.11, within 15 days
after demand by such Lender, the Company shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such corporation
on an after-tax basis, as the case may be, for such reduction.
(c) The Company shall not be required to make any payments to any
Lender for any additional amounts pursuant to this subsection 5.11 unless such
Lender has given written notice to the Company, through the Administrative
Agent, of its intent to request such payments prior to or within 60 days after
the date on which such Lender became entitled to claim such amounts. If any
Lender has notified the Company through the Administrative Agent of any
increased costs pursuant to paragraph (a) of this subsection 5.11, the Company
at any time thereafter may, upon at least three Business Days' notice to the
Administrative Agent (which shall promptly notify the Lenders thereof), and
subject to subsection 5.12, prepay (or convert into Alternate Base Rate Loans)
all (but not a part) of the Eurodollar Loans then outstanding. Each Lender
agrees that, upon the occurrence of any event giving rise to the operation of
paragraph (a) of this subsection 5.11 with respect to such Lender, it will, if
requested by the Company and to the extent permitted by law or by the relevant
Governmental Authority, endeavor in good faith to avoid or minimize the increase
in costs or reduction in payments resulting from such event (including, without
limitation, endeavoring to change its Eurodollar Lending Office); PROVIDED, that
such avoidance or minimization can be made in such a manner that such Lender, in
its sole determination, suffers no economic, legal or regulatory disadvantage.
If any Lender requests compensation from the Company under this subsection 5.11,
the Company may, by notice to such Lender (with a copy to the Administrative
Agent), suspend the obligation of such Lender thereafter to make or continue
Loans of the Type with respect to which such compensation is requested, or to
convert Loans of any other Type into Loans of such Type, until the Requirement
of Law giving rise to such request ceases to be in effect, PROVIDED that such
suspension shall not affect the right of such Lender to receive the compensation
so requested.
(d) Each Lender (and in case of an Assignee on the date it becomes a
Lender) that is not a United States Person (as defined in Section 7701(a)(30) of
the
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Code) for federal income tax purposes either (1) in the case of a Lender that is
a "bank" within the meaning of Section 881(c)(3)(A) of the Code, (i) represents
to the Company (for the benefit of the Company and the Administrative Agent)
that, on the date hereof (in the case of the Lenders originally party hereto) or
on the date it became a Lender (in the case of an Assignee), under applicable
law and treaties no withholding taxes are required to be withheld by the Company
or the Administrative Agent with respect to any payments to be made to such
Lender in respect of the Loans or the L/C Participating Interests, (ii) agrees
to furnish to the Company, with a copy to the Administrative Agent, either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001
(wherein such Lender claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and (iii) agrees (for the
benefit of the Company and the Administrative Agent), to the extent it may
lawfully do so at such times, to provide the Company, with a copy to the
Administrative Agent, a new Form 4224 or Form 1001 upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such Lender, and to comply from time to time with all
applicable U.S. laws and regulations with regard to such withholding tax
exemption or (2) in the case of a Lender that is not a "bank" within the meaning
of Section 881(c)(3)(A) of the Code, (i) represents to the Company (for the
benefit of the Company and the Administrative Agent) that it is not a bank
within the meaning of Section 881(c)(3)(A) of the Code, (ii) agrees to furnish
to the Company, with a copy to the Administrative Agent, (A) a certificate
substantially in the form of Exhibit I hereto (any such certificate, a
"SUBSECTION 5.11(D)(2) CERTIFICATE") and (B) two accurate and complete original
signed copies of Internal Revenue Service Form W-8, certifying to such Lender's
legal entitlement at the Closing Date (or date of the respective assignment in
the case of an Assignee) to an exemption from U.S. withholding tax under the
provisions of Section 881(c) of the Code with respect to all payments referred
to in such Code section to be made under this Agreement, and (iii) agrees, to
the extent legally entitled to do so, upon reasonable request by the Company, to
provide to the Company (for the benefit of the Company and the Administrative
Agent) such other forms as may be required in order to establish the legal
entitlement of such Lender to an exemption from withholding with respect to
payments under this Agreement. Notwithstanding any provision of this subsection
5.11 or 5.9(d) to the contrary, the Company shall have no obligation to pay any
amount to or for the account of any Lender (or the Eurodollar Lending Office of
any Lender) on account of any taxes pursuant to this subsection 5.11, to the
extent that such amount results from (i) the failure of any Lender to comply
with its obligations pursuant to this subsection 5.11, (ii) any representation
or warranty made or deemed to be made by any Lender pursuant to this subsection
5.11(d) proving to have been incorrect, false or misleading in any material
respect when so made or deemed to be made or (iii) any Change in Law or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other
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Governmental Authority, the effect of which would be to subject to any taxes any
payment made pursuant to this Agreement to any Lender making the representation
and covenants set forth in subsection 5.11(d)(2), which payment would not be
subject to such taxes if such Lender, on the date it became a Lender, were
eligible to make and comply with, and had actually made and complied with, the
representation and covenants set forth in subsection 5.11(d)(1) hereinabove.
(e) A certificate in reasonable detail as to any amounts submitted by
such Lender, through the Administrative Agent, to the Company, shall be
conclusive in the absence of manifest error. The covenants contained in this
subsection 5.11 shall survive the termination of this Agreement and repayment of
the Loans.
5.12 INDEMNITY. The Company agrees to indemnify each Lender and to
hold such Lender harmless from any loss or expense (but without duplication of
any amounts payable as default interest) which such Lender may sustain or incur
as a consequence of (a) default by the Company in payment of the principal
amount of or interest on any Eurodollar Loans of such Lender, including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Lender to lenders of funds obtained by it in order to make or maintain its
Eurodollar Loans hereunder, (b) default by the Company in making a borrowing
after the Company has given a notice in accordance with subsection 5.1 or in
making a conversion of Alternate Base Rate Loans to Eurodollar Loans or in
continuing Eurodollar Loans as such, in either case, after the Company has given
notice in accordance with subsection 5.2, (c) default by the Company in making
any prepayment after the Company has given a notice in accordance with
subsection 5.4 or (d) a payment or prepayment of a Eurodollar Loan or conversion
(including without limitation, as a result of subsection 5.4 and/or a conversion
pursuant to subsection 5.10) of any Eurodollar Loan into an Alternate Base Rate
Loan, in either case on a day which is not the last day of an Interest Period
with respect thereto, including, but not limited to, any such loss or expense
arising from interest or fees payable by such Lender to lenders of funds
obtained by it in order to maintain its Eurodollar Loans hereunder (but
excluding loss of profit). This covenant shall survive termination of this
Agreement and repayment of the Loans.
5.13 REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The Company hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender (i) the principal amount of the B Term Loan of such Lender, in
twenty-eight consecutive installments, payable on each B Installment Payment
Date (or the then unpaid principal amount of such B Term Loan on the date that
the B Term Loans become due and payable pursuant to Section 10), (ii) the
principal amount of the C Term Loan of each Lender, in thirty-two consecutive
installments, payable on each C Installment Payment Date (or the then unpaid
principal amount of such C Term Loan on the date that the C Term Loans become
due and payable pursuant to Section 10), (iii) the then unpaid principal amount
of each Revolving Credit Loan of such
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Lender on the Revolving Credit Termination Date, (iv) the then unpaid principal
amount of each Receivables Financing Loan of such Lender on the Receivables
Financing Termination Date and (v) the then unpaid principal amount of the Swing
Line Loans of the Swing Line Lender on the Revolving Credit Termination Date.
The Company hereby further agrees to pay interest on the unpaid principal amount
of the Loans from time to time outstanding from the date hereof until payment in
full thereof at the rates per annum and on the dates set forth in subsection
5.5.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Company to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
subsection 12.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each B Term Loan, C Term Loan, Revolving Credit Loan,
Receivables Financing Loan and Swing Line Loan made hereunder, the Type thereof
and each Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Company to each
Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from the Company and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 5.13(b) shall, to the extent permitted by
applicable law, be PRIMA FACIE evidence of the existence and amounts of the
obligations of the Company therein recorded; PROVIDED that the failure of any
Lender or the Administrative Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of the
Company to repay (with applicable interest) the Loans made to such Company by
such Lender or to repay any other obligations in accordance with the terms of
this Agreement.
(e) The Company agrees that, upon the request to the Administrative
Agent by any Lender, the Company will execute and deliver to such Lender (i) a
promissory note of the Company evidencing the B Term Loans of such Lender,
substantially in the form of Exhibit A-1 with appropriate insertions as to date
and principal amount (a "B TERM LOAN NOTE"), (ii) a promissory note of the
Company evidencing the C Term Loans of such Lender, substantially in the form of
Exhibit A-2 with appropriate insertions as to date and principal amount (a "C
TERM LOAN NOTE"), (iii) a promissory note of the Company evidencing the
Revolving Credit Loans of such Lender, substantially in the form of Exhibit B
with appropriate insertions as to date and principal amount (a "REVOLVING CREDIT
NOTE"), (iv) a promissory note of the Company evidencing the Receivables
Financing Loans of such Lender, substantially in the form of Exhibit C with
appropriate insertions as to date and principal amount (a
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"RECEIVABLES FINANCING NOTE"), and/or (v) in the case of the Swing Line Lender,
a promissory note of the Company evidencing the Swing Line Loans of the Swing
Line Lender, substantially in the form of Exhibit D with appropriate insertions
as to date and principal amount (the "SWING LINE NOTE").
5.14 REPLACEMENT OF LENDERS. In the event any Lender or the Issuing
Lender is a Non-Funding Lender, exercises its rights pursuant to subsection 5.10
or requests payments pursuant to subsections 3.10 or 5.11, the Company may
require, at the Company's expense (including payment of any processing fees
under subsection 12.6(e)) and subject to subsection 5.12, such Lender or the
Issuing Lender to assign, at par plus accrued interest and fees, without
recourse (in accordance with subsection 12.6) all of its interests, rights and
obligations hereunder (including all of its Commitments and the Loans and other
amounts at the time owing to it hereunder and its Notes and its interest in the
Letters of Credit) to a bank, financial institution or other entity specified by
the Company, PROVIDED that (i) such assignment shall not conflict with or
violate any law, rule or regulation or order of any court or other Governmental
Authority, (ii) the Company shall have received the written consent of the
Administrative Agent, which consent shall not unreasonably be withheld, to such
assignment, (iii) the Company shall have paid to the assigning Lender or the
Issuing Lender all monies other than principal, interest and fees accrued and
owing hereunder to it (including pursuant to subsections 3.10, 5.10, 5.11 and
5.12) and (iv) in the case of a required assignment by the Issuing Lender, the
Letters of Credit shall be canceled and returned to the Issuing Lender.
SECTION 6
REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Lenders to enter into this Agreement and to
make the Loans and to induce the Issuing Lender to issue, and the Participating
Lenders to participate in, the Letters of Credit, the Company hereby represents
and warrants to each Lender and the Administrative Agent as of the Closing Date
(after giving effect to the Recapitalization) and as of the making of any
extension of credit hereunder:
6.1 FINANCIAL CONDITION. (a) The consolidated audited balance sheets
of Holdings and its consolidated Subsidiaries as at December 31, 1995 and
December 31, 1996 and the related consolidated statements of operations and of
cash flows for the fiscal years ended on each such dates, audited by Ernst &
Young LLP, copies of which have heretofore been furnished to each Lender,
present fairly in accordance with GAAP the consolidated financial condition of
Holdings and its consolidated Subsidiaries as at such dates, and the
consolidated results of their operations and their consolidated cash flows for
the fiscal year then ended. All such financial statements have been prepared in
accordance with GAAP applied consistently throughout the
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periods involved (except as approved by such accountants and as disclosed
therein). Neither Holdings nor any of its consolidated Subsidiaries had, at the
date of each balance sheet referred to above, any material Contingent
Obligation, contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment, including, without limitation, any
material interest rate or foreign currency swap or exchange transaction, which
is not reflected in the foregoing statements or in the notes thereto or
expressly permitted to be incurred hereunder.
(b) The unaudited consolidated balance sheet of Holdings and its con-
solidated Subsidiaries as at September 30, 1997 and the related consolidated
statements of operations and of cash flows for the nine-month period then ended,
certified by a Responsible Officer of the Company, copies of which have
heretofore been furnished to each Lender, present fairly in accordance with GAAP
the financial position of Holdings and its consolidated Subsidiaries as at such
date and the consolidated results of their operations and their consolidated
cash flows for the nine-month period then ended (subject to normal year-end
adjustments). Such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP (except as approved by
such Responsible Officer and disclosed therein). Holdings and its consolidated
Subsidiaries did not have at the date of such balance sheet, any material
Contingent Obligation, contingent liability or liability for taxes, or any
long-term lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency exchange transaction, which is
not reflected in such balance sheet or in the notes thereto or in the notes to
Holdings' audited financial statements. During the period from December 31, 1996
to the Closing Date, and except for (i) payments to be made to effect the
Recapitalization and (ii) matters disclosed in the Offering Memorandum or the
Recapitalization Agreement, no dividends or other distributions have been
declared, paid or made upon the Capital Stock of Holdings or any of its
consolidated Subsidiaries nor has any of the Capital Stock of Holdings or any of
its consolidated Subsidiaries been redeemed, retired, purchased or otherwise
acquired for value by Holdings or any of its consolidated Subsidiaries,
respectively.
(c) The unaudited consolidated PRO FORMA balance sheet of Holdings
and its consolidated Subsidiaries, as of September 30, 1997, certified by a
Responsible Officer of Holdings (the "PRO FORMA BALANCE SHEET"), copies of which
have been furnished to each Lender, is the unaudited balance sheet of Holdings
and its consolidated Subsidiaries adjusted to give effect (as if such events had
occurred on the date set forth therein) to (i) the Recapitalization and each of
the transactions contemplated by the Recapitalization Agreement, (ii) the
incurrence of the Loans and the issuance of the Letters of Credit to be incurred
or issued, as the case may be, on the Closing Date and (iii) the incurrence of
the Bridge Subordinated Debt or the Permanent Subordinated Debt and all other
Indebtedness that Holdings and its consolidated Subsidiaries expect to incur,
and the payment of all amounts Holdings and its
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consolidated Subsidiaries expect to pay, in connection with the
Recapitalization. The Pro Forma Balance Sheet, together with the notes thereto,
were prepared based on good faith assumptions in accordance with GAAP and is
based on the best information available to Holdings as of the date of delivery
thereof and reflects on a PRO FORMA basis the financial position of Holdings and
its consolidated Subsidiaries as of September 30, 1997, as adjusted, as
described above, assuming that the events specified in the preceding sentence
had actually occurred as of September 30, 1997.
6.2 NO CHANGE. Other than the factual items disclosed in the Offering
Memorandum or in the Recapitalization Agreement (but only to the extent that
there have been no adverse changes with respect to such disclosed factual items
after the date hereof), since December 31, 1996 (but after giving effect to the
consummation of the Transaction), (a) there has been no material adverse change,
and (as of the Closing Date only) no development or event which has had or could
reasonably be expected to have a material adverse effect, on (i) the business,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries taken as a whole, (ii) the ability of the Company
and its Subsidiaries to perform their obligations under the Credit Documents and
with respect to the other financings contemplated hereby or (iii) the rights and
remedies of the Lenders under the Credit Documents and (b) no dividends or other
distributions have been declared, paid or made upon the Capital Stock of the
Company nor has any of the Capital Stock of the Company been redeemed, retired,
repurchased or otherwise acquired for value by the Company or any of its
Subsidiaries, except as permitted by subsection 9.12.
6.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the Company and
its Subsidiaries (other than Immaterial Subsidiaries) (a) is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation, (b) has full corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to use its corporate name and to own, lease or otherwise
hold its properties and assets and to carry on its business as presently
conducted other than such franchises, licenses, permits, authorizations and
approvals the lack of which, individually or in the aggregate, would not have a
material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries, taken
as a whole, (c) is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership, leasing or
holding of its properties makes such qualification necessary, except such
jurisdictions where the failure so to qualify would not have a material adverse
effect on the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole, and (d) except
as disclosed in Schedule 6.11, is in compliance with all applicable statutes,
laws, ordinances, rules, orders, permits and regulations of any governmental
authority or instrumentality, domestic or foreign (including, without
limitation, those related to Hazardous
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Materials and substances), except where noncompliance would not have a material
adverse effect on the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, taken as a whole.
Neither the Company nor any of its Subsidiaries has received any written
communication from a Governmental Authority that alleges that the Company or any
of its Subsidiaries is not in compliance, in all material respects, with all
material federal, state, local or foreign laws, ordinances, rules and
regulations.
6.4 CORPORATE POWER; AUTHORIZATION. Each of the Company and its
Subsidiaries has the corporate power and authority to make, deliver and perform
each of the Credit Documents to which it is a party, and the Company has the
corporate power and authority and legal right to borrow hereunder and to have
Letters of Credit issued for its account hereunder. Each of the Company and its
Subsidiaries has taken all necessary corporate action to authorize the
execution, delivery and performance of each of the Credit Documents to which it
is or will be a party and the Company has taken all necessary corporate action
to authorize the borrowings hereunder and the issuance of Letters of Credit for
its account hereunder. No consent or authorization of, or filing with, any
Person (including, without limitation, any Governmental Authority) is required
in connection with the execution, delivery or performance by the Company or any
of its Subsidiaries, or for the validity or enforceability against the Company
or any of its Subsidiaries, of any Credit Document except for consents,
authorizations and filings which have been obtained or made and are in full
force and effect and except (i) such consents, authorizations and filings, the
failure to obtain or perform (x) which would not have a material adverse effect
on the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole and (y) which
would not adversely affect the validity or enforceability of any of the Credit
Documents or the rights or remedies of the Administrative Agent or the Lenders
thereunder, and (ii) such filings as are necessary to perfect the Liens of the
Lenders created pursuant to this Agreement and the Security Documents.
6.5 ENFORCEABLE OBLIGATIONS. This Agreement and the Recapitali-
zation Agreement have been, and each of the other Credit Documents and any other
agreement to be entered into by any Credit Party pursuant to the
Recapitalization Agreement will be duly executed and delivered on behalf of such
Credit Party that is party thereto. The Recapitalization Agreement has been duly
executed and delivered on behalf of Holdings. This Agreement and the
Recapitalization Agreement each constitutes, and each of the other Credit
Documents and any other agreement to be entered into by any Credit Party
pursuant to the Recapitalization Agreement will constitute upon execution and
delivery, the legal, valid and binding obligation of such Credit Party, and is
enforceable against such Credit Party in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or similar laws affecting creditors' rights generally and by general
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principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
6.6 NO LEGAL BAR. The execution, delivery and performance of each
Credit Document, the incurrence or issuance of and use of the proceeds of the
Loans, the Subordinated Debt and of drawings under the Letters of Credit and the
transactions contemplated by the Recapitalization Agreement, the Credit
Documents and the documentation for the Subordinated Debt, (a) will not violate
any Requirement of Law or any Contractual Obligation applicable to or binding
upon Holdings, the Company or any Subsidiary or any of their respective
properties or assets, in any manner which, individually or in the aggregate, (i)
would have a material adverse effect on the ability of Holdings, the Company or
any such Subsidiary to perform its obligations under the Credit Documents, the
Recapitalization Agreement, and any other agreement to be entered into pursuant
to the Recapitalization Agreement or in connection with the Subordinated Debt,
to which it is a party, (ii) would give rise to any liability on the part of the
any Agent or any Lender, or (iii) would have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries taken as a whole, and (b) will not result in
the creation or imposition of any Lien on any of its properties or assets
pursuant to any Requirement of Law applicable to it, as the case may be, or any
of its Contractual Obligations, except for the Liens arising under the Security
Documents. Additionally, there shall not exist any judgment, order, injunction
or other restraint prohibiting or imposing materially adverse conditions upon
the execution, delivery and performance of the Credit Documents, the
Recapitalization Agreement, the documentation relating to the Subordinated Debt
or, in each case, the transactions contemplated thereby.
6.7 NO MATERIAL LITIGATION. No litigation by, investigation known to
the Company by, or proceeding of, any Governmental Authority is pending against
the Company or any of its Subsidiaries with respect to the validity, binding
effect or enforceability of the Recapitalization Agreement, any Credit Document,
the Loans made hereunder, the use of proceeds thereof, of the Subordinated Debt
or of any drawings under a Letter of Credit and the other transactions
contemplated hereby or by the Recapitalization Agreement. Other than factual
items disclosed in the Offering Memorandum or in the Recapitalization Agreement
(but only to the extent there have been no adverse changes with respect to such
disclosed factual items after the date hereof), no lawsuits, claims, proceedings
or investigations are pending or, to the best knowledge of the Company,
threatened as of the Closing Date against or affecting the Company or a
Subsidiary or any of their respective properties, assets, operations or
businesses (including after giving effect to the Recapitalization), in which
there is a probability of an adverse determination, and is reasonably likely, if
adversely decided, to have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a
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whole.
6.8 INVESTMENT COMPANY ACT. Neither the Company nor any Subsidiary is
an "investment company" or a company "controlled" by an "investment company" (as
each of the quoted terms is defined or used in the Investment Company Act of
1940, as amended).
6.9 FEDERAL REGULATION. No part of the proceeds of any of the Loans
or Subordinated Debt or any drawing under a Letter of Credit will be used for
the purpose of "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U. Neither the
making of any Loan nor the use of proceeds thereof nor the issuance of any
Letter of Credit or any drawing thereunder will violate or be inconsistent with
the provisions of Regulation G, T, U or X of the Board. Neither the Company nor
any of its Subsidiaries is engaged or will engage, principally or as one of its
important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" within the respective meanings of
each of the quoted terms under said Regulation U.
6.10 NO DEFAULT. The Company and each of its Subsidiaries have
performed all material obligations required to be performed by them under their
respective Contractual Obligations and they are not (with or without the lapse
of time or the giving of notice, or both) in breach or default in any respect
thereunder, except to the extent that such breach or default would not have a
material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries taken as
a whole. Neither the Company nor any of its Subsidiaries is in default under any
material judgment, order or decree of any Governmental Authority, domestic or
foreign, applicable to it or any of its respective properties, assets,
operations or business, except to the extent that any such defaults would not,
in the aggregate, have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a whole.
6.11 TAXES. Except as set forth on Schedule 6.11, each of the Company
and its Subsidiaries has filed or caused to be filed all material tax returns
which, to the knowledge of the Company, are required to be filed and has paid
all taxes shown to be due and payable on said returns or on any assessments made
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority (other than
any the amount of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves (or other sufficient
provisions) in conformity with GAAP have been provided on the books of the
Company or its Subsidiaries (including after giving effect to the
Recapitalization), as the case may be); and no tax Lien has been filed,
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and, to the knowledge of the Company, no written claim is being asserted, with
respect to any such tax, fee or other charges.
6.12 SUBSIDIARIES; IMMATERIAL SUBSIDIARIES. (a) On the Closing Date,
the Subsidiaries of the Company and their respective jurisdictions of
incorporation are as set forth on Schedule 6.12.
(b) On the Closing Date, each of Gold Medal Ladder Company, Florida
Ladder Company, Werner Distribution, Inc., Werner (FID), Co., Inc., BLP
Corporation and Amarlite Architectural Products, Inc. is an Immaterial
Subsidiary, and on the Closing Date such Persons constitute the only Immaterial
Subsidiaries.
6.13 OWNERSHIP OF PROPERTY; LIENS. As of the Closing Date and as of
the making of any extension of credit hereunder (subject to transfers and
dispositions of property permitted under subsection 9.5), each of the Company
and its Subsidiaries has good and valid title to all of its material assets
(other than real property or interests in real property) in each case free and
clear of all mortgages, liens, security interests or encumbrances of any nature
whatsoever except Permitted Liens. With respect to real property or interests in
real property, as of the Closing Date, each of the Company and its Subsidiaries
has (i) good and valid fee title to all of the real property listed on Schedule
6.13 under the heading "Fee Properties" (each, a "FEE PROPERTY"), and (ii) good
and valid title to the leasehold estates in all of the real property leased by
it and listed on Schedule 6.13 under the heading "Leased Properties" (each, a
"LEASED PROPERTY"), in each case, free and clear of all mortgages, liens,
security interests, easements, covenants, rights-of-way and other similar
restrictions of any nature whatsoever, except (A) Permitted Liens and (B) as to
Leased Property, the terms and provisions of the respective lease therefor,
including, without limitation, the matters set forth on Schedule 6.13, and any
matters affecting the fee title and any estate superior to the leasehold estate
related thereto. The Fee Properties and the Leased Properties constitute, as of
the Closing Date, all of the real property owned in fee or leased by the Company
and its Subsidiaries.
6.14 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan that would result
in a material liability to the Company, and each Plan has complied in all
material respects with the applicable provisions of ERISA and the Code. Neither
the Company nor any Commonly Controlled Entity has: been involved in any
transaction that would cause the Company to be subject to material liability
with respect to a Plan to which the Company or any Commonly Controlled Entity
contributed or was obligated to contribute during the six-year period ending on
the date this representation is made or deemed made; or incurred any material
liability under Title IV of ERISA which
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would become or remain a material liability of the Company after the Closing
Date. No termination of a Single Employer Plan has occurred, and no Lien in
favor of the PBGC or a Plan has arisen, during such six-year period that would
result in a material liability to the Company. The present value of all accrued
benefits under each Single Employer Plan (based on those assumptions used to
fund such Plans) did not, as of the last annual valuation date prior to the date
on which this representation is made or deemed made, exceed the value of the
assets of such Plan allocable to such accrued benefits that would result in a
material liability to the Company. Neither the Company nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan, and neither the Company nor any Commonly Controlled Entity
would become subject to any liability under ERISA if the Company or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made, in either case that would result in a
material liability to the Company. To the knowledge of the Company, no such
Multiemployer Plan is in Reorganization or Insolvent. The present value
(determined using actuarial and other assumptions which are reasonable in
respect of the benefits provided and the employees participating) of the
liability of the Company and each Commonly Controlled Entity for post retirement
benefits to be provided to their current and former employees under Plans which
are welfare benefit plans (as defined in Section 3(1) of ERISA) does not, in the
aggregate, exceed the assets under all such Plans allocable to such benefits by
an amount that would result in a material liability to the Company, except as
disclosed in the Company's audited financial statement provided to the Lenders
prior to the Closing Date. For purposes of this subsection 6.14, a material
liability shall exceed $10,000,000.
6.15 COLLATERAL DOCUMENTS. (a) Upon execution and delivery thereof by
the parties thereto, each of the Pledge Agreements will be effective to create
in favor of the Administrative Agent, for the ratable benefit of the Lenders, a
legal, valid and enforceable security interest in the pledged stock described
therein and, when stock certificates representing or constituting the pledged
stock described in each of the Pledge Agreements are delivered to the
Administrative Agent, such security interest shall constitute a perfected first
lien on, and security interest in, all described therein.
(b) Upon execution and delivery thereof by the parties thereto, each
of the Security Agreements will be effective to create in favor of the
Administrative Agent, for the ratable benefit of the Lenders, a legal, valid and
enforceable security interest in the collateral described therein, and Uniform
Commercial Code financing statements have been filed in each of the
jurisdictions listed on Schedule 6.15(b), or arrangements have been made for
such filing in such jurisdictions, and upon such filing, and upon the taking of
possession by the Administrative Agent of any such collateral the security
interests in which may be perfected only by possession, such security
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interests will, subject to the existence of Permitted Liens, constitute
perfected first priority liens on, and security interests in, all right, title
and interest of the debtor party thereto in the collateral described therein,
except to the extent that a security interest cannot be perfected therein by the
filing of a financing statement or the taking of possession under the Uniform
Commercial Code of the relevant jurisdiction.
(c) Upon execution and delivery thereof by the Company, each Mort-
gage will be effective to create in favor of the Administrative Agent, for the
ratable benefit of the Lenders, a legal, valid and enforceable security interest
in the collateral described therein, and upon recording the Mortgages in the
jurisdictions listed on Schedule 6.13 (or, in the case of a Mortgage delivered
pursuant to subsection 8.9, the jurisdiction in which the property covered by
such Mortgage is located), such security interests will, subject to the
existence of Permitted Liens, constitute first liens on, and perfected security
interests in, all rights, title and interest of the debtor party thereto in the
collateral described therein.
6.16 COPYRIGHTS, PATENTS, PERMITS, TRADEMARKS AND LICENSES. Schedule
6.16 sets forth a true and complete list as of the Closing Date of all material
trademarks (registered or unregistered), trade names, service marks, patents,
pending patent applications and copyrights and applications therefor owned, used
or filed by or licensed to the Company and its Subsidiaries and, with respect to
registered trademarks (if any), contains a list of all jurisdictions in which
such trademarks are registered or applied for and all registration and
application numbers. Except as set forth on Schedule 6.16, the Company or a
Subsidiary owns or has the right to use, trademarks (registered or
unregistered), trade names, service marks, patents, pending patent applications
and copyrights and applications therefor referred to in such Schedule. Except as
set forth on Schedule 6.16, to the best knowledge of the Company, no claims are
pending by any Person with respect to the ownership, validity, enforceability or
the Company's or any Subsidiary's use of any such trademarks (registered or
unregistered), trade names, service marks, patents, pending patent applications
and copyrights, or applications therefor, challenging or questioning the
validity or effectiveness of any of the foregoing, in any jurisdiction, domestic
or foreign, except to the extent such claims could not reasonably be expected to
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole.
6.17 ENVIRONMENTAL MATTERS. Except insofar as any exceptions to the
following, individually or in the aggregate, could not reasonably be expected to
result in a material adverse effect on the business, assets, conditions
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole:
(i) to the best knowledge of the Company, the properties
owned, leased, or otherwise operated by the Company or any of its
Subsidiaries do not contain, and have not previously contained, in,
on or under, including, without
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limitation, the soil and groundwater thereunder, any Hazardous
Materials in amounts or concentrations that constitute or constituted
a violation of, or could reasonably give rise to liability under,
Environmental Laws;
(ii) to the best knowledge of the Company, the properties
owned or leased, or otherwise operated by the Company or any of its
Subsidiaries and all operations and facilities at such properties are
in compliance with all Environmental Laws, and there is no
contamination or violation of any Environmental Law which could
interfere with the continued operation of, or impair the fair
saleable value of, such property;
(iii) neither the Company nor any of its Subsidiaries has
received or is aware of any written complaint, notice of violation,
alleged violation, or notice of investigation or of potential
liability under Environmental Laws with regard to the Company or its
Subsidiaries, nor does the Company or any of its Subsidiaries have
knowledge that any such action is being contemplated, considered or
threatened;
(iv) to the best knowledge of the Company, Hazardous
Materials have not been generated, treated, stored or disposed of at,
on or under any properties presently or formerly owned, leased, or
otherwise operated by the Company or any of its Subsidiaries, nor
have any Hazardous Materials been transported from any such property,
or come to be located at any other property, in violation of or in a
manner that could reasonably give rise to liability under any
Environmental Laws; and
(v) there are no governmental administrative actions or
judicial proceedings pending or, to the best knowledge of the Company
and its Subsidiaries, threatened under any Environmental Law to which
the Company or any of its Subsidiaries is a party, nor are there any
consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial
requirements, other than permits authorizing operations by the
Company or any of its Subsidiaries, outstanding under any
Environmental Law.
6.18 ACCURACY AND COMPLETENESS OF INFORMATION. The factual state-
ments contained in the financial statements referred to in subsection 6.1, the
Credit Documents (including the schedules thereto), the Recapitalization
Agreement and any other certificates or documents furnished or to be furnished
to the Agents or the Lenders from time to time in connection with this
Agreement, taken as a whole, do not and will not, to the best knowledge of the
Company, as of the date when made, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
contained therein not misleading in light of the
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circumstances in which the same were made, all except as otherwise qualified
herein or therein, such knowledge qualification being given only with respect to
factual statements made by Persons other than the Company or any of its
Subsidiaries.
SECTION 7
CONDITIONS PRECEDENT
--------------------
7.1 CONDITIONS TO INITIAL LOANS AND LETTERS OF CREDIT. The obligation
of each Lender to make its Loans, and the obligation of the Issuing Lender to
issue any Letter of Credit, on the Closing Date are subject to the satisfaction,
or waiver by the Required Lenders, immediately prior to or concurrently with the
making of such Loans or the issuance of such Letters of Credit, as the case may
be, of the following conditions:
(a) AGREEMENT; NOTES; RECAPITALIZATION AGREEMENT. The
Administrative Agent shall have received (i) a counterpart of this
Agreement for each Lender duly executed and delivered by a duly
authorized officer of the Company, (ii) for the account of each B
Term Loan Lender requesting the same pursuant to subsection 5.13(e),
a B Term Loan Note, conforming to the requirements hereof and
executed by a duly authorized officer of the Company, (iii) for the
account of each C Term Loan Lender requesting the same pursuant to
subsection 5.13(e), a C Term Loan Note, conforming to the
requirements hereof and executed by a duly authorized officer of the
Company, (iv) for the account of each Revolving Credit Lender
requesting the same pursuant to subsection 5.13(e), a Revolving
Credit Note of the Company conforming to the requirements hereof and
executed by a duly authorized officer of the Company, (v) for the
account of each Receivables Financing Lender requesting the same
pursuant to subsection 5.13(e), a Receivables Financing Note of the
Company conforming to the requirements hereof and executed by a duly
authorized officer of the Company and (vi) for the account of the
Swing Line Lender, a Swing Line Note, conforming to the requirements
hereof and executed by a duly authorized officer of the Company. The
Administrative Agent shall have received a copy of the
Recapitalization Agreement.
(b) RECAPITALIZATION. (i) The Recapitalization shall be
consummated, simultaneously with the incurrence of Loans on the
Closing Date, in accordance with the Recapitalization Agreement and
all applicable laws, with all funds with respect thereto to be
consistent with the description contained in the Offering Memorandum,
and all of the conditions precedent set forth in Article VI of the
Recapitalization Agreement shall have been satisfied or waived by the
Company; PROVIDED that no provision of the Recapitalization
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Agreement shall have been amended, supplemented, waived or otherwise
modified in any material respect without the prior written consent of
the Co-Arrangers, which consent shall not be unreasonably withheld.
(ii) No more than $525,000,000 (less the value
attributable to common stock of Holdings retained by the Existing
Shareholders), exclusive of fees and expenses and except for normal
fluctuations in working capital since September 30, 1997, shall be
expended in connection with the Recapitalization and to refinance
existing Indebtedness.
(c) CAPITALIZATION; CAPITAL STRUCTURE (i) (y) Holdings
shall have been capitalized by the Investors with at least
$122,700,000 in cash from the issuance of its common stock
(representing at least 66.7% of the voting Capital Stock of Holdings
upon the consummation of the Recapitalization) and (z) the value of
the common stock of Holdings held by Existing Shareholders (valued at
a price per share equal to the price at which the Investors purchased
their common stock), when added to the amount referred to in clause
(y) above, shall equal at least $182,000,000 (of which approximately
$23,700,000 shall constitute retained equity of existing management
shareholders and approximately $35,600,000 shall constitute retained
equity of other existing shareholders).
(ii) The Company shall have received net cash proceeds
(and shall have distributed the proceeds to Holdings) from the
Company's issuance of $135,000,000 aggregate principal amount of
either (y) Bridge Subordinated Debt pursuant to a Bridge Loan
Agreement executed and delivered by the parties thereto and subject
to terms and conditions which are consistent with the Bridge
Commitment Letter, which Bridge Loan Agreement shall be in full force
and effect and none of the provisions thereof shall have been
amended, waived, supplemented or otherwise modified without the prior
written consent of the Co-Arrangers (which consent shall not be
unreasonably withheld); or (z) Permanent Subordinated Debt, which
shall be issued on terms as described in the Offering Memorandum.
(iii) Holdings shall use all cash proceeds received from
the financings described in clauses (i) and (ii) above to make
payments owing in connection with the Recapitalization before (or
simultaneously with) the utilization of any proceeds of Loans
pursuant to this Agreement for such purpose. The cash proceeds
received from the financings described in clauses (i) and (ii), when
added to the aggregate principal amount of Loans incurred on the
Closing Date, shall be sufficient to effect the Recapitalization, to
refinance all Indebtedness being refinanced in connection therewith
and to pay all fees and expenses in connection therewith.
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(iv) The terms, conditions and documentation of all equity
securities of Holdings or any of its Subsidiaries to be outstanding
at or after the Closing Date, the certificate of incorporation,
by-laws, other governing documents and the corporate and capital
structure of Holdings and its Subsidiaries (excluding the identity
and amount of equity contribution of any Investor), in each case
after giving effect to the consummation of the Recapitalization,
shall be in form and substance satisfactory to the Co-Arrangers (it
being understood that all such terms, conditions and documentation as
disclosed or otherwise made available to the Co-Arrangers on or prior
to the date of the Offering Memorandum are in form and substance
satisfactory to the Co-Arrangers). All of the existing Indebtedness
of Holdings and its Subsidiaries (except for (x) the Industrial
Revenue Bonds, Financing Leases and similar obligations in an
aggregate amount not in excess of $10,000,000 and (y) letters of
credit collateralizing obligations of all Captive Insurance
Subsidiaries in an aggregate amount not in excess of $12,000,000)
shall have been repaid on terms reasonably satisfactory to the
Co-Arrangers.
(v) The execution and delivery of this Agreement by the
Lenders and the Agents shall be deemed to evidence the satisfaction
of the Lenders and the Agents with such of the matters referenced and
in clauses (i) through (iv) of this paragraph (c) as shall have been
disclosed and made available to the Administrative Agent prior to the
date hereof.
(d) FINANCIAL STATEMENTS. (i) The Lenders shall have
received the unaudited interim consolidated balance sheet of Holdings
and its Subsidiaries for the monthly period ended as of October 31,
1997, to the extent available, in form and substance reasonably
satisfactory to the Co-Arrangers; and (ii) the Lenders shall have
received a satisfactory PRO FORMA balance sheet on a consolidated
basis of the Company and its Subsidiaries as of October 31, 1997
reflecting and giving effect to the Recapitalization and the other
transactions contemplated hereby.
(e) FEES. The Agents and the Lenders shall have received
all fees, expenses and other consideration presented for payment
required to be paid or delivered on or before the Closing Date.
(f) LIEN SEARCHES; LIEN PERFECTION. (i) The Administrative
Agent shall have received the results of a search of Uniform
Commercial Code, tax and judgment filings made with respect to each
of Holdings and its Subsidiaries in each of the jurisdictions
reasonably requested by the Co-Arrangers, together with copies of
financing statements disclosed by such searches and such searches
shall disclose no Liens on any assets encumbered by any
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Security Document, except for Liens permitted hereunder or, if
unpermitted Liens are disclosed, the Administrative Agent shall have
received satisfactory evidence of the release of such Liens and (ii)
the Administrative Agent shall have received duly executed financing
statements on Form UCC-1, necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Liens created by the
Security Documents.
(g) ENVIRONMENTAL. The Lenders shall be reasonably
satisfied, based upon the results of the environmental diligence
conducted by the Co-Arrangers and their advisors in cooperation with
the Company (and the Lenders shall have received all information,
reasonably requested by the Co-Arrangers, in connection with such
environmental diligence), with respect to environmental hazards,
conditions or liabilities to which the Company or any of its
Subsidiaries may be subject (the execution and delivery of this
Agreement by the Lenders and the Co-Arrangers being deemed to
evidence the satisfaction of the Co-Arrangers with such due diligence
as shall have been disclosed and made available to the Co-Arrangers
prior to the date hereof).
(h) PLEDGE AGREEMENTS. The Administrative Agent shall have
received the Company Pledge Agreement and the Holdings/Subsidiary
Pledge Agreement executed and delivered by a duly authorized officer
of the parties thereto, together with stock certificates representing
100% of all issued and outstanding shares of Capital Stock of the
Company and each of the Domestic Subsidiaries of the Company (except
that (x) the Capital Stock of Captive Insurance Subsidiaries shall
not be required to be delivered and (y) to the extent the Capital
Stock of any Foreign Subsidiary of the Company is voting stock, not
more than 65% of the voting stock of any such Foreign Subsidiary
shall be required to be so pledged), and undated stock powers for
each certificate, executed in blank and delivered by a duly
authorized officer of the applicable pledgor and the acknowledgment
and consent of the issuer thereunder in the form annexed thereto.
(i) COMPANY SECURITY AGREEMENT. The Administrative Agent
shall have received the Company Security Agreement, executed and
delivered by a duly authorized officer of the Company.
(j) GUARANTEES. (i) The Administrative Agent shall have
received a Holdings Guarantee, executed and delivered by a duly
authorized officer of Holdings.
(ii) The Administrative Agent shall have received a
Subsidiary Guarantee, executed and delivered by a duly authorized
officer of each of the Domestic Subsidiaries of the Company except
for (i) any Receivables SPV, (ii)
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any Captive Insurance Subsidiary and (iii) any Immaterial Subsidiary.
(k) SUBSIDIARY SECURITY AGREEMENT. The Administrative
Agent shall have received a Subsidiary Security Agreement, executed
and delivered by a duly authorized officer of each Subsidiary
Guarantor.
(l) LEGAL OPINIONS. The Administrative Agent shall have
received, dated the Closing Date and addressed to each Agent and the
Lenders, an opinion of (i) Gibson, Dunn & Crutcher LLP, counsel to
the Credit Parties, in substantially the form of Exhibit J-1, with
such changes thereto as may be approved by the Co-Arrangers and their
counsel, (ii) the general counsel to the Company, in substantially
the form of Exhibit J-2, with such changes thereto as may be approved
by the Administrative Agent and its counsel and (iii) such local
counsel as may have been reasonably requested by the Co-Arrangers,
which opinions shall be in form and substance reasonably satisfactory
to the Co-Arrangers.
(m) CLOSING CERTIFICATE. The Administrative Agent shall
have received a Closing Certificate of each Credit Party dated the
Closing Date, in substantially the form of Exhibits K-1, K-2 and K-3,
respectively, with appropriate insertions and attachments, in form
and substance satisfactory to the Co-Arrangers and their counsel,
executed by the President, any Vice President or Chief Financial
Officer and the Secretary or any Assistant Secretary of Holdings, the
Company and its Subsidiaries, respectively.
(n) SOLVENCY OPINION. The Administrative Agent shall have
received an opinion or opinions of Murray, Devine & Co. in form and
substance reasonably satisfactory to it, setting forth the
conclusions that, after giving effect to the Transaction and the
incurrence of all the financings contemplated herein, each of the
Company, individually, and the Company and its Subsidiaries, taken as
a whole, are not insolvent and will not be rendered insolvent by the
indebtedness incurred in connection therewith, and will not be left
with unreasonably small capital with which to engage in their
businesses and will not have incurred debts beyond their ability to
pay such debts as they mature.
(o) INSURANCE. The Administrative Agent shall have
received (i) a schedule describing all insurance maintained by
Holdings and its Subsidiaries pursuant to subsection 8.5, and (ii)
binders or certificate of insurance for each policy set forth on such
schedule insuring against casualty and other usual and customary
risks.
(p) EXISTING CREDIT AGREEMENTS. (i) On the Closing Date,
the commitments under the Existing Credit Agreements shall have been
terminated, all
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loans thereunder shall have been repaid in full, together with
interest thereon, all letters of credit issued thereunder shall have
been terminated or incorporated hereunder as, or supported hereunder
by, Letters of Credit, and all other amounts owing pursuant to the
Existing Credit Agreements shall have been repaid in full, and the
Administrative Agent shall have received evidence in form, scope and
substance reasonably satisfactory to it that the matters set forth in
this subsection have been satisfied at such time.
(ii) On the Closing Date, the creditors under the Existing
Credit Agreements shall have terminated and released all Liens on the
capital stock of and assets owned by Holdings and its Subsidiaries,
and the Administrative Agent shall have received all such releases as
may have been requested by the Co-Arrangers, which releases shall be
in form and substance reasonably satisfactory to the Co-Arrangers.
(q) OTHER AGREEMENTS. The Administrative Agent shall have
received each additional document or instrument reasonably requested
by the Required Lenders.
(r) LITIGATION. On the Closing Date, there shall be no
actions, suits, injunctions, restraining orders or proceedings
pending or threatened against any Credit Party (x) with respect to
this Agreement or any other Credit Document or the transactions
contemplated hereby or thereby (including the Recapitalization) or
(y) which is reasonably likely to have a material adverse effect on
(I) the transactions contemplated by the Credit Documents or on the
business, property, assets, liabilities or condition (financial or
otherwise) of the Company or of the Company and its Subsidiaries
taken as a whole, in each case after giving effect to the
Recapitalization and the other transactions contemplated hereby, (II)
the rights or remedies of the Lenders hereunder or under any other
Credit Document or (III) on the ability of any Credit Party to
perform its respective obligations to the Lenders hereunder or under
any other Credit Document.
(s) CONSENTS, APPROVALS AND FILINGS. Except for the
financing statements contemplated by the Security Agreements and the
Mortgages and except as disclosed in Section 3.4 of the Company
Disclosure Letter to the Recapitalization Agreement, on the Closing
Date, all necessary governmental and other third party
authorizations, consents, approvals or waivers required in connection
with the execution, delivery and performance by the Credit Parties,
and the validity and enforceability against the Credit Parties, of
the Credit Documents to which any of them is a party, or otherwise in
connection with the transactions contemplated by the Credit Documents
and the Recapitalization Agreement, shall have been obtained or made
and remain in full force
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and effect (except where the failure to do so would not reasonably be
expected to have a material adverse effect on (x) the business,
operations, property, condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole, or (y) (I) the
validity or enforceability of this Agreement, any of the Notes or the
other Credit Documents or (II) the rights or remedies of the Agents
or the Lenders hereunder or thereunder), and all applicable waiting
periods shall have expired without any action being taken by any
competent authority which restrains or prevents such transactions or
imposes materially adverse conditions upon the consummation of such
transactions.
(t) CONTRACTUAL RESTRICTIONS. After giving effect to the
Transaction, the financings incurred in connection therewith and the
other transactions contemplated hereby and except as disclosed in
Sections 3.4 and 3.10 of the Company Disclosure Letter to the
Recapitalization Agreement, the Company and its Subsidiaries shall
not be subject to any material contractual or other restrictions
(including any such agreements acquired pursuant to the Transaction)
that would be violated by the Recapitalization or the other
transactions contemplated hereby, including the granting of security
interests and guarantees and the payment of dividends by
Subsidiaries.
(u) ADVERSE CHANGE. Nothing shall have occurred (and the
Agents shall have become aware of no facts or conditions) which is
reasonably likely to have a material adverse effect on (x) the rights
or remedies of the Lenders or the Agents, or on the ability of the
Company or its Subsidiaries to perform their obligations to the
Lenders or (y) the business, property, assets, liabilities or
condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole, in each case after giving effect to
the consummation of the Recapitalization and the transactions
contemplated hereby.
(v) INITIAL BORROWING BASE CERTIFICATE. On the Closing
Date, the Company shall have delivered to the Administrative Agent
the initial Borrowing Base Certificate meeting the requirements of
Section 8.1(e).
7.2 CONDITIONS TO ALL LOANS AND LETTERS OF CREDIT. The obligation of
each Lender to make any Loan (other than any Revolving Credit Loan the proceeds
of which are to be used to repay Refunded Swing Line Loans) and the obligation
of the Issuing Lender to issue any Letter of Credit is subject to the
satisfaction of the following conditions precedent on the relevant Borrowing
Date:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made in or pursuant to Section 6 or
which are contained in any other Credit Document shall be true and
correct in all material respects on and as of the date of such Loan
or of the issuance of such Letter of Credit as if
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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).
(b) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of
Default shall have occurred and be continuing on such Borrowing Date
or after giving effect to such Loan to be made or such Letter of
Credit to be issued on such Borrowing Date.
Each borrowing by the Company hereunder and the issuance of each Letter of
Credit by the Issuing Lender hereunder shall constitute a representation and
warranty by the Company as of the date of such borrowing or issuance that the
conditions in clauses (a) and (b) and of this subsection 7.2 have been
satisfied.
SECTION 8
AFFIRMATIVE COVENANTS
---------------------
The Company hereby agrees that, so long as the Commitments remain in
effect, any Loan, Note or L/C Obligation remains outstanding and unpaid, any
amount (unless cash in an amount equal to such amount has been deposited to a
cash collateral account established by the Administrative Agent) remains
available to be drawn under any Letter of Credit or any other amount is owing to
any Lender or the Administrative Agent hereunder or under any of the other
Credit Documents, the Company shall, and, in the case of the agreements
contained in subsections 8.3 through 8.6, and 8.8 through 8.9, shall cause each
of its Subsidiaries to:
8.1 FINANCIAL STATEMENTS. Furnish to the Administrative Agent (with
sufficient copies for each Lender which the Administrative Agent shall promptly
furnish to each Lender):
(a) as soon as available, but in any event within 95 days
after the end of each fiscal year of the Company, a copy of the
consolidated balance sheet of the Company and its consolidated
Subsidiaries as at the end of such fiscal year and the related
consolidated statements of stockholders' equity and cash flows and
the consolidated statements of income of the Company and its
Subsidiaries for such fiscal year, setting forth in each case in
comparative form the figures for the previous year and, in the case
of the consolidated balance sheet referred to above, reported on,
without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, or qualification
which would affect the computation of financial covenants, by
independent certified public accountants of nationally
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recognized standing;
(b) as soon as available, but in any event not later than
50 days after the end of each of the first three quarterly periods of
each fiscal year of the Company, the unaudited consolidated balance
sheet of the Company and its Subsidiaries as at the end of each such
quarter and the related unaudited consolidated statements of income
and cash flows of the Company and its Subsidiaries for such quarterly
period and the portion of the fiscal year of the Company through such
date, setting forth in each case in comparative form the figures for
the corresponding quarter in, and year to date portion of, the
previous year, and the figures for such periods in the budget
prepared by the Company and furnished to the Administrative Agent,
certified by the chief financial officer, controller or treasurer of
the Company as being fairly stated in all material respects;
(c) as soon as available, but in any event not later than
45 days after the beginning of each fiscal year of the Company to
which such budget relates, a preliminary consolidated operating
budget for the Company and its Subsidiaries taken as a whole; and as
soon as available, any material revision to or any final revision of
any such preliminary annual operating budget or any such consolidated
operating budget;
(d) concurrently with the delivery of financial statements
pursuant to subsection 8.1(a) or (b), a certificate of the chief
financial officer or treasurer of the Company setting forth, in
reasonable detail, (x) the computations of Capital Expenditures as of
the last day of the fiscal period covered by such financial
statements, the Leverage Ratio as of such last day, the Interest
Coverage Ratio as of such last day and Consolidated EBITDA for the
respective period being tested pursuant to Section 9.11 and (y) in
the case of financial statements delivered pursuant to subsection
8.1(a), the computations of Excess Cash Flow for the respective
fiscal year; and
(e) (i) on the Closing Date and (ii) thereafter, as soon
as possible but in any event not later than 30 days after the end of
each fiscal month, a borrowing base certificate substantially in the
form of Exhibit M (each, a "Borrowing Base Certificate"), with
respect to the Eligible Receivables of the Company and the Subsidiary
Guarantors as of (x) in the case of clause (i), October 31, 1997 and
(y) in the case of clause (ii), the last day of the immediately
preceding fiscal month, and in each case, certified by the chief
financial officer of the Company;
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all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and (except in the case of
the statements referred to in paragraphs (c), (d) and (e) of this subsection
8.1) in accordance with GAAP.
8.2 CERTIFICATES; OTHER INFORMATION. Furnish to the Administrative
Agent (with sufficient copies for each Lender which the Administrative Agent
shall promptly deliver to each Lender):
(a) concurrently with the delivery of the consolidated
financial statements referred to in subsection 8.1(a), a letter from
the independent certified public accountants reporting on such
financial statements stating that in making the examination necessary
to express their opinion on such financial statements no knowledge
was obtained of any Default or Event of Default under subsections
5.4(c), 9.1, 9.3, and 9.5 through 9.12, except as specified in such
letter;
(b) within 15 days of the delivery of the financial
statements referred to in subsections 8.1(a) and (b) (except that the
certificate referred to in clause (iii) below shall be delivered
concurrently with such financial statements), a certificate of the
chief financial officer or treasurer of the Company stating that, to
the best of such officer's knowledge, during such period (i) no
Subsidiary has been formed or acquired (or, if any such Subsidiary
has been formed or acquired, the Company has complied with the
requirements of subsection 8.9 with respect thereto), (ii) neither
the Company nor any of its Subsidiaries has changed its name, its
principal place of business, its chief executive office or the
location of any material item of tangible Collateral without
complying with the requirements of this Agreement and the Security
Documents with respect thereto, (iii) each of the Company and its
Subsidiaries has observed or performed all of its respective
covenants and other agreements, and satisfied every material
condition, contained in this Agreement, the Notes and the other
Credit Documents to be observed, performed or satisfied by it, and
that such officer has obtained no knowledge of any Default or Event
of Default except as specified in such certificate, (iv) showing in
detail as of the end of the related fiscal period the figures and
calculations supporting such statement in respect of subsection 9.1,
clauses (b) and (e) of subsection 9.3 and subsections 9.6 through
9.12 and any other calculations reasonably requested by the
Administrative Agent with respect to the quantitative aspects of the
other covenants contained herein, (v) if not specified in the
financial statements delivered pursuant to subsection
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8.1, specifying the aggregate amount of interest paid or accrued by
the Company and its Subsidiaries, and the aggregate amount of
depreciation, depletion and amortization charged on the books of the
Company and its Subsidiaries, during such accounting period, and (vi)
identify any owned Real Property of the Company or a Domestic
Subsidiary acquired during such accounting period that, together with
any improvements thereon, has a value of at least $5,000,000;
(c) promptly upon receipt thereof, copies of all final
reports submitted to the Company or to any of its Subsidiaries by
independent certified public accountants in connection with each
annual, interim or special audit of the books of the Company or any
of its Subsidiaries made by such accountants, and, upon the request
of any Lender (through the Administrative Agent), any final comment
letter submitted by such accountants to management in connection with
their annual audit;
(d) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or
made available to the public generally by Holdings, the Company or
any of their Subsidiaries, if any, and all regular and periodic
reports and all final registration statements and final prospectuses,
if any, filed by the Company or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange Commission or
any Governmental Authority succeeding to any of its functions;
(e) concurrently with the delivery of the financial
statements referred to in subsections 8.1(a) and (b), a management
summary describing and analyzing the performance of the Company and
its Subsidiaries during the periods covered by such financial
statements;
(f) within 50 days after the end of each fiscal quarter, a
summary of all Asset Sales during such fiscal quarter including the
amount of all Net Proceeds from such Asset Sales not previously
applied to prepayments of the Loans and reductions of the Commitments
pursuant to the proviso to subsection 5.4(c)(iii);
(g) within 50 days after the end of each fiscal year, (A)
a summary of all Recovery Events during such period for which
proceeds received by Holdings or its Subsidiaries exceeded $250,000,
(B) if the aggregate proceeds received with respect to all Recovery
Events during such period exceeded $1,000,000, a summary of all such
Recovery Events with individual amounts of proceeds in excess of
$50,000, in each case including the amounts of such
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proceeds and the dates on which they were received, or (C) a
statement that no Recovery Events described above have occurred
during such fiscal year;
(h) within 50 days after the end of each fiscal year, a
summary of all acquisitions effected pursuant to subsection
9.6(g)(B), for which the amount of individual expenditures exceeded
$1,000,000, which summary shall include the amount of expenditures in
connection with such acquisitions and the dates on which such
acquisitions were consummated; and
(i) promptly, such additional financial and other
information as any Lender may from time to time reasonably request
(through the Administrative Agent).
8.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations and liabilities of whatever nature, except (a) when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Company or any of its Subsidiaries, as the case may
be, (b) for delinquent obligations which do not have a material adverse effect
on the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole and (c) for
trade and other accounts payable in the ordinary course of business which are
not overdue for a period of more than 90 days or, if overdue for more than 90
days, as to which a dispute exists and adequate reserves in conformity with GAAP
have been established on the books of the Company or any of its Subsidiaries, as
the case may be.
8.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue to
engage in businesses of the same general type as now conducted by it (after
giving effect to the Recapitalization), and preserve, renew and keep in full
force and effect its corporate existence and take all reasonable action to
maintain all material rights, material privileges, franchises, copyrights,
patents, trademarks and trade names necessary or desirable in the normal conduct
of its business except for rights, privileges, franchises, copyrights, patents,
trademarks and tradenames the loss of which would not in the aggregate have a
material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries taken as
a whole, and except as otherwise permitted by subsections 9.4 and 9.5; and
comply with all applicable Requirements of Law except to the extent that the
failure to comply therewith would not, in the aggregate, have a material adverse
effect on the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole.
8.5 MAINTENANCE OF PROPERTY; INSURANCE. (a) Keep all property useful
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and necessary in its business in good working order and condition (ordinary wear
and tear excepted); and
(b) Maintain with financially sound and reputable insurance com-
panies insurance on all its property in at least such amounts and with only such
deductibles as are usually maintained by, and against at least such risks (but
including, in any event, public liability insurance) as are usually insured
against in the same general area by, companies engaged in the same or a similar
business, and furnish to each Lender, (i) annually, a schedule disclosing (in a
manner substantially similar to that used in the schedule provided pursuant to
subsection 7.1(o)) all insurance against products liability risk maintained by
the Company and its Subsidiaries pursuant to this subsection 8.5(b) or otherwise
and (ii) upon written request of any Lender, full information as to the
insurance carried; PROVIDED that the Company may implement programs of self
insurance in the ordinary course of business and in accordance with industry
standards for a company of similar size so long as reserves are maintained in
accordance with GAAP for the liabilities associated therewith.
8.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of record and account in which full, true and correct entries are
made of all dealings and transactions in relation to its business and activities
which permit financial statements to be prepared in conformity with GAAP and all
Requirements of Law; and permit representatives of any Lender upon reasonable
notice (made through the Administration Agent and no more frequently than
quarterly unless a Default or Event of Default shall have occurred and be
continuing) to visit and inspect any of its properties and examine and make
abstracts from any of its books and records at any reasonable time and as often
as may reasonably be requested upon reasonable notice, and to discuss the
business, operations, assets and financial and other condition of the Company
and its Subsidiaries with officers and employees thereof and with their
independent certified public accountants with prior reasonable notice to, and
coordination with, the chief financial officer or the treasurer of the Company.
8.7 NOTICES. Promptly give notice to the Administrative Agent (to be
distributed by the Administrative Agent to the Lenders):
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any
instrument or other agreement, guarantee or collateral document of
the Company or any of its Subsidiaries which default or event of
default has not been waived and would have a material adverse effect
on the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries taken as a
whole, or any other default or event of default under any such
instrument, agreement, guarantee or
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other collateral document which, but for the proviso to clause (e) of
Section 10, would have constituted a Default or Event of Default
under this Agreement, or (ii) litigation, investigation or proceeding
which may exist at any time between the Company or any of its
Subsidiaries and any Governmental Authority, or receipt of any notice
of any environmental claim or assessment against the Company or any
of its Subsidiaries by any Governmental Authority, which in any such
case, if adversely determined, would have a material adverse effect
on the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries taken as a
whole;
(c) of any litigation or proceeding against the Company or
any of its Subsidiaries (i) in which more than $5,000,000 of the
amount claimed is not covered by insurance or (ii) in which
injunctive or similar relief is sought which if obtained would have a
material adverse effect on the business, assets, condition (financial
or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole;
(d) of the following events, as soon as practicable after,
and in any event within 30 days after, the Company knows or has
reason to know thereof: (i) the occurrence of any Reportable Event
with respect to any Plan which Reportable Event could reasonably
result in material liability to the Company and its Subsidiaries
taken as a whole, or (ii) the institution of proceedings or the
taking of any other action by PBGC, the Company or any Commonly
Controlled Entity to terminate, withdraw or partially withdraw from
any Plan and, with respect to a Multiemployer Plan, the
Reorganization or Insolvency of such Plan, in each of the foregoing
cases which could reasonably result in material liability to the
Company and its Subsidiaries taken as a whole, and in addition to
such notice, deliver to the Administrative Agent and each Lender
whichever of the following may be applicable: (A) a certificate of a
Responsible Officer of the Company setting forth details as to such
Reportable Event and the action that the Company or such Commonly
Controlled Entity proposes to take with respect thereto, together
with a copy of any notice of such Reportable Event that may be
required to be filed with PBGC, or (B) any notice delivered by PBGC
evidencing its intent to institute such proceedings or any notice to
PBGC that such Plan is to be terminated, as the case may be;
(e) concurrently with the delivery of the information
delivered pursuant to subsection 8.2(f) and each prepayment required
pursuant to subsection 5.4(c)(iii), of any Asset Sale or
substantially like-kind
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exchange of real property by Holdings or any of its Subsidiaries; and
(f) of a material adverse change known to the Company or
its Subsidiaries in the business, assets, condition (financial or
otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole.
Each notice pursuant to this subsection 8.7 shall be accompanied by a statement
of a Responsible Officer of the Company setting forth details of the occurrence
referred to therein and (in the cases of clauses (a) through (d)) stating what
action the Company proposes to take with respect thereto.
8.8 ENVIRONMENTAL LAWS. (a) (i) Comply with all Environmental Laws
applicable to it, and obtain, comply with and maintain any and all Environmental
Permits necessary for its operations as conducted and as planned; and (ii) take
reasonable efforts to ensure that all of its tenants, subtenants, contractors,
subcontractors, and invitees comply with all Environmental Laws, and obtain,
comply with and maintain any and all Environmental Permits, applicable to any of
them insofar as any failure to so comply, obtain or maintain could result in a
material adverse effect on the Company and its Subsidiaries taken as a whole.
Noncompliance by the Company or any of its Subsidiaries with any applicable
Environmental Law or Environmental Permit shall be deemed not to constitute a
breach of this 8.8(a); PROVIDED that, upon learning of any such noncompliance,
the Company and its Subsidiaries shall promptly undertake reasonable efforts to
achieve compliance or to contest by appropriate proceedings any alleged
noncompliance and, PROVIDED FURTHER, that, in any case, such noncompliance, and
any other noncompliance with Environmental Law and any contesting of allegations
of noncompliance with Environmental Laws, individually or in the aggregate,
could not reasonably be expected to give rise to a material adverse effect on
the Company and its Subsidiaries taken as a whole.
(b) Comply in a timely manner with all orders and lawful directives
regarding Environmental Laws issued to the Company or any of its Subsidiaries by
any Governmental Authority, other than such orders and lawful directives as to
which an appeal or other challenge has been timely and properly taken in good
faith and the pendency of any and all such appeals and other challenges could
not reasonably be expected to give rise to a material adverse effect on the
Company and its Subsidiaries taken as a whole.
(c) Maintain, update as appropriate, and implement in all material
respects an environmental program reasonably designed to (i) ensure that the
Company, its Subsidiaries, any of their respective operations (including,
without limitation, disposal), and any properties owned, leased or operated by
any of them,
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attain and remain in substantial compliance with all applicable Environmental
Laws; (ii) reasonably and prudently manage any liabilities or potential
liabilities that the Company, any of the other Credit Parties, any of their
respective operations (including, without limitation, disposal), and any
properties owned or leased by any of them, may have under all applicable
Environmental Laws; and (iii) ensure that the Company and its Subsidiaries
undertake reasonable efforts to identify, and reasonably evaluate, issues of
compliance with and liability under Environmental Laws prior to acquiring,
directly or indirectly, any ownership or leasehold interest in real property, or
other interest in any real property that could give rise to the Company or any
of its Subsidiaries being subjected to liability under any Environmental Law as
a result of such acquisition.
8.9 ADDITIONAL COLLATERAL. (a) Subject to subsections 8.9(f) and (g),
with respect to any assets acquired after the Closing Date by the Company or any
of the Subsidiary Guarantors that are intended to be subject to the Lien created
by any of the Security Documents but which are not so subject (but, in any
event, excluding (x) any assets described in paragraph (b) or (c) of this
subsection, (y) immaterial assets and (z) Receivables Facility Assets), promptly
(and in any event within 30 days after the acquisition thereof): (i) execute and
deliver to the Administrative Agent such amendments or supplements to the
relevant Security Documents or such other documents as the Administrative Agent
shall deem necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a Lien on such assets, and (ii) take all actions
necessary or advisable to cause such Lien to be duly perfected to the extent
required by such Security Document in accordance with all applicable
Requirements of Law, including, without limitation, the filing of financing
statements in such jurisdictions as may be reasonably requested by the
Administrative Agent.
(b) With respect to any Person that is or becomes a Subsidiary (other
than (v) any joint venture or other Person referred to in subsection 9.6(h) in
which (x) there are no investments by the Company or any of its Subsidiaries as
of the Closing Date and (y) all investments by the Company or its Subsidiaries
after the Closing Date are made pursuant to subsection 9.6(h), (w) any
Immaterial Subsidiary (so long as such Subsidiary remains an Immaterial
Subsidiary), (x) subject to the provisions of subsection 8.9(g), any Receivables
SPV, (y) any Captive Insurance Subsidiary and (z) any Foreign Subsidiary),
promptly upon the request of the Administrative Agent: (i) execute and deliver
to the Administrative Agent, for the benefit of the Lenders, a new pledge
agreement or such amendments to the relevant Pledge Agreement as the
Administrative Agent reasonably shall deem necessary or advisable to grant to
the Administrative Agent, for the benefit of the Lenders, a Lien on any Capital
Stock owned by such Subsidiary except to the extent not required to be pledged
pursuant to the Holdings/Subsidiary Pledge Agreement, (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers executed and delivered in blank by a duly authorized
officer of the Company or such
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Subsidiary, as the case may be, and (iii) cause such new Subsidiary (A) to
become a party to the Subsidiary Guarantee and the Subsidiary Security Agreement
or such comparable documentation which is in form and substance reasonably
satisfactory to the Administrative Agent, and (B) to take all actions necessary
or advisable to cause the Lien created by the Subsidiary Security Agreement to
be duly perfected to the extent required by such agreement in accordance with
all applicable Requirements of Law, including, without limitation, the filing of
financing statements in such jurisdictions as may be reasonably requested by the
Administrative Agent. Notwithstanding the foregoing, any Person that is not a
Subsidiary on the Closing Date shall not be required to sign a Guaranty if (i)
all advances, loans and other investments made therein by the Company and its
Subsidiaries are made after the Closing Date and (ii) all such advances, loans
and investments in such Person are made pursuant to subsection 9.6(h).
(c) With respect to any Person that is or becomes a Foreign
Subsidiary (excluding (x) any Subsidiary that is a joint venture or other Person
referred to in subsection 9.6(h) in which (A) there are no investments by the
Company or any of its Subsidiaries as of the Closing Date and (B) all
investments made by the Company and its other Subsidiaries after the Closing
Date are made pursuant to subsection 9.6(h), or (y) any Immaterial Subsidiary so
long as it remains as such), promptly upon the request of the Administrative
Agent: (i) execute and deliver to the Administrative Agent a new pledge
agreement or such amendments to the relevant Pledge Agreement as the
Administrative Agent reasonably shall deem necessary or advisable to grant to
the Administrative Agent, for the benefit of the Lenders, a Lien on the Capital
Stock of such Subsidiary which is owned by the Company or any of its Domestic
Subsidiaries (PROVIDED that in no event shall more than 65% of the total
combined voting equity or its equivalent of any such Foreign Subsidiary be
required to be so pledged, although all non-voting equity and its equivalent
which is owned by the Company or any of its Domestic Subsidiaries shall be
required to be so pledged), (ii) deliver to the Administrative Agent any
certificates representing such Capital Stock, together with undated stock powers
executed and delivered in blank by a duly authorized officer of the Company or
such Subsidiary, as the case may be, and take or cause to be taken all such
other actions under the law of the jurisdiction of organization of such Foreign
Subsidiary as may be necessary or advisable to perfect such Lien on such Capital
Stock, and if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described in clauses
(i) and (ii) immediately preceding, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(d) In the event that at any time after the Closing Date, any
Subsidiary which was previously an Immaterial Subsidiary ceases to be an
Immaterial Subsidiary, the Company shall cause such Subsidiary to take all
action, if any, that would be required pursuant to preceding subsections 8.9(b)
and (c) with respect to a Person
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which then became a Subsidiary.
(e) Within 10 days of the Closing Date, the Administrative Agent
shall have received (i) fully executed counterparts of deeds of trust, mortgages
and similar documents in each case in form and substance reasonably satisfactory
to the Administrative Agent and substantially in the form of Exhibit L (each a
"MORTGAGE" and collectively, the "MORTGAGES") covering all the Mortgaged
Properties, and arrangements reasonably satisfactory to the Administrative Agent
shall be in place to provide that counterparts of such Mortgages shall be
promptly recorded upon execution in all places to the extent necessary or
desirable, in the reasonable judgment of the Administrative Agent, effectively
to create a valid and enforceable first priority Lien, subject only to Permitted
Liens, on each Mortgaged Property in favor of the Administrative Agent (or such
other trustee as may be required or desired under local law) for the benefit of
the Lenders, (ii) a lender's title insurance policy, paid for by the Company,
issued by a nationally recognized title insurance company, together with such
endorsements, coinsurance and reinsurance as may be reasonably requested by the
Administrative Agent, in form and substance reasonably acceptable to the
Administrative Agent, insuring each Mortgage as a first lien on the relevant
Mortgaged Property and subject only to Liens expressly agreed to by the
Administrative Agent and (iii) such other documents (including without
limitation, current ALTA/ASCM surveys of any parcel of Real Property made in
accordance with ALTA/ASCM standards, including Table A, Items Nos. 1-4 and 6-13)
as are reasonably required by the Administrative Agent.
(f) Upon the request of the Administrative Agent, the Company will,
and will cause its Wholly-Owned Subsidiary Guarantors to, promptly grant to the
Administrative Agent, within 60 days of such request, security interests and
mortgages (an "ADDITIONAL MORTGAGE") in such owned Real Property of the Company
and its Domestic Subsidiaries as are acquired after the Closing Date by the
Company or such Subsidiary and that, together with any improvements thereon,
individually have a value of at least $5,000,000, as additional security for the
obligations of the Credit Parties under any Credit Document (unless the subject
property is already mortgaged to a third party to the extent permitted by
subsection 9.2) (it being understood that the provisions of this subsection
8.9(f) will apply to the Real Property subject to the Industrial Revenue Bonds
at such time that the Industrial Revenue Bonds are repaid, as if such Real
Property were acquired on the date of such repayment). Such Mortgages shall be
granted pursuant to documentation reasonably satisfactory in form and substance
to the Administrative Agent and shall constitute valid and enforceable perfected
Liens subject only to Permitted Liens and such other Liens reasonably acceptable
to the Administrative Agent. The Additional Mortgages or instruments related
thereto shall be 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 Administrative Agent required to be granted pursuant to the Additional
Mortgages and
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all taxes, fees and other charges payable in connection therewith shall be paid
in full. If requested by the Administrative Agent or the Required Lenders, the
Company shall provide a lender's title policy with respect to each such
Additional Mortgage conforming to the requirements of subsection 8.9(e).
(g) All capital stock of each Receivables SPV, if any, shall be
required to be pledged pursuant to the relevant Pledge Agreement; PROVIDED that
(A) to the extent prohibited by the relevant Receivables Facility (and so long
as such Receivables Facility is in effect and contains such prohibition), no
security interest will be required in the Capital Stock of the respective
Receivables SPV and (B) to the extent the stock of a Receivables SPV is required
to be pledged to secure amounts owing under the respective Receivables Facility,
the Company shall use commercially reasonable efforts to grant a second priority
perfected security interest in such Capital Stock to secure the obligations
pursuant to the Credit Documents (and shall take all action in connection
therewith as may reasonably be requested by the Administrative Agent).
SECTION 9
NEGATIVE COVENANTS
------------------
The Company hereby agrees that it shall not, and the Company shall
not permit any of its Subsidiaries to, directly or indirectly so long as the
Commitments remain in effect or any Loan, Note or L/C Obligation remains
outstanding and unpaid, any amount (unless cash in an amount equal to such
amount has been deposited to a cash collateral account established by the
Administrative Agent) remains available to be drawn under any Letter of Credit
or any other amount is owing to any Lender or the Administrative Agent hereunder
or under any other Credit Document (it being understood that each of the
permitted exceptions to each of the covenants in this Section 9 is in addition
to, and not overlapping with, any other of such permitted exceptions except to
the extent expressly provided):
9.1 INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness, except:
(a) the Indebtedness outstanding on the Closing Date and
reflected on Schedule 9.1(a), including the refinancing of any such
Indebtedness on terms and conditions taken as a whole no less
favorable to the Company and its Subsidiaries or the Lenders;
(b) Indebtedness consisting of the Loans and in connection
with the Letters of Credit and this Agreement;
(c) Indebtedness (i) of the Company to any Wholly-Owned
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Subsidiary Guarantor, (ii) of any Wholly-Owned Subsidiary Guarantor
to the Company or any other Wholly-Owned Subsidiary Guarantor; (iii)
of any Foreign Subsidiary to the Company or any other Subsidiary in
an aggregate principal amount at any time outstanding not to exceed
$25,000,000 PLUS the sum of any amounts dividended or distributed to
the Company or any Wholly-Owned Subsidiary Guarantor by any Foreign
Subsidiary, LESS the sum of (A) the amount of any guarantees of
obligations of Foreign Subsidiaries pursuant to subsection 9.3(c)(ii)
and (B) the amount of any investments made in a Foreign Subsidiary
pursuant to subsection 9.6(b)(iii); (iv) of one or more Captive
Insurance Subsidiaries to the Company or any other Subsidiary in an
aggregate principal amount (for all Indebtedness pursuant to this
clause (iv)) at any time outstanding (calculated without regard to
any write-downs or write-offs thereof) not to exceed $10,000,000 PLUS
the sum of any amounts dividended or distributed (except as
contemplated by subsection 9.5(j)) to the Company or any Wholly-Owned
Subsidiary Guarantor after the Closing Date by Captive Insurance
Subsidiaries, LESS the sum of any amounts outstanding in accordance
with subsections 9.3(c)(iii) and 9.6(k); and (v) of any Receivables
SPV to the Company or any other Wholly-Owned Subsidiary Guarantor in
respect of receivables purchased by such Receivables SPV from such
Person and as evidenced by a promissory note or notes in an aggregate
principal amount not to exceed the difference between the face amount
of such purchased receivables and the amount of Receivables Facility
Attributed Indebtedness, LESS any amount outstanding in accordance
with subsection 9.6(b)(iv); PROVIDED THAT, IN THE CASE OF EACH OF
CLAUSES (i) THROUGH (v) ABOVE, IF (A) A DEFAULT OR EVENT OF DEFAULT
IS IN EXISTENCE AND (B) THE ADMINISTRATIVE AGENT OR REQUIRED LENDERS
SO REQUEST, THE INDEBTEDNESS REFERRED TO IN THIS CLAUSE (c) SHALL BE
EVIDENCED BY A PROMISSORY NOTE OR PROMISSORY NOTES WHICH SHALL BE
PLEDGED TO THE ADMINISTRATIVE AGENT ON TERMS AND CONDITIONS
SATISFACTORY TO THE ADMINISTRATIVE AGENT;
(d) Indebtedness of the Company in respect of:
(i)(y) up to $135,000,000 principal amount of
Bridge Subordinated Debt issued on the Closing Date, and
additional principal amount of Bridge Subordinated Debt
issued in lieu of cash interest on the outstanding Bridge
Subordinated Debt and otherwise as contemplated by the
Bridge Loan Agreement upon exchange of Bridge Subordinated
Debt into exchange notes or (z) up to $135,000,000
principal amount of Senior Subordinated
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Notes issued on the Closing Date; and
(ii) Permanent Subordinated Debt in an
aggregate principal amount at any time outstanding not to
exceed (A) the sum of $135,000,000 and 6% of such amount
LESS (B) the aggregate principal amount of Indebtedness
then outstanding pursuant to preceding (i) (after giving
effect to any repayment thereof with the proceeds of the
Permanent Subordinated Debt), the proceeds (net of any
fees and expenses in connection therewith) of which shall
be applied to prepay, redeem, retire or repurchase either
(I) the outstanding principal amount of the Bridge
Subordinated Debt or (II) Permanent Subordinated Debt plus
(C) $20,000,000 incurred at the time of any refinancing of
the Permanent Subordinated Debt;
(e) Indebtedness of the Company and its Subsidiaries for
industrial revenue bonds or other similar governmental and municipal
bonds, for the deferred purchase price of newly acquired property and
to finance equipment of the Company and its Subsidiaries (pursuant to
purchase money mortgages or otherwise and whether owed to the seller
or a third party) used in the ordinary course of business (PROVIDED
such financing is entered into within 180 days of the acquisition of
such property) of the Company and its Subsidiaries in an amount
(based on the remaining balance of the obligations therefor on the
books of the Company and its Subsidiaries) which shall not exceed
$25,000,000 in the aggregate at any one time outstanding and
Indebtedness of the Company and its Subsidiaries in respect of
Financing Leases to the extent subsections 9.7, 9.9 and 9.10 would
not be contravened;
(f) Indebtedness of the Company and its Domestic
Subsidiaries in an aggregate principal amount at any one time
outstanding not in excess of $25,000,000;
(g) Indebtedness of any Receivables SPV pursuant to any
Receivables Facility;
(h) Indebtedness in respect of letters of credit (other
than Letters of Credit issued hereunder) in an aggregate principal
amount equal to $25,000,000 at any one time outstanding;
(i) Indebtedness (i) assumed in connection with
acquisitions
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permitted by subsection 9.6(g) (so long as such Indebtedness was not
incurred in anticipation of the respective acquisition), (ii) of
newly acquired Subsidiaries acquired in such acquisitions (so long as
such Indebtedness was not incurred in anticipation of the respective
acquisition) and (iii) owed to the seller in any acquisition
permitted by subsection 9.6(g) constituting part of the purchase
price thereof, all of which Indebtedness permitted by this subsection
9.1(i) shall not exceed in the aggregate at any one time $25,000,000
outstanding;
(j) Indebtedness in connection with workmen's compensation
obligations and general liability exposure of the Company and its
Subsidiaries;
(k) Additional unsecured subordinated indebtedness of the
Company and its Subsidiaries (which Indebtedness shall be
subordinated to all obligations pursuant to the Credit Documents
pursuant to subordination terms which are at least as favorable to
the Lenders as those contained in the Indebtedness referenced in
preceding paragraph (d)), PROVIDED that (i) such Indebtedness shall
not exceed $10,000,000 in aggregate principal amount at any time
outstanding plus any additional principal amount of such Indebtedness
issued in lieu of cash interest on such outstanding Indebtedness or
any refinancing thereof, (ii) no part of the principal amount of such
Indebtedness shall have a maturity date earlier than the one-year
anniversary of the final C Installment Payment Date and (iii) the
non-default interest rate thereon shall not exceed 12% per annum; and
(l) Indebtedness of Foreign Subsidiaries in an aggregate
principal amount at any time outstanding not in excess of the
equivalent at the date of each incurrence thereof of $25,000,000.
9.2 LIMITATION ON LIENS. Create, incur, assume or suffer
to exist any Lien upon any of its property, assets, income or
profits, whether now owned or hereafter acquired, except:
(a) Liens for taxes, assessments or other governmental
charges not yet delinquent or which are being contested in good faith
and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of the Company or such
Subsidiary, as the case may be, in accordance with GAAP;
(b) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other like Liens arising in the
ordinary
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course of business in respect of obligations which are not yet due or
which are bonded or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Company or such Subsidiary, as the
case may be, in accordance with GAAP;
(c) pledges or deposits in connection with workmen's
compensation, unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, tenders,
trade or government contracts (other than for borrowed money),
leases, licenses, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements (including, without limitation, reciprocal
easement agreements), rights-of-way, building, zoning and similar
restrictions, utility agreements, covenants, reservations,
restrictions, encroachments, changes, and other similar encumbrances
or title defects incurred, or leases or subleases granted to others,
in the ordinary course of business, which do not in the aggregate
materially detract from the aggregate value of the properties of the
Company and its Subsidiaries, taken as a whole, or in the aggregate
materially interfere with or adversely affect in any material respect
the ordinary conduct of the business of the Company and its
Subsidiaries on the properties subject thereto, taken as a whole;
(f) Liens in favor of the Administrative Agent and the
Lenders pursuant to the Credit Documents, including Liens pursuant to
the Credit Documents in respect of Interest Rate Agreements, and
bankers' liens arising by operation of law;
(g) Liens on property of the Company or any of its
Subsidiaries created solely for the purpose of securing Indebtedness
permitted by subsection 9.1(e) representing or incurred to finance,
refinance or refund the purchase price of property, 9.1(i) (so long
as in the case of clauses (i) and (ii) thereof such Lien was not
incurred in anticipation of the related acquisition) or 9.1(l)
PROVIDED that (x) no such Lien incurred in connection with
Indebtedness pursuant to subsection 9.1(e) and 9.1(i) shall extend to
or cover other property of the Company or such Subsidiary other than
the respective property so acquired, and the principal amount of
Indebtedness secured by any such Lien shall at no time exceed the
original purchase price of such property and (y) no
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such Lien incurred in connection with Indebtedness pursuant to
subsection 9.1(l) shall extend to any property other than the
property of one or more Foreign Subsidiaries;
(h) Liens existing on the Closing Date after giving effect
to the consummation of the Recapitalization and described in
subsection 6.13 or Schedule 9.2(h) (including the extension of any
Liens listed on such Schedule relating to any Indebtedness permitted
under subsection 9.1(a) in connection with any refinancing of such
Indebtedness permitted by such subsection and any Liens securing
Indebtedness to be repaid on the Closing Date to the extent the
Company has made arrangements to terminate such Liens in a manner
satisfactory to the Administrative Agent), PROVIDED that no such Lien
shall extend to or cover other property of the Company or the
respective Subsidiary other than the respective property so
encumbered and the principal amount of Indebtedness secured by any
such Lien shall at no time exceed the original principal amount of
the Indebtedness so secured;
(i) Liens on documents of title and the property covered
thereby securing Indebtedness in respect of the Commercial L/Cs;
(j) (i) mortgages, liens, security interests,
restrictions, encumbrances or any other matter of record that have
been placed by any developer, landlord or other third party on
property over which the Company or any Subsidiary of the Company has
easement rights or on any Leased Property and subordination or
similar agreements relating thereto and (ii) any condemnation or
eminent domain proceedings affecting any real property;
(k) Liens in connection with workmen's compensation
obliga- tions and general liability exposure of the Company and its
Subsidiaries;
(l) Liens on goods (and proceeds thereof) securing
reimbursement obligations in respect of commercial letters of credit
issued in accordance with the terms of this Agreement; and
(m) Liens on any Receivables Facility Assets to the extent
required to secure the repayment of any Indebtedness incurred under
any Receivables Facility permitted by subsection 9.1(g).
9.3 LIMITATION ON CONTINGENT OBLIGATIONS. Create, incur, assume or
suffer to exist any Contingent Obligation except:
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(a) the Guarantees;
(b) other guarantees by the Company incurred in the
ordinary course of business for an aggregate amount not to exceed
$5,000,000 at any one time outstanding;
(c) guarantees by the Company or any Domestic Subsidiary
(i) of obligations of Wholly-Owned Subsidiary Guarantors or the
Company; (ii) of obligations of Foreign Subsidiaries of the Company
in an aggregate principal amount not to exceed $25,000,000 plus the
sum of any amounts dividended or distributed to the Company or any
Wholly-Owned Subsidiary Guarantors by such Foreign Subsidiaries, less
any amounts outstanding in accordance with subsections 9.1(c)(iii)
and 9.6(b)(iii); and (iii) of obligations of one or more Captive
Insurance Subsidiaries in an aggregate amount not to exceed
$10,000,000 plus the sum of all amounts dividended or distributed
(except as contemplated by subsection 9.5(j)) to the Company or any
Wholly-Owned Subsidiary Guarantor after the Closing Date by Captive
Insurance Subsidiaries, less any amounts outstanding in accordance
with subsections 9.1(c)(iv) and 9.6(k); provided that any
unreimbursed payments pursuant to any Contingent Obligations made as
permitted by preceding clause (iii) shall be deemed to constitute
investments made pursuant to (and shall be required to satisfy the
requirements of) subsection 9.6(k);
(d) Contingent Obligations existing on the Closing Date
and described in Schedule 9.3(d) and Contingent Obligations relating
to any refinancing Indebtedness permitted under subsection 9.1(a) (in
each case, so long as the Contingent Obligations relating to any such
refinancing Indebtedness are not more extensive (or provided by
additional obligors) than the Contingent Obligations as same existed
with respect to the Indebtedness being refinanced (or which was
originally so refinanced);
(e) guarantees of obligations to third parties in
connection with relocation of employees of the Company or any of its
Subsidiaries, in an amount which, together with all loans and
advances made pursuant to subsection 9.6(f), shall not exceed
$5,000,000 at any time outstanding;
(f) Contingent Obligations in connection with workmen's
compensation obligations and general liability exposure of the
Company and its Subsidiaries;
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(g) subordinated guarantees in respect of the Subordinated
Debt provided by one or more Subsidiary Guarantors (which guarantees
may remain in effect only so long as the respective such entity
remains a Subsidiary Guarantor), PROVIDED that such subordinated
guarantees are subordinated to the Guarantees on substantially the
same basis as the Subordinated Debt is subordinated to the Loans; and
(h) with respect to any Receivables Facility entered into
after the Closing Date, the Company and its Subsidiaries may provide
Standard Securitization Undertakings.
9.4 PROHIBITION OF FUNDAMENTAL CHANGES. Enter into any merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or engage in any type of business other
than of the same general type now conducted by it, except (a) for the
transactions otherwise permitted pursuant to clause (b) of subsection 9.5, (b)
any Subsidiary of the Company may be merged with and into the Company or a
Wholly-Owned Subsidiary Guarantor (in each case so long as no merger
consideration is paid in connection therewith to a Person other than the Company
or a Wholly-Owned Subsidiary Guarantor), (c) Subsidiaries with a net book value
not greater than $250,000 may be dissolved and (d) any Subsidiary may otherwise
be dissolved; PROVIDED that upon dissolution, the assets of such Subsidiary are
transferred to the Company or a Wholly-Owned Subsidiary Guarantor on the terms
and subject to the conditions set forth in subsection 9.5(b).
9.5 PROHIBITION ON SALE OF ASSETS. Convey, sell, lease (other than a
sublease of real property), assign, transfer or otherwise dispose of (including
through a transaction of merger or consolidation) any of its property, business
or assets (including, without limitation, other payments and receivables but
excluding leasehold interests), whether now owned or hereafter acquired, except:
(a) for sales or other dispositions of inventory in the
ordinary course of business;
(b) except as otherwise permitted by subsection 9.6, that
the Company or any Subsidiary of the Company may sell, lease,
transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to, and any Subsidiary of the
Company may merge with and into, the Company or a Wholly- Owned
Subsidiary Guarantor, and the Company or any Subsidiary of the
Company may sell or otherwise dispose of, or part with control of any
or all of, the Capital Stock of any Subsidiary to a Wholly-Owned
Subsidiary Guarantor or the Company, PROVIDED that, no such
transaction may be effected if it
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would result in the transfer of any assets of, or any Capital Stock
of, the Company or a Subsidiary to, or the merger with and into,
another Subsidiary all of the Capital Stock of which owned by the
Company or any Subsidiary has not been pledged to the Administrative
Agent and which has not guaranteed the obligations of the Company,
for the benefit of the Lenders, under the Notes and this Agreement,
and granted liens or security interests in favor of the
Administrative Agent, for the benefit of the Lenders, on
substantially all of its assets to secure such guarantee, pursuant to
a guarantee, security agreement and other documentation reasonably
satisfactory to the Administrative Agent;
(c) leases of Fee Properties and other real property owned
in fee;
(d) any condemnation or eminent domain proceedings
affecting any real property, PROVIDED that the parties hereto agree
that the net proceeds received in connection with such proceeding
shall be deemed to constitute "Net Proceeds" of a Recovery Event;
(e) substantially like-kind exchanges of real property;
PROVIDED that only any cash received by the Company or any Subsidiary
of the Company in connection with such an exchange (net of all costs
and expenses incurred in connection with such transaction or with the
commencement of operation of real property received in such exchange)
shall be deemed to be Net Proceeds and shall be applied as provided
for in subsection 5.4(c)(iii);
(f) for the sale or other disposition of any property
that, in the reasonable judgment of the Company has become
uneconomic, obsolete or worn out, and which is sold or disposed of in
the ordinary course of business;
(g) for the sale or other disposition of any property the
aggregate amount of the net proceeds received in respect of which
shall not exceed $7,500,000 during the term of this Agreement;
(h) the sale, encumbrance or other disposition at any time
or from time to time of Receivables Facility Assets pursuant to the
respective Receivables Facility;
(i) any sale or disposition of any interest in real
property; PROVIDED that (i) subject to following clause (iii), the
net proceeds of any such sale shall constitute Net Proceeds only to
the extent such net
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proceeds are not reinvested in real property within twelve months
from the date of such sale, (ii) if the real property so sold
constituted Collateral under the Security Documents then any real
property purchased with the net proceeds thereof shall be mortgaged
for the benefit of the Lenders if required by subsection 8.9(f) and
in accordance therewith and (iii) the aggregate outstanding amount of
net proceeds held by the Company at any time for reinvestment in
respect of any real property sold pursuant to this paragraph shall
not exceed $15,000,000;
(j) the sale (for cash at fair market value, as determined
in good faith by the Company) or liquidation (whether partial or
total) of any Captive Insurance Subsidiary, including, without
limitation, by way of a return of excess assets therefrom following
any transfer of liabilities of the respective Captive Insurance
Subsidiary;
(k) any sales, at fair market value for cash, Investment
Grade Securities or other Permitted Insurance Company Investments, of
Permitted Insurance Company Investments by any Captive Insurance
Subsidiary made in the ordinary course of business; and
(l) any sale of life insurance policies to certain
management personnel of Holdings, the Company or its Subsidiaries
pursuant to the Recapitalization Agreement in an approximate amount
not to exceed $2,000,000.
Notwithstanding anything to the contrary contained above, the foregoing
provisions shall in no event permit the sale by the Company or any of its
Subsidiaries of the Capital Stock of any Subsidiary of the Company; PROVIDED
that, to the extent otherwise permitted pursuant to the above provisions of this
subsection 9.5, Capital Stock of one or more Subsidiaries of the Company may be
sold so long as (x) 100% of the Capital Stock of the respective Subsidiary owned
by the Company and its Subsidiaries is so sold and (y) no Default or Event of
Default shall exist at the time of such sale or immediately after giving effect
thereto (it being understood that intercompany Indebtedness previously justified
pursuant to subsection 9.1(c) to or from the respective Subsidiary so sold shall
not be permitted to remain outstanding after giving effect to the respective
sale).
9.6 LIMITATION ON INVESTMENTS, ACQUISITIONS, LOANS AND ADVANCES. Make
any advance, loan, extension of credit or capital contribution to, or purchase
any stock, bonds, notes, debentures or other securities of, or make any other
investment in (including, without limitation, any acquisition of all or any
substantial portion of the assets, and any acquisition of a business or a
product line, of other companies, other than the acquisition of inventory in the
ordinary course of business), any Person (except to the extent permitted by
Section 9.7), except:
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(a) the Company may make loans or advances to
Subsidiaries, and Subsidiaries may make loans or advances to the
Company and other Subsidiaries, to the extent in each case the
Indebtedness created thereby is permitted by subsection 9.1(c);
(b)(i) any Subsidiary may make investments in the Company
(by way of capital contribution or otherwise), (ii) the Company and
any Subsidiary may make investments in, or create, any Wholly-Owned
Domestic Subsidiary (by way of capital contribution or otherwise) or
make investments permitted by subsection 9.5(b), PROVIDED that, in
any such case, the requirements of subsection 8.9 are satisfied and
(iii) the Company and any Subsidiary may make investments in, or
create, any Wholly-Owned Foreign Subsidiary (by way of capital
contribution or otherwise), PROVIDED that (x) the requirements of
subsection 8.9 are satisfied and (y) the aggregate amount of all
investments in such Foreign Subsidiaries shall not exceed (I)
$25,000,000 (plus the sum of any amount dividended or distributed by
such Foreign Subsidiaries to the Company or any Wholly-Owned
Subsidiary Guarantor), MINUS (II) the amount of any Indebtedness of
any Foreign Subsidiary at any such time outstanding in accordance
with subsection 9.1(c)(iii) or 9.3(c)(ii); and (iv) the Company and
any Subsidiary may contribute receivables to any Receivables SPV in
an aggregate face amount not to exceed the difference between the
face amount of such receivables and the Receivables Facility
Attributed Indebtedness, LESS any amount outstanding in accordance
with subsection 9.1(c)(vi);
(c) the Company and its Subsidiaries may invest in,
acquire and hold Cash Equivalents and Investment Grade Securities;
(d) the Company or any of its Subsidiaries may make
payroll advances in the ordinary course of business;
(e) the Company or any of its Subsidiaries may extend
credit and 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 (PROVIDED that
nothing in this clause (e) shall prevent the Company or any
Subsidiary from offering such concessionary trade terms, or from
receiving such investments, in connection with the bankruptcy or
reorganization of their respective suppliers or customers or the
settlement of disputes with such customers or suppliers arising in
the ordinary course of business, as management deems reasonable in
the circumstances);
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(f) the Company or any of its Subsidiaries may make travel
and entertainment advances and relocation and other loans to officers
and employees of the Company or any such Subsidiary, PROVIDED that
the aggregate principal amount of all such loans and advances
outstanding at any one time, together with the guarantees of such
loans and advances made pursuant to subsection 9.3(e), shall not
exceed $5,000,000 at any one time outstanding;
(g) the Company and its Wholly-Owned Subsidiaries
(excluding any Captive Insurance Subsidiary and Receivables SPV) may
make expenditures to acquire all or a substantial portion of the
Capital Stock or assets of any Person engaged primarily in one or
more businesses in which the Company and its Subsidiaries are engaged
or directly related thereto or in the building products, ladder and
climbing equipment and aluminum extrusion products industries
generally, PROVIDED that, after giving PRO FORMA effect to any such
acquisition and the financing thereof, either (A) (i) the amount of
the expenditures pursuant to this clause (g) does not exceed
$25,000,000 with respect to any single acquisition (or related series
of acquisitions) of Capital Stock or assets, and does not exceed
$50,000,000 in the aggregate for all expenditures made pursuant to
this clause (g), in each case without the prior written consent of
the Required Lenders, (ii) the provisions of subsection 8.9 are
satisfied, (iii) the ratio of Consolidated Funded Indebtedness as of
the day of such acquisition to Consolidated EBITDA for the period of
four fiscal quarters ending as at the last day of the most recently
ended fiscal quarter is less than 5.50 to 1.00; PROVIDED that the
last four fiscal quarters of Consolidated EBITDA (x) (as may be
adjusted for identified post acquisition cost savings reasonably
agreed to by the Company and the Co-Arrangers) of each acquired
company, business or group of assets during the testing period shall
be added for purposes of calculating such ratio and (y) of each
company, business or group of assets sold during the respective four
fiscal quarter period or thereafter and on or prior to the date of
determination pursuant to one or more Asset Sales shall be subtracted
for purposes of calculating such ratio, (iv) the Available Revolving
Credit Commitment at such time (after giving effect to all payments
reasonably anticipated to be made in connection with the respective
acquisition) shall be no less than $15,000,000, (v) no Default or
Event of Default has occurred and is continuing or would result
therefrom and (vi) on or prior to the date of consummation of the
respective acquisition, the Company furnishes to the Administrative
Agent a certificate from its chief financial officer stating that the
foregoing requirements of this clause (A) have been met
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(and providing, in reasonable detail, the calculations required
pursuant to preceding clause (iii)) or (B)(i) the amount of
expenditures in connection with such acquisition does not exceed
$7,500,000 and the Company elects (by prior written notice to the
Administrative Agent) to treat such expenditures as "Capital
Expenditures" for purposes of this Agreement, including, but not
limited to, subsection 9.7, (ii) the provisions of subsection 8.9 are
satisfied, and (iii) no Default or Event of Default has occurred and
is continuing or would result therefrom;
(h) the Company or any of its Subsidiaries may make
investments in, or loans or investments to, joint ventures or other
Persons engaged primarily in one or more businesses in which the
Company and its Subsidiaries are engaged or directly related thereto
or in the building products, ladder and climbing equipment and
aluminum extrusion products industries generally, in an aggregate
principal amount not to exceed $20,000,000 (plus the sum of any
amounts dividended or distributed to the Company or any Wholly-Owned
Subsidiary Guarantor by such joint venture or other Person); PROVIDED
that at the time of and after giving effect thereto no Default or
Event of Default shall have occurred and be continuing or would
result therefrom;
(i) Captive Insurance Subsidiaries may make Permitted
Insurance Company Investments;
(j) the Company and its Subsidiaries may, in the ordinary
course of business, engage in aluminum hedging so long as such
hedging is not for speculative purposes and is reasonably related to
its anticipated manufacturing needs; and
(k) the Company and any Wholly-Owned Subsidiary Guarantor
may make loans and advances to, or other investments in, Captive
Insurance Subsidiaries so long as the aggregate amount of any loans,
advances or other investments at any time outstanding (determined
without regard to any write-downs or write-offs thereof) pursuant to
this clause (k) shall not exceed $10,000,000; PLUS the sum of any
amounts dividended or distributed to the Company or any Wholly-Owned
Subsidiary Guarantor by such Captive Insurance Subsidiaries, LESS any
amounts outstanding in accordance with subsections 9.1(c)(iv) and
9.3(c)(iii).
For the purposes of this subsection 9.6, the payment by the Company
of expenses and operating costs of any Wholly-Owned Subsidiary Guarantor
incurred in the ordinary course of its business shall not be considered to be a
loan, advance or other investment of the Company in such Subsidiary and shall be
permitted under this
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Agreement.
Notwithstanding anything to the contrary contained above in this
subsection 9.6, none of the advances, loans, extensions of credit or capital
contributions, or purchases of stock, bonds, notes, debentures or other
securities, or other investments as otherwise permitted pursuant to clause (a)
through (k) above shall be permitted to be made in Holdings.
9.7 CAPITAL EXPENDITURES. Make or commit to make any Capital
Expenditures, except that the Company and its Subsidiaries may make or commit to
make Capital Expenditures not exceeding the amount set forth below (the "BASE
AMOUNT") for each of the years or other periods set forth below:
<TABLE>
<CAPTION>
Year
or Period Base Amount
--------- -----------
<S> <C>
Closing Date to $25,000,000
December 31, 1998
Calendar Year 1999 $25,000,000
Calendar Year 2000 $25,000,000
Calendar Year 2001 $25,000,000
Calendar Year 2002 $25,000,000
Calendar Year 2003 $25,000,000
Calendar Year 2004 $25,000,000
January 1, 2005 to
November 30, 2005 $25,000,000
</TABLE>
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PROVIDED that (i) for any period set forth above, the Base Amount set forth
above may be increased by a maximum of 50% of the Base Amount for any such
period by carrying over to any such period any portion of the Base Amount (as
increased) not spent in the immediately preceding period and (ii) for each
period of the Company, the Base Amount set forth above shall be increased in the
event any Person or assets of such Person (an "ACQUIRED PERSON") is acquired as
permitted herein by an amount equal to 110% of the amount of capital
expenditures (determined in accordance with GAAP) of such Acquired Person for
the twelve months prior to the date it was acquired ("ACQUIRED CAPITAL
EXPENDITURES"); PROVIDED that, with respect to the fiscal year in which such
Person becomes an Acquired Person, the Base Amount shall be increased by the
product of (A) the Acquired Capital Expenditures of such Acquired Person times
(B) a fraction, the numerator of which is the number of days remaining in the
fiscal year of the Company in which such Acquired Person was acquired and the
denominator of which is 365; PROVIDED FURTHER, that, notwithstanding anything to
the contrary herein, additional Capital Expenditures may be made with net
proceeds (x) received in property sales or dispositions under subsection 9.5(i)
and (y) of Recovery Events invested as permitted pursuant to subsection
5.4(c)(v); and PROVIDED FURTHER, that notwithstanding anything to the contrary
herein, additional Capital Expenditures may be made in an aggregate amount (for
all Capital Expenditures made after the Closing Date pursuant to this proviso)
not to exceed $50,000,000.
9.8 INTEREST RATE AGREEMENTS. Enter into, create, incur, assume or
suffer to exist any Interest Rate Agreements or obligations in respect thereof
except in the ordinary course of business for non-speculative purposes.
9.9 DEBT TO EBITDA. At the last day of any fiscal quarter set forth
below, permit the ratio (the "LEVERAGE RATIO") of Consolidated Funded
Indebtedness as of such day to Consolidated EBITDA for the period of four fiscal
quarters ending on such day to be greater than the ratio set forth below for
such fiscal quarter; PROVIDED that, (x) with respect to any acquisition made
during the respective four quarter period pursuant to, and as permitted by,
subsection 9.6(g), the last four fiscal quarters of Consolidated EBITDA (as may
be adjusted for post acquisition cost savings reasonably agreed to by the
Company and the Co-Arrangers) of the acquired company shall be added for the
purposes of calculating this ratio and (y) of each company, business or group of
assets sold during the respective four fiscal quarter period pursuant to one or
more Asset Sales shall be subtracted for purposes of calculating this ratio:
<TABLE>
<CAPTION>
Fiscal Year Fiscal Quarter Ratio
----------- -------------- -----
<S> <C> <C>
1997 Fourth 6.75 to 1.00
</TABLE>
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<TABLE>
<S> <C> <C>
1998 First 6.75 to 1.00
Second 6.75 to 1.00
Third 6.75 to 1.00
Fourth 6.75 to 1.00
1999 First 6.50 to 1.00
Second 6.50 to 1.00
Third 6.50 to 1.00
Fourth 6.50 to 1.00
2000 First 6.00 to 1.00
Second 6.00 to 1.00
Third 5.75 to 1.00
Fourth 5.75 to 1.00
2001 First 5.75 to 1.00
Second 5.50 to 1.00
Third 5.50 to 1.00
Fourth 5.25 to 1.00
2002 First 5.00 to 1.00
Second 5.00 to 1.00
Third 5.00 to 1.00
Fourth 4.75 to 1.00
2003 First 4.75 to 1.00
Second 4.50 to 1.00
Third 4.50 to 1.00
Fourth 4.25 to 1.00
2004 First 4.25 to 1.00
Second 4.00 to 1.00
Third 4.00 to 1.00
Fourth 3.75 to 1.00
2005 First 3.75 to 1.00
Second 3.50 to 1.00
Third 3.50 to 1.00
Fourth 3.50 to 1.00
</TABLE>
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9.10 INTEREST COVERAGE. At the last day of any fiscal quarter set
forth below, permit the Interest Coverage Ratio to be less than the ratio set
forth below for such fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Year Fiscal Quarter Ratio
----------- -------------- -----
<S> <C> <C>
1997 Fourth 1.60 to 1.00
1998 First 1.60 to 1.00
Second 1.60 to 1.00
Third 1.60 to 1.00
Fourth 1.60 to 1.00
1999 First 1.60 to 1.00
Second 1.60 to 1.00
Third 1.60 to 1.00
Fourth 1.70 to 1.00
2000 First 1.70 to 1.00
Second 1.70 to 1.00
Third 1.70 to 1.00
Fourth 1.80 to 1.00
2001 First 1.80 to 1.00
Second 1.80 to 1.00
Third 1.80 to 1.00
Fourth 1.90 to 1.00
2002 First 1.90 to 1.00
Second 1.90 to 1.00
Third 1.90 to 1.00
Fourth 2.00 to 1.00
2003 First 2.00 to 1.00
Second 2.00 to 1.00
Third 2.00 to 1.00
Fourth 2.25 to 1.00
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
2004 First 2.25 to 1.00
Second 2.25 to 1.00
Third 2.25 to 1.00
Fourth 2.25 to 1.00
2005 First 2.25 to 1.00
Second 2.25 to 1.00
Third 2.25 to 1.00
Fourth 2.25 to 1.00
</TABLE>
9.11 MINIMUM CONSOLIDATED EBITDA. At the last day of any fiscal
quarter set forth below, permit Consolidated EBITDA for the period of four
consecutive fiscal quarters (taken as one accounting period) ended on the last
day of the respective fiscal quarter set forth below, to be less than the amount
set forth for such fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Year Fiscal Quarter Amount
----------- -------------- ------
<S> <C> <C>
1997 Fourth $48,000,000
1998 First $49,000,000
Second $50,000,000
Third $50,000,000
Fourth $51,000,000
1999 First $53,000,000
Second $56,000,000
Third $58,000,000
Fourth $60,000,000
2000 First $63,000,000
Second $66,000,000
Third $69,000,000
Fourth $72,000,000
2001 First $73,500,000
Second $77,000,000
Third $80,000,000
Fourth $83,000,000
2002 First $84,000,000
Second $87,000,000
Third $89,000,000
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Fourth $90,000,000
2003 First $91,000,000
Second $92,000,000
Third $93,000,000
Fourth $94,000,000
2004 First $95,000,000
Second $96,000,000
Third $97,000,000
Fourth $98,000,000
2005 First $99,000,000
Second $100,000,000
Third $100,000,000
Fourth $100,000,000
</TABLE>
9.12 LIMITATION ON DIVIDENDS. Declare any dividends on any shares of
any class of its Capital Stock, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
retirement or other acquisition of any shares of any class of Capital Stock of
Holdings, the Company or any of their respective Subsidiaries, or any warrants
or options to purchase such Capital Stock, whether now or hereafter outstanding,
or make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of the Company or any
of its Subsidiaries; except that:
(a) Subsidiaries may pay dividends to the Company or to
Domestic Subsidiaries which are directly or indirectly wholly-owned
by the Company;
(b) the Company may, or may advance or dividend cash to
Holdings so long as all such amounts are used by Holdings to,
repurchase Capital Stock of Holdings owned by former, present or
future employees of Holdings or its Subsidiaries or their assigns,
estates and heirs, PROVIDED that the aggregate amount expended
pursuant to this clause (b) shall not in the aggregate exceed (i)
$3,000,000 in any fiscal year or (ii) $10,000,000 during the term of
this Agreement, plus any amounts contributed to Holdings as a result
of resales of such repurchased shares of Capital Stock (which amounts
shall be thereafter contributed by Holdings to the Company if the
Company has dividended or advanced amounts to Holdings to enable the
repurchase by Holdings of such Capital Stock);
(c) payments may be made to effect the Recapitalization
pursuant to,
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and in accordance with the terms of, the Recapitalization Agreement;
(d) the Company may pay dividends or distributions to
Holdings so long as promptly used by Holdings to make payments
permitted to be made by it pursuant to preceding paragraph (c);
(e) the Company may pay cash dividends or distributions to
Holdings for the purpose of paying, and so long as all proceeds
thereof are promptly used by Holdings to pay, its operating expenses
incurred in the ordinary course of business and other corporate
overhead costs and expenses (including, without limitation, legal and
accounting expenses and similar expenses), PROVIDED that the
aggregate amount of dividends and distributions paid to Holdings
pursuant to this paragraph (e) shall not exceed $2,000,000 in any
fiscal year of Holdings; and
(f) the Company may pay cash dividends or distributions to
Holdings for the purpose of paying, and so long as all proceeds
thereof are promptly used by Holdings to pay, franchise taxes and
federal, state and local income taxes and interest and penalties with
respect thereto, if any, payable by Holdings; PROVIDED that any
refund shall be promptly returned by Holdings to the Company.
9.13 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of
property or the rendering of any service, with any Affiliate except for
transactions which are otherwise permitted under this Agreement and which are in
the ordinary course of the Company's or a Subsidiary's business and which are
upon fair and reasonable terms no less favorable to the Company or such
Subsidiary than it would obtain in a hypothetical comparable arm's length
transaction with a Person not an Affiliate, PROVIDED that nothing in this
subsection 9.13 shall prohibit the Company or its Subsidiaries from engaging in
the following transactions: (x) the performance of the Company's or any
Subsidiary's obligations under any employment contract, collective bargaining
agreement, employee benefit plan, related trust agreement or any other similar
arrangement heretofore or hereafter entered into in the ordinary course of
business, (y) the payment of compensation to employees, officers, directors or
consultants in the ordinary course of business, or (z) the maintenance of
benefit programs or arrangements for employees, officers or directors,
including, without limitation, vacation plans, health and life insurance plans,
deferred compensation plans, and retirement or savings plans and similar plans,
in each case, in the ordinary course of business.
9.14 PREPAYMENTS AND AMENDMENTS OF SUBORDINATED DEBT. (a) Optionally
prepay, retire, redeem, purchase, defease or exchange, or make any mandatory
prepayment, retirement, redemption, purchase or defeasance of any
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Subordinated Debt (other than (x) any redemption of the Bridge
Subordinated Debt or the Senior Subordinated Notes with proceeds of
Permanent Subordinated Debt as permitted by subsection 9.1(d), (y)
any refinancing of the Permanent Subordinated Debt contemplated in
the definition thereof or (z) any redemption of Subordinated Debt
with the proceeds of the issuance of Capital Stock to the extent
permitted by subsection 5.4(c)(i)) or pay any interest on
Subordinated Debt in cash if such interest may be paid by the
issuance of additional Subordinated Debt or (b) waive, amend,
supplement, modify, terminate or release the provisions of any
Subordinated Debt, to the extent that any such waiver, amendment,
supplement, modification, termination or release would be materially
adverse to the Lenders.
9.15 LIMITATION ON CHANGES IN FISCAL YEAR. Permit the fiscal year of
Holdings and the Company to end on a day other than December 31 in any calendar
year.
9.16 LIMITATION ON BUSINESS. (a) Permit the Company to enter into any
business, either directly or through any Subsidiary, except for those businesses
in which the Company or any Subsidiary is engaged on the date of this Agreement
(or which are directly related thereto or those related generally to the
building products, ladder, climbing equipment and aluminum extrusion products
industries).
(b) Permit any Captive Insurance Subsidiary to enter into, or engage
in, any business, either directly or through any Subsidiary, except for
insurance businesses in which the Captive Insurance Subsidiaries are engaged on
the date of this Agreement (or which are directly related thereto and relate to
the insurance business so conducted by the Captive Insurance Subsidiaries).
(c) Permit any Receivables SPV to enter into, or engage in, any
business other than obtaining financing pursuant to one or more Receivables
Facilities and, in connection therewith, owning Receivables Facilities Assets
and taking action directly relating thereto.
9.17 DESIGNATED SENIOR INDEBTEDNESS. Designate, or permit the
designation of, any indebtedness as "Designated Senior Indebtedness" (or provide
a similar designation with respect to any Subordinated Debt) for purposes of the
Senior Subordinated Notes Indenture or any other Subordinated Debt unless the
Required Lenders specifically consent thereto in writing.
9.18 LIMITATION ON ISSUANCE OF CAPITAL STOCK. The Company will not,
and will not permit any of its Subsidiaries to, issue any capital stock
(including by way of sales of treasury stock) or any options or warrants to
purchase, or securities convertible into, capital stock, except (i) for
transfers and replacements of then outstanding shares of capital stock, (ii) for
stock splits, stock dividends and additional
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issuances which do not decrease the percentage ownership of the Company (or in
the case of issuances by the Company, of Holdings) or any of its Subsidiaries in
any class of the capital stock of the Company or such Subsidiary, as the case
may be, (iii) in the case of Foreign Subsidiaries of the Company, to qualify
directors to the extent required by applicable law, and (iv) Subsidiaries of the
Company formed after the Closing Date may issue capital stock to the Company or
the respective Subsidiary of the Company which is to own such stock.
Notwithstanding anything to the contrary contained above, this subsection 9.18
shall not apply to (x) any issuance of common stock of the Company to persons
other than Holdings pursuant to an IPO, so long as the Net Proceeds thereof are
received by the Company and applied by it in accordance with the relevant
requirements of subsection 5.4 and (y) issuances of equity by any Person, which
is not a Credit Party and is not, on the Closing Date, a Subsidiary of the
Company, in which all investments made therein by the Company and its
Subsidiaries are made after the Closing Date in accordance with the provisions
of subsection 9.6(h). All capital stock issued in accordance with this
subsection 9.18 (excluding the second sentence hereof) shall, to the extent
required by the relevant Pledge Agreement or subsection 8.9, be delivered to the
Administrative Agent for pledge pursuant to the relevant Pledge Agreement and
the requirements of subsection 8.9.
SECTION 10
EVENTS OF DEFAULT
-----------------
Upon the occurrence and during the continuance of any of the
following events:
(a) The Company shall fail to (i) pay any principal of any
Loan or Note when due in accordance with the terms hereof or thereof
or to reimburse the Issuing Lender in accordance with subsection 3.8
or (ii) pay any interest on any Loan or Note or any other amount
payable hereunder within five days after any such interest or other
amount becomes due in accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by
any Credit Party in any Credit Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) The Company shall default in the observance or
performance of any agreement contained in subsection 8.7(a) or 8.9 or
Section 9 of this Agreement or the Company shall default in the
observance or performance of any agreement contained in subsections
5(a), (h)
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through (k) and (o) of the Company Security Agreement or subsections
5(a), (b) and (c) of the Company Pledge Agreement or Holdings or any
Subsidiary, as the case may be, shall default in the observance or
performance of any agreement contained in subsections (a),(h) through
(k) and (o) of the Subsidiary Security Agreement, subsection 10 of
the Subsidiary Guarantee, subsection 10 of the Holdings Guarantee,
subsections 5(a), (b) and (c) of the Holdings/Subsidiary Pledge
Agreement or Section 5, 6 or 7 of any Mortgage; or
(d) Any Credit Party shall default in the observance or
performance of any other agreement contained in any Credit Document
and such default shall continue unremedied for a period of 30 days;
or
(e) The Company or any of its Subsidiaries (other than a
Receivables SPV) shall (i) default in any payment of principal of or
interest on or other amounts in respect of any Indebtedness (other
than the Loans, the L/C Obligations and any inter-company debt) or
Interest Rate Agreement or in the payment of any Contingent
Obligation, beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness, Interest Rate
Agreement or Contingent Obligation was created; or (ii) default in
the observance or performance of any other agreement or condition
relating to any such Indebtedness, Interest Rate Agreement or
Contingent Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Contingent
Obligation (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice
if required, such Indebtedness to become due prior to its stated
maturity, any applicable grace period having expired, or such
Contingent Obligation to become payable, any applicable grace period
having expired; in each case, PROVIDED that the aggregate principal
amount of all such Indebtedness, Interest Rate Agreements and
Contingent Obligations under which a default exists or which would
then become due or payable equals or exceeds $10,000,000; or
(f)(i) Holdings or any of its Subsidiaries shall commence
any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate
it as bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment,
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winding-up, liquidation, dissolution, composition or other relief
with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for
all or any substantial part of its assets, or the Company or any of
its Subsidiaries shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against Holdings or
any of its Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60
days; or (iii) there shall be commenced against Holdings or any of
its Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not
have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) Holdings or any of its
Subsidiaries shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) Holdings or any of
its Subsidiaries shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due;
or
(g)(i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor of
the PBGC or a Plan shall arise on the assets of the Company or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Company or any Commonly Controlled Entity shall, or in
the reasonable opinion of the Required Lenders is likely to, incur
any liability in connection with a withdrawal from, or the Insolvency
or Reorganization of, a Multi-employer Plan or (vi) any other event
or condition shall occur or exist with respect to a Plan, and such
event or condition, together with all other such events or
conditions, relating to a Plan, if any, would be reasonably likely to
subject Holdings or any of its Subsidiaries to any tax, penalty or
other
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liabilities in the aggregate resulting in a material adverse effect
to Holdings and its Subsidiaries taken as a whole; or
(h) One or more judgments or decrees shall be entered
against Holdings or any of its Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance) of
$10,000,000 or more and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within the
time required by the terms of such judgment; or
(i) Any Credit Document shall cease, for any reason, to be
in full force and effect (except as otherwise permitted under such
Credit Document) or any Credit Party or any of its Subsidiaries shall
so assert in writing, or any Security Document shall cease to be
effective to grant a perfected Lien on the collateral described
therein with the priority purported to be created thereby (other than
as a result of any action on the part of the Administrative Agent or
the Lenders), subject to such exceptions as may be permitted therein
or herein, and in the case of any Security Agreement, such condition
shall continue unremedied for 30 days after notice thereof to the
Company by the Administrative Agent or any Lender; or
(j) There shall have occurred a Change of Control; or
(k) The subordination provisions of any document governing
any Subordinated Debt shall cease, for any reason, to be valid or any
Credit Party or any of its Subsidiaries shall so assert in writing;
then, and in any such event, (a) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Company,
automatically (i) the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the Notes shall immediately become due and payable, and (ii) all
obligations of the Company in respect of the Letters of Credit, although
contingent and unmatured, shall become immediately due and payable and the
Issuing Lender's obligations to issue the Letters of Credit shall immediately
terminate and (b) if such event is any other Event of Default, so long as any
such Event of Default shall be continuing, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Company, declare the Commitments
and the Issuing Lender's obligations to issue the Letters of Credit to be
terminated forthwith, whereupon the Commitments and such obligations shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Administrative Agent
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may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice of default to the Company, (A) declare all or a portion of the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the Notes to be due and payable forthwith, whereupon
the same shall immediately become due and payable, and (B) declare all or a
portion of the obligations of the Company in respect of the Letters of Credit,
although contingent and unmatured, to be due and payable forthwith, whereupon
the same shall immediately become due and payable and/or demand that the Company
discharge any or all of the obligations supported by the Letters of Credit by
paying or prepaying any amount due or to become due in respect of such
obligations. All payments under this Section 10 on account of undrawn Letters of
Credit shall be made by the Company directly to a cash collateral account
established by the Administrative Agent for such purpose for application to the
Company's reimbursement obligations under subsection 3.8 as drafts are presented
under the Letters of Credit, with the balance, if any, to be applied to the
Company's obligations under this Agreement and the Notes as the Administrative
Agent shall determine with the approval of the Required Lenders. Except as
expressly provided above in this Section 10, presentment, demand, protest and
all other notices of any kind are hereby expressly waived.
SECTION 11
THE AGENTS; THE ISSUING LENDER
------------------------------
11.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints BTCo as the Administrative Agent, Merrill Lynch Capital Corporation as
the Syndication Agent, The Chase Manhattan Bank as the Documentation Agent and
Goldman Sachs Credit Partners L.P. as Co-Agent under this Agreement, and
irrevocably authorizes BTCo, as Administrative Agent, and Merrill Lynch Capital
Corporation, as Syndication Agent, as agents for such Lender to take such action
on its behalf under the provisions of the Credit Documents and to exercise such
powers and perform such duties as are expressly delegated to the Administrative
Agent and the Syndication Agent (including as Co-Arranger) by the terms of the
Credit Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent and the Syndication Agent, shall not have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into the
Credit Documents or otherwise exist against the Administrative Agent or the
Syndication Agent. Each Lender recognizes and agrees that neither the
Documentation Agent nor the Co-Agent shall have any duties or responsibilities
under this Agreement or any other Credit Document, or any fiduciary relationship
with any Lender, and shall have no functions, responsibilities, duties,
obligations or liabilities for acting as Documentation Agent or Co-Agent
hereunder.
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11.2 DELEGATION OF DUTIES. Any Co-Arranger may execute any of its
duties under this Agreement and each of the other Credit Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. No Co-Arranger shall be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care, except as otherwise provided in subsection
11.3.
11.3 EXCULPATORY PROVISIONS. No Co-Arranger nor any of their
respective 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 the 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 Lenders for any recitals,
statements, representations or warranties made by any Credit Party or any
officer thereof contained in the Credit Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by such
Co-Arranger under or in connection with, the Credit Documents or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of the
Credit Documents or for any failure of any Credit Party to perform its
obligations thereunder. No Co-Arranger shall be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, any Credit Document, or to
inspect the properties, books or records of any Credit Party.
11.4 RELIANCE BY CO-ARRANGERS. Each Co-Arranger shall be entitled to
rely, and shall be fully protected in relying, upon any Note, entries maintained
in the Register, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation, counsel
to the Company), independent accountants and other experts selected by the
Administrative Agent. Each Co-Arranger may deem and treat the payee of any Note
as the owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Administrative
Agent. Each Co-Arranger shall be fully justified in failing or refusing to take
any action under any Credit Document unless it shall first receive such advice
or concurrence of the Required Lenders (or, where a higher percentage of the
Lenders is expressly required hereunder, such Lenders) as it deems appropriate
or it shall first be indemnified to its satisfaction by the Lenders against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Each Co-Arranger shall in all cases be fully
protected in acting, or in refraining from acting, under any Credit Document in
accordance with a request of the Required Lenders (unless a higher percentage of
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Lenders is expressly required), and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Lenders and all future
holders of the Notes.
11.5 NOTICE OF DEFAULT. No Co-Arranger shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Co-Arranger has received written notice from a Lender or
the Company or any other Credit Party referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall promptly give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
PROVIDED that unless and until the Administrative Agent shall have received such
directions, the Administrative 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
Lenders.
11.6 NON-RELIANCE ON AGENTS AND OTHER LENDERS. Each Lender expressly
acknowledges that no Agent nor any of their respective officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by any Agent hereafter taken, including any
review of the affairs of the Credit Parties, shall be deemed to constitute any
representation or warranty by such Agent to any Lender. Each Lender represents
to each Agent that it has, independently and without reliance upon such Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of
Holdings and the Company and its Subsidiaries and made its own decision to make
its Loans hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon any Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under the Credit Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of
Holdings and the Company and its Subsidiaries. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, no Agent shall have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, operations, property, financial and other condition or
creditworthiness of the Credit Parties which may come into the possession of
such Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
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11.7 INDEMNIFICATION. The Lenders agree to indemnify each
Co-Arranger in its capacity as such (to the extent not reimbursed by the
Credit Parties and without limiting the obligation of the Credit Parties to do
so), ratably according to the respective amounts of their respective
Commitments (or, to the extent such Commitments have been terminated, according
to the respective outstanding principal amounts of the Loans and the L/C
Obligations and the respective obligations, whether as Issuing Lender or a
Participating Lender, under the Letter of Credit), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Loans) be imposed on, incurred by or asserted against any such Co-Arranger in
any way relating to or arising out of the Credit Documents or any documents
contemplated by or referred to herein or the transactions contemplated hereby
or any action taken or omitted by such Co-Arranger under or in connection with
any of the foregoing; PROVIDED that no Lender shall be liable for the payment
of any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
respective Co-Arranger's gross negligence or willful misconduct. The agreements
in this subsection 11.7 shall survive the repayment of the Loans and all other
amounts payable hereunder.
11.8 EACH AGENT IN ITS INDIVIDUAL CAPACITY. Each Agent and its
respective Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with Holdings, the Company and its Subsidiaries
as though such Agent were not an Agent hereunder. With respect to its Loans made
or renewed by it and any Note issued to it, each Agent shall have the same
rights and powers, duties and liabilities under the Credit Documents as any
Lender and may exercise the same as though it were not Agent and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.
11.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under the Credit
Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders which successor agent shall, so long as no Event
of Default has occurred and is continuing, be approved by the Company, which
shall not unreasonably withhold its approval, whereupon such successor agent
shall succeed to the rights, powers and duties of the Administrative Agent, and
the term "Administrative Agent" shall mean such successor agent effective upon
such appointment and approval, and the former Administrative Agent's rights,
powers and duties as Administrative Agent shall be terminated, without any other
or further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Notes. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Section 11 shall
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inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Administrative Agent under the Credit Documents.
11.10 ISSUING LENDER AS ISSUER OF LETTERS OF CREDIT. Each Lender
which is a holder of a Revolving Credit Commitment (collectively "REVOLVING
CREDIT LENDERS") hereby acknowledges that the provisions of this Section 11
shall apply to the Issuing Lender, in its capacity as issuer of the Letters of
Credit, in the same manner as such provisions are expressly stated to apply to
the Administrative Agent, except that obligations to indemnify the Issuing
Lender shall be ratable among the Revolving Credit Lenders in accordance with
their respective Revolving Credit Commitments (or, if the Revolving Credit
Commitments have been terminated, the outstanding principal amount of their
respective Revolving Credit Loans and L/C Obligations and their respective
participating interests in the outstanding Letters of Credit).
SECTION 12
MISCELLANEOUS
-------------
12.1 AMENDMENTS AND WAIVERS. Except as otherwise expressly set forth
in this Agreement, no Credit Document nor any terms thereof may be amended,
supplemented, waived or modified except in accordance with the provisions of
this subsection 12.1. With the written consent of the Required Lenders, the
Administrative Agent and the respective Credit Parties or their Subsidiaries
may, from time to time, enter into written amendments, supplements or
modifications hereto for the purpose of adding any provisions to any Credit
Document to which they are parties or changing in any manner the rights of the
Lenders or of any such Credit Party or its Subsidiaries thereunder or waiving,
on such terms and conditions as the Administrative Agent may specify in such
instrument, any of the requirements of any such Credit Document or any Default
or Event of Default and its consequences; PROVIDED that:
(a) no such waiver and no such amendment, supplement or
modification shall release collateral not required or permitted by
any Credit Document to be released and which, in the aggregate with
all other collateral released pursuant to this clause (a) (other than
collateral released pursuant to the proviso to this clause (a))
during the calendar year in which such proposed release would be
effected and the immediately preceding calendar year, has fair market
value on the proposed date of release in excess of 20% of the fair
market value of all collateral (including any Guarantee) on such date
without the written consent of the Supermajority Lenders; PROVIDED
that, notwithstanding the foregoing, this clause (a) shall not be
applicable to and no consent
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shall be required for (i) releases of collateral in connection with
any Asset Sales permitted by subsection 9.5, (ii) releases of
collateral in accordance with subsection 12.12 or (iii) upon the
reincorporation of the Company or any Subsidiary in a new
jurisdiction or the creation of a new Subsidiary of the Company, any
release of collateral in connection with the transfer of such
released collateral to such reincorporated entity or new Subsidiary
in compliance with subsection 9.4, PROVIDED that the Administrative
Agent, in its sole discretion, determines that such release and
transfer, together with any grant and perfection of a new Lien
therein in favor of the Administrative Agent, will cause no material
impairment of the value of the collateral taken as a whole, after
giving effect to such release and transfer;
(b) no such waiver and no such amendment, supplement or
modification shall (x) without the prior written consent of each
Lender whose obligations hereunder are being directly modified,
extend the final maturity date of any Note or the scheduled payment
date of any installment of any Loan, or reduce the rate or extend the
time of payment of interest thereon, or change the method of
calculating interest thereon, or reduce or extend the time of payment
of any fee payable to such Lender hereunder, or reduce the principal
amount thereof, or change the amount of any Lender's Commitment or
Commitment Percentage, or (y) without the prior written consent of
each Lender, amend, modify or waive any provision of subsection
5.9(b) or this subsection 12.1 or reduce the percentage specified in
the definition of Required Lenders or reduce the percentage specified
in the definition of Supermajority Lenders or consent to the
assignment or transfer by the Company of any of its rights and
obligations under any Credit Document;
(c) no such waiver and no such amendment, supplement or
modification affecting any Agent or Issuing Lender shall amend,
modify or waive any provision of Section 11 without the written
consent of such Agent and Issuing Lender; and
(d) no such waiver, and no such amendment, supplement or
modification shall amend, modify or waive (x) the prepayment
requirements specified in subsection 5.4(c)(i), (ii), (iii) and (v)
without the written consent of the holders of at least 51% of each of
(i) the aggregate unpaid principal amount of the aggregate of the
Tranches of Term Loans adversely affected thereby, if any, (ii) the
Revolving Credit Commitments or, if the Revolving Credit Commitments
are terminated, the aggregate unpaid principal amount of the
Revolving
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Credit Loans and (iii) the Receivables Financing Commitments or, if
the Receivables Financing Commitments are terminated, the aggregate
unpaid principal amount of the Receivables Financing Loans (the Term
Loans, the Revolving Credit Commitments and the Receivables Financing
Commitments of any Non-Funding Lender to be disregarded in
determining such percentage at any time) and (y) the order of
application of prepayments specified in subsection 5.4(a) or
5.4(c)(vi) without the written consent of the holders of at least 51%
of each of (i) the aggregate unpaid principal amount of each Tranche
of Term Loans adversely affected thereby and (ii) as set forth in
clauses (x)(ii) and (iii) of this subsection 12.1(d); PROVIDED that
the foregoing provisions of this paragraph (d) shall not be
applicable to any modifications to subsection 5.4(a) or 5.4(c)(vi) in
order to provide for PRO RATA payments to any additional Tranche of
Term Loans on substantially the same basis as payments to the
Tranches of Term Loans existing on the Closing Date are made;
any such waiver and any such amendment, supplement or modification described in
this subsection 12.1 shall apply equally to each of the Lenders and shall be
binding upon each Credit Party and its Subsidiaries, the Lenders, the
Administrative Agent and the Issuing Lender and all future holders of the Notes
and the Loans. Any extension of a Letter of Credit by the Issuing Lender shall
be treated hereunder as a new Letter of Credit. In the case of any waiver, the
Credit Parties, the Lenders, the Administrative Agent and Issuing Lender shall
be restored to their former position and rights hereunder and under the
outstanding Notes, and any Default or Event of Default waived shall be deemed to
be cured and not continuing; but no such waiver shall extend to any subsequent
or other Default or Event of Default, or impair any right consequent thereon.
12.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy or telex, if one is listed) and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by hand,
or three Business Days after being deposited in the mail, postage prepaid, or,
in the case of telecopy notice, when sent, confirmation of receipt received, or,
in the case of telex notice, when sent, answerback received, addressed as
follows in the case of the Company, the Administrative Agent, and as set forth
in Schedule I in the case of any Lender, or to such other address as may be
hereafter notified by the respective parties hereto and any future holders of
the Notes:
The Company: Werner Holding Co. (DE), Inc.
c/o Werner Holding Co. (PA), Inc.
93 Werner Road
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Greenville, Pennsylvania 16125
Attention: Eric J. Werner, Esq.
Telecopy: (412) 588-0618
With a copy to: Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attention: Janet Vance, Esq.
Telecopy: (212) 351-4035
The Administrative Agent
and Swing Line Lender: Bankers Trust Company
130 Liberty Street
New York, NY 10006
Attention: Mary Kay Coyle
Telecopy: (212) 250-7218
PROVIDED that any notice, request or demand to or upon the Administrative Agent
or the Issuing Lender shall not be effective until received and, PROVIDED
FURTHER, that the failure to provide the copies of notices to the Company
provided for in this subsection 12.2 shall not result in any liability to the
Administrative Agent.
12.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of any Agent or any Lender, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement, the Letters of Credit and the Notes.
12.5 PAYMENT OF EXPENSES AND TAXES. The Company agrees (a) to pay or
reimburse the Administrative Agent, the Syndication Agent, the Documentation
Agent and the Co-Agent for all their reasonable out-of-pocket costs and expenses
incurred in connection with the development, negotiation, preparation and
execution of the Credit Documents and any other documents prepared in connection
herewith, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of
one counsel to the Administrative Agent, the Syndication Agent, the
Documentation Agent and the Co-
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Agent, (b) to pay or reimburse all of the reasonable expenses, including,
without limitation, reasonable fees and expenses of counsel, incurred by the
Administrative Agent in connection with the administration of the facilities
provided for herein or in connection with any amendments, waivers, work-outs or
restructurings in respect thereof, (c) to pay or reimburse the Administrative
Agent, the Syndication Agent, the Documentation Agent, the Co-Agent, the
Issuing Lender and each Lender for all their costs and expenses incurred in
connection with, and to pay, indemnify, and hold the Administrative Agent, the
Syndication Agent, the Documentation Agent, the Co-Agent, the Issuing Lender
and each Lender harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever arising out of or in
connection with, the enforcement or preservation of any rights under any Credit
Document and any such other documents, including, without limitation,
reasonable fees and disbursements of counsel to the Administrative Agent, the
Co-Agent and each Lender incurred in connection with the foregoing and in
connection with advising the Administrative Agent with respect to its rights
and responsibilities under this Agreement and the documentation relating
thereto, (d) to pay, indemnify, and to hold the Administrative Agent, the
Syndication Agent, the Documentation Agent, the Co-Agent and each Lender
harmless from any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
similar taxes (other than withholding taxes), if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
any Credit Document and any such other documents, and (e) to pay, indemnify,
and hold the Administrative Agent, the Syndication Agent, the Documentation
Agent, the Co-Agent, the Issuing Lender and each Lender and their respective
Affiliates, officers, directors and trustees harmless from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including, without limitation, reasonable fees and
disbursements of counsel) which may be incurred by or asserted against the
Administrative Agent, the Syndication Agent, the Documentation Agent, the
Co-Agent, the Issuing Lender or the Lenders or such Affiliates, officers,
directors or trustees (x) arising out of or in connection with any
investigation, litigation or proceeding related to this Agreement, the other
Credit Documents, the proceeds of the Loans or the Subordinated Debt and the
transactions contemplated by or in respect of such use of proceeds, or any of
the other transactions contemplated hereby, whether or not the Administrative
Agent, the Syndication Agent, the Documentation Agent, the Co-Agent, the
Issuing Lender or any of the Lenders or such Affiliates, officers, directors or
trustees is a party thereto, including, without limitation, any of the
foregoing relating to the violation of, noncompliance with or liability under,
any Environmental Law applicable to the Company, any of its Subsidiaries or any
of the facilities and properties owned, leased or operated by the Company or
any of its
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Subsidiaries, or (y) without limiting the generality of the foregoing, by reason
of or in connection with the execution and delivery or transfer of, or payment
or failure to make payments under, Letters of Credit (it being agreed that
nothing in this subsection 12.5(d)(y) is intended to limit the Company's
obligations pursuant to subsection 3.8) (all the foregoing, collectively, the
"INDEMNIFIED LIABILITIES"), PROVIDED that the Company shall have no obligation
hereunder with respect to indemnified liabilities of the Administrative Agent,
the Syndication Agent, the Documentation Agent, the Co-Agent, the Issuing Lender
or any Lender or any of their respective Affiliates, officers, directors and
trustees arising from (i) the gross negligence or willful misconduct of the
person seeking indemnification or (ii) legal proceedings commenced against the
Administrative Agent, the Syndication Agent, the Documentation Agent, the
Co-Agent, the Issuing Lender or Lender by any security holder or creditor
thereof arising out of and based upon rights afforded any such security holder
or creditor solely in its capacity as such or (iii) legal proceedings commenced
against any Lender by any Transferee (as defined in subsection 12.6(f)) thereof.
Without limiting the foregoing, and to the extent permitted by applicable law,
Holdings and the Company agree not to assert, and hereby waive (and the Company
shall cause the Subsidiaries not to assert and to waive) all rights for
contribution or any other rights of recovery with respect to all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever, under or related to
Environmental Laws, that any of them might have by statute or otherwise against
the Administrative Agent, the Syndication Agent, the Documentation Agent, the
Co-Agent, the Issuing Lender or any Lender. The agreements in this subsection
12.5 shall survive repayment of the Loans and all other amounts payable
hereunder.
12.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (a) This
Agreement shall be binding upon and inure to the benefit of the Company, the
Lenders, the Administrative Agent, the Syndication Agent, the Documentation
Agent, the Co-Agent, all future holders of the Notes and the Loans, and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial bank-
ing, investment or lending business and in accordance with applicable law, at
any time sell to one or more banks or other entities ("PARTICIPANTS")
participating interests in any Loan owing to such Lender, any Note held by such
Lender, any Commitment of such Lender or any other interest of such Lender
hereunder. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Note for all purposes under this Agreement and the Company
and the Administrative Agent shall continue to deal solely and directly
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with such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Credit Documents. The Company agrees that if
amounts outstanding under this Agreement and the Notes are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of setoff in respect of its participating interest in amounts owing under
this Agreement and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement or any Note; PROVIDED that such right of setoff shall be subject to
the obligation of such Participant to share with the Lenders, and the Lenders
agree to share with such Participant, as provided in subsection 12.7. The
Company also agrees that each Participant shall be entitled to the benefits of
subsections 3.10, 5.11 and 5.12 with respect to its participation in the Letters
of Credit and in the Commitments and the Loans outstanding from time to time as
if it were a Lender; PROVIDED that no Participant shall be entitled to receive
any greater amount pursuant to any such subsection than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred. Notwithstanding the foregoing, no Lender 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 maturity of any Loan, Note or Letter of Credit (unless such Letter of
Credit is not extended beyond the Revolving Credit Termination 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
Commitments 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) or (ii) consent to the assignment or transfer by the
Company of any of its rights and obligations under this Agreement.
(c) Subject to paragraph (g) of this Subsection 12.6, any Lender may,
in the ordinary course of its commercial banking, lending or investment business
and in accordance with applicable law, (i) at any time and from time to time
assign all or any part of its rights and obligations under this Agreement and
the Notes to any Lender or any Affiliate thereof, PROVIDED that, in the event of
a sale of less than all of such rights and obligations, such assigning Lender
after any such sale to any other Lender or any Affiliate of such Lender shall
retain Commitments and/or Loans aggregating at least $5,000,000 (or such lesser
amount as the Administrative Agent may determine) and (ii) with the consent of
the Company and the Administrative Agent (which in each case shall not be
unreasonably withheld or delayed) at any time
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and from time to time assign to one or more additional banks, mutual funds or
financial institutions or entities (each, an "ASSIGNEE"), all or any part of its
rights and obligations under this Agreement and the Notes, pursuant to an
Assignment and Acceptance, executed by such Assignee, such transferor Lender
(and, in the case of an Assignee that is not then a Lender or an Affiliate
thereof, by the Company and the Administrative Agent), and delivered to the
Administrative Agent for its acceptance and recording in the Register (as
defined below); PROVIDED that (A) each such sale pursuant to clause (ii) of this
subsection 12.6(c) shall be in a principal amount of $5,000,000 or more unless
the Assigning Lender is transferring all of its rights and obligations and (B)
in the event of a sale of less than all of such rights and obligations, such
Lender after any such sale shall retain Commitments and/or Loans aggregating at
least $5,000,000 (or such lesser amount as the Administrative Agent and the
Company may determine). Upon such execution, delivery, acceptance and recording,
from and after the effective date determined pursuant to such Assignment and
Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with a Commitment as set forth therein, and
(y) the assigning Lender thereunder shall, to the extent of the interest
transferred, as reflected in such Assignment and Acceptance, be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of a transferor Lender's rights
and obligations under this Agreement, such transferor Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of the
indemnification provisions set forth in subsection 12.5). To the extent that an
assignment of all or a portion of a Lender's Commitments and/or outstanding
obligations pursuant to this subsection 12.6(c) would, at the time of such
assignment, result in increased cost under subsections 3.10 or 5.11 from those
being charged by the respective assigning Lender prior to such assignment, then
the Company shall not be obligated to pay such increased costs (although the
Company shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
assignment if same would otherwise be required by this Agreement). Furthermore,
each Lender which is permitted to make Eurodollar Loans at the time of an
assignment pursuant to this subsection 12.6(c) shall not be permitted to make an
assignment to any Assignee which, at the time of the respective assignment,
would not be able to make Eurodollar Loans for the reasons contemplated pursuant
to subsection 5.10.
(d) The Administrative Agent, which for purposes of this subsection
12.6(d) only shall be deemed to be the agent of the Company, shall maintain at
the address of the Administrative Agent referred to in subsection 12.2 a copy of
each Assignment and Acceptance delivered to it and a register (the "REGISTER")
for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amounts of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Person
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whose name is recorded in the Register as the owner of a Loan or other
obligation hereunder shall be the owner thereof for all purposes of this
Agreement and the other Credit Documents, notwithstanding any notice to the
contrary. Any assignment of any Loan or other obligation hereunder shall be
effective only upon appropriate entries with respect thereto being made in the
Register. The Register shall be available for inspection by the Company or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an Affiliate thereof, by the Company and the Administrative
Agent), together with payment to the Administrative Agent of a registration and
processing fee of $3,500 (or $0, in the case of an assignment to an Affiliate of
such assigning Lender), the Administrative Agent shall (i) promptly accept such
Assignment and Acceptance and (ii) on the effective date determined pursuant
thereto record the information contained therein in the Register and give notice
of such acceptance and recordation to the Lenders and the Company. On or prior
to such effective date, the Company at its own expense, shall execute and
deliver to the Administrative Agent (in exchange for any or all of the B Term
Loan Notes, C Term Loan Notes, Revolving Credit Notes or Receivables Financing
Notes of the assigning Lender, if any) new B Term Loan Notes, C Term Loan Notes,
Revolving Credit Notes or Receivables Financing Notes, as the case may be, to
the order of such Assignee (if requested) in an amount equal to the B Term
Loans, C Term Loans, Revolving Credit Commitment or Receivables Financing
Commitments, as the case may be, assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Commitment or any Term
Loans hereunder, new B Term Loan Notes, C Term Loan Notes, Revolving Credit
Notes or Receivables Financing Notes, as the case may be, to the order of the
assigning Lender in an amount equal to the Commitment or such Term Loans, as the
case may be, retained by it hereunder (if requested). Such new Notes shall be
dated the Closing Date and shall otherwise be in the form of the Notes replaced
thereby.
(f) The Administrative Agent, the Syndication Agent, the
Documentation Agent, the Co-Agent and the Lenders agree that they will use
reasonable efforts to protect the confidentiality of any confidential
information concerning the Company and its Subsidiaries and Affiliates.
Notwithstanding the foregoing, the Company authorizes each Lender to disclose
to any Participant or Assignee (each, a "TRANSFEREE") and any prospective
Transferee or to any Person who evaluates, approves, structures or
administers the Loans on behalf of a Lender and who is subject to this
confidentiality provision any and all information in such Lender's possession
concerning Holdings, the Company and its Subsidiaries which has been delivered
to such Lender by or on behalf of the Company pursuant to this Agreement or
which has been delivered to such Lender by or on behalf of the Company in con-
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nection with such Lender's credit evaluation of Holdings, the Company and its
Subsidiaries prior to becoming a party to this Agreement; PROVIDED that each
Lender shall cause its respective prospective Transferees and any Person who
evaluates, approves, structures or administers the Loans on such Lender's behalf
to agree to protect the confidentiality of any confidential information
concerning Holdings, the Company and its Subsidiaries and Affiliates.
(g) If, pursuant to this subsection 12.6, any interest in this
Agreement or any Note is transferred to any Transferee which is organized under
the laws of any jurisdiction other than the United States or any State thereof,
the transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer either (1) in the case of a Transferee that is a
"bank" within the meaning of Section 881(c)(3)(A) of the Code, (i) to represent
to the transferor Lender (for the benefit of the transferor Lender, the
Administrative Agent and the Company) that under applicable law and treaties no
taxes will be required to be withheld by the Administrative Agent, the Company
or the transferor Lender with respect to any payments to be made to such
Transferee in respect of the Loans or L/C Participating Interests, (ii) to
furnish to the transferor Lender (and, in the case of any Transferee registered
in the Register, the Administrative Agent and the Company) either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein
such Transferee claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and (iii) to agree (for the
benefit of the transferor Lender, the Administrative Agent and the Company) to
the extent permitted by then-current law to provide the transferor Lender (and,
in the case of any Transferee registered in the Register, the Administrative
Agent and the Company) a new Form 4224 or Form 1001 upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such Transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption or (2) in the case of any Transferee that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code, (i) to represent to the transferor
Lender (for the benefit of the transferor Lender, the Administrative Agent and
the Company) that it is not a "bank" within the meaning of Section 881(c)(3)(A)
of the Code, (ii) to furnish to the transferor Lender (and, in the case of any
Transferee registered in the Register, to the Company), with a copy to the
Administrative Agent, (A) a subsection 5.11(d)(2) Certificate and (B) two (2)
accurate and complete original signed copies of Internal Revenue Service Form
W-8, certifying to such Transferee's legal entitlement on the date of the
effectiveness of such transfer to an exemption from U.S. withholding tax under
the provisions of Section 881(c) of the Code with respect to all payments to be
made under this Agreement, and (iii) to agree (for the benefit of the transferor
Lender, the Administrative Agent and the Company), to the extent legally
entitled to do so, upon reasonable request by the transferor Lender (or, in the
case of any Transferee registered in the Register, the
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Administrative Agent or the Company), to provide to the transferor Lender, the
Administrative Agent and the Company such other forms as may be required to
establish the legal entitlement of such Transferee to an exemption from
withholding tax with respect to payments under this Agreement.
(h) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, (x) any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law and (y) in the case of a
Lender that is a fund, with the consent of the Administrative Agent, any pledge
or assignment by such Lender of all or any portion of its Loans and Notes to
its trustee in support of its obligations to its trustee.
12.7 SET-OFF. In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Company, any such notice being expressly waived by the Company to the extent
permitted by applicable law, upon (or concurrently with) the taking of any
action pursuant to the last paragraph of Section 10 or upon the filing of a
petition under any of the provisions of the federal bankruptcy code or
amendments thereto, by or against; the making of an assignment for the benefit
of creditors by; the application for the appointment, or the appointment, of any
receiver of, or of any substantial portion of the property of; the issuance of
any execution against any substantial portion of the property of; the issuance
of a subpoena or order, in supplementary proceedings, against or with respect to
any substantial portion of the property of; or the issuance of a warrant of
attachment against any substantial portion of the property of; the Company to
set off and apply against any indebtedness, whether matured or unmatured, of the
Company to such Lender, any amount owing from such Lender to the Company, at or
at any time after, the happening of any of the above mentioned events, and as
security for such indebtedness, the Company hereby grants to each Lender a
continuing security interest in any and all deposits, accounts or moneys of the
Company, then or thereafter maintained with such Lender, subject in each case to
subsection 12.8 of this Agreement. The aforesaid right of set-off may be
exercised by such Lender against the Company or against any trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver or execution, judgment or attachment creditor of the Company, or
against anyone else claiming through or against the Company or such trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor, notwithstanding the
fact that such right of set-off shall not have been exercised by such Lender
prior to the making, filing or issuance, or service upon such Lender of, or of
notice of, any such petition; assignment for the benefit of creditors;
appointment or application for the appointment of a receiver; or issuance of
execution, subpoena,
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order or warrant. Each Lender agrees promptly to notify the Company, and the
Administrative Agent after any such set-off and application made by such Lender,
PROVIDED that the failure to give such notice shall not affect the validity of
such set-off and application.
12.8 PAYMENTS PRO RATA. (a) Except as otherwise provided in this
Agreement, the Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf of the Company in respect of any obligations
hereunder, it shall distribute such payment to the Lenders PRO RATA based upon
their respective shares, if any, of the obligations with respect to which such
payment was received.
(b) Each of the Lenders 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 with respect to Letters of Credit, commitment
fees or Letter of Credit fees, of a sum which with respect to the related sum or
sums received by other Lenders is in a greater proportion than the total of such
obligation then owed and due to such Lender bears to the total of such
obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
respective obligations of the respective Credit Party to such Lenders in such
amount as shall result in a proportional participation by all the Lenders in
such amount; PROVIDED that if all or any portion of such excess amount is
thereafter recovered from such Lender, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding subsections 12.8(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Lenders which are not Non-Funding Lenders as opposed to
Non-Funding Lenders.
12.9 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Company and the Administrative Agent. This Agreement
shall become effective with respect to the Company, the Administrative Agent,
the Syndication Agent, the Documentation Agent, the Co-Agent and the Lenders
when the Administrative Agent shall have received copies of this Agreement
executed by the Company, the Administrative Agent, the Documentation Agent and
the Lenders, or, in the case of any Lender, shall have received telephonic
confirmation from such Lender stating that
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such Lender has executed counterparts of this Agreement or the signature pages
hereto and sent the same to the Administrative Agent.
12.10 GOVERNING LAW; NO THIRD PARTY RIGHTS. This Agreement and the
Notes and the rights and obligations of the parties under this Agreement and the
Notes shall be governed by, and construed and interpreted in accordance with,
the law of the State of New York. This Agreement is solely for the benefit of
the parties hereto and their respective successors and assigns, and, except as
set forth in subsection 12.6, no other Persons shall have any right, benefit,
priority or interest under, or because of the existence of, this Agreement.
12.11 SUBMISSION TO JURISDICTION; WAIVERS. (a) Each party to this
Agreement hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement or any of the other
Credit Documents, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States for
the Southern District of New York, and appellate courts from any
thereof;
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail),
postage pre-paid, to such party at its address set forth in
subsection 12.2 or at such other address of which the Administrative
Agent shall have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction.
(b) Each party hereto unconditionally waives trial by jury in any
legal action or proceeding referred to in paragraph (a) above and any
counterclaim therein.
12.12 RELEASES. The Administrative Agent and Lenders agree to
cooperate with the Company and its Subsidiaries with respect to any sale or
other dis-
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position permitted by subsection 9.5 and promptly take such action and execute
and deliver such instruments and documents necessary to release the liens and
security interests created by the Security Documents relating to any of the
assets or property affected by any such sale permitted by subsection 9.5.
including, without limitation, any Uniform Commercial Code amendment, release or
termination or partial release or termination statements, PROVIDED that such
liens and security interests in Receivables Facility Assets shall only be
required to be released to the extent required by the relevant Receivables
Facility.
12.13 INTEREST. Each provision in this Agreement and each other
Credit Document is expressly limited so that in no event whatsoever shall the
amount paid, or otherwise agreed to be paid, by the Company for the use,
forbearance or detention of the money to be loaned under this Agreement or any
other Credit Document or otherwise (including any sums paid as required by any
covenant or obligation contained herein or in any other Credit Document which is
for the use, forbearance or detention of such money), exceed that amount of
money which would cause the effective rate of interest to exceed the highest
lawful rate permitted by applicable law (the "HIGHEST LAWFUL RATE"), and all
amounts owed under this Agreement and each other Credit Document shall be held
to be subject to reduction to the effect that such amounts so paid or agreed to
be paid which are for the use, forbearance or detention of money under this
Agreement or such other Credit Document shall in no event exceed that amount of
money which would cause the effective rate of interest to exceed the Highest
Lawful Rate. Notwithstanding any provision in this Agreement or any other Credit
Document to the contrary, if the maturity of the Loans or the obligations in
respect of the other Credit Documents are accelerated for any reason, or in the
event of any prepayment of all or any portion of the Loans or the obligations in
respect of the other Credit Documents by the Company or in any other event,
earned interest on the Loans and such other obligations of the Company may never
exceed the Highest Lawful Rate, and any unearned interest otherwise payable on
the Loans or the obligations in respect of the other Credit Documents that is in
excess of the Highest Lawful Rate shall be cancelled automatically as of the
date of such acceleration or prepayment or other such event and (if theretofore
paid) shall, at the option of the holder of the Loans or such other obligations,
be either refunded to the Company or credited on the principal of the Loans. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Company and the Lenders shall,
to the maximum extent permitted by applicable law, amortize, pro-rate, allocate
and spread, in equal parts during the period of the actual term of this
Agreement, all interest at any time contracted for, charged, received or
reserved in connection with this Agreement.
12.14 SPECIAL INDEMNIFICATION. Notwithstanding any provision in this
Agreement to the contrary, (A) each Lender, or Transferee of any Lender pursuant
to subsection 12.6(g) of this Agreement, shall indemnify the Company and the
Adminis-
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trative Agent, and hold each of them harmless against any and all payments,
expenses or taxes which the Company or the Administrative Agent may become
subject to or obligated to pay if and to the extent that, (i) on the Closing
Date or the effective date of transfer, as the case may be, such Lender, or such
Transferee of a Lender pursuant to subsection 12.6(g) of this Agreement, (a)
makes the representation and covenants set forth in subsection 5.11(d)(2) of
this Agreement or, in the case of a Transferee, pursuant to subsection
12.6(g)(2) of this Agreement and the Assignment and Acceptance, and (b) is not
in fact also qualified to make the representation and covenants set forth in
subsection 5.11(d)(1) of this Agreement or, in the case of a Transferee,
pursuant to subsection 12.6(g)(2) of this Agreement and the Assignment and
Acceptance, and (ii) as a result of any Change in Law or compliance by such
Lender, or Transferee, with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority the Company
or the Administrative Agent is required to make any additional payments on
account of U.S. withholding taxes and amounts related thereto with respect to
any payments under this Agreement, any Note, or a Eurodollar Loan, made prior to
such Change in Law or request or directive, none of which payments would have
been required if such Lender, or Transferee, was qualified on the Closing Date
or the date of the transfer, as the case may be, to make the representation and
covenants set forth in subsection 5.11(d)(1) of this Agreement or pursuant to
subsection 12.6(g)(1) of this Agreement and the Assignment and Acceptance, as
the case may be, and (B) each Lender, or Transferee, agrees that to the extent
any amount payable by such Lender or Transferee pursuant to this subsection
12.14 remains unpaid on any Interest Payment Date or the date on which any
prepayment is made, the Company shall have the right to set-off against any
payment due to such Lender or Transferee on such date any amounts owing to the
Company pursuant to this subsection 12.14.
12.15 PERMITTED PAYMENTS AND TRANSACTIONS. Notwithstanding any
provision to the contrary contained in this Agreement, the Company and its
Subsidiaries shall be permitted to pay fees and expenses pursuant to or in
respect of, the following agreements, and, in the case of clauses (a) and (d)
below, to engage in the following transactions: (a) (i) the Financing Advisory
Agreement, dated as of October 8, 1997 between Investcorp International Inc. and
the Company, (ii) the Agreement For Management Advisory, Strategic Planning and
Consulting Services, dated as of November 24, 1997 among Investcorp
International Inc. and the Company; (iii) the Stand-By Commitment Letter, dated
as of November 19, 1997, between Invifin, S.A. and the Company and (iv) the
Recapitalization Agreement; (b) agreements with any Person or Persons providing
for the payment of customary fees in connection with serving as a director of
the Company or any Subsidiary of the Company; (c) agreements providing for the
payment of commercially reasonable fees in connection with any permitted
financing, refinancing, sale, transfer, sale and leaseback or other permitted
disposition of any assets of the Company or its Subsidiaries; (d) the borrowing
of any Indebtedness to the extent, and upon the terms and conditions, the same
is
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expressly permitted under subsection 9.1; and (e) agreements providing for
commercially reasonable fees in connection with any permitted purchase or
acquisition of stock or assets by the Company or any of its Subsidiaries.
12.16 CO-ARRANGERS; ADMINISTRATIVE AGENT. Notwithstanding any
provisions to the contrary contained in any Credit Document, if any Co-Arranger
ceases to be a Lender, any item set forth any Credit Document that is required
to be satisfactory to such Co-Arranger shall instead be required to be
satisfactory to the Administrative Agent, and any rights powers or duties of the
Co-Arranger shall be rights, powers or duties of the Administrative Agent.
12.17 CERTAIN PROVISIONS REGARDING ALABAMA MORTGAGED PROPERTY.
Notwithstanding anything to the contrary contained elsewhere in this Agreement
or any of the other Credit Documents, it is hereby acknowledged and agreed that
the Mortgage executed and delivered on the Closing Date with respect to the
Mortgaged Property of the Company located in Alabama (the "Alabama Mortgaged
Property") shall secure only the C Term Loans and obligations directly relating
thereto. Furthermore, and notwithstanding anything to the contrary contained in
this Agreement or any other Credit Document, if and to the extent that proceeds
received from any exercise of remedies with respect to the Alabama Mortgaged
Property are applied to the repayment of outstanding C Term Loans and related
interest or other obligations, then on a prospective basis any distributions to
be made to the Lenders (other than with respect to any Interest Rate Agreements
secured pursuant to the various Security Documents) pursuant to the provisions
of any other Security Document shall be adjusted with the intent that the
Lenders other than the holders of C Term Loans receive incremental distributions
at such times, and in such amounts, as the Administrative Agent reasonably
determines shall cause the Lenders to share equally and ratably in the aggregate
distributions made to the Lenders (other than with respect to any Interest Rate
Agreements secured pursuant to the respective Security Documents) pursuant to
the various Security Documents on the same basis as such distributions would
have been made if all of the Security Documents (including the Mortgage with
respect to the Alabama Mortgage Property) had at all times equally and ratably
secured all obligations hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
WERNER HOLDINGS CO. (DE), INC.
By: /s/
---------------------------
Title
BANKERS TRUST COMPANY, as
Administrative Agent,
Issuing Lender and a Lender
By: /s/
----------------------------
Title:
MERRILL LYNCH CAPITAL
CORPORATION, as
Syndication Agent and as Lender
By: /s/
----------------------------
Title:
THE CHASE MANHATTAN BANK, as
Documentation Agent and as a Lender
By: /s/
----------------------------
Title:
<PAGE> 149
GOLDMAN SACHS CREDIT
PARTNERS L.P., as
Co-Agent and as a Lender
By: /s/
-----------------------------
Title:
<PAGE> 150
WERNER HOLDING CO (DE), INC.
ARAB BANKING CORPORATION (B.S.C.)
By: /s/
-------------------------------
Title:
<PAGE> 151
WERNER HOLDING CO (DE), INC.
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By: /s/
-------------------------------
Title:
<PAGE> 152
WERNER HOLDING CO (DE), INC.
BANKBOSTON, N.A.
By: /s/
--------------------------------
Title:
<PAGE> 153
WERNER HOLDING CO (DE), INC.
KZH HOLDING CORPORATION III
By: /s/
--------------------------------
Title:
<PAGE> 154
WERNER HOLDING CO (DE), INC.
CREDIT AGRICOLE INDOSUEZ
By: /s/
--------------------------------
Title:
<PAGE> 155
WERNER HOLDING CO (DE), INC.
CITIBANK, N.A.
By: /s/
------------------------------
Title:
<PAGE> 156
WERNER HOLDING CO (DE), INC.
PRIME INCOME TRUST
By: /s/
-------------------------------
Title:
<PAGE> 157
WERNER HOLDING CO (DE), INC.
SENIOR DEBT PORTFOLIO
By: BOSTON MANAGEMENT &
RESEARCH,
AS INVESTMENT ADVISOR
By: /s/
-------------------------------
Title:
<PAGE> 158
WERNER HOLDING CO (DE), INC.
THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/
-------------------------------
Title:
<PAGE> 159
WERNER HOLDING CO (DE), INC.
FIRST UNION NATIONAL BANK
By: /s/
--------------------------------
Title:
<PAGE> 160
WERNER HOLDING CO (DE), INC.
FLEET NATIONAL BANK
By: /s/
-------------------------------
Title:
<PAGE> 161
WERNER HOLDING CO (DE), INC.
ING CAPITAL ADVISORS, INC.
By: /s/
-------------------------------
Title:
<PAGE> 162
WERNER HOLDING CO (DE), INC.
[MERRILL LYNCH]
By: /s/
--------------------------------
Title:
<PAGE> 163
WERNER HOLDING CO (DE), INC.
GLEACHER NATWEST
By: /s/
-------------------------------
Title:
<PAGE> 164
WERNER HOLDING CO (DE), INC.
PILGRIM AMERICA PRIME RATE TRUST
By: /s/
-------------------------------
Title:
<PAGE> 165
WERNER HOLDING CO (DE), INC.
PNC BANK, NATIONAL ASSOCIATION
By: /s/
--------------------------------
Title:
<PAGE> 166
WERNER HOLDING CO (DE), INC.
PROTECTIVE ASSET MANAGEMENT CO.
By: /s/
-------------------------------------
Title:
<PAGE> 167
WERNER HOLDING CO (DE), INC.
TRUST COMPANY OF THE WEST
By: /s/
--------------------------------
Title:
<PAGE> 168
WERNER HOLDING CO (DE), INC.
VAN KAMPEN MERRIT COMPANIES, INC.
By: /s/
-------------------------------
Title:
<PAGE> 169
WERNER HOLDING CO (DE), INC.
NATIONAL WESTMINSTER PLC
By: /s/
-------------------------------
Title:
<PAGE> 170
WERNER HOLDING CO (DE), INC.
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /s/
--------------------------------
Title:
<PAGE> 171
Schedule I to the
Credit Agreement
----------------
LENDERS, ADDRESSES AND COMMITMENTS
<TABLE>
<CAPTION>
Revolving Receivables
B Term Loan C Term Loan Credit Financing
Commitment Commitment Commitment Commitment Total
---------- ---------- ---------- ---------- -----
<S> <C> <C> <C> <C> <C>
BANKERS TRUST COMPANY 8,475,000.00 29,425,000.00 7,850,000.00 5,750,000.00 71,500,000.00
130 Liberty Street, 30th Floor
New York, NY 10016
Attn: Mary Kay Coyle
Telecopy: 212-250-7218
MERRILL LYNCH CAPITAL 4,400,000.00 -- 7,850,000.00 5,750,000.00 18,000,000.00
CORPORATION
World Financial Center
North Tower
New York, NY 10281-1307
Attn: Michael Zupon
Telecopy: (212) 449-8320
THE CHASE MANHATTAN 3,300,000.00 -- 7,300,000.00 5,400,000.00 16,000,000.00
BANK
270 Park Avenue
New York, New York 10017
Attn: Neil Boylan
Telecopy: (212) 270-1129
GOLDMAN SACHS CREDIT 3,300,000.00 -- 7,300,000.00 5,400,000.00 16,000,000.00
PARTNERS L.P.
85 Broad Street
New York, New York 10004
Attn: Jennifer Tye
Telecopy: (212) 357-1500
ARAB BANKING CORPORATION -- -- 5,100,000.00 3,900,000.00 9,000,000.00
(B.S.C.)
277 Park Avenue
32nd Floor
New York, New York 10172
Attn: Louise Bilbro
Telecopy: (212) 583-0935
BANK OF TOKYO-MITSUBISHI TRUST 3,200,000.00 -- 7,000,000.00 5,300,000.00 15,500,000.00
COMPANY
1251 Avenue of the Americas
12th Floor
New York, New York 10020
Attn: David McLaughlin
Telecopy: (212) 782-4981
BANKBOSTON N.A. 2,800,000.00 -- 6,100,000.00 4,600,000.00 13,500,000.00
100 Federal Street
</TABLE>
<PAGE> 172
<TABLE>
<CAPTION>
Revolving Receivables
B Term Loan C Term Loan Credit Financing
Commitment Commitment Commitment Commitment Total
---------- ---------- ---------- ---------- -----
<S> <C> <C> <C> <C> <C>
Boston, MA 02109
Attn: Tim Barns
Telecopy: (617) 434-4829
CREDIT AGRICOLE INDOSUEZ 2,800,000.00 -- 6,100,000.00 4,600,000.00 13,500,000.00
55 East Monroe Street
47th Floor
Chicago, Illinois 60603
Attn: Paul Dytrych
Telecopy: (313) 372-3724
CITIBANK, N.A. 3,200,000.00 -- 7,000,000.00 5,300,000.00 15,500,000.00
399 Park Avenue
6th Floor, Zone 7
New York, New York 10043
Attn: Bruce Hall
Telecopy: (212) 559-0292
PRIME INCOME TRUST 4,050,000.00 4,950,000.00 -- -- 9,000,000.00
Two World Trade Center
72nd Floor
New York, New York 10048
Attn: Rafael Scolari
Telecopy: (212) 392-5345
FIRST CHICAGO NBD BANK 3,200,000.00 -- 7,000,000.00 5,300,000.00 15,500,000.00
One First National Plaza
Suite 0324
Chicago, Illinois 60670
Attn: Ken Krammer
Telecopy: (32) 732-7655
FIRST UNION NATIONAL BANK 3,200,000.00 -- 7,000,000.00 5,300,000.00 15,500,000.00
301 South College Street
19th Floor
Charlotte, North Carolina 28288
Attn: David Sharp
Telecopy: (704) 374-3300
FLEET BANK, N.A. 2,800,000.00 -- 6,100,000.00 4,600,000.00 13,500,000.00
1185 Avenue of the Americas
16th Floor
New York, New York 10036
Attn: Ty Anderson
Telecopy: (212) 819-6201
KZH Holding Corporation III 2,025,000.00 2,475,000.00 4,500,000.00
c/o The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attn: Virginia Conway
Telecopy: (212) 946-7776
KZH Crescent Corp. 2,025,000.00 2,475,000.00 4,500,000.00
c/o The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001
</TABLE>
<PAGE> 173
<TABLE>
<CAPTION>
Revolving Receivables
B Term Loan C Term Loan Credit Financing
Commitment Commitment Commitment Commitment Total
---------- ---------- ---------- ---------- -----
<S> <C> <C> <C> <C> <C>
Attn: Virginia Conway
Telecopy: (212) 946-7776
NATIONAL WESTMINISTER BANK PLC 2,800,000.00 -- 6,100,000.00 4,600,000.00 13,500,000.00
660 Madison Avenue
17th Floor
New York, New York 10021
Attn: Field Smith
Telecopy: (212) 418-4598
PILGRIM AMERICA PRIME RATE 4,050,000.00 4,950,000.00 -- -- 9,000,000.00
TRUST
Two Renaissance Square
40 North Central Avenue
Suite 1200
Phoenix, Arizona 85004
Attn: Michael Bacevich
Telecopy: (602) 417-8327
PNC BANK, NATIONAL ASSOCIATION 2,800,000.00 -- 6,100,000.00 4,600,000.00 13,500,000.00
345 Park Avenue
29th Floor
New York, New York 10154
Attn: Mark Williams
Telecopy: (212) 409-3737
TRUST COMPANY OF THE WEST 2,025,000.00 2,475,000.00 -- -- 4,500,000.00
(TCW CRESCENT/MACH I PARTNERS)
200 Park Avenue
Suite 2200
New York, New York 10166
Attn: Justin Driscoll/Jonathan Insull
Telecopy: (212) 297-4159
VAN KAMPEN MERRIT COMPANIES, 6,750,000.00 8,250,000.00 -- -- 15,000,000.00
INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Attn: Jeffrey Maillet
Telecopy: (630) 684-6740
THE MITSUBISHI TRUST AND 2,800,000.00 -- 6,100,000.00 4,600,000.00 13,500,000.00
BANKING CORPORATION
Attn: Paul Arzourian
Telecopy: (212) 644-6825
TOTAL ALLOCATION $90,000,000 $55,000,000 $100,000,000 $75,000,000 $320,000,000
</TABLE>
<PAGE> 174
<TABLE>
<CAPTION>
Schedule II to the
CREDIT AGREEMENT
PRICING AND COMMITMENT FEE GRID
- -----------------------------------------------------------------------------------------------------------------------------------
B Term Loans C Term Loans Revolving Loans Receivables Commitment
Financing Loans Fee
--------------------------------------------------------------------
Leverage Ratio ABR Eurodollar ABR Eurodollar ABR Eurodollar ABR Eurodollar
Loans Loans Loans Loans Loans Loans Loans Loans
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Greater than or equal 1.50% 2.50% 1.75% 2.75% 1.25% 2.25% 1.25% 2.25% 0.50%
to 5.5 to 1.0
Less than 5.5 to 1.0, 1.50% 2.50% 1.75% 2.75% 1.25% 2.25% 1.25% 2.25% 0.50%
but greater than or
equal to 5.0 to 1.0
Less than 5.0 to 1.0, 1.25% 2.25% 1.50% 2.50% 1.00% 2.00% 1.00% 2.00% 0.375%
but greater than or
equal to 4.5 to 1.0
Less than 4.5 to 1.0, 1.25% 2.25% 1.50% 2.50% 0.75% 1.75% 0.75% 1.75% 0.375%
but greater than or
equal to 4.0 to 1.0
Less than 4.0 to 1.0, 1.00% 2.00% 1.25% 2.25% 0.50% 1.50% 0.50% 1.50% 0.30%
but greater than or
equal to 3.5 to 1.0
Less than 3.5 to 1.0, 1.00% 2.00% 1.25% 2.25% 0.25 1.25% 0.25% 1.25% 0.25%
but greater than or
equal to 3.0 to 1.0
Less than 3.0 to 1.0 1.00% 2.00% 1.25% 2.25% 0.0% 1.00% 0.0 1.00% 0.25%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 175
EXHIBIT N TO
CREDIT AGREEMENT
----------------
FORM OF LETTER OF CREDIT REQUEST
No. (1) Dated (2)
---- ------
Bankers Trust Company, as Administrative Agent under the
Credit Agreement (as amended, modified or supplemented from time to time,
the "CREDIT AGREEMENT"), dated as of November 24, 1997, among Werner
Holding Co. (DE), Inc., the Lenders from time to time party thereto,
Bankers Trust Company, as Administrative Agent and Co-Arranger, Merrill
Lynch Capital Corporation, as Syndication Agent and Co-Arranger, The Chase
Manhattan Bank, as Documentation Agent, and Goldman Sachs Credit Partners
L.P., as Co-Agent
130 Liberty Street
New York, New York 10006
Attention: Mary Kay Coyle
[Name and Address of applicable Issuing Lender
Attention: ______________________]
Dear Sirs:
We hereby request that [name of proposed Issuing Lender], in
its individual capacity, issue a [Standby] [Commercial] L/C for the account of
the undersigned on (3) (the "Date of Issuance") in the aggregate stated amount
of (4). The requested Letter of
- -----------------------------
(1) Letter of Credit Request Number.
(2) Date of Letter of Credit Request.
(3) Date of Issuance which shall be at least five Business Days after the
date of this Letter of Credit Request (or such shorter period as is
acceptable to the respective Issuing Bank).
(4) Aggregate initial stated amount of Letter of Credit.
<PAGE> 176
Credit shall be denominated in Dollars.
For purposes of this Letter of Credit Request, unless
otherwise defined herein, all capitalized terms used herein which are defined in
the Credit Agreement shall have the respective meaning provided therein.
The beneficiary of the requested Letter of Credit will be (5),
and such Letter of Credit will be in support of 6 and will have a stated
expiration date of
(7).
We hereby certify that:
(1) the representations and warranties contained in the Credit
Documents will be true and correct in all material respects on the Date
of Issuance, both before and after giving effect to the issuance of the
Letter of Credit requested hereby (it being understood and agreed that
any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct in all material
respects only as of such specified date);
(2) no Default or Event of Default has occurred and is
continuing nor, after giving effect to the issuance of the Letter of
Credit requested hereby, would such a Default or an Event of Default
occur; and
(3) the Letter of Credit requested hereby is permitted to be
issued in accordance with the relevant requirements of Section 3 of the
Credit Agreement.
- ------------------------------------------
(5) Insert name and address of beneficiary.
(6) Insert description of the obligations which are being supported in the
case of a Standby L/C and a description of the commercial transaction
which is being supported in the case of a Commercial L/C.
(7) Insert last date upon which drafts may be presented which may not be
later than the earlier of (x) the date which occurs 365 days (or such
other duration as may be agreed upon by the Issuing Lender) after the
Date of Issuance, or, if any such Letter of Credit is automatically
extended for successive periods of up to 365 days, a date not beyond
the tenth day prior to the Revolving Credit Termination Date or (y) the
tenth day prior to the Revolving Credit Termination Date.
-2-
<PAGE> 177
Copies of all relevant documentation with respect to the
supported transaction are attached hereto.
WERNER HOLDING CO. (DE), INC.
By____________________________
Title:
-3-
<PAGE> 178
EXHIBIT D
TO THE
CREDIT AGREEMENT
----------------
FORM OF SWING LINE NOTE
$10,000,000 New York, New York
November 24, 1997
FOR VALUE RECEIVED, the undersigned, WERNER HOLDING CO. (DE),
INC., a Delaware corporation (the "COMPANY"), promises to pay to the order of
BANKERS TRUST COMPANY (the "LENDER") on the Revolving Credit Termination Date,
as defined in the Credit Agreement described below, at the office of Bankers
Trust Company, located at 130 Liberty Street, New York, New York 10006, in
lawful money of the United States and in immediately available funds, the
principal amount of the lesser of (a) TEN MILLION DOLLARS ($10,000,000) and (b)
the aggregate unpaid principal amount of all Swing Line Loans made by the Lender
to the Company pursuant to subsection 3.4 of the Credit Agreement defined below.
The Company further agrees to pay interest in like money at such office on the
unpaid principal amount hereof from time to time from the date hereof at the
rates, and on the dates, specified in the Credit Agreement. The Lender is
authorized to record the Borrowing Date and amount of each Swing Line Loan and
the date and amount of each payment or prepayment of principal thereof, on the
schedule annexed hereto and made a part hereof (or on a continuation thereof
which shall be attached hereto and made a part hereof) and any such recordation
shall constitute PRIMA FACIE evidence of the accuracy of the information so
recorded; PROVIDED that the failure of the Lender to make such recordation (or
any error in such recordation) shall not affect the obligations of the Company
hereunder or under the Credit Agreement.
This Note is the Swing Line Note referred to in the Credit
Agreement, dated as of November 24, 1997, among the Company, the lenders from
time to time party thereto, Bankers Trust Company, as Administrative Agent and
Co-Arranger, Merrill Lynch Capital Corporation, as Syndication Agent and Co-
Arranger, The Chase Manhattan Bank, as Documentation Agent, and Goldman Sachs
Credit Partners L.P. as Co-Agent (as amended, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT"), is subject to the provisions
thereof, is entitled to the benefits thereof and is subject to optional and
mandatory prepayment in whole or in part as provided therein. Terms used herein
which are defined in the Credit Agreement shall have such defined meanings
unless otherwise defined herein.
<PAGE> 179
This Note is secured and guaranteed as provided in the
Security Documents and the Guarantees. Reference is hereby made to the Security
Documents and the Guarantees for a description of the properties and assets in
which a security interest has been granted, the nature and extent of the
security and guarantees, the terms and conditions upon which the security
interest and each guarantee was granted and the rights of the Lender in respect
thereof. The undersigned hereby agrees to pay all costs and expenses incurred by
the Lender in connection with the enforcement of its rights and remedies under
the Credit Agreement, the Notes, the Security Documents and each other Credit
Document.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Note may become, or may be declared to be, immediately due and payable, all
as provided therein.
All parties now and hereafter liable with respect to this
Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
-2-
<PAGE> 180
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE TERMS OF THE CREDIT AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN
THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE
CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
WERNER HOLDING CO. (DE), INC.
By:
-------------------------------
Title:
-3-
<PAGE> 181
Schedule
to Swing
Line Note
---------
SWING LINE
LOANS AND PAYMENTS OF PRINCIPAL
-------------------------------
Amount Amount
of Swing of Unpaid Notation
Line Principal Principal Made
Date Loans Repaid Balance
- ------- -------- --------- --------- ---------
By
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
- ------- -------- --------- --------- ---------
-4-
<PAGE> 182
EXHIBIT E
TO THE
CREDIT AGREEMENT
----------------
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of
November __, 1997, among Werner Holding Co. (DE), Inc., a Delaware corporation
(the "Company"), the Lenders named therein, Bankers Trust Company, as
Administrative Agent and Co-Arranger, Merrill Lynch Capital Corporation, as
Syndication Agent and Co-Arranger, The Chase Manhattan Bank, as Documentation
Agent, and Goldman Sachs Credit Partners L.P., as Co-Agent (as amended,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT").
Terms defined in the Credit Agreement are used herein with the same meanings.
__________________ (the "ASSIGNOR") and ____________________
(the "ASSIGNEE") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as of
the Effective Date (as defined below), the interest (the "ASSIGNED INTEREST") in
and to the Assignor's rights and obligations under the Credit Agreement with
respect to those credit facilities contained in the Credit Agreement as are set
forth on Schedule 1 (individually, an "ASSIGNED FACILITY"; collectively, the
"ASSIGNED FACILITIES"), in a principal amount for each Assigned Facility as set
forth on Schedule 1.
2. The Assignor (i) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement, any other
Credit Document or any other instrument or document furnished pursuant thereto,
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement, any other Credit Document or any other
instrument or document furnished pursuant thereto, other than it has not created
any adverse claim upon the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Company, any of the Company's Subsidiaries or any other obligor or
the performance or observance by the Company, any of the Company's Subsidiaries
or any other obligor of any of their respective obligations under the Credit
Agreement or any other Credit Document or any other instrument or document
furnished pursuant
-1-
<PAGE> 183
hereto or thereto; (iii) attaches the Note(s), if any, held by it evidencing the
Assigned Facilities and requests that the Administrative Agent exchange such
Note(s) for a new Note or Notes payable to the Assignee (if requested by the
Assignee) and (if the Assignor has retained any interest in the Assigned
Facility) a new Note or Notes payable to the Assignor (if requested by the
Assignor) in the respective amounts which reflect the assignment being made
hereby (and after giving effect to any other assignments which have become
effective on the Effective Date); and (iv) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance.
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (iii) agrees that it
will, independently and without reliance upon the Assignor, the Administrative
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement, the other Credit
Documents or any other instrument or document furnished pursuant hereto or
thereto; (iv) appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
the Credit Agreement, the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
incidental thereto; (v) agrees that it will be bound by the provisions of the
Credit Agreement and will perform in accordance with its terms all the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender including, if it is organized under the laws of a
jurisdiction outside the United States, its obligations pursuant to subsections
5.11(d) and 12.6(g) of the Credit Agreement to deliver the forms prescribed by
the Internal Revenue Service of the United States certifying as to the
Assignee's exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Credit Agreement, or such other
documents as are necessary to indicate that all such payments are subject to
such tax at a rate reduced by an applicable tax treaty; and (vi) represents and
warrants that the provisions of the last sentence of subsection 12.6(c) of the
Credit Agreement do not prohibit the assignment to the Assignee effected hereby.
4. The effective date of this Assignment and Acceptance shall
be __________, (the "EFFECTIVE DATE"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent for
acceptance by it and recording by the Administrative Agent pursuant to
subsection 12.6(d) of the Credit Agreement, effective as of the Effective Date
(which shall not, unless otherwise agreed to by the Administrative Agent, be
earlier than five Business Days after the date of such acceptance and recording
by the Administrative Agent).
-2-
<PAGE> 184
5. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignee whether such amounts have accrued prior to the
Effective Date or accrue subsequent to the Effective Date. The Assignor and the
Assignee shall make all appropriate adjustments in payments by the
Administrative Agent for periods prior to the Effective Date or with respect to
the making of this assignment directly between themselves.
6. From and after the Effective Date, (i) the Assignee shall
be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Credit Documents and shall be bound by the
provisions thereof and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
-3-
<PAGE> 185
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first above written by
their respective duly authorized officers on Schedule 1 hereto.
[ASSIGNEE] [ASSIGNOR]
By:____________________ By:___________________
Name: Name:
Title: Title:
ACCEPTED [AND CONSENTED TO]:*
[WERNER HOLDING CO. (DE), INC.] BANKERS TRUST COMPANY,
as Administrative Agent
By:_______________________ By:_______________________
Name: Name:
Title: Title:
- -----------------------------------------
* Consents only required where Assignee is not a Lender or an Affiliate of a
Lender.
-4-
<PAGE> 186
Schedule 1 to Assignment and Acceptance relating to the Credit Agreement, dated
as of November 24, 1997,
among
WERNER HOLDING CO. (DE), INC., a Delaware corporation,
the Lenders named therein,
BANKERS TRUST COMPANY,
as Administrative Agent and Co-Arranger,
MERRILL LYNCH CAPITAL CORPORATION,
as Syndication Agent and as Co-Arranger,
THE CHASE MANHATTAN BANK, as Documentation Agent,
AND GOLDMAN SACHS CREDIT PARTNERS L.P., AS CO-AGENT
---------------------------------------------------
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Commitment Percentages Assigned
(to at least fifteen decimals)
Credit Principal (shown as a percentage of aggregate
Facility Assigned Amount Assigned Principal Amount Of All Lenders)
----------------- --------------- ---------------------------------
-5-
<PAGE> 187
EXHIBIT F-1 TO
CREDIT AGREEMENT
FORM OF
COMPANY SECURITY AGREEMENT
--------------------------
SECURITY AGREEMENT, dated as of November 24, 1997, made by
WERNER HOLDING CO. (DE), INC., a Delaware corporation (the "COMPANY") in favor
of BANKERS TRUST COMPANY, a New York banking corporation, as administrative
agent (in such capacity, the "ADMINISTRATIVE AGENT") for the Agents and for the
several lenders (the "LENDERS") from time to time parties to the Credit
Agreement (as defined below) and for the benefit of the other Secured Creditors
referred to below.
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of the date
hereof (as amended, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), among the Company, the Lenders, Bankers Trust Company, as
Administrative Agent and Co-Arranger, Merrill Lynch Capital Corporation, as
Syndication Agent and Co-Arranger, The Chase Manhattan Bank, as Documentation
Agent, and Goldman Sachs Credit Partners L.P., as Co-Agent (together with the
Administrative Agent, Syndication Agent and Documentation Agent, the "AGENTS"),
the Lenders have severally agreed to make loans to, and the Issuing Lender (as
defined in the Credit Agreement) has agreed to issue, and certain of the other
Lenders have agreed to participate in, letters of credit for the account of, the
Company upon the terms and subject to the conditions set forth therein; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective loans to, and the obligation of the Issuing
Lender to issue and the Lenders to participate in letters of credit for the
account of, the Company under the Credit Agreement that the Company shall have
executed and delivered this Security Agreement to the Administrative Agent for
the ratable benefit of the Agents and the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent, the other Agents and the Lenders to enter into the
Credit Agreement and to make their respective loans to, and to issue or
participate in letters of credit for the account of, the Company under the
Credit Agreement, the Company hereby agrees with the Administrative Agent, for
the ratable benefit of the Secured
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Creditors, as follows:
1. DEFINED TERMS. Unless otherwise defined herein or in the
preamble or recitals hereto, terms which are defined in the Credit Agreement and
used herein are so used as so defined; the following terms which are defined in
the Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Chattel Paper, Farm Products, Documents,
Goods and Inventory; and the following terms shall have the following meanings:
"ACCOUNTS" means all accounts receivable (other than any
Receivables Facility Assets), book debts, notes, drafts, instruments,
documents, acceptances and other forms of obligations now owned or
hereafter received or acquired by or belonging or owing to the Company
(including under any trade names, styles or divisions thereof) whether
arising out of personal property owned or leased by it, Goods sold by
it or services rendered by it or from any other transaction, whether or
not the same involves the lease of personal property, sale of Goods or
performance of services by the Company (including, without limitation,
any such obligation which would be characterized as an account, general
intangible or chattel paper under the Code) and all of the Company's
rights in, to and under all purchase orders now owned or hereafter
received or acquired by it for Goods or services, and all of the
Company's rights to any Goods represented by any of the foregoing
(including returned or repossessed Goods and unpaid seller's rights)
and all moneys due or to become due to the Company under all contracts
for the sale of Goods and/or the performance of services by it (whether
or not yet earned by performance), under any lease of real or personal
property (to the extent the grant of such a security interest is
permitted by applicable law and is not prohibited by such lease), or
under any franchise agreement, or in connection with any other
transaction, now in existence or hereafter arising, including without
limitation the right to receive the proceeds of said purchase orders
and contracts and rents under such leases, and all collateral security
and guarantees of any kind given by any Person with respect to any of
the foregoing.
"CODE" means the Uniform Commercial Code as from time to time
in effect in the State of New York.
"COLLATERAL" has the meaning assigned to it in Section 2 of
this Security Agreement.
"CONTRACT" means, with respect to an Account, any agreement
relating to the terms of payment or the terms of performance thereof,
including, without limitation, (a) all rights of the Company to receive
moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of the
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Company to damages arising out of, or for, breach or default in
respect thereof and (c) all rights of the Company to perform and to
exercise all remedies thereunder.
"COPYRIGHT LICENSE" means any written agreement, naming the
Company, as licensor or licensee, granting any right in the United
States to use any Copyright including, without limitation, any referred
to in Schedule I hereto.
"COPYRIGHTS" means all of the following to the extent the
Company now or hereafter has any right, title or interest: (a) all
United States copyrights and all registrations and applications
therefor, including, without limitation, any referred to in Schedule I
hereto, and (b) all renewals of such copyrights.
"CREDIT AGREEMENT OBLIGATIONS" has the meaning assigned that
term in the definition of "Obligations" contained herein.
"EQUIPMENT" means all machinery, equipment and furniture
except Vehicles, now owned or hereafter acquired by the Company or in
which the Company now has or hereafter may acquire any right, title or
interest and any and all additions, substitutions and replacements
thereof, wherever located, together with all attachments, components,
parts, equipment and accessories installed therein or affixed thereto,
including, but not limited to, all equipment as defined in Section
9-109(2) of the Code.
"GENERAL INTANGIBLES" has the meaning given to it in the Code
and includes, whether or not so included in such meaning, any franchise
agreements or rights in favor of or granted by the Company to know-how,
trade secrets, product or service development ideas and designs,
advertising commercials, renderings, strategies and plans, blueprints,
architectural drawings, site location, personnel and franchisee
information, proprietary information, computer and software technology
and programs, contracts with distributors, and any similar items, all
interest rate, foreign currency or similar agreements and general
intangibles attributable to the Capital Stock of each of the
Subsidiaries of the Company.
"INSTRUMENT" has the meaning given to it in the Code, except
that it shall not include the Pledged Notes and the Undelivered Notes
(as each such term is defined in each of the Pledge Agreements).
"LICENSE" means any Copyright License, Patent License or
Trademark License.
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"OBLIGATIONS" means (i) the unpaid principal amount of, and
interest on (including interest accruing on or after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Company, whether or
not a claim for such post-filing or post-petition interest is
allowed), the Loans and all other obligations and liabilities of the
Company to the Agents, the Issuing Lender or the Lenders, whether
direct or indirect, absolute or contingent, due or to become due, or
now existing or hereafter incurred, which may arise under, out of, or
in connection with, the Credit Agreement, any Letter of Credit, the
other Credit Documents and any other document executed and delivered or
given in connection therewith or herewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all reasonable fees and
disbursements of counsel to the Agents, the Issuing Lender or to the
Lenders that are required to be paid by the Company pursuant to the
terms of the Credit Agreement) or otherwise (collectively, "CREDIT
AGREEMENT OBLIGATIONS") and (ii) all obligations of the Company to any
Lender or Lenders or its or their Affiliates (each such Lender or
Affiliate, even if the respective Lender subsequently ceases to be a
lender under the Credit Agreement for any reason, together with such
Lender's or Affiliate's successors and assigns, collectively, the
"Other Creditors" and, together with the Administrative Agent, the
Agents and the Lenders, the "Secured Creditors") under or in respect of
any Interest Rate Agreement (collectively "OTHER OBLIGATIONS").
"OTHER OBLIGATIONS" has the meaning assigned that term in the
definition of "Obligations" contained herein.
"PATENT LICENSE" means any agreement, whether written or oral,
providing for the grant by or to the Company of any right to
manufacture, use, sell or import into any jurisdiction any invention
covered by a Patent, including, without limitation, any thereof
referred to in Schedule II hereto.
"PATENTS" means (a) all letters patent of the United States or
any other country and all reissues and extensions thereof, including,
without limitation, any thereof referred to in Schedule II hereto, and
(b) all applications for letters patent of the United States and all
divisions, continuations and continuations-in-part thereof or any other
country, including, without limitation, any thereof referred to in
Schedule II hereto.
"PROCEEDS" means "proceeds", as such term is defined in
Section 9-306(1) of the Code and, to the extent not included in such
definition, shall include, without limitation, (a) any and all proceeds
of any insurance, indemnity, warranty, guaranty or letter of credit
payable to the Company,
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from time to time with respect to any of the Collateral, (b) all
payments (in any form whatsoever) paid or payable to the Company from
time to time in connection with any taking of all or any part of the
Collateral by any Governmental Authority or any Person acting under
color of Governmental Authority, (c) all judgments in favor of the
Company in respect of the Collateral and (d) all other amounts from
time to time paid or payable or received or receivable under or in
connection with any of the Collateral.
"SECURED CREDITORS" has the meaning assigned that term in the
definition of "Obligations" contained herein.
"SECURITY AGREEMENT" means this Security Agreement, as
amended, supplemented or otherwise modified from time to time.
"TRADEMARK LICENSE" means any agreement, written or oral,
providing for the grant by or to the Company of any right to use any
Trademark, including, without limitation, any thereof referred to in
Schedule III hereto.
"TRADEMARKS" means (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source of business identifiers,
and the goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States
Patent and Trademark Office or in any similar office or agency of the
United States, any state thereof or any other country or any political
subdivision thereof, or otherwise, including, without limitation, any
thereof referred to in Schedule III hereto, and (b) all renewals
thereof.
"VEHICLES" means all cars, trucks, trailers and other vehicles
(including forklifts) covered by a certificate of title law of any
state.
2. GRANT OF SECURITY INTEREST. (a) As collateral security for
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, the Company hereby
grants to the Administrative Agent for the ratable benefit of the Secured
Creditors a security interest in all of the following property now owned or at
any time hereafter acquired by the Company or in which the Company now has or at
any time in the future may acquire any right, title or interest, excluding,
however, Vehicles, Receivables Facility Assets and Pledged Notes (as defined in
the Company Pledge Agreement) (collectively, the "COLLATERAL"):
(i) all Accounts;
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(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Copyrights;
(v) all Copyright Licenses;
(vi) all Documents;
(vii) all Equipment;
(viii) all General Intangibles;
(ix) all Instruments;
(x) all Inventory;
(xi) all Patents;
(xii) all Patent Licenses;
(xiii) all Trademarks;
(xiv) all Trademark Licenses;
(xv) all books and records pertaining to the
Collateral;
(xvi) all other Goods, personal property and
investment securities of the Company, whether
tangible or intangible and whether now or
hereafter owned by the Company, and wherever
located; and
(xvii) to the extent not otherwise included, all
Proceeds and products of any and all of the
foregoing and all collateral security and
guarantees given by any Person with respect to
any of the foregoing.
3. RIGHTS OF SECURED CREDITORS; LIMITATIONS ON SECURED
CREDITORS' OBLIGATIONS.
(a) COMPANY REMAINS LIABLE UNDER ACCOUNTS, LICENSES,
CONTRACTS,
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ETC. Anything herein to the contrary notwithstanding, the Company shall
remain liable under each of the Accounts, Licenses and Contracts to
observe and perform all the material conditions and obligations to be
observed and performed by it thereunder, all in accordance with the
terms of any agreement giving rise to each such Account, License or
Contract. None of the Secured Creditors shall have any obligation or
liability under any Account, License or Contract by reason of or arising
out of this Security Agreement or the receipt by any Secured Creditor of
any payment relating to such Account, License or Contract pursuant
hereto, nor shall any Secured Creditor be obligated in any manner to
perform any of the obligations of the Company under or pursuant to any
Account, License or Contract, to make any payment, to make any inquiry
as to the nature or the sufficiency of any payment received by it or as
to the sufficiency of any performance by any party under any Account,
License or Contract, to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time
or times.
(b) NOTICE TO ACCOUNT DEBTORS AND CONTRACTING PARTIES. At any
time after an Event of Default has occurred and so long as such Event
of Default shall be continuing, upon the request of the Administrative
Agent the Company shall, and the Administrative Agent may (with
concurrent notice to the Company thereof), notify account debtors on
the Accounts and parties to the Contracts and Licenses that the
Accounts, Contracts and Licenses have been assigned to the
Administrative Agent for the ratable benefit of the Secured Creditors
and that payments in respect thereof shall be made directly to the
Administrative Agent. At any time after an Event of Default shall have
occurred and be continuing, the Administrative Agent may in its own
name or in the name of others communicate with account debtors on the
Accounts and parties to the Contracts and Licenses to verify with them
to its satisfaction the existence, amount and terms thereof.
(c) VERIFICATION OF ACCOUNTS AND INVENTORY. The
Administrative Agent shall have the right to make test verifications of
the Accounts and Inventory in any reasonable manner and through any
medium that it considers advisable, and the Company agrees to furnish
all such assistance and information as the Administrative Agent may
reasonably require in connection therewith provided that, so long as no
Event of Default shall have occurred and be continuing, (i) any such
verification shall be conducted in the name of the Company or in such
other manner as shall not disclose the Administrative Agent's identity
or interest in the Collateral and (ii) the Administrative Agent shall
conduct such verification no more frequently than once per year and
shall give the Company reasonable advance notice thereof. The
Administrative Agent may after the occurrence and during the
continuance
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of an Event of Default in its own name or in the name of others
communicate with account debtors in order to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of
any Accounts and/or Inventory.
4. REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants that:
(a) TITLE; NO OTHER LIENS. Except for the Lien granted to the
Administrative Agent for the ratable benefit of the Secured Creditors
pursuant to this Security Agreement and the other Liens permitted to
exist on the Collateral pursuant to the Credit Agreement, the Company
owns each item of the Collateral free and clear of any and all Liens.
No security agreement, financing statement or other public notice with
respect to all or any part of the Collateral is on file or of record in
any public office, except (i) such as may have been filed in favor of
the Administrative Agent, for the ratable benefit of the Secured
Creditors, pursuant to this Security Agreement, or (ii) as may be
permitted pursuant to the Credit Agreement.
(b) PERFECTED FIRST PRIORITY LIENS. The Liens granted pursuant
to this Security Agreement constitute perfected Liens on the Collateral
in favor of the Administrative Agent, for the ratable benefit of the
Secured Creditors, to the extent that (i) such Liens constitute Liens
on General Intangibles, or (ii) such Liens constitute Liens on
Equipment located in a jurisdiction listed on Schedule IV, or (iii)
such Liens can be perfected by filing a financing statement under the
Uniform Commercial Code, as in effect in the relevant jurisdiction, or
(iv) the Company is required to deliver such Collateral to the
Administrative Agent pursuant to Section 5(a) hereof, which are prior
to all other Liens on the Collateral created by the Company and in
existence on the date hereof, except for Liens permitted to exist on
the Collateral pursuant to the Credit Agreement, and which are
enforceable as such against all creditors of and purchasers from the
Company.
(c) ACCOUNTS AND RECORDS. The amount represented by the
Company to the Administrative Agent from time to time as owing by each
account debtor or by all account debtors in respect of the Accounts
will at such time be the correct amount actually owing by such account
debtor or debtors thereunder in all material respects, subject to
adjustments in the ordinary course of business. No amount payable to
the Company under or in connection with any Account, Contract or
License in excess of $250,000 individually or $1,000,000 in the
aggregate is evidenced by any Instrument or Chattel Paper which has not
been delivered to the Administrative Agent except for notes receivable
from officers or key employees pursuant to executive
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stock purchase plans. The place where the Company keeps its records
concerning the Accounts and the other Collateral is 93 Werner Road,
Greenville, PA 16125-9499.
(d) CONSENTS. Each Contract and License is in full force and
effect and, to the best knowledge of the Company, constitutes a valid
and legally enforceable obligation of the other obligor in respect
thereof or parties thereto, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally. No consent or
authorization of, filing with or other act by or in respect of any
Governmental Authority is required in connection with the execution,
delivery, performance, validity or enforceability of any of the
Accounts, Licenses or Contracts by any party thereto other than those
which have been duly obtained, made or performed, are in full force and
effect and do not subject the scope of any such Account, License or
Contract to any material adverse limitation, either specific or general
in nature. Neither the Company nor (to the best of the Company's
knowledge) any other party to any Account, License or Contract is in
default in the performance or observance of any of the material terms
thereof. The Company has fully performed all its material obligations
under each License and Contract to the extent such obligations are
required to be performed on or prior to the date hereof. The right,
title and interest of the Company in, to and under each Account,
License and Contract are not subject to any defense, offset,
counterclaim or claim which would materially adversely affect the value
of such Account, License or Contract as Collateral, nor have any of the
foregoing been asserted or alleged against the Company as to any of the
foregoing.
(e) INVENTORY. The Inventory is kept at the locations listed
on Schedule IV hereto, as amended or supplemented from time to time
pursuant to Section 5(o) hereof.
(f) EQUIPMENT. The Equipment is kept at the locations listed
on Schedule IV hereto, as amended or supplemented from time to time
pursuant to Section 5(o) hereof.
(g) CHIEF EXECUTIVE OFFICE. The Company's chief executive
office and chief place of business is located at 93 Werner Road,
Greenville, PA 16125-9499.
(h) FARM PRODUCTS. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
(i) PATENTS, TRADEMARKS AND COPYRIGHTS. Schedule II hereto
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includes a complete and current list of all material Patents and Patent
Licenses owned by the Company in its own name as of the date hereof.
Schedule III hereto includes a complete and current list of all
material Trademarks and Trademark Licenses owned by the Company in its
own name as of the date hereof. Schedule I hereto includes a complete
and current list of all material Copyrights in which the Company owns
or purports to own as of the date hereof. To the best of the Company's
knowledge, except as set forth on Schedule II or Schedule III, each
Patent and Trademark is valid, subsisting, unexpired and enforceable
and has not been abandoned. Except as set forth in Schedule II or on
Schedule III, none of such Patents and Trademarks is the subject of any
licensing or franchise agreement. All licenses of the Company's
Trademarks are in force and, to the best knowledge of the Company, not
in default. No holding, decision or judgment has been rendered by any
Governmental Authority with respect to any Patent or Trademark which
would limit, cancel or question the validity of any Patent or
Trademark. Except as set forth on Schedule II or Schedule III, no
action or proceeding is pending or, to the knowledge of the Company,
threatened (i) seeking to limit, cancel or question the validity of any
material Patent or Trademark or the Company's ownership thereof, or
(ii) which, if adversely determined, would have a material adverse
effect on the value of any material Patent or Trademark.
(j) POWER AND AUTHORITY; AUTHORIZATION. The Company has the
corporate power and authority and the right to execute and deliver, to
perform its obligations under, and to grant the Lien on the Collateral
pursuant to, this Security Agreement and has taken all necessary
corporate action to authorize its execution, delivery and performance
of, and grant of the Lien on the Collateral pursuant to, this Security
Agreement.
(k) NO LITIGATION. No litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to
the knowledge of the Company, threatened by or against the Company or
against any of its properties or revenues with respect to this Security
Agreement or any of the transactions contemplated hereby which would
have a material adverse effect upon any material portion of the
Collateral or the granting of the security interests hereby.
5. COVENANTS. The Company covenants and agrees with the
Secured Creditors that, from and after the date of this Security Agreement until
the Obligations are paid in full, the Commitments are terminated and either no
Letters of Credit are outstanding or each outstanding Letter of Credit has been
cash collateralized so that it is fully secured to the satisfaction of the
Administrative Agent:
(a) FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS AND CHATTEL
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PAPER. (i) At any time and from time to time, upon the written request
of the Administrative Agent, and at the sole expense of the Company,
the Company will promptly and duly execute and deliver such further
instruments and documents and take such further action as the
Administrative Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Security Agreement
and of the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation statements
under the Uniform Commercial Code in effect in any jurisdiction with
respect to the Liens created hereby. The Company also hereby authorizes
the Administrative Agent to file (after written notice to the Company)
any such financing or continuation statement without the signature of
the Company to the extent permitted by applicable law. A carbon,
photographic or other reproduction of this Security Agreement shall be
sufficient as a financing statement for filing in any jurisdiction.
(ii) If any amounts payable under or in connection with any of
the Collateral having a face value in excess of $250,000 individually
or $1,000,000 in the aggregate at any one time outstanding shall be or
become evidenced by any Instruments or Chattel Paper, such Instruments
or Chattel Paper shall be immediately delivered to the Administrative
Agent, duly endorsed in a manner satisfactory to the Administrative
Agent, to be held as Collateral pursuant to this Security Agreement. So
long as no Default or Event of Default has occurred and is continuing,
upon request by the Company, the Administrative Agent shall make
available any pledged Collateral to the Company, or its designee, that
the Company specifies is required for the purpose of ultimate sale,
exchange, presentation, collection, renewal, registration or transfer
thereof, PROVIDED that in each case arrangements reasonably
satisfactory to the Administrative Agent shall be made for the return
of such pledged Collateral within 21 days from the time of delivery by
the Administrative Agent, except for pledged Collateral that has been
fully repaid, satisfied, or transferred as permitted hereunder.
(iii) Notwithstanding anything set forth in this Security
Agreement to the contrary, so long as no Default or Event of Default
has occurred and is continuing, the Company shall not be required to
deliver to the Administrative Agent any Instruments or Chattel Paper to
be held by the Administrative Agent as Collateral pursuant to this
Security Agreement so long as the aggregate amount evidenced by all
such Instruments and Chattel Paper does not exceed $250,000
individually or $1,000,000 in the aggregate at any one time
outstanding.
(b) INDEMNIFICATION. The Company agrees to pay, and to save
the Secured Creditors harmless from, any and all liabilities, costs and
expenses
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(including, without limitation, reasonable legal fees and expenses) (i)
with respect to, or resulting from, any delay in paying, any and all
excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral, (ii) with respect to, or
resulting from, any delay by the Company in complying with any
Requirement of Law applicable to any of the Collateral or (iii) in
connection with any of the transactions contemplated by this Security
Agreement; PROVIDED that the Company shall not be liable for the
payment of any portion of such liabilities, costs or expenses resulting
from the gross negligence or willful misconduct of any Secured
Creditor. Without limiting the preceding sentence, the Company
will indemnify and save and keep harmless each Secured Creditor from
and against all expense, loss or damage suffered by reason of any
counterclaim of the account debtor or obligor thereunder, arising out
of a breach by the Company of any obligation thereunder or arising out
of any other agreement, indebtedness or liability at any time owing to
or in favor of such account debtor or obligor or its successors from
the Company.
(c) MAINTENANCE OF RECORDS. The Company will keep and maintain
at its own cost and expense satisfactory and complete records of the
Collateral, including, without limitation, a record of all payments
received and all credits granted with respect to the Accounts,
Contracts and Licenses. The Company will mark its internal books and
records pertaining to the Collateral to evidence this Security
Agreement and the security interests granted hereby. For the Secured
Creditors' further security, the Administrative Agent, for the ratable
benefit of the Secured Creditors, shall have a security interest in all
of the Company's books and records pertaining to the Collateral, and
the Company shall make available for review any such books and records
to the Administrative Agent or to its representatives during normal
business hours at the reasonable request of the Administrative Agent.
The Company shall permit representatives of the Administrative Agent,
upon reasonable notice to the Company (but no more frequently than
monthly unless a Default or Event of Default shall have occurred and be
continuing), to visit and inspect any of its properties and examine and
make abstracts from any of its books and records at any reasonable time
and as often as may reasonably be requested upon reasonable notice, and
to discuss the business, assets, condition (financial or otherwise) or
the results of operation of the Company and its Subsidiaries with
appropriate officers and employees thereof and with their independent
certified public accountants.
(d) RIGHT OF INSPECTION. The Administrative Agent and the
representatives of any other Secured Creditor shall upon reasonable
notice (made through the Administration Agent and no more frequently
than quarterly unless a Default or Event of Default shall have occurred
and be continuing)
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have full and free reasonable access to visit and inspect any of its
properties and examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably be
requested upon reasonable notice, and to discuss the business, assets,
condition (financial or otherwise) or the results of operation of the
Company and its Subsidiaries with appropriate officers and employees
thereof and with their independent certified public accountants with
prior reasonable notice to, and coordination with, the chief financial
officer or the treasurer of the Company, and the Company agrees to
render to the Administrative Agent at the Company's cost and expense,
and to the other Secured Creditors, such clerical and other assistance
as may be reasonably requested with regard thereto. The Secured
Creditors shall keep such information thereby obtained confidential to
the extent set forth in subsection 12.6(f) of the Credit Agreement.
(e) COMPLIANCE WITH LAWS, ETC. The Company will comply in all
material respects with all Requirements of Law applicable to the
Collateral or any part thereof or to the operation of the Company's
business; PROVIDED that the Company may contest any Requirement of Law
in any reasonable manner which shall not, in the reasonable opinion of
the Administrative Agent, adversely affect the Secured Creditors'
rights or the priority of their Liens on the Collateral.
(f) COMPLIANCE WITH TERMS OF CONTRACTS, ETC. The Company will
perform and comply in all material respects with all its obligations
under the Contracts and all its other Contractual Obligations relating
to the Collateral.
(g) PAYMENT OF OBLIGATIONS. The Company will pay promptly when
due all material taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of its income or profits
therefrom, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or with
respect to the Collateral, except that no such charge need be paid if
(i) the validity thereof is being contested in good faith by
appropriate proceedings, (ii) such proceedings do not involve any
material danger of the sale, forfeiture or loss of any of the
Collateral or any interest therein and (iii) such charge is adequately
reserved against on the Company's books in accordance with GAAP.
(h) LIMITATION ON LIENS ON COLLATERAL. The Company will not
create, incur or permit to exist, will take all commercially reasonable
actions to defend the Collateral against, and will take such other
commercially reasonable action as is necessary to remove, any Lien or
claim on or to the Collateral, other than the Liens created hereby and
other than as permitted pursuant to the Credit Agreement, and will take
all commercially reasonable
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actions to defend the right, title and interest of the Secured
Creditors in and to any of the Collateral against the claims and
demands of all Persons whomsoever.
(i) LIMITATIONS ON DISPOSITIONS OF COLLATERAL. The Company
will not sell, transfer, lease or otherwise dispose of any of the
Collateral, or attempt, offer or contract to do so except for sales of
assets permitted by the Credit Agreement. Concurrently with any such
permitted disposition, the property acquired by a transferee in such
disposition shall automatically be released from the security interest
created by this Security Agreement (the "SECURITY INTEREST"). It is
acknowledged and agreed that notwithstanding any release of property
from the Security Interest in accordance with the foregoing provisions
of this Section, the Security Interest shall in any event continue in
the Proceeds of Collateral. The Administrative Agent shall promptly
execute and deliver (and, when appropriate, shall cause any separate
agent, co-agent or trustee to execute and deliver) any releases,
instruments or documents reasonably requested by the Company to
accomplish or confirm the release of Collateral provided by this
Section. Any such release of Collateral provided by the Administrative
Agent shall specifically describe that portion of the Collateral to be
released, shall be expressed to be unconditional and shall be without
recourse or warranty (other than a warranty that the Administrative
Agent has not assigned its rights and interests to any other Person).
The Company shall pay all of the Administrative Agent's reasonable
expenses in connection with any release of Collateral.
(j) LIMITATIONS ON MODIFICATIONS, WAIVERS, EXTENSIONS OF
AGREEMENTS GIVING RISE TO ACCOUNTS. The Company will not (i) amend,
modify, terminate or waive any provision of any Contract, agreement or
lease giving rise to an Account or License in any manner which could
reasonably be expected to materially adversely affect the value of such
Contract, Account or License as Collateral, except in a manner
consistent with the ordinary and customary conduct of its business,
(ii) fail to exercise promptly and diligently each and every material
right which it may have under each material Contract, agreement or
lease giving rise to an Account or License (other than any right of
termination), except in a manner consistent with the ordinary and
customary conduct of its business or (iii) fail to deliver to the
Administrative Agent upon its reasonable request a copy of each
material demand, notice or document received by it relating in any way
to any material Contract, agreement or lease giving rise to an Account
or License.
(k) LIMITATIONS ON DISCOUNTS, COMPROMISES, EXTENSIONS OF
ACCOUNTS. Other than in the ordinary course of business as generally
conducted by the Company over a period of time, the Company will not
grant
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any extension of the time of payment of any of the Accounts,
compromise, compound or settle the same for less than the full amount
thereof, release, wholly or partially, any Person liable for the
payment thereof, or allow any credit or discount whatsoever thereon.
(l) MAINTENANCE OF EQUIPMENT. The Company will maintain each
item of Equipment in good operating condition, ordinary wear and tear
and immaterial impairments of value and damage by the elements
excepted, and will provide all maintenance, service and repairs
necessary for such purpose.
(m) FURTHER IDENTIFICATION OF COLLATERAL. The Company will
furnish to the Administrative Agent from time to time statements and
schedules further identifying and describing the Collateral and such
other reports in connection with the Collateral as the Administrative
Agent may reasonably request, all in reasonable detail.
(n) NOTICES. The Company will advise the Administrative Agent
and the Lenders promptly, in reasonable detail, at their respective
addresses set forth in the Credit Agreement, (i) of any Lien (other
than Liens created hereby or permitted under the Credit Agreement) on,
or claim asserted against, any of the Collateral and (ii) of the
occurrence of any other event which could reasonably be expected to
have a material adverse effect on the aggregate value of the Collateral
or on the Liens created hereunder.
(o) CHANGES IN LOCATIONS, NAME, ETC. The Company will not (i)
change the location of its chief executive office/chief place of
business from that specified in Section 4(g) or remove its books and
records from the location specified in Section 4(c), (ii) remove any
material amount of the Inventory or Equipment to, or keep any material
amount of Inventory or Equipment at, a location other than those listed
on Schedule IV hereto, or (iii) change its name (including the adoption
of any new trade name), identity or corporate structure to such an
extent that any financing statement filed by the Administrative Agent
in connection with this Security Agreement would become seriously
misleading, unless it shall have provided at least 15 days prior
written notice to the Administrative Agent of any such event and
provide the Administrative Agent with the new location of its chief
executive office/chief place of business and its books and records, the
location of the Inventory and Equipment and the change in the Company's
name, as the case may be. Any notice given pursuant to this Section
5(o) shall be deemed to amend Section 4(c) and 4(g) hereof or Schedule
IV hereto, as the case may be. In connection with any actions permitted
pursuant to clause (i) of this Section 5(o), the Administrative Agent
shall be entitled to receive any legal opinions it reasonably requests
as to the continued perfection of the security interest granted hereby
in the
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Collateral, which opinions shall be deemed satisfactory to the
Administrative Agent if substantially similar to the perfection
opinions given by Gibson, Dunn & Crutcher LLP on the Closing Date.
(p) COPYRIGHTS. The Company (i) will employ the Copyright for
each material published work with such notice of copyright as may be
required by law to secure copyright protection and (ii) will not do any
act or knowingly omit to do any act whereby any material Copyright may
become invalidated and:
(A) will not do any act, or omit to do any act,
whereby any material Copyright may become injected into the
public domain;
(B) shall notify the Administrative Agent immediately
if it knows, or has reason to know, that any material
Copyright may become injected into the public domain or of any
adverse determination or development (including, without
limitation, the institution of, or any such determination or
development in, any court or tribunal in the United States or
any other country) regarding the Company's ownership of any
such Copyright or its validity;
(C) will take all necessary steps as it shall deem
appropriate under the circumstances, to maintain and pursue
each application (and to obtain the relevant registration) and
to maintain each registration of each material Copyright owned
by the Company including, without limitation, filing of
applications for renewal, where necessary; and
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(D) will promptly notify the Administrative Agent of
any material infringement of any material Copyright of the
Company of which it becomes aware and will take such actions
as it shall reasonably deem appropriate under the
circumstances to protect such Copyright, including, where
appropriate, the bringing of suit for infringement, seeking
injunctive relief and seeking to recover any and all damages
for such infringement.
(q) PATENTS AND TRADEMARKS.
(i) The Company (either itself or through
licensees) will, except with respect to any Trademark that the
Company shall, after the exercise of reasonable business
judgment, reasonably determine is of immaterial economic value
to it or otherwise reasonably determines not to do so, (A) use
reasonable efforts to continue to use each Trademark on each
and every trademark class of goods applicable to its current
line as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force free
from any claim of abandonment for non-use, (B) maintain as in
the past the quality of products and services offered under
such Trademark, (C) use reasonable efforts to employ such
Trademark with the appropriate notice of registration, (D) not
adopt or use any mark which is confusingly similar or a
colorable imitation of such Trademark unless within 45 days
after such use or adoption the Administrative Agent, for the
ratable benefit of the Secured Creditors, shall obtain a
perfected security interest in such mark pursuant to this
Security Agreement, and (E) not (and not permit any licensee
or sublicensee thereof to) do any act or knowingly omit to do
any act whereby any Trademark may become invalidated.
(ii) The Company will not, except with respect
to any Patent that the Company shall, after the exercise of
reasonable business judgment, determine is of immaterial
economic value to it or otherwise reasonably determine so to
do, do any act, or omit to do any act, whereby any Patent may
become abandoned or dedicated.
(iii) The Company will notify the Administrative
Agent immediately if it knows, or has reason to know, that any
application relating to any Patent, or any application or
registration relating to any Trademark may become abandoned or
dedicated, or of any adverse determination or material
development (including, without limitation, the institution
of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office or
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any court or tribunal in any country) regarding the Company's
ownership of any Patent or Trademark or its right to register
the same or to keep and maintain the same.
(iv) Whenever the Company, either by itself or
through any agent, employee, licensee or designee, shall file
an application for any Patent or for the registration of any
Trademark with the United States Patent and Trademark Office
or any similar office or agency in any other country or any
political subdivision thereof, the Company shall report such
filing to the Administrative Agent within five Business Days
after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Administrative Agent, the Company
shall execute and deliver any and all agreements, instruments,
documents, and papers as the Administrative Agent may request
to evidence the Administrative Agent's security interest in
any Patent or Trademark and the goodwill and general
intangibles of the Company relating thereto or represented
thereby, and the Company hereby appoints and constitutes the
Administrative Agent its attorney-in-fact to execute and file
all such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power being
coupled with an interest and is irrevocable until the
Obligations are paid in full, the Commitments are terminated
and no Letters of Credit are outstanding.
(v) The Company, except with respect to any
Patent or Trademark the Company shall, after the exercise of
reasonable business judgment, determine is of immaterial
economic value to it or it otherwise reasonably determines not
to so do and except with respect to any Trademark that is not
registrable, will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the
United States Patent and Trademark Office, or any similar
office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application
(and to obtain the relevant registration or Patent) and to
maintain each Patent and each registration of Trademarks,
including, without limitation, filing of applications for
renewal, affidavits of use and affidavits of incontestability
when appropriate.
(vi) In the event that any Patent or Trademark
included in the Collateral is infringed, misappropriated or
diluted by a third party, the Company shall promptly notify
the Administrative Agent after it learns thereof and shall,
unless the Company shall, after the exercise of reasonable
business judgment determine that such Patent
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or Trademark is of immaterial economic value to the Company,
which determination the Company shall promptly report to the
Administrative Agent, promptly sue for infringement,
misappropriation or dilution, to seek injunctive relief where
appropriate and to recover any and all damages for such
infringement, misappropriation or dilution, or take such other
actions as the Company shall reasonably deem appropriate under
the circumstances to protect such Patent or Trademark.
6. ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) POWERS. The Company hereby irrevocably constitutes and
appoints the Administrative Agent and any officer or agent thereof,
with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place
and stead of the Company and in the name of the Company or in its own
name, from time to time after the occurrence, and during the
continuation, of an Event of Default for the purpose of carrying out
the terms of this Security Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may
be necessary or desirable to accomplish the purposes of this Security
Agreement, and, without limiting the generality of the foregoing, the
Company hereby gives the Administrative Agent the power and right, on
behalf of the Company, without notice to or assent by the Company, to
do the following:
(i) in the name of the Company or its own name,
or otherwise, to take possession of and indorse and collect
any checks, drafts, notes, acceptances or other instruments
for the payment of moneys due under any Account, Instrument,
License or General Intangible or with respect to any other
Collateral and to file any claim or to take any other action
or proceeding in any court of law or equity or otherwise
deemed appropriate by the Administrative Agent for the purpose
of collecting any and all such moneys due under any Account,
Instrument, License or General Intangible or with respect to
any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral, PROVIDED that
if such taxes are being contested in good faith and by
appropriate proceedings, the Administrative Agent will consult
with the Company before making any such payment; and
(iii) (A) to direct any party liable for any
payment under any of the Collateral to make payment of any and
all moneys due
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or to become due thereunder directly to the Administrative
Agent or as the Administrative Agent shall direct; (B) to ask
or demand for, collect, receive payment of and receipt for,
any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any
Collateral; (C) to sign and indorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications, notices
and other documents in connection with any of the Collateral;
(D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any thereof and to
enforce any other right in respect of any Collateral; (E) to
defend any suit, action or proceeding brought against the
Company with respect to any Collateral; (F) to settle,
compromise or adjust any suit, action or proceeding described
in clause (E) above and, in connection therewith, to give such
discharges or releases as the Administrative Agent may deem
appropriate; (G) to assign any Patent or Trademark (along with
the goodwill of the business to which any such Trademark
pertains), throughout the world for such term or terms, on
such conditions, and in such manner, as the Administrative
Agent shall in its sole discretion determine; and (H)
generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Administrative Agent
were the absolute owner thereof for all purposes, and to do,
at the Administrative Agent's option and the Company's
expense, at any time, or from time to time, all acts and
things which the Administrative Agent reasonably deems
necessary to protect, preserve or realize upon the Collateral
and the Secured Creditors' Liens thereon and to effect the
intent of this Security Agreement, all as fully and
effectively as the Company might do.
The Company hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) OTHER POWERS. (i) The Company also authorizes the
Administrative Agent, at any time and from time to time, to execute, in
connection with the sale provided for in Section 8 hereof, any
indorsement, assignments or other instruments of conveyance or transfer
with respect to the Collateral and (ii) pursuant to Section 9-402 of
the Code, the Company authorizes the Administrative Agent to file
financing statements with respect to the Collateral without the
signature of the Company in such form and in such filing offices as the
Administrative Agent reasonably determines appropriate to perfect the
security interests of the Administrative Agent under this
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Agreement. A carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement for filing in
any jurisdiction.
(c) NO DUTY ON AGENTS' OR SECURED CREDITORS' PART. The powers
conferred on the Co-Arrangers and the Lenders hereunder are solely to
protect the Secured Creditors' interests in the Collateral and shall
not impose any duty upon any Secured Creditor to exercise any such
powers. The Secured Creditors shall be accountable only for amounts
that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees or
agents shall be responsible to the Company for any act or failure to
act hereunder, except for their own gross negligence or willful
misconduct or failure to comply with mandatory provisions of applicable
law.
7. PERFORMANCE BY ADMINISTRATIVE AGENT OF COMPANY'S
OBLIGATIONS. If the Company fails to perform or comply with any of its
agreements contained herein and the Administrative Agent, as provided for by the
terms of this Security Agreement, shall itself perform or comply, or otherwise
cause performance or compliance, with such agreement, the expenses of the
Administrative Agent incurred in connection with such performance or compliance,
together with interest thereon at a rate per annum equal to 2% plus the
Alternate Base Rate, shall be payable by the Company to the Administrative Agent
on demand and shall constitute Obligations secured hereby; PROVIDED that the
Administrative Agent shall in any event first have given the Company written
notice of its intent to do the same and the Company shall not have, within 30
days of such notice (or such shorter period as the Administrative Agent may
reasonably determine is necessary in order to preserve the benefits of this
Security Agreement with respect to any material portion of the Collateral), paid
such claim or obtained to the Administrative Agent's satisfaction the release of
the claim or Lien to which such notice relates.
8. REMEDIES. (a) If an Event of Default shall occur and be
continuing, the Administrative Agent on behalf of the Secured Creditors may
exercise, in addition to all other rights and remedies granted to them in this
Security Agreement and in any other instrument or agreement securing, evidencing
or relating to the Obligations, all rights and remedies of a secured party under
the Code. Without limiting the generality of the foregoing, the Administrative
Agent, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Company or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
an option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do
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any of the foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker's board or office of any Secured Creditor or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. Any Secured Creditor shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in the Company, which right
or equity is hereby waived and released. The Administrative Agent shall apply
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Secured
Creditors hereunder, including, without limitation, reasonable attorneys' fees
and disbursements of counsel to the Administrative Agent:
(i) first, to any amounts owing to the Administrative Agent or
the Co-Arrangers in their capacities as such;
(ii) second, to the payment of an amount equal to the
outstanding Primary Obligations to the Secured Creditors as provided in
paragraph (e) below, with each Secured Creditor receiving an amount
equal to its outstanding Primary Obligations or, if the proceeds are
insufficient to pay in full all such Primary Obligations, its Pro Rata
Share (as defined below) of the amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) and (ii), to the
payment of an amount equal to the outstanding Secondary Obligations to
the Secured Creditors as provided in paragraph (e) below, with each
Secured Creditor receiving an amount equal to its outstanding Secondary
Obligations or, if the proceeds are insufficient to pay in full all
such Secondary Obligations, its Pro Rata Share of the amount remaining
to be distributed; and
(iv) fourth, to the extent proceeds remain after the
application pursuant to the preceding clauses (i), (ii) and (iii),
after the payment of any other amounts required by any provision of
law, including without limitation, Section 9-504(1)(c) of the Code, and
following the termination of this Agreement pursuant to Section 23
hereof, the Administrative Agent shall account for the surplus, if any,
to the Company.
(b) For purposes of this Agreement, (x) "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
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the then unpaid amount of such Secured Creditor's Primary Obligations or
Secondary Obligations, as the case may be, and the denominator of which is the
then outstanding amount of all Primary Obligations or Secondary Obligations, as
the case may be, (y) "Primary Obligations" shall mean (i) in the case of the
Credit Agreement Obligations, all principal of, and interest on, all Loans, all
L/C Obligations, and all related fees and (ii) in the case of the Other
Obligations, all amounts due under the Interest Rate Agreements (other than
indemnities, fees (including, without limitation, attorneys' fees) and similar
obligations and liabilities) and (z) "Secondary Obligations" shall mean all
Obligations other than Primary Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 8 only) (i) first, to their Primary Obligations (with the amount to be
applied by any Secured Creditor to its Primary Obligations to be applied (x)
first, to interest and (y) second, to any other Primary Obligations) and (ii)
second, to their Secondary Obligations.
(d) Each of the Secured Creditors agrees and acknowledges that
if the Agents and the Lenders are to receive a distribution on account of
undrawn amounts with respect to Letters of Credit issued under the Credit
Agreement (which shall only occur after all outstanding Loans and unpaid
drawings with respect to such Letters of Credit have been paid in full), such
amounts shall be paid to the Administrative Agent under the Credit Agreement and
held by it, for the equal and ratable benefit of the Agents and the Lenders, as
cash security for the repayment of Obligations owing to the Agents and the
Lenders as such. If any amounts are held as cash security pursuant to the
immediately preceding sentence, then upon the termination of all outstanding
Letters of Credit, and after the application of all such cash security to the
repayment of all Obligations owing to the Agents and the Lenders after giving
effect to the termination of all such Letters of Credit, if there remains any
excess cash, such excess cash shall be distributed in accordance with subsection
8(a) hereof.
(e) Except as set forth in subsection 8(c) hereof, all
payments required to be made to the Agents and the Lenders hereunder shall be
made to the Administrative Agent under the Credit Agreement for the account of
the Agents and the Lenders and all payments required to be made to the Other
Creditors hereunder shall be made directly to the respective Other Creditor.
(f) For purposes of applying payments received in accordance
with this Section 8, the Administrative Agent shall be entitled to rely upon the
Other Creditors for a determination (which each Other Creditor agrees (or shall
agree) to provide upon request of the Administrative Agent) of the outstanding
Obligations
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owed to the Other Creditors. Unless it has actual knowledge (including by way of
written notice from any other Agent, any Lender or an Other Creditor) to the
contrary, the Administrative Agent shall be entitled to assume that (x) no
Secondary Obligations are owing to any other Agent, any Lender or Other Creditor
and (y) no Interest Rate Agreement or Other Obligations in respect thereof, are
in existence.
(g) It is understood that the Company shall remain 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 clause (a) of
this Section 8.
(h) To the extent permitted by applicable law, the Company
waives all claims, damages and demands it may acquire against any Secured
Creditor arising out of the exercise by them of any rights hereunder, except to
the extent arising from the gross negligence or willful misconduct of such
Secured Creditor. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition. The
Company shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the Obligations and
the fees and disbursements of any attorneys employed by any Secured Creditor to
collect such deficiency.
9. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS. The
Company shall remain obligated hereunder, and the Collateral shall remain
subject to the Lien granted hereby notwithstanding that, without any reservation
of rights against the Company, and without notice to or further assent by the
Company, any demand for payment of any of the Obligations made by any Secured
Creditor may be rescinded by the Administrative Agent, any other Agent, the
Issuing Lender or any Lender, and any of the Obligations continued, and the
Obligations, or the liability of the Company or any other Person upon or for any
part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered, or released by the Administrative Agent, the Issuing Lender or any
Lender, and the Credit Agreement, the Notes, the other Credit Documents, any
Interest Rate Agreements and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Administrative Agent, any other Co-Arranger (subject to
subsection 12.16 of the Credit Agreement), the Issuing Lender, any Lender or any
Other Creditor may deem advisable from time to time, and any guarantee, right of
offset or other collateral security at any time held by the Administrative
Agent, the Issuing Lender or any Lender for the payment of the Obligations may
be sold, exchanged, waived, surrendered or released. None of the Secured
Creditors shall have any obligation to protect, secure, perfect or insure this
or any other Lien at any time held by it as security for the Obligations or any
property subject thereto.
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The Company waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of reliance by the
Secured Creditors upon this Security Agreement; the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred
in reliance upon this Security Agreement; and all dealings between the Company
and the Administrative Agent, any other Agent, the Issuing Lender or any Lender,
shall likewise be conclusively presumed to have been had or consummated in
reliance upon this Security Agreement. The Company waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Company with respect to the Obligations.
10. LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL.
The Administrative Agent's sole duty with respect to the custody, safekeeping
and physical preservation of the Collateral in its possession, under Section
9-207 of the Code or otherwise, shall be to deal with it in the same manner as
the Administrative Agent deals with similar property for its own account. No
Secured Creditor nor any of their respective directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all or any
part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Company or otherwise.
11. DELEGATION OF DUTIES. The Administrative Agent may execute
any of its duties under this Security Agreement by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care, except as otherwise provided in subsection
11.3 of the Credit Agreement.
12. POWERS COUPLED WITH AN INTEREST. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
13. SEVERABILITY. Any provision of this Security 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.
14. SECTION HEADINGS. The section headings used in this
Security Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
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15. NO WAIVER; CUMULATIVE REMEDIES. No Secured Creditor shall
by any act (except by a written instrument pursuant to Section 16 hereof),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of any Secured Creditor, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by any Secured Creditor of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
any Secured Creditor would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law.
16. INTEGRATION; WAIVERS AND AMENDMENTS; SUCCESSORS AND
ASSIGNS; GOVERNING LAW. This Security Agreement represents the entire agreement
of the Company with respect to the subject matter hereof, except as otherwise
set forth in the Credit Agreement, and there are no promises or representations
by any Secured Creditor relative to the subject matter hereof not reflected
herein or in the other Credit Documents. In the event of a conflict among the
Credit Documents, the Credit Agreement shall control. None of the terms or
provisions of this Security Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Company and
the Administrative Agent (with the consent of either (x) the Required Lenders
or, to the extent required by subsection 12.1 of the Credit Agreement, the
Supermajority Lenders or all of the Lenders, at all times prior to the time on
which all Credit Agreement 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 Agreement 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 also 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 Agents and the Lenders as holders of the Credit Agreement
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 Agreement Obligations, the
Required Lenders 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 Agreements; PROVIDED that, subject to the immediately preceding
proviso, any provision of this Security Agreement may be waived by the
Administrative Agent in a written letter or agreement executed by the
Administrative Agent or by telex or facsimile transmission from the
Administrative Agent. This
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Security Agreement shall be binding upon the successors and assigns of the
Company and shall inure to the benefit of the Secured Creditors and their
respective successors and assigns. Subject to the representation set forth in
subsection 4(j) hereof, the inclusion of copyrights, trademarks, patents or
licenses thereto on Schedules I, II and III to the Company Security Agreement
and the Subsidiary Security Agreement and Schedule 6.16 to the Credit Agreement
shall not constitute a representation by the Company or any of its Subsidiaries
that any particular such copyright, trademark, patent or license thereto is
material. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
17. NOTICES. All notices, requests and demands to or upon the
Company or any Secured Creditor to be effective shall be in writing or by
telecopy or telex and unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand, or, in the case
of mail, three days after deposit in the postal system, first class postage
prepaid, or, in the case of telecopy notice, when sent, or, in the case of telex
notice, when sent, answerback received, addressed to a party at the address
provided for such party in the Credit Agreement.
18. COUNTERPARTS. This Security Agreement may be executed
by one or more of the parties hereto on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.
19. AUTHORITY OF ADMINISTRATIVE AGENT. The Company
acknowledges that the rights and responsibilities of the Administrative Agent
under this Security Agreement with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the Administrative Agent
of any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Security Agreement shall, as between
the Administrative Agent, the other Agents and the Lenders, be governed by the
Credit Agreement and by such other agreements with respect thereto as may exist
from time to time among them, but, as between the Administrative Agent and the
Company, the Administrative Agent shall be conclusively presumed to be acting as
agent for the Secured Creditors with full and valid authority so to act or
refrain from acting, and the Company shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
20. RELEASES. The Secured Creditors agree to cooperate with
the Company and its Subsidiaries with respect to any sale permitted by
subsection 9.5 of the Credit Agreement and promptly take such action and execute
and deliver such instruments and documents necessary to release the Liens and
security interests created hereby relating to any of the assets or property
affected by any sale permitted by subsection 9.5 of the Credit Agreement
including, without limitation, any
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necessary Uniform Commercial Code amendment, termination or partial termination
statement.
21. TERMINATION; RELEASE. (a) This Security Agreement (other
than with respect to any cash collateral securing any outstanding Letter of
Credit) shall terminate when all the Obligations have been paid in full, the
Commitments have been terminated and either no Letters of Credit are outstanding
or each outstanding Letter of Credit has been cash collateralized so that it is
fully secured to the satisfaction of the Administrative Agent. Upon such
termination, the Administrative Agent shall reassign and redeliver (or cause to
be reassigned and redelivered) to the Company, or to such person or persons as
the Company shall designate, or to whomever may be lawfully entitled to receive
such surplus, against receipt, such of the Collateral (if any) (other than with
respect to any cash collateral securing any outstanding Letter of Credit) as
shall not have been sold or otherwise applied by the Administrative Agent
pursuant to the terms hereof and shall still be held by it hereunder, together
with appropriate instruments or reassignment and release. Any such reassignment
and release shall be without recourse upon or warranty by the Administrative
Agent (other than a warranty that the Administrative Agent has not
assigned its rights and interests hereunder to any Person) and at the expense of
the Company.
(b) In the event that any part of the Collateral is sold
(except to Holdings or any of its Subsidiaries) in connection with a sale
permitted by subsection 9.5 of the Credit Agreement or otherwise released at the
direction of the Required Lenders (or all Lenders if required by subsection 12.1
of the Credit Agreement) and the proceeds of such sale or sales or from such
release are applied in accordance with the provisions of subsection 5.4 of the
Credit Agreement, to the extent required to be so applied, such Collateral will
be sold free and clear of the Liens created by this Agreement and the
Administrative Agent, at the request and expense of the Company, will duly
assign, transfer and deliver to the Company (without recourse and without any
representation or warranty) such of the Collateral as is then being (or has
been) so sold or released and has not theretofore been released pursuant to this
Agreement and will promptly execute and deliver to the Company a proper
instrument or instruments (including UCC termination statements on form UCC-3)
acknowledging the release of such Collateral pursuant to this Agreement.
(c) At any time that the Company desires that the
Administrative Agent take any action to acknowledge or give effect to any
release of Collateral pursuant to the foregoing subsection 21(a) or (b), as the
case may be, it shall deliver to the Administrative Agent, if requested by the
Administrative Agent, a certificate signed by an executive officer of the
Company stating that the release of the respective Collateral is permitted
pursuant to such subsection 21(a) or (b), as the case may be.
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IN WITNESS WHEREOF, the Company and the Administrative Agent
have caused this Security Agreement to be duly executed and delivered as of the
date first above written.
WERNER HOLDING CO. (DE), INC.
By:
----------------------------------
Title:
BANKERS TRUST COMPANY, as
Administrative Agent
By:
---------------------------------
Title:
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Schedule I to
SECURITY AGREEMENT
------------------
Copyrights And Copyright Licenses
---------------------------------
[SEE SCHEDULE 6.16 TO THE CREDIT AGREEMENT]
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Schedule II to
Security Agreement
------------------
Patents And Patent Licenses
---------------------------
[SEE SCHEDULE 6.16 TO THE CREDIT AGREEMENT]
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Schedule III to
Security Agreement
------------------
Trademarks And Trademark Licenses
---------------------------------
[SEE SCHEDULE 6.16 TO THE CREDIT AGREEMENT]
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Schedule IV to
Security Agreement
------------------
Locations of Inventory and Equipment Locations
----------------------------------------------
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EXHIBIT F-2 TO
Credit Agreement
----------------
FORM OF
SUBSIDIARY SECURITY AGREEMENT
-----------------------------
SECURITY AGREEMENT, dated as of November 24, 1997, made by each of the
corporations that are signatories hereto (the "ASSIGNORS") in favor of BANKERS
TRUST COMPANY, as administrative agent (in such capacity, the "ADMINISTRATIVE
AGENT") for the Agents and for the several lenders (the "Lenders") from time to
time parties to the Credit Agreement (as defined below) and for the benefit of
the other Secured Creditors referred to below.
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of the date
hereof (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Werner Holding Co. (DE), Inc. (the "Company"), the
Lenders, Bankers Trust Company, as Administrative Agent and Co-Arranger, Merrill
Lynch Capital Corporation, as Syndication Agent and Co-Arranger, The Chase
Manhattan Bank, as Documentation Agent, and Goldman Sachs Credit Partners L.P.,
as Co-Agent (together with the Administrative Agent, Syndication Agent and
Documentation Agent, the "AGENTS"), the Lenders have severally agreed to make
loans to, and the Issuing Lender (as defined in the Credit Agreement) has agreed
to issue, and certain of the other Lenders have agreed to participate in,
letters of credit for the account of, the Company upon the terms and subject to
the conditions set forth therein; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective loans to, and the obligation of the Issuing
Lender to issue and the Lenders to participate in letters of credit for the
account of, the Company under the Credit Agreement that the Assignors shall have
executed and delivered this Security Agreement to the Administrative Agent for
the ratable benefit of the Agents and the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent, the other Agents and the Lenders to enter into the
Credit
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Agreement and to make their respective loans to, and to issue or participate in
letters of credit for the account of, the Company under the Credit Agreement,
each Assignor hereby agrees with the Administrative Agent, for the ratable
benefit of the Secured Creditors, as follows:
1. DEFINED TERMS. Unless otherwise defined herein or in the
preamble or recitals hereto, terms which are defined in the Credit Agreement and
used herein are so used as so defined; the following terms which are defined in
the Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Chattel Paper, Farm Products, Documents,
Goods and Inventory; and the following terms shall have the following meanings:
"ACCOUNTS" means all accounts receivable other than any
Receivables Facility Assets, book debts, notes, drafts, instruments,
documents, acceptances and other forms of obligations now owned or
hereafter received or acquired by or belonging or owing to any Assignor
(including under any trade names, styles or divisions thereof) whether
arising out of personal property owned or leased by it, Goods sold by
it or services rendered by it or from any other transaction, whether or
not the same involves the lease of personal property, sale of Goods or
performance of services by such Assignor (including, without
limitation, any such obligation which would be characterized as an
account, general intangible or chattel paper under the Code) and all of
such Assignor's rights in, to and under all purchase orders now owned
or hereafter received or acquired by it for Goods or services, and all
of such Assignor's rights to any Goods represented by any of the
foregoing (including returned or repossessed Goods and unpaid seller's
rights) and all moneys due or to become due to such Assignor under all
contracts for the sale of Goods and/or the performance of services by
it (whether or not yet earned by performance), under any lease of real
or personal property (to the extent the grant of such a security
interest is permitted by applicable law and is not prohibited by such
lease), or under any franchise agreement, or in connection with any
other transaction, now in existence or hereafter arising, including
without limitation the right to receive the proceeds of said purchase
orders and contracts and rents under such leases, and all collateral
security and guarantees of any kind given by any Person with respect to
any of the foregoing.
"CODE" means the Uniform Commercial Code as from time to time
in effect in the State of New York.
"COLLATERAL" has the meaning assigned to it in Section 2 of
this Security Agreement.
"CONTRACT" means, with respect to an Account, any agreement
relating to the terms of payment or the terms of performance thereof,
including, without
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limitation, (a) all rights of each Assignor to receive moneys due and
to become due to it thereunder or in connection therewith, (b) all
rights of each Assignor to damages arising out of, or for, breach or
default in respect thereof and (c) all rights of each Assignor to
perform and to exercise all remedies thereunder.
"COPYRIGHT LICENSE" means any written agreement, naming any
Assignor, as licensor or licensee, granting any right in the United
States to use any Copyright including, without limitation, any referred
to in Schedule I hereto.
"COPYRIGHTS" means all of the following to the extent any
Assignor now or hereafter has any right, title or interest: (a) all
United States copyrights and all registrations and applications
therefor, including, without limitation, any referred to in Schedule I
hereto, and (b) all renewals of such copyrights.
"CREDIT AGREEMENT OBLIGATIONS" has the meaning assigned that
term in the definition of "Obligations" contained herein.
"EQUIPMENT" means all machinery, equipment and furniture
except Vehicles, now owned or hereafter acquired by each Assignor or in
which each Assignor now has or hereafter may acquire any right, title
or interest and any and all additions, substitutions and replacements
thereof, wherever located, together with all attachments, components,
parts, equipment and accessories installed therein or affixed thereto,
including, but not limited to, all equipment as defined in Section
9-109(2) of the Code.
"GENERAL INTANGIBLES" has the meaning given to it in the Code
and includes, whether or not so included in such meaning, any franchise
agreements or rights in favor of or granted by each Assignor to
know-how, trade secrets, product or service development ideas and
designs, advertising commercials, renderings, strategies and plans,
blueprints, architectural drawings, site location, personnel and
franchisee information, proprietary information, computer and software
technology and programs, contracts with distributors, and any similar
items, all interest rate, foreign currency or similar agreements and
general intangibles attributable to the Capital Stock held by each
Assignor.
"INSTRUMENT" has the meaning given to it in the Code, except
that it shall not include the Pledged Notes and the Undelivered Notes
(as each such term is defined in each of the Pledge Agreements).
"LICENSE" means any Copyright License, Patent License or
Trademark License.
"OBLIGATIONS" means (i) the collective reference to the unpaid
principal of
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and interest on the Notes and all other obligations and liabilities of
each Assignor to the Administrative Agent, the other Agents and the
Lenders (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of
the Loans and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding,
relating to such Assignor, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), whether direct
or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, the Notes, this Security
Agreement, the other Credit Documents or any other document made,
delivered or given in connection therewith, in each case whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative
Agent, the other Agents or to the Lenders that are required to be paid
by each Assignor pursuant to the terms of the Credit Agreement or this
Agreement or any other Credit Document) (collectively, "CREDIT
AGREEMENT OBLIGATIONS" and (ii) all obligations of the Company to any
Lender or Lenders or its or their Affiliates (each such Lender or
Affiliate, even if the respective Lender subsequently ceases to be a
lender under the Credit Agreement for any reason, together with such
Lender's or Affiliate's successors and assigns, collectively, the
"Other Creditors" and, together with the Administrative Agent, the
Agents and the Lenders, the "Secured Creditors") under or in respect of
any Interest Rate Agreement, and all guarantees by any Assignor
(collectively, "OTHER OBLIGATIONS").
"OTHER OBLIGATIONS" has the meaning assigned that term in the
definition of "Obligations" contained herein.
"PATENT LICENSE" means any agreement, whether written or oral,
providing for the grant by or to each Assignor of any right to
manufacture, use,
sell or import into any jurisdiction any invention covered by a Patent,
including, without limitation, any thereof referred to in Schedule II
hereto.
"PATENTS" means (a) all letters patent of the United States or
any other country and all reissues and extensions thereof, including,
without limitation, any thereof referred to in Schedule II hereto, and
(b) all applications for letters patent of the United States and all
divisions, continuations and continuations-in-part thereof or any
other country, including, without limitation, any thereof referred to
in Schedule II hereto.
"PROCEEDS" means "proceeds", as such term is defined in
Section 9- 306(1) of the Code and, to the extent not included in such
definition, shall include,
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without limitation, (a) any and all proceeds of any insurance,
indemnity, warranty, guaranty or letter of credit payable to each
Assignor, from time to time with respect to any of the Collateral, (b)
all payments (in any form whatsoever) paid or payable to each Assignor
from time to time in connection with any taking of all or any part of
the Collateral by any Governmental Authority or any Person acting under
color of Governmental Authority, (c) all judgments in favor of each
Assignor in respect of the Collateral and (d) all other amounts from
time to time paid or payable or received or receivable under or in
connection with any of the Collateral.
"SECURED CREDITORS" has the meaning assigned that term in the
definition of "Obligations" contained herein.
"SECURED OBLIGATIONS": the collective reference to (a) the
Obligations and (b) all obligations and liabilities of each Assignor
which may arise under or in connection with this Agreement or any other
Credit Document to which such Assignor is a party, whether on account
of reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent, any other Agent or to the Lenders
that are required to be paid by such Assignor pursuant to the terms of
this Security Agreement or any other Credit Document to which such
Assignor is a party).
"SECURITY AGREEMENT" means this Security Agreement, as
amended, supplemented or otherwise modified from time to time.
"TRADEMARK LICENSE" means any agreement, written or oral,
providing for the grant by or to any Assignor of any right to use any
Trademark, including, without limitation, any thereof referred to in
Schedule III hereto.
"TRADEMARKS" means (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source of business identifiers,
and the goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States
Patent and Trademark Office or in any similar office or agency of the
United States, any state thereof or any other country or any political
subdivision thereof, or otherwise, including, without limitation, any
thereof referred to in Schedule III hereto, and (b) all renewals
thereof.
"VEHICLES" means all cars, trucks, trailers and other vehicles
(including forklifts) covered by a certificate of title law of any
state.
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2. GRANT OF SECURITY INTEREST. (a) As collateral security for
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, each Assignor hereby
grants to the Administrative Agent for the ratable benefit of the Secured
Creditors a security interest in all of the following property now owned or at
any time hereafter acquired by such Assignor or in which such Assignor now has
or at any time in the future may acquire any right, title or interest,
excluding, however, Vehicles, and Receivables Facility Assets and Pledged Notes
(as defined in the Holdings/Subsidiary Pledge Agreement) (collectively, the
"COLLATERAL"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Copyrights;
(v) all Copyright Licenses;
(vi) all Documents;
(vii) all Equipment;
(viii) all General Intangibles;
(ix) all Instruments;
(x) all Inventory;
(xi) all Patents;
(xii) all Patent Licenses;
(xiii) all Trademarks;
(xiv) all Trademark Licenses;
(xv) all books and records pertaining to the
Collateral;
(xvi) all other Goods and personal property, whether
tangible or intangible and whether now or
hereafter owned by such Assignor, and wherever
located; and
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(xvii) to the extent not otherwise included, all
Proceeds and products of any and all of the
foregoing and all collateral security and
guarantees given by any Person with respect to
any of the foregoing.
3. RIGHTS OF SECURED CREDITORS; LIMITATIONS ON SECURED
CREDITORS OBLIGATIONS.
(a) EACH ASSIGNOR REMAINS LIABLE UNDER ACCOUNTS, LICENSES,
CONTRACTS, ETC. Anything herein to the contrary notwithstanding, each
Assignor shall remain liable under each of the Accounts, Licenses and
Contracts to observe and perform all the material conditions and
obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise to each such
Account, License or Contract. None of the Secured Creditors shall have
any obligation or liability under any Account, License or Contract by
reason of or arising out of this Security Agreement or the receipt by
any Secured Creditor of any payment relating to such Account, License
or Contract pursuant hereto, nor shall any Secured Creditor be
obligated in any manner to perform any of the obligations of any
Assignor under or pursuant to any Account, License or Contract, to make
any payment, to make any inquiry as to the nature or the sufficiency of
any payment received by it or as to the sufficiency of any performance
by any party under any Account, License or Contract, to present or file
any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
(b) NOTICE TO ACCOUNT DEBTORS AND CONTRACTING PARTIES. At any
time after an Event of Default has occurred and so long as such Event
of Default shall be continuing, upon the request of the Administrative
Agent such Assignor shall, and the Administrative Agent may (with
concurrent notice to such Assignor thereof), notify account debtors on
the Accounts and parties to the Contracts and Licenses that the
Accounts, Contracts and Licenses have been assigned to the
Administrative Agent for the ratable benefit of the Secured Creditors
and that payments in respect thereof shall be made directly to the
Administrative Agent. At any time after an Event of Default shall have
occurred and be continuing, the Administrative Agent may in its own
name or in the name of others communicate with account debtors on the
Accounts and parties to the Contracts and Licenses to verify with them
to its satisfaction the existence, amount and terms thereof.
(c) VERIFICATION OF ACCOUNTS AND INVENTORY. The
Administrative Agent shall have the right to make test verifications of
the Accounts and Inventory in any reasonable manner and through any
medium that
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it considers advisable, and each Assignor agrees to furnish all such
assistance and information as the Administrative Agent may reasonably
require in connection therewith provided that, so long as no Event of
Default shall have occurred and be continuing, (i) any such
verification shall be conducted in the name of the Company or of such
Assignor or in such other manner as shall not disclose the
Administrative Agent's identity or interest in the Collateral and (ii)
the Administrative Agent shall conduct such verification with respect
to any Assignor no more frequently than once per year and shall give
the Company reasonable advance notice thereof. The Administrative Agent
may after the occurrence and during the continuance of an Event of
Default in its own name or in the name of others communicate with
account debtors in order to verify with them to the Administrative
Agent's satisfaction the existence, amount and terms of any Accounts
and/or Inventory.
4. REPRESENTATIONS AND WARRANTIES. Each Assignor hereby
represents and warrants that:
(a) POWER AND AUTHORITY. Each Assignor has the corporate power
and authority and the legal right to execute and deliver, to perform
its obligations under, and to grant the security interest in the
Collateral pursuant to, this Agreement and has taken all necessary
corporate actions to authorize its execution, delivery and performance
of, and grant of the security interest in the Collateral pursuant to,
this Security Agreement.
(b) TITLE; NO OTHER LIENS. Except for the Lien granted to the
Administrative Agent for the ratable benefit of the Secured Creditors
pursuant to this Security Agreement and the other Liens permitted to
exist on the Collateral pursuant to the Credit Agreement, each Assignor
owns each item of the Collateral free and clear of any and all Liens.
No security agreement, financing statement or other public notice with
respect to all or any part of the Collateral is on file or of record in
any public office, except (i) such as may have been filed in favor of
the Administrative Agent, for the ratable benefit of the Secured
Creditors, pursuant to this Security Agreement, or (ii) as may be
permitted pursuant to the Credit Agreement.
(c) PERFECTED FIRST PRIORITY LIENS. The Liens granted pursuant
to this Security Agreement constitute perfected Liens on the Collateral
in favor of the Administrative Agent, for the ratable benefit of the
Secured Creditors, to the extent that (i) such Liens constitute Liens
on General Intangibles, or (ii) such Liens constitute Liens on
Equipment located in a jurisdiction listed on Schedule IV, (iii) such
Liens can be perfected by filing a financing statement under the
Uniform Commercial Code, as in effect in the relevant jurisdiction, or
(iv) any Assignor is required to deliver such Collateral to the
Administrative Agent
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pursuant to Section 5(a) hereof, which are prior to all other Liens on
the Collateral created by such Assignor and in existence on the date
hereof, except for Liens permitted to exist on the Collateral pursuant
to the Credit Agreement, and which are enforceable as such against all
creditors of and purchasers from such Assignor.
(d) ACCOUNTS AND RECORDS. The amount represented by each
Assignor to the Administrative Agent from time to time as owing by each
account debtor or by all account debtors in respect of the Accounts
will at such time be the correct amount actually owing by such account
debtor or debtors thereunder in all material respects, subject to
adjustments in the ordinary course of business. No amount payable to
such Assignor under or in connection with any Account, Contract or
License in excess of $250,000 individually or $1,000,000 in the
aggregate is evidenced by any Instrument or Chattel Paper which has not
been delivered to the Administrative Agent except for notes receivable
from officers or key employees pursuant to executive stock purchase
plans. The place where each Assignor keeps its records concerning the
Accounts and the other Collateral is located at the address listed on
Schedule V hereto.
(e) CONSENTS. Each Contract and License is in full force and
effect and, to the best knowledge of each Assignor, constitutes a valid
and legally enforceable obligation of the other obligor in respect
thereof or parties thereto, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally. No consent or
authorization of, filing with or other act by or in respect of any
Governmental Authority is required in connection with the execution,
delivery, performance, validity or enforceability of any of the
Accounts, Licenses or Contracts by any party thereto other than those
which have been duly obtained, made or performed, are in full force and
effect and do not subject the scope of any such Account, License or
Contract to any material adverse limitation, either specific or general
in nature. No Assignor (to the best of such Assignor's knowledge) and
no other party to any Account, License or Contract is in default in the
performance or observance of any of the material terms thereof. Each
Assignor has fully performed all its material obligations under each
License and Contract to the extent such obligations are required to be
performed on or prior to the date hereof. The right, title and interest
of such Assignor in, to and under each Account, License and Contract
are not subject to any defense, offset, counterclaim or claim which
would materially adversely affect the value of such Account, License or
Contract as Collateral, nor have any of the foregoing been asserted or
alleged against such Assignor as to any of the foregoing.
(f) INVENTORY. The Inventory is kept at the locations listed
on
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Schedule IV hereto, as amended or supplemented from time to time
pursuant to Section 5(o) hereof.
(g) EQUIPMENT. The Equipment is kept at the locations listed
on Schedule IV hereto, as amended or supplemented from time to time
pursuant to Section 5(o) hereof.
(h) CHIEF EXECUTIVE OFFICE. Each Assignor's chief executive
office and chief place of business is located at the address listed on
Schedule V hereto.
(i) FARM PRODUCTS. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
(j) PATENTS, TRADEMARKS AND COPYRIGHTS. Schedule II hereto
includes a complete and current list of all material Patents and Patent
Licenses owned by each Assignor in its own name as of the date hereof.
Schedule III hereto includes a complete and current list of all
material Trademarks and Trademark Licenses owned by each Assignor in
its own name as of the date hereof. Schedule I hereto includes a
complete and current list of all material Copyrights in which each
Assignor owns or purports to own as of the date hereof. Except
as set forth on Schedule II or Schedule III, each Patent and Trademark
is valid, subsisting, unexpired and enforceable and has not been
abandoned. Except as set forth on Schedule III, none of such Patents
and Trademarks is the subject of any licensing or franchise agreement.
All licenses of each Assignor's Trademarks are in force and, to the
best knowledge of such Assignor, not in default. No holding, decision
or judgment has been rendered by any Governmental Authority with
respect to any Patent or Trademark which would limit, cancel or
question the validity of any Patent or Trademark. Except as set forth
on Schedule II or Schedule III, no action or proceeding is pending or,
to the knowledge of such Assignor, threatened (i) seeking to limit,
cancel or question the validity of any material Patent or Trademark or
such Assignor's ownership thereof, or (ii) which, if adversely
determined, would have a material adverse effect on the value of any
material Patent or Trademark.
(k) POWER AND AUTHORITY; AUTHORIZATION. Each Assignor has the
corporate power and authority and the right to execute and deliver, to
perform its obligations under, and to grant the Lien on the Collateral
pursuant to, this Security Agreement and has taken all necessary
corporate action to authorize its execution, delivery and performance
of, and grant of the Lien on the Collateral pursuant to, this Security
Agreement.
(l) NO LITIGATION. No litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to
the knowledge
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of any Assignor, threatened by or against such Assignor or against any
of its properties or revenues with respect to this Security Agreement
or any of the transactions contemplated hereby which would have a
material adverse effect upon any material portion of the Collateral or
the granting of the security interests hereby.
5. COVENANTS. Each Assignor covenants and agrees with the
Secured Creditors that, from and after the date of this Security Agreement until
the Obligations are paid in full, the Commitments are terminated and either no
Letters of Credit are outstanding or each outstanding Letter of Credit has been
cash collateralized so that it is fully secured to the satisfaction of the
Administrative Agent:
(a) FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS AND CHATTEL
PAPER. (i) At any time and from time to time, upon the written request
of the Administrative Agent, and at the sole expense of such Assignor,
any Assignor will promptly and duly execute and deliver such further
instruments and documents and take such further action as the
Administrative Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Security Agreement
and of the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation statements
under the Uniform Commercial Code in effect in any jurisdiction with
respect to the Liens created hereby. Each Assignor also hereby
authorizes the Administrative Agent to file (after written notice to
such Assignor) any such financing or continuation statement without the
signature of such Assignor to the extent permitted by applicable law. A
carbon, photographic or other reproduction of this Security Agreement
shall be sufficient as a financing statement for filing in any
jurisdiction.
(ii) If any amounts payable under or in connection with any of
the Collateral having a face value in excess of $250,000 individually
or $1,000,000 in the aggregate at any one time outstanding shall be or
become evidenced by any Instruments or Chattel Paper, such Instruments
or Chattel Paper shall be immediately delivered to the Administrative
Agent, duly endorsed in a manner satisfactory to the Administrative
Agent, to be held as Collateral pursuant to this Security Agreement. So
long as no Default or Event of Default has occurred and is continuing,
upon request by any Assignor, the Administrative Agent shall make
available any pledged Collateral to such Assignor, or its designee,
that such Assignor specifies is required for the purpose of ultimate
sale, exchange, presentation, collection, renewal, registration or
transfer thereof, PROVIDED that in each case arrangements reasonably
satisfactory to the Administrative Agent shall be made for the return
of such pledged Collateral within 21 days from the time of delivery by
the Administrative Agent, except for pledged Collateral that has been
fully repaid, satisfied, or transferred as permitted hereunder.
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(iii) Notwithstanding anything set forth in this Security
Agreement to the contrary, so long as no Default or Event of Default
has occurred and is continuing, no Assignor shall be required to
deliver to the Administrative Agent any Instruments or Chattel Paper to
be held by the Administrative Agent as Collateral pursuant to this
Security Agreement so long as the aggregate amount evidenced by all
such Instruments and Chattel Paper does not exceed $250,000
individually or $1,000,000 in the aggregate at any one time
outstanding.
(b) INDEMNIFICATION. Each Assignor agrees to pay, and to save
the Secured Creditors harmless from, any and all liabilities, costs and
expenses (including, without limitation, reasonable legal fees and
expenses) (i) with respect to, or resulting from, any delay in paying,
any and all excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral, (ii)
with respect to, or resulting from, any delay by such Assignor in
complying with any Requirement of Law applicable to any of the
Collateral or (iii) in connection with any of the transactions
contemplated by this Security Agreement; PROVIDED that no Assignor
shall be liable for the payment of any portion of such liabilities,
costs or expenses resulting from the gross negligence or willful
misconduct of the any Secured Creditor. Without limiting the preceding
sentence, each Assignor will indemnify and save and keep harmless the
each Secured Creditor from and against all expense, loss or damage
suffered by reason of any counterclaim of the account debtor or obligor
thereunder, arising out of a breach by such Assignor of any obligation
thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or
obligor or its successors from such Assignor.
(c) MAINTENANCE OF RECORDS. Each Assignor will keep and
maintain at its own cost and expense satisfactory and complete records
of the Collateral, including, without limitation, a record of all
payments received and all credits granted with respect to the Accounts,
Contracts and Licenses. Each Assignor will mark its internal books and
records pertaining to the Collateral to evidence this Security
Agreement and the security interests granted hereby. For the Secured
Creditors' further security, the Administrative Agent, for the ratable
benefit of the Secured Creditors shall have a security interest in each
Assignor's books and records pertaining to the Collateral, and each
Assignor shall make available for review any such books and records to
the Administrative Agent or to its representatives during normal
business hours at the reasonable request of the Administrative Agent.
Each Assignor shall permit representatives of the Administrative Agent,
upon reasonable notice to the Company (but no more frequently than
monthly unless a Default or Event of Default shall have occurred and be
continuing), to visit and inspect any of its properties and examine and
make abstracts from any of its books and records at any reasonable time
and as
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often as may reasonably be requested upon reasonable notice, and to
discuss the business, assets, condition (financial or otherwise) or the
results of operation of such Assignor with appropriate officers and
employees thereof and with their independent certified public
accountants.
(d) RIGHT OF INSPECTION. The Administrative Agent and the
representatives of any other Secured Creditor shall upon reasonable
notice (made through the Administration Agent and no more frequently
than quarterly unless a Default or Event of Default shall have occurred
and be continuing) have full and free reasonable access to visit and
inspect any of its properties and examine and make abstracts from any
of its books and records at any reasonable time and as often as may
reasonably be requested upon reasonable notice, and to discuss the
business, assets, condition (financial or otherwise) or the results of
operation of the Company and its Subsidiaries with appropriate officers
and employees thereof and with their independent certified public
accountants with prior reasonable notice to, and coordination with, the
chief financial officer or the treasurer of the Company, and the
Company agrees to render to the Administrative Agent at the Company's
cost and expense, and to the other Secured Creditors, such clerical and
other assistance as may be reasonably requested with regard thereto.
The Secured Creditors shall keep such information thereby obtained
confidential to the extent set forth in subsection 12.6(f) of the
Credit Agreement.
(e) COMPLIANCE WITH LAWS, ETC. Each Assignor will comply in
all material respects with all Requirements of Law applicable to the
Collateral or any part thereof or to the operation of such Assignor's
business; PROVIDED that such Assignor may contest any Requirement of
Law in any reasonable manner which shall not, in the reasonable opinion
of the Administrative Agent, adversely affect the Secured Creditors'
rights or the priority of their Liens on the Collateral.
(f) COMPLIANCE WITH TERMS OF CONTRACTS, ETC. Each Assignor
will perform and comply in all material respects with all its
obligations under the Contracts and all its other Contractual
Obligations relating to the Collateral.
(g) PAYMENT OF OBLIGATIONS. Each Assignor will pay promptly
when due all material taxes, assessments and governmental charges or
levies imposed upon the Collateral or in respect of its income or
profits therefrom, as well as all claims of any kind (including,
without limitation, claims for labor, materials and supplies) against
or with respect to the Collateral, except that no such charge need be
paid if (i) the validity thereof is being contested in good faith by
appropriate proceedings, (ii) such proceedings do not involve any
material danger of the sale, forfeiture or loss of any of the
Collateral or any interest therein and (iii) such charge is adequately
reserved against on such Assignor's books in accordance with GAAP.
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(h) LIMITATION ON LIENS ON COLLATERAL. No Assignor will
create, incur or permit to exist, and each Assignor will take all
commercially reasonable actions to defend the Collateral against, and
will take such other commercially reasonable action as is necessary to
remove, any Lien or claim on or to the Collateral, other than the Liens
created hereby and other than as permitted pursuant to the Credit
Agreement, and will take all commercially reasonable actions to defend
the right, title and interest of the Secured Creditors in and to
any of the Collateral against the claims and demands of all Persons
whomsoever.
(i) LIMITATIONS ON DISPOSITIONS OF COLLATERAL. No Assignor
will sell, transfer, lease or otherwise dispose of any of the
Collateral, or attempt, offer or contract to do so except for sales of
assets permitted by the Credit Agreement. Concurrently with any such
permitted disposition, the property acquired by a transferee in such
disposition shall automatically be released from the security interest
created by this Security Agreement (the "SECURITY INTEREST"). It is
acknowledged and agreed that notwithstanding any release of property
from the Security Interest in accordance with the foregoing provisions
of this Section, the Security Interest shall in any event continue in
the Proceeds of Collateral. The Administrative Agent shall promptly
execute and deliver (and, when appropriate, shall cause any separate
agent, co-agent or trustee to execute and deliver) any releases,
instruments or documents reasonably requested by any Assignor to
accomplish or confirm the release of Collateral provided by this
Section. Any such release of Collateral provided by the Administrative
Agent shall specifically describe that portion of the Collateral to be
released, shall be expressed to be unconditional and shall be without
recourse or warranty (other than a warranty that the Administrative
Agent has not assigned its rights and interests to any other Person).
Such Assignor shall pay all of the Administrative Agent's reasonable
expenses in connection with any release of Collateral.
(j) LIMITATIONS ON MODIFICATIONS, WAIVERS, EXTENSIONS OF
AGREEMENTS GIVING RISE TO ACCOUNTS. No Assignor will (i) amend, modify,
terminate or waive any provision of any Contract, agreement or lease
giving rise to an Account or License in any manner which could
reasonably be expected to materially adversely affect the value of such
Contract, Account or License as Collateral, except in a manner
consistent with the ordinary and customary conduct of its business,
(ii) fail to exercise promptly and diligently each and every material
right which it may have under each material Contract, agreement or
lease giving rise to an Account or License (other than any right of
termination), except in a manner consistent with the ordinary and
customary conduct of its business or (iii) fail to deliver to the
Administrative Agent upon its reasonable request a copy of each
material demand, notice or document received by it relating in any way
to any material Contract, agreement or lease giving rise
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to an Account or License.
(k) LIMITATIONS ON DISCOUNTS, COMPROMISES, EXTENSIONS OF
ACCOUNTS. Other than in the ordinary course of business as generally
conducted by such Assignor over a period of time, no Assignor will
grant any extension of the time of payment of any of the Accounts,
compromise, compound or settle the same for less than the full amount
thereof, release, wholly or partially, any Person liable for the
payment thereof, or allow any credit or discount whatsoever thereon.
(l) MAINTENANCE OF EQUIPMENT. Each Assignor will maintain each
item of Equipment in good operating condition, ordinary wear and tear
and immaterial impairments of value and damage by the elements
excepted, and will provide all maintenance, service and repairs
necessary for such purpose.
(m) FURTHER IDENTIFICATION OF COLLATERAL. Each Assignor will
furnish to the Administrative Agent from time to time statements and
schedules further identifying and describing the Collateral and such
other reports in connection with the Collateral as the Administrative
Agent may reasonably request, all in reasonable detail.
(n) NOTICES. Each Assignor will advise the Administrative
Agent and the Lenders promptly, in reasonable detail, at their
respective addresses set forth in the Credit Agreement, (i) of any Lien
(other than Liens created hereby or permitted under the Credit
Agreement) on, or claim asserted against, any of the Collateral and
(ii) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of
the Collateral or on the Liens created hereunder.
(o) CHANGES IN LOCATIONS, NAME, ETC. No Assignor will (i)
change the location of its chief executive office/chief place of
business from that specified on Schedule V hereto or remove its books
and records from the location specified on Schedule V hereto, (ii)
remove any material amount of the Inventory or Equipment to, or keep
any material amount of Inventory or Equipment at, a location other than
those listed on Schedule IV hereto, or (iii) change its name (including
the adoption of any new trade name), identity or corporate structure to
such an extent that any financing statement filed by the Administrative
Agent in connection with this Security Agreement would become seriously
misleading, unless it shall have provided at least 15 days prior
written notice to the Administrative Agent of any such event and
provide the Administrative Agent with the new location of its chief
executive office/chief place of business and its books and records, the
location of the Inventory and Equipment and the change in any
Assignor's name, as the case may be. Any notice given pursuant to this
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Section 5(o) shall be deemed to amend Schedule IV hereto or Schedule V
hereto, as the case may be. In connection with any actions permitted
pursuant to clause (i) of this Section 5(o), the Administrative
Agent shall be entitled to receive any legal opinions it reasonably
requests as to the continued perfection of the security interest
granted hereby in the Collateral, which opinions shall be deemed
satisfactory to the Administrative Agent if substantially similar to
the perfection opinions given by Gibson, Dunn & Crutcher LLP on the
Closing Date.
(p) COPYRIGHTS. Each Assignor (i) will employ the Copyright
for each material published work with such notice of copyright as may
be required by law to secure copyright protection and (ii) will not do
any act or knowingly omit to do any act whereby any material Copyright
may become invalidated and:
(A) will not do any act, or omit to do any act,
whereby any material Copyright may become injected into the
public domain;
(B) shall notify the Administrative Agent immediately
if it knows, or has reason to know, that any material
Copyright may become injected into the public domain or of any
adverse determination or development (including, without
limitation, the institution of, or any such determination or
development in, any court or tribunal in the United States or
any other country) regarding such Assignor's ownership of any
such Copyright or its validity;
(C) will take all necessary steps as it shall deem
appropriate under the circumstances, to maintain and pursue
each application (and to obtain the relevant registration) and
to maintain each registration of each material Copyright owned
by such Assignor including, without limitation, filing of
applications for renewal, where necessary; and
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(D) will promptly notify the Administrative Agent of
any material infringement of any material Copyright of such
Assignor of which it becomes aware and will take such actions
as it shall reasonably deem appropriate under the
circumstances to protect such Copyright, including, where
appropriate, the bringing of suit for infringement, seeking
injunctive relief and seeking to recover any and all damages
for such infringement.
(q) PATENTS AND TRADEMARKS.
(i) Each Assignor (either itself or through
licensees) will, except with respect to any Trademark that
such Assignor shall, after the exercise of reasonable business
judgment, determine is of immaterial economic value to it or
otherwise reasonably determines not to do so, (A) use
reasonable efforts to continue to use each Trademark on each
and every trademark class of goods applicable to its current
line as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force free
from any claim of abandonment for non-use, (B) maintain as in
the past the quality of products and services offered under
such Trademark, (C) use reasonable efforts to employ such
Trademark with the appropriate notice of registration, (D) not
adopt or use any mark which is confusingly similar or a
colorable imitation of such Trademark unless within 45 days
after such use or adoption the Administrative Agent, for the
ratable benefit of the Secured Creditors shall obtain a
perfected security interest in such mark pursuant to this
Security Agreement, and (E) not (and not permit any licensee
or sublicensee thereof to) do any act or knowingly omit to do
any act whereby any Trademark may become invalidated.
(ii) No Assignor will, except with respect to
any Patent that such Assignor shall, after the exercise of
reasonable business judgment, determine is of immaterial
economic value to it or otherwise reasonably determine so to
do, do any act, or omit to do any act, whereby any Patent may
become abandoned or dedicated.
(iii) Each Assignor will notify the
Administrative Agent immediately if it knows, or has reason to
know, that any application relating to any Patent, or any
application or registration relating to any Trademark may
become abandoned or dedicated, or of any adverse determination
or material development (including, without limitation, the
institution of, or any such determination or development in,
any proceeding in the United States Patent and Trademark
Office or any court or tribunal in any country) regarding such
Assignor's ownership of any
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Patent or Trademark or its right to register the same or to
keep and maintain the same.
(iv) Whenever any Assignor, either by itself or
through any agent, employee, licensee or designee, shall file
an application for any Patent or for the registration of any
Trademark with the United States Patent and Trademark Office
or any similar office or agency in any other country or any
political subdivision thereof, such Assignor shall report such
filing to the Administrative Agent within five Business Days
after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Administrative Agent, such
Assignor shall execute and deliver any and all agreements,
instruments, documents, and papers as the Administrative Agent
may request to evidence the Administrative Agent's security
interest in any Patent or Trademark and the goodwill and
general intangibles of such Assignor relating thereto or
represented thereby, and each Assignor hereby appoints and
constitutes the Administrative Agent its attorney-in-fact to
execute and file all such writings for the foregoing purposes,
all acts of such attorney being hereby ratified and confirmed;
such power being coupled with an interest and is irrevocable
until the Obligations are paid in full, the Commitments are
terminated and no Letters of Credit are outstanding.
(v) Each Assignor, except with respect to any
Patent or Trademark such Assignor shall, after the exercise of
reasonable business judgment, determine is of immaterial
economic value to it or it otherwise reasonably determines not
to so do and except with respect to any Trademark that is not
registrable, will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the
United States Patent and Trademark Office, or any similar
office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application
(and to obtain the relevant registration or Patent) and to
maintain each Patent and each registration of Trademarks,
including, without limitation, filing of applications for
renewal, affidavits of use and affidavits of incontestability
when appropriate.
(vi) In the event that any Patent or Trademark
included in the Collateral is infringed, misappropriated or
diluted by a third party, such Assignor shall promptly notify
the Administrative Agent after it learns thereof and shall,
unless such Assignor shall, after the exercise of reasonable
business judgment, determine that such Patent or Trademark is
of immaterial economic value to such Assignor, which
determination such Assignor shall promptly report to the
Administrative Agent, promptly sue
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for infringement, misappropriation or dilution, to seek
injunctive relief where appropriate and to recover any and all
damages for such infringement, misappropriation or dilution,
or take such other actions as such Assignor shall reasonably
deem appropriate under the circumstances to protect such
Patent or Trademark.
6. ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) POWERS. Each Assignor hereby irrevocably constitutes and
appoints the Administrative Agent and any officer or agent thereof,
with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place
and stead of such Assignor and in the name of such Assignor or in its
own name, from time to time after the occurrence, and during the
continuation, of an Event of Default for the purpose of carrying out
the terms of this Security Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may
be necessary or desirable to accomplish the purposes of this Security
Agreement, and, without limiting the generality of the foregoing, each
Assignor hereby gives the Administrative Agent the power and right, on
behalf of such Assignor, without notice to or assent by such Assignor,
to do the following:
(i) in the name of such Assignor or its own name,
or otherwise, to take possession of and indorse and collect
any checks, drafts, notes, acceptances or other instruments
for the payment of moneys due under any Account, Instrument,
License or General Intangible or with respect to any other
Collateral and to file any claim or to take any other action
or proceeding in any court of law or equity or otherwise
deemed appropriate by the Administrative Agent for the purpose
of collecting any and all such moneys due under any Account,
Instrument, License or General Intangible or with respect to
any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral, PROVIDED that
if such taxes are being contested in good faith and by
appropriate proceedings, the Administrative Agent will consult
with such Assignor before making any such payment; and
(iii) (A) to direct any party liable for any
payment under any of the Collateral to make payment of any and
all moneys due or to become due thereunder directly to the
Administrative Agent or as the Administrative Agent shall
direct; (B) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other
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amounts due or to become due at any time in respect of or
arising out of any Collateral; (C) to sign and indorse any
invoices, freight or express bills, bills of lading, storage
or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with
any of the Collateral; (D) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court
of competent jurisdiction to collect the Collateral or any
thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding
brought against such Assignor with respect to any Collateral;
(F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection
therewith, to give such discharges or releases as the
Administrative Agent may deem appropriate; (G) to assign any
Patent or Trademark (along with the goodwill of the business
to which any such Trademark pertains), throughout the world
for such term or terms, on such conditions, and in such
manner, as the Administrative Agent shall in its sole
discretion determine; and (H) generally, to sell, transfer,
pledge and make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely as
though the Administrative Agent were the absolute owner
thereof for all purposes, and to do, at the Administrative
Agent's option and such Assignor's expense, at any time, or
from time to time, all acts and things which the
Administrative Agent reasonably deems necessary to protect,
preserve or realize upon the Collateral and the Secured
Creditors' Liens thereon and to effect the intent of this
Security Agreement, all as fully and effectively as such
Assignor might do.
Each Assignor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) OTHER POWERS. (i) Each Assignor also authorizes the
Administrative Agent, at any time and from time to time, to execute, in
connection with the sale provided for in Section 8 hereof, any
indorsement, assignments or other instruments of conveyance or transfer
with respect to the Collateral and (ii) pursuant to Section 9-402 of
the Code, each Assignor authorizes the Administrative Agent to file
financing statements with respect to the Collateral without the
signature of such Assignor in such form and in such filing offices as
the Administrative Agent reasonably determines appropriate to perfect
the security interests of the Administrative Agent under this
Agreement. A carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement for filing in
any jurisdiction.
(c) NO DUTY ON AGENTS' OR SECURED CREDITORS' PART. The
powers
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conferred on the Co-Arrangers and the Lenders hereunder are solely to
protect the Secured Creditors' interests in the Collateral and shall
not impose any duty upon any Secured Creditor to exercise any such
powers. The Secured Creditors shall be accountable only for amounts
that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees or
agents shall be responsible to any Assignor for any act or failure to
act hereunder, except for their own gross negligence or willful
misconduct or failure to comply with mandatory provisions of applicable
law.
7. PERFORMANCE BY ADMINISTRATIVE AGENT OF ANY ASSIGNOR'S
OBLIGATIONS. If any Assignor fails to perform or comply with any of its
agreements contained herein and the Administrative Agent, as provided for by the
terms of this Security Agreement, shall itself perform or comply, or otherwise
cause performance or compliance, with such agreement, the expenses of the
Administrative Agent incurred in connection with such performance or compliance,
together with interest thereon at a rate per annum equal to 2% plus the
Alternate Base Rate, shall be payable by such Assignor to the Administrative
Agent on demand and shall constitute Obligations secured hereby; PROVIDED that
the Administrative Agent shall in any event first have given such Assignor
written notice of its intent to do the same and such Assignor shall not have,
within 30 days of such notice (or such shorter period as the Administrative
Agent may reasonably determine is necessary in order to preserve the benefits of
this Security Agreement with respect to any material portion of the Collateral),
paid such claim or obtained to the Administrative Agent's satisfaction the
release of the claim or Lien to which such notice relates.
8. REMEDIES. (a) If an Event of Default shall occur and be
continuing, the Administrative Agent on behalf of the other Secured Creditors
may exercise, in addition to all other rights and remedies granted to them in
this Security Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon such Assignor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give an option or options to purchase, or otherwise dispose of
and deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the any Secured Creditor or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. Any Secured Creditor shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such private
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sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in such Assignor, which right or equity is
hereby waived and released. The Administrative Agent shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Secured
Creditors hereunder, including, without limitation, reasonable attorneys' fees
and disbursements of counsel to the Administrative Agent:
(i) first, to any amounts owing to the Administrative Agent or
the Co-Arrangers in their capacities as such;
(ii) second, to the payment of an amount equal to the
outstanding Primary Obligations to the Secured Creditors as provided in
paragraph (e) below, with each Secured Creditor receiving an amount
equal to its outstanding Primary Obligations or, if the proceeds are
insufficient to pay in full all such Primary Obligations, its Pro Rata
Share (as defined below) of the amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) and (ii) to the
payment of an amount equal to the outstanding Secondary Obligations to
the Secured Creditors as provided in paragraph (e) below, with each
Secured Creditor receiving an amount equal to its outstanding Secondary
Obligations or, if the proceeds are insufficient to pay in full all
such Secondary Obligations, its Pro Rata Share of the amount remaining
to be distributed; and
(iv) fourth, to the extent proceeds remain after the
application pursuant to the preceding clauses (i), (ii) and (iii),
after the payment of any other amounts required by any provision of
law, including without limitation, Section 9-504(1)(c) of the Code, and
following the termination of this Agreement pursuant to Section 23
hereof, the Administrative Agent shall account for the surplus, if any,
to the relevant Pledgor.
(b) For purposes of this Agreement, (x) "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 Primary
Obligations or Secondary Obligations, as the case may be, and the denominator of
which is the then outstanding amount of all Primary Obligations or Secondary
Obligations, as the case may be, (y) "Primary Obligations" shall mean (i) in the
case of the Credit Agreement Obligations, all principal of, and interest on, all
Loans, all L/C Obligations, and all related fees, and guarantees thereof, and
(ii) in the case of the Other Obligations, all amounts due under the Interest
Rate
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Agreements (other than indemnities, fees (including, without limitation,
attorneys' fees) and similar obligations and liabilities), and guarantees
thereof, and (z) "Secondary Obligations" shall mean all Obligations other than
Primary Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 8 only) (i) first, to their Primary Obligations (with the amount to be
applied by any Secured Creditor to its Primary Obligations to be applied (x)
first, to interest and (y) second, to any other Primary Obligations) and (ii)
second, to their Secondary Obligations.
(d) Each of the Secured Creditors agrees and acknowledges that
if the Agents and the Lenders are to receive a distribution on account of
undrawn amounts with respect to Letters of Credit issued under the Credit
Agreement (which shall only occur after all outstanding Loans and unpaid
drawings with respect to such Letters of Credit have been paid in full), such
amounts shall be paid to the Administrative Agent under the Credit Agreement and
held by it, for the equal and ratable benefit of the Agents and the Lenders, as
cash security for the repayment of Obligations owing to the Agents and the
Lenders as such. If any amounts are held as cash security pursuant to the
immediately preceding sentence, then upon the termination of all outstanding
Letters of Credit, and after the application of all such cash security to the
repayment of all Obligations owing to the Agents and the Lenders after giving
effect to the termination of all such Letters of Credit, if there remains any
excess cash, such excess cash shall be distributed in accordance with subsection
8(a) hereof.
(e) Except as set forth in subsection 8(c) hereof, all
payments required to be made to the Agents and the Lenders hereunder shall be
made to the Administrative Agent under the Credit Agreement for the account of
the Agents and the Lenders and all payments required to be made to the Other
Creditors hereunder shall be made directly to the respective Other Creditor.
(f) For purposes of applying payments received in accordance
with this Section 8, the Administrative Agent shall be entitled to rely upon the
Other Creditors for a determination (which each Other Creditor agrees (or shall
agree) to provide upon request of the Administrative Agent) of the outstanding
Obligations owed to the Other Creditors. Unless it has actual knowledge
(including by way of written notice from any other Agent, any Lender or an Other
Creditor) to the contrary, the Administrative Agent shall be entitled to assume
that (x) no Secondary Obligations are owing to any other Agent, any Lender or
Other Creditor and (y) no Interest Rate Agreement or Other Obligations in
respect thereof, are in existence.
(g) 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
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Collateral and the aggregate amount of the sums referred to in clause (a) of
this Section 8.
(h) To the extent permitted by applicable law, each Assignor
waives all claims, damages and demands it may acquire against any Secured
Creditor arising out of the exercise by them of any rights hereunder, except to
the extent arising from the gross negligence or willful misconduct of such
Secured Creditor. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition. Such
Assignor shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the Obligations and
the fees and disbursements of any attorneys employed by any Secured Creditor to
collect such deficiency.
9. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS. Each
Assignor shall remain obligated hereunder, and the Collateral shall remain
subject to the Lien granted hereby notwithstanding that, without any reservation
of rights against any Assignor, and without notice to or further assent by such
Assignor, any demand for payment of any of the Obligations made by any Secured
Creditor may be rescinded by any Secured Creditor, and any of the Obligations
continued, and the Obligations, or the liability of each Assignor or any other
Person upon or for any part thereof, or any collateral security or guarantee
therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered, or released by any Secured Creditor, and the
Credit Agreement, the Notes, the other Credit Documents, any Interest Rate
Agreements and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or
part, as the Administrative Agent, the Co-Arrangers (subject to subsection 12.16
of the Credit Agreement), the Issuing Lender, any Lender or any Other Creditor
may deem advisable from time to time, and any guarantee, right of offset or
other collateral security at any time held by the Administrative Agent, the
Issuing Lender or any Lender for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released. None of the Secured Creditors shall
have any obligation to protect, secure, perfect or insure this or any other Lien
at any time held by it as security for the Obligations or any property subject
thereto. Each Assignor waives any and all notice of the creation, renewal,
extension or accrual of any of the Obligations and notice of or proof of
reliance by the Secured Creditors upon this Security Agreement; the Obligations,
and any of them, shall conclusively be deemed to have been created, contracted
or incurred in reliance upon this Security Agreement; and all dealings between
any Assignor and the Administrative Agent, any other Agent, the Issuing Lender
or any Lender, shall likewise be conclusively presumed to have been had or
consummated in reliance upon this Security Agreement. Each Assignor waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon such Assignor with respect to
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the Obligations.
10. LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL.
The Administrative Agent's sole duty with respect to the custody, safekeeping
and physical preservation of the Collateral in its possession, under Section
9-207 of the Code or otherwise, shall be to deal with it in the same manner as
the Administrative Agent deals with similar property for its own account.
Neither the Administrative Agent, any other Secured Creditor nor any of their
respective directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Assignor or otherwise.
11. DELEGATION OF DUTIES. The Administrative Agent may execute
any of its duties under this Security Agreement by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care, except as otherwise provided in subsection
11.3 of the Credit Agreement.
12. POWERS COUPLED WITH AN INTEREST. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
13. SEVERABILITY. Any provision of this Security 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.
14. SECTION HEADINGS. The section headings used in this
Security Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
15. NO WAIVER; CUMULATIVE REMEDIES. No Secured Creditor shall
by any act (except by a written instrument pursuant to Section 16 hereof),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of any Secured Creditor any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by any Secured Creditor of any right or
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remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which any Secured Creditor would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
16. INTEGRATION; WAIVERS AND AMENDMENTS; SUCCESSORS AND
ASSIGNS; GOVERNING LAW. This Security Agreement represents the entire agreement
of each Assignor with respect to the subject matter hereof, except as otherwise
set forth in the Credit Agreement, and there are no promises or representations
by any Secured Creditor relative to the subject matter hereof not reflected
herein or in the other Credit Documents. In the event of a conflict among the
Credit Documents, the Credit Agreement shall control. None of the terms or
provisions of this Security Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Company, each
Assignor, and the Administrative Agent (with the consent of either (x) the
Required Lenders or, to the extent required by subsection 12.1 of the Credit
Agreement, the Supermajority Lenders or all of the Lenders, at all times prior
to the time on which all Credit Agreement 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 Agreement 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 also 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 Agents and the Lenders as holders of
the Credit Agreement 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
Agreement Obligations, the Required Lenders 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 Agreements; PROVIDED that any
provision of this Security Agreement may be waived by the Administrative Agent
in a written letter or agreement executed by the Administrative Agent or by
telex or facsimile transmission from the Administrative Agent. This Security
Agreement shall be binding upon the successors and assigns of each Assignor and
shall inure to the benefit of the Administrative Agent, the other Agents and the
Lenders and their respective successors and assigns. Subject to the
representation set forth in subsection 4(j) hereof, the inclusion of copyrights,
trademarks, patents or licenses thereto on Schedules I, II and III to the
Company Security Agreement and the Subsidiary Security Agreement and Schedule
6.16 to the Credit Agreement shall not constitute a representation by the
Company or any of its Subsidiaries that any such particular copyright,
trademark, patent or license thereto is material. THIS SECURITY AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
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17. NOTICES. All notices, requests and demands to or upon each
Assignor or any Secured to be effective shall be in writing or by telecopy or
telex and unless otherwise expressly provided herein, shall be deemed to have
been duly given or made when delivered by hand, or, in the case of mail, three
days after deposit in the postal system, first class postage prepaid, or, in the
case of telecopy notice, when sent, or, in the case of telex notice, when sent,
answerback received, addressed to a party at the address provided for such party
(including any addresses for copies) on Schedule I to the Subsidiary Guarantee.
18. COUNTERPARTS. This Security Agreement may be executed by
one or more of the parties hereto on any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.
19. AUTHORITY OF ADMINISTRATIVE AGENT. Each Assignor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Security Agreement with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the Administrative Agent
of any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Security Agreement shall, as between
the Administrative Agent, the other Agents and the Lenders, be governed by the
Credit Agreement and by such other agreements with respect thereto as may exist
from time to time among them, but, as between the Administrative Agent and each
Assignor, the Administrative Agent shall be conclusively presumed to be acting
as agent for the Secured Creditors with full and valid authority so to act or
refrain from acting, and such Assignor shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
20. RELEASES. The Secured Creditors agree to cooperate with
each Assignor with respect to any sale permitted by subsection 9.5 of the Credit
Agreement and promptly take such action and execute and deliver such instruments
and documents necessary to release the Liens and security interests created
hereby relating to any of the assets or property affected by any sale permitted
by subsection 9.5 of the Credit Agreement including, without limitation, any
necessary Uniform Commercial Code amendment, termination or partial termination
statement.
21. TERMINATION; RELEASE. (a) This Security Agreement (other
than with respect to any cash collateral securing any outstanding Letter of
Credit) shall terminate when all the Obligations have been paid in full, the
Commitments have been terminated and either no Letters of Credit are outstanding
or each outstanding Letter of Credit has been cash collateralized so that it is
fully secured to the satisfaction of the Administrative Agent. Upon such
termination, the Administrative Agent shall reassign and redeliver (or cause to
be reassigned and redelivered) to each Assignor, or to such person or persons as
such Assignor shall designate, or to whomever may be lawfully
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entitled to receive such surplus, against receipt, such of the Collateral (if
any) (other than with respect to any cash collateral securing any outstanding
Letter of Credit) as shall not have been sold or otherwise applied by the
Administrative Agent pursuant to the terms hereof and shall still be held by it
hereunder, together with appropriate instruments or reassignment and release.
Any such reassignment and release shall be without recourse upon or warranty by
the Administrative Agent (other than a warranty that the Administrative Agent
has not assigned its rights and interests hereunder to any Person) and at the
expense of each Assignor.
(b) In the event that any part of the Collateral is sold
(except to Holdings or any of its Subsidiaries) in connection with a sale
permitted by subsection 9.5 of the Credit Agreement or otherwise released at the
direction of the Required Lenders (or all Lenders if required by subsection 12.1
of the Credit Agreement) and the proceeds of such sale or sales or from such
release are applied in accordance with the provisions of subsection 5.4 of the
Credit Agreement, to the extent required to be so applied, such Collateral will
be sold free and clear of the Liens created by this Agreement and the
Administrative Agent, at the request and expense of the relevant Assignor, will
duly 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 has not theretofore been released pursuant to this
Agreement and will promptly execute and deliver to such Assignor a proper
instrument or instruments (including UCC termination statements on form UCC-3)
acknowledging the release of such Collateral pursuant to this Agreement.
(c) At any time that an Assignor desires that the
Administrative Agent take any action to acknowledge or give effect to any
release of Collateral pursuant to the foregoing subsection 21(a) or (b), as the
case may be, it shall deliver to the Administrative Agent, if requested by the
Administrative Agent, a certificate signed by an executive officer of such
Assignor stating that the release of the respective Collateral is permitted
pursuant to such subsection 21(a) or (b), as the case may be.
22. ADDITIONAL ASSIGNORS. It is understood and agreed that any
Subsidiary of the Company 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 Administrative Agent.
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IN WITNESS WHEREOF, each Assignor and the Administrative Agent
have caused this Security Agreement to be duly executed and delivered as of the
date first above written.
ARDEE INVESTMENT CO., INC.
KENTUCKY LADDER COMPANY
OLYMPUS PROPERTIES, INC.
PHOENIX MANAGEMENT SERVICES, INC.
R.D. ARIZONA LADDER CORP. (D/B/A.R.D.
WERNER CO., INC.- ARIZONA)
WERNER CO.
WERNER FINANCIAL INC.
WERNER MANAGEMENT CO.
WIP TECHNOLOGIES, INC.
By:_____________________________
Title:
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Schedule I to
Security Agreement
COPYRIGHTS AND COPYRIGHT LICENSES
[SEE SCHEDULE 6.16 TO THE CREDIT AGREEMENT]
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Schedule II to
Security Agreement
Patents And Patent Licenses
---------------------------
[SEE SCHEDULE 6.16 TO THE CREDIT AGREEMENT]
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Schedule III to
Security Agreement
------------------
TRADEMARKS AND TRADEMARK LICENSES
[SEE SCHEDULE 6.16 TO THE CREDIT AGREEMENT]
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Schedule IV to
Security Agreement
------------------
Locations Of Inventory And Equipment Locations
----------------------------------------------
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Schedule V to
Security Agreement
------------------
Addresses Of Assignors
----------------------
[Name of Assignor]
[Address]
Attention:
Telecopy: (412) ___-____
With a copy to:
Werner Holding Co. (DE), Inc.
93 Werner Road
Greenville, PA 16125-9499
Attention: Eric J. Werner, General Counsel
Telecopy: (412) 588-0618
With a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166
Attention: Janet Vance, Esq.
Telecopy: (212) 351-4035
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EXHIBIT G-1 TO
CREDIT AGREEMENT
----------------
FORM OF
HOLDINGS GUARANTEE
------------------
HOLDINGS GUARANTEE, dated as of November 24, 1997, made by
WERNER HOLDING CO. (PA), INC., a Pennsylvania corporation (the "GUARANTOR"), in
favor of BANKERS TRUST COMPANY, as administrative agent (in such capacity, the
"ADMINISTRATIVE AGENT") for the Agents and for the banks and other financial
institutions (the "LENDERS") that are parties to the Credit Agreement (as
hereafter defined) and for the benefit of the other Guaranteed Creditors
referred to below.
W I T N E S S E T H :
---------------------
WHEREAS, Werner Holding Co. (DE), Inc. (the "COMPANY"), is a
party to a Credit Agreement, dated as of the date hereof, with the lenders from
time to time party thereto (the "LENDERS"), Bankers Trust Company, as
Administrative Agent and Co-Arranger, Merrill Lynch Capital Corporation, as
Syndication Agent and Co- Arranger, The Chase Manhattan Bank, as Documentation
Agent and Goldman Sachs Credit Partners L.P., as Co-Agent (together with the
Administrative Agent, Syndication Agent and Documentation Agent, the "AGENTS")
(as the same may be amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT");
WHEREAS, pursuant to the terms of the Credit Agreement, the
Lenders severally agreed to make certain extensions of credit to the Company;
WHEREAS, the Guarantor owns directly all of the issued and
outstanding Capital Stock of the Company;
WHEREAS, the proceeds of the extensions of credit will be used
in part to enable the Company to make valuable transfers (as determined as
provided herein) to the Guarantor;
WHEREAS, the Guarantor will derive substantial direct and
indirect benefit from the making of the extensions of credit; and
WHEREAS, under the Credit Agreement, the obligation of the
Lenders
<PAGE> 255
to make the extensions of credit to the Company on and after the date
hereof is conditioned upon, among other things, the execution and delivery by
the Guarantor of this Guarantee;
NOW, THEREFORE, in consideration of the premises and to induce
the Lenders to enter into the Credit Agreement and to make their respective
extensions of credit to the Company under the Credit Agreement, the Guarantor
hereby agrees with and for the benefit of the Administrative Agent and the
Guaranteed Creditors as follows:
1. DEFINED TERMS. As used in this Guarantee, terms defined in
the Credit Agreement or in the preamble or recitals hereto are used herein as
therein defined, and the following term shall have the following meaning:
"Affiliate Loan" shall mean any loan of cash made to the
Guarantor by one or more of its Affiliates (for this purpose, excluding
as an Affiliate any Subsidiary of the Guarantor), provided that each
such Affiliate Loan (i) shall be unsecured and shall not be guaranteed
by any Subsidiary of the Guarantor, (ii) shall provide that interest
may be deferred, paid-in-kind or otherwise added to the principal
amount thereof, in each case so that no payment default will exist as a
result of a non-payment of interest prior to the date which occurs 6
months after the then stated final maturity of the last maturing Loans
pursuant to the Credit Agreement, and (iii) shall have a final maturity
date which occurs at least 6 months after the then stated final
maturity date of the last maturing Loans pursuant to the Credit
Agreement and shall not have any required amortizations or sinking fund
payments prior thereto.
"OBLIGATIONS" (i) shall mean the unpaid principal amount of,
and interest on (including interest accruing on or after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Company, whether or
not a claim for such post-filing or post-petition interest is allowed),
the Loans and all other obligations and liabilities of the Company to
the each of the Agents, the Issuing Lender or the Lenders, whether
direct or indirect, absolute or contingent, due or to become due, or
now existing or hereafter incurred, which may arise under, out of, or
in connection with, the Credit Agreement, any Letter of Credit, the
other Credit Documents and any other document executed and delivered or
given in connection therewith or herewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all reasonable fees and
disbursements of counsel to the Agents, the Issuing Lender or the
Lenders that are required to be paid by the Company or the Guarantor
pursuant to the terms of the Credit Agreement) or otherwise, and (ii)
all obligations of the Company to any Lender or Lenders or its or their
Affiliates (each such Lender or Affiliate, even if the respective
Lender subsequently ceases
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to be a lender under the Credit Agreement for any reason, together with
such Lender's or Affiliate's successors and assigns, collectively, the
"Other Creditors" and, together with the Administrative Agent, the
Agents and the Lenders, the "Guaranteed Creditors") under or in respect
of any Interest Rate Agreement.
2. GUARANTEE. (a) The Guarantor hereby unconditionally and
irrevocably, guarantees to the Administrative Agent, for the ratable benefit of
the Guaranteed Creditors and their respective successors, indorsees, transferees
and assigns, the prompt and complete payment and performance by the Company when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations, and the Guarantor further agrees to pay any and all expenses
(including, without limitation, all reasonable fees and disbursements of
counsel) which may be paid or incurred by any Agent, the Issuing Lender or any
Lender in enforcing, or obtaining advice of counsel in respect of, any rights
with respect to, or collecting, any or all of the Obligations and/or enforcing
any rights with respect to, or collecting against, the Guarantor under this
Guarantee.
(b) No payment or payments made by any of the Company, the
Guarantor, any other guarantor or any other Person or received or collected by
any Agent or any Lender from the Company, the Guarantor, any other guarantor or
any other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of any Guarantor hereunder which shall,
notwithstanding any such payment or payments other than payments made by the
Guarantor in respect of the Obligations or payments received or collected from
the Guarantor in respect of the Obligations, remain liable for the Obligations
until the Obligations are paid in full, the Commitments are terminated and
either no Letters of Credit are outstanding or each outstanding Letter of Credit
has been cash collateralized so that it is fully secured to the satisfaction of
the Administrative Agent.
(c) The Guarantor agrees that whenever, at any time, or from
time to time, it shall make any payment to any Agent or any Guaranteed Creditor
on account of its liability hereunder, it will notify the Administrative Agent
in writing that such payment is made under this Guarantee for such purpose.
3. RIGHT OF SET-OFF. Upon the occurrence of any Event of
Default under any Credit Document, the Guarantor hereby irrevocably authorizes
each Guaranteed Creditor at any time and from time to time without notice to the
Guarantor or any other guarantor, any such notice being expressly waived by the
Guarantor, to set off and appropriate and apply any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or
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unmatured, at any time held or owing by such Guaranteed Creditor to or for the
credit or the account of the Guarantor, or any part thereof in such amounts as
such Guaranteed Creditor may elect, against and on account of the obligations
and liabilities of the Guarantor to such Guaranteed Creditor hereunder or under
the Credit Agreement, the Notes, or the other Credit Documents, as such
Guaranteed Creditor may elect, whether or not any Agent or any Guaranteed
Creditor has made any demand for payment and although such obligations,
liabilities and claims may be contingent or unmatured. Each Guaranteed Creditor
agrees to notify the Guarantor promptly of any such set-off and the application
made by such Guaranteed Creditor, PROVIDED that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Guaranteed Creditor under this paragraph are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which such
Guaranteed Creditor may have.
4. NO SUBROGATION. Notwithstanding any payment or payments
made by the Guarantor hereunder or any set-off or application of funds of the
Guarantor by any Guaranteed Creditor, the Guarantor shall not be entitled to be
subrogated to any of the rights of any Agent or any Guaranteed Creditor against
the Company or any collateral security or guarantee or right of offset held by
any Guaranteed Creditor for the payment of the Obligations, nor shall the
Guarantor seek or be entitled to seek any contribution or reimbursement from the
Company in respect of payments made by the Guarantor hereunder, and any such
rights of subrogation and reimbursement of the Guarantor are hereby waived until
all amounts owing to each of the Agents and the Guaranteed Creditors by the
Company on account of the Obligations are paid in full, the Commitments are
terminated and either no Letters of Credit are outstanding or each outstanding
Letter of Credit has been cash collateralized so that it is fully secured to the
satisfaction of the Administrative Agent.
5. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS; WAIVER OF
RIGHTS. The Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against the Guarantor and without notice to or
further assent by the Guarantor, any demand for payment of any of the
Obligations made by any Agent, the Issuing Lender or any Guaranteed Creditor may
be rescinded by such party and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
any Agent, the Issuing Lender or any Guaranteed Creditor and the Credit
Agreement, the Notes, the other Credit Documents, any Letter of Credit, any
Interest Rate Agreement and any other collateral security document or other
guarantee or document in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Administrative Agent,
the Co-Arrangers (subject to subsection 12.16 of the Credit Agreement), the
Issuing Lender, any Lender or any Other Creditor may deem advisable
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from time to time, and any collateral security, guarantee or right of offset at
any time held by any Agent or any Guaranteed Creditor for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. None of the
Agents nor any Guaranteed Creditor shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the
Obligations or for this Guarantee or any property subject thereto. When making
any demand hereunder against the Guarantor, any Agent or any Guaranteed Creditor
may, but shall be under no obligation to, make a similar demand on any other
guarantor, and any failure by any Agent or any Guaranteed Creditor to make any
such demand or to collect any payments from any such other guarantor or any
release of any such other guarantor shall not relieve the Guarantor in respect
of which a demand or collection is not made, and shall not impair or affect the
rights and remedies, express or implied, or as a matter of law, of any Agent or
any Guaranteed Creditor against the Guarantor. For the purposes hereof "demand"
shall include the commencement and continuance of any legal proceedings.
6. GUARANTEE ABSOLUTE AND UNCONDITIONAL. The Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by each of the Agents, the
Issuing Lender or any Guaranteed Creditor upon this Guarantee or acceptance of
this Guarantee; the Obligations, and any of them, shall conclusively be deemed
to have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon this Guarantee; and all dealings between the Company or
the Guarantor and any Agent, the Issuing Lender or any Guaranteed Creditor shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guarantee. The Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Company or
the Guarantor with respect to the Obligations. The Guarantor understands and
agrees that this Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity,
regularity or enforceability of the Credit Agreement, the Notes, any other
Credit Document, the Letters of Credit, any Interest Rate Agreements, any of the
Obligations or any other collateral security therefor or guarantee or right of
offset with respect thereto at any time or from time to time held by any Agent,
the Issuing Lender or any Guaranteed Creditor, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Company, the Guarantor or any other
Person against any Agent, the Issuing Lender or any Guaranteed Creditor, or (c)
any other circumstance whatsoever (with or without notice to or knowledge of the
Company or the Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of any of the Company for the
Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against the
Guarantor, any Agent and/or any Guaranteed Creditor may, but shall be under no
obligation to, pursue such rights and remedies as it may have against the
Company or any other Person or against any collateral security or guarantee for
the Obligations or any right of offset with
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respect thereto, and any failure by any Agent or any Guaranteed Creditor to
pursue such other rights or remedies or to collect any payments from the Company
or any such other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the Company
or any such other Person or any such collateral security, guarantee or right of
offset, shall not relieve the Guarantor of any liability hereunder, and shall
not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of any Agent or any Guaranteed Creditor against
the Guarantor. This Guarantee shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon the Guarantor and
the successors and assigns thereof, and shall inure to the benefit of the Agents
and the Guaranteed Creditors, and their respective successors, indorsees,
transferees and assigns, until all the Obligations and the obligations of the
Guarantor under this Guarantee shall have been satisfied by payment in full,
either no Letters of Credit are outstanding or each outstanding Letter of Credit
has been cash collateralized so that it is fully secured to the satisfaction of
the Administrative Agent and the Commitments shall be terminated,
notwithstanding that from time to time during the term of the Credit Agreement
the Company may be free from any Obligations.
7. REINSTATEMENT. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of the Obligations is rescinded or must otherwise be restored or
returned by any Agent or any Guaranteed Creditor upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Company or of the
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Company or the
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.
8. PAYMENTS. The Guarantor hereby guarantees that payments
hereunder will be paid in Dollars to the Administrative Agent without set-off or
counterclaim on the same basis as payments are made by the Company under
subsection 5.9(b) of the Credit Agreement, at the office of the Administrative
Agent located at 130 Liberty Street, New York, New York 10006, U.S.A. or at such
other office as the Administrative Agent may notify to the Guarantor in
accordance with Section 15.
9. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants that:
(a) it is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and possesses
all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to use its corporate name and to own,
lease or otherwise hold its properties and assets and to carry on its
business as presently conducted other than such franchises,
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licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, would not have a material adverse
effect on the business, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, taken as a
whole;
(b) it is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct or proposed conduct of its
business requires such qualification and is in compliance with all
Requirements of Law except to the extent that the failure to comply
therewith could not reasonably be expected to have a material adverse
effect on its business, assets, condition (financial or otherwise) or
results of operations or on its ability to perform its obligations
under this Guarantee or the other Credit Documents to which it is a
party;
(c) it has the corporate power and authority and the legal
right to execute and deliver, and to perform its obligations under,
this Guarantee and the other Credit Documents to which the Guarantor is
a party and to grant the Liens granted by it pursuant to the other
Credit Documents to which the Guarantor is a party, and has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Guarantee and the other Credit Documents to which
the Guarantor is a party and to grant the Liens granted by it pursuant
to the other Credit Documents to which it is a party;
(d) it (x) owns 100% of the issued and outstanding shares of
all classes of Capital Stock of the Company, except, if this
representation is being made at any time after the Closing Date, for
shares of common stock of the Company issued to Persons other than the
Guarantor pursuant to any IPO occurring after the Closing Date, as
permitted by subsection 9.18 of the Credit Agreement, and (y) has no
other Subsidiaries (other than Subsidiaries of the Company);
(e) no consent, license, permit, approval or authorization of,
or filing with, or notice or report to, or registration, filing or
declaration with, or other act by or in respect of, any arbitrator or
Governmental Authority and no consent of any other Person (including,
without limitation, any stockholder or creditor of the Guarantor), is
required in connection with the execution, delivery, performance,
validity or enforceability by or against the Guarantor of this
Guarantee and the other Credit Documents to which the Guarantor is a
party;
(f) this Guarantee and the other Credit Documents to which the
Guarantor is a party have been duly executed and delivered on behalf of
the Guarantor and each of this Guarantee and the other Credit Documents
to which the Guarantor is a party constitutes a legal, valid and
binding obligation of the
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Guarantor enforceable against the Guarantor in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity;
(g) the execution, delivery and performance of this Guarantee
and the other Credit Documents to which the Guarantor is a party do not
and will not violate any Requirement of Law or any material Contractual
Obligation of the Guarantor and will not result in the creation or
imposition of any Lien on any of the properties or revenues of the
Guarantor pursuant to any Requirement of Law or Contractual Obligation
other than the Liens created by the Holdings/Subsidiary Pledge
Agreement;
(h) no litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the
knowledge of the Guarantor, threatened by or against the Guarantor or
against any of its properties or revenues (i) with respect to this
Guarantee or the other Credit Documents to which the Guarantor is a
party or any of the transactions contemplated hereby or thereby or (ii)
which could have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the
Guarantor and the Guarantor's Subsidiaries taken as a whole
or on the ability of any Guarantor to perform its obligations under
this Guarantee or the other Credit Documents to which it is a party;
and
(i) the Guarantor has filed or caused to be filed all material
tax returns required to be filed by it, and has paid all taxes due on
said returns or on any assessments made against it (other than those
the amount or validity of which is currently being contested in good
faith by appropriate proceedings for which adequate reserves have been
provided on its books).
(j) the Guarantor agrees that the foregoing representations
and warranties shall be deemed to have been made by the Guarantor on
each Borrowing Date occurring on or after the date hereof under the
Credit Agreement on and as of such Borrowing Date as though made
hereunder on and as of such Borrowing Date.
10. COVENANTS. The Guarantor hereby covenants and agrees with
the Agents and the Lenders that, from and after the date of this Guarantee until
the Obligations are paid in full and the Commitments are terminated and no
Letter of Credit is outstanding:
(a) the Guarantor shall engage in no business or activities,
other than holding the Capital Stock of the Company, and activities
incidental thereto;
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(b) the Guarantor shall not create, incur, assume or suffer to
exist any Indebtedness, other than Affiliate Loans incurred by the
Guarantor in an aggregate principal amount not to exceed the amount of
cash actually loaned to the Guarantor from the respective Affiliate or
Affiliates extending such loans; and
(c) Holdings shall at all times own 100% of the outstanding
capital stock of the Company, except for any shares of common stock of
the Company issued to Persons other than Holdings pursuant to an IPO,
in each case as permitted by subsection 9.18 of the Credit Agreement.
11. SEVERABILITY. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12. PARAGRAPH HEADINGS. The paragraph headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
13. NO WAIVER; CUMULATIVE REMEDIES. None of the Agents, the
Issuing Lender nor any Guaranteed Creditor shall by any act (except by a written
instrument pursuant to paragraph 14 hereof), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any default or event of default under any Credit Document or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of any Agent or any Guaranteed
Creditor, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by any Agent or any Guaranteed
Creditor of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which such Agent or such Guaranteed
Creditor would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
14. INTEGRATION; WAIVERS AND AMENDMENTS; SUCCESSORS AND
ASSIGNS; GOVERNING LAW. This Guarantee represents the entire agreement of the
Guarantor with respect to the subject matter hereof, except as otherwise set
forth in the Credit Agreement, and there are no promises or representations by
any Agent or any Guaranteed Creditor relative to the subject matter hereof not
reflected herein or in the
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other Credit Documents. In the event of a conflict among the Credit Documents
and the Credit Agreement, the Credit Agreement shall control. None of the terms
or provisions of this Guarantee may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Guarantor and
the Administrative Agent (in each case with the consents required by subsection
12.1 of the Credit Agreement), PROVIDED that any provision of this Guarantee may
be waived by the Agents and the Guaranteed Creditors in a letter or agreement
executed by the Administrative Agent or by telex or facsimile transmission from
the Administrative Agent (in each case with the consents required by subsection
12.1 of the Credit Agreement). This Guarantee shall be binding upon the
successors and assigns of the Guarantor and shall inure to the benefit of the
Agents and the Guaranteed Creditors and their respective successors and assigns.
THIS GUARANTEE SHALL BE GOVERNED BY, AND BE CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. NOTICES. All notices, requests and demands to or upon the
Guarantor or any Agent or any Guaranteed Creditor to be effective shall be in
writing or by telecopy or telex and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or, in
the case of mail, three days after deposit in the postal system, first class
postage pre-paid, or, in the case of telecopy notice, confirmation of receipt
received, or, in the case of telex notice, when sent, answerback received,
addressed to a party at the address provided for such party in the Credit
Agreement or Schedule I hereto, as the case may be, or to such other address as
may be hereafter notified to the parties hereto.
16. COUNTERPARTS. This Guarantee may be executed by one or
more of the parties hereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
17. AUTHORITY OF ADMINISTRATIVE AGENT. The Guarantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Guarantee with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Guarantee shall, as between the Administrative
Agent, the other Agents and the Guaranteed Creditors, be governed by the Credit
Agreement and by such other agreements with respect thereto as may exist from
time to time among them, but, as between the Administrative Agent and the
Guarantor, the Administrative Agent shall be conclusively presumed to be acting
as agent for the Guaranteed Creditors with full and valid authority so to act or
refrain from acting, and the Guarantor shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
18. SUBMISSION TO JURISDICTION; WAIVERS. (a) The Guarantor
hereby
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irrevocably and unconditionally:
1. submits for itself and its property in any legal
action or proceeding relating to this Guarantee or any other Credit
Document, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
2. consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
3. agrees that service of process in any such action or
proceeding may be affected by mailing a copy thereof by registered or
certified mail, postage prepaid, to the Guarantor at its address set
forth on Schedule I hereto or at such other address of which the
Administrative Agent shall have been notified pursuant to paragraph 15;
and
4. agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in other jurisdiction.
(b) The Guarantor and the Administrative Agent, on behalf of
itself and the Guaranteed Creditors, hereby unconditionally waive trial by jury
in any legal action or proceeding referred to in paragraph (a) above.
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IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and year first above written.
WERNER HOLDING CO. (PA), INC.
By:_________________________________
Title:
Accepted and agreed to:
BANKERS TRUST COMPANY, as
Administrative Agent
By:_______________________________
Name:
Title:
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SCHEDULE I to
Holdings Guarantee
------------------
ADDRESS OF GUARANTOR
--------------------
Werner Holding Co. (PA), Inc.
93 Werner Road
Greenville, PA 16125
Attention: Eric J. Werner, Esq.
Telecopy: (412) 588-0618
with a copy to:
Werner Holding Co. (DE), Inc.
93 Werner Road
Greenville, PA 16125
Attention: Eric J. Werner, Esq.
Telecopy: (412) 588-0618
with a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166
Attention: Janet Vance, Esq.
Telecopy: (212) 351-4035
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EXHIBIT G-2 TO
CREDIT AGREEMENT
----------------
FORM OF
SUBSIDIARY GUARANTEE
--------------------
SUBSIDIARY GUARANTEE, dated as of November 24, 1997, made by
each of the corporations that are signatories hereto (the "GUARANTORS"), in
favor of BANKERS TRUST COMPANY, as administrative agent (in such capacity, the
"ADMINISTRATIVE AGENT") for the Agents and for the banks and other financial
institutions (the "LENDERS") that are parties to the Credit Agreement (as
hereafter defined) and for the benefit of the other Guaranteed Creditors
referred to below.
W I T N E S S E T H :
---------------------
WHEREAS, Werner Holding Co. (DE), Inc. (the "COMPANY"), is
party to a Credit Agreement, dated as of the date hereof, with the lenders from
time to time party thereto (the "LENDERS"), Bankers Trust Company, as
Administrative Agent and Co-Arranger, Merrill Lynch Capital Corporation, as
Syndication Agent and Co-Arranger, The Chase Manhattan Bank, as Documentation
Agent and Goldman Sachs Credit Partners L.P., as Co-Agent (together with the
Administrative Agent, Syndication Agent and Documentation Agent, the "AGENTS")
(as the same may be amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT");
WHEREAS, pursuant to the terms of the Credit Agreement, the
Lenders severally agreed to make certain extensions of credit to the Company;
WHEREAS, the Company owns directly or indirectly all of the
issued and outstanding Capital Stock of each Guarantor;
WHEREAS, the proceeds of the extensions of credit will be used
in part to enable the Company to make valuable transfers (as determined as
provided herein) to each Guarantor in connection with the operation of its
respective business;
WHEREAS, the Company and the Guarantors are engaged in related
businesses, and each Guarantor will derive substantial direct and indirect
benefit from the making of the extensions of credit; and
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WHEREAS, under the Credit Agreement, the obligation of the
Lenders to make the extensions of credit to the Company on and after the date
hereof is conditioned upon, among other things, the execution and delivery by
the Guarantors of this Guarantee;
NOW, THEREFORE, in consideration of the premises and to induce
the Lenders to enter into the Credit Agreement and to make their respective
extensions of credit to the Company under the Credit Agreement, the Guarantors
hereby agree with and for the benefit of the Administrative Agent and the
Guaranteed Creditors as follows:
1. DEFINED TERMS. As used in this Guarantee, terms defined in
the Credit Agreement or in the preamble or recitals hereto are used herein as
therein defined, and the following term shall have the following meaning:
"OBLIGATIONS" (i) shall mean the unpaid principal amount of,
and interest on (including interest accruing on or after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Company, whether or
not a claim for such post-filing or post-petition interest is allowed),
the Loans and all other obligations and liabilities of the Company to
the each of the Agents, the Issuing Lender or the Lenders, whether
direct or indirect, absolute or contingent, due or to become due, or
now existing or hereafter incurred, which may arise under, out of, or
in connection with, the Credit Agreement, any Letter of Credit, the
other Credit Documents and any other document executed and delivered or
given in connection therewith or herewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all reasonable fees and
disbursements of counsel to the Agents, the Issuing Lender or the
Lenders that are required to be paid by the Company or the Guarantors
pursuant to the terms of the Credit Agreement) or otherwise, and (ii)
all obligations of the Company to any Lender or Lenders or its or their
Affiliates (each such Lender or Affiliate, even if the respective
Lender subsequently ceases to be a lender under the Credit Agreement
for any reason, together with such Lender's or Affiliate's successors
and assigns, collectively, the "Other Creditors" and, together with the
Administrative Agent, the Agents and the Lenders, the "Guaranteed
Creditors") under or in respect of any Interest Rate Agreement.
2. GUARANTEE. (a) Each Guarantor hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Guaranteed Creditors and their respective
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance by the Company when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations, and each of the Guarantors
further agrees to pay any and all expenses (including, without limitation, all
reasonable fees and disbursements of counsel)
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which may be paid or incurred by any Agent, the Issuing Lender or any Guaranteed
Creditor in enforcing, or obtaining advice of counsel in respect of, any rights
with respect to, or collecting, any or all of the Obligations and/or enforcing
any rights with respect to, or collecting against, the Guarantors under this
Guarantee.
(b) Anything herein or in any other Credit Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Credit Documents shall in no event exceed the amount which can
be guaranteed by such Guarantor under applicable federal and state laws relating
to the insolvency of debtors.
(c) Each Guarantor agrees that the Obligations may at any time
and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing this Guarantee or affecting the rights of any Agent
or any Guaranteed Creditor hereunder.
(d) No payment or payments made by any of the Company, the
Guarantors, any other guarantor or any other Person or received or collected by
any Agent or any Guaranteed Creditor from the Company, the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment or payments other than payments made by
such Guarantor in respect of the Obligations or payments received or collected
from such Guarantor in respect of the Obligations, remain liable for the
Obligations up to the maximum liability of such Guarantor hereunder until the
Obligations are paid in full, the Commitments are terminated and either no
Letters of Credit are outstanding or each outstanding Letter of Credit has been
cash collateralized so that it is fully secured to the satisfaction of the
Administrative Agent.
(e) Each Guarantor agrees that whenever, at any time, or from
time to time, it shall make any payment to any Agent or any Guaranteed Creditor
on account of its liability hereunder, it will notify the Administrative Agent
in writing that such payment is made under this Guarantee for such purpose.
3. RIGHT OF SET-OFF. Upon the occurrence of any Event of
Default under any Credit Document, each Guarantor hereby irrevocably authorizes
each Guaranteed Creditor at any time and from time to time without notice to
such Guarantor or any other guarantor, any such notice being expressly waived by
each Guarantor, to set off and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Guaranteed Creditor to or for the credit or
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the account of the Guarantor, or any part thereof in such amounts as such
Guaranteed Creditor may elect, against and on account of the obligations and
liabilities of such Guarantor to such Guaranteed Creditor hereunder or under the
Credit Agreement, the Notes, or the other Credit Documents, as such Guaranteed
Creditor may elect, whether or not any Agent or any Guaranteed Creditor has made
any demand for payment and although such obligations, liabilities and claims may
be contingent or unmatured. Each Guaranteed Creditor agrees to notify such
Guarantor promptly of any such set-off and the application made by such
Guaranteed Creditor, PROVIDED that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each
Guaranteed Creditor under this paragraph are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which such
Guaranteed Creditor may have.
4. NO SUBROGATION. Notwithstanding any payment or payments
made by any of the Guarantors hereunder or any set-off or application of funds
of any of the Guarantors by any Guaranteed Creditor, no Guarantor shall be
entitled to be subrogated to any of the rights of any Agent or any Guaranteed
Creditor against the Company or any other Guarantor or any collateral security
or guarantee or right of offset held by any Guaranteed Creditor for the payment
of the Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from the Company or any other Guarantor in respect
of payments made by such Guarantor hereunder, and any such rights of subrogation
and reimbursement of the Guarantors are hereby waived until all amounts owing to
each of the Agents and the Guaranteed Creditors by the Company on account of the
Obligations are paid in full, the Commitments are terminated and either no
Letters of Credit are outstanding or each outstanding Letter of Credit has been
cash collateralized so that it is fully secured to the satisfaction of the
Administrative Agent.
5. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS; WAIVER OF
RIGHTS. Each Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against any Guarantor and without notice to or
further assent by any Guarantor, any demand for payment of any of the
Obligations made by any Agent, the Issuing Lender or any Guaranteed Creditor may
be rescinded by such party and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
any Agent, the Issuing Lender or any Guaranteed Creditor and the Credit
Agreement, the Notes, the other Credit Documents, any Letter of Credit, any
Interest Rate Agreement and any other collateral security document or other
guarantee or document in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Administrative Agent,
the Co-Arrangers (subject to subsection 12.16 of the Credit Agreement), the
Issuing Lender, any Lender or any Other Creditor may deem advisable
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from time to time, and any collateral security, guarantee or right of offset at
any time held by any Agent or any Guaranteed Creditor for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. None of the
Agents nor any Guaranteed Creditor shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the
Obligations or for this Guarantee or any property subject thereto. When making
any demand hereunder against any particular Guarantor, any Agent or any
Guaranteed Creditor may, but shall be under no obligation to, make a similar
demand on any other Guarantor or guarantor, and any failure by any Agent or any
Lender to make any such demand or to collect any payments from any such other
Guarantor or guarantor or any release of any such other Guarantor or guarantor
shall not relieve such Guarantor in respect of which a demand or collection is
not made or any of the Guarantors not so released of their several obligations
or liabilities hereunder, and shall not impair or affect the rights and
remedies, express or implied, or as a matter of law, of any Agent or any
Guaranteed Creditor against any of the Guarantors. For the purposes hereof
"demand" shall include the commencement and continuance of any legal
proceedings.
6. GUARANTEE ABSOLUTE AND UNCONDITIONAL. Each Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by each of the Agents, the
Issuing Lender or any Guaranteed Creditor upon this Guarantee or acceptance of
this Guarantee; the Obligations, and any of them, shall conclusively be deemed
to have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon this Guarantee; and all dealings between the Company or
any of the Guarantors and any Agent, the Issuing Lender or any Guaranteed
Creditor shall likewise be conclusively presumed to have been had or consummated
in reliance upon this Guarantee. Each Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Company or any of the Guarantors with respect to the Obligations. Each Guarantor
understands and agrees that this Guarantee shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity, regularity or enforceability of the Credit Agreement, the Notes, any
other Credit Document, the Letters of Credit, any Interest Rate Agreements, any
of the Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
any Agent, the Issuing Lender or any Guaranteed Creditor, (b) any defense,
set-off or counterclaim (other than a defense of payment or performance) which
may at any time be available to or be asserted by the Company, any of the
Guarantors or any other Person against any Agent, the Issuing Lender or any
Guaranteed Creditor, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of the Company or such Guarantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of any of the
Company for the Obligations, or of any Guarantor under this Guarantee, in
bankruptcy or in any other instance. When pursuing its rights and remedies
hereunder against any Guarantor, any Agent and/or any Guaranteed Creditor may,
but shall be
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under no obligation to, pursue such rights and remedies as it may have against
the Company or any other Person or against any collateral security or guarantee
for the Obligations or any right of offset with respect thereto, and any failure
by any Agent or any Guaranteed Creditor to pursue such other rights or remedies
or to collect any payments from the Company or any such other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Company or any such other Person or any
such collateral security, guarantee or right of offset, shall not relieve such
Guarantor of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of any
Agent or any Guaranteed Creditor against such Guarantor. This Guarantee shall
remain in full force and effect and be binding in accordance with and to the
extent of its terms upon each Guarantor and the successors and assigns thereof,
and shall inure to the benefit of the Agents and the Guaranteed Creditors, and
their respective successors, indorsees, transferees and assigns, until all the
Obligations and the obligations of each Guarantor under this Guarantee shall
have been satisfied by payment in full, either no Letters of Credit are
outstanding or each outstanding Letter of Credit has been cash collateralized so
that it is fully secured to the satisfaction of the Administrative Agent and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Company may be free from any Obligations.
7. REINSTATEMENT. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of the Obligations is rescinded or must otherwise be restored or
returned by any Agent or any Guaranteed Creditor upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Company or of any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Company or any
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.
8. PAYMENTS. Each Guarantor hereby guarantees that payments
hereunder will be paid in Dollars to the Administrative Agent without set-off or
counterclaim on the same basis as payments are made by the Company under
subsection 5.9(b) of the Credit Agreement, at the office of the Administrative
Agent located at 130 Liberty Street, New York, New York 10006, U.S.A. or at such
other office as the Administrative Agent may notify to the Guarantor in
accordance with Section 15.
9. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby
represents and warrants that:
(a) it is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and possesses
all governmental franchises,
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licenses, permits, authorizations and approvals necessary to enable it
to use its corporate name and to own, lease or otherwise hold its
properties and assets and to carry on its business as presently
conducted other than such franchises, licenses, permits, authorizations
and approvals the lack of which, individually or in the aggregate,
would not have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole;
(b) it is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct or proposed conduct of its
business requires such qualification and is in compliance with all
Requirements of Law except to the extent that the failure to comply
therewith could not reasonably be expected to have a material adverse
effect on its business, assets, condition (financial or otherwise) or
results of operations or on its ability to perform its obligations
under this Guarantee or the other Credit Documents to which it is a
party;
(c) it has the corporate power and authority and the legal
right to execute and deliver, and to perform its obligations under,
this Guarantee and the other Credit Documents to which the Guarantor is
a party and to grant the Liens granted by it pursuant to the other
Credit Documents to which such Guarantor is a party, and has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Guarantee and the other Credit Documents to which
such Guarantor is a party and to grant the Liens granted by it pursuant
to the other Credit Documents to which it is a party;
(d) it is a Subsidiary of the Company;
(e) no consent, license, permit, approval or authorization of,
or filing with, or notice or report to, or registration, filing or
declaration with, or other act by or in respect of, any arbitrator or
Governmental Authority and no consent of any other Person (including,
without limitation, any stockholder or creditor of any Guarantor), is
required in connection with the execution, delivery, performance,
validity or enforceability by or against any Guarantor of this
Guarantee and the other Credit Documents to which each Guarantor is a
party;
(f) this Guarantee and the other Credit Documents to which
each Guarantor is a party have been duly executed and delivered on
behalf of such Guarantor and each of this Guarantee and the other
Credit Documents to which each Guarantor is a party constitutes a
legal, valid and binding obligation of such Guarantor enforceable
against such Guarantor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
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<PAGE> 274
creditors' rights generally and by general principles of equity;
(g) the execution, delivery and performance of this Guarantee
and the other Credit Documents to which each Guarantor is a party do
not and will not violate any Requirement of Law or any material
Contractual Obligation of such Guarantor and will not result in the
creation or imposition of any Lien on any of the properties or revenues
of such Guarantor pursuant to any Requirement of Law or Contractual
Obligation other than the Liens created by the Holdings/Subsidiary
Pledge Agreement and Subsidiary Security Agreement;
(h) no litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the
knowledge of such Guarantor, threatened by or against such Guarantor or
against any of its properties or revenues of any Guarantor (i) with
respect to this Guarantee or the other Credit Documents to which such
Guarantor is a party or any of the transactions contemplated hereby or
thereby or (ii) which could have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of
operations of any Guarantor and any such Guarantor's Subsidiaries taken
as a whole or on the ability of any Guarantor to perform its
obligations under this Guarantee or the other Credit Documents to which
it is a party; and
(i) each Guarantor has filed or caused to be filed all
material tax returns required to be filed by it, and has paid all taxes
due on said returns or on any assessments made against it (other than
those the amount or validity of which is currently being contested in
good faith by appropriate proceedings for which adequate reserves have
been provided on its books).
(j) Each Guarantor agrees that the foregoing representations
and warranties shall be deemed to have been made by each Guarantor on
each Borrowing Date occurring on or after the date hereof under the
Credit Agreement on and as of such Borrowing Date as though made
hereunder on and as of such Borrowing Date.
10. COVENANTS. Each Guarantor hereby covenants and agrees with
the Agents and the Lenders that, from and after the date of this Guarantee until
the Obligations are paid in full and the Commitments are terminated and no
Letter of Credit is outstanding, each Guarantor will comply with provisions of
Sections 8 and 9 of the Credit Agreement to the extent such provisions apply to
such Guarantors.
11. SEVERABILITY. Any provision of this Guarantee 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
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<PAGE> 275
not invalidate or render unenforceable such provision in any other jurisdiction.
12. PARAGRAPH HEADINGS. The paragraph headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
13. NO WAIVER; CUMULATIVE REMEDIES. None of the agents, the
Issuing Lender nor any Guaranteed Creditor shall by any act (except by a written
instrument pursuant to paragraph 14 hereof), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any default or event of default under any Credit Document or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of any Agent or any Guaranteed
Creditor, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by any Agent or any Guaranteed
Creditor of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which such Agent or such Guaranteed
Creditor would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
14. INTEGRATION; WAIVERS AND AMENDMENTS; SUCCESSORS AND
ASSIGNS; GOVERNING LAW. This Guarantee represents the entire agreement of each
Guarantor with respect to the subject matter hereof, except as otherwise set
forth in the Credit Agreement, and there are no promises or representations by
any Agent or any Guaranteed Creditor relative to the subject matter hereof not
reflected herein or in the other Credit Documents. In the event of a conflict
among the Credit Documents and the Credit Agreement, the Credit Agreement shall
control. None of the terms or provisions of this Guarantee may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by each Guarantor and the Administrative Agent (in each case with the
consents required by subsection 12.1 of the Credit Agreement), PROVIDED that (x)
any provision of this Guarantee may be waived by the Agents and the Guaranteed
Creditors in a letter or agreement executed by the Administrative Agent or by
telex or facsimile transmission from the Administrative Agent (in each case with
the consents required by subsection 12.1 of the Credit Agreement) and (y) any
Subsidiary of the Company that is required to become a Guarantor may execute a
counterpart of this Guarantee after the date hereof in accordance with the
requirements of the Credit Agreement and upon such execution (and without any
consent or action by any other Guarantor), such Subsidiary shall automatically
become a Guarantor hereunder by executing a counterpart hereof and delivering
same to the Administrative Agent.. This Guarantee shall be binding upon the
successors and assigns of each Guarantor and shall inure to the benefit of the
Agents and the Guaranteed Creditors and their respective
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<PAGE> 276
successors and assigns. THIS GUARANTEE SHALL BE GOVERNED BY, AND BE CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. NOTICES. All notices, requests and demands to or upon each
Guarantor or any Agent or any Guaranteed Creditor to be effective shall be in
writing or by telecopy or telex and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or, in
the case of mail, three days after deposit in the postal system, first class
postage pre-paid, or, in the case of telecopy notice, confirmation of receipt
received, or, in the case of telex notice, when sent, answerback received,
addressed to a party at the address provided for such party in the Credit
Agreement or Schedule I hereto, as the case may be, or to such other address as
may be hereafter notified to the parties hereto.
16. COUNTERPARTS. This Guarantee may be executed by one or
more of the parties hereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
17. AUTHORITY OF ADMINISTRATIVE AGENT. Each Guarantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Guarantee with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Guarantee shall, as between the Administrative
Agent, the other Agents and the Guaranteed Creditors, be governed by the Credit
Agreement and by such other agreements with respect thereto as may exist from
time to time among them, but, as between the Administrative Agent and each
Guarantor, the Administrative Agent shall be conclusively presumed to be acting
as agent for the Guaranteed Creditors with full and valid authority so to act or
refrain from acting, and no Guarantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
18. SUBMISSION TO JURISDICTION; WAIVERS. (a) Each Guarantor
hereby irrevocably and unconditionally:
1. submits for itself and its property in any legal
action or proceeding relating to this Guarantee or any other Credit
Document, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
2. consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may now or
hereafter
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<PAGE> 277
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
3. agrees that service of process in any such action or
proceeding may be affected by mailing a copy thereof by registered or
certified mail, postage prepaid, to such Guarantor at its address set
forth on Schedule I hereto or at such other address of which the
Administrative Agent shall have been notified pursuant to paragraph 15;
and
4. agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in other jurisdiction.
(b) Each Guarantor and the Administrative Agent, on behalf of
itself and the Guaranteed Creditors, hereby unconditionally waive trial by jury
in any legal action or proceeding referred to in paragraph (a) above.
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<PAGE> 278
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee to be duly executed and delivered by its duly authorized officer as of
the day and year first above written.
ARDEE INVESTMENT CO., INC
KENTUCKY LADDER COMPANY
OLYMPUS PROPERTIES, INC.
PHOENIX MANAGEMENT SERVICES, INC.
R.D. ARIZONA LADDER CORP. (D/B/A/ R.D.
WERNER CO., INC.- ARIZONA)
WERNER CO.
WERNER FINANCIAL INC.
WERNER MANAGEMENT CO.
WIP TECHNOLOGIES, INC.
By:_________________________________
Title:
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<PAGE> 279
SCHEDULE I to
Subsidiary Guarantee
--------------------
Addresses Of Guarantors
-----------------------
[Name of Guarantor]
[Address]
Attention:
Telecopy:
with a copy to:
Werner Holding Co. (DE), Inc.
93 Werner Road
Greenville, PA 16125
Attention: Eric J. Werner, Esq.
Telecopy: (412) 588-0618
with a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166
Attention: Janet Vance, Esq.
Telecopy: (212) 351-4035
<PAGE> 280
EXHIBIT C
TO THE
CREDIT AGREEMENT
----------------
FORM OF RECEIVABLES FINANCING NOTE
$__________ New York, New York
November 24, 1997
FOR VALUE RECEIVED, the undersigned, WERNER HOLDING CO. (DE),
INC., a Delaware corporation (the "COMPANY"), hereby promises to pay to the
order of ________________ (the "LENDER") on the Receivables Financing
Termination Date, as defined in the Credit Agreement referred to below, at the
office of Bankers Trust Company, located at 130 Liberty Street, New York, New
York 10006, in lawful money of the United States and in immediately available
funds, the principal amount of the lesser of (a) _______________ DOLLARS
($__________) and (b) the aggregate unpaid principal amount of all Receivables
Financing Loans made by the Lender to the Company pursuant to subsection 4.1 of
the Credit Agreement defined below. The Company further agrees to pay interest
in like money at such office on the unpaid principal amount thereof from time to
time from the date hereof at the rates, and on the dates, specified in such
Credit Agreement. The holder of this Note is authorized to record the Borrowing
Date, Type and amount of each Receivables Financing Loan made by the Lender
pursuant to subsection 4.1 of the Credit Agreement, the date and amount of each
payment or prepayment of principal hereof, and the date of each interest rate
conversion or continuation pursuant to subsection 5.2 of the Credit Agreement
and the principal amount subject thereto, on the schedules annexed hereto and
made a part hereof (or on a continuation thereof which shall be attached hereto
and made a part hereof) and any such recordation shall constitute PRIMA FACIE
evidence of the accuracy of the information so recorded; PROVIDED that the
failure of the Lender to make any such recordation (or any error in such
recordation) shall not affect the obligations of the Company hereunder or under
the Credit Agreement.
This Note is one of the Receivables Financing Notes referred
to in the Credit Agreement, dated as of November 24, 1997, among the Company,
the lenders from time to time party thereto, Bankers Trust Company, as
Administrative Agent and Co-Arranger, Merrill Lynch Capital Corporation, as
Syndication Agent and Co-Arranger, The Chase Manhattan Bank, as Documentation
Agent, and Goldman Sachs
<PAGE> 281
Credit Partners L.P., as Co-Agent (as amended, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"), is subject to the
provisions thereof, is entitled to the benefits thereof and is subject to
optional and mandatory prepayment in whole or in part as provided therein. Terms
used herein which are defined in the Credit Agreement shall have such defined
meanings unless otherwise defined herein.
This Note is secured and guaranteed as provided in the
Security Documents and the Guarantees. Reference is hereby made to the Security
Documents and the Guarantees for a description of the properties and assets in
which a security interest has been granted, the nature and extent of the
security and guarantees, the terms and conditions upon which the security
interest and each guarantee was granted and the rights of the holder of this
Note in respect thereof. The undersigned hereby agrees to pay all costs and
expenses incurred by the Lender in connection with the enforcement of its rights
and remedies under the Credit Agreement, this Note, the Security Documents and
each other Credit Document.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Note shall become, or may be declared to be, immediately due and payable,
all as provided therein.
All parties now and hereafter liable with respect to this
Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE TERMS OF THE CREDIT AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN
THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE
CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
WERNER HOLDING CO. (DE), INC.
By:
-----------------------------------
Title:
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<PAGE> 282
Schedule A to
Receivables Financing Note
ALTERNATE BASE RATE LOANS
AND REPAYMENTS OF ALTERNATE BASE RATE LOANS
<TABLE>
<CAPTION>
Unpaid Principal
Amount of Amount Converted Amount Converted Balance of
Alternate Base to Alternate Base Amount of to Eurodollar Alternate Base Notation Made
Date Rate Loans Rate Loans Principal Repaid Loans Rate Loans By
- ------------ ---------------- --------------------- ----------------- ----------------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C>
- ------------ ---------------- --------------------- ----------------- ----------------- ------------------ --------------
- ------------ ---------------- --------------------- ----------------- ----------------- ------------------ --------------
- ------------ ---------------- --------------------- ----------------- ----------------- ------------------ --------------
- ------------ ---------------- --------------------- ----------------- ----------------- ------------------ --------------
- ------------ ---------------- --------------------- ----------------- ----------------- ------------------ --------------
- ------------ ---------------- --------------------- ----------------- ----------------- ------------------ --------------
- ------------ ---------------- --------------------- ----------------- ----------------- ------------------ --------------
- ------------ ---------------- --------------------- ----------------- ----------------- ------------------ --------------
- ------------ ---------------- --------------------- ----------------- ----------------- ------------------ --------------
- ------------ ---------------- --------------------- ----------------- ----------------- ------------------ --------------
- ------------ ---------------- --------------------- ----------------- ----------------- ------------------ --------------
- ------------ ---------------- --------------------- ----------------- ----------------- ------------------ --------------
- ------------ ---------------- --------------------- ----------------- ----------------- ------------------ --------------
</TABLE>
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<PAGE> 283
Schedule B to
Receivables Financing Note
--------------------------
EURODOLLAR LOANS
AND REPAYMENTS OF EURODOLLAR LOANS
----------------------------------
<TABLE>
<CAPTION>
Amount Interest Period Amount
Amount of Converted to and Eurodollar Amount of Converted to Unpaid Principal
Eurodollar Eurodollar Rate with Principal Alternate Base Balance of Notation
Date Loans Loans Respect Thereto Repaid Rate Loans Eurodollar Loans Made By
- -------------- ------------ ------------ ------------------ ----------- -------------- --------------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------- ------------ ------------ ------------------ ----------- -------------- --------------------- ---------
- -------------- ------------ ------------ ------------------ ----------- -------------- --------------------- ---------
- -------------- ------------ ------------ ------------------ ----------- -------------- --------------------- ---------
- -------------- ------------ ------------ ------------------ ----------- -------------- --------------------- ---------
- -------------- ------------ ------------ ------------------ ----------- -------------- --------------------- ---------
- -------------- ------------ ------------ ------------------ ----------- -------------- --------------------- ---------
- -------------- ------------ ------------ ------------------ ----------- -------------- --------------------- ---------
- -------------- ------------ ------------ ------------------ ----------- -------------- --------------------- ---------
- -------------- ------------ ------------ ------------------ ----------- -------------- --------------------- ---------
- -------------- ------------ ------------ ------------------ ----------- -------------- --------------------- ---------
- -------------- ------------ ------------ ------------------ ----------- -------------- --------------------- ---------
- -------------- ------------ ------------ ------------------ ----------- -------------- --------------------- ---------
- -------------- ------------ ------------ ------------------ ----------- -------------- --------------------- ---------
</TABLE>
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<PAGE> 284
EXHIBIT M TO
CREDIT AGREEMENT
----------------
FORM OF BORROWING BASE CERTIFICATE AS OF [DATE]
To: The Lenders party to the Credit Agreement, dated
as of November 24, 1997, among Werner Holding
Co. (DE), Inc., the Lenders from time to time
party thereto, Bankers Trust Company, as
Administrative Agent and Co-Arranger, Merrill
Lynch Capital Corporation, as Syndication Agent
and Co-Arranger, The Chase Manhattan Bank, as
Documentation Agent, and Goldman Sachs Credit
Partners L.P., as Co-Agent (such Credit
Agreement, as in effect on the date of this
Certificate, being herein called the "CREDIT
AGREEMENT"). Unless otherwise defined herein,
capitalized terms used in this Certificate shall have
the meanings set forth in the Credit Agreement.
<TABLE>
<CAPTION>
<S> <C>
1. ACCOUNTS RECEIVABLE AMOUNT
Total face amount of the receivables of the Company and the
Wholly-Owned Subsidiary Guarantors which conform to the
representations and warranties with respect to receivables
contained in the Security Agreements (including, without
limitation, that the Administrative Agent shall have and maintain a
first priority perfected security interest in all such receivables)
$_________
Less:
Returns, discounts, claims, credits and allowances
of any nature (whether issued, owing, granted or
outstanding)
($_________)
Reserves taken by the Company or its respective
Subsidiary with respect to the receivables
($________)
</TABLE>
<PAGE> 285
<TABLE>
<S> <C>
Bill and hold (deferred shipment) transactions and
progress billings ($________)
Contracts or sales to any Affiliate ($________)
All receivables which have not been paid in full within 120 days after
the invoice date thereof or which have been disputed by the account
debtor ($________)
Receivables of any account debtor of which 15% or more of the aggregate
outstanding receivables of such account debtor owed to the Company
and Wholly-Owned Subsidiary Guarantors would be excluded pursuant
to the preceding item ($________)
Receivables of account debtors residing or located
outside the United States ($________)
Receivables of any account debtor with respect to which any action or
event of the types described in subsection 10(f) of the Credit
Agreement has occurred ($________)
To the extent that the receivables of any account debtor exceed 10%
(or, in the case of a Qualified Account Debtor, 25%) of the total
outstanding receivables of all account debtors owed to the Company
and Wholly-Owned Subsidiary Guarantors, all receivables of such
account debtor in excess of such 10% (or 25%) ($________)
Receivables with respect to which the Administrative Agent does not
have a valid, first priority and perfected security interest ($________)
Receivables subject to a Lien (other than (x) Liens granted to the
Administrative Agent as contemplated under the Credit Agreement and
(y) so long as the Administrative Agent maintains a first priority
perfected security interest in such receivables, junior liens that
are Permitted Liens as described in clauses (a) and (b) of
subsection 9.2 of the Credit Agreement) ($________)
</TABLE>
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<PAGE> 286
<TABLE>
<S> <C>
2. Eligible Receivables
(Net Amount of No. ) ($________)
3. Borrowing Base (80% of Eligible Receivables) $________
4. Outstanding Principal Amount of Receivables
Financing Loans $________
5. Borrowing Base Surplus (Deficiency)
(No. 3 minus No. 4) $________
</TABLE>
The undersigned hereby certifies on behalf of the Company and not
in his or her individual capacity that all of the information provided above is
true and correct as of the date first above written.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her
hand this ____ day of ___________, ____.
WERNER HOLDING CO. (DE), INC.
By_______________________________
Name:
Title:
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<PAGE> 287
EXHIBIT B
TO THE
CREDIT AGREEMENT
----------------
FORM OF REVOLVING CREDIT NOTE
$__________ New York, New York
November 24, 1997
FOR VALUE RECEIVED, the undersigned, WERNER HOLDING CO. (DE),
INC., a Delaware corporation (the "COMPANY"), hereby promises to pay to the
order of ________________ (the "LENDER") on the Revolving Credit Termination
Date, as defined in the Credit Agreement referred to below, at the office of
Bankers Trust Company, located at 130 Liberty St., New York, New York 10006, in
lawful money of the United States and in immediately available funds, the
principal amount of the lesser of (a) _______________ DOLLARS ($__________) and
(b) the aggregate unpaid principal amount of all Revolving Credit Loans made by
the Lender to the Company pursuant to subsection 3.1 of the Credit Agreement
defined below. The Company further agrees to pay interest in like money at such
office on the unpaid principal amount hereof from time to time from the date
hereof at the rates, and on the dates, specified in such Credit Agreement. The
holder of this Note is authorized to record the Borrowing Date, Type and amount
of each Revolving Credit Loan made by the Lender pursuant to subsection 3.1 of
the Credit Agreement, the date and amount of each payment or prepayment of
principal thereof, and the date of each interest rate conversion or continuation
pursuant to subsection 5.2 of the Credit Agreement and the principal amount
subject thereto, on the schedules annexed hereto and made a part hereof (or on a
continuation thereof which shall be attached hereto and made a part hereof) and
any such recordation shall constitute PRIMA FACIE evidence of the accuracy of
the information so recorded; PROVIDED that the failure of the Lender to make any
such recordation (or any error in such recordation) shall not affect the
obligations of the Company hereunder or under the Credit Agreement.
This Note is one of the Revolving Credit Notes referred to in
the Credit Agreement, dated as of November 24, 1997, among the Company, the
lenders from time to time party thereto, Bankers Trust Company, as
Administrative Agent and Co-Arranger, Merrill Lynch Capital Corporation, as
Syndication Agent and Co-Arranger, The Chase Manhattan Bank, as Documentation
Agent, and Goldman Sachs Credit Partners L.P., as Co-Agent (as amended,
supplemented or otherwise modified from
<PAGE> 288
time to time, the "CREDIT AGREEMENT", is subject to the provisions thereof, is
entitled to the benefits thereof and is subject to optional and mandatory
prepayment in whole or in part as provided therein. Terms used herein which are
defined in the Credit Agreement shall have such defined meanings unless
otherwise defined herein.
This Note is secured and guaranteed as provided in the
Security Documents and the Guarantees. Reference is hereby made to the Security
Documents and the Guarantees for a description of the properties and assets in
which a security interest has been granted, the nature and extent of the
security and guarantees, the terms and conditions upon which the security
interest and each guarantee was granted and the rights of the holder of this
Note in respect thereof. The undersigned hereby agrees to pay all costs and
expenses incurred by the Lender in connection with the enforcement of its rights
and remedies under the Credit Agreement, this Note, the Security Documents and
each other Credit Document.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Note shall become, or may be declared to be, immediately due and payable,
all as provided therein.
All parties now and hereafter liable with respect to this
Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE TERMS OF THE CREDIT AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN
THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE
CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
WERNER HOLDING CO. (DE), INC.
By:
--------------------------------
Title:
-2-
<PAGE> 289
Schedule A to
Revolving Credit Note
---------------------
ALTERNATE BASE RATE LOANS
AND REPAYMENTS OF ALTERNATE BASE RATE LOANS
-------------------------------------------
<TABLE>
<CAPTION>
Unpaid Principal
Amount of Amount Converted Amount Converted Balance of
Alternate Base to Alternate Base Amount of to Eurodollar Alternate Base Notation Made
Date Rate Loans Rate Loans Principal Repaid Loans Rate Loans By
- --------- ----------------- ------------------- ---------------- ------------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
- --------- ----------------- ------------------- ---------------- ------------------- ---------------- --------------
- --------- ----------------- ------------------- ---------------- ------------------- ---------------- --------------
- --------- ----------------- ------------------- ---------------- ------------------- ---------------- --------------
- --------- ----------------- ------------------- ---------------- ------------------- ---------------- --------------
- --------- ----------------- ------------------- ---------------- ------------------- ---------------- --------------
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- --------- ----------------- ------------------- ---------------- ------------------- ---------------- --------------
- --------- ----------------- ------------------- ---------------- ------------------- ---------------- --------------
</TABLE>
-3-
<PAGE> 290
Schedule B to
Revolving Credit Note
---------------------
EURODOLLAR LOANS
AND REPAYMENTS OF EURODOLLAR LOANS
----------------------------------
<TABLE>
<CAPTION>
Interest Period Amount
Amount of Amount and Eurodollar Amount of Converted to Unpaid Principal
Eurodollar Converted to Rate with Principal Alternate Base Balance of Notation
Date Loans Eurodollar Loans Respect Thereto Repaid Rate Loans Eurodollar Loans Made By
- ---------- ------------- ----------------- ---------------- ------------ ---------------- ---------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------- ------------- ----------------- ---------------- ------------ ---------------- ---------------- -------
- ---------- ------------- ----------------- ---------------- ------------ ---------------- ---------------- -------
- ---------- ------------- ----------------- ---------------- ------------ ---------------- ---------------- -------
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- ---------- ------------- ----------------- ---------------- ------------ ---------------- ---------------- -------
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- ---------- ------------- ----------------- ---------------- ------------ ---------------- ---------------- -------
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- ---------- ------------- ----------------- ---------------- ------------ ---------------- ---------------- -------
- ---------- ------------- ----------------- ---------------- ------------ ---------------- ---------------- -------
- ---------- ------------- ----------------- ---------------- ------------ ---------------- ---------------- -------
- ---------- ------------- ----------------- ---------------- ------------ ---------------- ---------------- -------
- ---------- ------------- ----------------- ---------------- ------------ ---------------- ---------------- -------
</TABLE>
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<PAGE> 291
EXHIBIT I TO
CREDIT AGREEMENT
----------------
FORM OF
SUBSECTION 5.11(d)(2) CERTIFICATE
Reference is hereby made to the Credit Agreement, dated as of
November 24, 1997 among Werner Holding Co. (DE), Inc., the lenders party
thereto, Bankers Trust Company, as Administrative Agent and Co-Arranger, Merrill
Lynch Capital Corporation, as Syndication Agent and Co-Arranger, The Chase
Manhattan Bank, as Documentation Agent, and Goldman Sachs Credit Partners L.P.,
as Co-Agent (the "CREDIT AGREEMENT"). Pursuant to the provisions of subsection
5.11(d)(2) of the Credit Agreement, the undersigned hereby certifies that it is
not a "bank" as such term is used in Section 881(c)(3)(A) of the Internal
Revenue Code of 1986, as amended.
[NAME OF LENDER]
By: __________________________
Title:
Date:
<PAGE> 292
EXHIBIT A-2
TO THE
CREDIT AGREEMENT
----------------
FORM OF C TERM LOAN NOTE
$__________ New York, New York
November 24, 1997
FOR VALUE RECEIVED, the undersigned, WERNER HOLDING CO. (DE),
INC., a Delaware corporation (the "Company"), promises to pay to the order of
_______________ (the "LENDER") on the C Maturity Date, as defined in the Credit
Agreement referred to below, at the office of Bankers Trust Company, located at
130 Liberty Street, New York, New York 10006, in lawful money of the United
States and in immediately available funds, the principal amount of the lesser of
(a) ____________________ DOLLARS ($__________) and (b) the aggregate unpaid
principal amount of all C Term Loans made by the Lender to the Company pursuant
to subsection 2.1(b) of the Credit Agreement defined below. The Company further
agrees to pay interest in like money at said office from the date hereof on the
unpaid principal amount hereof from time to time outstanding at the rates, and
on the dates, specified in the Credit Agreement. The holder of this Note is
authorized to record the Borrowing Date, Type and amount of the C Term Loan made
by the Lender pursuant to subsection 2.1(b) of the Credit Agreement, the date
and amount of each payment or prepayment of principal thereof, and the date of
each interest rate conversion or continuation pursuant to subsection 5.2 of the
Credit Agreement and the principal amount subject thereto, on the schedules
annexed hereto and made a part hereof (or on a continuation thereof which shall
be attached hereto and made a part hereof) and any such recordation shall
constitute PRIMA FACIE evidence of the information so recorded, PROVIDED that
the failure of the Lender to make such recordation (or any error in such
recordation) shall not affect the obligations of the Company hereunder or under
the Credit Agreement.
This Note is one of the C Term Loan Notes referred to in the
Credit Agreement, dated as of November 24, 1997 among the Company, the lenders
from time to time party thereto (including the Lender), Bankers Trust Company,
as Administrative Agent and Co-Arranger, Merrill Lynch Capital Corporation, as
Syndication Agent and Co-Arranger, The Chase Manhattan Bank, as Documentation
Agent, and Goldman Sachs Credit Partners L.P., as Co-Agent (as the same may be
from time to time amended, supplemented or otherwise modified from time to time,
<PAGE> 293
the "CREDIT AGREEMENT"), is subject to the provisions thereof, is entitled to
the benefits thereof and is subject to optional and mandatory prepayment in
whole or in part as provided therein. Terms used herein which are defined in the
Credit Agreement shall have such defined meanings unless otherwise defined
herein.
This Note is secured and guaranteed as provided in the
Security Documents and the Guarantees. Reference is hereby made to the Security
Documents and the Guarantees for a description of the properties and assets in
which a security interest has been granted, the nature and extent of the
security and guarantees, the terms and conditions upon which the security
interest and each guarantee was granted and the rights of the holder of this
Note in respect thereof. The undersigned agrees to pay all costs and expenses
incurred by the Lender in connection with the enforcement of its rights and
remedies under the Credit Agreement, this Note, the Security Documents and each
other Credit Document.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Note shall become, or may be declared to be, immediately due and payable,
all as provided therein.
All parties now and hereafter liable with respect to this
Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE TERMS OF THE CREDIT AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN
THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE
CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
WERNER HOLDING CO. (DE), INC.,
By:_____________________________
Title:
-2-
<PAGE> 294
<TABLE>
<CAPTION>
Schedule A to
C TERM LOAN NOTE
ALTERNATE BASE RATE LOANS
AND REPAYMENTS OF ALTERNATE BASE RATE LOANS
Amount of Amount Converted to Amount Unpaid Principal
Alternate Base Alternate Base Rate Amount of Converted to Balance of Alternate Notation
Date Rate Loans Loans Principal Repaid Eurodollar Loans Base Rate Loans Made by
- ------ ----------------- --------------------- ----------------- ----------------- ----------------------- -------
<S> <C> <C> <C> <C> <C> <C>
- ------ ----------------- --------------------- ----------------- ----------------- ----------------------- -------
- ------ ----------------- --------------------- ----------------- ----------------- ----------------------- -------
- ------ ----------------- --------------------- ----------------- ----------------- ----------------------- -------
- ------ ----------------- --------------------- ----------------- ----------------- ----------------------- -------
- ------ ----------------- --------------------- ----------------- ----------------- ----------------------- -------
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- ------ ----------------- --------------------- ----------------- ----------------- ----------------------- -------
- ------ ----------------- --------------------- ----------------- ----------------- ----------------------- -------
- ------ ----------------- --------------------- ----------------- ----------------- ----------------------- -------
- ------ ----------------- --------------------- ----------------- ----------------- ----------------------- -------
- ------ ----------------- --------------------- ----------------- ----------------- ----------------------- -------
- ------ ----------------- --------------------- ----------------- ----------------- ----------------------- -------
- ------ ----------------- --------------------- ----------------- ----------------- ----------------------- -------
</TABLE>
-3-
<PAGE> 295
Schedule B to
C Term Loan Note
----------------
EURODOLLAR LOANS
AND REPAYMENTS OF EURODOLLAR LOANS
----------------------------------
<TABLE>
<CAPTION>
Amount Unpaid
Interest Period Converted to Principal
Amount of Amount and Eurodollar Amount of Alternate Balance of
Eurodollar Converted to Rate with Respect Principal Base Rate Eurodollar Notation
Date Loans Eurodollar Loans Thereto Repaid Loans Loans Made By
- ------ --------------- ------------------ ----------------- ----------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------ --------------- ------------------ ----------------- ----------- -------------- ----------- ---------
- ------ --------------- ------------------ ----------------- ----------- -------------- ----------- ---------
- ------ --------------- ------------------ ----------------- ----------- -------------- ----------- ---------
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- ------ --------------- ------------------ ----------------- ----------- -------------- ----------- ---------
- ------ --------------- ------------------ ----------------- ----------- -------------- ----------- ---------
- ------ --------------- ------------------ ----------------- ----------- -------------- ----------- ---------
- ------ --------------- ------------------ ----------------- ----------- -------------- ----------- ---------
</TABLE>
-4-
<PAGE> 296
EXHIBIT H-2 TO
CREDIT AGREEMENT
----------------
FORM OF
HOLDINGS/SUBSIDIARY PLEDGE AGREEMENT
Agreement (this "Agreement"), dated as of November 24, 1997,
made by the corporations that are signatories hereto (the "PLEDGORS"), in favor
of BANKERS TRUST COMPANY, as administrative agent (in such capacity, the
"ADMINISTRATIVE AGENT"), for the Agents and for the several lenders (the
"LENDERS") from time to time parties to the Credit Agreement (as defined below)
and for the benefit of the Secured Creditors referred to below.
W I T N E S S E T H :
---------------------
WHEREAS, pursuant to the Credit Agreement, dated as of the
date hereof (as amended, supplemented or otherwise modified from time to time,
the "CREDIT AGREEMENT"), among Werner Holding Co. (DE), Inc. (the "COMPANY"),
the Lenders, Bankers Trust Company, as Administrative Agent and Co-Arranger,
Merrill Lynch Capital Corporation, as Syndication Agent and Co-Arranger, The
Chase Manhattan Bank, as Documentation Agent, and Goldman Sachs Credit Partners
L.P., as Co-Agent (together with the Administrative Agent, Syndication Agent and
Documentation Agent, the "AGENTS"), the Lenders have severally agreed to make
loans to, and the Issuing Lender (as defined in the Credit Agreement) has agreed
to issue, and certain of the Lenders have agreed to participate in, certain
letters of credit for the account of, the Company upon the terms and subject to
the conditions set forth therein;
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective loans to, and the obligation of the Issuing
Lender to issue, and the Lenders to participate in, letters of credit for the
account of, the Company under the Credit Agreement that the Pledgors guarantee
payment and performance of the Company's obligations under the Credit Agreement,
the Notes and the other Loan Documents; and
WHEREAS, in satisfaction of such condition, each Pledgor has
entered
<PAGE> 297
into (x) the case of Holdings, a guarantee of even date herewith (as
amended, supplemented or otherwise modified from time to time, the "HOLDINGS
GUARANTEE") and (y) in the case of each other Pledgor, a Guarantee of even date
herewith (as amended, supplemented or otherwise modified from time to time, the
"SUBSIDIARY GUARANTEE" and, together with the Holdings Guarantee, the
"GUARANTEES") for the benefit of the Agent and the Lenders;
WHEREAS, it is a further condition precedent to the obligation
of the Lenders to make their respective loans to, and the obligation of the
Issuing Lender to issue, and the Lenders to participate in, letters of credit
for the account of, the Company under the Credit Agreement that the Pledgors
shall have executed and delivered this Agreement to the Administrative Agent for
the ratable benefit of the Secured Creditors to secure payment and performance
of such Pledgors' obligations under the Guarantees;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent, the other Agents, the Issuing Lender and the Lenders
to enter into the Credit Agreement and to induce the Lenders to make their
respective loans and the Issuing Lender to issue, and the Lenders to participate
in, the letters of credit under the Credit Agreement, each Pledgor hereby agrees
with the Administrative Agent, for the ratable benefit of the Secured Creditors,
as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms that
are defined in the Credit Agreement and used herein are so used as so defined,
and the following terms shall have the following meanings:
"AGREEMENT" means this Pledge Agreement, as the same may be
amended, modified or otherwise supplemented from time to time.
"CODE" means the Uniform Commercial Code from time to time in
effect in the State of New York.
"COLLATERAL" means (w) the Pledged Stock, (x) the Pledged
Notes, (y) the Undelivered Notes and (z) all Proceeds thereof.
"CREDIT AGREEMENT OBLIGATIONS" has the meaning assigned that
term in the definition of "Obligations" contained herein.
"ISSUERS" means the collective reference to the companies
identified on SCHEDULE I attached hereto as the issuers of the Pledged
Stock on the Closing Date and any other issuer of Pledged Stock
acquired thereafter; individually, each an "ISSUER."
-2-
<PAGE> 298
"OBLIGATIONS" means (i) the collective reference to the unpaid
principal of and interest on the Notes and all other obligations and
liabilities of each Assignor to the Administrative Agent, the other
Agents and the Lenders (including, without limitation, interest
accruing at the then applicable rate provided in the Credit Agreement
after the maturity of the Loans and interest accruing at the then
applicable rate provided in the Credit Agreement after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to such Pledgor, whether or
not a claim for post-filing or post-petition interest is allowed in
such proceeding), whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may
arise under, out of, or in connection with, the Credit Agreement, the
Notes, this Security Agreement, the other Credit Documents or any other
document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative
Agent, the other Agents or to the Lenders that are required to be paid
by each Pledgor pursuant to the terms of the Credit Agreement or this
Agreement or any other Credit Document) (collectively, "CREDIT
AGREEMENT OBLIGATIONS" and (ii) all obligations of the Company to any
Lender or Lenders or its or their Affiliates (each such Lender or
Affiliate, even if the respective Lender subsequently ceases to be a
lender under the Credit Agreement for any reason, together with such
Lender's or Affiliate's successors and assigns, collectively, the
"Other Creditors" and, together with the Administrative Agent, the
Agents and the Lenders, the "Secured Creditors") under or in respect of
any Interest Rate Agreement, and all guarantee thereof by any Pledgor
(collectively, "OTHER OBLIGATIONS").
"OBLIGORS" means the collective reference to the Persons
identified on SCHEDULE II attached hereto as the obligors in respect of
the Pledged Notes and the respective Obligor or Obligors with respect
to any other promissory notes created or acquired after the date
hereof; individually, each an "OBLIGOR."
"OTHER OBLIGATIONS" has the meaning assigned that term in the
definition of "Obligations" contained herein.
"PLEDGED NOTES" means all promissory notes from time to time
issued to, or held by, any Pledgor other than the Undelivered Notes.
"PLEDGED STOCK" means (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 shares of
capital stock, at any time owned by any Pledgor, in such Domestic
Corporations, together with all stock
-3-
<PAGE> 299
certificates, options or rights of any nature whatsoever that may be
issued or granted by any such Domestic Corporation to such Pledgor
while this Agreement is in effect (including, in respect of Holdings,
in any event 100% of the Capital Stock of the Company, other than
common stock issued to Persons other than Holdings pursuant to one or
more IPOs); and (y) in the case of corporations not Domestic
Corporations (each a "FOREIGN CORPORATION"), all of the shares of
capital stock, at any time owned by any Pledgor, in such Foreign
Corporations, together with all stock certificates, options or rights
of any nature whatsoever that may be issued or granted by any such
Foreign Corporation to such Pledgor while this Agreement is in effect,
provided that no Pledgor shall be required to pledge hereunder, and
nothing herein shall be deemed to constitute a pledge hereunder of,
more than 65% of the total combined voting power of all classes of
capital stock of any such Foreign Corporation entitled to vote
(although 100% of all classes of non-voting stock of each Foreign
Corporation shall be required to be pledged). Notwithstanding anything
to the contrary contained above or elsewhere in this Agreement, Pledged
Stock shall not include shares of capital stock of (i) Immaterial
Subsidiaries in the process of dissolution on the Closing Date (so long
as same continue to constitute Immaterial Subsidiaries in the process
of dissolution), (ii) Captive Insurance Subsidiaries, (iii) any joint
venture or other Person referred to in subsection 9.6(h) of the Credit
Agreement, in which (x) there are no investments by the Company or any
of its other Subsidiaries on the Closing Date and (y) all investments
made by the Company and its other Subsidiaries made after the Closing
Date are made pursuant to subsection 9.6(h) of the Credit Agreement and
(iv) in the circumstances, and to the extent, provided in subsection
23(c) hereof and subsection 8.9(g) of the Credit Agreement, any
Receivables SPV the pledge of the capital stock of which pursuant to
this Agreement is not permitted pursuant to the terms of the respective
Receivables Facility.
"PROCEEDS" means all "proceeds", as such term is defined in
Section 9-306(1) of the Code on the date hereof, of the Pledged Stock
and the Pledged Notes, and, in any event, shall include, without
limitation, (x) all dividends or other income from the Pledged Stock,
collections thereon or distributions with respect thereto and (y) all
payments in respect of the Pledged Notes.
"SECURED CREDITORS" has the meaning assigned that term in the
definition of "Obligations" contained herein.
"UNDELIVERED NOTES" means promissory issued (x) in respect of
Indebtedness permitted under subsection 9.1(c) of the Credit Agreement,
(y) in respect of loans or advances permitted under subsection 9.6(h)
of the Credit Agreement or (z) in the principal amount of less than
$250,000 individually or
-4-
<PAGE> 300
$1,000,000 in the aggregate; provided that Undelivered Notes shall
cease to constitute Undelivered Notes, and shall thereafter constitute
Pledged Notes, at such time, if any, as same are delivered as required
by clause (ii) of subsection 7(a) of this Agreement.
2. PLEDGE; GRANT OF SECURITY INTEREST; UNCERTIFICATED
SECURITIES. (a) Each Pledgor hereby delivers to the Administrative Agent, for
the ratable benefit of the Secured Creditors, all certificates or instruments
representing or evidencing the Pledged Stock and the Pledged Notes on the date
hereof, and hereby transfers and grants to the Administrative Agent, for the
ratable benefit of the Secured Creditors, a first priority security interest in
all of such Pledgor's right, title and interest in the Collateral, as collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations.
(b) Notwithstanding anything to the contrary contained in
subsection 2(a) hereof, if any Pledged Stock or Pledged Notes (whether now owned
or hereafter acquired) are uncertificated securities, the relevant Pledgor shall
promptly notify the Administrative Agent thereof, and shall promptly take all
actions required to perfect the security interest of the Administrative Agent
under applicable law (including, in any event, under Section 9-115 of the Code,
if applicable). Each Pledgor further agrees to take such actions as the
Administrative Agent deems reasonably necessary or desirable to effect the
foregoing and to permit the Administrative Agent to exercise any of its rights
and remedies hereunder.
3. STOCK POWERS. Concurrently with the delivery to the
Administrative Agent of (x) each certificate representing one or more shares of
Pledged Stock, each Pledgor shall deliver an undated stock power covering such
certificate, duly executed in blank by such Pledgor and (y) each instrument
evidencing the Pledged Notes, the respective Pledgor shall duly endorse the
respective Pledged Note in blank.
4. REPRESENTATIONS AND WARRANTIES. Each Pledgor represents and
warrants with respect to the Pledged Stock and Pledged Notes pledged by it
hereby that:
(a) each Issuer, as of the Closing Date, and the percentage
ownership thereof, is listed on Schedule I hereto;
(b) all the shares of Pledged Stock have been duly and validly
issued and are fully paid and nonassessable;
(c) the Pledged Notes held by such Pledgor, as of the Closing
Date,
-5-
<PAGE> 301
consist of the promissory notes described in Schedule II where such Pledgor is
listed as the payee;
(d) each Pledgor is the record and sole beneficial owner of
its respective Pledged Stock and the Pledged Notes pledged by it hereby, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the Lien created by this Agreement;
(e) upon delivery to the Administrative Agent of the stock
certificates evidencing the Pledged Stock and the instruments evidencing the
Pledged Notes, the Lien granted pursuant to this Agreement will constitute a
valid, perfected (except with respect to the Undelivered Notes) first priority
Lien on the Collateral (except, with respect to Proceeds, only to the extent
permitted by Section 9-306 of the Code), enforceable as such against all
creditors of such Pledgor and any Persons purporting to purchase any of the
Collateral from such Pledgor.
Each Pledgor agrees that the foregoing representations and warranties shall be
deemed to have been made by such Pledgor on each Borrowing Date occurring on or
after the date hereof under the Credit Agreement, on and as of such Borrowing
Date as though made hereunder on and as of such date.
5. COVENANTS. Each Pledgor covenants and agrees with the
Administrative Agent, for the benefit of the Secured Creditors, that, from and
after the date of this Agreement until the Obligations are paid in full and the
Commitments are terminated and either no Letters of Credit are outstanding or
each outstanding Letter of Credit has been cash collateralized so that it is
fully secured to the satisfaction of the Administrative Agent:
(a) If any Pledgor shall become entitled to receive or shall
receive (x) any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital or any certificate issued
in connection with any reorganization), option or rights in respect of capital
stock of any Person, whether in addition to, in substitution of, as a conversion
of, or in exchange for any shares of the Pledged Stock, or otherwise in respect
thereof, or (y) any additional promissory notes or instruments therefor or any
additional instruments in respect of, or constituting, Pledged Notes, such
Pledgor shall accept the same as the agent of the Secured Creditors, hold the
same in trust for the Secured Creditors and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such Pledgor
to the Administrative Agent, if required, and, in the case of stock
certificates, together with an undated stock power covering such certificate
duly executed in blank by such Pledgor and with, if the Administrative Agent so
requests, signature guaranteed, to be held by the Administrative Agent, subject
to the terms
-6-
<PAGE> 302
hereof, as additional collateral security for the Obligations.
Notwithstanding the foregoing, no Pledgor shall be required at any time to, and
nothing herein shall be deemed to constitute, a pledge hereunder of (i) more
than 65% of the total combined voting power of all classes of Capital Stock of
any Foreign Corporations entitled to vote (although 100% of all classes of
non-voting stock of any Foreign Corporation, to the extent owned by one or more
Pledgors, shall be required to be pledged hereunder) or (ii) any capital stock
which does not constitute Pledged Stock in accordance with the last sentence of
the definition of "Pledged Stock" contained herein.
(b) Without the prior written consent of the Administrative
Agent, no Pledgor will (i) except as permitted by subsection 9.5 of the Credit
Agreement, sell, assign, transfer, exchange, or otherwise dispose of, or grant
any option with respect to, the Collateral, or (ii) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Collateral, or any interest therein, except for the Lien provided
for by this Agreement. Each Pledgor will defend the right, title and interest of
the Secured Creditors in and to the Collateral against the claims and demands of
all Persons whomsoever.
(c) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense of the relevant
Pledgor, such Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purposes of obtaining or preserving the
full benefits of this Agreement and of the rights and powers herein granted. If
any amount payable under or in connection with any of the Collateral shall be or
become evidenced by any promissory note, other instrument or chattel paper,
except to the extent meeting the requirements set forth in the definition of
Undelivered Notes, such note, instrument or chattel paper shall be immediately
delivered to the Administrative Agent, duly endorsed in a manner satisfactory to
the Administrative Agent, to be held as Collateral pursuant to this Agreement.
(d) Each Pledgor agrees to pay, and to save the Secured
Creditors harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the Collateral
or in connection with any of the transactions contemplated by this Agreement.
(e) From time to time upon the written request of the
Administrative Agent or the Required Lenders, the Pledgors shall provide updated
Schedules I and II hereunder. Furthermore, at any time when additional Pledged
Stock or Pledged Notes are delivered for pledge hereunder, the Pledgors shall
provide an updated Schedule I or II, as the case may be, to the Administrative
Agent.
-7-
<PAGE> 303
6. CASH DIVIDENDS; VOTING RIGHTS. Unless an Event of Default
shall have occurred and be continuing, each Pledgor shall be permitted to
receive all cash dividends paid by each Issuer to the extent permitted in the
Credit Agreement in respect of the Pledged Stock, to receive all payments in
respect of the Pledged Notes and to exercise all voting and corporate rights
with respect to the Pledged Stock, PROVIDED, HOWEVER, that each Pledgor agrees
that it shall not vote in any way which would be inconsistent with or result in
any violation of any provision of the Credit Agreement, the Notes, the Security
Documents, any of the other Credit Documents or any Interest Rate Agreement. The
Administrative Agent shall, at the relevant Pledgor's sole cost and expense,
execute and deliver (or cause to be executed and delivered) to such Pledgor all
proxies and other instruments as such Pledgor may reasonably request for the
purpose of enabling such Pledgor to exercise the voting and other rights that it
is entitled to exercise pursuant to this Section 6.
7. RIGHTS OF THE SECURED CREDITORS. (a) If an Event of Default
shall occur and be continuing, (i) the Administrative Agent shall have the right
to receive any and all cash dividends paid in respect of the Pledged Stock and
all payments in respect of the Pledged Notes and, in each case, to make
application thereof to the Obligations in such order as the Administrative Agent
may determine, (ii) the Administrative Agent or the Required Lenders may (and
shall have the right to) direct the Pledgors to (x) cause all Indebtedness then
outstanding pursuant to subsection 9.1(c) of the Credit Agreement to be
evidenced by promissory notes and, to the extent same are payable to the Company
or any other Credit Party which is a party to any other Pledge Agreement, cause
the delivery of same for pledge to the Administrative Agent under the respective
Pledge Agreement and (y) deliver all Undelivered Notes to the Administrative
Agent for pledge pursuant to this Agreement, in which case the Pledgors shall
promptly take, or cause to be taken, the actions described in preceding clauses
(x) and (y) and deliver all Undelivered Notes for pledge pursuant hereto, at
which time such Undelivered Notes shall constitute Pledged Notes and shall no
longer constitute Undelivered Notes and (iii) all shares of the Pledged Stock
may be registered in the name of the Administrative Agent or its nominee, and,
subject to the terms of this Agreement, the Administrative Agent or its nominee
may thereafter exercise (A) all voting, corporate and other rights pertaining to
such shares of the Pledged Stock at any meeting of shareholders of such Issuer
or otherwise and (B) any and all rights of conversion, exchange, subscription
and any other rights, privileges or options pertaining to such shares of the
Pledged Stock as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the Pledged
Stock upon the merger, consolidation, reorganization, recapitalization or other
fundamental change in the corporate structure of the Issuer, or upon the
exercise by any Pledgor or the Administrative Agent of any right, privilege or
option pertaining to such shares of the Pledged Stock, and in connection
therewith, the right to deposit and deliver any and all of the Pledged Stock
with any committee, depositary, transfer agent, registrar or other designated
agency upon such
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terms and conditions as it may determine), all without liability except to
account for property actually received by it and except for its gross negligence
or willful misconduct or failure to comply with the provisions of Section 12,
but the Administrative Agent shall have no duty to any Pledgor to exercise any
such right, privilege or option and shall not be responsible for any failure to
do so or delay in so doing.
(b) The rights of the Secured Creditors hereunder shall not be
conditioned or contingent upon the pursuit by any Secured Creditor of any right
or remedy against any other Person which may be or become liable in respect of
all or any part of the Obligations or against any collateral security therefor,
guarantee therefor or right of offset with respect thereto. None of the Secured
Creditors shall be liable for any failure to demand, collect or realize upon all
or any part of the Collateral or for any delay in doing so, nor shall the
Administrative Agent be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Pledgor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof. The
Administrative Agent agrees to release promptly to the relevant Pledgor any
dividends, cash, securities, instruments and other property paid, payable or
otherwise distributed in respect of the Collateral which it may receive under
subsection 7(a) (other than Pledged Notes pursuant to clause (ii) thereof) if,
prior to the occurrence of an acceleration of any of the Obligations, all
Defaults and Events of Default have been waived or are no longer continuing.
(c) The Administrative Agent may execute any of its duties
under this Agreement by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care, except as otherwise provided in subsection 11.3 of the Credit Agreement or
Section 12 hereof.
8. REMEDIES. (a) In the event that any portion of the
Obligations has been declared or becomes due and payable in accordance with the
terms of the Credit Agreement, the Administrative Agent, on behalf of the
Secured Creditors, may exercise, in addition to all other rights and remedies
granted in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Pledgor any Issuer or any
other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, assign, give option or options to purchase or
otherwise dispose of and deliver the
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Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, in the over-the-counter
market, at any exchange, broker's board or office of any Secured Creditor or
elsewhere upon such terms and conditions as it may deem commercially reasonable
and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. Any Secured Creditor shall have
the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption in the
relevant Pledgor which right or equity is hereby waived and released. The
Administrative Agent promptly shall apply any Proceeds from time to time held by
it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred in respect thereof or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Secured Creditors hereunder, including, without
limitation, reasonable attorneys' fees and disbursements of counsel to the
Administrative Agent:
(i) first, to any amounts owing to the Administrative
Agent or the Co-Arrangers in their capacities as such;
(ii) second, to the payment of an amount equal to the
outstanding Primary Obligations to the Secured Creditors as provided in
paragraph (e) below, with each Secured Creditor receiving an amount
equal to its outstanding Primary Obligations or, if the proceeds are
insufficient to pay in full all such Primary Obligations, its Pro Rata
Share (as defined below) of the amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) and (ii) to the
payment of an amount equal to the outstanding Secondary Obligations to
the Secured Creditors as provided in paragraph (e) below, with each
Secured Creditor receiving an amount equal to its outstanding Secondary
Obligations or, if the proceeds are insufficient to pay in full all
such Secondary Obligations, its Pro Rata Share of the amount remaining
to be distributed; and
(iv) fourth, to the extent proceeds remain after the
application pursuant to the preceding clauses (i), (ii) and (iii),
after the payment of any other amounts required by any provision of
law, including without limitation, Section 9-504(1)(c) of the Code, and
following the termination of this Agreement pursuant to Section 23
hereof, the Administrative Agent shall account for the surplus, if any,
to the relevant Pledgor.
(b) For purposes of this Agreement, (x) "Pro Rata Share" shall
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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 Primary
Obligations or Secondary Obligations, as the case may be, and the denominator of
which is the then outstanding amount of all Primary Obligations or Secondary
Obligations, as the case may be, (y) "Primary Obligations" shall mean (i) in the
case of the Credit Agreement Obligations, all principal of, and interest on, all
Loans, all L/C Obligations, and all related fees and (ii) in the case of the
Other Obligations, all amounts due under the Interest Rate Agreements (other
than indemnities, fees (including, without limitation, attorneys' fees) and
similar obligations and liabilities) and (z) "Secondary Obligations" shall mean
all Obligations other than Primary Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 8 only) (i) first, to their Primary Obligations (with the amount to be
applied by any Secured Creditor to its Primary Obligations to be applied (x)
first, to interest and (y) second, to any other Primary Obligations) and (ii)
second, to their Secondary Obligations.
(d) Each of the Secured Creditors agrees and acknowledges that
if the Agents and the Lenders are to receive a distribution on account of
undrawn amounts with respect to Letters of Credit issued under the Credit
Agreement (which shall only occur after all outstanding Loans and unpaid
drawings with respect to such Letters of Credit have been paid in full), such
amounts shall be paid to the Administrative Agent under the Credit Agreement and
held by it, for the equal and ratable benefit of the Agents and the Lenders, as
cash security for the repayment of Obligations owing to the Agents and the
Lenders as such. If any amounts are held as cash security pursuant to the
immediately preceding sentence, then upon the termination of all outstanding
Letters of Credit, and after the application of all such cash security to the
repayment of all Obligations owing to the Agents and the Lenders after giving
effect to the termination of all such Letters of Credit, if there remains any
excess cash, such excess cash shall be distributed in accordance with subsection
8(a) hereof.
(e) Except as set forth in subsection 8(c) hereof, all
payments required to be made to the Agents and the Lenders hereunder shall be
made to the Administrative Agent under the Credit Agreement for the account of
the Agents and the Lenders and all payments required to be made to the Other
Creditors hereunder shall be made directly to the respective Other Creditor.
(f) For purposes of applying payments received in accordance
with this Section 8, the Administrative Agent shall be entitled to rely upon the
Other
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Creditors for a determination (which each Other Creditor agrees (or shall
agree) to provide upon request of the Administrative Agent) of the outstanding
Obligations owed to the Other Creditors. Unless it has actual knowledge
(including by way of written notice from any other Agent, any Lender or an Other
Creditor) to the contrary, the Administrative Agent shall be entitled to assume
that (x) no Secondary Obligations are owing to any other Agent, any Lender or
Other Creditor and (y) no Interest Rate Agreement or Other Obligations in
respect thereof, are in existence.
(g) It is understood that the Pledgors 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
clause (a) of this Section 8.
(h) To the extent permitted by applicable law, each Pledgor
waives all claims, damages and demands it may acquire against any Secured
Creditor arising out of the lawful exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition. Each Pledgor further waives
and agrees not to assert any rights or privileges which it may acquire under
Section 9-112 of the Code. Each Pledgor shall remain liable for any deficiency
if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay the Obligations and the fees and disbursements of any
attorneys employed by the Administrative Agent, any other Agent, or any Lender
to collect such deficiency.
9. REGISTRATION RIGHTS; PRIVATE SALES. (a) If the
Administrative Agent shall determine to exercise its right to sell any or all of
the Pledged Stock pursuant to Section 8, and if in the opinion of the
Administrative Agent it is necessary or advisable to have the Pledged Stock, or
that portion thereof to be sold, registered under the provisions of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), the relevant Pledgor
will cause such Issuer to (i) execute and deliver, and cause the directors and
officers of such Issuer to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may be, in the
opinion of the Administrative Agent, necessary or advisable to register the
Pledged Stock, or that portion thereof to be sold, under the provisions of the
Securities Act, (ii) use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of 90
days from the date of the first public offering of the Pledged Stock, or that
portion thereof to be sold, and (iii) make all amendments thereto and/or to the
related prospectus that, in the opinion of the Administrative Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. Each Pledgor agrees to cause each Issuer to
comply
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with the provisions of the securities or "Blue Sky" laws of any and all
jurisdictions that the Administrative Agent shall reasonably designate and to
make available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) that will satisfy the provisions of
Section 11(a) of the Securities Act.
(b) Each Pledgor recognizes that the Administrative Agent may
be unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers that will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale conducted
in a manner that the Administrative Agent in good faith believes to be
commercially reasonable under the circumstances shall be deemed to have been
made in a commercially reasonable manner. The Administrative Agent shall be
under no obligation to delay the sale of any of the Pledged Stock for the period
of time necessary to permit such Issuer to register such securities for public
sale under the Securities Act, or under applicable state securities laws, even
if such Issuer would agree to do so.
(c) Each Pledgor further agrees to use its best efforts to do
or cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Pledged Stock, pursuant to this Section 9
valid and binding and in compliance with any and all other applicable
Requirements of Law. Each Pledgor further agrees that a breach of any of the
covenants contained in this Section 9 will cause irreparable injury to the
Secured Creditors, that the Secured Creditors have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 9 shall be specifically enforceable against such
Pledgor, and such Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants.
10. NO SUBROGATION. Notwithstanding any payment or payments
made by any Pledgor hereunder, or any setoff or application of funds of any
Pledgor by any Lender, or the receipt of any amounts by any Secured Creditor
with respect to any of the Collateral, no Pledgor shall be entitled to be
subrogated to any of the rights of any Secured Creditor against any Subsidiary
of such Pledgor or against any collateral security held by any Secured Creditor
for the payment of the Obligations, nor shall any Pledgor seek any reimbursement
from any Subsidiary of such Pledgor in respect of payments made by such Pledgor
in connection with the Collateral, or amounts realized by any Secured Creditor
in connection with the Collateral, and any such rights of subrogation and
reimbursement of such Pledgor are hereby waived until
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all amounts owing to the Secured Creditors by the Company on account of the
Obligations are paid in full, the Commitments are terminated and either no
Letters of Credit are outstanding or each outstanding Letter of Credit has been
cash collateralized so that it is fully secured to the satisfaction of the
Administrative Agent.
11. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS. Each
Pledgor shall remain obligated hereunder, and the Collateral shall remain
subject to the Lien granted hereby, notwithstanding that, without any
reservation of rights against such Pledgor and without notice to or further
assent by such Pledgor, any demand for payment of any of the Obligations made by
any Secured Creditor may be rescinded by such Secured Creditor, and any of the
Obligations continued, and the Obligations, or the liability of each Issuer or
any other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered, or released by the Administrative Agent, any
other Co-Arranger (subject to subsection 12.16 of the Credit Agreement), the
Issuing Lender, any Lender or any Other Creditor and the Credit Agreement, the
Notes, the Security Documents, and the other Credit Documents, any Interest Rate
Agreement entered into with any Lender or Lenders and any other documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Lenders (or the Required
Lenders, as the case may be) may deem advisable from time to time, and any
guarantee, right of offset or other collateral security at any time held by any
Secured Creditor for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released. None of the Secured Creditors shall have any
obligation to protect, secure, perfect or insure any other Lien at any time held
by it as security for the Obligations or any property subject thereto. Each
Pledgor waives any and all notice of the creation, renewal, extension or accrual
of any of the Obligations and notice of or proof of reliance by any Secured
Creditor upon this Agreement; the Obligations, and any of them shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon this Agreement; and all dealings between each Issuer and such Pledgor, on
the one hand, and the Secured Creditors, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Agreement. Each Pledgor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon each Issuer or such
Pledgor with respect to the Obligations.
12. LIMITATION ON DUTIES REGARDING COLLATERAL. The
Administrative Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar securities and property for its own
account. None of the Secured Creditors nor any of
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their respective directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Company or otherwise.
13. POWERS COUPLED WITH AN INTEREST. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
14. 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.
15. SECTION HEADINGS. The section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
16. NO WAIVER; CUMULATIVE REMEDIES. None of the Secured
Creditors shall by any act (except by a written instrument pursuant to Section
17 hereof) be deemed to have waived any right or remedy hereunder or to have
acquiesced in any default of any obligation under any Credit Document or in any
breach of any of the terms and conditions hereof or thereof. No failure to
exercise, nor any delay in exercising, on the part of any Secured Creditor, any
right, power or privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. A waiver by any Secured Creditor of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy which
such Secured Creditor would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies provided by
law.
17. INTEGRATION; WAIVERS AND AMENDMENTS; SUCCESSORS AND
ASSIGNS; GOVERNING LAW. This Agreement represents the entire agreement of the
Pledgors with respect to the subject matter hereof, except as otherwise set
forth in the Credit Agreement, and there are no promises or representations by
any Secured Creditor relative to the subject matter hereof not reflected herein
or in the other Credit Documents. In the event of a conflict among the Credit
Documents and the Credit Agreement, the Credit Agreement shall control. None of
the terms or provisions of this Agreement may be amended, supplemented or
otherwise modified except by a
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written instrument executed by each Pledgor and the Administrative Agent (with
the consent of either (x) the Required Lenders or, to the extent required by
subsection 12.1 of the Credit Agreement, the Supermajority Lenders or all of the
Lenders, 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 also require the written consent of the Requisite Creditors of such Class
of Secured Creditors, I.E., whether (x) the Agents and the Lenders as holders of
the Credit Agreement 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
Agreement Obligations, the Required Lenders 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 Agreements; provided that, subject to
the immediately preceding proviso, any provision of this Agreement may be waived
by the Administrative Agent in a letter or agreement executed by the
Administrative Agent or by telex or facsimile transmission from the
Administrative Agent. This Agreement shall be binding upon the successors and
assigns of the Pledgors and shall inure to the benefit of the Secured Creditors
and their respective successors and assigns. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
18. NOTICES. Notices by the Administrative Agent to any
Pledgor or any Issuer may be given by mail, by telex or by facsimile
transmission, addressed or transmitted to the relevant Pledgor or such Issuer at
its address or transmission number set forth (x) in the case of Holdings, in
subsection 12.2 of the Credit Agreement, (y) in the case of each other Pledgor
on Schedule I to the Subsidiary Guarantee and (z) in the case of each Issuer,
and on Schedule III hereto, which notice shall be effective (a) in the case of
mail, three days after deposit in the postal system, first class postage
pre-paid, and (b) in the case of telex or facsimile notices, when sent. Any
Pledgor and any Issuer may change their respective addresses and transmission
numbers by written notice to the Administrative Agent.
19. COUNTERPARTS. This Agreement may be executed by one or
more of the parties hereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
20. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO ISSUERS. Each
Pledgor hereby authorizes and instructs each Issuer to comply with any
instruction received by it from the Administrative Agent in writing that (a)
states that an Event of Default has occurred and is continuing and (b) is
otherwise in accordance with the
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terms of this Agreement, without any other or further instructions from such
Pledgor and each Pledgor agrees that each Issuer shall be fully protected in so
complying.
21. AUTHORITY OF ADMINISTRATIVE AGENT. Each Pledgor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as among the Secured
Creditors, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and any Pledgor, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Secured Creditors with full
and valid authority so to act or refrain from acting, and neither any Pledgor
nor any Issuer shall be under any obligation, or entitlement, to make any
inquiry respecting such authority.
22. ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Each Pledgor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent of the Administrative Agent, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Pledgor and in the name of
such Pledgor or in the Administrative Agent's own name, from time to time in the
Administrative Agent's discretion, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, including, without limitation, any financing
statements, endorsements, assignments or other instruments of transfer.
(b) Each Pledgor hereby ratifies all that said attorneys shall lawfully
do or cause to be done pursuant to the power of attorney granted in subsection
22(a). All powers, authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement is terminated
and the security interests created hereby are released.
23. TERMINATION; RELEASE. (a) This Agreement shall terminate
when all the Obligations have been fully paid and performed and the Commitments
terminated or as otherwise explicitly permitted under the Credit Agreement and
either no Letters of Credit are outstanding or each outstanding Letter of Credit
has been cash collateralized so that it is fully secured to the satisfaction of
the Administrative Agent. Upon such termination, the Administrative Agent shall
on its behalf and on behalf of the other Agents and the Lenders reassign and
redeliver (or cause to be reassigned and redelivered) to the relevant Pledgor,
or to such person or persons as such Pledgor shall designate or to whomever may
be lawfully entitled to receive such surplus,
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against receipt, such of the Collateral (if any) as shall not have been sold or
otherwise applied by the Administrative Agent pursuant to the terms hereof and
shall still be held by it hereunder, together with appropriate instruments of
reassignment and release. Any such reassignment shall be without recourse upon
or warranty by the Administrative Agent (other than a warranty that the
Administrative Agent has not assigned its rights and interests hereunder to any
other Person) and at the sole cost and expense of such Pledgor.
(b) In the event that any part of the Collateral is sold
(except to Holdings or any of its Subsidiaries) in connection with a sale
permitted by subsection 9.5 of the Credit Agreement or otherwise released
pursuant to the Credit Agreement or at the direction of the Required Lenders (or
all Lenders if required by subsection 12.1 of the Credit Agreement) and the
proceeds of such sale or sales or from such release are applied in accordance
with the provisions of subsection 5.4 of the Credit Agreement, to the extent
required to be so applied, the Administrative Agent, at the request and expense
of the relevant Pledgor, will duly assign, transfer and deliver to such Pledgor
(without recourse and without any representation or warranty) such of the
Collateral (and releases therefor) as is then being (or has been) so sold or
released and has not theretofore been released pursuant to this Agreement.
(c) In the event that any Pledgor establishes a Receivables
Facility that prohibits the pledge hereby of the Capital Stock of any
Receivables SPV, as described in subsection 8.9(g) of the Credit Agreement, (and
so long as such Receivables Facility is in effect and contains such
prohibition), the Administrative Agent, at the request and expense of the
relevant Pledgor, will release the Capital Stock of such Receivables SPV and
will duly assign, transfer and deliver to such Pledgor (without recourse and
without any representation or warranty) such Pledged Stock (and releases
therefor); PROVIDED that Holdings and the Company shall use commercially
reasonable efforts to grant a second priority perfected security interest in
such Capital Stock to secure the obligations pursuant to the Credit Documents
(and shall take all action in connection therewith as may reasonably be
requested by the Administrative Agent).
(d) At any time that a Pledgor desires that the Administrative
Agent assign, transfer and deliver Collateral (and releases therefor) as
provided in subsection 23(a), (b) or (c) hereof, it shall deliver to the
Administrative Agent a certificate signed by an executive officer of such
Pledgor stating that the release of the respective Collateral is permitted
pursuant to such subsection 23(a) or (b).
24. 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 Administrative Agent.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be duly executed and delivered as of the date first above written.
WERNER HOLDING CO. (PA), INC.
By:
--------------------------------
Name:
Title:
ARDEE INVESTMENT CO., INC
KENTUCKY LADDER COMPANY
OLYMPUS PROPERTIES, INC.
PHOENIX MANAGEMENT SERVICES, INC.
R.D. ARIZONA LADDER CORP. (D/B/A R.D.
WERNER CO., INC.- ARIZONA)
WERNER CO.
WERNER FINANCIAL INC.
WERNER MANAGEMENT CO.
WIP TECHNOLOGIES, INC.
By:_________________________________
Title:
BANKERS TRUST COMPANY, as
Administrative Agent
By:
-------------------------------------
Name:
Title:
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ACKNOWLEDGEMENT AND CONSENT
Each Issuer referred to in the foregoing Pledge Agreement
hereby acknowledge receipt of a copy thereof and agrees to be bound thereby and
to comply with the terms thereof insofar as such terms are applicable to it.
Each Issuer agrees to notify the Administrative Agent promptly in writing of the
occurrence of any of the events described in subsection 5(a) of the Pledge
Agreement. Each Issuer further agrees that the terms of subsection 9(c) of the
Pledge Agreement shall apply to it, MUTATIS MUTANDIS, with respect to all
actions that may be required of it under or pursuant to or arising out of
Section 9 of the Pledge Agreement.
[SUBSIDIARIES OF THE COMPANY]
By:
--------------------------------
Name:
Title:
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<PAGE> 316
SCHEDULE I
----------
Holdings/Subsidiary Pledge Agreement
DESCRIPTION OF PLEDGED STOCK
==============================================================================
Percentage of
No. of Outstanding Shares
ISSUER CLASS OF STOCK STOCK CERTIFICATE NO. SHARES OF CAPITAL STOCK
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<PAGE> 317
ANNEX II
to
Holdings/subsidiary Pledge Agreement
------------------------------------
DESCRIPTION OF PLEDGED NOTES
----------------------------
============================================================================
OBLIGOR PRINCIPAL AMOUNT (IF ANY) MATURITY DATE (IF ANY)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
============================================================================
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<PAGE> 318
SCHEDULE III
Holdings/Subsidiary Pledge Agreement
ADDRESSES OF PLEDGORS
Werner Holding Co. (PA), Inc.
93 Werner Road
Greenville, PA 16125-9499
Attention:
Telecopy: (412) ___-____
With a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attention: Janet Vance, Esq.
Telecopy: (212) 351-4035
[Name of Pledgor]
[Address]
Attention:
Telecopy: (412) ___-____
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<PAGE> 319
EXHIBIT A-1
TO THE
CREDIT AGREEMENT
----------------
FORM OF B TERM LOAN NOTE
$__________ New York, New York
November 24, 1997
FOR VALUE RECEIVED, the undersigned, WERNER HOLDING CO. (DE),
INC., a Delaware corporation (the "Company"), promises to pay to the order of
_______________ (the "LENDER") on the B Maturity Date, as defined in the Credit
Agreement referred to below, at the office of Bankers Trust Company, located at
130 Liberty Street, New York, New York 10006, in lawful money of the United
States and in immediately available funds, the principal amount of the lesser of
(a) ____________________ DOLLARS ($__________) and (b) the aggregate unpaid
principal amount of all B Term Loans made by the Lender to the Company pursuant
to subsection 2.1(a) of the Credit Agreement defined below. The Company further
agrees to pay interest in like money at said office from the date hereof on the
unpaid principal amount hereof from time to time outstanding at the rates, and
on the dates, specified in the Credit Agreement. The holder of this Note is
authorized to record the Borrowing Date, Type and amount of the B Term Loan made
by the Lender pursuant to subsection 2.1(a) of the Credit Agreement, the date
and amount of each payment or prepayment of principal thereof, and the date of
each interest rate conversion or continuation pursuant to subsection 5.2 of the
Credit Agreement and the principal amount subject thereto, on the schedules
annexed hereto and made a part hereof (or on a continuation thereof which shall
be attached hereto and made a part hereof) and any such recordation shall
constitute PRIMA FACIE evidence of the information so recorded, PROVIDED that
the failure of the Lender to make such recordation (or any error in such
recordation) shall not affect the obligations of the Company hereunder or under
the Credit Agreement.
This Note is one of the B Term Loan Notes referred to in the
Credit Agreement, dated as of November 24, 1997 among the Company, the lenders
from time to time party thereto (including the Lender), Bankers Trust Company,
as Administrative Agent and Co-Arranger, Merrill Lynch Capital Corporation, as
Syndication Agent and Co-Arranger, The Chase Manhattan Bank, as Documentation
Agent, and Goldman Sachs Credit Partners L.P., as Co-Agent (as the same may be
<PAGE> 320
from time to time amended, supplemented or otherwise modified from time to time,
the "CREDIT AGREEMENT"), is subject to the provisions thereof, is entitled to
the benefits thereof and is subject to optional and mandatory prepayment in
whole or in part as provided therein. Terms used herein which are defined in the
Credit Agreement shall have such defined meanings unless otherwise defined
herein.
This Note is secured and guaranteed as provided in the
Security Documents and the Guarantees. Reference is hereby made to the Security
Documents and the Guarantees for a description of the properties and assets in
which a security interest has been granted, the nature and extent of the
security and guarantees, the terms and conditions upon which the security
interest and each guarantee was granted and the rights of the holder of this
Note in respect thereof. The undersigned agrees to pay all costs and expenses
incurred by the Lender in connection with the enforcement of its rights and
remedies under the Credit Agreement, this Note, the Security Documents and each
other Credit Document.
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Note shall become, or may be declared to be, immediately due and payable,
all as provided therein.
All parties now and hereafter liable with respect to this
Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
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<PAGE> 321
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF
THE CREDIT AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER
MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE CREDIT
AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
WERNER HOLDING CO. (DE), INC.,
By:_____________________________
Title:
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<PAGE> 322
Schedule A to
B Term Loan Note
ALTERNATE BASE RATE LOANS
AND REPAYMENTS OF ALTERNATE BASE RATE LOANS
-------------------------------------------
<TABLE>
<CAPTION>
Amount of Amount Converted to Amount Unpaid Principal
Alternate Base Alternate Base Rate Amount of Converted to Balance of Alternate Notation
Date Rate Loans Loans Principal Repaid Eurodollar loans Base Rate Loans made by
- ------- ---------------- ------------------------ ------------------ ----------------- ---------------------- -------
<S> <C> <C> <C> <C> <C> <C>
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</TABLE>
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<PAGE> 323
Schedule B to
B Term Loan Note
----------------
EURODOLLAR LOANS
AND REPAYMENTS OF EURODOLLAR LOANS
----------------------------------
<TABLE>
<CAPTION>
Amount Unpaid
Interest Period Converted to Principal
Amount of Amount and Eurodollar Amount of Alternate Balance of
Eurodollar Converted to Rate with Respect Principal Base Rate Eurodollar Notation
Date Loans Eurodollar Loans Thereto Repaid Loans Loans made by
- ------ --------------- ------------------ ------------------- ------------ ------------- ------------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------ --------------- ------------------ ------------------- ------------ ------------- ------------------ -------
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</TABLE>
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<PAGE> 324
EXHIBIT H-1 TO
CREDIT AGREEMENT
----------------
FORM OF
COMPANY PLEDGE AGREEMENT
------------------------
Agreement (this "Agreement"), dated as of November 24, 1997,
made by WERNER HOLDING CO. (DE), INC., a Delaware corporation (the "COMPANY"),
in favor of BANKERS TRUST COMPANY, as administrative agent (in such capacity,
the "ADMINISTRATIVE AGENT"), for the Agents and for the several lenders (the
"LENDERS") from time to time parties to the Credit Agreement (as defined below)
and for the benefit of the Secured Creditors referred to below.
W I T N E S S E T H :
---------------------
WHEREAS, pursuant to the Credit Agreement, dated as of the
date hereof (as amended, supplemented or otherwise modified from time to time,
the "CREDIT AGREEMENT"), among the Company, the Lenders, Bankers Trust Company,
as Administrative Agent and Co-Arranger, Merrill Lynch Capital Corporation, as
Syndication Agent and Co-Arranger, The Chase Manhattan Bank, as Documentation
Agent, and Goldman Sachs Credit Partners L.P., as Co-Agent (together with the
Administrative Agent, Syndication Agent and Documentation Agent, the "AGENTS"),
the Lenders have severally agreed to make loans to, and the Issuing Lender (as
defined in the Credit Agreement) has agreed to issue, and certain of the Lenders
have agreed to participate in, certain letters of credit for the account of, the
Company upon the terms and subject to the conditions set forth therein;
WHEREAS, the Company is the legal and beneficial owner of the
(x) shares of Pledged Stock (as hereinafter defined) and (y) the Pledged Notes
(as hereinafter defined) made by the Obligors (as hereinafter defined); and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective loans to, and the obligation of the Issuing
Lender to issue, and the Lenders to participate in, letters of credit for the
account of, the Company under the Credit Agreement that the Company shall have
executed and delivered this Agreement to the Administrative Agent for the
ratable benefit of the Secured Creditors;
<PAGE> 325
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent, the other Agents, the Issuing Lender and the Lenders
to enter into the Credit Agreement and to induce the Lenders to make their
respective loans and the Issuing Lender to issue, and the Lenders to participate
in, the letters of credit under the Credit Agreement, the Company hereby agrees
with the Administrative Agent, for the ratable benefit of the Secured Creditors,
as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms that
are defined in the Credit Agreement and used herein are so used as so defined,
and the following terms shall have the following meanings:
"AGREEMENT" means this Pledge Agreement, as the same may be
amended, modified or otherwise supplemented from time to time.
"CODE" means the Uniform Commercial Code from time to time in
effect in the State of New York.
"COLLATERAL" means (w) the Pledged Stock, (x) the Pledged
Notes, (y) the Undelivered Notes and (z) all Proceeds thereof.
"CREDIT AGREEMENT OBLIGATIONS" has the meaning assigned that
term in the definition of "Obligations" contained herein.
"ISSUERS" means the collective reference to the companies
identified on SCHEDULE I attached hereto as the issuers of the Pledged
Stock on the Closing Date, and any other issuer of Pledged Stock as
from time to time in existence; individually, each an "ISSUER."
"OBLIGATIONS": means (i) the unpaid principal amount of, and
interest on (including interest accruing on or after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Company, whether or
not a claim for such post-filing or post-petition interest is
allowed), the Loans and all other obligations and liabilities of the
Company to the Agents, the Issuing Lender or the Lenders, whether
direct or indirect, absolute or contingent, due or to become due, or
now existing or hereafter incurred, which may arise under, out of, or
in connection with, the Credit Agreement, any Letter of Credit, the
other Credit Documents and any other document executed and delivered or
given in connection therewith or herewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all reasonable fees and
disbursements of counsel to the Agents, the Issuing Lender or to the
Lenders that are required to be paid by
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<PAGE> 326
the Company pursuant to the terms of the Credit Agreement) or otherwise
(collectively, "CREDIT AGREEMENT OBLIGATIONS"), and (ii) all
obligations of the Company to any Lender or Lenders or its or their
Affiliates (each such Lender or Affiliate, even if the respective
Lender subsequently ceases to be a lender under the Credit Agreement
for any reason, together with such Lender's or Affiliate's successors
and assigns, collectively, the "Other Creditors" and, together with the
Administrative Agent, the Agents and the Lenders, the "Secured
Creditors") under or in respect of any Interest Rate Agreement
(collectively, "OTHER OBLIGATIONS").
"OBLIGORS" means the collective reference to the Persons
identified on SCHEDULE II attached hereto as the obligors in respect of
the Pledged Notes and the respective obligor or obligors with respect
to any other promissory notes created or acquired after the date
hereof; individually, each an "OBLIGOR."
"OTHER OBLIGATIONS" has the meaning assigned that term in the
definition of "Obligations" contained herein.
"PLEDGED NOTES" means all promissory notes from time to time
issued to, or held by, the Company other than Undelivered Notes.
"PLEDGED STOCK" means (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 shares of
capital stock, at any time owned by the Company, in such Domestic
Corporations, together with all stock certificates, options or rights
of any nature whatsoever that may be issued or granted by any such
Domestic Corporations to the Company while this Agreement is in effect;
and (y) in the case of corporations not Domestic Corporations (each a
"FOREIGN CORPORATION"), all of the shares of capital stock, at any time
owned by the Company, in such Foreign Corporations, together with all
stock certificates, options or rights of any nature whatsoever that may
be issued or granted by any such Person to the Company while this
Agreement is in effect, provided that the Company shall not be required
to pledge hereunder, and nothing herein shall be deemed to constitute a
pledge hereunder of, more than 65% of the total combined voting power
of all classes of capital stock of any such Foreign Corporation
entitled to vote (although 100% of all classes of non-voting stock of
each Foreign Corporation shall be required to be pledged).
Notwithstanding anything to the contrary contained above or elsewhere
in this Agreement, Pledged Stock shall not include shares of capital
stock of (i) Immaterial Subsidiaries in the process of dissolution on
the Closing Date (so long as same continue to constitute Immaterial
Subsidiaries in the process of dissolution), (ii) Captive Insurance
Subsidiaries, (iii) any joint venture or other Person referred to in
subsection 9.6(h) of the Credit
-3-
<PAGE> 327
Agreement, in which (x) there are no investments by the Company or any
of its other Subsidiaries on the Closing Date and (y) all investments
made by the Company and its other Subsidiaries made after the Closing
Date are made pursuant to subsection 9.6(h) of the Credit Agreement and
(iv) in the circumstances, and to the extent, provided in subsection
23(c) hereof and subsection 8.9(g) of the Credit Agreement, any
Receivables SPV where the pledge of the capital stock of which pursuant
to this Agreement is not permitted pursuant to the terms of the
respective Receivables Facility.
"PROCEEDS" means all "proceeds", as such term is defined in
Section 9-306(1) of the Code on the date hereof, of the Pledged Stock
and the Pledge Notes, and, in any event, shall include, without
limitation, (x) all dividends or other income from the Pledged Stock,
collections thereon or distributions with respect thereto and (y) all
payments in respect of the Pledged Notes.
"SECURED CREDITORS" has the meaning assigned that term in the
definition of "Obligations" contained herein.
"UNDELIVERED NOTES" means promissory notes issued (x) in
respect of Indebtedness permitted under subsection 9.1(c) of the Credit
Agreement, (y) in respect of loans or advances permitted under
subsection 9.6(h) of the Credit Agreement or (z) in the principal
amount of less than $250,000 individually or $1,000,000 in the
aggregate; provided that Undelivered Notes shall cease to constitute
Undelivered Notes, and shall thereafter constitute Pledged Notes, at
such time, if any, as same are delivered as required by clause (ii) of
subsection 7(a) of this Agreement.
2. PLEDGE; GRANT OF SECURITY INTEREST; UNCERTIFICATED
SECURITIES. (a) The Company hereby delivers to the Administrative Agent, for the
ratable benefit of the Secured Creditors, all certificates or instruments
representing or evidencing the Pledged Stock and the Pledged Notes on the date
hereof, and hereby transfers and grants to the Administrative Agent, for the
ratable benefit of the Secured Creditors, a first priority security interest in
all of the Company's right, title and interest in the Collateral, as collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations.
(b) Notwithstanding anything to the contrary contained in subsection
2(a) hereof, if any Pledged Stock or Pledged Notes (whether now owned or
hereafter acquired) are uncertificated securities, the Company shall promptly
notify the Administrative Agent thereof, and shall promptly take all actions
required to perfect the security interest of the Administrative Agent under
applicable law (including, in any event, under Section 9-115 of the Code, if
applicable). The Company further
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<PAGE> 328
agrees to take such actions as the Administrative Agent deems reasonably
necessary or desirable to effect the foregoing and to permit the Administrative
Agent to exercise any of its rights and remedies hereunder.
3. STOCK POWERS. Concurrently with the delivery to the
Administrative Agent of (x) each certificate representing one or more shares of
Pledged Stock, the Company shall deliver an undated stock power covering such
certificate, duly executed in blank by the Company and (y) each instrument
evidencing the Pledged Notes, the Company shall duly endorse the respective
Pledged Note in blank.
4. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants that:
(a) each Issuer, as of the Closing Date, and the percentage
ownership thereof, is listed on Schedule I hereto;
(b) all the shares of Pledged Stock have been duly and validly
issued and are fully paid and nonassessable;
(c) the Pledged Notes held by the Company, as of the Closing
Date, consist of the promissory notes described in Schedule II;
(d) the Company is the record and sole beneficial owner of the
Pledged Stock and the Pledged Notes, free of any and all Liens or options in
favor of, or claims of, any other Person, except the Lien created by this
Agreement;
(e) upon delivery to the Administrative Agent of the stock
certificates evidencing the Pledged Stock and the instruments evidencing the
Pledged Notes, the Lien granted pursuant to this Agreement will constitute a
valid, perfected (except with respect to Undelivered Notes) first priority Lien
on the Collateral (except, with respect to Proceeds, only to the extent
permitted by Section 9-306 of the Code), enforceable as such against all
creditors of the Company and any Persons purporting to purchase any of the
Collateral from the Company.
The Company agrees that the foregoing representations and warranties shall be
deemed to have been made by the Company on each Borrowing Date occurring on or
after the date hereof under the Credit Agreement, on and as of such Borrowing
Date as though made hereunder on and as of such date.
5. COVENANTS. The Company covenants and agrees with the
Administrative Agent for the benefit of the Secured Creditors that, from and
after the date of this Agreement until the Obligations are paid in full and the
Commitments are
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<PAGE> 329
terminated and either no Letters of Credit are outstanding or each outstanding
Letter of Credit has been cash collateralized so that it is fully secured to the
satisfaction of the Administrative Agent:
(a) If the Company shall become entitled to receive or shall
receive (x) any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital or any certificate issued
in connection with any reorganization), option or rights in respect of capital
stock of any Person, whether in addition to, in substitution of, as a conversion
of, or in exchange for any shares of the Pledged Stock, or otherwise in respect
thereof, or (y) any additional promissory notes or instruments therefor or any
additional instruments in respect of, or constituting, Pledged Notes, the
Company shall accept the same as the agent of the Administrative Agent, the
other Agents and the Secured Creditors, hold the same in trust for the
Administrative Agent, the other Agents and the Secured Creditors and deliver the
same forthwith to the Administrative Agent in the exact form received, duly
indorsed by the Company to the Administrative Agent, if required, and, in the
case of stock certificates, together with an undated stock power covering such
certificate duly executed in blank by the Company and with, if the
Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Notwithstanding the foregoing, the Company shall
not be required at any time to, and nothing herein shall be deemed to
constitute, a pledge hereunder of, (i) more than 65% of the total combined
voting power of all classes of Capital Stock of any Foreign Corporations
entitled to vote (although 100% of all classes of non-voting stock of any
Foreign Corporation, to the extent owned by the Company, shall be required to be
pledged hereunder) or (ii) any capital stock which does not constitute Pledged
Stock in accordance with the last sentence of the definition of "Pledged Stock"
contained herein.
(b) Without the prior written consent of the Administrative
Agent, the Company will not (i) except as permitted by subsection 9.5 of the
Credit Agreement, sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Collateral, or (ii) create, incur or
permit to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Collateral, or any interest therein, except for the Lien
provided for by this Agreement. The Company will defend the right, title and
interest of the Secured Creditors in and to the Collateral against the claims
and demands of all Persons whomsoever.
(c) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense of the Company, the
Company will promptly and duly execute and deliver such further instruments and
documents and
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<PAGE> 330
take such further actions as the Administrative Agent may reasonably request for
the purposes of obtaining or preserving the full benefits of this Agreement and
of the rights and powers herein granted. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
promissory note, other instrument or chattel paper, except to the extent meeting
the requirements set forth in the definition of Undelivered Notes, such note,
instrument or chattel paper shall be immediately delivered to the Administrative
Agent, duly endorsed in a manner satisfactory to the Administrative Agent, to be
held as Collateral pursuant to this Agreement.
(d) The Company agrees to pay, and to save the Secured
Creditors harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the Collateral
or in connection with any of the transactions contemplated by this Agreement.
(e) From time to time upon the written request of the
Administrative Agent or the Required Lenders, the Company shall provide updated
Schedules I and II hereunder. Furthermore, at any time when additional Pledged
Stock or Pledged Notes are delivered for pledge hereunder, the Company shall
provide an updated Schedule I or II, as the case may be, to the Administrative
Agent.
6. CASH DIVIDENDS; VOTING RIGHTS. Unless an Event of Default
shall have occurred and be continuing, the Company shall be permitted to receive
all cash dividends paid by each Issuer to the extent permitted in the Credit
Agreement in respect of the Pledged Stock, to receive all payments in respect of
the Pledged Notes and to exercise all voting and corporate rights with respect
to the Pledged Stock, PROVIDED, HOWEVER, that the Company agrees that it shall
not vote in any way which would be inconsistent with or result in any violation
of any provision of the Credit Agreement, the Notes, the Security Documents, any
of the other Credit Documents or any Interest Rate Agreement. The Administrative
Agent shall, at the Company's sole cost and expense, execute and deliver (or
cause to be executed and delivered) to the Company all proxies and other
instruments as the Company may reasonably request for the purpose of enabling
the Company to exercise the voting and other rights that it is entitled to
exercise pursuant to this Section 6.
7. RIGHTS OF THE SECURED CREDITORS. (a) If an Event of Default
shall occur and be continuing, (i) the Administrative Agent shall have the right
to receive any and all cash dividends paid in respect of the Pledged Stock and
all payments in respect of the Pledged Notes and, in each case, to make
application thereof to the Obligations in such order as the Administrative Agent
may determine, (ii) the Administrative Agent or the Required Lenders may (and
shall have the right to) direct the Company to (x) cause all Indebtedness then
outstanding pursuant to
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<PAGE> 331
subsection 9.1(c) of the Credit Agreement to be evidenced by promissory notes
and, to the extent same are payable to the Company or any other Credit Party
which is a party to any other Pledge Agreement, cause the delivery of same for
pledge to the Administrative Agent under the respective Pledge Agreement and (y)
deliver all Undelivered Notes to the Administrative Agent for pledge pursuant to
this Agreement, in which case the Company shall promptly take, or cause to be
taken, the actions described in preceding clauses (x) and (y) and deliver all
Undelivered Notes for pledge pursuant hereto, at which time such Undelivered
Notes shall constitute Pledged Notes and shall no longer constitute Undelivered
Notes and (iii) all shares of the Pledged Stock may be registered in the name of
the Administrative Agent or its nominee, and, subject to the terms of this
Agreement, the Administrative Agent or its nominee may thereafter exercise (A)
all voting, corporate and other rights pertaining to such shares of the Pledged
Stock at any meeting of shareholders of such Issuer or otherwise and (B) any and
all rights of conversion, exchange, subscription and any other rights,
privileges or options pertaining to such shares of the Pledged Stock as if it
were the absolute owner thereof (including, without limitation, the right to
exchange at its discretion any and all of the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of the Issuer, or upon the exercise by the Company or
the Administrative Agent of any right, privilege or option pertaining to such
shares of the Pledged Stock, and in connection therewith, the right to deposit
and deliver any and all of the Pledged Stock with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as it may determine), all without liability except to account for
property actually received by it and except for its gross negligence or willful
misconduct or failure to comply with the provisions of Section 12, but the
Administrative Agent shall have no duty to the Company to exercise any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.
(b) The rights of the Secured Creditors hereunder shall not be
conditioned or contingent upon the pursuit by any Secured Creditor of any right
or remedy against any other Person which may be or become liable in respect of
all or any part of the Obligations or against any collateral security therefor,
guarantee therefor or right of offset with respect thereto. None of the Secured
Creditors shall be liable for any failure to demand, collect or realize upon all
or any part of the Collateral or for any delay in doing so, nor shall the
Administrative Agent be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Company or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof. The
Administrative Agent agrees to release promptly to the Company any dividends,
cash, securities, instruments and other property paid, payable or otherwise
distributed in respect of the Collateral which it may receive under subsection
7(a) (other than Pledged Notes pursuant to clause (ii) thereof) if, prior to the
occurrence of an acceleration of any of the Obligations, all
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<PAGE> 332
Defaults and Events of Default have been waived or are no longer continuing.
(c) The Administrative Agent may execute any of its duties
under this Agreement by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care, except as otherwise provided in subsection 11.3 of the Credit Agreement or
subsection 12 hereof.
8. REMEDIES. (a) In the event that any portion of the
Obligations has been declared or becomes due and payable in accordance with the
terms of the Credit Agreement, the Administrative Agent, on behalf of the
Secured Creditors, may exercise, in addition to all other rights and remedies
granted in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Company, any Issuer or any
other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, assign, give option or options to purchase or
otherwise dispose of and deliver the Collateral or any part thereof (or contract
to do any of the foregoing), in one or more parcels at public or private sale or
sales, in the over-the-counter market, at any exchange, broker's board or office
of any Secured Creditor or elsewhere upon such terms and conditions as it may
deem commercially reasonable and at such prices as it may deem best, for cash or
on credit or for future delivery without assumption of any credit risk. Any
Secured Creditor shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in the Company, which right or equity is hereby waived and released.
The Administrative Agent promptly shall apply any Proceeds from time to time
held by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred in respect thereof or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Secured Creditors hereunder, including, without limitation,
reasonable attorneys' fees and disbursements of counsel to the Administrative
Agent:
(i) first, to any amounts owing to the Administrative
Agent or the Co-Arrangers in their capacities as such;
(ii) second, to the payment of an amount equal to the
outstanding
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Primary Obligations to the Secured Creditors as provided in paragraph
(e) below, with each Secured Creditor receiving an amount equal to its
outstanding Primary Obligations or, if the proceeds are insufficient to
pay in full all such Primary Obligations, its Pro Rata Share (as
defined below) of the amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) and (ii), to the
payment of an amount equal to the outstanding Secondary Obligations to
the Secured Creditors as provided in paragraph (e) below, with each
Secured Creditor receiving an amount equal to its outstanding Secondary
Obligations or, if the proceeds are insufficient to pay in full all
such Secondary Obligations, its Pro Rata Share of the amount remaining
to be distributed; and
(iv) fourth, to the extent proceeds remain after the
application pursuant to the preceding clauses (i), (ii) and (iii),
after the payment of any other amounts required by any provision of
law, including without limitation, Section 9-504(1)(c) of the Code, and
following the termination of this Agreement pursuant to Section 23
hereof, the Administrative Agent shall account for the surplus, if any,
to the Company.
(b) For purposes of this Agreement, (x) "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 Primary
Obligations or Secondary Obligations, as the case may be, and the denominator of
which is the then outstanding amount of all Primary Obligations or Secondary
Obligations, as the case may be; (y) "Primary Obligations" shall mean (i) in the
case of the Credit Agreement Obligations, all principal of, and interest on, all
Loans, all L/C Obligations, and all related fees and (ii) in the case of the
Other Obligations, all amounts due under the Interest Rate Agreements (other
than indemnities, fees (including, without limitation, attorneys' fees) and
similar obligations and liabilities); and (z) "Secondary Obligations" shall mean
all Obligations other than Primary Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 8 only) (i) first, to their Primary Obligations (with the amount to be
applied by any Secured Creditor to its Primary Obligations to be applied (x)
first, to interest and (y) second, to any other Primary Obligations) and (ii)
second, to their Secondary Obligations.
(d) Each of the Secured Creditors agrees and acknowledges that
if
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the Agents and the Lenders are to receive a distribution on account of
undrawn amounts with respect to Letters of Credit issued under the Credit
Agreement (which shall only occur after all outstanding Loans and unpaid
drawings with respect to such Letters of Credit have been paid in full), such
amounts shall be paid to the Administrative Agent under the Credit Agreement and
held by it, for the equal and ratable benefit of the Agents and the Lenders, as
cash security for the repayment of Obligations owing to the Agents and the
Lenders as such. If any amounts are held as cash security pursuant to the
immediately preceding sentence, then upon the termination of all outstanding
Letters of Credit, and after the application of all such cash security to the
repayment of all Obligations owing to the Agents and the Lenders after giving
effect to the termination of all such Letters of Credit, if there remains any
excess cash, such excess cash shall be distributed in accordance with subsection
8(a) hereof.
(e) Except as set forth in subsection 8(c) hereof, all
payments required to be made to the Agents and the Lenders hereunder shall be
made to the Administrative Agent under the Credit Agreement for the account of
the Agents and the Lenders and all payments required to be made to the Other
Creditors hereunder shall be made directly to the respective Other Creditor.
(f) For purposes of applying payments received in accordance
with this Section 8, the Administrative Agent shall be entitled to rely upon the
Other Creditors for a determination (which each Other Creditor agrees (or shall
agree) to provide upon request of the Administrative Agent) of the outstanding
Obligations owed to the Other Creditors. Unless it has actual knowledge
(including by way of written notice from any other Agent, any Lender or an Other
Creditor) to the contrary, the Administrative Agent shall be entitled to assume
that (x) no Secondary Obligations are owing to any other Agent, any Lender or
Other Creditor and (y) no Interest Rate Agreement or Other Obligations in
respect thereof, are in existence.
(g) It is understood that the Company shall remain 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 clause (a) of
this Section 8.
(h) To the extent permitted by applicable law, the Company
waives all claims, damages and demands it may acquire against any Secured
Creditor arising out of the lawful exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition. The Company further waives
and agrees not to assert any rights or privileges which it may acquire under
Section 9-112 of the Code. The Company shall remain liable for any deficiency if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay the Obligations and the fees and disbursements of any
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attorneys employed by the Administrative Agent, any other Agent, or any Lender
to collect such deficiency.
9. REGISTRATION RIGHTS; PRIVATE SALES. (a) If the
Administrative Agent shall determine to exercise its right to sell any or all of
the Pledged Stock pursuant to Section 8, and if in the opinion of the
Administrative Agent it is necessary or advisable to have the Pledged Stock, or
that portion thereof to be sold, registered under the provisions of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), the Company will
cause such Issuer to (i) execute and deliver, and cause the directors and
officers of such Issuer to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may be, in the
opinion of the Administrative Agent, necessary or advisable to register the
Pledged Stock, or that portion thereof to be sold, under the provisions of the
Securities Act, (ii) use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of 90
days from the date of the first public offering of the Pledged Stock, or that
portion thereof to be sold, and (iii) make all amendments thereto and/or to the
related prospectus that, in the opinion of the Administrative Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. The Company agrees to cause each Issuer to comply
with the provisions of the securities or "Blue Sky" laws of any and all
jurisdictions that the Administrative Agent shall reasonably designate and to
make available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) that will satisfy the provisions of
Section 11(a) of the Securities Act.
(b) The Company recognizes that the Administrative Agent may
be unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers that will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. The
Company acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale conducted
in a manner that the Administrative Agent in good faith believes to be
commercially reasonable under the circumstances shall be deemed to have been
made in a commercially reasonable manner. The Administrative Agent shall be
under no obligation to delay the sale of any of the Pledged Stock for the period
of time necessary to permit such Issuer to register such securities for public
sale under the Securities Act, or under applicable state securities laws, even
if such Issuer would agree to do so.
(c) The Company further agrees to use its best efforts to do
or
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cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Pledged Stock, pursuant to this Section 9
valid and binding and in compliance with any and all other applicable
Requirements of Law. The Company further agrees that a breach of any of the
covenants contained in this Section 9 will cause irreparable injury to the
Secured Creditors, that the Secured Creditors have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 9 shall be specifically enforceable against the
Company, and the Company hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants.
10. NO SUBROGATION. Notwithstanding any payment or payments
made by the Company hereunder, or any setoff or application of funds of the
Company by any Lender, or the receipt of any amounts by any Secured Creditor
with respect to any of the Collateral, the Company shall not be entitled to be
subrogated to any of the rights of any Secured Creditor against any Subsidiary
of the Company or against any collateral security held by any Secured Creditor
for the payment of the Obligations, nor shall the Company seek any reimbursement
from any Subsidiary of the Company in respect of payments made by the Company in
connection with the Collateral, or amounts realized by any Secured Creditor in
connection with the Collateral, and any such rights of subrogation and
reimbursement of the Company are hereby waived until all amounts owing to the
Secured Creditors by the Company on account of the Obligations are paid in full,
the Commitments are terminated and either no Letters of Credit are outstanding
or each outstanding Letter of Credit has been cash collateralized so that it is
fully secured to the satisfaction of the Administrative Agent.
11. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS. The
Company shall remain obligated hereunder, and the Collateral shall remain
subject to the Lien granted hereby, notwithstanding that, without any
reservation of rights against the Company, and without notice to or further
assent by the Company, any demand for payment of any of the Obligations made by
any Secured Creditor may be rescinded by such Secured Creditor, and any of the
Obligations continued, and the Obligations, or the liability of each Issuer or
any other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered, or released by the Administrative Agent, any
other Co-Arranger (subject to subsection 12.16 of the Credit Agreement), the
Issuing Lender, any Lender or any Other Creditor, and the Credit Agreement, the
Notes, the Security Documents, and the other Credit Documents, any Interest Rate
Agreement entered into with any Lender or Lenders and any other documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Lenders (or the Required
Lenders, as the case may be) may deem advisable from time to time, and
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any guarantee, right of offset or other collateral security at any time held by
any Secured Creditor for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released. None of the Secured Creditors shall have any
obligation to protect, secure, perfect or insure any other Lien at any time held
by it as security for the Obligations or any property subject thereto. The
Company waives any and all notice of the creation, renewal, extension or accrual
of any of the Obligations and notice of or proof of reliance by any Secured
Creditor upon this Agreement; the Obligations, and any of them shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon this Agreement; and all dealings between each Issuer and the Company, on
the one hand, and the Secured Creditors on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Agreement. The Company waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon each Issuer or the
Company with respect to the Obligations.
12. LIMITATION ON DUTIES REGARDING COLLATERAL. The
Administrative Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar securities and property for its own
account. None of the Secured Creditors nor any of their respective directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Company or otherwise.
13. POWERS COUPLED WITH AN INTEREST. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
14. 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.
15. SECTION HEADINGS. The section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
16. NO WAIVER; CUMULATIVE REMEDIES. None of the Secured
Creditors shall by any act (except by a written instrument pursuant to Section
17 hereof) be deemed to have waived any right or remedy hereunder or to have
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acquiesced in any default of any obligation under any Credit Document or in any
breach of any of the terms and conditions hereof or thereof. No failure to
exercise, nor any delay in exercising, on the part of any Secured Creditor, any
right, power or privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. A waiver by any Secured Creditor of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy which
such Secured Creditor would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies provided by
law.
17. INTEGRATION; WAIVERS AND AMENDMENTS; SUCCESSORS AND
ASSIGNS; GOVERNING LAW. This Agreement represents the entire agreement of the
Company with respect to the subject matter hereof except as otherwise set forth
in the Credit Agreement and there are no promises or representations by any
Secured Creditor relative to the subject matter hereof not reflected herein or
in the other Credit Documents. In the event of a conflict among the Credit
Documents, the Credit Agreement shall control. None of the terms or provisions
of this Agreement may be amended, supplemented or otherwise modified except by a
written instrument executed by the Company and the Administrative Agent (with
the consent of either (x) the Required Lenders or, to the extent required by
subsection 12.1 of the Credit Agreement, the Supermajority Lenders or all of the
Lenders, at all times prior to the time on which all Credit Agreement
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 Agreement 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 also require the written consent of the Requisite Creditors of
such Class of Secured Creditors, I.E., whether (x) the Agents and the Lenders as
holders of the Credit Agreement 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 Agreement Obligations, the Required Lenders 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 Agreements; provided that,
subject to the immediately preceding provision, any provision of this Agreement
may be waived by the Administrative Agent in a letter or agreement executed by
the Administrative Agent or by telex or facsimile transmission from the
Administrative Agent. This Agreement shall be binding upon the successors and
assigns of the Company and shall inure to the benefit of the Secured Creditors
and their respective successors and assigns. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
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18. NOTICES. Notices by the Administrative Agent to the
Company or any Issuer may be given by mail, by telex or by facsimile
transmission, addressed or transmitted to the Company or such Issuer at its
address or transmission number set forth in subsection 12.2 of the Credit
Agreement in the case of the Company and on Schedule III hereto in the case of
each Issuer and shall be effective (a) in the case of mail, three days after
deposit in the postal system, first class postage pre-paid, and (b) in the case
of telex or facsimile notices, when sent. The Company and any Issuer may change
their respective addresses and transmission numbers by written notice to the
Administrative Agent.
19. COUNTERPARTS. This Agreement may be executed by one or
more of the parties hereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
20. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO COMPANY. The
Company hereby authorizes and instructs each Issuer to comply with any
instruction received by it from the Administrative Agent in writing that (a)
states that an Event of Default has occurred and is continuing and (b) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from the Company, and the Company agrees that each Issuer
shall be fully protected in so complying.
21. AUTHORITY OF ADMINISTRATIVE AGENT. The Company
acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as among the Secured
Creditors, Agents and the Lenders, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Administrative Agent and the Company, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Secured Creditors with full and valid authority so to act or refrain from
acting, and neither the Company nor any Issuer shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
22. ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) The Company hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent of the Administrative Agent, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Company and in the name of the
Company or in the Administrative Agent's own name, from time to time in the
Administrative Agent's discretion, for the purpose of carrying out the terms of
this Agreement, to take any
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<PAGE> 340
and all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Agreement, including, without limitation, any financing statements,
endorsements, assignments or other instruments of transfer.
(b) The Company hereby ratifies all that said attorneys shall lawfully
do or cause to be done pursuant to the power of attorney granted in subsection
22(a). All powers, authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement is terminated
and the security interests created hereby are released.
23. TERMINATION; RELEASE. (a) This Agreement shall terminate
when all the Obligations have been fully paid and performed and the Commitments
terminated or as otherwise explicitly permitted under the Credit Agreement and
either no Letters of Credit are outstanding or each outstanding Letter of Credit
has been cash collateralized so that it is fully secured to the satisfaction of
the Administrative Agent. Upon such termination, the Administrative Agent shall
on its behalf and on behalf of the other Agents and the Lenders reassign and
redeliver (or cause to be reassigned and redelivered) to the Company, or to such
person or persons as the Company shall designate or to whomever may be lawfully
entitled to receive such surplus, against receipt, such of the Collateral (if
any) as shall not have been sold or otherwise applied by the Administrative
Agent pursuant to the terms hereof and shall still be held by it hereunder,
together with appropriate instruments of reassignment and release. Any such
reassignment shall be without recourse upon or warranty by the Administrative
Agent (other than a warranty that the Administrative Agent has not assigned its
rights and interests hereunder to any other Person) and at the sole cost and
expense of the Company.
(b) In the event that any part of the Collateral is sold
(except to Holdings or any of its Subsidiaries) in connection with a sale
permitted by subsection 9.5 of the Credit Agreement or otherwise released
pursuant to the Credit Agreement or at the direction of the Required Lenders (or
all Lenders if required by subsection 12.1 of the Credit Agreement) and the
proceeds of such sale or sales or from such release are applied in accordance
with the provisions of subsection 5.4 of the Credit Agreement, to the extent
required to be so applied, the Administrative Agent, at the request and expense
of the Company, will duly assign, transfer and deliver to the Company (without
recourse and without any representation or warranty) such of the Collateral (and
releases therefor) as is then being (or has been) so sold or released and has
not theretofore been released pursuant to this Agreement.
(c) In the event that the Company establishes a Receivables
Facility, as described in subsection 8.9(g) of the Credit Agreement, that
prohibits the pledge hereby of the Capital Stock of the respective Receivables
SPV (and so long as
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such Receivables Facility is in effect and contains such prohibition), the
Administrative Agent, at the request and expense of the Company, will release
the Capital Stock of such Receivables SPV and will duly assign, transfer and
deliver to the Company (without recourse, and without any representation or
warranty) such Pledged Stock (and releases therefor); PROVIDED that the Company
shall use commercially reasonable efforts to grant to the Administrative Agent
for the ratable benefit of the Secured Creditors a second priority perfected
security interest in such Capital Stock to secure the obligations pursuant to
the Credit Documents (and shall take all action in connection therewith as may
reasonably be requested by the Administrative Agent).
(d) At any time that the Company desires that the
Administrative Agent assign, transfer and deliver Collateral (and releases
therefor) as provided in subsection 23(a), (b) or (c) hereof, it shall deliver
to the Administrative Agent a certificate signed by an executive officer of the
Company stating that the release of the respective Collateral is permitted
pursuant to such subsection 23(a), (b) or (c).
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IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be duly executed and delivered as of the date first above written.
WERNER HOLDING CO. (DE), INC.
By:
------------------------------------
Name:
Title:
BANKERS TRUST COMPANY, as
Administrative Agent
By:
--------------------------------------
Name:
Title:
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<PAGE> 343
ACKNOWLEDGEMENT AND CONSENT
Each Issuer referred to in the foregoing Pledge Agreement
hereby acknowledge receipt of a copy thereof and agrees to be bound thereby and
to comply with the terms thereof insofar as such terms are applicable to it.
Each Issuer agrees to notify the Administrative Agent promptly in writing of the
occurrence of any of the events described in subsection 5(a) of the Pledge
Agreement. Each Issuer further agrees that the terms of subsection 9(c) of the
Pledge Agreement shall apply to it, MUTATIS MUTANDIS, with respect to all
actions that may be required of it under or pursuant to or arising out of
Section 9 of the Pledge Agreement.
[SUBSIDIARIES OF THE COMPANY]
By:
-----------------------------------
Name:
Title:
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0000H7V1.W51
<PAGE> 344
SCHEDULE I
----------
Company Pledge Agreement
DESCRIPTION OF PLEDGED STOCK
----------------------------
============================================================================
Percentage of
No. of Outstanding Shares
ISSUER CLASS OF STOCK STOCK CERTIFICATE NO. SHARES OF CAPITAL STOCK
- ------ -------------- --------------------- ------ ----------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
============================================================================
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SCHEDULE II
to
Company Pledge Agreement
------------------------
DESCRIPTION OF PLEDGED NOTES
----------------------------
=============================================================================
OBLIGOR PRINCIPAL AMOUNT (IF ANY) MATURITY DATE (IF ANY)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
=============================================================================
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<PAGE> 346
SCHEDULE III
------------
Company Pledge Agreement
ADDRESS OF COMPANY
------------------
Werner Holding Co. (DE), Inc.
93 Werner Road
Greenville, PA 16125-9499
Attention:
Telecopy: (412)
With a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attention: Janet Vance, Esq.
Telecopy: (212) 351-4035
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<PAGE> 1
Exhibit 10.19
MANAGEMENT STOCK PURCHASE AGREEMENT
THIS MANAGEMENT STOCK PURCHASE AGREEMENT (this "Agreement") is made as
of November __, 1997 (the "Effective Date") between Stepup Limited, a Cayman
Islands corporation ("Stepup"), Werner Holding Co. (PA), Inc., a Pennsylvania
corporation (the "Company"), and the individual signatory hereto ("Buyer").
R E C I T A L S
A. Buyer is an employee of the Company or a Subsidiary (as defined
herein) and desires to acquire an equity interest in the Company.
B. Buyer does not own shares of common stock of the Company ("Company
Common Stock").
C. Stepup is willing to sell to Buyer shares of Class C Stock, $0.01
par value, of the Company ("Class C Stock") subject to the terms and conditions
of this Agreement.
AGREEMENTS
1. DEFINITIONS. Capitalized terms used herein shall have the following
meanings:
"Act" means the Securities Act of 1933, as amended.
"Agreement" means this Management Stock Purchase Agreement.
"Approved Sale" means a transaction or a series of related
transactions which results in a BONA FIDE, unaffiliated change of economic
beneficial ownership of the Company or its business of greater than 50%
(disregarding for this purpose any disparate voting rights attributable to the
outstanding stock of the Company), whether pursuant to the sale of the stock of
the Company or a Subsidiary, the sale of the assets of the Company, or a merger
or consolidation (other than (i) a sale of stock by an Initial Stockholder to
another Initial Stockholder, an affiliate thereof, or a non-U.S. entity with
respect to which an Initial Stockholder or an affiliate thereof has an
administrative relationship, or (ii) a sale of stock in a public offering or
pursuant to Rule 144 under the Act).
"Articles of Incorporation" means the Restated Articles of
Incorporation of the Company setting forth the rights, preferences and
privileges of and restrictions on the Class C Stock.
"Buyer" is defined in the preamble.
"Cause," when used in connection with the termination of
employment of Buyer, has the meaning set forth in the employment agreement
between the Company and Buyer, or if there is no such employment agreement,
means (a) conviction of Buyer for a felony, or the entry by Buyer of a plea of
guilty or NOLO CONTENDERE to a felony, (b) the
1
<PAGE> 2
commission of an act of fraud involving dishonesty for personal gain which is
materially injurious to the Company, (c) the willful and continued refusal by
the Buyer to substantially perform his duties with the Company (other than any
such refusal resulting from his incapacity due to mental illness or physical
illness or injury), after a demand for substantial performance is delivered to
the Buyer by the Company's Board of Directors, where such demand specifically
identifies the manner in which the Company's Board of Directors believes that
the Buyer has refused to substantially perform his duties and the passage of a
reasonable period of time for Buyer to comply with such demand or (d) the
willful engaging by the Buyer in gross misconduct materially and demonstrably
injurious to the Company or its Subsidiaries. For purposes of this paragraph, no
act or failure to act on the Buyer's part shall be considered "willful" unless
done, or omitted to be done, by the Buyer not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company or its Subsidiaries. Notwithstanding the foregoing, with respect to
termination for Cause arising out of conduct described in clause (b), (c) or (d)
above, a termination shall not be considered for Cause for purposes of this
Agreement unless there shall have been delivered to the Buyer a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire Board of Directors of the Company, at a meeting of such board
called and held for that purpose (after reasonable notice to the Buyer and an
opportunity for the Buyer, together with his counsel or other advisors, to be
heard at such meeting), finding that in the good faith opinion of the board the
Buyer had engaged in conduct described above in clause (b), (c) or (d) of the
first sentence of this paragraph and specifying the particulars thereof in
detail. Such a finding by the Board of Directors of the Company is a
prerequisite to a termination for Cause pursuant to clauses (b), (c) or (d)
above; PROVIDED, HOWEVER, that such a finding may be challenged, by appropriate
judicial process, on the merits (i.e., that Cause did not exist) or on the basis
that the board's finding was not made in good faith (provided that proof that
Cause for termination existed shall be a complete defense to any showing that
the board's findings was not made in good faith).
"Class C Stock" is defined in recital C.
"Closing Date" means the date on which occurs the closing of
the recapitalization of the Company pursuant to the Recapitalization Agreement
dated as of October 8, 1997 by and between the Company and the Investors, as
such term is defined herein.
"Company" is defined in the preamble.
"Company Common Stock" is defined in recital B.
"Cost" means $2421.29 per share.
"Disability" has the meaning set forth in the employment
agreement between the Company and Buyer or, if there is no such employment
agreement, means the failure by Buyer to render full-time employment services to
the Company for an aggregate of ninety (90) days in any continuous period of six
(6) months on account of physical or mental disability.
"Effective Date" is defined in the preamble.
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<PAGE> 3
"Endorsed Certificate" is defined in Section 4(a).
"Fair Market Value" means the value of a Share, as of the
Termination Date, determined pursuant to Section 4(d).
"Fiscal Year" means the fiscal year of the Company.
"Good Reason" means, unless Buyer shall have consented in
writing thereto, any of the following:
(a) except as specifically provided in Buyer's
employment agreement, if any, the assignment to Buyer of duties, or the
assignment of Buyer to a position, constituting a material diminution
in Buyer's role, responsibilities or authority compared with his role,
responsibilities or authority on the Effective Date;
(b) a reduction by the Company in Buyer's bonus
opportunities or base salary as in effect on the Effective Date or as
the same may be increased from time to time;;
(c) unless the members of the Board appointed
pursuant to section 4(iii) of the Shareholder Agreement dated as of
November 24, 1997 agree to such reduction or other action, any material
reduction in the level of benefits (including participation in any
bonus plan) to which Buyer is entitled under one or more employee
benefit plans on the Effective Date, or the taking of any action by the
Company which would adversely affect Buyer's accrued benefits under any
such employee benefit plans or deprive Buyer of any material fringe
benefit enjoyed by Buyer on the Effective Date;
(d) a demand by the Company to Buyer to relocate to
any place that exceeds a fifty (50) mile radius beyond the location at
which Buyer performed his duties on the Effective Date; or
(e) any material breach of this Agreement on the part
of the Company.
"Initial Public Offering" means the sale of any of the common
stock of the Company pursuant to a registration statement that has been declared
effective under the Act, if as a result of such sale (i) the issuer becomes a
reporting company under Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended, and (ii) such stock is traded on the New York Stock Exchange
or the American Stock Exchange, or is quoted on the NASDAQ National Market
System, or is traded or quoted on any other national stock exchange or national
securities system.
"Initial Stockholders" means the shareholders of the Company
who became shareholders as of the Closing Date (other than any such shareholders
who are also employees of
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<PAGE> 4
the Company or were shareholders of the Company prior to the Closing Date) and
any transferees of such shareholders prior to an Approved Sale or an IPO.
"Investors" means those entities set forth on Schedule 1 of
the Recapitalization Agreement.
"permitted transferee" is defined in Section 3.
"person" means an individual, partnership, corporation,
limited liability company, trust, joint venture or other entity.
"Remaining Capital Stock" means the Company's capital stock
outstanding immediately prior to the Approved Sale other than the Company's
capital stock disposed of by stockholders of the Company as a result of such
Approved Sale in exchange for money or other property.
"Repurchase Period" is defined in Section 4(a).
"Retirement" has the meaning set forth in the employment
agreement between the Company and Buyer, or if there is no such employment
agreement, means Buyer's retirement from the Company in accordance with the
Company's normal retirement policy generally applicable to its salaried
employees.
"Shareholder Rights Agreement" is defined in Section 5.
"Shares" is defined in Section 2.
"Subsidiary" means any joint venture, corporation, partnership
or other entity as to which the Company, whether directly or indirectly, has
more than 50% of the (i) voting rights or (ii) rights to capital or profits.
"Termination Date" means the date on which Buyer ceases to be
employed by the Company for any reason.
2. PURCHASE AND SALE OF SHARES. On the terms and subject to the
conditions hereof, Stepup hereby sells and transfers to Buyer the number of
shares of Class C Stock of the Company set forth on the signature page hereof
(the "Shares") in consideration of the transfer by Buyer to Stepup of the amount
set forth on the signature page hereof, receipt of which is hereby acknowledged
by Stepup.
3. RESTRICTIONS ON TRANSFERS OF SHARES; PERMITTED TRANSFEREES. Subject
to Sections 4, 5 and 6 hereof and Exhibit A hereto, prior to 180 days following
an Initial Public Offering, the Shares shall not be transferable or transferred,
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) except that Buyer may transfer the Shares (i) to his or her spouse,
child, estate, personal representative, heir or successor or to a trust for the
benefit of Buyer or his or her spouse, child or heir or to a partnership the
partners of which consist solely of the Buyer and/or his or her spouse, child,
heir and/or successor (a "permitted transferee"), or
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<PAGE> 5
(ii) [insert appropriate references to the Articles of Incorporation]. This
Agreement shall be binding on and enforceable against any person who is a
permitted transferee of the Shares, and for purposes of Sections 4, 5, and 6,
the rights and obligations relating to Shares owned by Buyer shall extend as
well to Shares owned by permitted transferees of Buyer and, unless the context
otherwise requires, each reference to Buyer in said Sections shall encompass
also permitted transferees of Buyer. The stock certificates issued to evidence
Shares hereunder shall bear a legend referring to this Agreement and the
restrictions contained herein.
4. REPURCHASE OF SHARES.
(a) In the event that Buyer ceases to be employed by the
Company for any reason prior to an Initial Public Offering, Stepup, during the
sixty (60) days following the Termination Date (the "Repurchase Period"), shall
have a one-time right to purchase all, but not less than all, of the Shares. The
purchase price for each Share shall equal Fair Market Value, or, if Buyer
resigns without Good Reason prior to January 1, 2001 or is terminated for Cause
at any time, the lower of Fair Market Value or Cost. If Stepup elects to
purchase the Shares, it shall notify Buyer at or before the end of the
Repurchase Period of such election and the purchase price shall be paid in cash
at a time set by Stepup (the "Repurchase Date") within thirty (30) days after
the end of the Repurchase Period, provided that Buyer has presented to Stepup a
stock certificate evidencing the Shares duly endorsed for transfer (the
"Endorsed Certificate"). If Buyer fails to deliver the Endorsed Certificate, the
Shares represented thereby shall be deemed to have been purchased upon (i) the
payment by Stepup of the purchase price to Buyer or his or her permitted
transferee or (ii) notice to Buyer or such permitted transferee that Stepup is
holding the purchase price for the account of Buyer or such permitted
transferee, and upon such payment or notice Buyer and such permitted transferee
will have no further rights in or to such Shares. If Stepup does not purchase
the Shares, the restrictions on transfer thereof contained in this Agreement
shall terminate and be of no further force and effect.
(b) If Buyer's employment by the Company is terminated prior
to an Initial Public Offering or an Approved Sale (i) by the Company without
Cause or by Buyer for any reason; (ii) due to Buyer's Retirement, death or
Disability; or (iii) by the Company with Cause after January 1, 2001, Buyer or
his or her representative, during the 120 days following the Termination Date,
shall have a one-time right to require Stepup to purchase all, but not less than
all, of the Shares, unless, by the thirtieth (30th) day after Stepup and the
Company have received notice of Buyer's election to exercise his put right, the
Company has notified Buyer and Stepup of its election, exercisable in the
discretion of the Company, to purchase the Shares on the same terms as such
Shares were offered to Stepup, in which case the Shares will be acquired by the
Company. The purchase price shall be at Fair Market Value, unless the employment
of Buyer is terminated for any reason other than Retirement, death, or
Disability prior to January 1, 2001 and Buyer exercises his put right prior to
such date, in which case the purchase price will be the lower of Fair Market
Value or Cost. The purchase price shall be paid in cash on the thirtieth (30th)
day after Stepup and the Company have received notice of Buyer's election to
exercise his put right (the "Put Date"), provided that Stepup or the Company, as
the case may be, need not pay the purchase price until such later time that
Buyer presents to the Company the Endorsed Certificate.
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<PAGE> 6
(c) The Fair Market Value of Shares to be purchased by the
Company or Stepup, as the case may be, hereunder shall be determined in good
faith by the Company's Board of Directors. The Board of Directors shall make its
determination of Fair Market Value annually (the "Annual Valuation") promptly
after the completion of the Company's audited financial statements for the year
then completed and such determination shall remain in effect until the Board of
Directors makes the next Annual Valuation. Notwithstanding the foregoing, if the
Board of Directors or an investment banker or appraiser appointed by the Company
makes a determination of Fair Market Value subsequent to an Annual Valuation,
such subsequent determination shall supersede the Annual Valuation then in
effect and shall establish the Fair Market Value until the next Annual
Valuation. The Fair Market Value shall be based on an assumed sale of 100% of
the outstanding capital stock of the Company (without reduction for minority
interest or lack of liquidity of the Shares or similar discount) and determined
in a manner consistent with the manner in which the purchase price to be paid by
the Investors pursuant to the Recapitalization Agreement was determined. If such
determination of the Fair Market Value is challenged by Buyer, a mutually
acceptable investment banker or appraiser shall establish the Fair Market Value
as of the date of valuation referenced in the Annual Valuation or a subsequent
determination. The investment banker's or appraiser's determination shall be
conclusive and binding on the Company and Buyer. The Company shall bear all
costs incurred in connection with the services of such investment banker or
appraiser unless the Fair Market Value established by such investment banker or
appraiser is less than 115% of the determination challenged by the Buyer, in
which case Buyer shall promptly pay or reimburse the Company for such costs (up
to a maximum amount of $______). If Buyer and the Company cannot agree upon an
investment banker or appraiser, they shall each choose an investment banker or
appraiser and the two shall choose a third investment banker or appraiser who
shall establish the Fair Market Value. Notwithstanding the foregoing, the
Company shall obtain valuation of all of its common stock at least once annually
for purposes of Buyer's estate and gift planning; provided, however, that such
valuation is not binding on the Board of Directors for purposes of determining
Fair Market Value.
(d) Buyer shall not be considered to have ceased to be
employed by the Company for purposes of this Agreement if he or she continues to
be employed by the Company or a Subsidiary, or by a company of which the Company
is a Subsidiary.
5. REPRESENTATIONS OF THE COMPANY. The Company represents and warrants
to Buyer as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania.
(b) Upon delivery to Buyer in accordance with the terms
hereof, the Shares will be duly and validly authorized, issued and outstanding,
fully paid and non-assessable.
(c) The Shares shall not be subject to dilution upon (i) the
conversion, pursuant to the terms of the Articles of Incorporation, of (A) any
of the Company's Class D Stock or Class E Stock, each with a par value of $0.01,
or (B) any of the Class C Stock, or (ii) the
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<PAGE> 7
exercise of those certain warrants issued by the Company on November __,
1997 entitling the holder thereof to purchase shares of the Company's common
stock, $0.01 par value.
6. REPRESENTATIONS AND ACKNOWLEDGMENTS OF BUYER.
(a) Buyer hereby represents and warrants to the Company as
follows:
(i) Buyer is acquiring the Shares for investment for
his or her own account and without a view to further distribution of
the Shares.
(ii) Buyer is an employee of the Company and has been
given access to all information that Buyer considers necessary to make
an investment decision as to the Shares.
(b) Buyer hereby acknowledges to the Company as follows:
(i) The Shares are being transferred to Buyer without
registration under the Act pursuant to exemptions from registration
thereunder. Buyer cannot transfer the Shares except pursuant to an
effective registration statement or an exemption from registration
under the Act.
(ii) The Shares are nonvoting under the Articles of
Incorporation.
7. GOVERNING LAW. All terms of and rights under this Agreement shall be
governed by and construed in accordance with the internal law of the
Commonwealth of Pennsylvania, without giving effect to principles of conflicts
of law.
8. NOTICES. All notices, requests, demands and other communications
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given if personally delivered, telexed or telecopied to, or, if mailed,
when received by, the other party at the following addresses (or at such other
address as shall be given in writing by either party to the other):
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<PAGE> 8
If to Stepup to:
Stepup Limited
P.O. Box 1111, West Wind Building
Grand Cayman, Cayman Islands B.W.I.
With a copy to:
Investcorp Management Services Limited
c/o Investcorp Bank E.C.
P.O. Box 5430
Manama, Bahrain
Attention: H. Richard Lukens, III
If to the Company to:
Werner Holding Co. (PA), Inc.
93 Werner Road
Greenville, PA 16125
Attention: Eric J. Werner, Esq.
With a required copy (which shall not constitute notice to the
principal) to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue, 47th Floor
New York, New York 10166
Attention: E. Michael Greaney, Esq.
If to Buyer, to the address set forth on the signature page
hereof.
9. AMENDMENTS AND WAIVERS. This Agreement may be amended, and any
provision hereof may be waived, only by a writing signed by the party to be
charged.
10. CAPITALIZATIONS, EXCHANGES, ETC. AFFECTING SHARES; ADJUSTMENT OF
COST.
(a) The provisions of this Agreement shall apply to any and
all shares of capital stock of the Company or any successor or assign of the
Company that may be issued in respect of, in exchange for, or in substitution
of, the Shares by reason of any stock dividend, stock split, stock issuance,
reverse stock split, combination, recapitalization, reclassification, merger,
consolidation or otherwise, other than an Approved Sale. Nothing herein shall
prohibit or restrict the Company from taking any corporate action or engaging in
any corporate transaction of any kind, including, without limitation, any
merger, consolidation, liquidation or sale of assets.
(b) In the event of any stock dividend, stock split, stock
issuance, reverse stock split, combination, recapitalization, reclassification,
merger, consolidation or similar event as a result of which Buyer holds a lesser
or greater number of Shares and/or other securities, the
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<PAGE> 9
Cost of a Share or other security shall be appropriately adjusted as determined
in good faith by the Board of Directors of the Company.
11. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding between the parties as to the subject matter hereof and
supersedes all prior oral and written and all contemporaneous oral discussions,
agreements and understandings of any kind or nature.
12. SEPARABILITY. In the event that any provision of this Agreement is
declared to be illegal, invalid or otherwise unenforceable by a court of
competent jurisdiction, such provision shall be reformed, if possible, to the
extent necessary to render it legal, valid and enforceable, or otherwise
deleted, and the remainder of this Agreement shall not be affected except to the
extent necessary to reform or delete such illegal, invalid or unenforceable
provision.
13. HEADINGS. The headings preceding the text of the sections hereof
are inserted solely for convenience of reference, and shall not constitute a
part of this Agreement, nor shall they affect its meaning, construction or
effect.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
15. FURTHER ASSURANCES. Each party shall cooperate and take such action
as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement.
16. REMEDIES. Consistent with section 18 herein, in the event of a
breach by any party to this Agreement of its obligations under this Agreement,
any party injured by such breach, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, shall be entitled to
specific performance of its rights under this Agreement. The parties agree that
the provisions of this Agreement shall be specifically enforceable, it being
agreed by the parties that the remedy at law, including monetary damages, for
breach of any such provision will be inadequate compensation for any loss and
that any defense in any action for specific performance that a remedy at law
would be adequate is hereby waived.
17. NOT AN EMPLOYMENT CONTRACT. Nothing in this Agreement or any other
instrument executed pursuant hereto shall confer upon Buyer any right to
continue in the employ of the Company or any Subsidiary or shall affect the
right of the Company or any Subsidiary to terminate the employment of Buyer with
or without Cause.
18. ARBITRATION. Any dispute, claim or controversy arising out of or
relating to this Agreement, or the breach, termination or validity hereof, shall
be finally settled by arbitration in accordance with the then-prevailing
Commercial Arbitration Rules of the American Arbitration Association, as
modified herein ("Rules"). There shall be one arbitrator who shall be jointly
selected by the parties. If the parties have not jointly agreed upon an
arbitrator within twenty days of respondent's receipt of claimant's notice of
intention to arbitrate, either party may request
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<PAGE> 10
the American Arbitration Association to furnish the parties with a list of names
from which the parties shall jointly select an arbitrator. If the parties have
not agreed upon an arbitrator within ten days of the transmittal date of the
list, then each party shall have an additional five days in which to strike any
names objected to, number the remaining names in order of preference, and return
the list to the American Arbitration Association, which shall then select an
arbitrator in accordance with Rule 13 of the Rules. The place of arbitration
shall be Pittsburgh, Pennsylvania. By agreeing to arbitration, the parties
hereto do not intend to deprive any court of its jurisdiction to issue a
pre-arbitral injunction, pre-arbitral attachment or other order in aid of
arbitration. The arbitration shall be governed by the Federal Arbitration Act, 9
U.S.C. ss.ss. 1-16. Judgment upon the award of the arbitrator may be entered in
any court of competent jurisdiction. Each party shall bear its or his own costs
and expenses in any such arbitration and one-half of the arbitrator's fees and
expenses.
19. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective permitted successors and
assigns.
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<PAGE> 11
IN WITNESS WHEREOF, this Agreement is entered into as of the date first
above written.
WERNER HOLDING CO. (PA), INC.
By:
-----------------------------------
Name:
Title:
STEPUP LIMITED
By:
-----------------------------------
Name:
Title:
"BUYER"
---------------------------------------
Name:
Address:
No. of Shares of Class C
Stock acquired by Buyer:
Amount paid by Buyer:
11
<PAGE> 1
Exhibit 10.20
LOAN AND PLEDGE AGREEMENT
-------------------------
LOAN AND PLEDGE AGREEMENT dated as of November __, 1997, between Werner
Holding Co. (PA), Inc., a Pennsylvania corporation (the "Lender"), and (the
"Borrower").
The parties hereto agree as follows:
1. AMOUNT AND TERMS OF THE LOAN.
1.1. THE LOAN. On the terms and subject to the conditions of
this Agreement, the Lender agrees to lend $______to the Borrower for the purpose
of enabling the Borrower to purchase shares of Class C Common Stock, par value
$0.01 per share, of the Lender (collectively, the "Purchased Shares"), said loan
is being made pursuant to the Werner Holding Co. (PA), Inc. 1997 Stock Loan Plan
(the "Plan"). Except as otherwise defined herein, capitalized terms used in this
Agreement have the respective meanings set forth in the Plan.
1.2. MATURITY DATE. Subject to the prepayment provisions of
subsections 1.3 and 1.4 and the acceleration provisions set forth below and in
Section 3 below, the Loan shall mature on November 24, 2004 (the "Maturity
Date"). Notwithstanding the foregoing, all principal and accrued but unpaid
interest outstanding under the Loan will automatically become due and payable on
the date the Borrower's employment with the Lender and its affiliates terminates
if the Borrower terminates employment before age 65 unless his employment
terminates (i) by reason of his death or Disability, or (ii) for a reason other
than Cause.
1.3. MANDATORY PREPAYMENTS AND PAYMENTS.
(a) In the event that any cash dividend or distribution is
paid by the Lender with respect to any Pledged Property relating to the
Loan, the Borrower shall make a mandatory prepayment with respect to
the Loan equal to the amount of such dividend or distribution, which
shall be applied first to accrued but unpaid interest under the Loan,
then to principal. Notwithstanding the foregoing, in the event that the
Committee under the Plan determines that the Borrower would recognize a
net increase in taxable income from the receipt of any such dividends
or distributions after giving effect to any deduction for the related
payment under the Loan, the Committee may in its discretion permit the
Borrower to retain a portion of the dividends or distributions so as to
be able to pay all or part of his related increase in taxes.
(b) Any cash received upon an exchange or conversion of
Pledged Property shall be applied to reduce the outstanding Loan
balance (with any accrued but unpaid interest being reduced first). Any
cash in excess of that applied to repay in full all principal and
interest outstanding under the Loan shall be paid to the Borrower.
(c) Borrower shall pay any accrued interest on the Loan on the
first day of each calendar quarter.
<PAGE> 2
(d) Borrower agrees to make annual principal payments on this
Note within two (2) business days of his receipt of his annual
employment bonus, if any, from Lender or a subsidiary of Lender in an
amount equal to percent (__%) of such bonus amount, net of applicable
state and federal taxes due thereon.
1.4 OPTIONAL PREPAYMENTS.
(a) The Borrower may make voluntary prepayments on the Loan at
any time without penalty in such minimum amounts as the Committee may
determine, which shall be applied first to accrued but unpaid interest,
and then to principal.
(b) In the event that the Borrower at any time desires to
obtain a release of all or part of any Pledged Property securing the
Loan, whether for the purpose of selling such Pledged Property or
otherwise, as a condition to the release, the Borrower shall make
arrangements satisfactory to the Lender for the prepayment by the
Borrower of an amount equal to the higher of (i) a percentage of the
outstanding Loan balance as of the date of the release equal to the
percentage in value of the Pledged Property sought to be released and
(ii) a sufficient portion of the outstanding Loan balance so that the
amount of the outstanding Loan balance remaining unpaid after giving
effect to such payment does not exceed fifty percent (50%) of the fair
market value of the Pledged Property, as determined in good faith by
the Committee, that will remain subject to this Agreement after giving
effect to the release, which shall be applied first to accrued but
unpaid interest under the Loan, then to principal.
1.5. EVIDENCE OF BORROWING. The Loan will be evidenced by a
promissory note in substantially the form attached as Exhibit A to this
Agreement (the "Note"). The Borrower will promptly execute and deliver to the
Lender any other instruments evidencing the Loan reasonably requested by the
Lender.
2. SECURITY.
2.1. GRANT OF SECURITY INTEREST. As security for the
Borrower's performance of this Agreement and the Borrower's indefeasible payment
in full of the Loan and all interest thereon in accordance with this Agreement,
the Borrower hereby pledges, hypothecates, assigns, transfers and delivers to
the Lender and grants the Lender a continuing security interest in the
Borrower's right, title and interest in and to the Pledged Property, to have and
to hold, together with all rights, titles, interests, privileges and preferences
appertaining or incidental thereto, unto the Lender, its successors and assigns,
forever, subject to the terms and conditions of this Agreement.
2.2. PERFECTION OF SECURITY INTEREST. Simultaneously with the
execution and delivery of this Agreement, the Borrower will deliver to the
Lender all instruments and certificates evidencing the Pledged Property and will
execute and deliver to the Lender stock powers or assignments in such forms as
may reasonably be requested by the Lender with respect to each such instrument
or certificate. The Borrower will perform all additional acts and execute all
other documents reasonably requested by the Lender at any time to further
evidence, perfect,
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<PAGE> 3
maintain and enforce the Lender's security interest in the Pledged Property. The
Borrower will not pledge, hypothecate or grant a security interest in any of the
Pledged Property to any other person without the prior written consent of the
Lender.
2.3. VOTING AND OTHER RIGHTS OF THE BORROWER AND THE LENDER.
So long as no Event of Default (as described in subsection 3.1) has occurred and
is continuing, the Borrower will be entitled to vote and to exercise all other
rights and remedies with respect to the Pledged Property. Upon the occurrence
and during the continuance of an Event of Default, the Lender, subject to the
terms and conditions of this Agreement, will have the right, after the delivery
of written notice to the Borrower, to vote and to exercise all other rights and
remedies with respect to the Pledged Property.
2.4. RELEASE OF COLLATERAL. In the event of any prepayment of
principal under the Loan, the Lender will release from the pledge under this
Agreement a portion of the Pledged Property equal to the percentage of the
outstanding principal balance so paid, provided, that the Lender will retain
Pledged Property with an aggregate fair market value, as determined in good
faith by the Committee, equal to at least two hundred percent (200%) of the
outstanding Loan balance as of the date of the prepayment (after giving effect
to the prepayment).
3. EVENTS OF DEFAULT.
3.1. EVENTS OF DEFAULT. For purposes of this Agreement, any of
the following events will constitute an Event of Default:
(a) the Borrower fails to pay any amount due under the Loan
and the default remains uncured for a period of (10) days after the
date the Lender gives the Borrower notice of the default;
(b) the Borrower defaults under or breaches any other
covenant, representation or warranty under the Note, this Agreement or
any other agreement under the Plan and the default or breach remains
uncured for a period of thirty (30) days after the date the Lender
gives the Borrower notice of his default or breach;
(c) the Borrower applies for or consents to the appointment of
a receiver, trustee, custodian or liquidator of any of his property,
admits in writing his inability to pay his debts as they mature, makes
a general assignment as a bankrupt or insolvent or is the subject of an
order for relief under Chapter 7 or Chapter 13 of the United States
Bankruptcy Code or files a voluntary petition in bankruptcy or a
petition or answer seeking an arrangement with creditors to take
advantage of any bankruptcy, insolvency, readjustment or debt or
liquidation law or statute, or an answer admitting the material
allegations of a petition filed against him in any proceeding under any
such law; or
(d) any court of competent jurisdiction enters an order,
judgment or decree, without the application, approval or consent of the
Borrower, approving a petition appointing a receiver, trustee,
custodian or liquidator of all or a
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<PAGE> 4
substantial part of the assets of the Borrower, and such order,
judgment or decree continues unstayed and in effect for a period of
thirty (30) days.
3.2. CONSEQUENCES OF EVENTS OF DEFAULT. If an Event of Default
occurs, the Lender may foreclose on the Pledged Property and may otherwise
enforce its rights under the Plan, the Note and any other agreement entered into
under the Plan.
4. GENERAL.
4.1. COMPLIANCE WITH WITHHOLDING. The Lender shall have the
right to require the Borrower to pay to the Lender the amount of any taxes that
are required to be withheld in connection with any repayment of a Loan, any
release of Pledged Property or any sale of Pledged Property. To the extent
permitted by the Committee, the Borrower may elect to have any distribution
otherwise required to be made under this Agreement to be withheld to fulfill any
tax withholding obligation.
4.2. AMENDMENT AND WAIVER. This Agreement may be amended by
written agreement of the Borrower and the Lender, without the consent of any
other person.
4.3. SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
4.4. COMPLETE AGREEMENT. This document and the documents
referred to herein contain the complete agreement between the parties and
supersede any prior understandings, agreements or representations by or between
the parties, written or oral, which relate to the subject matter hereof.
4.5. GOVERNING LAW. The provisions of this Agreement shall be
construed in accordance with the internal laws of the Commonwealth of
Pennsylvania.
4.6. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties have executed this Agreement as of the
date first written above.
BORROWER WERNER HOLDING CO. (PA), INC.
- -------------------------------- By
-------------------------------------
Its
-------------------------------------
4
<PAGE> 1
Exhibit 10.21
AGREEMENT FOR MANAGEMENT ADVISORY,
STRATEGIC PLANNING AND
CONSULTING SERVICES
THIS AGREEMENT is made effective as of the 24th day of
November, 1997 (the "Effective Date"), by and between Investcorp International
Inc., a Delaware corporation ("III"), and Werner Holding Co.
(DE), Inc., a Delaware corporation ("Werner").
WHEREAS, III, by and through its officers, employees, agents
and affiliates has developed in connection with the conduct of its business and
affairs various areas of expertise in the fields of management, finance,
marketing, and strategic planning; and
WHEREAS, Werner desires to avail itself of the expertise of
III in those areas hereinabove enumerated and in which III is acknowledged to
have expertise, for a period of five (5) years from the Effective Date, said
5-year period being referred to as the "Term";
NOW, THEREFORE, the parties do hereby agree as follows:
1. APPOINTMENT. Werner hereby appoints III to render
management advisory, strategic planning and consulting services to Werner on an
exclusive basis during the Term as herein contemplated.
2. III. During the Term, III shall render to Werner, by and
through such of its officers, employees, agents and affiliates as III, in its
sole discretion, shall designate from time to time, management advisory,
strategic planning and consulting services. Said services shall consist of
advice concerning management, finance, marketing, strategic planning, and such
other services as shall be requested from time to time by the Board of Directors
of Werner. Werner acknowledges and agrees that the services to be provided by
III hereunder do not encompass services that would be required in connection
with an acquisition, restructuring or initial public offering by Werner, or a
private sale of the stock or assets of Werner. Should Werner desire to engage
III to provide financial advisory services in connection with any such type of
transaction, such engagement shall be subject to the negotiation of mutually
acceptable fee arrangements for such additional services, albeit the
indemnification obligations of Werner as set forth in paragraph 7 of this
Agreement shall apply to any such additional services performed by III.
<PAGE> 2
3. FEES. In consideration of III's performance of the
above-described services, Werner shall pay to III, in cash, consulting services
fees at the rate of $1,000,000 per year for the duration of the Term
(collectively, the "Fee"). It is recognized that the services provided under
this Agreement will not be evenly distributed over time and that a significant
portion of such services will be performed early in the period of time covered
by this Agreement. It is also recognized that, subject to the terms of this
Agreement, Werner is committed to pay the full amount payable hereunder, and the
Fee, once paid, is non-refundable. The full amount of the Fee for the entire
Term shall be paid on the Effective Date.
4. REIMBURSEMENTS. Within 15 calendar days of delivery of
III's invoice, Werner shall reimburse III for its actual out-of-pocket expenses
incurred in connection with the performance of services pursuant to this
Agreement.
5. DEFAULT. In the event that Werner fails to pay any part of
the Fee as set forth in Paragraph 3 above when and as due, and Werner does not
cure such failure prior to the 10th day of the month in which such payment is
due, then Werner shall be in default under this Agreement and III shall be
entitled to receive payment in full of the unpaid portion of the Fee upon making
written demand upon Werner for such payment. Upon delivery of such written
demand, III shall be excused from rendering any further services pursuant to
this Agreement. The aforesaid right and privilege of III to withhold services is
intended to be in addition to any and all other remedies available because of
Werner's default, including III's right to payment of all fees set forth herein.
Further, in the event of a default by Werner, Werner agrees to reimburse III for
any and all costs and expenses incurred by III, including, without limitation,
reasonable counsel fees and expenses, in connection with such default and any
litigation or other proceedings instituted for the collection of payments due
hereunder.
6. PERMISSIBLE ACTIVITIES. Nothing herein shall in any way
preclude III from engaging in any business activities or from performing
services for its own account or for the account of others.
7. INDEMNIFICATION. Werner shall indemnify and hold harmless
III and its directors, officers, employees, agents and controlling persons (each
being an "Indemnified Party") from and against any and all losses, claims,
damages and liabilities, joint or several, to which such Indemnified Party may
become subject under any applicable federal or state law, or otherwise, relating
to or arising out of the management, strategic planning and consulting services
2
<PAGE> 3
contemplated by, this Agreement. Werner shall reimburse any Indemnified Party
for all costs and expenses (including reasonable counsel fees and expenses)
incurred in connection with the investigation of, preparation for or defense of
any pending or threatened claim or any action or proceeding arising therefrom,
whether or not such Indemnified Party is a party. Werner shall not be liable
under the foregoing indemnification provision to the extent that any loss,
claim, damage, liability or expense is found in a final judgment by a court of
competent jurisdiction to have resulted primarily from the bad faith or gross
negligence of III.
8. AMENDMENTS. No amendment or waiver of any provision of this
Agreement, or consent to any departure by either party from any such provision,
shall in any event be effective unless the same shall be in writing and signed
by the parties to this Agreement and then such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
9. NOTICES. Any and all notices hereunder shall, in the
absence of receipted hand delivery, be deemed duly given when mailed, if the
same shall be sent by registered or certified mail, return receipt requested,
and the mailing date shall be deemed the date from which all time periods
pertaining to a date of notice shall run. Notices shall be addressed to the
parties at the following addresses:
If to III, to:
Investcorp International Inc.
280 Park Avenue
37th Floor
New York, New York 10017
Attention: President
with a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attention: E. Michael Greaney, Esq.
If to Werner, to:
Werner Holding Co. (DE), Inc.
1105 North Market Street, Suite 1300
Wilmington, DE 19899
Attention: General Counsel
3
<PAGE> 4
with a copy to:
Werner Holding Co. (PA), Inc.
93 Werner Road
Greenville, PA 16125
Attention: General Counsel
10. ENTIRE AGREEMENT. This Agreement shall constitute the
entire agreement between the parties with respect to the subject matter hereof,
and shall supersede all previous oral and written (and all contemporaneous oral)
negotiations, commitments, agreements and understandings relating hereto.
11. ASSIGNMENT. This Agreement shall be assignable by either
party hereto provided that the non-assigning party consents in writing to such
assignment.
12. APPLICABLE LAW. This Agreement shall be construed and
enforced in accordance with the laws of Delaware (without regard to the
conflicts of laws provisions thereof or of any other jurisdiction) and shall
inure to the benefit of, and be binding upon, III and Werner and their
respective successors and assigns.
13. NO CONTINUING WAIVER. The waiver by any party of any
breach of this Agreement shall not operate or be construed to be a waiver of any
subsequent breach.
14. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
4
<PAGE> 5
IN WITNESS WHEREOF, each of the parties has caused this
Agreement for Management Advisory, Strategic Planning and Consulting Services to
be executed and delivered by its duly authorized officer or agent as set forth
below.
INVESTCORP INTERNATIONAL INC.
By: /s/
-----------------------------
Name:
Title:
WERNER HOLDING CO. (DE), INC.
By:/s/
------------------------------
Name:
Title:
<PAGE> 1
Exhibit 10.22
FINANCING ADVISORY AGREEMENT
This Agreement is made effective as of the 8th day of October,
1997, by and between Investcorp International Inc., a Delaware corporation
("III") and Werner Holding Co. (DE), Inc., a Delaware corporation ("Werner").
WHEREAS, pursuant to the Amended and Restated Recapitalization
Agreement (the "Recapitalization Agreement") by and between Werner Holding Co.
(PA), Inc. ("Holding") and the investors set forth on Schedule 1 of the
Recapitalization Agreement (the "Investors"), the Investors will acquire
approximately 67% of the outstanding stock of Holding (the "Recapitalization");
WHEREAS, Werner intends to arrange borrowing facilities with
one or more financial institutions unaffiliated with III in the aggregate amount
of approximately $455 million (the "Financing");
WHEREAS, III and its officers, employees, agents and
affiliates are experienced in the field of obtaining debt financing and are
willing to act as a financial advisor to Werner; and
WHEREAS, Werner is desirous to avail itself of the assistance
and expertise of III in arranging the Financing;
NOW, THEREFORE, the parties do hereby agree as follows:
1. SERVICES OF III. III shall assist Werner in arranging the
Financing. In connection therewith, III may, solely in its discretion and on
behalf of Werner:
(a) seek out financial institutions that may provide
the Financing;
(b) enter into negotiations with banks and other
financial institutions regarding the terms and conditions upon
which the Financing is to be provided;
(c) advise, conduct and participate in the
negotiation and drafting of any agreements, contracts, or
other documents relating to the placement of the Financing;
and
(d) take all such other actions as it may deem
necessary to arrange for the Financing.
<PAGE> 2
2. FEES. In consideration of the services contemplated by
Section 1 hereof, Werner shall pay to III a fee in the amount of $6,000,000,
payable on the closing of the Recapitalization.
3. REIMBURSEMENT. Werner shall pay directly any commitment
fees, arrangement fees, or other actual out-of-pocket expenses incurred in
connection with the performance of III's services under this Agreement,
including, but not limited to, fees and disbursements of III's legal counsel.
4. COOPERATION AND INFORMATION. Werner shall cooperate with
III in the performance of its obligations hereunder and shall furnish III with
such information as III may request (all such information so furnished
hereinafter referred to as the "Information"). Werner recognizes and confirms
that III:
(a) will use and rely primarily on the Information
and on information available from generally recognized public
sources in performing the services contemplated by this
Agreement without having independently verified the same;
(b) does not assume responsibility for the accuracy
or completeness of the Information; and
(c) will not make an appraisal of any of the assets
of Werner.
All Information so furnished to III will be kept confidential by III, except
such Information as is in the public domain or as Werner agrees may be disclosed
or as III is required by law to disclose; PROVIDED, HOWEVER, that III may
provide such Information as it deems necessary or appropriate to financial
institutions in connection with obtaining, negotiating or arranging the
Financing in accordance with the terms of this Agreement.
5. TERMINATION. Subject to the provisions of Paragraph 6
hereof, which shall survive any termination of this Agreement, this Agreement
shall terminate if the Recapitalization is not consummated on or before February
24, 1998, unless extended by the parties' mutual consent.
6. INDEMNIFICATION. Werner shall:
(a) indemnify III and hold it harmless against any
losses, claims, damages or liabilities to which III may become
subject
2
<PAGE> 3
arising in any manner out of or in connection with the
rendering of services by III hereunder, unless it is finally
judicially determined that such losses, claims, damages or
liabilities arose primarily out of the gross negligence or
bad faith of III; and
(b) reimburse III immediately for any legal or other
expenses reasonably incurred by it in connection with
investigating, preparing to defend or defending any lawsuits
or other proceedings arising in any manner out of or in
connection with the rendering of services by III hereunder;
PROVIDED, HOWEVER, that in the event a final judicial
determination is made to the effect specified in subparagraph
6(a) above, III will remit to Werner any amounts reimbursed
under this subparagraph 6(b). Werner agrees that (i) the
indemnification and reimbursement commitments set forth in
this paragraph shall apply whether or not III is a formal
party to any such lawsuits, claims or other proceedings, (ii)
III is entitled to retain separate counsel of its choice at
the expense of Werner in connection with any of the matters to
which such commitments relate, and (iii) such commitments
shall extend upon the terms set forth in this paragraph to any
controlling person, director, officer, employee or agent of
III; PROVIDED, however, that to the extent that III retains
separate counsel in connection with any matters set forth in
this subparagraph 6(b), such counsel shall coordinate its
efforts with counsel to Werner.
7. AMENDMENTS. No amendment or waiver of any provision of this
Agreement, or consent to any departure by either party from any such provision,
shall be effective unless the same shall be in writing and signed by the parties
to this Agreement and then such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
8. NOTICES. All notices hereunder shall, in the absence of
receipted hand delivery, be deemed duly given when mailed, if the same shall be
sent by registered or certified mail, return receipt requested, and the mailing
date shall be deemed the date from which all time periods pertaining to a date
of notice shall run. Notices shall be addressed to the parties at the following
addresses:
3
<PAGE> 4
If to III, to:
Investcorp International Inc.
280 Park Avenue
37th Floor
New York, New York 10017
Attention: President
with a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue, 47th Floor
New York, NY 10166-0193
Attention: E. Michael Greaney, Esq.
If to Werner, to:
Werner Holding Co. (DE), Inc.
1105 North Market Street, Suite 1300
Wilmington, DE 19899
Attention: General Counsel
with a copy to:
Werner Holding Co. (PA), Inc.
93 Werner Road
Greenville, PA 16125
Attention: General Counsel
9. ENTIRE AGREEMENT. This Agreement shall constitute the
entire Agreement between the parties with respect to the subject matter hereof,
and shall supersede all previous oral and written (and all contemporaneous oral)
negotiations, commitments, agreements and understandings relating thereto.
10. APPLICABLE LAW. This Agreement shall be construed and
enforced in accordance with the laws of the State of New York (without regard to
the conflicts of laws provisions thereof or of any other jurisdiction) and shall
inure to the benefit of, and be binding upon, III and Werner and their
respective successors and assigns.
11. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
4
<PAGE> 5
IN WITNESS WHEREOF, each of the parties has caused this
Financing Advisory Agreement to be executed and delivered by its duly authorized
officer or agent as set forth below.
INVESTCORP INTERNATIONAL INC.
By:__/s/________________________
Name:
Title:
WERNER HOLDING CO. (DE), INC.
By:__/s/________________________
Name:
Title:
5
<PAGE> 1
Exhibit 10.23
INVIFIN S.A.
11, RUE ALDRINGEN
LUXEMBOURG
As of November 19, 1997
Werner Holding Co. (DE), Inc.
93 Werner Road
Greenville, PA 16125
Attn: Eric J. Werner
Re: Stand-By Commitment to Loan up to $320 Million
of Senior Debt
-----------------------------------------------
Gentlemen:
The following outlines our mutual understanding and agreement in
connection with the above referenced commitment.
1. STAND-BY COMMITMENT. Invifin S.A. ("Invifin") understands that,
pursuant to an Amended and Restated Recapitalization Agreement (the
"Agreement"), certain investors will purchase approximately 67% of the voting
stock of Werner Holding Co. (PA), Inc., a Pennsylvania corporation ("Werner").
Invifin hereby commits to provide up to $320 million principal amount of senior
debt (the "Senior Debt") for use in effecting the recapitalization of Werner
(the "Recapitalization") in the event that Werner Holding Co. (DE), Inc. (the
"Company") is unable to arrange such financing from other sources. Invifin's
obligations hereunder are subject to the terms and conditions set forth in this
letter, including the consummation of the Recapitalization substantially on the
terms set forth in the Agreement, with such changes as to which Invifin shall
consent, which consent shall not be unreasonably withheld, and the failure of
the Company to arrange alternative sources for the Senior Debt.
2. TERMS OF SENIOR DEBT. The Senior Debt will (i) be provided on the
closing date of the Recapitalization (the "Closing Date"), (ii) be evidenced by
one or more notes which will be purchased pursuant to the terms of a Note
Purchase Agreement, (iii) bear interest and have a final maturity on terms to be
negotiated. The terms of the Senior Debt will be set forth in a loan agreement,
a promissory note and related documents, which shall contain such other terms
and conditions as are reasonably satisfactory to Invifin after consultation with
you.
3. COMMISSIONS AND EXPENSES. The Company shall pay a fee of $6 million
in consideration of Invifin's standby commitment to provide the Senior Debt.
Such fee is payable on the Closing Date. The Company shall or shall cause its
successor to reimburse Invifin for its out-of-pocket expenses, including counsel
fees, incurred in connection with the making of this commitment and, if funded,
its funding of the Senior Debt.
<PAGE> 2
4. DUE AUTHORIZATION. The Company represents that it is authorized to
execute this letter agreement.
5. TERMINATION. The obligations of Invifin under this letter shall
terminate on the earlier to occur of the termination of the Agreement or
February 8, 1998, provided that Invifin may earlier terminate its obligations
hereunder by notice to the Company (a) if any condition to the closing of, or
any provision in, the Agreement has been waived or the Agreement has been
amended in any case without Invifin's consent, which consent shall not be
unreasonably withheld; or (b) if trading in securities generally on the New York
Stock Exchange or the American Stock Exchange or the over-the-counter market
shall have been suspended or minimum prices shall have been established on
either of such exchanges or such market by the Securities and Exchange
Commission or by such exchange or a general banking moratorium shall have been
declared by federal or state authorities. Upon termination of this letter
agreement pursuant to this paragraph or upon any termination by the Company, the
Company will remain obligated under paragraph 4 hereof with respect to the
payment of Invifin's expenses.
6. EFFECTIVE DATE: This letter agreement, and the commitment hereunder,
shall be effective as of October 8, 1997.
7. COUNTERPARTS. This letter agreement may be signed in counterparts,
each of which shall constitute an original and which together shall constitute
one and the same agreement.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed copy of this letter agreement. We look forward to working
with you on this matter.
Very truly yours,
Invifin S.A.
By: /S/
--------------------------
Title:
-----------------------
Accepted and Agreed:
Werner Holding Co. (DE), Inc.
By: /S/
-----------------------------
Title:
--------------------------
2
<PAGE> 1
WERNER HOLDING CO. (PA), INC. EXHIBIT 12
<TABLE>
<CAPTION>
Historical Pro-Forma
-----------------------------------------------------------------------
Year Ended December 31, December 31,
-----------------------------------------------------------------------
Computation of Ratio of Earnings of Fixed Charges 1993 1994 1995 1996 1997 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Pre-tax income (loss) from continuing operations $16,673 $19,116 $12,020 $29,348 ($89,793) ($109,300)
Amortization of Capitalized Interest 9 24 33 60 126 126
Less: capitalized interest during period (180) (111) (319) (685) (282) (282)
----------------------------------------------------------------------
16,502 19,029 11,734 28,723 (89,949) (109,456)
Fixed Charges:
Interest expense 6,645 5,461 7,206 7,517 8,979 31,900
Capitalized Interest 180 111 319 685 282 282
Estimated interest portion of rentals 1,414 1,563 1,874 1,869 1,640 1,640
-----------------------------------------------------------------------
Total Fixed Charges 8,239 7,135 9,399 10,071 10,901 33,822
Earnings used in ratio computation 24,741 26,164 21,134 38,793 (79,048) (75,634)
Ratio of Earnings of Fixed Charged (a) 3.0 3.7 2.2 3.9 - -
======================================================================
</TABLE>
(a) The ratio of earnings to fixed charges is determined by dividing the
sum of earnings before extraordinary items, interest expense including
amortization of deferred financing costs, taxes, amortization of
capitalized interest and a portion of rent expense representative of
interest, by the sum of interest including amortization of deferred
financing costs, capitalized interest, and a portion of rent expense
representative of interest. The ratio of earnings to fixed charges is not
meaningful for periods that results in a deficit. For the historical and
proforma year ended December 31, 1997, the deficit of earnings to fixed
charges was $89,949 and $109,456, respectively.
<PAGE> 1
[Ernst & Young LLP Logo]
Exhibit 21
----------
Werner Co., a Pennsylvania corporation.
Gold Medal Ladder Company, a Pennsylvania corporation.
Kentucky Ladder Company, a Pennsylvania corporation.
Florida Ladder Company, a Florida corporation.
Werner Management Co., a Pennsylvania corporation.
Werner Financial Inc., a Delaware corporation.
R.D. Arizona Ladder Corp., an Arizona corporation.
WIP Technologies, Inc., a Delaware corporation.
Ardee Investment Co., Inc., a Delaware corporation.
Olympus Properties, Inc., an Illinois corporation.
Phoenix Management Services, Inc., a Pennsylvania corporation.
<PAGE> 2
Manufacturers Indemnity and Insurance Company of America, a Colorado
corporation.
Wentworth Institutional Realty, Inc., a Delaware corporation.
Ad Valorem Properties, Inc., a Colorado corporation.
Werner Distribution, Inc., a Pennsylvania corporation.
Werner (FID), Co., Inc., a Delaware corporation.
BLP Corporation, a Colorado corporation.
Amarlite Architectural Products, Inc., a Delaware corporation.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference of our firm under the caption "Experts" and to the
use of our report on the consolidated financial statements of Werner Holding Co.
(PA), Inc. dated February 10, 1998, in the Registration Statement (Form S-4 No.
333- ) and related Prospectus of Werner Holding Co. (DE), Inc. for the
registration of $135,000,000 in Senior Subordinated Notes due 2007.
/s/ Ernst & Young LLP
--------------------------------------
Ernst & Young LLP
Cleveland, Ohio
February 19, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001056112
<NAME>WERNER HOLDING CO.(PA), INC.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,107
<SECURITIES> 0
<RECEIVABLES> 64,163
<ALLOWANCES> 1,250
<INVENTORY> 44,670
<CURRENT-ASSETS> 122,897
<PP&E> 143,113
<DEPRECIATION> 77,284
<TOTAL-ASSETS> 288,185
<CURRENT-LIABILITIES> 92,750
<BONDS> 279,541
0
0
<COMMON> 1
<OTHER-SE> (153,672)
<TOTAL-LIABILITY-AND-EQUITY> 288,185
<SALES> 416,321
<TOTAL-REVENUES> 416,321
<CGS> 300,095
<TOTAL-COSTS> 380,225
<OTHER-EXPENSES> 116,910
<LOSS-PROVISION> (115)
<INTEREST-EXPENSE> 8,979
<INCOME-PRETAX> (89,793)
<INCOME-TAX> 714
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (90,507)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
