<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 7, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WORLDWIDE FLIGHT SERVICES, INC.
(Exact name of registrant as specified in Its Charter)
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<S> <C> <C>
DELAWARE 4581 75-1932711
(State or Other Jurisdiction Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number Identification Number)
Organization)
</TABLE>
A. SCOTT LETIER
CHIEF FINANCIAL OFFICER
1001 WEST EULESS BOULEVARD, SUITE 320, EULESS, TEXAS 76040
PH: (817) 665-3200
FAX: (817) 665-3423
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
<TABLE>
<S> <C>
CO-REGISTRANTS CT CORPORATION
SEE NEXT PAGE CORPORATION TRUST CENTER
C/O WORLDWIDE FLIGHT SERVICES, INC. 1209 ORANGE STREET
ATTN: A. SCOTT LETIER WILMINGTON, DE 19801
1001 WEST EULESS BOULEVARD, SUITE 320 PH: (800) 677-3394
EULESS, TEXAS 76040 FAX: (302) 655-5049
PH: (817) 665-3200 (Name, Address, Including Zip Code, and
FAX: (817) 665-2423 Telephone Number, Including Area Code,
(Name, Address, Including Zip Code, and of Agent For Service)
Telephone Number, Including Area Code,
of Co-Registrants)
</TABLE>
Copies to:
MICHAEL R. LITTENBERG, ESQ.
SCHULTE ROTH & ZABEL LLP
900 THIRD AVENUE
NEW YORK, NEW YORK 10022
PH: (212) 756-2000
FAX: (212) 593-5955
---------------------
Approximate Date of Commencement of Proposed Offer to the Public. As soon as
practicable after this registration statement becomes effective.
If the securities being registered are being offered in connection with the
formation of a holding company and there is compliance with General Instruction
G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER NOTE OFFERING PRICE(1) REGISTRATION FEE(2)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12 1/4% Series B Senior Notes due 2007
and Note Guarantees................. $130,000,000 100% $130,000,000 $36,140
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</TABLE>
(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(f) under the Securities Act of 1933.
(2) Calculated pursuant to Rule 457(f) under the Securities Act.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
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<PAGE> 2
CO-REGISTRANTS
<TABLE>
<CAPTION>
EXACT NAME OF STATE OR OTHER PRIMARY STANDARD
CO-REGISTRANT AS JURISDICTION OF INDUSTRIAL
SPECIFIED IN ITS INCORPORATION OR CLASSIFICATION CODE I.R.S. EMPLOYER
CHARTER ORGANIZATION NUMBER IDENTIFICATION NUMBER
---------------- ---------------- ------------------- ---------------------
<S> <C> <C> <C>
Worldwide Flight Delaware 4581 75-2533058
Finance Company
Worldwide Flight Delaware 4581 75-2276559
Security Service
Corporation
Miami International Florida 4581 59-2550848
Airport Cargo
Facilities &
Services, Inc.
International Florida 4581 65-0117574
Enterprises Group,
Inc.
Miami Aircraft Delaware 4581 59-2096579
Support, Inc.
Aerolink Pennsylvania 4581 25-1559013
International, Inc.
Aerolink Maintenance, Pennsylvania 4581 25-1579442
Inc.
Aerolink Management, Pennsylvania 4581 25-1824429
Inc.
Aerolink Pennsylvania 4581 25-6449621
International, L.P.
</TABLE>
<PAGE> 3
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- --------------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED OCTOBER 7, 1999
PRELIMINARY PROSPECTUS
[WORLDWIDE FLIGHT SERVICES, INC. LOGO]
WORLDWIDE FLIGHT SERVICES, INC.
OFFER TO EXCHANGE
12 1/4% SENIOR NOTES DUE 2007, SERIES B
FOR ANY AND ALL OUTSTANDING
12 1/4% SENIOR NOTES DUE 2007, SERIES A
OF
WORLDWIDE FLIGHT SERVICES, INC.
- --------------------------------------------------------------------------------
The Exchange Offer will expire at 5:00 p.m., New York City time,
on , unless extended.
- --------------------------------------------------------------------------------
THE COMPANY:
- - We are one of the world's leading independent providers of ground services to
air cargo and passenger airlines.
THE OFFERING:
- - Offered Securities: the securities offered by this prospectus are senior
notes, which are being issued in exchange for senior notes sold by us in our
August 1999 private placement. The New Notes are substantially identical to
the Original Notes and are governed by the same indenture governing the
Original Notes.
- - Expiration of Offering: the exchange offer expires at 5:00 p.m., New York City
time, on , unless extended.
THE NEW NOTES:
- - Maturity: August 15, 2007.
- - Interest Payment Dates: semiannually in cash in arrears on each February 15
and August 15, beginning on February 15, 2000.
- - Subsidiary guarantees: with some exceptions, our domestic subsidiaries will
unconditionally guarantee the New Notes. Our foreign subsidiaries and any
subsidiaries we later designate as "unrestricted" under the indenture will not
guarantee the New Notes.
- - Redemption: we can redeem the New Notes on or after August 15, 2003, except we
may redeem up to 35% of the New Notes prior to August 15, 2002 with the
proceeds of one or more public equity offerings. We are required to redeem the
New Notes under some circumstances involving changes of control and asset
sales.
- - Ranking: the New Notes and subsidiary guarantees will be senior unsecured
obligations, and will rank equally with all of our other existing and future
obligations that are not by their terms subordinated in right of payment to
the New Notes. The New Notes will rank senior in right of payment to all of
our obligations that are expressly subordinated in right of payment to the New
Notes.
SEE "RISK FACTORS," BEGINNING ON PAGE 13, FOR A DISCUSSION OF SOME FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS IN CONNECTION WITH A DECISION TO TENDER
ORIGINAL NOTES IN THE EXCHANGE OFFER.
These securities have not been approved or disapproved by the Securities
and Exchange Commission or any state securities commission nor has the
Securities and Exchange Commission or any state securities commission passed on
the accuracy or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.
The date of this prospectus is , 1999
<PAGE> 4
TABLE OF CONTENTS
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PAGE
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Notice to New Hampshire Residents........................... i
Special Note Regarding Forward-Looking Statements........... i
Prospectus Summary.......................................... 1
Risk Factors................................................ 13
Use of Proceeds............................................. 21
Capitalization.............................................. 22
Unaudited Pro Forma Combined Consolidated Financial Data.... 23
Selected Historical Consolidated Financial Data............. 33
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 36
The Exchange Offer.......................................... 47
Business.................................................... 57
Management.................................................. 66
Security Ownership of Certain Beneficial Owners and
Management................................................ 73
Related Party Transactions.................................. 75
Description of Senior Secured Credit Facility............... 76
Description of New Notes.................................... 79
Certain United States Federal Income Tax Consequences....... 125
Plan of Distribution........................................ 129
Legal Matters............................................... 130
Experts..................................................... 130
Where You Can Find More Information......................... 130
Index to Consolidated Financial Statements.................. F-1
</TABLE>
NOTICE TO NEW HAMPSHIRE RESIDENTS
Neither the fact that a registration statement or an application for a
license has been filed 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 RSA 421-B is true, complete and not misleading. Neither those facts
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.
-------------------------
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act. The safe harbors contained in these sections are not applicable to
"forward-looking statements" made in connection with "tender offers" or "initial
public offerings." The words "believe," "estimate," "anticipate," "project,"
"intend," "expect" and similar expressions are intended to identify
forward-looking statements. All forward-looking statements involve some risks
and uncertainties. In light of these risks and uncertainties, the
forward-looking events
i
<PAGE> 5
discussed in this prospectus might not occur. Factors that may cause actual
results or events to differ materially from those contemplated by the
forward-looking statements include, among other things, the following
possibilities:
- future revenues are lower than expected;
- costs or difficulties relating to the integration of businesses that we
acquire are greater than expected;
- expected cost savings from our acquisitions are not fully realized or
realized within the expected time frame;
- competitive pressures in the industry increase;
- general economic conditions or conditions affecting the airline industry,
whether internationally, nationally or in the states in which we do
business, are less favorable than expected;
- changes in the interest rate environment generally; and
- conditions in the securities markets are less favorable than expected.
You are cautioned not to place undue reliance on forward-looking statements
contained in this prospectus as these speak only as of its date. We undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. For a further
discussion of these and other risks related to our business, see the section
entitled "Risk Factors."
ii
<PAGE> 6
PROSPECTUS SUMMARY
This summary may not contain all of the information that may be important
to you. You should read the entire prospectus, including the financial
statements and other financial data, before making an investment decision to
tender Original Notes.
Unless the context otherwise indicates:
- "We," "our," "us" or the "Company" refers to Worldwide Flight Services,
Inc. and its subsidiaries on a pro forma combined basis after giving
effect to the acquisitions of Miami Aircraft Support, Inc. and its
subsidiaries, which are collectively referred to in this prospectus as
MAS, and Aerolink International, Inc. and its affiliates, which are
collectively referred to in this prospectus as Aerolink; and
- "Worldwide" refers to Worldwide Flight Services, Inc. and its
subsidiaries without giving effect to the acquisitions of MAS and
Aerolink.
THE COMPANY
We are one of the world's leading independent providers of ground services
to air cargo and passenger airlines. Our services include cargo handling and
ramp, passenger and technical services. We provide services for over 300
customers, including American Airlines, British Airways, Cathay Pacific,
Continental Airlines, Delta Air Lines, DHL, Emery Worldwide, Korean Air Lines,
Nippon Cargo Airlines and UPS. We currently service our customers at 86
airports, including 25 of the 30 busiest U.S. airports and five of the 10
busiest European airports, each based on 1997 annual arrivals and departures. We
employ approximately 9,800 employees in North America, the Caribbean, Europe and
Hong Kong.
The ground services that we provide fall into the following four main
categories:
- CARGO HANDLING. Cargo handling includes loading and unloading of cargo
aircraft, cargo warehousing at or near airport terminals, the build-up
and break-down of cargo and other related cargo services. Cargo handling
services accounted for approximately 46% of pro forma 1998 revenues,
giving effect to the acquisitions of MAS and Aerolink.
- RAMP SERVICES. Ramp services include loading and unloading of baggage and
freight from passenger aircraft, guiding the aircraft to and from the
gate, cabin cleaning and providing heating, air conditioning, lavatory
and water services. Ramp services accounted for approximately 26% of pro
forma 1998 revenues, giving effect to the acquisitions of MAS and
Aerolink.
- PASSENGER SERVICES. Passenger services include passenger ticketing,
curbside and ticket counter check-in, boarding services, baggage claim
and other services for passengers. We customize our passenger services to
meet the specific needs of each of our airline customers. Passenger
services accounted for approximately 16% of pro forma 1998 revenues,
giving effect to the acquisitions of MAS and Aerolink.
- TECHNICAL SERVICES. Technical services include jet bridge and ground
equipment maintenance, aircraft de-icing, freight management, aircraft
fueling and other services. Technical services accounted for
approximately 12% of pro forma 1998 revenues, giving effect to the
acquisitions of MAS and Aerolink.
1
<PAGE> 7
We frequently provide more than one of our services to the same customer at
a particular airport. Our services are generally provided under service
contracts. At June 30, 1999, we had over 800 service contracts and over 75 of
our customer relationships date back five years or more.
BUSINESS STRATEGY
Our goal is to become the world's leading provider of ground services for
air cargo and passenger airlines. We intend to achieve this goal through the
following:
- increasing our customer base at existing locations where we provide
services;
- cross-selling our services;
- emphasizing our service quality; and
- selectively pursuing additional complementary acquisitions.
COMPETITIVE STRENGTHS
We believe that we are well positioned to benefit from current trends,
including expected growth in our industry due to the following competitive
strengths:
- our long-standing customer relationships;
- the wide range of services that we offer;
- our broad geographic presence; and
- our experienced management team.
Our principal executive offices are located at 1001 West Euless Boulevard,
Suite 320, Euless, Texas 76040, and our telephone number is (817) 665-3200.
2
<PAGE> 8
THE EXCHANGE OFFER
Expiration Date.............. 5:00 p.m., New York City time, on ,
unless we extend the exchange offer.
Exchange and Registration
Rights..................... In an A/B exchange registration rights agreement
dated August 12, 1999, the holders of
Worldwide's 12 1/4 senior notes due 2007, series
A, which are referred to in this prospectus as
the Original Notes, were granted exchange and
registration rights. This exchange offer is
intended to satisfy these rights. You have the
right to exchange the Original Notes that you
hold for Worldwide's 12 1/4 senior notes due
2007, series B, which are referred to in this
prospectus as the New Notes, with substantially
identical terms. Once the exchange offer is
complete, you will no longer be entitled to any
exchange or registration rights with respect to
your Original Notes.
Accrued Interest on the New
Notes and Original Notes... The New Notes will bear interest from August 12,
1999. Holders of Original Notes which are
accepted for exchange will be deemed to have
waived the right to receive any payment in
respect of interest on those Original Notes
accrued to the date of issuance of the New
Notes.
Conditions to the Exchange
Offer...................... The exchange offer is conditioned upon some
customary conditions which we may waive and upon
compliance with securities laws.
Procedures for Tendering
Original Notes............. Each holder of Original Notes wishing to accept
the exchange offer must:
- complete, sign and date the letter of
transmittal, or a facsimile of the letter of
transmittal; or
- arrange for the Depository Trust Company to
transmit certain required information to the
exchange agent in connection with a book-entry
transfer.
You must mail or otherwise deliver this
documentation together with the Original Notes
to the exchange agent.
Special Procedures for
Beneficial Holders......... If you beneficially own Original Notes
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and you wish to tender your Original Notes in
the exchange offer, you should contact the
registered holder promptly and instruct
3
<PAGE> 9
them to tender on your behalf. If you wish to
tender on your own behalf, you must, before
completing and executing the letter of
transmittal for the exchange offer and
delivering your Original Notes, either arrange
to have your Original Notes registered in your
name or obtain a properly completed bond power
from the registered holder. The transfer of
registered ownership may take considerable time.
Guaranteed Delivery
Procedures................. You must comply with the applicable procedures
for tendering if you wish to tender your
Original Notes and:
- time will not permit your required documents
to reach the exchange agent by the expiration
date of the exchange offer; or
- you cannot complete the procedure for
book-entry transfer on time; or
- your Original Notes are not immediately
available.
Withdrawal Rights............ You may withdraw your tender of Original Notes
at any time up to 5:00 p.m., New York City time,
on the business day prior to the date the
exchange offer expires.
Failure to Exchange Will
Affect You Adversely....... If you are eligible to participate in the
exchange offer and you do not tender your
Original Notes, you will not have further
exchange or registration rights and your
Original Notes will continue to be subject to
some restrictions on transfer. Accordingly, the
liquidity of the Original Notes will be
adversely affected.
Certain Federal Tax
Considerations............. We believe that the exchange of Original Notes
for New Notes pursuant to the exchange offer
will not be a taxable event for United States
federal income tax purposes. A holder's holding
period for New Notes will include the holding
period for Original Notes, and the adjusted tax
basis of the New Notes will be the same as the
adjusted tax basis of the Original Notes
exchanged. See "Certain United States Federal
Income Tax Consequences."
Exchange Agent............... The Bank of New York, trustee under the
Indenture under which the New Notes will be
issued, is serving as exchange agent.
Use of Proceeds.............. We will not receive any proceeds from the
exchange offer.
4
<PAGE> 10
SUMMARY TERMS OF NEW NOTES
Issuer....................... Worldwide Flight Services, Inc.
Securities Offered........... The form and terms of the New Notes will be the
same as the form and terms of the Original Notes
except that:
- the New Notes will bear a different CUSIP
number from the Original Notes;
- the New Notes will have been registered under
the Securities Act and, therefore, will not
bear legends restricting their transfer; and
- you will not be entitled to any exchange or
registrations rights with respect to the New
Notes.
The New Notes will evidence the same debt as the
Original Notes. They will be entitled to the
benefits of the indenture governing the Original
Notes and will be treated under the indenture as
a single class with the Original Notes.
Maturity..................... August 15, 2007.
Interest..................... The New Notes will bear cash interest at the
rate of 12 1/4% per annum, payable semi-annually
in arrears.
Payment frequency--every six months on February
15 and August 15.
First payment--February 15, 2000.
Ranking...................... The New Notes and subsidiary guarantees will be
senior unsecured obligations and will rank
equally with all of our other existing and
future obligations that are not by its terms
subordinated in right of payment to the New
Notes, including borrowings under our senior
secured credit facility. The New Notes will rank
senior in right of payment to all of our
obligations that are expressly subordinated in
right of payment to the New Notes.
Guarantees................... The New Notes will be unconditionally guaranteed
by our domestic subsidiaries (existing, and with
some exceptions, future), which are referred to
in this prospectus as the guarantors. Our
existing and future foreign subsidiaries and any
subsidiaries we later designate as
"unrestricted" under the indenture will not be
guarantors. The guarantees, which are referred
to in this prospectus as the "subsidiary
guarantees," will be senior unsecured
obligations of each guarantor. These subsidiary
guarantees will rank equal to other existing and
future senior subordinated indebtedness of the
guarantors and senior in right of payment to all
of the existing and future obligations of the
guarantors that are expressly subordinated in
right of payment to the subsidiary guarantees.
Optional Redemption.......... On or after August 15, 2003, we may redeem some
or all of the New Notes at any time at the
redemption prices listed in the section
"Description of New Notes" under the heading
"Optional Redemption."
5
<PAGE> 11
Before August 15, 2002, we may redeem up to 35%
of the New Notes with the proceeds of one or
more public equity offerings by us or WFS
Holdings, Inc., which is our parent and is
referred to in this prospectus as Holdings. The
redemption would be at the price listed in the
section "Description of New Notes" under the
heading "Optional Redemption."
Mandatory Offer to
Repurchase................... If we sell some of our assets or experience
specific kinds of changes of control, we must
offer to repurchase the New Notes at the prices
listed in the section "Description of New Notes"
under the heading "Repurchase at Option of
Holders."
Basic Covenants of
Indenture.................... We will issue the New Notes under an indenture
with The Bank of New York. The terms of the New
Notes will, among other things, restrict our
ability and the ability of our restricted
subsidiaries to:
- borrow more money;
- pay dividends on stock or make other
equity distributions;
- purchase or redeem our capital stock;
- make some investments;
- allow the imposition of dividend
restrictions on some subsidiaries;
- sell some assets;
- create some liens;
- engage in transactions with affiliates;
and
- sell all, or almost all, of our assets or
merge with or into other companies.
For more details, see the section "Description
of New Notes" under the heading "Certain
Covenants."
Exchange Offer; Registration
Rights....................... You have the right to exchange the Original
Notes for New Notes with substantially identical
terms. This exchange offer is intended to
satisfy that right. The New Notes will not
provide you with any further exchange or
registration rights.
Resales Without Further
Registration............... We believe that the New Notes issued in the
exchange offer in exchange for Original Notes
may be offered for resale, resold and otherwise
transferred by you without compliance with the
registration and prospectus delivery provisions
of the Securities Act, if:
- you are acquiring the New Notes issued in the
exchange offer in the ordinary course of your
business;
- you have not engaged in, do not intend to
engage in, and have no arrangement or
understanding with any person to participate
in the distribution of the New Notes issued to
you in the exchange offer; and
6
<PAGE> 12
- you are not our "affiliate," as defined under
Rule 405 of the Securities Act.
Each of the participating broker-dealers that
receives New Notes for its own account in
exchange for Original Notes that were acquired
by it as a result of market-making or other
activities must acknowledge that it will deliver
a prospectus in connection with the resale of
the New Notes. We do not intend to list the New
Notes on any securities exchange.
7
<PAGE> 13
SUMMARY PRO FORMA AND HISTORICAL CONSOLIDATED FINANCIAL DATA
THE COMPANY--UNAUDITED PRO FORMA FINANCIAL DATA
The summary unaudited pro forma financial data set forth below have been
derived from the unaudited pro forma financial data included elsewhere in this
prospectus and give effect to:
- the acquisition of MAS;
- Worldwide's entering into a new senior secured credit facility;
- an equity contribution of $10.0 million to Worldwide by Holdings;
- the refinancing of the existing indebtedness of both Worldwide and MAS;
and
- the prior acquisition of AMR Services Corporation, which is referred to
in this prospectus as AMRS or the Predecessor.
All of the above listed transactions, except for the prior acquisition of
AMRS, occurred on August 12, 1999 and are collectively referred to in this
prospectus as the Transactions.
The pro forma statements of operations data and other data give effect to
the Transactions and the prior acquisition of AMRS as if they had occurred at
the beginning of the period presented and the pro forma balance sheet data give
effect to the Transactions as if they had occurred on June 30, 1999.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1998 1999
---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................. $286,144 $150,920
Salaries, wages, and benefits............................. 189,100 97,667
Depreciation and amortization............................. 14,123 7,445
Other operating expenses.................................. 72,388 39,524
-------- --------
Operating income from continuing operations............... 10,533 6,284
Interest expense, net..................................... 18,885 9,443
Other income (expense).................................... 518 (822)
-------- --------
Loss from continuing operations before income taxes....... $ (7,834) $ (3,981)
OTHER DATA:
Capital expenditures...................................... $ 7,756 $ 2,815
Cash interest expense(a).................................. 17,038 8,519
ADDITIONAL DATA:
EBITDA(b)................................................. $ 25,174 $ 12,907
SELECTED RATIOS:
Ratio of EBITDA to cash interest expense(b)............... 1.5x 1.5x
Ratio of net debt to EBITDA(c)............................ 5.2x 10.2x
Ratio of earnings to fixed charges(d)..................... -- --
</TABLE>
8
<PAGE> 14
<TABLE>
<CAPTION>
AS OF JUNE 30,
1999
----
(IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 5,000
Working capital........................................... 33,930
Total assets.............................................. 236,396
Long-term debt (including current portion)................ 136,107
Stockholder's equity...................................... 37,062
</TABLE>
- -------------------------
(a) Cash interest expense represents interest expense, less the amortization of
debt discount and issuance costs.
(b) EBITDA for any period is calculated as the sum of net income plus the
following to the extent deducted in calculating net income: (1) interest
expense (income), (2) income tax expense, (3) depreciation expense and (4)
amortization expense. We consider EBITDA to be a widely accepted financial
indicator of a company's ability to service debt, fund capital expenditures
and expand its business; however, EBITDA is not calculated in the same way
by all companies and is neither a measurement required, nor represents cash
flow from operations as defined, by generally accepted accounting
principles. EBITDA should not be considered by you as an alternative to net
income, as an indicator of operating performance or as an alternative to
cash flow as a measure of liquidity. The calculation of EBITDA in this
prospectus is calculated differently than for purposes of the covenants
under the indenture and the senior secured credit facility. See "Description
of Senior Secured Credit Facility" and "Description of New Notes" for how
these instruments calculate EBITDA.
(c) Net debt represents total debt less cash and cash equivalents and is
calculated based on pro forma cash and debt balances as of June 30, 1999.
(d) Ratio of earnings to fixed charges is computed assuming that 1/3 of rental
expense is representative of the interest factor. Earnings were insufficient
to cover fixed charges by $7,834,000 and $3,981,000 for 1998 and the six
months ended June 30, 1999, respectively.
9
<PAGE> 15
WORLDWIDE--HISTORICAL AND PREDECESSOR FINANCIAL DATA
The following table sets forth certain summary historical consolidated
financial data of Worldwide and its predecessor, AMRS. The statement of
operations data and other data for 1997 and 1998 have been derived from the
audited consolidated financial statements of AMRS included elsewhere in this
prospectus. The statement of operations data and other data for 1996, the six
months ended June 30, 1998 and the three month periods ended March 31, 1999 and
June 30, 1999 and the balance sheet data as of June 30, 1999 have been derived
from unaudited consolidated financial statements of Worldwide and AMRS and, for
the interim periods, in the opinion of management, include all adjustments,
consisting only of normal recurring adjustments, which we consider necessary for
a fair presentation of its financial position and results of operations. The
results of operations for the three months ended June 30, 1999 are not
necessarily indicative of the results that may be expected for all of 1999 or
for any other interim period.
<TABLE>
<CAPTION>
AMRS HISTORICAL (PREDECESSOR) WORLDWIDE
----------------------------------------------------------- ---------
THREE
SIX MONTHS THREE MONTHS MONTHS
YEAR ENDED DECEMBER 31, ENDED ENDED ENDED
------------------------------- JUNE 30, MARCH 31, JUNE 30,
1996(A) 1997 1998 1998 1999 1999
------- ---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................... $193,189 $223,090 $229,742 $110,904 $ 61,475 $ 59,877
Salaries, wages, and
benefits.................. 124,543 144,422 154,706 75,069 39,679 39,682
Depreciation and
amortization.............. 5,938 5,643 5,908 2,820 1,627 1,973
Other operating expenses.... 56,598 66,167 61,074 29,703 18,438 15,270
-------- -------- -------- -------- -------- --------
Operating income from
continuing operations..... 6,110 6,858 8,054 3,312 1,731 2,952
Interest income............. 1,052 1,421 2,160 1,093 440 --
Interest expense............ -- -- -- -- -- (1,556)
Other income (expense)...... 288 (584) 580 -- (552) (270)
-------- -------- -------- -------- -------- --------
Income from continuing
operations before income
taxes..................... 7,450 7,695 10,794 4,405 1,619 1,126
OTHER DATA:
Depreciation and
amortization.............. $ 5,938 $ 5,643 $ 5,908 $ 2,820 $ 1,627 $ 1,973
Capital expenditures........ 9,182 12,662 7,219 3,508 1,688 989
Ratio of earnings to fixed
charges................... 2.6x 3.1x 3.4x 3.0x 2.3x 1.4x
ADDITIONAL DATA:
EBITDA(b)................... $ 12,336 $ 11,917 $ 14,542 $ 6,132 $ 2,806 $ 4,655
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30,
1999
----
(IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA(c):
Cash and cash equivalents................................. $ 5,984
Working capital........................................... 26,816
Total assets.............................................. 135,574
Long-term debt (including current portion)................ 69,018
Stockholder's equity...................................... 28,375
</TABLE>
- -------------------------
(a) Our financial statements for 1996 have not been audited.
(b) EBITDA for any period is calculated as the sum of net income plus the
following to the extent deducted in calculating net income: (1) interest
expense (income), (2) income tax expense, (3) depreciation expense, and (4)
amortization expense. We consider EBITDA to be a widely accepted financial
indicator of a company's ability to service debt, fund capital expenditures
and expand its business; however, EBITDA is not calculated in the same way
by all companies and is neither a measurement required, nor represents cash
flow from operations as defined, by generally accepted accounting
principles. EBITDA should not be considered by you as an alternative to net
10
<PAGE> 16
income, as an indicator of operating performance or as an alternative to cash
flow as a measure of liquidity. The calculation of EBITDA in this prospectus is
calculated differently than for purposes of the covenants under the indenture
and the senior secured credit facility. See "Description of Senior Secured
Credit Facility" and "Description of New Notes" for how the instruments
calculate EBITDA.
(c) Information does not reflect the Transactions.
11
<PAGE> 17
MAS--HISTORICAL FINANCIAL DATA
The following table sets forth summary historical consolidated financial
data of MAS. The statement of operations data and other data for 1996, 1997 and
1998 have been derived from MAS's audited consolidated financial statements. The
statement of operations data and other data for the six months ended June 30,
1998 and June 30, 1999 and the balance sheet data as of June 30, 1999 have been
derived from MAS's unaudited consolidated financial statements and, for the
interim periods, in the opinion of our management, include all adjustments,
consisting of only normal recurring adjustments, which we consider necessary for
a fair presentation of its financial position and results of operations. The
results of operations for the interim periods are not necessarily indicative of
the results of operations for a full year.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------- -----------------
1996 1997 1998 1998 1999
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................................... $38,084 $46,557 $56,402 $24,893 $29,568
Operating expenses..................................... 29,876 36,145 43,519 19,872 23,804
Depreciation and amortization.......................... 2,338 2,743 3,274 1,614 1,707
General and administrative expenses.................... 2,717 4,297 4,073 2,041 1,968
------- ------- ------- ------- -------
Total operating expenses............................... 34,931 43,185 50,866 23,527 27,479
------- ------- ------- ------- -------
Operating income....................................... 3,153 3,372 5,536 1,366 2,089
Interest income........................................ 32 71 69 30 57
Interest expense....................................... (621) (516) (563) (285) (260)
Other income (expense)................................. (53) 74 (62) 5 --
------- ------- ------- ------- -------
Income before income taxes............................. 2,511 3,001 4,980 1,116 1,886
Provision for income tax expense....................... 942 1,163 1,886 402 718
------- ------- ------- ------- -------
Net income............................................. $ 1,569 $ 1,838 $ 3,094 $ 714 $ 1,168
OTHER DATA:
Depreciation and amortization.......................... $ 2,338 $ 2,743 $ 3,274 $ 1,614 $ 1,707
Capital expenditures................................... 733 611 537 204 138
Ratio of earnings to fixed charges..................... 2.6x 2.4x 3.0x 2.1x 2.7x
ADDITIONAL DATA:
EBITDA(a).............................................. $ 5,437 $ 6,189 $ 8,748 $ 2,985 $ 3,796
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30,
1999
----
(IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 3,437
Working capital........................................... 3,025
Total assets.............................................. 23,528
Long-term debt (including current portion)................ 5,982
Stockholders' equity...................................... 13,500
</TABLE>
- -------------------------
(a) EBITDA for any period is calculated as the sum of net income plus the
following to the extent deducted in calculating net income: (1) interest
expense (income), (2) income tax expense, (3) depreciation expense and (4)
amortization expense. We consider EBITDA to be a widely accepted financial
indicator of a company's ability to service debt, fund capital expenditures
and expand its business; however, EBITDA is not calculated in the same way
by all companies and is neither a measurement required, nor represents cash
flow from operations as defined, by generally accepted accounting
principles. EBITDA should not be considered by you as an alternative to net
income, as an indicator of operating performance or as an alternative to
cash flow as a measure of liquidity. The calculation of EBITDA in this
prospectus is calculated differently than for purposes of the covenants
under the indenture and the senior secured credit facility. See "Description
of Senior Secured Credit Facility" and "Description of New Notes" for how
these instruments calculate EBITDA.
12
<PAGE> 18
RISK FACTORS
In addition to the other information set forth in this prospectus, you
should carefully consider the following factors before tendering Original Notes
in exchange for New Notes. The risks and uncertainties described below are not
the only ones we face. Additional risks and uncertainties not presently known to
us, or that we consider immaterial or that are similar to those faced by other
companies in one or more of the same lines of business, may also impair our
business operations. The following risks could materially harm our business,
financial condition or future results. If that occurs, the value of the New
Notes could decline, and you could lose all or part of your investment.
OUR SUBSTANTIAL AMOUNT OF DEBT COULD MATERIALLY HARM OUR FINANCIAL HEALTH AND
PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE NEW NOTES
We have a substantial amount of debt. As of August 31, 1999, we had total
debt of $142.4 million, which reflects $11.0 million of borrowings under the
senior secured credit facility that was outstanding at August 31, 1999. At
August 31, 1999, we had additional availability under the senior secured credit
facility of approximately $30.4 million, subject to us satisfying leverage and
coverage ratios and other customary conditions. This includes the additional
debt of approximately $5.9 million that we incurred in connection with the
acquisition of Aerolink on August 23, 1999. As of August 31, 1999, our total
stockholders' equity was approximately $36.4 million.
After giving effect to the Transactions:
- for 1998, we would have had a net loss of $7.8 million; and
- for 1998, our earnings would have been insufficient to cover our fixed
charges by $7.8 million.
Our high level of debt could have important consequences for you and us.
For example, it could:
- make it more difficult for us to obtain additional financing in the
future for working capital, capital expenditures, acquisitions or other
purposes;
- require us to dedicate a large portion of our cash flow to pay principal
and interest on our indebtedness, including the New Notes, which would
reduce the amount of cash flow available to fund working capital, capital
expenditures, acquisitions and other business activities;
- adversely effect the value of the securities;
- increase our vulnerability to general adverse economic and industry
conditions, including increases in interest rates;
- place us at a competitive disadvantage compared to our competitors that
have proportionately less debt; and
- limit our flexibility in planning for, or reacting to, changes in our
business and the ground services industry generally.
We anticipate that our cash flow from operations, together with borrowings
under the senior secured credit facility, will be sufficient to service our debt
obligations as they become due. Our ability to meet these requirements depends
on our future financial performance, which will be affected by financial,
business, economic, competitive and other factors. We will not be able to
control many of these factors, such as economic conditions in the markets in
which we operate and competitive initiatives undertaken by competitors.
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<PAGE> 19
We cannot be certain that our cash flow from operations will be sufficient to
allow us to pay principal and interest on our debt, including the New Notes, and
meet our other obligations. If we cannot generate sufficient cash flow from
operations, we may be required to adopt one or more alternative financing plans,
such as refinancing or restructuring all or part of our existing debt, including
the New Notes, selling assets, reducing or delaying investments in our business
or seeking to raise additional debt or equity capital. We may not be able to
effect any of these actions on commercially reasonable terms, or at all, and
these actions may not enable us to continue to satisfy our cash requirements. In
addition, the terms of existing or future debt agreements, including the senior
secured credit facility and the indenture relating to the New Notes, may
restrict us from adopting any of these alternatives.
COVENANT RESTRICTIONS MAY LIMIT OUR ABILITY TO OPERATE OUR BUSINESS
The senior secured credit facility and the indenture contain, and our other
indebtedness agreements may contain, covenants that restrict our ability to make
distributions or other payments to our investors and creditors unless financial
tests or other criteria are satisfied. We must also comply with specified
financial ratios and tests. If we do not comply with these or other covenants
and restrictions contained in the senior secured credit facility or the
indenture, we could default under those agreements and the indebtedness,
together with accrued interest, could then be declared immediately due and
payable. Our ability to comply with these provisions of the senior secured
credit facility and the indenture may be affected by changes in economic or
business conditions or other events beyond our control.
The senior secured credit facility contains, and our other indebtedness
agreements may contain, additional affirmative and negative covenants, including
limitations on our ability to incur additional indebtedness and to make
acquisitions and capital expenditures, which could affect our ability to operate
our business. The indenture restricts, among other things, our ability to incur
additional debt, sell assets, create liens or other encumbrances, make dividend
and other payments to third parties or merge or consolidate, all of which could
affect our ability to operate our business and may limit our ability to take
advantage of potential business opportunities as they arise. A failure to comply
with these covenants and restrictions could result in an event of default under
either the senior secured credit facility or the indenture, which could lead to
an acceleration of the related debt and the acceleration of debt under other
debt instruments that may contain cross-acceleration or cross-default
provisions.
OUR ASSETS ARE ENCUMBERED TO SECURE THE SENIOR SECURED CREDIT FACILITY
The New Notes and guarantees of the New Notes will not be secured by any of
our assets. Our obligations under the senior secured credit facility, however,
are secured by a first priority pledge of, and security interest in, the stock
of all our present and future domestic subsidiaries, and 65% of the stock of all
our present and future foreign subsidiaries, and substantially all of our assets
and the assets of our domestic subsidiaries. If we were to become insolvent or
liquidate, or if payment under the senior secured credit facility were
accelerated, the lenders under the senior secured credit facility would be
entitled to exercise the legal remedies available to a secured lender.
Accordingly, all secured lenders would be effectively senior in right of payment
to all unsecured lenders, including the holders of the New Notes, to the extent
of the value of the assets securing the indebtedness owed to the secured
lenders.
14
<PAGE> 20
OUR ABILITY TO REPAY THE NEW NOTES AND OTHER DEBT DEPENDS ON CASH FLOW FROM OUR
SUBSIDIARIES
We conduct a substantial amount of our business through our subsidiaries.
As a result, we depend, in part, on dividends, loans, advances or other payments
from our subsidiaries to satisfy our financial obligations and make payments to
our investors.
The ability of our subsidiaries to make payments to us may be restricted
by, among other things:
- their earnings;
- covenants contained in their debt agreements;
- covenants contained in other agreements to which our subsidiaries
are or may become a party;
- business and tax considerations; and
- applicable corporate and other laws and regulations.
Although the indenture limits the ability of our subsidiaries to agree to
encumbrances and restrictions on their ability to pay dividends and make other
payments, this limitation is subject to a number of significant exceptions and
qualifications.
NOT ALL OF OUR SUBSIDIARIES ARE GUARANTORS; ASSETS OF THE NON-GUARANTOR
SUBSIDIARIES MAY NOT BE AVAILABLE TO MAKE PAYMENTS ON THE NEW NOTES
Our present and future foreign subsidiaries and some of our other
subsidiaries which do not meet certain economic measures will not be guarantors
of the New Notes. Payments on the New Notes are only required to be made by us
and the guarantors. As a result, no payments are required to be made from assets
of subsidiaries which do not guarantee the New Notes unless those assets are
transferred, by dividend or otherwise, to us or a guarantor.
In the event of a bankruptcy, liquidation or reorganization of any of our
non-guarantor subsidiaries, holders of their indebtedness, including their trade
creditors, will generally be entitled to payment of their claims from the assets
of those subsidiaries before any assets are made available for distribution to
us. After giving pro forma effect to the Transactions, as of June 30, 1999, the
total liabilities, including trade payables, of our non-guarantor foreign
subsidiaries would have been approximately $8.6 million.
After giving effect to the Transactions, our non-guarantor foreign
subsidiaries generated approximately 10.5% of our pro forma consolidated
revenues for 1998 and approximately 12.6% of our pro forma consolidated revenues
for the first six months of 1999. In addition, our non-guarantor foreign
subsidiaries held approximately 11.0% of our pro forma consolidated assets as of
June 30, 1999.
WE MAY NOT BE ABLE TO REPURCHASE THE NEW NOTES UPON A CHANGE OF CONTROL AS
REQUIRED BY THE INDENTURE
Upon the occurrence of specific change of control events under the
indenture, we will be required to offer to repurchase all outstanding New Notes
from their holders at 101% of their principal amount, plus accrued interest to
the date of repurchase. However, a change
15
<PAGE> 21
of control will also constitute an event of default under the senior secured
credit facility. Any future credit agreements or other agreements to which we
become a party may contain similar provisions. A default under the senior
secured credit facility would result in an event of default under the indenture
if the lenders were to accelerate the debt under the senior secured credit
facility. This event of default under the indenture would require us to
repurchase the New Notes. However, the terms of the senior secured credit
facility provide that certain change of control events will constitute a default
thereunder. In the event a change of control occurs at a time when we are
prohibited from repurchasing the New Notes, we could seek the consent of our
lenders to repurchase the New Notes or could attempt to refinance those
borrowings. If we do not obtain their consent or refinance borrowings, we will
remain contractually prohibited from repurchasing the New Notes.
The source of funds for any repurchase of the New Notes would be our
available cash or cash generated from other sources, including borrowings, sales
of assets or sales of equity. None of these sources may be available. Upon the
occurrence of a change of control event, we may seek to refinance the
indebtedness outstanding under the senior secured credit facility and the New
Notes. However, it is possible that we will not be able to complete the
refinancing on commercially reasonable terms or at all. In that case, we would
not have the funds necessary to finance the required change of control offer.
WE ARE DEPENDENT ON MAINTAINING OUR RELATIONSHIPS WITH SOME OF OUR SIGNIFICANT
CUSTOMERS
We derived approximately 26% of our revenues from American Airlines and its
affiliate American Eagle in 1998 and our top ten customers accounted for
approximately 50% of our revenues in 1998 after giving effect to the acquisition
of MAS. If we experience a significant reduction in business from American
Airlines or its affiliates before we grow our business, it would result in
material harm to our business, financial condition and future results. We cannot
assure you that we will be able to service our significant customers at current
or increased levels. Revenues from our customers could decrease either because
they choose to use other third party ground services providers or because they
choose to perform these services using their own personnel. Many of our
customers, including American Airlines, currently provide a significant portion
of their own ground services.
OUR CUSTOMERS MAY TERMINATE THEIR CONTRACTS WITH US ON SHORT NOTICE
Many of our service contracts allow customers to terminate their contract
on 90 days notice or sooner for performance breaches. However, many of our
contracts have passed the term specified in the contract, and therefore, under
their terms, generally have become terminable by either party on 60 days notice
or less for any reason. While we believe these terms are typical in the
industry, we can provide no assurance that customers will not terminate their
contracts. The termination of a large portion of our contracts would have a
material adverse effect on our business, financial condition and future results.
OUR RIGHTS TO OPERATE AT AIRPORTS COULD BE TERMINATED BY LOCAL AIRPORT
AUTHORITIES
In order to provide our services at an airport, we usually must have
permission from the local airport authority. This permission generally can be
terminated by the local airport authority at will and without cause. The loss of
one or more of our permits, licenses or
16
<PAGE> 22
consents to operate could materially harm our business, financial condition and
future results.
THE OCCURRENCE OF SIGNIFICANT ADVERSE EVENTS AFFECTING THE AIRLINE INDUSTRY MAY
HARM OUR BUSINESS
Because we provide most of our services to air cargo and passenger
airlines, we are likely to be affected by significant events that affect those
businesses. All of these events will be outside of our control and any of them
could materially harm our business, financial condition and future results. Some
of the events that could harm our business include the following:
- an economic downturn in one or more of the geographic markets where
we do business;
- route changes by airlines;
- strikes by unions; and
- a substantial reduction in air traffic or financial problems
incurred by air cargo or passenger airlines.
THE GROUND SERVICES INDUSTRY IS HIGHLY COMPETITIVE
The ground services business is highly competitive. If we do not compete
effectively with other service providers, we could lose customers and our
revenues could be reduced. Either of these could materially harm our business,
financial condition and future results.
Service quality and price are particularly important competitive factors in
our industry. In addition to competition for customers, we compete against other
service providers for airport permits, which are in some cities only issued to a
small number of service providers. In addition to competing with other service
providers, we indirectly compete for portions of our business with airlines that
do not outsource some or all of their ground services and businesses that
provide other forms of transportation, including businesses that transport cargo
by trucks. Although we believe that trends and projections in our industry are
favorable for third party providers of ground services, this may not prove to be
the case as a result of factors outside of our control such as changes in
economic conditions or a change in outsourcing strategies by airlines. In
addition, some of our competitors are larger than us and have significant
financial and other resources.
OUR ACQUISITION STRATEGY ENTAILS RISKS
As part of our business strategy, we intend to grow through acquisitions,
as well as through internal growth. On August 12, 1999, Worldwide acquired MAS
and on August 23, 1999, Worldwide acquired Aerolink. We intend to pursue
additional acquisitions, including a smaller acquisition for which we have
signed a non-binding letter of intent. Acquisitions present various risks,
including the following:
- difficulties assimilating and integrating the operations of the combined
companies and retaining key personnel;
- difficulties integrating the acquired company's financial, computer,
payroll and other systems into our own;
17
<PAGE> 23
- difficulties implementing additional controls and information systems
appropriate to a larger company;
- distractions to management, which could result in a disruption of our
business;
- unanticipated liabilities or contingencies relating to the acquired
company; and
- reduced earnings due to increased goodwill amortization, increased
interest costs and costs related to integration.
If we fail to manage our growth effectively, we could be materially harmed.
In addition, suitable acquisition candidates may not be available. Anticipated
benefits from acquisitions also may not be realized.
FLUCTUATIONS IN FOREIGN CURRENCY MAY ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE
A substantial portion of our revenues are denominated in non-U.S.
currencies, consisting principally of French francs, Canadian dollars, Hong Kong
dollars and British pounds. However, most of our expenses, including interest
and principal on our indebtedness, are denominated in U.S. dollars. This exposes
us to fluctuations in the rate of exchange between foreign currencies and the
U.S. dollar. Significant exchange rate fluctuations could materially harm our
business and financial condition. We currently do not engage in foreign currency
hedging, although we may do so in the future.
OUR BUSINESS IS SUBJECT TO SIGNIFICANT ENVIRONMENTAL REGULATION
We are subject to a variety of international, federal, state and local
governmental regulations relating to the use, storage, discharge, emission and
disposal of hazardous substances and wastes, remediation of contamination
associated with the releases of hazardous substances and worker health and
safety.
We maintain fueling operations at four locations. In connection with these
fueling operations, we stock jet fuel in large above-ground storage tanks and
operate sub-surface fuel lines that may give rise to unknown releases. We are
not aware of the occurrence of any releases that are expected to materially harm
our business, financial condition and future results. However, future events,
such as the discovery of unknown contamination, future spills and releases,
compliance with more stringent regulations, more vigorous enforcement policies
by regulatory agencies or stricter or different interpretations of existing
regulations could cause us operating constraints or require us to make material
expenditures for cleaning up contamination or complying with evolving
environmental regulations. These or other events relating to compliance with
environmental regulations could materially harm our business, financial
condition and future results. See "Business--Regulatory
Compliance--Environmental" for a summary discussion of these regulations.
THE INTERESTS OF HOLDINGS' SHAREHOLDERS MAY CONFLICT WITH YOUR INTERESTS
All of our outstanding shares of common stock are owned by Holdings. The
principal shareholder of Holdings and parties related to the principal
shareholder own and control in excess of 98% of Holdings' outstanding voting
common stock. As a result, the principal shareholder and parties related to the
principal shareholder have the ability to elect all of our directors and the
directors of Holdings and approve any action requiring the approval of the
holders of other voting common stock and the voting common stock of Holdings,
18
<PAGE> 24
including adopting amendments to our certificate of incorporation and the
certificate of incorporation of Holdings and approving acquisitions or sales of
all or substantially all of our assets or the assets of Holdings.
Circumstances may occur in which the interests of Holdings' shareholders
could be in conflict with your interests. In addition, Holdings' shareholders
may have an interest in pursuing transactions that, in their judgment, enhance
the value of their equity investment in our company, even though these
transactions may involve risks to you as a holder of New Notes.
OUR BUSINESS MAY BE DISRUPTED BY YEAR 2000 PROBLEMS
Internal or external Year 2000-related disruptions and costs could
materially harm our business, financial condition and future results. Although
we believe that our systems are Year 2000 compliant, undetected errors or
effects may remain, which could result in disruptions to our business or
unexpected costs. Disruptions and unexpected costs also may arise as a result of
third parties not being Year 2000 compliant, especially air cargo and passenger
airlines, airports and air traffic control systems. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Year 2000" for a
more extensive discussion of Year 2000 risks.
FRAUDULENT TRANSFER CONSIDERATIONS
Under applicable provisions of the United States Bankruptcy Code or
comparable provisions of state fraudulent transfer or conveyance law, if, at the
time the New Notes or the subsidiary guarantees are issued:
(1) we or our guarantors incurred that indebtedness with the intent to
hinder, delay or defraud creditors; or
(2) (a) we or our guarantors received less than reasonably equivalent value
for incurring that indebtedness; and
(b) we or our guarantors
- were insolvent or were rendered insolvent by reason of the
incurrence of that indebtedness (and the application of the
proceeds of the incurrence);
- were engaged, or about to engage, in a business or transaction
for which the assets remaining constituted unreasonably small
capital to carry on our business; or
- intended to incur, or believed that we would incur, debts beyond
our ability to pay those debts as they matured;
then, in each of these cases, a court of competent jurisdiction could void,
in whole or in part, the New Notes or the subsidiary guarantees or, in the
alternative, subordinate the New Notes or the subsidiary guarantees to our
existing and future indebtedness.
The measure of insolvency for purposes of the above would likely vary
depending upon the law applied in the case. Generally, however, we or our
guarantors would be considered insolvent if the sum of our debts, including
contingent liabilities, were greater than all of our assets at a fair valuation.
We believe that, for purposes of the United States Bankruptcy Code and state
fraudulent transfer or conveyance laws, the New Notes and the subsidiary
guarantees are being issued without the intent to hinder, delay or defraud
19
<PAGE> 25
creditors and for proper purposes and in good faith, and that we will receive
reasonably equivalent value or fair consideration therefor. Based on our
projections of expected cash flows and estimates of the fair value of our assets
and liabilities, we believe that after the issuance of the New Notes and the
subsidiary guarantees and the application of the net proceeds therefrom, we will
be solvent, will have sufficient capital for carrying on our business and will
be able to pay our debts as they mature. However, we cannot assure you that a
court passing on these issues would agree with our determination.
AN ACTIVE TRADING MARKET MAY NOT DEVELOP FOR THE NEW NOTES
There is no established trading market for the New Notes. The Original
Notes are eligible for trading in the PORTAL market. The New Notes are a new
issue of securities with no established trading market and will not be listed on
any securities exchange. The initial purchasers informed us that they intend to
make a market in the New Notes. However, they may cease their market-making at
any time.
We cannot assure you that a liquid market will develop for the New Notes.
The liquidity of any market for the New Notes will depend upon many factors,
including:
- the number of holders of the New Notes;
- our results of operations and financial condition;
- the market for similar securities; and
- the interest of securities dealers in making a market in the New Notes.
If a trading market does not develop or is not maintained, you may
experience difficulty in reselling the New Notes, or you may be unable to sell
them at all.
Historically, the market for non-investment grade debt has been subject to
disruptions that have caused volatility in prices. It is possible that the
market for the New Notes will be subject to disruptions. These disruptions may
have a negative effect on you as a holder of the New Notes regardless of our
prospects and financial performance.
IF YOU FAIL TO EXCHANGE YOUR ORIGINAL NOTES, YOUR ORIGINAL NOTES WILL REMAIN
SUBJECT TO RESTRICTIONS ON TRANSFER
Holders of Original Notes who do not exchange their Original Notes for New
Notes in the exchange offer will continue to be subject to the restrictions on
transfer of the Original Notes described in the legend on those notes. The
restrictions result from the issuance of the Original Notes in reliance on
exemptions from registration under the Securities Act and applicable state
securities laws. In general, the Original Notes may not be transferred or resold
except in a transaction registered in accordance with, or exempt from, these
registration requirements. If we complete this exchange offer, we will not be
required to register the Original Notes, and we do not anticipate that we will
register the Original Notes, under the Securities Act. Additionally, to the
extent that Original Notes are tendered and accepted in the exchange offer, the
aggregate principal amount of the Original Notes outstanding will decrease, with
a resulting decrease in the liquidity of the market for the Original Notes.
20
<PAGE> 26
USE OF PROCEEDS
This exchange offer is intended to satisfy our obligations under the
registration rights agreement entered into in connection with the offering of
the Original Notes. We will not receive any proceeds from the exchange offer. In
consideration for issuing the New Notes, we will receive Original Notes with
like original principal amount at maturity. The form and terms of the Original
Notes are the same as the form and terms of the New Notes, except as otherwise
described in this prospectus. The Original Notes surrendered in exchange for New
Notes will be retired and canceled and cannot be reissued. Accordingly, the
issuance of the New Notes will not result in any increase in our outstanding
debt.
We received net proceeds totaling approximately $126.8 million from the
private placement of the Original Notes. The net proceeds were used to:
- fund the acquisition of MAS;
- repay outstanding indebtedness of Worldwide and MAS; and
- pay related fees and expenses.
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<PAGE> 27
CAPITALIZATION
The following table indicates our cash position and total capitalization as
of June 30, 1999 (1) on an actual, historical basis and (2) as adjusted to give
pro forma effect to the Transactions.
You should read this information in conjunction with the "Use of Proceeds,"
"Unaudited Pro Forma Combined Consolidated Financial Data," "Selected Historical
Consolidated Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" sections and the consolidated financial
statements of Worldwide and MAS and the related notes thereto included elsewhere
in this prospectus.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
--------------------
ACTUAL PRO FORMA
------- ---------
(IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents................................... $ 6.0 $ 5.0
===== ======
Total debt, including current portion:
Existing Worldwide debt................................... $69.0 $ --
New senior secured credit facility........................ -- 9.6
Senior notes.............................................. -- 126.5(1)
----- ------
Total debt................................................ 69.0 136.1
----- ------
Stockholder's equity........................................ 28.4 37.1
----- ------
Total capitalization...................................... $97.4 $173.2
===== ======
</TABLE>
- ---------------
(1) Net of unamortized discount of $3.5 million.
22
<PAGE> 28
UNAUDITED PRO FORMA COMBINED CONSOLIDATED
FINANCIAL DATA
The unaudited pro forma combined consolidated financial data is based on
the historical consolidated financial statements of Worldwide, its predecessor
AMRS and the historical consolidated financial statements of MAS, and on the
assumptions and adjustments described in the notes to the unaudited pro forma
combined consolidated financial data, including assumptions relating to the
allocation of the consideration paid for AMRS and MAS to the assets and
liabilities of AMRS and MAS based on preliminary estimates of their respective
fair values. The actual allocation of this consideration may differ from that
reflected in the unaudited pro forma combined consolidated financial data. In
addition, the interest rates on the New Notes and borrowings under the senior
secured credit facility, and the estimated transaction fees and expenses, are
assumed solely for the purpose of presenting the unaudited pro forma combined
consolidated financial data set forth below. The actual interest rates on the
borrowings under the senior secured credit facility and actual transaction fees
expenses may differ from assumptions forth below.
Our unaudited pro forma combined consolidated statements of operations data
has been presented as if the Transactions and the acquisition of AMRS had
occurred at the beginning of each period. Pro forma adjustments were calculated
to:
- reflect the resulting changes in amortization and interest expense from
the acquisition of MAS and the acquisition of AMRS;
- adjust the results of operations of MAS and AMRS to remove certain
operating expenses, previously allocated by their owners, that no longer
existed after the acquisitions; and
- adjust interest expense resulting from the refinancings of existing MAS
and Worldwide indebtedness.
Our unaudited pro forma combined balance sheet as of June 30, 1999 has been
presented as if the Transactions had occurred on June 30, 1999. Specifically,
pro forma adjustments have been included for the following:
- the acquisition of the stock of MAS, the preliminary purchase price
allocation and the payment of related transaction costs, using proceeds
from this offering; and
- the refinancing of existing indebtedness, including indebtedness of both
Worldwide and MAS, with proceeds from the offering and borrowings under
the senior secured credit facility.
The unaudited pro forma combined consolidated financial data does not give
effect to the acquisition of Aerolink. The acquisition of Aerolink is not
material to the Company and thus has not been included in the unaudited pro
forma combined consolidated financial data.
We completed the Transactions in the third quarter of 1999. We recorded an
extraordinary loss of approximately $1.5 million in connection with the
refinancing of Worldwide's existing indebtedness.
Our unaudited pro forma combined financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the respective historical consolidated financial
statements of Worldwide, AMRS and MAS and the related notes thereto included
elsewhere in this prospectus. Our unaudited pro forma combined consolidated
financial data does not purport to represent what our
23
<PAGE> 29
financial position and results of operations would have been if the Transactions
had actually been completed as of the dates indicated and are not intended to
project our financial position or results of operations for any future period.
24
<PAGE> 30
UNAUDITED PRO FORMA COMBINED CONSOLIDATED
STATEMENT OF OPERATIONS DATA
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
PREDECESSOR PRO FORMA
AMRS WORLDWIDE MAS COMBINED
------------ ------------ ---------- ----------
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, JUNE 30, JUNE 30, PRO FORMA JUNE 30,
1999 1999 1999 ADJUSTMENTS 1999
---- ---- ---- ----------- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................ $61,475 $59,877 $29,568 $ -- $150,920
Salaries, wages, and benefits....... 39,679 39,682 18,436 (130)(c) 97,667
Depreciation and amortization....... 1,627 1,973 1,707 2,138(a)(b) 7,445
Other operating expenses............ 18,438 15,270 7,336 (1,520)(f)(g)(h) 39,524
------- ------- ------- ------- --------
Operating income from continuing
operations........................ 1,731 2,952 2,089 (488) 6,284
Interest income..................... 440 -- -- (440)(i) --
Interest expense.................... -- (1,556) (203) (7,684)(d) (9,443)
Other income (expense), net......... (552) (270) -- -- (822)
------- ------- ------- ------- --------
Income (loss) from continuing
operations before income taxes.... 1,619 1,126 1,886 (8,612) (3,981)
Provision for income tax expense.... 644 587 718 (1,949)(e) --
------- ------- ------- ------- --------
Income (loss) from continuing
operations........................ $ 975 $ 539 $ 1,168 $(6,663) $ (3,981)
======= ======= ======= ======= ========
OTHER DATA:
Ratio of earnings to fixed charges(k)....................................................... --
ADDITIONAL DATA:
EBITDA(j)................................................................................... $ 12,907
</TABLE>
The accompanying notes are an integral part of these
pro forma combined consolidated financial statements.
25
<PAGE> 31
UNAUDITED PRO FORMA COMBINED CONSOLIDATED
STATEMENT OF OPERATIONS DATA
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PREDECESSOR PRO FORMA
AMRS MAS COMBINED
------------ ------------ ------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, PRO FORMA DECEMBER 31,
1998 1998 ADJUSTMENTS 1998
---- ---- ----------- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues........................................... $229,742 $56,402 $ -- $286,144
Salaries, wages, and benefits...................... 154,706 34,699 (305)(c) 189,100
Depreciation and amortization...................... 5,908 3,274 4,941(a)(b) 14,123
Other operating expenses........................... 61,074 12,893 (1,579)(f) 72,388
-------- ------- -------- --------
Operating income from continuing operations........ 8,054 5,536 (3,057) 10,533
Interest income.................................... 2,160 -- (2,160)(i) --
Interest expense................................... -- (494) (18,391)(d) (18,885)
Other income (expense), net........................ 580 (62) -- 518
-------- ------- -------- --------
Income (loss) from continuing operations before
income taxes..................................... 10,794 4,980 (23,608) (7,834)
Provision for income tax expense................... 4,490 1,886 (6,376)(e) --
-------- ------- -------- --------
Income (loss) from continuing operations........... $ 6,304 $ 3,094 $(17,232) $ (7,834)
======== ======= ======== ========
OTHER DATA:
Ratio of earnings to fixed charges(k)......................................................... --
ADDITIONAL DATA:
EBITDA(j)..................................................................................... $ 25,174
</TABLE>
The accompanying notes are an integral part of these
pro forma combined consolidated financial statements.
26
<PAGE> 32
NOTES TO UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(a) Represents the increase in amortization expense for the excess of the AMRS
purchase price over estimated fair value of the net assets acquired under
the terms of the acquisition agreement. In connection with the acquisition
of AMRS, Worldwide recorded approximately $33.7 million of intangibles,
including goodwill which is being amortized over 20 years. The pro forma
adjustment reflects additional amortization expense assuming the
acquisition had occurred as of the beginning of each period being
presented.
(b) Represents the increase in amortization expense for the excess of the MAS
purchase price over estimated fair value of the net assets acquired under
the terms of the acquisition agreement. In connection with the acquisition
of MAS, Worldwide recorded approximately $71.3 million of intangibles,
including goodwill which is being amortized over 20 years. The pro forma
adjustment reflects additional amortization assuming the acquisition had
occurred at the beginning of the period being presented.
(c) Represents the elimination of salaries, wages, and benefits previously
incurred by MAS that are no longer incurred by Worldwide. In connection
with the acquisition of MAS, some salary expenses, primarily relating to a
transaction with an employee shareholder, have been eliminated.
(d) Represents the interest expense resulting from completion of the
Transactions net of the elimination of interest expense of MAS. In
addition, upon completion of the Transactions, Worldwide had outstanding
some amounts under the senior secured credit facility. The following table
sets forth the calculation of pro forma interest expense:
<TABLE>
<CAPTION>
INTEREST RATE PRO FORMA
USED IN ANNUAL
PRO FORMA INTEREST
DEBT ISSUE BASE INTEREST RATE BORROWINGS CALCULATION EXPENSE
---------- ------------------ ----------- ------------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Senior Secured
Credit
Facility......... LIBOR plus 3% for the
outstanding balance $ 9,556 8.23% $ 786
Commitment Fee -- 0.5% on
unused balance 0.5% 327
Senior Notes due
2007.............
12.25% 15,925
$130,000 12.25% -------
17,038
Pro forma cash interest expense................................................
1,847
Amortization of debt discount and issuance costs...............................
-------
$18,885
Total pro forma interest expense...............................................
=======
</TABLE>
- -------------------------
A 1/8% change in interest rates on the senior secured credit facility would
cause interest expense to increase or decrease by approximately $12,000 per
annum as compared to the amounts set forth above.
(e) Represents an adjustment to eliminate taxes recorded as a result of the
pro forma pretax loss.
(f) Represents the elimination of the corporate overhead expenses allocated
from AMR Corporation and included in the historical financial statements
of AMRS. Prior to
27
<PAGE> 33
the acquisition of AMRS by Holdings, AMR Corporation allocated significant
overhead expenses to AMRS. In connection with the acquisition certain of
these expenses will no longer be incurred by Worldwide. These expenses
primarily relate to benefit plans, including stock based compensation
plans and employee personal travel plans that will no longer be continued
nor replaced by Worldwide, and allocation of the AMR Corporation senior
executive salaries for which there will be no equivalent at Worldwide. The
following is a listing of expenses that will no longer be incurred by
Worldwide:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1998 1999
---- ----
(IN THOUSANDS)
<S> <C> <C>
Allocation of AMR Corporation senior executives..... $ 550 $349
Personal travel benefits............................ 516 79
Variable stock based compensation plans allocated by
AMR Corporation.................................. 514 80
------ ----
Total....................................... $1,580 $508
</TABLE>
(g) Represents the additional overhead expense that was allocated by AMR
Corporation during the three month period ended March 31, 1999. During the
three months ended March 31, 1999 AMRS received a monthly allocation of
approximately $640,000 of overhead expense, excluding items removed above,
from AMR Corporation as compared to an average monthly allocation of
$407,000 of overhead expense, excluding items removed above, during fiscal
1998. This increase resulted exclusively from the sale during the quarter
of AMR Corporation's other operations in this segment. Upon their sale,
corporate overhead allocated to AMRS was increased with no increase in
services. As a result, a pro forma adjustment has been included for
$699,000 to reduce the AMR Corporation overhead allocation to reflect
historical levels.
(h) As a consequence of the offering of the Original Notes, we and Castle
Harlan, Inc. amended the management agreement as described in "Related
Party Transactions" to provide that management fees will not be payable in
respect of any period from July 1, 1999 to June 30, 2000. Accordingly, this
adjustment removes management fees paid by Worldwide during the three
months ended June 30, 1999.
(i) Represents the elimination of interest income from AMR Corporation related
to accumulated undistributed cash of AMRS, held by AMR Corporation, and
included in the historical financial statements. These amounts were paid by
dividend to AMR Corporation prior to the sale of AMRS.
(j) EBITDA for any period is calculated as the sum of net income plus the
following to the extent deducted in calculating net income: (1) interest
expense (income), (2) income tax expense, (3) depreciation expense and (4)
amortization expense. We consider EBITDA to be a widely accepted financial
indicator of a company's ability to service debt, fund capital expenditures
and expand its business; however, EBITDA is not calculated in the same way
by all companies and is neither a measurement required, nor represents cash
flow from operations as defined, by generally accepted accounting
principles. EBITDA should not be considered by you as an alternative to net
income, as an indicator of operating performance or as an alternative to
cash flow as a measure of liquidity. The calculation of EBITDA in this
prospectus is calculated differently than for purposes of the covenants
under the indenture and the senior
28
<PAGE> 34
secured credit facility. See "Description of Senior Secured Credit
Facility" and "Description of New Notes" for how these instruments
calculate EBITDA.
(k) Ratio of earnings to fixed charges is computed assuming that 1/3 of rental
expense is representative of the interest factor. Earnings were
insufficient to cover fixed charges by $3,981,000 and $7,834,000,
respectively, for each of the periods presented.
29
<PAGE> 35
UNAUDITED PRO FORMA COMBINED CONSOLIDATED
BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA
WORLDWIDE MAS COMBINED
--------- -------- ---------
JUNE 30, JUNE 30, PRO FORMA JUNE 30,
1999 1999 ADJUSTMENTS 1999
---- ---- ----------- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS:
Current assets
Cash and cash equivalents............................... $ 5,984 $ 3,437 $ (4,421)(c) $ 5,000
Accounts receivable, net................................ 55,364 6,871 -- 62,235
Inventories............................................. 541 -- -- 541
Prepaid expenses and other.............................. 7,635 116 -- 7,751
-------- ------- -------- --------
Total current assets.............................. 69,524 10,424 (4,421) 75,527
Property and equipment, net............................... 30,620 13,100 -- 43,720
Intangibles, including goodwill........................... 33,669 -- 71,270(a) 104,939
Other assets.............................................. 1,761 4 (1,555)(e) 12,210
12,000(f)
-------- ------- -------- --------
Total assets...................................... $135,574 $23,528 $ 77,294 $236,396
======== ======= ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY:
Current liabilities
Accounts payable........................................ $ 18,085 $ 3,293 $ -- $ 21,378
Other current liabilities............................... 20,096 123 -- 20,219
Current portion of long-term debt....................... 4,527 3,983 (8,510)(g) --
-------- ------- -------- --------
Total current liabilities......................... 42,708 7,399 (8,510) 41,597
Existing revolving credit agreement....................... 18,866 -- (18,866)(g) --
Long-term debt............................................ 45,625 1,999 (47,624)(g) --
Senior notes, due 2007.................................... -- -- 126,551(c)(i) 126,551
Senior secured revolving credit agreement................. -- -- 9,556(d) 9,556
Deferred income taxes..................................... -- 630 21,000(b) 21,630
Stockholder's equity...................................... 28,375 13,500 (13,500)(a) 37,062
(1,555)(e)
10,000(h)
242(j)
-------- ------- -------- --------
Total liabilities and stockholder's equity........ $135,574 $23,528 $ 77,294 $236,396
======== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these
pro forma combined consolidated financial statements.
30
<PAGE> 36
NOTES TO UNAUDITED PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET
(a) Represents the excess of the purchase price over estimated fair value of
the net assets acquired under the terms of the MAS acquisition agreement
as follows (in thousands):
<TABLE>
<S> <C>
Total purchase price................................. $63,000
Less:
Cash............................................... 2,667
Accounts receivable, net........................... 6,871
Plant, property & equipment........................ 13,100
Prepaid expenses and other......................... 119
Plus:
Liabilities assumed................................ 10,027
-------
Net assets assumed.............................. (12,730)
-------
Plus:
Deferred taxes as a result of the acquisition...... 21,000
-------
Intangible assets, including goodwill................ $71,270
=======
</TABLE>
(b) Represents deferred taxes established pursuant to purchase accounting for
the difference between the book and tax basis of identifiable intangible
assets acquired.
(c) Represents the proceeds to be received from the offering of the Original
Notes used to fund the Transactions, net of cash acquired from MAS and
certain cash held by Worldwide to pay down indebtedness, as a component of
the Transactions as follows (in thousands):
<TABLE>
<S> <C>
Purchase 100% of MAS shares.............................. $ 63,000
Repayment of Worldwide debt.............................. 69,018
Repayment of MAS debt.................................... 5,982
Estimated transaction fees and expenses.................. 12,770
Less: Cash used to pay down indebtedness................ (4,421)
Holdings' equity contribution..................... (10,000)
--------
Total to be financed........................... $136,349
========
</TABLE>
(d) Represents the proceeds received under the senior secured credit facility
to fund the remaining requirements of the repayment of existing Worldwide
debt, debt assumed in the acquisition of MAS and transaction costs paid in
connection with the Transactions.
(e) Represents the extraordinary loss from Worldwide's repayment of existing
debt.
(f) Represents the estimated debt issuance costs incurred in connection with
obtaining the senior secured credit facility and the Original Notes.
(g) Represents the repayment of Worldwide's existing debt and the debt assumed
in connection with the acquisition of MAS.
(h) Represents an equity contribution of $10.0 million to Worldwide by
Holdings used to reduce existing indebtedness.
31
<PAGE> 37
(i) Represents the issuance of the Original Notes of $130.0 million less the
original issuance discount of $3.2 million and the value assigned to the
issuance of Holdings' warrants of $0.2 million. (See Note j below)
(j) Represents value assigned to the issuance of the warrants of $0.2 million
that Holdings issued simultaneously with the issuance of the Original
Notes.
32
<PAGE> 38
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
You should read the selected historical consolidated financial data set
forth below in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and the consolidated financial
statements and the notes thereto, and the pro forma and other financial
information included herein.
WORLDWIDE AND PREDECESSOR FINANCIAL INFORMATION
The selected consolidated financial data for the years ended December 31,
1994, December 31, 1995, December 31, 1996, the three month periods ended March
31, 1999 and June 30, 1999, the six month period ended June 30, 1998, and the
combined six month period ended June 30, 1999 have been derived from Worldwide's
and AMRS's unaudited consolidated financial statements and, in the opinion of
our management, include all adjustments (consisting of only normal recurring
adjustments) necessary for a fair presentation of its results of operations for
these periods and financial condition as at the dates presented. The selected
historical consolidated financial data for the fiscal years ended December 31,
1997 and December 31, 1998 have been derived from AMRS's audited consolidated
financial statements. The results of operations for any interim period are not
necessarily indicative of the results of operations for a full year.
<TABLE>
<CAPTION>
AMRS Historical (Predecessor) Worldwide COMBINED
------------------------------------------------------------------- ------------ SIX
THREE MONTHS THREE MONTHS MONTHS
Years Ended December 31, ENDED ENDED ENDED
---------------------------------------------------- MARCH 31, JUNE 30, JUNE 30,
1994 1995 1996 1997 1998 1999 1999 1999(a)
---- ---- ---- ---- ---- ---- ---- -------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues......................... $134,338 $156,262 $193,189 $223,090 $229,742 $61,475 $59,877 $121,352
Salaries, wages, and benefits.... 78,276 96,662 124,543 144,422 154,706 39,679 39,682 79,361
Depreciation and amortization.... 5,366 5,650 5,938 5,643 5,908 1,627 1,973 3,600
Other operating expenses......... 47,039 50,609 56,598 66,167 61,074 18,438 15,270 33,708
-------- -------- -------- -------- -------- ------- ------- --------
Operating income................. 3,657 3,341 6,110 6,858 8,054 1,731 2,952 4,683
Interest income.................. 2,826 1,460 1,052 1,421 2,160 440 -- (a)
Interest expense................. -- -- -- -- -- -- (1,556) (a)
Other income (expense)........... (1,568) 585 288 (584) 580 (552) (270) (822)(a)
-------- -------- -------- -------- -------- ------- ------- --------
Income from continuing
operations before income
taxes.......................... 4,915 5,386 7,450 7,695 10,794 1,619 1,126 --
Provision for income tax
expense........................ 2,113 2,316 3,162 3,309 4,490 644 587 --
-------- -------- -------- -------- -------- ------- ------- --------
Income from continuing
operations..................... 2,802 3,070 $ 4,288 $ 4,386 $ 6,304 $ 975 $ 539 --
Loss from discontinued
operations..................... -- -- -- -- 552 210 -- --
-------- -------- -------- -------- -------- ------- ------- --------
Net income....................... $ 2,802 $ 3,070 4,288 $ 4,386 $ 5,752 $ 765 $ 539 --
======== ======== ======== ======== ======== ======= ======= ========
OTHER DATA:
Capital expenditures............. $ 5,126 $ 6,253 $ 9,182 $ 12,662 $ 7,219 $ 1,688 $ 989 $ 2,677
Ratio of earnings to fixed
charges........................ 2.4x 2.3x 2.6x 3.1x 3.4x 2.3x 1.4x (a)
ADDITIONAL DATA:
EBITDA(b)........................ $ 7,455 $ 9,576 $ 12,336 $ 11,917 $ 14,542 $ 2,806 $ 4,655 $ 7,461
</TABLE>
33
<PAGE> 39
<TABLE>
<CAPTION>
AS OF
AS OF DECEMBER 31, JUNE 30,
----------------------------------------------- --------
1994 1995 1996 1997 1998 1999
------- ------- ------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents... $10,033 $ 3,922 $20,396 $20,544 $14,200 $ 5,984
Working capital............. 13,500 14,448 23,707 24,083 25,747 26,540
Total assets................ 74,105 79,937 79,205 85,418 88,696 135,574
Long-term debt (including
current position)........ -- -- -- -- -- 69,018
Stockholders' equity........ 46,021 48,451 52,773 56,756 62,365 28,099
</TABLE>
- ---------------
(a) The six months ended June 30, 1999 represents an adjusted combination of two
interim periods, one for the Predecessor for the three month period prior to
the consummation of the acquisition ended March 31, 1999, and one for
Worldwide for the three month period following the consummation of the
acquisition ended June 30, 1999. Revenue and operating expense data for the
two periods have been combined to present a combined six month period ended
June 30, 1999. No combined information is presented below the operating
income from continued operations line item, except for foreign exchange gain
(loss), as Worldwide and AMRS had dramatically different capital structures
and a combination of such data is not meaningful.
(b) EBITDA for any period is calculated as the sum of net income plus the
following to the extent deducted in calculating net income: (1) interest
expense (income), (2) income tax expense, (3) depreciation expense and (4)
amortization expense. We consider EBITDA to be a widely accepted financial
indicator of a company's ability to service debt, fund capital expenditures
and expand its business; however, EBITDA is not calculated in the same way
by all companies and is neither a measurement required, nor represents cash
flow from operations as defined, by generally accepted accounting
principles. EBITDA should not be considered by you as an alternative to net
income, as an indicator of operating performance or as an alternative to
cash flow as a measure of liquidity. The calculation of EBITDA in this
prospectus is calculated differently than for purposes of the covenants
under the indenture and the senior secured credit facility. See "Description
of Senior Secured Credit Facility" and "Description of New Notes" for how
these instruments calculate EBITDA.
34
<PAGE> 40
MAS
The following table sets forth selected historical data of MAS. The
selected historical consolidated financial data for 1994, 1995, 1996, 1997, and
1998 have been derived from MAS's audited consolidated financial statements.
MAS's selected consolidated financial data for the six months ended June 30,
1998 and June 30, 1999 have been derived from MAS's unaudited consolidated
financial statements and, for the interim periods, in the opinion of MAS's
management, include all adjustments (consisting of only normal recurring
adjustments) necessary for a fair presentation of its results of operations. The
results of operations for any interim period are not necessarily indicative of
the results of operations for a full year.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------- ------------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue............................ $24,782 $34,617 $38,084 $46,557 $56,402 $24,893 $29,568
Operating expenses................. 19,730 26,633 29,876 36,145 43,519 19,872 23,804
Depreciation and amortization...... 1,292 3,034 2,338 2,743 3,274 1,614 1,707
General and administrative
expenses......................... 2,102 1,870 2,717 4,297 4,073 2,041 1,968
------- ------- ------- ------- ------- ------- -------
Operating income................... 1,658 3,080 3,153 3,372 5,536 1,366 2,089
Interest income.................... 66 36 32 71 69 30 57
Interest expense................... (361) (559) (621) (516) (563) (285) (260)
Other income (expense)............. 202 61 (53) 74 (62) 5 --
------- ------- ------- ------- ------- ------- -------
Income before income taxes......... 1,565 2,618 2,511 3,001 4,980 1,116 1,886
Provision for income tax expense... 570 981 942 1,163 1,886 402 718
------- ------- ------- ------- ------- ------- -------
Net income......................... $ 995 $ 1,637 $ 1,569 $ 1,838 $ 3,094 $ 714 $ 1,168
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
----------------------------------------------- -----------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......... $ 9 $ 8 $ 4 $ 4 $ 1,212 $ 1,273 $ 3,437
Working capital (deficit).......... (708) (972) (671) (871) 1,638 (966) 3,025
Total assets....................... 13,646 17,936 18,044 22,412 25,299 20,594 23,528
Long-term debt and capital leases
(including current portion)...... 5,166 6,991 6,136 6,716 6,886 6,716 5,982
Stockholders' equity............... 3,849 5,486 7,055 9,238 12,332 9,808 13,500
OTHER DATA:
Ratio of earnings to fixed
charges.......................... 2.3x 2.5x 2.6x 2.4x 3.0x 2.1x 2.7x
</TABLE>
35
<PAGE> 41
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Financial Statements, and the notes thereto, included elsewhere in
this prospectus. This discussion should also be read in conjunction with the
Unaudited Pro Forma Combined Consolidated Financial Statements included
elsewhere in this prospectus.
THE COMPANY
OVERVIEW
We are one of the world's leading independent providers of ground services
to air cargo and passenger airlines. Our services include cargo handling, and
ramp, passenger and technical services. We provide services for over 300
customers, including American Airlines, British Airways, Cathay Pacific,
Continental Airlines, Delta Air Lines, DHL, Emery, Korean Air Lines, Nippon
Cargo Airlines and UPS. We currently service our customers at 86 airports,
including 25 of the 30 busiest U.S. airports and five of the 10 busiest European
airports, based on 1997 annual arrivals and departures. We have approximately
9,800 employees in North America, the Caribbean, Europe and Hong Kong.
Worldwide Acquisition; Predecessor Entity. Holdings, which is owned by
Castle Harlan Partners III, L.P., its affiliates and some members of Worldwide's
management, acquired Worldwide from AMR Corporation on March 31, 1999. Prior to
the acquisition, Worldwide was known as AMR Services Corporation. Worldwide's
business was not operated by AMR Corporation as a single entity, but instead
operated through a number of companies that were part of the AMR Global Services
group. Prior to the date the acquisition was closed, some of these operations
were sold or were merged directly into AMR Corporation. The financial statements
and financial information included in this prospectus for AMR Services
Corporation represent the entity purchased (and that entity is sometimes
referred to in this prospectus as the Predecessor) and not the distinct AMR
Services Corporation legal entity that existed prior to the acquisition.
Acquisition of MAS. We completed the acquisition of MAS on August 12,
1999, the same time as the sale of the Original Notes. The purchase price for
MAS was approximately $63.0 million. We also repaid $6.0 million of debt of MAS.
The acquisition was accounted for under the purchase method of accounting.
Worldwide recorded approximately $71.3 million of intangibles, including
goodwill which is being amortized over 20 years.
Acquisition of Aerolink. We completed the acquisition of Aerolink on
August 23, 1999. The purchase price was approximately $5.9 million plus an
earn-out of a maximum of $1.0 million. As part of the purchase price, we repaid
$0.6 million of debt of Aerolink. The acquisition was accounted for under the
purchase method of accounting. Worldwide recorded approximately $3.4 million of
intangibles, including goodwill which is being amortized over 20 years.
Integration and Expansion Strategy. Historically, under AMR Corporation's
ownership, we pursued an aggressive geographic expansion strategy, spending a
significant amount of capital to open new locations. In the future, we plan to
focus on building market share at existing locations and spending capital
primarily on equipment to service
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<PAGE> 42
new contracts at existing locations. Limited capital spending on new locations
is anticipated, as we intend to acquire other companies to gain access to new
locations rather than incurring significant start-up costs. We completed our
acquisition of MAS on August 12, 1999 and we completed the acquisition of
Aerolink on August 23, 1999. We have entered into a nonbinding letter of intent
to purchase a smaller ground service company. We have not yet negotiated a
definitive purchase agreement for this company.
Allocated Corporate Expenses. Prior to the sale of Worldwide to Holdings,
AMR Corporation provided us with various corporate services, including executive
oversight and corporate planning, cash management, tax planning, risk
management, insurance, payroll, legal, corporate administrative and other
services. Allocated expenses for these services amounted to $2.3 million, $5.8
million, $5.9 million and $5.9 million for the three month period ended March
31, 1999 and for the years ended December 31, 1998, 1997 and 1996, respectively.
These expenses have been reflected in our operating income for these periods.
Charges for these corporate services were based on a general allocation
methodology used by AMR Corporation to allocate all corporate overhead expenses
to its operating divisions. These costs were not necessarily allocated on a
basis that approximated Worldwide's estimated usage of services or the costs
Worldwide would have incurred if it had provided these services using its own
personnel. AMR Corporation's corporate allocations ceased at the time the
acquisition was closed.
Discontinued Business. In July 1998, the Predecessor acquired a license to
operate and began to fund the operations of Cyclone Surface Cleaning, Inc.,
which was engaged in developing a technology to clean airport runways. We
decided that Cyclone does not fit with our core businesses and to discontinue
its operations. Results of operations for 1998 and the three months ended March
31, 1999 have been adjusted to reflect Cyclone as a discontinued operation. On
August 31, 1999, we assigned our license and a stock option that we also had
acquired and paid approximately $0.6 million to the owners of Cyclone to settle
our obligations due under a promissory note.
RESULTS OF OPERATIONS
Financial information for periods prior to March 31, 1999, which was the
date that Holdings acquired Worldwide, and for periods subsequent to that date
are presented using different bases of accounting. This information therefore is
not comparable in some respects. Results of operations for the six months ended
June 30, 1999 represent an adjusted combination of two interim periods: one for
the Predecessor for the period prior to the consummation of the acquisition
until March 31, 1999, and one for Worldwide for the three month period following
the consummation of the acquisition through June 30, 1999. No combined
historical financial information is presented below the operating income line
item because Worldwide and AMR Services Corporation had different capital
structures and we believe that a combination of this information is not
meaningful. Information with respect to interest expense and income taxes is
provided in the unaudited pro forma combined consolidated statement of
operations for the three months ended June 30, 1999.
Revenues. Revenues are generated by providing cargo handling and ramp,
passenger and technical services for air cargo and passenger airlines. Cargo
services are generally billed based on the number of man-hours needed to provide
the services, the number of pounds of cargo handled or, in some cases, a
combination of the two. Most of our other services are billed based on the
number of man-hours used to provide the services,
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<PAGE> 43
although some ramp services are billed on a per aircraft basis. Technical
services are generally billed based on time and materials.
Expenses. Expenses incurred to generate revenues consist primarily of
salaries, wages and benefits. Other significant expenditures are (1) materials,
supplies and services, which includes operating supplies such as fuel, glycol
for de-icing, outsourced services, cost of sales for freight management services
and office supplies, (2) equipment and facilities rentals, (3) depreciation and
amortization and (4) other operating expenses, which include data processing and
information systems, telecommunications, accounting, human resources, office
supplies, travel and general corporate administration.
As indicated above, the Predecessor was responsible for paying significant
overhead allocations from AMR Corporation in addition to the overhead required
to run the Predecessor's daily operations. For example, the Predecessor had its
own executive group, finance and accounting, legal and human resources
departments. AMR Corporation's corporate allocations ceased at the time the
acquisition of Worldwide by Holdings was closed. In connection with our
establishment of an administrative structure, we have hired, and intend to
continue to hire, additional personnel at our Euless corporate office.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
The following table contains, for the periods indicated, revenues and
categories of expenses in dollars and as a percentage of sales.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------------
1998 % 1999 %
---- - ---- -
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues........................... $110,904 100.0% $121,352 100.0%
Salaries, wages and benefits....... 75,069 67.7 79,361 65.4
Materials, supplies and services... 13,184 11.9 14,870 12.2
Equipment and facilities rental.... 6,484 5.9 7,334 6.0
Depreciation and amortization...... 2,820 2.5 3,600 3.0
Other operating expenses........... 6,704 6.0 9,235 7.6
General and administrative
allocated expenses............... 3,331 3.0 2,269 1.9
-------- --------
Operating income from continuing
operations....................... $ 3,312 3.0 $ 4,683 3.9
======== ========
</TABLE>
Revenues. Total revenues increased $10.5 million, or 9.4%, from $110.9
million in 1998 to $121.4 million in 1999. Revenues increased $3.9 million, or
3.5%, in 1999 as a result of the addition of a new location in Hong Kong, which
opened in July 1998. The remaining increase resulted primarily from revenue
growth in our cargo handling operations, especially at our location in Paris,
and moderate increases in our freight management business over the 1998 period.
Salaries, wages and benefits. Salaries, wages and benefits increased $4.3
million, or 5.7%, from $75.1 million in 1998 to $79.4 million in 1999. The
primary reason for the increase was the increased number of employees required
to support the additional business during 1999. Specifically, an increase of
$2.0 million occurred at our new location in Hong Kong, which was not in
operation during the same period in 1998.
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<PAGE> 44
Materials, supplies and services. Materials, supplies and services
increased $1.7 million, or 12.8%, from $13.2 million in 1998 to $14.9 million in
1999. This increase was primarily due to an increase in freight management cost
of sales, resulting from additional freight management business.
Equipment and facilities rental. Equipment and facilities rental increased
$0.8 million, or 13.2%, from $6.5 million in 1998 to $7.3 million in 1999. The
primary reason for the increase was the increase in facility rentals required to
service our cargo handling operations, primarily in New York and Europe.
Depreciation and amortization. Depreciation and amortization increased
$0.8 million, or 27.7%, from $2.8 million in 1998 to $3.6 million in 1999. The
primary reason for the increase was an additional $0.5 million in amortization
in the quarter ended June 30, 1999 as a result of the acquisition of Worldwide
by Holdings.
Other operating expenses. Other operating expenses increased $2.5 million,
or 37.8%, from $6.7 million in 1998 to $9.2 million in 1999. Expenses increased
as a result of the higher level of business activity, the growth in freight
management expenses due to the increase in business volume, the addition of the
new Hong Kong location and increases in corporate expenses due to staff added to
provide some services previously provided by AMR Corporation. The increase was
substantially offset by a decrease in general and administrative allocated
expenses as indicated below.
General and administrative allocated expenses. General and administrative
allocated expenses decreased $1.0 million, or 31.9%, from $3.3 million in 1998
to $2.3 million in 1999. The reason for the decrease was the elimination of the
corporate overhead charge allocated to the Predecessor from AMR Corporation.
This allocation was included in the 1998 period and the quarter ended March 31,
1999, but was eliminated at the time of the acquisition of Worldwide. AMR
Corporation increased the allocation in the quarter ended March 31, 1999, which
resulted in this decrease being lower than if the allocation had remained
constant with amounts from prior years.
Operating income from continuing operations. Operating income from
continuing operations increased $1.4 million, or 41.4%, from $3.3 million in
1998 to $4.7 million in 1999. As a percentage of sales, operating income
increased by 0.9% in 1999 to 3.9%. This increase resulted from the elimination
of corporate overhead allocations from AMR Corporation in the quarter ended
March 31, 1999, and lower expenses, consisting primarily of salaries and wages,
as a percentage of sales during the six month period ended June 30, 1999. Also
responsible for the increase during 1999 were one-time start-up costs of $0.7
million incurred in Hong Kong during the first six months of 1998 before
operations began at that location.
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<PAGE> 45
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1998
The following table contains, for the periods indicated, revenues and
categories of expenses in dollars and as a percentage of sales.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1997 % 1998 %
---- - ---- -
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues............................ $223,090 100.0% $229,742 100.0%
Expenses:
Salaries, wages and benefits........ 144,422 64.7 154,706 67.3
Materials, supplies and services.... 33,384 15.0 28,047 12.2
Equipment and facilities rental..... 11,059 5.0 13,597 5.9
Depreciation and amortization....... 5,643 2.5 5,908 2.6
Other operating expenses............ 15,847 7.1 13,632 6.0
General and administrative allocated
expenses.......................... 5,877 2.6 5,798 2.5
-------- --------
Operating income from continuing
operations........................ 6,858 3.1 8,054 3.5
Interest income..................... 1,421 0.6 2,160 0.9
Other income (expense), net......... (584) 0.3 580 0.3
-------- --------
Income before taxes................. 7,695 3.4 10,794 4.7
Taxes............................... 3,309 1.5 4,490 1.4
-------- --------
Income from continuing operations... 4,386 2.0 6,304 2.7
-------- --------
Loss from discontinued operations
net of applicable income taxes.... -- -- (552) .2
-------- --------
Net income.......................... $ 4,386 2.0 $ 5,752 2.5
======== ========
</TABLE>
Revenues. Total revenues increased $6.6 million, or 3.0%, from $223.1
million in 1997 to $229.7 million in 1998. This increase had a number of
components, including (1) revenue from providing technical and passenger
services at our new Hong Kong location, which accounted for $3.9 million of the
increase, (2) an expansion of cargo handling and passenger services operations
at Boston, which accounted for $2.0 million and (3) additional revenues from our
New York cargo operations, which increased by $2.2 million. However, these were
largely offset by a $7.6 million loss of revenue in the freight management
business due to a major customer in that business ceasing operations in late
1997.
Salaries, wages and benefits. Salaries, wages and benefits increased $10.3
million, or 7.1%, from $144.4 million in 1997 to $154.7 million in 1998.
Increases in salaries and wages track closely with increases in revenues in our
Hong Kong, Boston and New York locations discussed above. The decrease in the
freight management business during 1998 did not significantly decrease salaries
and wages as fulfillment in our freight management business is exclusively
provided by common carriers, and not our employees.
Materials, supplies and services. Materials, supplies and services
decreased $5.3 million, or 16.0%, from $33.4 million in 1997 to $28.0 million in
1998. The primary
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<PAGE> 46
reason for the decrease was the reduction in volume in the freight management
business, which accounted for $6.3 million, due to the major customer loss
discussed above. This decrease was partially offset by normal growth in our
other business lines, as discussed above.
Equipment and facilities rental. Equipment and facilities rental increased
$2.5 million, or 22.9%, from $11.1 million in 1997 to $13.6 million in 1998. The
primary reason for the increase was the increase in the cargo handling
operations at our New York location, which were lower in 1997 due to rental
credit received.
Depreciation and amortization. Depreciation and amortization remained
relatively flat increasing only $0.3 million, or 4.7%, from $5.6 million in 1997
to $5.9 million in 1998. This increase was primarily related to our new location
in Hong Kong.
Other operating expenses. Other operating expenses decreased $2.2 million,
or 14.0%, from $15.8 million in 1997 to $13.6 million in 1998. The primary
reason for the decrease was the decrease in freight management business,
including a $1.0 million bad debt write-off occurring in 1997 relating to a
major customer ceasing operations.
General and administrative allocated expenses. Allocations included in the
financial statements for 1997 and 1998 were at AMR Corporation's discretion and
were comparable.
Operating income from continuing operations. Operating income from
continuing operations increased $1.2 million, or 17.4%, from $6.9 million in
1997 to $8.1 million in 1998. As a percent of sales, operating income remained
relatively flat increasing by only 0.5% in 1998.
Interest income. Interest income increased $0.7 million, or 52.0%, from
$1.4 million in 1997 to $2.2 million in 1998. This increase reflected an
increase in the accumulated undistributed cash balances at the Predecessor,
which were held on its behalf by AMR Corporation.
Income tax expense. Income tax expense increased from $3.3 million in 1997
to $4.5 million in 1998. The Predecessor's effective income tax rate remained
relatively flat at approximately 43.0% in 1997 and 41.6% in 1998.
Loss from discontinued operations net of applicable income taxes. Loss
from discontinued operations net of applicable income taxes was $0.6 million in
1998. It was due to the operations of Cyclone, which was purchased in July 1998.
As discussed above, we intend to dispose of Cyclone.
Net income. Net income increased $1.4 million, or 31.1%, from $4.4 million
in 1997 to $5.8 million in 1998. The increase in net income was due to increases
in operating income and interest income in 1998.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1997
The Predecessor's statement of operations data for 1996 is unaudited.
However, in the opinion of management, this data includes all adjustments,
consisting only of normal recurring adjustments, which we consider necessary for
a fair presentation of results of operations for 1996. Some results of
operations data for the Predecessor has not been presented because it was not
determinable from AMR Corporation's historical accounting records. Prior to
December 31, 1996, balance sheet data was aggregated for the Predecessor with
other AMR Corporation non-airline subsidiaries, although operating data
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<PAGE> 47
was tracked to each specific entity. The absence of separate balance sheet data
makes operating costs with respect to interest and taxes not determinable. As a
result, 1996 statement of operations data is presented only through operating
income from continuing operations.
The following table contains, for the periods indicated, revenues and
categories of expenses in dollars and as a percentage of sales.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1996 % 1997 %
---- - ---- -
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues........................... $193,189 100.0% $223,090 100.0%
Expenses:
Salaries, wages and benefits....... 124,543 64.5 144,422 64.7
Materials, supplies and services... 25,661 13.3 33,384 15.0
Equipment and facilities rental.... 12,776 6.6 11,059 5.0
Depreciation and amortization...... 5,729 3.0 5,643 2.5
Other operating expenses........... 12,466 6.5 15,847 7.1
General and administrative
allocated expenses............... 5,904 3.1 5,877 2.6
-------- --------
Operating income................... $ 6,110 3.2 $ 6,858 3.1
</TABLE>
Revenues. Total revenues increased $29.9 million, or 15.5%, from $193.2
million in 1996 to $223.1 million in 1997. Significant increases in revenues
resulted from an $8.1 million increase due to new customers in the freight
management business, subsequently lost in late 1997, significant new operations
starting up in Boston, Halifax, Providence, and Oakland in late 1996 or early
1997, most of which related to new ramp services activities, and a significant
increase in Denver's revenues due to the opening of the new Denver International
Airport in 1997.
Salaries, wages and benefits. Salaries, wages and benefits increased $19.9
million, or 16.0%, from $124.5 million in 1996 to $144.4 million in 1997. The
primary reason for the increase was the increase in employees required to
support additional business activity as described in the preceding paragraph.
Materials, supplies and services. Materials, supplies and services
increased $7.7 million, or 30.1%, from $25.7 million in 1996 to $33.4 million in
1997. The increase is almost exclusively related to the increase in freight
management business, for which fulfillment cost is included in materials,
supplies, and services.
Equipment and facilities rental. Equipment and facilities rental decreased
$1.7 million, or 13.4%, from $12.8 million in 1996 to $11.1 million in 1997. The
primary reason for the decrease was rent credits received on our New York cargo
facilities in 1997.
Depreciation and amortization. Depreciation and amortization remained flat
decreasing only $0.1 million, or 1.5%, from $5.7 million in 1996 to $5.6 million
in 1997.
Other operating expenses. Other operating expenses increased $3.3 million,
or 27.1%, from $12.5 million in 1996 to $15.8 million in 1997. The primary
reason for the increase was the increase in operating expenses required to
support additional business activity, including the increase in freight
management business.
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<PAGE> 48
General and administrative allocated expenses. Allocations included in the
financial statements for 1996 and 1997 were at AMR Corporation's discretion and
were comparable as a percentage of sales.
Operating income. Operating income increased $0.7 million, or 12.2%, from
$6.1 million in 1996 to $6.9 million in 1997. As a percentage of sales,
operating income decreased by 0.1% in 1997 due to slightly lower operating
margins. The slight decrease in operating margins was due to a significant
increase in freight management business, which has a lower operating margin than
most of our other services.
LIQUIDITY AND CAPITAL RESOURCES
Prior to August 12, 1999, our primary sources of liquidity were cash flows
from operations and borrowings under our old credit facility. Our current
primary sources of liquidity are cash flows from operations and borrowings under
the senior secured credit facility, which is discussed below. In the three
months ended June 30, 1999, net cash used in operations was $5.6 million and
borrowings under our old revolving credit facility of $18.9 million were used to
fund this expansion in working capital and $1.0 million in capital expenditures.
At June 30, 1999, we had $6.0 million in cash and cash equivalents, the majority
of which is held by our operations in France and Hong Kong.
In addition to our debt service obligations, our principal liquidity needs
are for working capital and capital expenditures. During 1998, the Predecessor
spent $7.2 million on capital projects, and for the six months ended June 30,
1999, Worldwide spent $2.7 million on capital projects. Most of the projects
were related to the purchase of additional equipment to handle new business
activity and the purchase of replacement capital items or the refurbishment of
equipment.
We have significant debt service obligations. Our annual interest payments
on the Original Notes are $15.9 million. Our interest payment requirements on
borrowings under the senior secured credit facility depend on the level of our
borrowings.
Total capital expenditures for 1999 are expected to be approximately $9.5
million. Of this amount, approximately $3.0 million is expected to be incurred
in connection with the establishment of our new corporate administrative
facility, principally for computer software and hardware, as well as for
furniture, fixtures and office equipment. The other capital expenditures of $6.5
million are budgeted for the replacement and refurbishment of equipment and for
new equipment to support existing and new business. AMR Corporation has agreed
to fund up to $3.0 million for the replacement or establishment of a new
business enterprise resource planning system for us. We are in the process of
implementing this system and expect it to be completed prior to the end of 1999.
We have not included the cost of this system in our 1999 capital expenditure
budget because we do not expect the cost to exceed $3.0 million.
The purchase price for MAS, which was acquired on August 12, 1999, was
$63.0 million. In addition, we repaid or retained approximately $6.0 million of
MAS indebtedness. These amounts were funded out of the proceeds of the offering
of the Original Notes and an equity contribution of $10.0 million to Worldwide
by Holdings which occurred simultaneously.
The purchase price of Aerolink was approximately $5.9 million, plus
possible additional consideration of up to a maximum of $1.0 million based on
various conditions being satisfied, including conditions relating to calendar
1999 earnings. We repaid
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<PAGE> 49
$0.6 million of Aerolink indebtedness. These amounts were funded in part with
borrowings under the senior secured credit facility.
We are also pursuing additional acquisitions which, if completed, are
expected to be funded primarily through borrowings under the senior secured
credit facility.
The acquisition price for Worldwide has an adjustment provision that
requires a price adjustment depending on a calculation based on working capital
and capital spending. This issue is still being negotiated and its ultimate
outcome cannot currently be determined.
As indicated above, prior to the offering of the Original Notes on August
12, 1999, we had a term debt and credit facility in place. Borrowings under
these facilities at June 30, 1999 totaled $68.0 million, which included $49.2
million under the term loans and $18.9 million under the revolver. As of June
30, 1999, borrowings accrued interest at an average rate of 8.52%. All
outstanding principal and interest on the term debt and facility were repaid out
of the proceeds of the offering of the Original Notes.
We entered into the senior secured credit facility with a new group of
lenders that provides us with up to $75.0 million for purposes of funding
working capital requirements and funding financing needs for future
acquisitions. Through August 31, 1999, we borrowed approximately $11.0 million
under the senior secured credit facility. As of that date, we had additional
availability under the senior secured credit facility of at least $30.4 million.
However, our future additional availability may be less than the total remaining
commitment amount and will depend on the borrowing base and us being able to
meet the applicable leverage and coverage ratios and other customary conditions.
If we are in default under the senior secured credit facility, which may occur
if we fail to maintain financial ratios and meet other covenants, we may not be
able to make these additional borrowings under that facility. See "Description
of Senior Secured Credit Facility" for a summary of some of its terms.
We intend to satisfy our working capital requirements, capital expenditures
and scheduled debt service requirements for at least the next twelve months
through a combination of cash flows generated from operations, funds available
under the senior secured credit facility and the commitment from AMR Corporation
to fund our business enterprise resource planning business system.
EFFECTS OF INFLATION
Inflation has not had a significant effect on our operations. However, in
the event of increases in inflation, particularly in employment costs, we could
experience sudden and significant increases in operating costs. Over the
short-term, we may be unable to completely pass wage increases on to our
customers. Management believes that, over longer periods of time, we generally
will be able to pass on inflationary increases to our customers.
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<PAGE> 50
SEASONALITY
Historically, our revenues and operating income have not been significantly
seasonal due to our geographic dispersion and business line diversity. We
experience a moderate seasonal peak during the fourth quarter due to December
holiday season cargo activity.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 requires all derivatives to be
measured at fair value and recognized as either assets or liabilities on the
balance sheet. Changes in such fair value are required to be recognized
immediately in net income (loss) to the extent the derivatives are not effective
as hedges. SFAS No. 133 is effective for fiscal years beginning after June 15,
1999 and is effective for interim periods in the initial year of adoption. At
the present time, we do not feel the adoption of SFAS No. 133 will have a
material effect on our results of operations, financial position or cash flows.
YEAR 2000
We are not heavily reliant on date sensitive equipment to provide our
services. Worldwide's information technology, or IT, systems that use date
sensitive equipment consist primarily of computers that we use for billing,
accounting and payroll. We also use the Sabre system to provide certain
information to perform flight operation tasks. This is a system owned and
operated by Sabre Group, a subsidiary of AMR Corporation, that we access over
telecommunications lines. Most commercial airlines use the Sabre system for
reservation and flight information. None of our non-IT systems, which consist
primarily of ground services equipment, use date sensitive technology.
We received notice or confirmation from the vendors of our IT systems that
these systems are Year 2000 compliant. The Sabre system also has been
represented as Year 2000 compliant by the Sabre Group. Because we believe that
our systems are Year 2000 compliant, and because we believe that Year 2000
compliance is not critical to providing our services, we have not established a
Year 2000 contingency plan and do not intend to do so. To date, we have not
incurred material expenses for Year 2000 analysis, testing or remediation. We do
not anticipate any material expenses in connection with Year 2000 compliance,
and therefore have not included any expenditures for Year 2000 compliance in our
budget. However, we cannot assure you that we will not incur significant
unanticipated expenses for Year 2000 compliance. We believe that our reasonably
likely worst-case scenario if one or more of our internal systems are not Year
2000 compliant is that we would be required to manually complete billing,
payroll and/or accounting until we either upgraded or replaced these systems.
Our business is indirectly reliant on the Year 2000 compliance of our
airline customers and the municipalities and airports at which we operate, as
well as air traffic control systems. We have not independently sought to confirm
the Year 2000 compliance of any customers, municipalities, airports or air
traffic control systems. If one or more of them is not Year 2000 compliant, it
could impair demand for our services or our ability to provide them, either of
which could materially harm our business, financial condition and operating
results.
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<PAGE> 51
MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS
The risk inherent in our market risk sensitive instruments and positions is
the potential loss arising from adverse changes in foreign currency exchange
rates and interest rates. The sensitivity analyses presented do not consider the
effects that those adverse changes may have on overall economic activity, nor do
they consider additional actions we may take to mitigate our exposure to those
changes. Actual results may differ.
Foreign currency. We are exposed to the effect of foreign exchange rate
fluctuations between the U.S. dollar and the currencies related to our foreign
operations. Our largest exposure comes from the French franc. However the
operations in France are substantially self-contained in that the majority of
the revenues and related expenses are incurred in French francs. However, we are
exposed to currency fluctuations with respect to finance costs which are
currently all incurred in the United States in U.S. dollars, and to the extent
there are investments and profits denominated in French francs that need to be
repatriated. During 1997, foreign currency losses amounted to $584,000 and
during 1998, the currency gains amounted to $440,000, mainly as a result of
French franc fluctuations.
Interest. Our earnings are also affected by changes in interest rates due
to the impact those changes have on our interest expense from variable-rate debt
instruments, which a 1/8% change in interest rates would cause interest expense
to increase or decrease by approximately $100,000 currently exist for our
current term debt and revolving credit agreement. We purchased an interest rate
cap to limit our exposure to increases in levels of variable interest rates.
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<PAGE> 52
THE EXCHANGE OFFER
GENERAL
We sold the Original Notes on August 12, 1999 in a transaction exempt from
the registration requirements of the Securities Act. The initial purchaser of
the Original Notes subsequently resold them to qualified institutional buyers in
reliance on Rule 144A under the Securities Act.
In connection with the sale of Original Notes to the initial purchasers,
the holders of the Original Notes became entitled to the benefits of an A/B
exchange registration rights agreement dated August 12, 1999 among us, some of
our subsidiaries and the initial purchasers.
Under the registration rights agreement, we became obligated to file a
registration statement in connection with an exchange offer within 60 days after
the issue date and cause the exchange offer registration statement to become
effective within 180 days after the issue date. The exchange offer being made by
this prospectus, if consummated within the required time periods, will satisfy
our obligations under the registration rights agreement. This prospectus,
together with the letter of transmittal, is being sent to all beneficial holders
known to us.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying letter of transmittal, we will accept all Original Notes
properly tendered and not withdrawn on or prior to the expiration date. We will
issue $1,000 principal amount of New Notes in exchange for each $1,000 principal
amount of outstanding Original Notes accepted in the exchange offer. Holders may
tender some or all of their Original Notes pursuant to the exchange offer.
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (which is sometimes referred to in this prospectus as the
SEC) to third parties, we believe that holders of the New Notes issued in
exchange for Original Notes may offer for resale, resell and otherwise transfer
the New Notes, other than any holder that is an affiliate of ours within the
meaning of Rule 405 under the Securities Act, without compliance with the
registration and prospectus delivery provisions of the Securities Act. This is
true as long as the New Notes are acquired in the ordinary course of the
holder's business, the holder has no arrangement or understanding with any
person to participate in the distribution of the New Notes and neither the
holder nor any other person is engaging in or intends to engage in a
distribution of the New Notes. A broker-dealer that acquired Original Notes
directly from us cannot exchange the Original Notes in the exchange offer. Any
holder who tenders in the exchange offer for the purpose of participating in a
distribution of the New Notes cannot rely on the no-action letters of the staff
of the Securities and Exchange Commission and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale transaction.
Each broker-dealer that receives New Notes for its own account in exchange
for Original Notes, where Original Notes were acquired by such broker-dealer as
a result of market-making or other trading activities, must acknowledge that it
will deliver a
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prospectus in connection with any resale of such New Notes. See "Plan of
Distribution" for additional information.
We will be deemed to have accepted validly tendered Original Notes when, as
and if we have given oral or written notice of the acceptance of those notes to
the exchange agent. The exchange agent will act as agent for the tendering
holders of Original Notes for the purposes of receiving the New Notes from the
issuer and delivering New Notes to those holders.
If any tendered Original Notes are not accepted for exchange because of an
invalid tender or the occurrence of the conditions set forth under
"--Conditions" without waiver by us, certificates for any of those unaccepted
Original Notes will be returned, without expense, to the tendering holder of any
of those Original Notes as promptly as practicable after the expiration date.
Holders of Original Notes who tender in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
Original Notes, pursuant to the exchange offer. We will pay all charges and
expenses, other than certain applicable taxes in connection with the exchange
offer. See "--Fees and Expenses."
SHELF REGISTRATION STATEMENT
If (1) applicable law or interpretations of the staff of the SEC are
changed so that the New Notes received by holders who make all of the necessary
representations in the letter of transmittal are not or would not be, upon
receipt, transferable by each such holder without restriction under the
Securities Act, or (2) any holder of Original Notes which are Transfer
Restricted Securities (which is defined below) notifies the Company prior to the
20th business day following the consummation of the exchange offer that (a)
based on the advise of counsel (which may be internal counsel), it is prohibited
by law or SEC policy from participating in the exchange offer, (b) it may not
resell the New Notes acquired by it in the exchange offer to the public without
delivering a prospectus, and the prospectus contained in the exchange offer
registration statement is not appropriate or available for such resales by it,
or (c) it is a broker-dealer and holds Original Notes acquired directly from the
Company or any of the Company's affiliates, we will, at our cost:
- file a shelf registration statement covering resales of the Original
Notes;
- use our best efforts to cause the shelf registration statement to be
filed under the Securities Act at the earliest possible time, but no
later than 30 days after the time the obligation to file arises;
- use our best efforts to cause the shelf registration statement to be
declared effective at the earliest possible time, but no later than 60
days after the date in which we are required to file the shelf
registration statement as set forth above; and
use our reasonable best efforts to keep effective the shelf registration
statement until the earlier of two years after the date as of which the SEC
declares that shelf registration statement effective or the shelf registration
otherwise becomes effective, or a shorter period as will terminate when all
Transfer Restricted Securities covered thereby have been sold pursuant thereto,
except that the Company and the Guarantors will have the ability to suspend the
shelf registration statement for up to 60 calendar days in the aggregate, if the
Company, upon written advice of counsel, determines that the continued
effectiveness and
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<PAGE> 54
use of a shelf registration statement would require the disclosure of
confidential information or interfere with any financing, acquisition,
reorganization or other material transaction involving the Company.
"Transfer Restricted Securities" means each Original Note or New Note until
the earliest on the date of which (1) that note is exchanged in the exchange
offer and entitled to be resold to the public by the Holder thereof without
complying with the prospectus delivery requirements of the Securities Act, (2)
that note has been disposed of in accordance with the shelf registration
statement, (3) that note is disposed of by a broker-dealer pursuant to the "Plan
of Distribution" contemplated herein (including delivery of the prospectus
contained therein) or (4) that note is distributed to the public pursuant to
Rule 144 under the Securities Act.
We will, if and when we file the shelf registration statement, provide to
each holder of the Original Notes copies of the prospectus which is a part of
the shelf registration statement, notify each holder when the shelf registration
statement has become effective and take other actions as are required to permit
unrestricted resales of the Original Notes. A holder that sells Original Notes
pursuant to the shelf registration statement generally must be named as a
selling security-holder in the related prospectus and must deliver a prospectus
to purchasers. A seller will be subject to civil liability provisions under the
Securities Act in connection with these sales. A seller of the Original Notes
also will be bound by applicable provisions of the registration rights
agreement, including indemnification obligations. In addition, each holder of
Original Notes must deliver information to be used in connection with the shelf
registration statement and provide comments on the shelf registration statement
in order to have its Original Notes included in the shelf registration statement
and benefit from the provisions regarding any liquidated damages in the
registration rights agreement.
LIQUIDATED DAMAGES
If we are required to file the shelf registration statement and either:
(1) if the exchange offer is not consummated on or before the 30th business day
after this registration statement is declared effective;
(2) if obligated to file the shelf registration statement and the we and the
guarantors fail to file the shelf registration statement with the SEC on or
prior to the 30th day after such filing obligation arises;
(3) if obligated to file a shelf registration statement and the shelf
registration statement is not declared effective on or prior to the 60th day
after the obligation to file a shelf registration statement arises; or
(4) if the exchange offer registration statement or the shelf registration
statement, as the case may be, is declared effective but thereafter ceases
to be effective or useable in connection with resales of the Transfer
Restricted Securities, for such time of non-effectiveness or non-usability
(each, a "Registration Default"),
then the we and the guarantors agree to pay to each holder of Transfer
Restricted Securities affected thereby liquidated damages ("Liquidated Damages")
in an amount equal to $0.05 per week per $1,000 in principal amount of Transfer
Restricted Securities held by such holder for each week or portion thereof that
the Registration Default
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continues for the first 90-day period immediately following the occurrence of
such Registration Default. The amount of the Liquidated Damages will increase by
an additional $0.05 per week per $1,000 in 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 $0.35 per week per $1,000 in principal amount of Transfer Restricted
Securities. We and the guarantors will not be required to pay Liquidated Damages
for more than one Registration Default at any given time. Following the cure of
all Registration Defaults, the accrual of Liquidated Damages will cease.
All accrued Liquidated Damages will be paid by us or the Guarantors to
holders entitled thereto in the same manner in which interest is payable to
holders under the Indenture.
The sole remedy available to the holders of the Original Notes will be that
described above. Any amounts of additional interest due will be payable in cash
on the same interest payments dates as the Original Notes.
EXPIRATION DATE; EXTENSIONS; AMENDMENT
The term "expiration date" means 5:00 p.m., New York City time, on,
, unless we extend the exchange offer, in which case the term
"expiration date" means the latest date to which the exchange offer is extended.
In order to extend the expiration date, we will notify the exchange agent
of any extension by oral or written notice and will issue a public announcement
of the extension, each prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.
We reserve the right:
(a) to delay accepting of any Original Notes, to extend the exchange offer or to
terminate the exchange offer and not accept Original Notes not previously
accepted if any of the conditions set forth under "--Conditions" shall have
occurred and shall not have been waived by us, if permitted to be waived by
us, by giving oral or written notice of the delay, extension or termination
to the exchange agent, or
(b) to amend the terms of the exchange offer in any manner deemed by us to be
advantageous to the holders of the Original Notes.
We will notify you as promptly as practicable of any delay in acceptance,
extension, termination or amendment. If the exchange offer is amended in a
manner determined by us to constitute a material change, we will promptly
disclose the amendment in a manner intended to inform the holders of the
Original Notes of the amendment. Depending upon the significance of the
amendment, we may extend the exchange offer if it otherwise would expire during
the extension period.
Without limiting the manner in which we may choose to publicly announce any
extension, amendment or termination of the exchange offer, we will not be
obligated to publish, advertise, or otherwise communicate that announcement,
other than by making a timely release to an appropriate news agency.
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PROCEDURES FOR TENDERING
To tender in the exchange offer, a holder must complete, sign and date the
letter of transmittal, or a facsimile of the letter of transmittal, have the
signatures on the letter of transmittal guaranteed if required by instruction 3
of the letter of transmittal, and mail or otherwise delivery the letter of
transmittal or the facsimile in connection with a book entry transfer, together
with the Original Notes and any other required documents. To be validly
tendered, the documents must reach the exchange agent by or before 5:00 p.m. New
York City time, on the expiration date. Delivery of the Original Notes may be
made by book-entry transfer in accordance with the procedures described below.
Confirmation of the book-entry transfer must be received by the exchange agent
on or prior to the expiration date.
The tender by a holder of Original Notes will constitute an agreement
between that holder and us in accordance with the terms and subject to the
conditions set forth in this prospectus and in the letter of transmittal.
Delivery of all documents must be made to the exchange agent at its address
set forth below. Holders may also request their brokers, dealers, commercial
banks, trust companies or nominees to effect the tender for those holders.
The method of delivery of Original Notes and the letter of transmittal and
all other required documents to the exchange agent is at the election and risk
of the holders. Instead of delivery by mail, it is recommended that holders use
an overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure timely delivery to the exchange agent by or before 5:00 p.m.
New York City time, on the expiration date. No letter of transmittal or Original
Notes should be sent to us.
Only a holder of Original Notes may tender Original Notes in the exchange
offer. The term "holder" with respect to the exchange offer means any person in
whose name Original Notes are registered on our books or any other person who
has obtained a properly completed bond power from the registered holder.
Any beneficial holder whose Original Notes are registered in the name of
its broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact the registered holder promptly and instruct the
registered holder to tender on its behalf. If the beneficial holder wishes to
tender on its own behalf, it must, prior to completing and executing the letter
of transmittal and delivering its Original Notes, either make appropriate
arrangements to register ownership of the Original Notes in the holder's name or
obtain a properly completed bond power from the registered holder. The transfer
of record ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed by a member firm of a registered national securities exchange or of
the National Association of Securities Dealers, Inc. or a commercial bank or
trust company having an office or correspondent in the United States referred to
as an "eligible institution," unless the Original Notes are tendered: (a) by a
registered holder who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the letter of transmittal;
or (b) for the account of an eligible institution. In the event that signatures
on a letter of transmittal or a notice of withdrawal, are required to be
guaranteed, the guarantee must be by an eligible institution.
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If the letter of transmittal is signed by a person other than the
registered holder of any Original Notes listed therein, those Original Notes
must be endorsed or accompanied by appropriate bond powers and a proxy which
authorizes that person to tender the Original Notes on behalf of the registered
holder, in each case signed as the name of the registered holder or holders
appears on the Original Notes.
If the letter of transmittal or any Original Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, they should indicate that when signing, and unless waived by us,
submit evidence satisfactory to us of their authority to act with the letter of
transmittal.
All questions as to the validity, form, eligibility, including time of
receipt, and withdrawal of the tendered Original Notes will be determined by us
in our sole discretion. This determination will be final and binding. We reserve
the absolute right to reject any Original Notes not properly tendered or any
Original Notes our acceptance of which, in the opinion of counsel for us, would
be unlawful. We also reserve the right to waive any irregularities or conditions
of tender as to particular Original Notes. Our interpretation of the terms and
conditions of the exchange offer, including the instructions in the letter of
transmittal, will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Original Notes must be
cured within such time as we shall determine. None of us, the exchange agent or
any other person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Original Notes, nor shall any of them
incur any liability for failure to give notification. Tenders of Original Notes
will not be deemed to have been made until irregularities have been cured or
waived. Any Original Notes received by the exchange agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned without cost by the exchange agent to the tendering
holders of Original Notes, unless otherwise provided in the letter of
transmittal, as soon as practicable following the expiration date.
In addition, we reserve the right in our sole discretion to:
(a) purchase or make offers for any Original Notes that remain outstanding
subsequent to the expiration date or, as set forth under "--Conditions," to
terminate the exchange offer in accordance with the terms of the
registration rights agreements; and
(b) to the extent permitted by applicable law, purchase Original Notes in the
open market, in privately negotiated transactions or otherwise. The terms of
any such purchases or offers may differ from the terms of the exchange
offer.
By tendering Original Notes pursuant to the exchange offer, each holder
will represent to us that, among other things,
(a) the New Notes acquired pursuant to the exchange offer are being obtained in
the ordinary course of business of such holder;
(b) the holder is not engaged in and does not intend to engage in a distribution
of the New Notes;
(c) the holder has no arrangement or understanding with any person to
participate in the distribution of such New Notes; and
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(d) the holder is not our "affiliate," as defined under Rule 405 of the
Securities Act, or, if the holder is an affiliate, will comply with the
registration and prospectus delivery requirements of the Securities Act to
the extent applicable.
BOOK-ENTRY TRANSFER
We understand that the exchange agent will make a request promptly after
the date of this prospectus to establish accounts with respect to the Original
Notes at the Depository Trust Company for the purpose of facilitating the
exchange offer, and subject to the establishment of those accounts, any
financial institution that is a participant in the Depository Trust Company's
system may make book-entry delivery of Original Notes by causing the Depository
Trust Company to transfer the Original Notes into the exchange agent's account
with respect to the Original Notes in accordance with the Depository Trust
Company's procedures for transfers. Although delivery of the Original Notes may
be effected through book-entry transfer into the exchange agent's account at the
Depository Trust Company, an appropriate letter of transmittal properly
completed and duly executed with any required signature guarantee, and all other
required documents must in each case be transmitted to and received or confirmed
by the exchange agent at its address set forth below on or prior to the
expiration date, or, if the guaranteed delivery procedures described below are
complied with, within the time period provided under the procedures. Delivery of
documents to the Depository Trust Company does not constitute delivery to the
exchange agent.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Original Notes and
(a) whose Original Notes are not immediately available or
(b) who cannot deliver their Original Notes, the letter of transmittal or any
other required documents to the exchange agent on or prior to the expiration
date, may effect a tender if:
(1) the tender is made through an eligible institution;
(2) on or prior to the expiration date, the exchange agent receives from
the eligible institution a properly completed and duly executed Notice
of Guaranteed Delivery, by facsimile transmission, mail or hand
delivery, setting forth the name and address of the holder of the
Original Notes, the certificate number or numbers of the Original Notes
and the principal amount of Original Notes tendered stating that the
tender is being made thereby, and guaranteeing that, within three
business days after the expiration date, the letter of transmittal, or
facsimile thereof, together with the certificate(s) representing the
Original Notes to be tendered in proper form for transfer and any other
documents required by the letter of transmittal will be deposited by
the eligible institution with the exchange agent; and
(3) the properly completed and executed letter of transmittal (or facsimile
thereof) together with the certificate(s) representing all tendered
Original Notes in proper form for transfer and all other documents
required by the letter of transmittal are received by the exchange
agent within three business days after the expiration date.
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WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, tenders of Original Notes
may be withdrawn at any time by or prior to 5:00 p.m., New York City time, on
the expiration date, unless previously accepted for exchange.
To withdraw a tender of Original Notes in the exchange offer, a written or
facsimile transmission notice of withdrawal must be received by the exchange
agent at its address set forth in this prospectus by 5:00 p.m., New York City
time, on the expiration date. Any such notice of withdrawal must:
(a) specify the name of the depositor, who is the person having deposited the
Original Notes to be withdrawn;
(b) identify the Original Notes to be withdrawn, including the certificate
number or numbers and principal amount of the Original Notes or, in the case
of Original Notes transferred by book-entry transfer, the name and number of
the account at Depository Trust Company to be credited;
(c) be signed by the holder in the same manner as the original signature on the
letter of transmittal by which such Original Notes were tendered, including
any required signature guarantees, or be accompanied by documents of
transfer sufficient to have the trustee with respect to the Original Notes
register the transfer of such Original Notes into the name of the depositor
withdrawing the tender; and
(d) specify the name in which any such Original Notes are being registered if
different from that of the depositor.
All questions as to the validity, form and eligibility, including time of
receipt, of withdrawal notices will be determined by us, and our determination
will be final and binding on all parties. Any Original Notes so withdrawn will
be deemed not to have been validly tendered for purposes of the exchange offer
and no New Notes will be issued with respect to the Original Notes withdrawn
unless the Original Notes so withdrawn are validly retendered. Any Original
Notes which have been tendered but which are not accepted for exchange will be
returned to their holder without cost to the holder as soon as practicable after
withdrawal, rejection of tender or termination of the exchange offer. Properly
withdrawn Original Notes may be retendered by following one of the procedures
described above under "Procedures for Tendering" at any time on or prior to the
expiration date.
CONDITIONS
Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange, or exchange, any New Notes for any Original
Notes, and may terminate or amend the exchange offer on or before the expiration
date, if the exchange offer violates any applicable law or interpretation by the
staff of the SEC.
If we determine in our reasonable discretion that the foregoing condition
exists, we may (1) refuse to accept any Original Notes and return all tendered
Original Notes to the tendering holders, (2) extend the exchange offer and
retain all Original Notes tendered prior to the expiration of the exchange
offer, subject, however, to the rights of holders who tendered the Original
Notes to withdraw their tendered Original Notes, or (3) waive such condition, if
permissible, with respect to the exchange offer and accept all properly tendered
Original Notes which have not been withdrawn. If a waiver constitutes a material
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change to the exchange offer, we will promptly disclose the waiver by means of a
prospectus supplement that will be distributed to the holders, and we will
extend the exchange offer as required by applicable law.
Pursuant to the registration rights agreement, we are required to cause to
be filed with the SEC a shelf registration statement with respect to the
Original Notes on or prior to 30 days after the filing deadline, and thereafter
use our best efforts to have the shelf registration statement declared
effective, if:
(a) the exchange offer is not permitted by law or applicable interpretations of
the staff of the SEC or
(b) any holder of Original Notes or New Notes notifies us that either
(1) the holder is not eligible to participate in the exchange offer
(2) the holder participates in the exchange offer and does not receive
freely transferable New Notes in exchange for tendered Original Notes,
or
(3) the holder is a broker-dealer and holds the Original Notes acquired
directly from us or our affiliates.
EXCHANGE AGENT
The Bank of New York has been appointed as exchange agent for the exchange
offer, and is also the trustee under the Indenture under which the New Notes
will be issued. Questions and requests for assistance and requests for
additional copies of this prospectus or of the letter of transmittal should be
directed to , addressed as follows:
For information by Telephone:
(212) 815-2742
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Delivery Service:
The Bank of New York The Bank of New York
101 Barclay Street, Floor 7E 101 Barclay Street
New York, New York 10286 Corporate Trust Service Window, Ground
Attn: , Reorganization Level
Dept.--7E New York, New York 10286
Attn: , Reorganization
Dept.--7E
</TABLE>
By Facsimile Transmission:
(212) 815-4699
(Telephone Confirmation)
(212) 815-2742
FEES AND EXPENSES
We have agreed to bear the expenses of the exchange offer pursuant to the
registration rights agreement. We have not retained any dealer-manager in
connection with the exchange offer and will not make any payments to brokers,
dealers or others soliciting acceptances of the exchange offer. We, however,
will pay the exchange agent reasonable and customary fees for its services and
will reimburse it for its reasonable out-of-pocket expenses in connection with
providing the services.
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The cash expenses to be incurred in connection with the exchange offer will
be paid by us. These expenses include fees and expenses of The Bank of New York
as exchange agent, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Original
Notes as reflected in our accounting records on the date of exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by us.
The expenses of the exchange offer and the unamortized expenses related to the
issuance of the Original Notes will be amortized over the term of the New Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Original Notes who are eligible to participate in the exchange
offer but who do not tender their Original Notes will not have any further
registration rights, and their Original Notes will continue to be subject to
restrictions on transfer. Accordingly, such Original Notes may be resold only:
(a) to us, upon redemption of the Original Notes or otherwise;
(b) so long as the Original Notes are eligible for resale pursuant to Rule 144A
under the Securities Act to a person inside the United States whom the
seller reasonably believes is a qualified institutional buyer within the
meaning of Rule 144A, in a transaction meeting the requirements of Rule
144A;
(c) in accordance with Rule 144 under the Securities Act, or under another
exemption from the registration requirements of the Securities Act, and
based upon an opinion of counsel reasonably acceptable to us;
(d) outside the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act; or
(e) under an effective registration statement under the Securities Act;
in each case in accordance with any applicable securities laws of any state of
the United States.
REGULATORY APPROVALS
We do not believe that the receipt of any material federal or state
regulatory approval will be necessary in connection with the exchange offer,
other than the effectiveness of the exchange offer registration statement under
the Securities Act.
OTHER
Participation in the exchange offer is voluntary and holders of Original
Notes should carefully consider whether to accept the terms and condition of
this exchange offer. Holders of the Original Notes are urged to consult their
financial and tax advisors in making their own decisions on what action to take
with respect to the exchange offer.
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BUSINESS
We are one of the world's leading independent providers of ground services
to air cargo and passenger airlines. Our services include cargo handling and
ramp, passenger and technical services. We provide services for over 300
customers, including American Airlines, British Airways, Cathay Pacific,
Continental Airlines, Delta Air Lines, DHL, Emery Worldwide, Korean Air Lines,
Nippon Cargo Airlines and UPS. We currently service our customers at 86
airports, including 25 of the 30 busiest U.S. airports and five of the 10
busiest European airports, each based on 1997 annual arrivals and departures. We
employ approximately 9,800 employees in North America, the Caribbean, Europe and
Hong Kong.
We have experienced steady revenue growth by providing dependable and cost
effective service in the commercial aviation market that has experienced nearly
uninterrupted growth in annual departures, revenue passenger miles and air cargo
ton miles. Worldwide's revenues grew from $72.0 million in 1989 to $229.7
million in 1998, representing a compounded annual growth rate of 13.8%. On
August 12, 1999, Worldwide purchased all of the stock of MAS, one of the largest
independent providers of express air cargo handling services in the United
States. MAS's revenues grew from $24.8 million in 1994 to $56.4 million in 1998,
representing a compounded annual growth rate of 22.7%. On a pro forma basis
giving effect to the MAS acquisition and other pro forma adjustments, for the
year ended December 31, 1998, we generated revenues and EBITDA of $286.1 million
and $25.2 million, respectively.
INDUSTRY TRENDS
We believe that the demand for independent ground services will continue to
increase due to (1) the growing demand for air cargo and passenger
transportation and the increased outsourcing of ground services and (2)
continuing European regulatory liberalization. In addition, we believe that the
highly fragmented nature of our industry will provide us with significant
opportunities to obtain new business and make acquisitions. Each of these
factors is discussed below.
Growing Demand for Air Transportation. Historically, the ground services
industry has grown along with cargo and passenger air traffic. We expect
continued growth in both cargo and passenger air traffic, as well as in the
ground services industry, due to continued global economic growth, increased
globalization of trade, increased use of express air shipments and foreign
airport liberalization. According to MergeGlobal, Inc., global freight
ton-kilometers, which is a measure of cargo air traffic, were estimated to have
grown at a compounded annual rate of 8.6% from 1990 to 1998 and were projected
to grow at a compounded annual rate of 8.0% from 1998 to 2006. According to The
Airline Monitor, global passenger air traffic, as measured by revenue passenger
miles, were estimated to have grown at a compounded annual rate of 5.6% from
1990 to 1998 and were projected to grow at a compounded annual rate of 4.8% from
1998 to 2008.
Increased Outsourcing. Outsourcing ground services is a cost-effective
alternative to performing services internally for many airlines. For example,
outsourcing is cost-effective when a carrier has a limited number of daily
flights into a particular airport, making the purchase and maintenance of the
necessary equipment and labor uneconomical. As a result, foreign carriers,
regional carriers, carriers initiating service to a new city and U.S. carriers
at non-hub airports outsource a relatively high percentage of their ground
services. We believe that outsourcing of ground services will increase as (1)
major carriers
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further heighten their focus on their core airline businesses and seek to
further reduce costs, (2) airlines expand to new airports, (3) ground services
liberalization continues at European Union airports and (4) new airlines emerge.
European Regulatory Liberalization. We expect regulatory liberalization in
Europe to increase demand for third party ground services at European airports.
We believe that this regulatory liberalization will create significant
opportunities for expansion of our presence in Europe.
At most European airports, there have historically been significant
limitations on the ability of third party ground services providers to provide
these services. The European Union has called for a two-part liberalization of
European airports which took effect January 1999. The first part of the
liberalization requires that all European airports allow any ground services
provider to provide cargo handling, passenger services and cabin cleaning
services at these airports. The second part requires that European airports
grant permission for at least one independent ground services provider that is
not affiliated with the airport or the national flag carrier in that country to
provide ramp services and baggage handling services. Compliance with this second
part of regulatory liberalization is subject to petitions by European airports
that may postpone compliance until 2003.
Fragmented Industry. The ground services industry is highly fragmented in
both the United States and Europe and consists of a large number of domestic and
international service providers, many of which provide services at a small
number of airports or a single airport. Many of the smaller providers also
specialize in particular geographic areas or niche markets such as cargo
warehousing or fueling. We believe that smaller providers are likely to face
significant competitive pressures as large airlines increasingly outsource to
fewer and larger suppliers that can provide a broader range of services at
multiple locations.
COMPETITIVE STRENGTHS
We believe that we are well positioned to benefit from current trends,
including expected growth in our industry due to the following competitive
strengths:
Long-standing Customer Relationships. We have long-standing relationships
with many of the major passenger airlines and express air cargo carriers. We
believe that these relationships provide us with significant credibility when
marketing our services to new customers and in cross-selling additional services
to our existing customers. Our long-standing customer relationships include
Emery (16 years), UPS (16 years), American Airlines (15 years), Nippon Cargo
Airlines (15 years), Continental Airlines (10 years), Korean Air Lines (10
years), DHL (10 years) and BAX Global (7 years). We believe that our
long-standing customer relationships are due in part to our emphasis on
providing quality service.
Wide Range of Services. We provide a wide range of services, from aircraft
arrival through departure, to both air cargo and passenger airlines. By doing
so, we are able to build on existing customer relationships by cross-selling our
services. For example, when we sign a new contract for baggage loading and cargo
handling, we may offer that customer additional services such as aircraft
cleaning, de-icing or passenger ticketing at the same or another airport. We
believe that cargo and passenger airlines will increasingly look to fewer and
larger suppliers, such as our company, that provide a more comprehensive range
of ground services at multiple locations.
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Broad Geographic Presence. We have a presence at 19 international airports
and 67 domestic airports. We intend to use our broad geographic presence to
further build on our customer relationships by cross-selling our services at
more locations. We believe that few other providers can offer as many types of
ground services in as many locations. We also believe that the diversity of our
customer base, both by geography and type of carrier, creates a stronger revenue
base and reduces our exposure to regional economic cycles.
Experienced Management Team. Our executive officers have an average of
over 17 years of experience in the aviation industry. Many of our executive
officers and our managers have worked at major international airlines, which we
believe provides them with firsthand knowledge of the needs and perspectives of
our airline customers. Our chairman and chief executive officer, Peter A.
Pappas, has held various management positions in the aviation industry for
approximately 30 years, including as a corporate officer for both AMR
Corporation and Pan American World Airways. In addition, our president and chief
operating officer, Mark Dunkerley, has worked in the aviation industry for
approximately 14 years, including as a senior vice president for British
Airways.
BUSINESS STRATEGY
Our goal is to become the world's leading provider of ground services for
air cargo and passenger airlines by:
Increasing Our Customer Base at Existing Locations. We intend to market
our wide range of services and broad geographic presence to increase our
customer base across our existing network of 86 airports. We believe that our
services and geographic presence will provide us with a competitive advantage
when offering our services to potential new customers. We also believe that, as
an independent company, we will have new customer opportunities that were not
available to us when we were affiliated with American Airlines.
Cross-Selling Our Services. By providing a broad range of services at a
large number of airports in North America and Europe, we believe that we are
well positioned to cross-sell additional services to our customers, including at
additional locations. For example, if we provide cargo handling services to a
customer at one location, we can cross-sell cargo handling or other services to
that customer at one or more additional locations. Moreover, we believe that the
increase in the number of airline alliances will present cross-selling
opportunities by enabling us to use our relationships with alliance member
customers to more effectively market our services to other alliance members.
Emphasizing Service Quality. Due to the nature of the services we provide,
we believe that service quality is critical to our customers and therefore
compete on this basis. Our employees go through training programs tailored to
our customers' policies and procedures. Local managers at our airport locations
are also given substantial discretion in tailoring services to the needs of
customers at their airports. Additionally, we believe that we are one of the few
ground service providers that has brought its services to a new standard of
quality by obtaining ISO 9002 certification for our cargo terminals at key
domestic and international airports. We intend to pursue this certification at
additional locations.
Selectively Pursuing Complementary Acquisitions. We believe that
significant acquisition opportunities exist as a result of the highly fragmented
nature of the U.S. and European ground services industry. We view the purchase
of MAS and Aerolink as excellent examples of these opportunities because both
MAS and Aerolink complement
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Worldwide in terms of current services, customer base and geographic presence
and are expected to improve our profitability and cash flow stability. In
addition to the acquisitions of MAS and Aerolink, we have signed a non-binding
letter of intent with a smaller ground services company, although there can be
no assurance that we will complete this acquisition. We intend to continue to
selectively pursue additional domestic and international acquisitions that
complement our existing business, profitability and cash flow stability.
SERVICES
Our ground services consist of:
- cargo handling;
- ramp services;
- passenger services; and
- technical services.
Cargo Handling. Cargo handling is our largest line of business and
represented 46% of total revenues in 1998, giving effect to the acquisitions of
MAS and Aerolink.
We generate much of our cargo handling revenue by charging fees to load and
unload cargo on to and from cargo aircraft. Through the acquisition of MAS, we
are one of the largest providers of services for express air cargo carriers that
deliver time sensitive parcels, mail and other cargo. We also handle various
types of cargo items, including perishables, electronic equipment, valuable or
fragile merchandise and bulk items for other air carrier customers.
For selected customers, we also manage warehouse facilities. For inbound
flights, we transport freight to a warehouse, remove it from the pallet or
container and process the shipment and delivery orders. For outbound flights, we
handle cargo shipment receiving, processing and aircraft loading.
We provide cargo handling services at 49 U.S. airports. We principally
provide these services in the United States at John F. Kennedy International
Airport in New York, Dallas-Fort Worth International Airport and Miami
International Airport. In France, we are a leading provider of cargo handling
services, with operations at six airports. We also provide cargo handling
services at four other European markets.
We believe that we are one of the few ground service providers that has
brought its services to a new standard of quality by obtaining ISO 9002
certification at John F. Kennedy airport in New York and Charles de Gaulle and
Orly airports in Paris, which are key domestic and international airports. ISO
9002 certification is important to our customers because it demonstrates formal
recognition of our quality control procedures. Currently we intend to pursue
this certification in additional locations.
Ramp Services. Ramp services, which comprised approximately 26% of our
1998 revenues, giving effect to the acquisitions of MAS and Aerolink, include
the following services for passenger airlines:
- guiding the aircraft to and from the gate;
- loading and unloading baggage and freight;
- cabin cleaning; and
- providing heating, air conditioning, lavatory and water services.
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Ramp services are critical to every airline. This is because airlines only
have a short period of time between arrival and departure to prepare an aircraft
for new passengers. Without experienced ramp crews and well-maintained
equipment, a flight may be delayed and customers may become dissatisfied. An
experienced ramp crew helps ensure that an aircraft departs on schedule.
Passenger Services. Passenger services accounted for approximately 16% of
our total 1998 revenues, giving effect to the acquisitions of MAS and Aerolink.
These services, which are provided to passenger airlines, include the following:
- checking passengers' baggage at curbside;
- providing ticket counter service, which includes helping passengers to
check baggage, receive boarding passes, purchase tickets, check
documentation and receive flight-related information;
- staffing airline lounges;
- providing departure gate services and managing the ticket-taking process;
- assisting with passengers' baggage-related problems such as damage, theft
or mishandled bags; and
- providing wheelchair assistance.
We customize passenger services to meet the particular needs of an airline.
For example, at the airports where we provide passenger services to American
Airlines, our employees that provide these services wear the same uniforms as
American Airlines employees and are trained to their standards. For our foreign
airline customers, we frequently provide employees who are fluent in the
language of the airline's home country. Passenger services customers provide
individualized specifications regarding the number of employees that must be
available for the handling of a given flight.
Our approximately 75 customers for these services include American
Airlines, for which we provide passenger services at approximately 50 airports,
foreign airlines such as Korean Air Lines and Japan Airlines, and smaller and
start-up airlines, such as Citybird and Spirit Airlines.
Technical Services. Technical services, which provided 12% of our 1998
revenues, giving effect to the acquisitions of MAS and Aerolink, include the
following:
- preventive maintenance and mechanical support for aircraft, ground
equipment and jet bridges;
- freight management, including brokering freight for both airline and
non-airline customers;
- shuttling of airline crews to and from the airport;
- aircraft fueling and managing airport fuel storage facilities; and
- aircraft de-icing.
Because we already have a presence at 86 airports and our equipment and
personnel are already in place, we believe that we are able to provide these
additional services for customers at these airports upon short notice and in an
efficient manner.
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AIRPORT LOCATIONS
We provide services at the airports indicated below.
UNITED STATES
Atlanta, GA
Baltimore, MD
Boston, MA
Bradley, CT
Buffalo, NY
Burbank, CA
Charlotte, NC
Chicago, IL
Cincinnati, OH
Cleveland, OH
Colorado Springs, CO
Columbus, OH
Dallas/Ft. Worth, TX
Dayton, OH
Denver, CO
Detroit, MI
Ft. Lauderdale, FL
Ft. Myers, FL
Greensboro, NC
Gunnison, CO
Harrisburg, PA
Hayden, CO
Honolulu, HI
Houston, TX
Islip, NY
Jackson Hole, WY
Jackson, MS
Jacksonville, FL
Las Vegas, NV
Los Angeles, CA
Louisville, KY
Mather AFB, CA
Memphis, TN
Miami, FL
Newburgh, NY
New York(JFK), NY
New York(LaGuardia), NY
Newark, NJ
Norfolk, VA
Oakland, CA
Oklahoma City, OK
Omaha, NB
Ontario, CA
Orange County, CA
Philadelphia, PA
Pittsburgh, PA
Portland, ME
Providence, RI
Raleigh/Durham, NC
Reno, NV
Richmond, VA
Sacramento, CA
Salt Lake City, UT
San Antonio, TX
San Diego, CA
San Francisco, CA
San Jose, CA
San Juan, Puerto Rico
Seattle, WA
Spokane, WA
St. Petersburg, FL
Tucson, AZ
Vail, CO
Washington(Dulles), DC
Washington(National), DC
West Palm Beach, FL
White Plains, NY
CANADA
Halifax, Nova Scotia
Montreal,(Dorval), Quebec
Montreal,(Mirabel), Quebec
Toronto, Ontario
CARIBBEAN
Kingston, Jamaica
Montego Bay, Jamaica
St. Croix, Virgin Islands
St. Thomas, Virgin Islands
EUROPE
Brussels, Belgium
Frankfurt, Germany
Lille, France
London(Heathrow), England
Lyon, France
Madrid, Spain
Marseilles, France
Paris(Charles de Gaulle), France
Paris(Orly), France
Toulouse, France
ASIA
Hong Kong, China
CUSTOMERS
We have over 300 customers, including approximately 200 airline customers,
approximately 30 air cargo carrier customers and approximately 10 airport
customers. Our remaining customers include among others, freight forwarders and
non-airline customers for which we provide a variety of services. Our airline
customers include American Airlines and its affiliate American Eagle, British
Airways, Continental Airlines, Korean Air Lines, Nippon Cargo Airlines and Saudi
Arabian Airlines. Air cargo carrier customers include UPS, DHL, Emery and BAX
Global. Significant airport customers include the Port Authority of New York and
New Jersey, the Houston Intercontinental Airport, the State of Hawaii and the
Madrid airport. Our top ten customers, including American Airlines and its
affiliate American Eagle, accounted for 50% of 1998 pro forma revenues, giving
effect to the acquisition of MAS. No single customer accounted for more than 5%
of our pro forma revenues in 1998, other than American Airlines and American
Eagle, which together accounted for 26% of total pro forma revenues in 1998
after giving effect to the acquisition of MAS.
We generally have service contracts with our customers, and at June 30,
1999, we had over 800 service contracts. These contracts are typically based on
standard industry forms that are customized to fit the desired contractual
arrangement. Many of our service
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contracts are effective for a specified term and allow our customers to
terminate their contract on ninety days notice or sooner for continuing
performance breaches. After their initial term, our contracts typically
automatically continue but become terminable by either party on 60 days notice
or less for any reason. Our contracts usually contain price escalation clauses
that are linked to the consumer price index. Under these clauses, if the
consumer price index increases, we are permitted to increase our prices by the
consumer price index or a percentage of it.
SALES AND MARKETING
We employ nine sales and five marketing professionals on a full-time basis.
They have been with our company for an average of approximately nine years.
Our sales force performs a combination of functions, including the
servicing of existing accounts and generating new business. Each salesperson is
assigned accounts that they manage on a national and local basis. Our sales
force formally markets our services through customer visits, membership in trade
organizations and annual customer events. Our sales force also conducts market
and competitive research to identify new business opportunities. Emphasis is
placed on determining where a current or potential customer is currently
outsourcing ground services and on who is providing the services. The research
conducted by our sales force on market conditions and competition enables us to
concentrate on our strengths at an individual location. Local managers also
informally market our services on a daily basis through their interaction with
customers. Instead of paying commissions to our sales professionals, we allow
them to participate in our incentive compensation plan, which we believe alters
their focus from short-term growth to establishing and maintaining profitable
long-term customer relationships.
The primary function of our five person marketing group is to create and
enhance our brand and image through advertising and sales promotion activities.
The marketing group also prepares customer and industry presentations and
prepares and reviews contracts.
COMPETITION
The ground services industry consists of a large number of domestic and
international service providers. Many of these provide service at more than one
airport, although only a small number of them provide services nationally or
internationally. In the United States, our principal competitors are national
ground service providers such as DynAir Services, Hudson General Corporation and
Ogden Aviation Corporation, as well as smaller companies that operate regionally
or at individual locations. Internationally, we compete principally with
international ground service providers such as Cargo Service Centers, Globe
Ground, Servisair and Swissport. We also indirectly compete against airlines,
since airlines continue to perform a large portion of their ground services
in-house.
The principal competitive factors in our industry are:
- price;
- reputation for quality;
- breadth of services offered; and
- experience in a particular market or geographic region.
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We believe that we compare favorably to our competition with respect to all
of these factors.
EMPLOYEES
As of June 30, 1999, giving effect to the acquisitions of MAS and Aerolink,
we had approximately 9,800 employees, of whom approximately 1,075 were
management and approximately 8,775 were non-management personnel. Approximately
4,225, or 43%, of our employees work part-time.
Approximately 2,300 of our U.S. employees are represented by collective
bargaining agreements. These employees consist primarily of cargo handling and
ramp services workers. The Transport Workers Union, or TWU, represents
approximately 2,200 of our U.S.-based employees. Our current agreement with the
TWU is effective until June 2001. The Teamsters Union also represents
approximately 100 Philadelphia employees, and the contract is effective until
February 2000. In Canada, approximately 300 of our employees are represented by
the Canadian Auto Workers Union. This agreement expired in November 1998. We
continue to operate under the agreement and we intend to renegotiate the
agreement in the near future. In some of the other countries where we operate,
we are subject to industry-wide collective bargaining agreements, as well as
local labor laws.
We have not experienced any material business interruption as a result of
labor disputes and believe that we have a good relationship with our employees.
PROPERTIES
Our headquarters are located in Euless, Texas, where we lease approximately
18,700 square feet of office space. This lease expires on August 15, 2004. We
also lease more than 2,350,000 square feet of other space at approximately 50
different airports domestically and internationally. Many of these leases are on
a month-to-month basis. We do not own any facilities.
Often, the cargo facilities that we use are owned or leased by airline
customers, rather than leased by us.
LEGAL PROCEEDINGS
We are not a party to any legal proceedings, other than ordinary routine
litigation incidental to our business, that we believe are material to our
business or financial condition.
REGULATORY COMPLIANCE
FAA and Other Related Operational Regulations. Our business is subject to
Federal Aviation Administration, or FAA, airport security regulations regarding
the screening of passengers and cargo on behalf of air carriers. While companies
that screen passengers and cargo are not currently required to be certificated
by the FAA, the FAA published an advance notice of proposed rulemaking in March
1997 that would have required the certification of companies that screen
passengers or cargo, such as ours. While the FAA withdrew this advance notice in
May 1998, the FAA may require this certification in the future. At that time, we
would be required to become certificated to continue screening passengers and
cargo. In addition, we would be directly regulated by the FAA and could be
subject to enforcement actions, such as suspension or revocation of our
certification or civil penalties, if we did not adequately comply with FAA
security regulations.
Because we accept hazardous material on behalf of our customers and perform
services regarding the transportation of hazardous materials by both air and
ground
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transport, we are subject to Department of Transportation, or DOT, regulations
governing the handling, packaging, marking, labeling and transportation of
hazardous materials. Our employees who directly affect hazardous materials
transportation safety must comply with DOT regulations, including among other
things, receiving specialized training. If we fail to properly handle, package,
mark, label or transport hazardous materials or to properly train employees who
directly affect hazardous materials transportation safety, it could result in
substantial civil penalties. Additionally, because of the types of materials
that we carry for ground transport on behalf of our customers, such as
explosives and toxic materials, we are required to register with the DOT
annually as a hazardous materials carrier.
While we do not hold an FAA-issued repair station certificate, and do not
hold ourselves out as an FAA-certificated repair station, we employ certificated
and rated mechanics who perform maintenance and preventive maintenance on
aircraft. These mechanics must perform their duties in accordance with the
Federal Aviation Regulations in order to approve and return to service aircraft
upon which any maintenance has been performed. Their failure to comply with
these regulations could result in civil penalties, as well as the suspension or
revocation of their individual mechanic's certificates, which could adversely
affect that portion of our business.
While we are not directly impacted by FAA regulations regarding drug and
alcohol use, our certificated mechanics, our employees who perform passenger and
cargo screening and our other employees who perform safety sensitive functions
must be covered by FAA approved drug and alcohol misuse plans to perform
services on behalf of many of our customers. If we or our employees fail to
comply with the FAA drug and alcohol use regulations, we could be subject to
fines or be restricted by our airline customers from performing these services
in the future, which could adversely affect that portion of our business.
Environmental. Our business is subject to compliance with a variety of
international, federal and state laws and regulations relating to environmental
protection, including laws and regulations relating to the handling, storage,
disposal and remediation of petroleum-based products used in the airline
industry. These operations are regulated by the Resource Conservation and
Recovery Act, or RCRA, and its state and local counterparts. RCRA regulates our
hazardous waste generator status, the disposal of solid wastes from our
operations and our storage of petroleum products. We are also required to file
Spill Prevention Control and Countermeasure Plans with the regulatory
authorities where we have bulk storage of petroleum. Also, at some of our
locations, we are required to register with regulatory authorities as either
permittee or co-permittee for discharges of wastewater and stormwater.
These laws and regulations may affect the cost of operating our business
because we operate fueling depots in a small number of locations, maintain
equipment for our cargo and ramp operations and store and dispose of petroleum
products used in these operations. We believe that our operations are in
material compliance with these environmental laws and regulations. We do not
expect future costs associated with compliance with these laws and regulations
to materially harm our business, financial condition or future results. In
addition, in connection with the sale of Worldwide to Holdings, we obtained
environmental indemnities from AMR Corporation which provide that AMR
Corporation will indemnify us, subject to deductibles, for all environmental
liabilities that relate to periods prior to the closing of the sale. We also
received environmental indemnities from the sellers of MAS and Aerolink. We also
maintain environmental impairment insurance.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table contains the name, age and position of each person who
is an executive officer or director of our company. Each director also serves as
a director of Holdings.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Peter A. Pappas..................... 62 Chairman and Chief Executive Officer
Mark Dunkerley...................... 36 Chief Operating Officer, President and
Director
A. Scott Letier..................... 38 Chief Financial Officer
John P. Vittas...................... 54 Senior Vice President, Sales and
Marketing
Olivier Bijaoui..................... 42 Senior Vice President, Europe
Jonathan S. Weaver.................. 35 Senior Vice President, Planning
Albert V. Casey..................... 79 Director
Marcel Fournier..................... 44 Director
Leonard M. Harlan................... 63 Director
Lieut. General Thomas G. McInerney
(Retired)......................... 62 Director
Bradley G. Stanius.................. 53 Director
Gilbert A. Yanuck................... 59 Director
</TABLE>
We currently have eight authorized directors, each of whom will serve until
a successor is elected or until any of them resigns or is removed.
Peter A. Pappas joined Worldwide in October 1998 and serves as Chairman and
Chief Executive Officer. From October 1998 to July 1999, Mr. Pappas served as
Worldwide's President and Chief Executive Officer. Mr. Pappas has approximately
30 years of aviation industry experience. Prior to joining Worldwide, Mr. Pappas
served as Senior Vice President of Marketing, Planning and Sales at American
Eagle, a position he held since November 1995. From January 1992 to October
1995, Mr. Pappas served as President of the AMR Consulting Group and its
successor, AMR Training and Consulting Group. From March 1989 to November 1991,
Mr. Pappas served as Vice President of Strategic Planning at Pan American World
Airways. Prior to March 1989, Mr. Pappas held various executive positions with
American Airlines, Pan American World Airways and Eastern Airlines.
Mark Dunkerley joined Worldwide in July 1999 and serves as Chief Operating
Officer and President and as a director. Prior to joining Worldwide, Mr.
Dunkerley served as the Senior Vice President in charge of the Latin America and
Caribbean Division for British Airways from April 1997 to July 1999 and also
served as Manager in British Airways' Eastern Europe division from October 1995
until April 1997. Mr. Dunkerley also served as a Vice President and Manager of
British Airways from August 1989 to October 1995 in various capacities and was
responsible for Commercial and Government Affairs for North America and Investor
Relations for North America. Prior to joining British Airways, Mr. Dunkerley
served as the Assistant to the Chief Executive Officer of the Miami
International Airport from August 1985 to August 1989.
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A. Scott Letier joined Worldwide in April 1999 and has served as Chief
Financial Officer since coming to Worldwide. Prior to joining Worldwide, Mr.
Letier served as Vice President and Chief Financial Officer of
Gorges/Quik-to-Fix Foods, Inc. from January 1997 to March 1999. From July 1996
until December 1996, Mr. Letier served as Senior Vice President and Chief
Financial Officer of CS Wireless Systems Inc. and from February 1992 until June
1996 served as Vice President of Finance and Chief Financial Officer of
AmeriServ Food Company. Prior to that time, Mr. Letier spent five years with
Ernst & Young as a certified public accountant.
John P. Vittas joined Worldwide in September 1993 and has been Senior Vice
President of Sales and Marketing since August 1998. Mr. Vittas also served as
Senior Vice President of the New York Region of Worldwide from September 1993 to
July 1998. Prior to joining Worldwide, Mr. Vittas held various management
positions at American Airlines, dating back to 1968.
Olivier Bijaoui joined Worldwide in January 1996 and has served as Senior
Vice President for Europe since May 1996. From January 1993 to May 1996, Mr.
Bijaoui served as President of SFS, a cargo handling company operated at Orly
and Charles de Gaulle airports in Paris which had been built by Mr. Bijaoui and
his father and was acquired by Worldwide in 1993. From 1980 until his promotion
to President, Mr. Bijaoui served as managing director of SFS.
Jonathan S. Weaver joined Worldwide in September 1988 and has served as
Senior Vice President of Planning since February 1999. From August 1998 to
February 1999, Mr. Weaver served as Vice President of Field Resources of
Worldwide. From May 1997 to August 1998, he acted as Assistant Vice President of
Field Resources. From March 1995 to May 1997, Mr. Weaver served as Director of
Field Resources. Prior to March 1995, Mr. Weaver held various other management
positions at Worldwide.
Albert V. Casey has served as a director of Worldwide since March 1999. Mr.
Casey rejoined the Edwin L. Cox School of Business at Southern Methodist
University during July 1993 after having served as the school's Ann Cox
Distinguished Professor of Business Policy from August 1986 to May 1988. Prior
to rejoining the Business School, Mr. Casey was the President and Chief
Executive Officer of the Resolution Trust Corporation from October 1991 to March
1993. Mr. Casey was the Chief Executive Officer of AMR Corp. and American
Airlines from February 1974 until the retirement in February 1985. In 1986, Mr.
Casey served as Postmaster General of the United States.
Marcel Fournier has served as a director of Worldwide since March 1999. Mr.
Fournier has served as a Managing Director of Castle Harlan, Inc. since December
1995. Prior to joining Castle Harlan, Inc., Mr. Fournier held various positions,
including Managing Director, at the investment banking group of Lepercq, de
Neuflize & Co., Inc. from November 1981 to November 1995. From June 1979 to
November 1981, Mr. Fournier was Assistant Director of the United States office
of the agency of the French Prime Minister.
Leonard M. Harlan has served as a director of Worldwide since March 1999.
Mr. Harlan is the President of Castle Harlan, Inc., which he co-founded in 1987,
Castle Harlan Partners II GP, Inc. and Castle Harlan Partners III GP, Inc. Prior
to founding Castle Harlan, from 1969 to 1995, Mr. Harlan was Chairman and Chief
Executive Officer of the Harlan Company, a real estate investment banking and
advisory firm. Mr. Harlan was also a member of the Executive Committee of the
Harvard Business School Alumni
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Association, is currently a Trustee of the New York City Citizens Budget
Commission and is on the Advisory Board of the Journal of Private Equity.
Lieut. General Thomas G. McInerney (Retired) has served as a director of
Worldwide since March 1999. General McInerney has served as the Chief Executive
Officer and President of Business Executives for National Security (BENS) since
March 1996. Prior to joining BENS, General McInerney was Vice President of
Command and Control for Loral Defense Systems--Eagan, which was formerly Unisys,
Electronic Systems Division, from November 1994 to March 1996. Prior to 1994,
General McInerney served in numerous key U.S. Air Force assignments and had
extensive military command, including Assistant Vice Chief of Staff of the Air
Force, Director of the Defense Performance Review, Vice Commander in
Chief-United States Air Forces in Europe and Commander-Alaskan Air Command.
General McInerney is also a member of the board of directors of Signal
Technology Corporation.
Bradley G. Stanius has served as a director of Worldwide since March 1999.
Mr. Stanius has served as the Chief Executive Officer of Smarte Carte since
December 1997, which he joined in 1992. Prior to joining Smarte Carte in 1992,
Mr. Stanius served as the Chairman and Chief Executive Officer of Pharmaceutical
Services, Inc. Mr. Stanius is also a former member of the Minnesota House of
Representatives, served as the Republican caucus whip and is a former Mayor of
White Bear Lake, Minnesota.
Gilbert A. Yanuck has served as a director of Worldwide since March 1999.
Mr. Yanuck spent 28 years with MAG Aerospace Industries, Inc. and has held
various positions there, including President and Chief Executive Officer. Mr.
Yanuck has also served as a consultant and a director of MAG Aerospace
Industries, Inc.
COMMITTEES OF THE BOARD OF DIRECTORS
Our board of directors presently has two committees, a compensation
committee and an audit committee. The compensation committee is comprised of
Messrs. Fournier, Harlan, Stanius and Yanuck and the audit committee is
comprised of Mr. Casey, General McInerney and Mr. Fournier. The compensation
committee establishes remuneration levels for some of our officers and performs
other functions as may be delegated to it under our various benefit and
executive compensation programs. The audit committee selects and engages the
independent public accountants to audit our annual financial statements. The
audit committee also reviews and approves the planned scope of the annual audit.
The board of directors may from time to time establish other committees to
facilitate our management.
COMPENSATION OF DIRECTORS
Messrs. Casey, McInerney, Stanius and Yanuck, as directors who are not
otherwise associated with Worldwide or its affiliates, are paid $25,000 per
year, payable quarterly. Mr. Harlan and Mr. Fournier, employees of Castle
Harlan, Inc., and Mr. Pappas and Mr. Dunkerley, who are executive officers of
Worldwide, do not receive compensation for serving as directors.
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EXECUTIVE COMPENSATION
The following table indicates the minimum 1999 contractual compensation of
our Chief Executive Officer and our four other most highly compensated officers
under their employment agreements. The table does not include discretionary
bonuses. The board of directors may in its discretion increase the salary or
bonus of any of these employees. Selected terms of their employment agreements
are summarized below. Salary information for executive officers during 1998 is
not included below because we believe that information would not be meaningful,
as two of our executive officers were not hired until 1999, our Chairman and
Chief Executive Officer was not hired until October, 1998 and some of our
executive officers during 1998 are no longer executive officers.
<TABLE>
<CAPTION>
1999 CONTRACTUAL
COMPENSATION, EXCLUDING
DISCRETIONARY BONUSES AND
NAME TITLE SIGNING BONUSES(4)
- ---- ----- -------------------------
<S> <C> <C>
Peter A. Pappas...... Chairman and Chief Executive Officer $320,000
Mark Dunkerley(1).... President and Chief Operating Officer 235,000
A. Scott Letier(2)... Chief Financial Officer 165,000
Olivier Bijaoui...... Senior Vice President, Europe 198,847(3)
John P. Vittas....... Senior Vice President, Sales and 141,700
Marketing
</TABLE>
- -------------------------
(1) Hired on July 12, 1999.
(2) Hired on March 31, 1999.
(3) Converted from 1,264,672 French francs at a conversion rate of FF 6.36 to
$1.00.
(4) Some of our executive officers received signing bonuses when they entered
into their employment agreements or upon the closing of the acquisition of
Worldwide by Holdings. These signing bonuses are described in the summaries
of their employment agreements below.
1999 STOCK OPTION PLAN
Holdings has established a stock option plan which provides for the
granting of incentive stock options and non-qualified stock options to key
employees, consultants and directors of Holdings, our company and our
subsidiaries to acquire shares of non-voting common stock of Holdings. The
granting of these options is made in the discretion of the compensation
committee of the board of directors of Holdings and each grantee will receive
options over a period of five years. The exercise price of each option will be
the fair market value of the stock on the date that the option is granted.
Options vest and become exercisable based on the achievement of performance
targets. The compensation committee of Holdings will review performance targets
annually or upon the sale of a majority of the stock of either Holdings or the
sale of all or substantially all of the assets of Holdings, to determine what
portion, if any, of the options will vest and become exercisable. If the
grantee's employment is terminated for any reason, all options not yet
exercisable as of the date of termination will expire.
We have reserved 100,000 shares of non-voting common stock for issuance
under the option plan. As of August 31, 1999, no options had been granted.
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<PAGE> 75
EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
PETER A. PAPPAS. We have an employment agreement with Peter A. Pappas for
him to serve as our Chief Executive Officer. Mr. Pappas is to be paid an annual
base salary of $270,000 per year and compensation committee of the board of
directors, with a guaranteed minimum bonus of $50,000. The term of his agreement
extends to September 30, 2001. Mr. Pappas's employment agreement provides that
if he dies, becomes disabled, terminates his employment with good reason or if
Worldwide terminates his employment without cause, he will be entitled to
receive a severance payment, equal to his base salary for the remainder of his
employment term and a termination bonus. If Mr. Pappas' employment is terminated
other than for the reasons listed above, he will not receive any severance
payment. If Mr. Pappas continues his employment until September 30, 2001 and the
fair market value of the stock in Holdings granted to him is less than the
aggregate amount of bonuses paid to him throughout his employment term, Mr.
Pappas will be entitled to receive an additional payment equal to the difference
between his total bonuses and the fair market value of his stock in Holdings.
MARK DUNKERLEY. We have an employment agreement with Mark Dunkerley under
which he serves as our Chief Operating Officer and President. This agreement
extends to July 12, 2002. Mr. Dunkerley is to be paid an annual base salary of
$235,000 per year and a discretionary annual cash bonus up to a maximum of 50%
of his base salary, as determined by the compensation committee of Worldwide.
Mr. Dunkerley was paid a signing bonus of $30,000 on July 12, 1999 and is
entitled to an additional signing bonus of $32,500 on October 12, 1999. Mr.
Dunkerley's employment agreement also provides that if he terminates his
employment with good reason or if Worldwide terminates his employment for any
reason other than cause, he will be entitled to receive a severance payment
equal to his base salary for the greater of 18 months and the remainder of his
employment term. If there is a sale of a majority of the stock of Holdings or
the sale of all or substantially all of the assets of Holdings, Mr. Dunkerley
will have the right to terminate his employment and receive a lump sum severance
payment equal to nine months of his base salary. If Mr. Dunkerley's employment
is terminated for reasons other than those listed above, he will not receive any
severance payment.
A. SCOTT LETIER. We have entered into an employment agreement with A.
Scott Letier for him to serve as our Chief Financial Officer. The agreement
extends until March 31, 2002. He is to be paid an annual base salary of $165,000
and a discretionary annual cash bonus up to a maximum of 50% of his base salary,
as determined by the compensation committee of Worldwide. Mr. Letier's
employment agreement also provides that if he terminates his employment or if he
is terminated by Worldwide for a reason other than for cause, he will receive a
lump sum severance payment equal to the number of years remaining in the term of
the agreement, including fractional years, multiplied by base salary. If Mr.
Letier's employment is terminated for reasons other than those listed above, he
will not receive any severance payment.
JOHN P. VITTAS. We have an employment agreement with John Vittas for him
to serve as our Senior Vice President, Sales and Marketing. Under this
agreement, Mr. Vittas is to be paid an annual base salary of $109,000. Also, Mr.
Vittas is guaranteed an annual bonus of 30% of his base salary. The term of this
agreement extends until March 31, 2001. Mr. Vittas also was paid a signing bonus
equal to two months of his base salary upon the closing of the acquisition of
Worldwide by Holdings. This agreement also provides that, if Mr. Vittas becomes
disabled, terminates his employment with good reason or if Worldwide terminates
his employment without cause, he will be entitled to receive a severance payment
equal to his base salary and bonus until the end of his employment term. If
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<PAGE> 76
Mr. Vittas' employment is terminated for reasons other than those listed above,
he will not receive any severance payment.
OLIVIER BIJAOUI. We have an employment agreement with Olivier Bijaoui for
him to serve as our Senior Vice President, Europe. The agreement took effect as
of December 7, 1998 and extends until March 31, 2001. He is to be paid an annual
base salary of 972,825 French francs. Mr. Bijaoui is also guaranteed an annual
bonus of 30% of his base salary. Mr. Bijaoui also was paid a signing bonus equal
to eight months of his base salary upon the closing of the acquisition of
Worldwide by Holdings. This agreement provides that if Mr. Bijaoui becomes
disabled, terminates his employment with good reason or if Worldwide terminates
his employment without cause, he will be entitled to receive a severance payment
equal to his base salary and bonus until the end of the term of his employment.
agreement. If Mr. Bijaoui's employment is terminated for reasons other than
those listed above, he will not receive any severance payment.
All of the employment agreements described above provide that each of the
executives will receive life, disability and health insurance benefits for the
period of time that they receive payments from Worldwide after their termination
of employment, except for Mr. Pappas who will only receive these benefits until
the end of his agreement's term if his employment terminates as a result of a
disability.
In addition, Holdings and Worldwide have entered into non-competition and
confidentiality agreements with each of Mr. Dunkerley and Mr. Letier that
prohibit these executives from competing with or soliciting employees or
customers of Holdings, Worldwide or any of our subsidiaries. These limitations
last for three years from the termination of employment if the executive leaves
Worldwide without good reason or if he is terminated for cause. If the executive
leaves our employment with good reason or is terminated without cause, the
limitations on competition and solicitation will last for the remaining term of
the employment agreement or eighteen months from the time of termination,
whichever is longer. In addition, these executives are prohibited from
disclosing confidential information obtained while working for us.
LIMITATIONS ON OFFICERS' AND DIRECTORS' LIABILITY
Our Certificate of Incorporation indemnifies our officers and directors to
the fullest extent permitted by the Delaware General Corporation Law, which is
referred to in this prospectus as the DGCL. Under Section 145 of the DGCL, a
corporation may indemnify its directors, officers, employees and agents and its
former directors, officers, employees and agents and those who serve, at the
corporation's request, in such capacities with another enterprise, against
expenses (including attorneys' fees), as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or are threatened to be made parties by
reason of their serving or having served in that capacity. The DGCL provides,
however, that the person must have acted in good faith and in a manner that he
or she reasonably believed to be in (or not opposed to) the best interests of
the corporation and, in the case of a criminal action, he or she must have had
no reasonable cause to believe his or her conduct was unlawful. In addition, the
DGCL does not permit indemnification in an action or suit by or in the right of
the corporation where he or she has been adjudged liable to the corporation,
unless, and only to the extent that, a court determines that he or she fairly
and reasonably is entitled to indemnity for costs the court deems proper in
light of liability adjudication. Indemnification is mandatory to the extent a
claim, issue or matter has been successfully defended. The Certificate of
Incorporation and the DGCL also prohibit limitations on officer or
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<PAGE> 77
director liability for acts or omissions which resulted in a violation of a
statute prohibiting certain dividend declarations, certain payments to
stockholders after dissolution and particular types of loans. The effect of
these provisions is to eliminate the rights of our company and our stockholders
(through stockholders' derivative suits on behalf of our company) to recover
monetary damages against an officer or director for breach of a fiduciary duty
as an officer or director (including breaches resulting from grossly negligent
behavior), except in the situations described above.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors or officers of our company pursuant to the
foregoing provisions, we have been informed that, in the opinion of the SEC,
this indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
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<PAGE> 78
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
As a wholly-owned subsidiary of Holdings, all of our issued and outstanding
capital stock is held by Holdings. As of August 31, 1999, Holdings had
outstanding 1,369,912 shares of voting common stock, $.01 par value per share,
and 3,424,781 shares of Series A preferred stock, $.01 par value per share. Each
share of voting common stock carries one vote while the shares of the Series A
preferred stock are non-voting shares.
The following table contains information with respect to the beneficial
ownership of the voting common stock (but not giving effect to the issuance of
warrants to purchase 74,750 shares of the voting common stock of Holdings issued
in connection with the Original Notes) and Series A preferred stock of Holdings
as of August 31, 1999 by (1) any person or group who beneficially owns more than
five percent of Holdings' voting common stock or Series A preferred stock, (2)
each of our directors and executive officers and (3) all of our directors and
officers as a group. All information with respect to beneficial ownership has
been furnished to us by the respective stockholders of Holdings.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE NUMBER OF PERCENTAGE
SHARES OF OF TOTAL SHARES OF OF TOTAL
COMMON COMMON PREFERRED PREFERRED
NAME AND ADDRESS OF BENEFICIAL OWNER(1) STOCK STOCK STOCK STOCK
- --------------------------------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Castle Harlan Partners III,
L.P.(2)(3)(5)...................... 1,353,982 98.8% 3,384,956 98.8%
Leonard M. Harlan(3)(4)(5)........... 31,396 2.3 7,691 *
Peter A. Pappas...................... 7,080 * 17,700 *
Mark Dunkerley....................... -- -- -- --
A. Scott Letier...................... -- -- -- --
John P. Vittas....................... -- -- -- --
Olivier Bijaoui(6)................... -- -- -- --
Jonathan S. Weaver................... -- -- -- --
Albert V. Casey(5)................... 3,540 * 8,850 *
Marcel Fournier(5)(7)................ 1,770 * 4,425 *
Thomas G. McInerney(5)............... 1,770 * 4,425 *
Bradley G. Stanius(5)................ 1,770 * 4,425 *
Gilbert A. Yanuck(5)................. 1,770 * 4,425 *
All directors and officers as a group
(12 persons)....................... 31,396 2.3 51,941 1.5
</TABLE>
- -------------------------
* Less than 1%.
(1) Beneficial ownership includes shares of voting common stock and Series A
preferred stock to be outstanding upon the Holdings' equity contribution and
shares of voting common stock and Series A preferred stock that any person
has the right to acquire within 60 days after August 31, 1999. Shares of
voting common stock and Series A preferred stock not outstanding but deemed
beneficially owned because a person or group has the right to acquire them
within 60 days are treated as outstanding only for purposes of determining
the percentage owned by that person or group. For purposes of this table,
all fractional shares have been rounded to the nearest whole share.
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<PAGE> 79
Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have sole
investment power with respect to the voting common stock and the Series A
preferred stock, but (1) all of the shares of the voting common stock are
subject to a voting trust agreement under which Mr. Harlan acts as voting
trustee and (2) all of the shares of Series A preferred stock are non-voting
shares. Except as otherwise indicated in the footnotes to this table, the
address for each person in the table is c/o Worldwide Flight Services, Inc.,
1001 West Euless Boulevard, Suite 320, Euless, Texas 76040.
(2) Includes 55,906 shares of voting common stock and 139,765 shares of Series A
preferred stock held by related entities and persons, all of which may be
deemed to be beneficially owned by Castle Harlan Partners III, L.P. Castle
Harlan Partners III, L.P. disclaims beneficial ownership of these shares.
(3) John K. Castle and Leonard M. Harlan are the controlling stockholders of
Castle Harlan Partners III G.P., Inc., the general partner of the general
partner of Castle Harlan Partners III, L.P., and as such, each of them may
be deemed to be a beneficial owner of the shares owned by Castle Harlan
Partners III, L.P. Both Mr. Castle and Mr. Harlan disclaim beneficial
ownership of the shares in excess of their respective pro rata partnership
interests in Castle Harlan Partners III, L.P. and its affiliates.
(4) Includes 31,396 shares of voting common stock of entities and persons
related to Castle Harlan Partners III, L.P. and some of our officers or
directors, the voting of which Leonard M. Harlan may direct pursuant to a
voting trust agreement under which Mr. Harlan acts as voting trustee. Mr.
Harlan disclaims beneficial ownership of the shares subject to the voting
trust agreement, other than 3,076 shares of voting common stock owned by him
subject to the voting trust. The term of the voting trust is the maximum
period allowed under Delaware law.
(5) The address for this person is c/o Castle Harlan, Inc., 150 East 58th
Street, New York, New York 10155.
(6) The address for this person is c/o Societe de Fret et de Services, Zone
Roissy-Tech, 5, Rue du cercle -- Batiment 3312, Roissy CDG 96703, France.
(7) All shares are held in Marcel Fournier's individual retirement account of
which Mr. Fournier is the sole beneficiary. These shares may be deemed to be
beneficially owned by Mr. Fournier. Mr. Fournier disclaims beneficial
ownership of these shares.
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<PAGE> 80
RELATED PARTY TRANSACTIONS
We entered into a management agreement with Castle Harlan, Inc., as
manager, under which the manager will provide us with business and
organizational strategy, financial, investment management, advisory and merchant
and investment banking services. Castle Harlan, Inc. is an affiliate of
Holdings, which owns all of our outstanding stock. In connection with the
Transactions, the management agreement was amended to provide that we pay the
manager an annual fee of $1.25 million starting July 1, 2000 until December 31,
2002, increasing to $2.0 million starting January 1, 2003 until December 31,
2005. After December 31, 2005 the agreement will automatically renew each year
unless cancelled by either party. On March 31, 1999, we paid $312,000 to Castle
Harlan, Inc. under this fee agreement. We also indemnify the manager, its
officers, directors and affiliates from any losses or claims suffered by them as
a result of services they provide us.
In connection with the acquisition of Worldwide from AMR Corporation, we
paid $2.0 million to Castle Harlan, Inc. for reimbursement of expenses related
thereto. Concurrent with the closing of the offering of the Original Notes and
the senior secured credit facility, fees of $2.5 million were paid to Castle
Harlan. See "Description of New Notes--Certain Covenants--Restricted Payments."
For a discussion of the Predecessor's transactions with its affiliates, see
note 5 to the Worldwide financial statements.
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<PAGE> 81
DESCRIPTION OF SENIOR SECURED CREDIT FACILITY
The Chase Manhattan Bank, Chase Securities Inc. and DLJ Capital Funding,
Inc., which are referred to as the Agents, provided to us a 5 1/2-year revolving
credit facility of up to $75.0 million which provides for loans and under which
letters of credit may be issued. The maximum amount we may borrow at any time
will be limited by a borrowing base formula which will consist of a percentage
of some of our accounts receivable and a percentage of the value of some of our
equipment.
We may use the proceeds of loans under the senior secured credit facility
as follows:
- up to $50.0 million for acquisitions, including the acquisitions of MAS
and Aerolink; and
- up to $25.0 million for working capital purposes.
As of August 31, 1999, we had $30.4 million of available borrowings under
the senior secured credit facility.
REDUCTION IN COMMITMENTS
Commitments under the senior secured credit facility will be reduced as
follows:
<TABLE>
<CAPTION>
MONTHS AFTER
AUGUST 12,
1999 REDUCTION
------------ ---------
<S> <C>
12.......................................................... $ 0
24.......................................................... 0
36.......................................................... 5,000,000
42.......................................................... 5,000,000
48.......................................................... 5,000,000
54.......................................................... 5,000,000
60.......................................................... 5,000,000
</TABLE>
Except for limited exceptions, the commitment under the senior secured
credit facility will be reduced by 100% of the net cash proceeds of all asset
sales and other dispositions of our property or that of our subsidiaries.
We are permitted to voluntarily reduce the unutilized amount committed
under the senior secured credit facility without any penalty or premium at any
time.
INTEREST
At our option, the interest rate on the senior secured credit facility will
be either (1) LIBOR plus 3.00% or (2) 2.00% plus the greater of The Chase
Manhattan Bank's prime rate, the federal funds effective rate plus 1/2% and the
base CD rate published by The Chase Manhattan Bank plus 1%. The interest rate
will be subject to step-downs based on our financial performance. At August 31,
1999, we were paying interest of 8.3% based on LIBOR plus 3.00%.
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<PAGE> 82
FEES
We have agreed to pay customary fees with respect to the senior secured
credit facilities, including annual administration and agency fees, commitment
fees on the unused portion of the senior secured credit facility and letter of
credit fees.
PREPAYMENTS
Except for limited exceptions, we are required to repay the senior secured
credit facility with:
- 100% of the net cash proceeds of all asset sales and other dispositions
of our property and property of our subsidiaries; and
- 100% of the net cash proceeds of any debt issuances by us and our
subsidiaries.
Mandatory repayments will be applied first to borrowings made for acquisitions
and then to borrowings made for working capital purposes.
GUARANTEES
Holdings and our existing domestic subsidiaries have unconditionally
guaranteed repayment of the senior secured credit facility. Our future domestic
subsidiaries, and to the extent no adverse tax consequences to us would result,
our future foreign subsidiaries, will also unconditionally guarantee repayment
of the senior secured credit facility.
SECURITY
We, Holdings and our existing domestic subsidiaries have, our future
domestic subsidiaries will and, to the extent no adverse tax consequences to us
would result, our future foreign subsidiaries will unconditionally secure
repayment of the senior secured credit facility through the following:
- a first-priority pledge in all of our capital stock owned by Holdings and
all of the capital stock of our existing and future subsidiaries, except
that, in the case of a foreign subsidiary, the pledge will be limited to
65% of the voting capital stock of the foreign subsidiary to the extent
that any greater percentage will result in adverse tax consequences to
us; and
- first-priority security interests in, and mortgages on, substantially all
of our tangible and intangible assets (including all accounts receivable,
inventory, equipment, intellectual property, licensing agreements, real
property and proceeds of the foregoing) and those of our existing and
future domestic, and, to the extent indicated above, foreign
subsidiaries.
RESTRICTIVE COVENANTS
The senior secured credit facility contains covenants restricting our
ability and the ability of our domestic subsidiaries to:
- incur debt;
- issue equity securities;
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<PAGE> 83
- subject our assets to liens and enter into sale-leaseback transactions;
- engage in mergers and acquisitions and change the nature of our business;
- conduct asset sales;
- enter into hedging agreements;
- pay dividends and make investments, loans, guarantees and other
restricted payments;
- make capital expenditures;
- prepay other debt; and
- enter into affiliate transactions.
In addition, the senior secured credit facility requires us to meet various
financial performance tests, including a minimum interest coverage ratio and a
maximum leverage ratio, and also contain some covenants restricting the ability
of Holdings to enter into some transactions.
EVENTS OF DEFAULT
An event of default could occur under the senior secured credit facility if
any of the following occurs:
- principal, interest or fees under the senior secured credit facility are
not paid when due;
- we default under other debt or other debt obligations are accelerated;
- we breach covenants or representations and warranties contained in the
senior secured credit facility;
- the security interests created in connection with the senior secured
credit facility are invalid or are claimed to be invalid;
- voluntary bankruptcy or involuntary bankruptcy of us, Holdings or any of
our subsidiaries;
- there is a material judgment against us; or
- we have a change in control.
If an event of default occurs, all principal and interest owed under the
senior secured credit facility could become immediately payable within a short
period of time after the event of default occurs.
Borrowings under the senior secured credit facility are subject to
significant conditions, including compliance with certain financial ratios and
the absence of any material adverse change.
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<PAGE> 84
DESCRIPTION OF NEW NOTES
As used in this "Description of New Notes," the term the "Company" refers
only to Worldwide Flight Services, Inc., a Delaware corporation, and not to any
of our Subsidiaries or Affiliates. You can find the definitions of certain terms
used in this Description of New Notes under the subheading "Certain
Definitions."
The Original Notes were issued, and the New Notes will be issued under an
Indenture (the "INDENTURE") among the Company, the Guarantors and The Bank of
New York, 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 (the "TRUST INDENTURE ACT"). The holders of New
Notes (the "HOLDERS") are referred to the Indenture and the Trust Indenture Act
for a statement of the terms thereof.
The terms of the New Notes are identical in all material respects to the
terms of the Original Notes, except for transfer restrictions and registration
rights relating to the Original Notes.
The following description is a summary of the material provisions of the
Indenture. It does not restate that agreement in its entirety. We urge you to
read the Indenture because it, and not this description, defines your rights as
Holders. A copy of the Indenture is available as indicated below under "Where
You Can Find More Information."
BRIEF DESCRIPTION OF THE NEW NOTES AND THE GUARANTEES
THE NEW NOTES
The New Notes:
(a) will be senior unsecured obligations of the Company;
(b) will be equal in right of payment to all existing and future
Indebtedness of the Company that is not by its terms subordinated in
right of payment to the New Notes and senior in right of payment to
any future subordinated Indebtedness of the Company;
(c) will be effectively subordinated in right of payment to all existing
and future secured Indebtedness of the Company, including all
Indebtedness under the Senior Secured Credit Facility, to the extent
of the assets securing such Indebtedness;
(d) will be unconditionally guaranteed by the Guarantors; and
(e) will be effectively subordinated to all liabilities of the Company's
Subsidiaries that are not Guarantors, including trade payables.
THE GUARANTEES
With certain exceptions provided for below, the New Notes will be
unconditionally guaranteed by all of the Domestic Subsidiaries of the Company.
The Guarantees of the New Notes:
(a) will be senior unsecured obligations of each Guarantor;
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<PAGE> 85
(b) will be equal in right of payment to all existing and future
Indebtedness of each Guarantor that is not by its terms subordinated
in right of payment to the Guarantees and senior in right of payment
to any future subordinated Indebtedness of each Guarantor; and
(c) will be effectively subordinated in right of payment to all existing
and future secured Indebtedness of each Guarantor, including all
Indebtedness under the Senior Secured Credit Facility, to the extent
of the assets securing such Indebtedness.
As of the Issue Date, all of our subsidiaries will be "Restricted
Subsidiaries." However, under the circumstances described below in the
definition of "Unrestricted Subsidiaries," we will be permitted to designate
certain of our Subsidiaries as "Unrestricted Subsidiaries." Unrestricted
Subsidiaries will not be subject to any of the restrictive covenants in the
Indenture and will not guarantee the New Notes. Our Foreign Subsidiaries,
whether existing currently or acquired or created subsequently, will not
guarantee the New Notes.
Not all of our "Restricted Subsidiaries" will guarantee the New Notes. In
the event of a bankruptcy, liquidation or reorganization of any non-guarantor
Subsidiaries, these non-guarantor Subsidiaries will pay the holders of their
debt and their trade creditors before they will be able to distribute any of
their assets to us.
PRINCIPAL, MATURITY AND INTEREST
The Company will issue New Notes with a maximum aggregate principal amount
of $130.0 million in exchange for the Original Notes. The Company will issue New
Notes in denominations of $1,000 and integral multiples of $1,000. The New Notes
will mature on August 15, 2007.
Interest on the New Notes will accrue at the rate of 12 1/4% per annum and
will be payable semi-annually in arrears on February 15 and August 15,
commencing on February 15, 2000. The Company will make each interest payment to
the Holders of record of the New Notes on the immediately preceding February 1
and August 1, respectively.
Interest on the New Notes will accrue from August 12, 1999, the date of
original issuance of the Original Notes or, if interest has already been paid,
from the date it was most recently paid. Interest will be computed on the basis
of a 360-day year comprised of twelve 30-day months.
METHODS OF RECEIVING PAYMENTS ON THE NEW NOTES
If a Holder has given wire transfer instructions to the Company, the
Company will make all principal, premium and interest payments on those New
Notes in accordance with those instructions. All other payments on the New Notes
will be made at the office or agency of the Paying Agent and Registrar within
the City and State of New York unless the Company elects to make interest
payments by check mailed to the Holders at their respective addresses set forth
in the register of Holders.
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<PAGE> 86
PAYING AGENT AND REGISTRAR FOR THE NEW NOTES
The Trustee will initially act as Paying Agent and Registrar. The Company
may change the Paying Agent or Registrar without prior notice to the Holders of
the New Notes, and the Company or any of its Subsidiaries may act as Paying
Agent or Registrar.
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
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or exchange
any New Note selected for redemption. Also, the Company is not required to
transfer or exchange any New Note for a period of 15 days before a selection of
New Notes to be redeemed.
The registered Holder will be treated as the owner of it for all purposes.
SUBSIDIARY GUARANTEES
The Guarantors will jointly and severally guarantee the Company's
Obligations under the New Notes. Each Subsidiary Guarantee will be effectively
subordinated in right of payment to all existing and future secured Indebtedness
of that Guarantor to the extent of the assets securing such Indebtedness. The
obligations of each Guarantor under its Subsidiary Guarantee will be limited as
necessary to prevent that Subsidiary Guarantee from constituting a fraudulent
conveyance under applicable law. See "--Risk Factors--Fraudulent transfer
considerations."
The Subsidiary Guarantee of a Guarantor will be automatically and
unconditionally released without any action on the part of the Trustee or the
Holder of the New Notes: (1) in connection with any sale or other disposition of
all or substantially all of the assets of that Guarantor (including, without
limitation, by way of merger or consolidation), if the Company applies the Net
Proceeds of that sale or other disposition, in accordance with the applicable
provisions of the Indenture; (2) in connection with any sale of all of the
Capital Stock of that Guarantor, if the Company applies the Net Proceeds of that
sale in accordance with the applicable provisions of the Indenture; or (3) if
the Company designates that Guarantor as an Unrestricted Subsidiary in
accordance with the applicable provisions of the Indenture. See "--Repurchase at
Option of Holders--Asset Sales."
In addition, concurrently with any Legal Defeasance or Covenant Defeasance,
the Guarantors shall be released from all of their Obligations under their
Subsidiaries Guarantees.
OPTIONAL REDEMPTION
At any time prior to August 15, 2002, the Company may, at its option, use
the net cash proceeds of any one or more Public Equity Offerings to the extent
the net cash proceeds thereof are contributed to the equity capital of the
Company to redeem up to 35% of the aggregate principal amount of New Notes
issued under the Indenture at a
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redemption price of 112.250% of the principal amount thereof, plus accrued and
unpaid interest to the redemption date; provided that
(1) at least 65% of the aggregate principal amount of New Notes issued on the
Issue Date remains outstanding immediately after the occurrence of each
such redemption (excluding New Notes held by the Company and its
Subsidiaries); and
(2) each such redemption must occur within 90 days of the date of the closing
of the related Public Equity Offering.
Except pursuant to the preceding paragraph, the New Notes will not be
redeemable at the Company's option prior to August 15, 2003. After August 15,
2003, the Company may redeem the New Notes, in whole or from time to time 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 thereon, if any, to the applicable redemption date,
if redeemed during the twelve-month period beginning on August 15 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003........................................ 106.125%
2004........................................ 104.594%
2005........................................ 103.063%
2006........................................ 101.531%
2007 and thereafter......................... 100.000%
</TABLE>
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each Holder of New Notes will have the right
to require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of that Holder's New Notes pursuant to an Offer to
repurchase the New Notes in accordance with the terms of this section (a "CHANGE
OF CONTROL OFFER"). In the Change of Control Offer, the Company will offer a
payment in cash (a "CHANGE OF CONTROL PAYMENT") equal to 101% of the aggregate
principal amount of New Notes repurchased plus accrued and unpaid interest
thereon, if any, to the date of purchase. Within 30 days following any Change of
Control, the Company 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 a date specified in such notice (the "CHANGE OF
CONTROL PAYMENT DATE"), pursuant to the procedures required by the Indenture and
described in such notice. The Company 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 securities laws or regulations applicable to the
Company and the Change of Control Offer conflict with the "Change of Control"
provisions of the Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the Indenture by virtue thereof.
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<PAGE> 88
On the Change of Control Payment Date, the Company 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 tendered to the Company.
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 replacement New Note equal in principal amount to any unpurchased portion of
the New Notes surrendered, if any; provided that each such replacement New Note
will be in a principal amount of $1,000 or an integral multiple thereof.
The provisions described above that require the Company to make a Change of
Control Offer following a Change of Control will be applicable whether or not
the covenant described below under "--Certain Covenants--Merger, Consolidation
or Sale of Assets" is applicable. Except as described above with respect to a
Change of Control Offer, the Indenture does not contain provisions that permit
the Holders of the New Notes to require that the Company repurchase or redeem
the New Notes in the event of a takeover, recapitalization or similar
transaction.
There can be no assurance that the Company will have sufficient funds
available to make the payments (including purchasing the New Notes) required in
connection with any Change of Control Offer. The Senior Secured Credit Facility
will prohibit the Company from purchasing any New Notes prior to the repayment
in full of the Indebtedness thereunder, and also will provide that certain
change of control events with respect to the Company will constitute a default
thereunder. Any future credit agreements or other agreements relating to other
Indebtedness of the Company may contain similar restrictions and provisions. In
the event a Change of Control occurs at a time when the Company is contractually
prohibited from purchasing New Notes, the Company could seek the consent of its
lenders thereunder to the purchase of New Notes or could attempt to refinance
the borrowings made pursuant to agreements that contain such prohibition. If the
Company does not obtain such a consent or repay such borrowings, the Company
will remain contractually prohibited from purchasing New Notes. In such case,
the Company's failure to purchase tendered New Notes would constitute an Event
of Default pursuant to clause (3) described in "Events of Default and Remedies"
which would, in turn, constitute a default under the agreements relating to such
other Indebtedness.
The Company 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 Company and
purchases all New Notes validly tendered and not withdrawn under such Change of
Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. There is a
limited body of case law
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interpreting the phrase "substantially all;" however, there is no precise
established definition of the phrase under applicable law. Accordingly, the
ability of a Holder of New Notes to require the Company to repurchase such New
Notes as a result of a sale, lease, transfer, conveyance or other disposition of
less than all of the assets of the Company and its Subsidiaries, taken as a
whole, to another Person or group may be uncertain.
ASSET SALES
The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) the Company (or such Restricted Subsidiary) receives consideration at the
time of such Asset Sale (without giving effect to subsequent changes in
value) at least equal to the fair market value of the assets or Equity
Interests issued or sold or otherwise disposed of;
(2) with respect to any such Asset Sale involving aggregate consideration in
excess of $2.5 million, such fair market value is determined by the
Company's Board of Directors and evidenced by a resolution of the Board of
Directors set forth in an Officer's Certificate delivered to the Trustee;
and
(3) at least 75% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash or Cash Equivalents. For
purposes of this provision, each of the following shall be deemed to be
cash:
(a)any Indebtedness or other liabilities, of the Company or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated
to the New Notes or any Subsidiary Guarantee) that are assumed by the
transferee of any such assets pursuant to an agreement that releases the
Company or such Restricted Subsidiary from further liability; and
(b)any currencies, securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee (or any
Person on behalf of such transferee in respect of such Asset Sale) and
that are converted by the Company or such Restricted Subsidiary into
cash or Cash Equivalents within 60 days after the closing of such Asset
Sale (to the extent of the cash or Cash Equivalents received in that
conversion).
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or any Restricted Subsidiary may, at its option, apply such Net
Proceeds, or enter into a legally binding agreement:
(1) to prepay or repay permanently Indebtedness of the Company or Restricted
Subsidiaries under the Senior Secured Credit Facility or any other
Indebtedness secured by a Lien and, if the Indebtedness repaid is revolving
credit Indebtedness, to correspondingly reduce commitments with respect
thereto to the extent the aggregate of all such revolving commitments
exceeds $40.0 million;
(2) to acquire all or substantially all of the assets of, or a majority of the
Voting Stock of, another Permitted Business or to make a Permitted
Investment pursuant to clause (7) of the definition of "Permitted
Investments;"
(3) to make a capital expenditure;
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<PAGE> 90
(4) to acquire other properties or other assets (other than Indebtedness, cash
or Cash Equivalents or Capital Stock) that are used or useful in a
Permitted Business; or
(5) to make any combination of (1) through (4) above.
Pending the final application of any such Net Proceeds, the Company or such
Restricted Subsidiary may temporarily reduce outstanding Indebtedness or
otherwise invest such Net Proceeds in any manner that is not prohibited by the
Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute Excess Proceeds. When the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Indenture will
require the Company to make an offer to all Holders of New Notes (an "ASSET SALE
OFFER") and, to the extent required by the terms thereof, the Company may also
make a similar offer to all holders of other Indebtedness that is pari passu
with the New Notes containing provisions similar to those set forth in the
Indenture with respect to offers to purchase or redeem with the proceeds of
sales of assets to purchase the maximum principal amount of New Notes and such
other pari passu Indebtedness that may be purchased out of the Excess Proceeds.
The offer price in any Asset Sale Offer will be equal to 100% of principal
amount plus accrued and unpaid interest, if any, to the date of purchase, and
will be payable in cash. If any Excess Proceeds remain after consummation of an
Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not
otherwise prohibited by the Indenture. If the aggregate principal amount of New
Notes and such other pari passu Indebtedness tendered into such Asset Sale Offer
exceeds the amount of Excess Proceeds, the Trustee shall select the New Notes
and such other pari passu Indebtedness to be purchased on a pro rata basis. Upon
completion of each Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any Asset Swaps, unless:
(1) at the time of entering into such Asset Swap and immediately after giving
effect to such Asset Swap, no Default or Event of Default shall have
occurred and be continuing;
(2) in the event such Asset Swap involves the transfer by the Company or any
Restricted Subsidiary of the Company of assets having an aggregate fair
market value, as determined by the Board of Directors in good faith, in
excess of $2.5 million, the terms of such Asset Swap have been approved by
a majority of the members of the Board of Directors whose resolution with
respect thereto shall be delivered to the Trustee; and
(3) in the event such Asset Swap involves the transfer by the Company or any
Restricted Subsidiary of the Company of assets having an aggregate fair
market value, as determined by a majority of the members of the Board of
Directors in good faith, in excess of $10.0 million, the Company has
received an opinion issued by an accounting, appraisal or investment
banking firm of nationally recognized standing that such Asset Swap is fair
to the Company or such Restricted Subsidiary, as the case may be, from a
financial point of view.
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<PAGE> 91
SELECTION AND NOTICE
If less than all of the New Notes are to be redeemed at any time, the
Trustee will select New Notes for redemption as follows:
(1) if the New Notes are listed, in compliance with the requirements of the
principal national securities exchange on which the New Notes are listed;
or
(2) 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.
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
such Holder's 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 that New Note shall state the portion of the principal amount
thereof to be redeemed. A replacement New Note in principal amount equal to the
unredeemed portion of the replaced New Note will be issued in the name of the
Holder thereof upon cancellation of the replaced New Note. New Notes called for
redemption become due on the date fixed for redemption. On and after the
redemption date, interest shall cease to accrue on New Notes or portions of them
called for redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution on
account of the Company's or any of its Restricted Subsidiaries' Equity
Interests other than declarations or payments of dividends, distributions
or such other payments payable (a) in Equity Interests (other than
Disqualified Stock) of the Company or (b) to the Company or a Restricted
Subsidiary of the Company;
(2) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Company or any direct or indirect parent of the Company or
any Restricted Subsidiary of the Company (other than any such Equity
Interests owned by the Company or any Restricted Subsidiary of the Company
or in exchange for other Equity Interests (other than Disqualified Stock)
of the Company);
(3) make any voluntary or optional principal payment, or purchase, redeem,
defease or otherwise acquire or retire for value, any Indebtedness that (a)
is subordinate in right of payment to the Subsidiary Guarantees, with
respect to the Guarantors or (b) otherwise constitutes Subordinated
Indebtedness, except a payment of principal at the Stated Maturity thereof
or pursuant to any required sinking fund payments; or
(4) make any Restricted Investment;
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<PAGE> 92
(all such payments and other actions set forth in clauses (1) through (4) above
being collectively referred to as "RESTRICTED PAYMENTS"), unless, at the time of
and immediately after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing; and
(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, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the covenant
described below under the caption "--Incurrence of Indebtedness and
Issuance of Preferred Stock;" and
(3) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by the Company and its Restricted Subsidiaries
after the Issue Date (excluding Restricted Payments permitted by clauses
(2), (3), (4) and (9) of the next succeeding paragraph), is less than the
sum, without duplication, of
(a)50% of the Consolidated Net Income of the Company for the period (taken
as one accounting period) from the beginning of the first fiscal quarter
commencing after the Issue Date 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
(b)100% of the aggregate net cash proceeds received by the Company from any
Person (other than a Subsidiary of the Company) since the Issue Date (i)
as a contribution to its common equity capital, (ii) from the issuance
or sale of Equity Interests of the Company (other than Disqualified
Stock) and/or (iii) from the issuance or sale of convertible or
exchangeable Disqualified Stock or convertible or exchangeable debt
securities of the Company that have been converted into or exchanged for
such Equity Interests (other than Equity Interests (or Disqualified
Stock or debt securities) sold to a Subsidiary of the Company), together
with the aggregate cash received by the Company or any of its
Subsidiaries at the time of such conversion or exchange (in any case,
other than net cash proceeds received from an issuance or sale of such
Capital Stock to an employee of the Company or any of its Restricted
Subsidiaries to the extent such sale is financed by loans from or
guaranteed by the Company or any Restricted Subsidiary unless such loans
have been repaid (or such guarantee has been released or discharged) on
or prior to the date of determination); plus
(c)to the extent that any Restricted Investment that was made after the
Issue Date is sold or otherwise liquidated or repaid, the lesser of (i)
the cash (including Cash Equivalents) return of capital with respect to
such Restricted Investment, including any cash or Cash Equivalents
received as a result of the sale of any property received upon the sale
or other liquidation or repayment of such Restricted Investment within
60 days after the receipt of such property (less the cost of
disposition, if any) and (ii) the initial amount of such Restricted
Investment; plus
(d)upon the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary, the fair market value (as determined by the Board of
Directors in good faith) of such Unrestricted Subsidiary as of the date
it is redesignated; provided, however,
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that for purposes of this clause (d), the fair market value of any
redesignated Unrestricted Subsidiary shall be reduced by the amount that
any such redesignation replenishes or increases the amount of Restricted
Investments permitted to be made pursuant to clause (7) of the
definition of Permitted Investments.
The preceding provisions will not prohibit:
(1) the payment of any dividend or distribution within 60 days after the date
of declaration thereof, if at said date of declaration such payment would
have complied with the provisions of the Indenture;
(2) the redemption, repurchase, retirement, defeasance or other acquisition of
any Indebtedness or of any Equity Interests of the Company or of any
Restricted Subsidiary in exchange for, or out of the net cash proceeds of
the substantially concurrent sale (other than to a Subsidiary of the
Company) of, Equity Interests of the Company (other than Disqualified
Stock); provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (3)(b) of the preceding
paragraph;
(3) payment of principal or the defeasance, redemption, retirement, repurchase
or other acquisition of Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness;
(4) the payment of any dividend, distribution or other payment by a Restricted
Subsidiary of the Company to the holders of its common Equity Interests or
the repurchase by a Restricted Subsidiary of the Company of its common
Equity Interests, in each case, on a pro rata basis, provided that no
Default or Event of Default shall have occurred and be continuing (i) in
the case of any dividend, distribution or other payment, at the time of,
and immediately after giving effect to, the declaration of such dividend,
distribution or other payment or (ii) in the case of any repurchase, at the
time of, and immediately after giving effect to, such repurchase;
(5) the repurchase, redemption or other acquisition or retirement for value of
(a) any Equity Interests of the Company or any Restricted Subsidiary of the
Company held by any member (present or former) of the Company's or any of
its Subsidiaries' management (or their estates or beneficiaries thereunder)
pursuant to any management equity subscription agreement or stock option
agreement or other compensation or severance arrangement in effect as of
the Issue Date or entered into or created thereafter without violating the
Indenture or (b) any Equity Interests of the Company or any of its
Restricted Subsidiaries to the extent necessary, in the good faith judgment
of the Board of Directors of the Company, to prevent the loss or secure the
renewal or reinstatement of any license, permit or authorization held by
the Company or any of its Restricted Subsidiaries under any applicable law
or governmental regulation or the policies of any applicable governmental
authority or other regulatory body; provided, that the amount of any such
repurchase, redemption, acquisition or retirement for value pursuant to
this clause (b) shall not exceed the fair market value of the Equity
Interests being repurchased, redeemed, acquired or otherwise retired;
provided, further, that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests pursuant to clauses
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(a) and (b) shall not exceed $2.0 million in any calendar year (with up to
$1.0 million of any unused amount in any calendar year being carried over
to the succeeding calendar year subject to a maximum of $3.0 million in any
calendar year, after giving effect to any unused amounts carried over to a
succeeding calendar year);
(6) the payment or distribution to dissenting equityholders (other than
Affiliates of the Company or any of its Subsidiaries) pursuant to
applicable law, pursuant to or in connection with a consolidation, merger
or transfer of all, or substantially all, of the assets or property of the
Company that is not prohibited by the Indenture;
(7) the declaration or payment of dividends on the common stock of the Company
following any Public Equity Offering of such common stock, or of the common
stock of Holdings, of up to 6% per annum of the net cash proceeds received
by the Company, or contributed by Holdings to the equity capital of the
Company, in all such Public Equity Offerings; provided that, at the time of
the declaration of any such dividends and immediately after giving effect
to such declaration, no Default or Event of Default shall have occurred and
be continuing;
(8) the repurchase of any Subordinated Indebtedness pursuant to an offer to
purchase in the event of a change of control in accordance with provisions
similar to the "Change of Control" covenant in the Indenture; provided,
that, (i) at the time any such Subordinated Indebtedness is accepted for
payment pursuant to the offer to purchase and immediately after giving
effect to such repurchase, no Default or Event of Default shall have
occurred and be continuing and (ii) prior to or simultaneously with the
making of the offer to purchase such Subordinated Indebtedness, the Company
has made the Change of Control Offer as provided in such covenant with
respect to the New Notes and has repurchased all New Notes validly tendered
for payment in connection with such Change of Control Offer;
(9) loans and advances to employees, officers and directors of the Company and
its Restricted Subsidiaries the proceeds of which are used to purchase
Equity Interests of the Company or its Restricted Subsidiaries and other
loans and advances to employees and officers in the ordinary course of
business for bona fide business purposes, provided that the aggregate
principal amount of all such loans and advances made pursuant to this
clause (9) does not exceed $2.0 million at any one time outstanding; and
(10) the declaration or payment of any dividends or distributions or the making
of loans or other payments to Holdings to enable Holdings to pay reasonable
and customary fees to directors of Holdings.
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 its Restricted
Subsidiaries, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash assets or securities that are required to be valued
by this covenant in excess of $2.5 million shall be determined by a majority of
the members of the Board of Directors whose resolution with respect thereto
shall be delivered to the Trustee. The Board of Directors' determination must be
based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing if the fair market value exceeds
$10.0 million. Not later than 10 days after the date of making any Restricted
Payment (but not including
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any Restricted Payment described in the preceding paragraph), of more than $2.5
million, the Company shall deliver to the Trustee an Officer's Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this "Restricted Payments" covenant were
computed, together with a copy, if any, of any fairness opinion or appraisal
required by the Indenture.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Company 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 the Company 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 Company and any Guarantor may incur Indebtedness
(including Acquired Debt) or issue Disqualified Stock or preferred stock (or
other Capital Stock having preferential rights similar to 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 (or other Capital Stock having
preferential rights similar to preferred stock) is issued would have been at
least 2.0 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if such additional Indebtedness
had been incurred, or such Disqualified Stock or preferred stock (or other
Capital Stock having preferential rights similar to preferred stock) has been
issued, as the case may be, at the beginning of such four-quarter period.
So long as no Default shall have occurred and be continuing or would occur
or be continuing immediately after giving effect to the incurrence of any of the
following, the first paragraph of this covenant will not prohibit the incurrence
of any of the following (collectively, "PERMITTED DEBT"):
(1) the incurrence by the Company and any Restricted Subsidiary of Indebtedness
under one or more Credit Facilities; provided that the aggregate principal
amount of all Indebtedness of the Company outstanding under all Credit
Facilities after giving effect to such incurrence does not exceed an amount
equal to the sum of (A) (1) $75 million less (2) (without duplication) the
aggregate amount applied by the Company or any of its Subsidiaries since
the Issue Date to repay Indebtedness under a Credit Facility as a result of
asset dispositions which are required by the Indenture to be accompanied by
a corresponding permanent commitment reduction plus (B) additional
Indebtedness incurred under one or more Credit Facilities in an aggregate
amount not exceeding in the aggregate the amount of Indebtedness that is
permitted to be incurred, but has not been incurred, under clauses (4) and
(10) of this paragraph;
(2) the incurrence by the Company and its Subsidiaries of Existing
Indebtedness;
(3) the incurrence by the Company and the Guarantors of Indebtedness
represented by the New Notes in an aggregate principal amount of $130.0
million at any time outstanding and the Subsidiary Guarantees;
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(4) (a) Acquired Debt of the Company and its Restricted Subsidiaries and (b)
the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money obligations, in each case, incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the
Company or such Restricted Subsidiary; provided that the aggregate
principal amount at any time outstanding of all Indebtedness outstanding
under clauses (a) and (b) after giving effect to such incurrence does not
exceed $10.0 million (reduced by the aggregate amount of additional
Indebtedness incurred under one or more Credit Facilities then in effect
that represents such additional Indebtedness under the immediately
preceding clause (1)(B)) (it being understood that any Indebtedness
incurred under this clause (4) shall, at the option of the Company, cease
to be deemed incurred or outstanding for purposes of this clause (4) but
shall be deemed to be incurred for purposes of the first paragraph of this
covenant from and after the first date on which the Company or such
Restricted Subsidiary could have incurred such Indebtedness under such
paragraph without reliance on this clause (4));
(5) the incurrence by the Company or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace, Indebtedness (other than
intercompany Indebtedness) that was permitted by the Indenture to be
incurred under the first paragraph of this covenant or clauses (2), (3) or
(10) of this paragraph;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Restricted Subsidiaries; provided, however, that:
(a)if the Company or any Guarantor is the obligor on such Indebtedness,
such Indebtedness must be expressly subordinated upon the occurrence
and continuation of an Event of Default, to the prior payment in full
in cash or Cash Equivalents of all Obligations with respect to the New
Notes, in the case of the Company, or the Subsidiary Guarantee of such
Guarantor, in the case of a Guarantor; and
(b)(i) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than the
Company or a Restricted Subsidiary thereof and (ii) any sale or other
transfer of any such Indebtedness to a Person that is other than the
Company or a Restricted Subsidiary thereof; shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the Company
or any such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (6) (provided that for purposes of this clause
(6), a pledge of Equity Interests under the Credit Facilities shall not
be considered a sale, transfer or issuance of such Equity Interests);
(7) shares of preferred stock (or other Capital Stock having preferential
rights similar to preferred stock) of a Restricted Subsidiary of the
Company issued to the Company or another Restricted Subsidiary of the
Company; provided that any subsequent
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event which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary of the Company shall be deemed, in each case, to be
an Investment by the Company or any such Restricted Subsidiary in the
issuer of such preferred stock (or other Capital Stock having preferential
rights similar to preferred stock)(provided that for purposes of this
clause (7), a pledge of Equity Interests under the Credit Facilities shall
not be considered a sale, transfer or issuance of such Equity Interests);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred in the ordinary course of business
for the purpose of fixing or hedging interest rate risk or foreign currency
valuation risk, but excluding Hedging Obligations entered into for
speculative purposes;
(9) (a) the guarantee by the Company or any of the Guarantors of Indebtedness
of the Company or any Restricted Subsidiary that was permitted to be
incurred by another provision of this covenant and (b) the guarantee by a
Restricted Subsidiary of the Company that is not a Guarantor of
Indebtedness of any other Restricted Subsidiary of the Company that is not
a Guarantor;
(10) the incurrence by the Company or any of its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including, without
duplication, all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause
(10), not to exceed $5.0 million (reduced by the aggregate amount of
additional Indebtedness incurred under one or more Credit Facilities then
in effect that represents such additional Indebtedness under the
immediately preceding clause (1)(B) (it being understood that any
Indebtedness incurred under this clause (10) shall, at the option of the
Company, cease to be deemed incurred or outstanding for purposes of this
clause (10) but shall be deemed to be incurred for purposes of the first
paragraph of this covenant from and after the first date on which the
Company or such Restricted Subsidiary could have incurred such Indebtedness
under such paragraph without reliance on this clause (10));
(11) Indebtedness of the Company's Foreign Subsidiaries in an aggregate
principal amount at any time outstanding not to exceed the Foreign
Borrowing Base at the time of such incurrence;
(12) the accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends
on Disqualified Stock or preferred stock (or other Capital Stock having
preferential rights similar to preferred stock) in the form of additional
shares of the same class of Disqualified Stock or preferred stock; (or
other Capital Stock having preferential rights similar to preferred stock)
provided, in each such case, that the amount thereof is included in Fixed
Charges of the Company as accrued;
(13) Indebtedness in respect of standby letters of credit and performance,
surety and appeal bonds and completion guarantees provided by the Company
or any Restricted Subsidiary in the ordinary course of business or pursuant
to self-insurance obligations
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and not in connection with the borrowing of money or the obtaining of
advances of credit;
(14) Indebtedness 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 the maximum assumable
liability in respect of the principal amount of all such Indebtedness 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; and
(15) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently drawn
against insufficient funds in the ordinary course of business; provided,
that such Indebtedness is extinguished within five Business Days of
incurrence.
For purposes of determining compliance with this "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant, in the event that an
item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (15) above, or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness on the
date of its incurrence in any manner that complies with this covenant and such
items of Indebtedness will be treated as having been incurred pursuant to one or
more of such clauses or pursuant to the first paragraph of this covenant, as so
classified. Indebtedness under Credit Facilities outstanding on the Issue Date
shall be deemed to have been incurred on such date in reliance on the exception
provided by clause (1) of the preceding paragraph.
For purposes of this covenant, "Acquired Debt" shall be deemed to have been
incurred by the Company or one of its Restricted Subsidiaries, as the case may
be, at the time an acquired Person becomes a Restricted Subsidiary (or is merged
into the Company or any of its Restricted Subsidiaries) or at the time of the
acquisition of assets, as the case may be; and, to avoid duplication,
guarantees, Liens, letters of credit or other obligations supporting
Indebtedness otherwise included in the determination of any particular amount of
Indebtedness under this covenant shall not be included.
For purposes of determining compliance with any U.S. dollar-denominated
restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent
principal amount of Indebtedness denominated in a foreign currency shall be
calculated based on the relevant currency exchange rate in effect on the date
such Indebtedness was incurred, in the case of term Indebtedness, or first
committed, in the case of revolving credit Indebtedness; provided that if such
Indebtedness is incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the applicable U.S. dollar-
denominated restriction to be exceeded if calculated at the relevant currency
exchange rate in effect on the date of such refinancing, such U.S.
dollar-denominated restriction shall be deemed not to have been exceeded so long
as the principal amount of such refinancing
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Indebtedness does not exceed the principal amount of such Indebtedness being
refinanced. The principal amount of any Indebtedness incurred to refinance other
Indebtedness, if incurred in a different currency from the Indebtedness being
refinanced, shall be calculated based on the currency exchange rate between the
currency in which such Refinancing Indebtedness is denominated and the currency
applicable to the Indebtedness being refunded that is in effect on the date of
such refinancing.
The Company will not incur, create, issue, assume or guarantee any
Indebtedness that is contractually subordinate or junior in right of payment to
any other Indebtedness other than Indebtedness permitted by clause (1) of the
second paragraph of the covenant entitled "Incurrence of Indebtedness and
Issuance of Preferred Stock" of the Company unless such Indebtedness is also
contractually subordinated in right of payment to the New Notes on substantially
similar terms. No Guarantor will incur, create, issue, assume or guarantee any
Indebtedness that is contractually subordinate in right of payment to any other
Indebtedness other than Indebtedness permitted by clause (1) of the second
paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of
Preferred Stock" of such Guarantor unless such Indebtedness is also
contractually subordinated in right of payment to such Guarantor's Subsidiary
Guarantee on substantially similar terms.
LIENS
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind securing any Indebtedness on any asset now owned or
hereafter acquired, unless the New Notes or such Guarantee, as the case may be,
are directly secured equally and ratably with (or prior to, in the case of
Subordinated Indebtedness) the Indebtedness secured by such Lien; provided,
however, that the foregoing restriction shall not apply to any Permitted Lien.
In the event that the Lien the existence of which gives rise to a Lien
securing the New Note or a Subsidiary Guarantee pursuant to the provisions of
this covenant ceases to exist, the Lien securing the New Notes or such
Subsidiary Guarantee required by this covenant shall automatically be released
and the Trustee shall execute appropriate documentation.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of such
Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Equity Interests to
the Company or any of the Company's Restricted Subsidiaries, or pay any
Indebtedness owed to the Company or any of the Company's Restricted
Subsidiaries;
(2) make loans or advances to the Company or any of the Company's Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to the Company or any of the
Company's Restricted Subsidiaries.
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However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) agreements, including, without limitation, those with respect to Existing
Indebtedness and the Credit Facilities in each case, as in effect on the
Issue Date and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof,
provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive, in any material respect, taken as a whole, with respect to
such dividend and other payment restrictions than those contained in such
agreements as in effect on the Issue Date;
(2) the Indenture, the Subsidiary Guarantees and the New Notes;
(3) applicable law;
(4) any instrument governing Acquired Debt or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect
at the time of such acquisition (except to the extent such Acquired Debt
was incurred in connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired;
(5) customary non-assignment provisions restricting subletting, assignment or
transfer in licenses, leases or other agreements entered into in the
ordinary course of business;
(6) purchase money or capital lease obligations for property or assets acquired
in the ordinary course of business that impose restrictions on the property
or assets so acquired of the nature described in clause (3) of the
preceding paragraph;
(7) any agreement for the sale or other disposition of all or substantially all
of the Equity Interests of, or property and assets of, any Restricted
Subsidiary that restricts dividends, distributions, loans, advances or
transfers by such Restricted Subsidiary pending its sale or other
disposition;
(8) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, in any material respect, taken as a
whole, than those contained in the agreements governing the Indebtedness
being refinanced;
(9) Liens not prohibited by the Indenture that limit the right of the Company
or any of its Restricted Subsidiaries to transfer property or assets
subject to such Lien;
(10) provisions with respect to the disposition or distribution of assets or
property in joint venture agreements and other similar agreements entered
into in the ordinary course of business;
(11) restrictions on cash or other deposits imposed by customers under contracts
entered into in the ordinary course of business;
(12) provisions in agreements or instruments which prohibit the payment of
dividends or the making of other distributions with respect to any Capital
Stock of a Person other than on a pro rata basis;
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(13) restrictions on the ability of any Restricted Subsidiary to make dividends
or other distributions resulting from the operation of reasonable and
customary covenants including, without limitation, negative pledge
covenants, contained in documentation governing Indebtedness incurred by
such Restricted Subsidiary in compliance with the Indenture; and
(14) provisions contained in any licenses, permits or leases with airports or
airport regulatory authorities entered into in the ordinary course of
business that restrict the ability of any Restricted Subsidiary of the
Company to make loans or advances or to transfer any of its properties or
assets to Persons other than the Company or any other Person which owns,
directly or indirectly, any Equity Interests in such Restricted Subsidiary.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company may not, directly or indirectly: (1) consolidate or merge with
or into another Person (whether or not the Company is the surviving Person); or
(2) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of its properties or assets (determined on a consolidated basis for the
Company and its Restricted Subsidiaries), in one or more related transactions,
to another Person; unless:
(1) either: (a) the Company is the surviving Person; or (b) the Person formed
by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia;
(2) the Person formed by or surviving any such consolidation or merger (if
other than the Company) or the Person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes all
the obligations of the Company under the New Notes, the Indenture and the
Registration Rights Agreement pursuant to a supplemental indenture
reasonably satisfactory to the Trustee;
(3) immediately after giving effect to such transaction no Default or Event of
Default exists; and
(4) except in the case of a merger of the Company with a Wholly Owned
Restricted Subsidiary, the Company or the Person formed by or surviving any
such consolidation or merger (if other than the Company) or to which such
sale, assignment, transfer, conveyance or other disposition shall have been
made:
(a)will have, on a pro forma basis after giving effect to the transaction,
Consolidated Net Worth equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the transaction; and
(b)will, on the date of such transaction after giving pro forma effect
thereto and any related financing transactions as if the same had
occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
the covenant described above under the caption "--Incurrence of
Indebtedness and Issuance of Preferred Stock."
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In addition, the Company may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person. This covenant will not apply to a sale,
assignment, transfer, conveyance or other disposition of assets between or among
the Company and any of its Wholly Owned Subsidiaries.
A Guarantor may not sell or otherwise dispose of all or substantially all
of its assets, or consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person, whether or not such Person is affiliated with
such Guarantor), another Person unless: (1) immediately after giving effect to
that transaction, no Default or Event of Default exists; and (2) either: (a) the
Person acquiring the property in any such sale or disposition or the Person
formed by or surviving any such consolidation or merger assumes all the
Obligations of that Guarantor under its Guarantee pursuant to a supplemental
indenture reasonably satisfactory to the Trustee; or (b) the Net Proceeds of
such sale or other disposition are applied in accordance with the applicable
provisions of the Indenture. If the sale, disposition, consolidation or merger
is with or into the Company or another Guarantor, then the immediately preceding
sentence shall not apply.
TRANSACTIONS WITH AFFILIATES
The Company will not, and will not permit any of its Restricted
Subsidiaries to sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each, an
"AFFILIATE TRANSACTION"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to the
Company or such 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
(2) the Company delivers to the Trustee:
(a)with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $2.5
million, a resolution of the Board of Directors set forth in an
Officer's Certificate certifying that such Affiliate Transaction or
series of related Affiliate Transactions complies with this covenant and
that such Affiliate Transaction or series of related Affiliate
Transactions has been approved by a majority of the disinterested
members of the Board of Directors; and
(b)with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $10.0
million, an opinion as to the fairness to the Company or such Restricted
Subsidiary, as the case may be, of such Affiliate Transaction or series
of related Affiliate Transactions from a financial point of view issued
by an accounting, appraisal or investment banking firm of national
standing.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment, consulting, stock option, stock repurchase, employee
benefit, indemnification, compensation (including the payment of reasonable
and customary
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fees to Directors of the Company or any of its Restricted Subsidiaries who
are not employees of any such Person), business expense reimbursement or
other employee-related agreements, arrangements or plans entered into by
the Company or any of its Restricted Subsidiaries in the ordinary course of
business;
(2) transactions between or among the Company and its Restricted Subsidiaries;
(3) any agreement, including, without limitation, the Management Agreement
(provided that all obligations of the Company under the Management
Agreement are subordinated to the prior payment in full in cash or Cash
Equivalents of all Obligations with respect to the New Notes upon the
occurrence and continuation of an Event of Default), as in effect as of the
Issue Date or any amendment thereto or any transaction contemplated thereby
(including pursuant to any amendment thereto) or any replacement agreement
thereto so long as any such amendment or replacement agreement is not
materially more disadvantageous to the Holders taken as a whole than the
original agreements as in effect on the Issue Date;
(4) the entering into, and any payment pursuant to, any tax-sharing agreement
existing at the time of such payment between the Company and any other
Person with which it files a consolidated tax return or with which the
Company is part of a consolidated group for tax purposes, provided, that
any such payment relates solely to taxes and, in each case, is not in
excess of the tax liability that would have been payable by the Person
making such payment on a stand-alone basis;
(5) payment by the Company or any of its Restricted Subsidiaries to CHI of fees
for advisory services in connection with financings, acquisitions or
divestitures or other investment banking activities upon terms no less
favorable than the Company or any of its Restricted Subsidiaries could
obtain from a nationally recognized investment banking firm for a
comparable transaction, in each case, which fees pursuant to this clause
(5) are approved by a majority of the Board of Directors in good faith; and
(6) Restricted Payments that are permitted by the provisions of the Indenture
described above under the caption "--Restricted Payments."
ADDITIONAL SUBSIDIARY GUARANTEES
If the Company or any of its Restricted Subsidiaries acquires or creates
another Domestic Subsidiary after the Issue Date or if any Foreign Subsidiary
becomes a Domestic Subsidiary, then that newly acquired or created Restricted
Subsidiary must become a Guarantor and execute a supplemental indenture
reasonably satisfactory to the Trustee and deliver an opinion of counsel to the
Trustee within 10 Business Days of the date on which it was acquired or created,
provided, that this covenant shall not apply to any Subsidiary that has been
properly designated as an Unrestricted Subsidiary; provided, further, the
Company may, at its option, elect to have any such newly acquired or created
Restricted Subsidiary not become a Guarantor (a "NON-GUARANTOR SUBSIDIARY")
provided that, and for so long as, (1) none of the total assets, stockholders'
equity or Consolidated Cash Flow of such Restricted Subsidiary exceeds $500,000
and (2) none of the total assets, stockholders' equity or Consolidated Cash Flow
of such Restricted Subsidiary together with all other Non-Guarantor
Subsidiaries, considered as a single Person, exceeds $1.0 million in the
aggregate.
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SALE AND LEASEBACK TRANSACTIONS
The Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Restricted Subsidiary of the Company may enter into a sale
and leaseback transaction if:
(1) the Company or that Restricted Subsidiary, as applicable, could have
incurred Indebtedness in an amount equal to the Attributable Debt relating
to such sale and leaseback transaction under the Fixed Charge Coverage
Ratio test in the first paragraph of the covenant described above under the
caption "--Incurrence of Additional Indebtedness and Issuance of Preferred
Stock;"
(2) the gross proceeds consisting of cash and Cash Equivalents of that sale and
leaseback transaction are at least equal to the fair market value (in the
case of gross cash proceeds in excess of $1.0 million as determined in good
faith by the Board of Directors and set forth in an Officer's Certificate
delivered to the Trustee), of the property that is the subject of such sale
and leaseback transaction; and
(3) the transfer of assets in that sale and leaseback transaction complies with
the covenant described above under the caption "--Asset Sales," to the
extent applicable.
The foregoing restrictions shall not apply to one or more sale and leaseback
transactions that (i) singly or in the aggregate relate to assets having in the
aggregate (in the case of related transactions) a fair market value not
exceeding $1.0 million; (ii) are solely between or among any of the Company and
any Guarantors; or (iii) are solely between or among any Restricted Subsidiary
of the Company that are not Guarantors and other Restricted Subsidiaries that
are not Guarantors.
BUSINESS ACTIVITIES
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business other than Permitted Businesses.
PAYMENTS FOR CONSENT
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder of New Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the Indenture or the
New Notes unless such consideration is offered to be paid and is paid to all
Holders of the New Notes that consent, waive or agree to amend in the time frame
set forth in the solicitation documents relating to such consent, waiver or
agreement.
REPORTS
Whether or not required by the SEC, so long as any New Notes are
outstanding, the Company will deliver or otherwise make available to the Holders
of New Notes or the Trustee, within the time periods specified in the SEC's
rules and regulations:
(1) all quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if the Company
were required to file such Forms, including a "Management's Discussion and
Analysis of Financial
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Condition and Results of Operations" and, with respect to the annual
information only, a report on the annual financial statements by the
Company's certified independent accountants; and
(2) all current reports that would be required to be filed with the SEC on Form
8-K if the Company were required to file such reports.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest or liquidated
damages on the New Notes;
(2) default in payment when due of the principal of or premium, if any, on the
New Notes;
(3) failure by the Company or any Guarantor to comply with its Obligations
described under the caption "--Merger, Consolidation or Sale of Assets," or
the failure of the Company to make or consummate a Change of Control Offer
under the provisions described under the caption "--Change of Control," or
the failure of the Company to make or consummate an Asset Sale Offer under
the provisions described under the caption "--Asset Sales;"
(4) failure by the Company or any of its Restricted Subsidiaries for 60 days
after receipt of written notice by the Trustee to the Company specifying
the default to comply with any of the other agreements in the Indenture;
(5) default under the terms of any Indebtedness for money borrowed by the
Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether
such Indebtedness or guarantee now exists, or is created after the Issue
Date, if that default:
(a)is caused by a failure to pay principal of such Indebtedness when due at
final stated maturity after the expiration of the grace period provided
in such Indebtedness on the date of such default (a "PAYMENT DEFAULT");
or
(b)results in the acceleration of such Indebtedness prior to its final
maturity, and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $5.0 million or
more;
(6) failure by the Company or any Significant Subsidiary or group of Restricted
Subsidiaries that, taken together (as of the latest audited consolidated
financial statements for the Company and its Restricted Subsidiaries) would
constitute a Significant Subsidiary to pay one or more final judgments
which exceed in the aggregate $5.0 million (net of any amounts for which a
reputable and creditworthy insurance company has assumed the defense of or
acknowledged liability for in writing), which judgments are not paid,
discharged or stayed for a period of 60 consecutive days;
(7) except as permitted by the terms of the Indenture, any Subsidiary Guarantee
shall be held in any judicial proceeding by a court of competent
jurisdiction to be
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unenforceable or invalid or shall cease for any reason to be in full force
and effect or any Guarantor shall deny or disaffirm in writing that it has
any further liability under its Subsidiary Guarantee; and
(8) certain events of bankruptcy, insolvency or reorganization of the Company
or a Significant Subsidiary or group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated financial statements for
the Company and its Restricted Subsidiaries), would constitute a
Significant Subsidiary.
In the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Company, any Restricted Subsidiary
that is a Significant Subsidiary or any group of Restricted Subsidiaries that,
taken together, would constitute a Significant Subsidiary, all outstanding New
Notes will become due and payable immediately without further action or notice.
If any other Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding New Notes
may declare all the New Notes to be due and payable by notice in writing to the
Company and the Trustee specifying the respective Event of Default and that it
is a notice of acceleration (the "ACCELERATION NOTICE") and the same shall
become immediately due and payable.
In the event of an Acceleration Notice because an Event of Default has
occurred and is continuing as a result of the acceleration of any Indebtedness
described in clause (5) of the preceding paragraph, the Acceleration Notice
shall be automatically annulled and rescinded if the holders of any Indebtedness
described in clause (5) have rescinded the declaration of acceleration in
respect of such Indebtedness within 30 days of the date of such declaration and
if (i) the annulment of the acceleration of the New Notes would not conflict
with any judgment or decree binding on the Company or its property and issued by
a court of competent jurisdiction, and (ii) all existing Events of Default,
except nonpayment of principal or interest on the New Notes that became due
solely because of the acceleration of the New Notes, have been cured or waived.
The Trustee may withhold from Holders of the New Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest.
Holders of the New Notes may not enforce the Indenture or the New Notes
except as provided in the Indenture and under the Trust Indenture Act. Subject
to certain limitations, Holders of a majority in principal amount of the then
outstanding New Notes may direct the Trustee in its exercise of any trust or
power. The Holders of a majority in aggregate principal amount of the New Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the New Notes waive any 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 New Notes. At any time after the date of
the Acceleration Notice the Holders of a majority in aggregate principal amount
of the New Notes then outstanding may rescind and cancel such declaration and
its consequences if (i) the annulment of the acceleration of the New Notes would
not conflict with any judgment or decree binding on the Company or its property
and issued by a court of competent jurisdiction, and (ii) all existing Events of
Default, except nonpayment of principal or interest on the New Notes that became
due solely because of the acceleration of the New Notes, have been cured or
waived.
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The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture. Upon becoming aware of any Default or
Event of Default, the Company is required to deliver promptly to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any Guarantor, as such, shall have any liability for any obligations of the
Company or the Guarantors under the New Notes, the Indenture or the Subsidiary
Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of New Notes by accepting a New Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the New Notes. The waiver may not be effective to
waive liabilities under the federal securities laws, and it is the view of the
SEC that such waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding New Notes and all
obligations of the Guarantors discharged with respect to their Subsidiary
Guarantees ("LEGAL DEFEASANCE") except for:
(1) the rights of Holders of outstanding New Notes to receive payments in
respect of the principal of, premium, if any, and interest on such New
Notes when such payments are due from the trust referred to below;
(2) the Company's obligations with respect to the New Notes concerning issuing
temporary notes, registration of New Notes, mutilated, destroyed, lost or
stolen New Notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee, and the
Company's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company and the Guarantors released with respect to
certain covenants that are described in the Indenture ("COVENANT DEFEASANCE")
and thereafter any omission to comply with those covenants shall not constitute
a Default or Event of Default with respect to the New Notes. In the event
Covenant Defeasance occurs, events (other than non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute Events of Default with respect to the New
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders of the New Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants selected by the
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Company, to pay the principal of, premium, if any, and interest on the
outstanding New Notes on the stated maturity or on the applicable
redemption date, as the case may be, and the Company must specify whether
the New Notes are being defeased to maturity or to a particular redemption
date;
(2) in the case of Legal Defeasance, the Company shall have delivered to the
Trustee an opinion of counsel 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 Issue
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, the Holders of the outstanding New Notes will not
recognize income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Company shall have delivered to the
Trustee an opinion of counsel reasonably acceptable to the Trustee
confirming that the Holders of the outstanding New Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing
either: (a) on the date of such deposit (other than a Default or Event of
Default arising in connection with the borrowing of funds to be applied to
such deposit); or (b) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the
91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under the Senior Secured Credit
Facility or any other material agreement or instrument (other than the
Indenture) to which the Company or any of its Restricted Subsidiaries is a
party or by which the Company or any of its Restricted Subsidiaries is
bound;
(6) the Company must have delivered to the Trustee an opinion of counsel to the
effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(7) the Company must deliver to the Trustee an Officer's Certificate stating
that the deposit was not made by the Company with the intent of preferring
the Holders of New Notes over the other creditors of the Company with the
intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and
(8) the Company must deliver to the Trustee an Officer's Certificate and an
opinion of counsel, each stating that all conditions precedent relating to
the Legal Defeasance or the Covenant Defeasance have been complied with.
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AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, the Indenture
or the New Notes may be amended, supplemented or otherwise modified with the
consent of the Company and the Holders of at least a majority in principal
amount of the New Notes then outstanding (including consents obtained in
connection with a purchase of, or tender offer or exchange offer for, the New
Notes), and any existing Default or Event of 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 New Notes
(including consents obtained in connection with a purchase of, or tender offer
or exchange offer for, the New Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any New Notes held by a non-consenting Holder):
(1) reduce the principal amount of New Notes whose Holders must consent to an
amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any New Note or
alter the provisions with respect to the redemption of the New Notes (other
than provisions relating to the covenants described above under the caption
"--Repurchase at the Option of Holders");
(3) reduce the rate of or change the time for payment of interest on any New
Note;
(4) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the New Notes (except a rescission of
acceleration of the New Notes by the Holders of at least a majority in
aggregate principal amount of the New Notes and a waiver of the payment
default that resulted from such acceleration);
(5) make any New Note payable in money other than that stated in the New Notes;
(6) make any change in the provisions of the Indenture relating to waivers of
past Defaults or the rights of Holders of New Notes to receive payments of
principal of or premium, if any, or interest on the New Notes;
(7) waive a redemption payment with respect to any New Note (other than a
payment required by one of the covenants described above under the caption
"--Repurchase at the Option of Holders"); or
(8) make any change in the preceding amendment and waiver provisions.
Notwithstanding the preceding, without the consent of any Holder of New
Notes, the Company and the Trustee may amend, supplement, waive or otherwise
modify provisions of the Indenture, the New Notes or the Guarantees:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated New Notes in addition to or in place of
certificated New Notes;
(3) to provide for the assumption of the Company's obligations to Holders of
New Notes in the case of a merger or consolidation or sale of all or
substantially all of the Company's assets;
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(4) to make any change that would provide any additional rights or benefits to
the Holders of New Notes or that does not adversely affect the legal rights
under the Indenture of any such Holder; or
(5) to comply with requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of the Company or any Guarantor, the
Indenture limits its right to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security or
otherwise. The Trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest it must eliminate such conflict
within 90 days, apply to the SEC for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding New
Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur and be continuing (which shall not be cured or waived in conformity
with the Indenture), the Trustee will be required, in the exercise of its power,
to use the degree of care of a prudent person in the conduct of such person's
own affairs. Subject to such provisions, the Trustee will be under no obligation
to exercise any of its rights or powers under the Indenture at the request of
any Holder of New Notes, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, New Notes will be issued in registered, global
form in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof. New Notes will be issued at the closing of this exchange offer
only against delivery of the tendered Original Notes.
The New Notes initially will be represented by one or more New Notes in
registered, global form without interest coupons (collectively, the "Global
Notes"). The Global Notes will be deposited upon issuance with the Trustee as
custodian for the Depository Trust Company, in New York, New York, and
registered in the name of the Depository Trust Company or its nominee, in each
case for credit to an account of a direct or indirect participant in the
Depository Trust Company as described below.
Except as set forth below, the Global Notes may be transferred, in whole
and not in part, only to another nominee of the Depository Trust Company or to a
successor of the Depository Trust Company or its nominee. Beneficial interests
in the Global Notes may not be exchanged for New Notes in certificated form
except in limited circumstances.
In addition, transfers of beneficial interests in the Global Notes will be
subject to the applicable rules and procedures of the Depository Trust Company
and its direct or indirect participants (including, if applicable, those of
Euroclear and Cedel), which may change from time to time.
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DEPOSITORY PROCEDURES
The following description of the operations and procedures of the
Depository Trust Company, Euroclear and Cedel are provided solely as a matter of
convenience. These operations and procedures are solely within the control of
the respective settlement systems and are subject to changes by them. The
Company takes no responsibility for these operations and procedures and urges
investors to contact the system or their participants directly to discuss these
matters.
The Depository Trust Company has advised the Company that it is a
limited-purpose trust company created to hold securities for its participating
organizations (collectively, the "Participants") and to facilitate the clearance
and settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. Access to the Depository Trust
Company's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of the Depository Trust Company only through
the Participants or the Indirect Participants. The ownership interests in, and
transfers of ownership interests in, each security held by or on behalf of the
Depository Trust Company are recorded on the records of the Participants and
Indirect Participants.
The Depository Trust Company has also advised the Company that, pursuant to
procedures established by it:
(1) upon deposit of the Global Notes, the Depository Trust Company will credit
the accounts of Participants designated by the tendering Holders with
portions of the principal amount of the Global Notes; and
(2) ownership of these interests in the Global Notes will be shown on, and the
transfer of ownership thereof will be effected only through, records
maintained by the Depository Trust Company (with respect to the
Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interest in the Global Notes).
Investors in the Global Notes who are Participants in the Depository Trust
Company's system may hold their interests therein directly through the
Depository Trust Company. Investors in the Global Notes who are not Participants
may hold their interests therein indirectly through organizations (including
Euroclear and Cedel) which are Participants in such system. All interests in a
Global Note, including those held through Euroclear or Cedel, may be subject to
the procedures and requirements of the Depository Trust Company. Those interests
held through Euroclear or Cedel may also be subject to the procedures and
requirements of such systems. The laws of some states require that certain
Persons take physical delivery in definitive form of securities that they own.
Consequently, the ability to transfer beneficial interests in a Global Note to
such Persons will be limited to that extent. Because the Depository Trust
Company can act only on behalf of Participants, which in turn act on behalf of
Indirect Participants, the ability of a Person having beneficial interests in a
Global Note to pledge such interests to Persons that do not participate in the
Depository Trust Company system, or otherwise take actions in respect
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of such interests, may be affected by the lack of a physical certificate
evidencing such interests.
Except as described below, owners of interests in the Global Notes will not
have New Notes registered in their names, will not receive physical delivery of
New Notes in certificated form and will not be considered the registered owners
or "Holders" thereof under the Indenture for any purpose.
Payments in respect of the principal of, and interest and premium and
Liquidated Damages, if any, on a Global Note registered in the name of the
Depository Trust Company or its nominee will be payable to Depository Trust
Company in its capacity as the registered Holder under the Indenture. Under the
terms of the Indenture, the Company and the Trustee will treat the Persons in
whose names the New Notes, including the Global Notes, are registered as the
owners thereof for the purpose of receiving payments and for all other purposes.
Consequently, neither the Company, the Guarantors, the Trustee nor any agent of
the Company, the Guarantors, or the Trustee has or will have any responsibility
or liability for:
(1) any aspect of the Depository Trust Company's records or any Participant's or
Indirect Participant's (including Euroclear and Cedel, without limitation)
records relating to or payments made on account of beneficial ownership
interest in the Global Notes or for maintaining, supervising or reviewing
any of the Depository Trust Company's records or any Participant's or
Indirect Participant's (including Euroclear and Cedel, without limitation)
records relating to the beneficial ownership interests in the Global Notes;
or
(2) any other matter relating to the actions and practices of the Depository
Trust Company or any of its Participants or Indirect Participants (including
Euroclear and Cedel, without limitation).
The Depository Trust Company has advised the Company that its current
practice, upon receipt of any payment in respect of securities such as the New
Notes (including principal and interest), is to credit the accounts of the
relevant Participants with the payment on the payment date unless the Depository
Trust Company has reason to believe it will not receive payment on such payment
date. Each relevant Participant is credited with an amount proportionate to its
beneficial ownership of an interest in the principal amount of the relevant
security as shown on the records of the Depository Trust Company. Payments by
the Participants and the Indirect Participants to the beneficial owners of New
Notes will be governed by standing instructions and customary practices and will
be the responsibility of the Participants or the Indirect Participants and will
not be the responsibility of the Depository Trust Company, the Trustee, the
Company or the Guarantors. The Company, the Guarantors and the Trustee will not
be liable for any delay by the Depository Trust Company or any of its
Participants in identifying the beneficial owners of the New Notes, and the
Company and the Trustee may conclusively rely on and will be protected in
relying on instructions from the Depository Trust Company or its nominee for all
purposes.
Transfers between Participants in the Depository Trust Company will be
effected in accordance with the Depository Trust Company's procedures, and will
be settled in same-day funds, and transfers between participants in Euroclear
and Cedel will be effected in accordance with their respective rules and
operating procedures.
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Subject to compliance with the transfer restrictions applicable to the New
Notes described herein, cross-market transfers between the Participants in the
Depository Trust Company, on the one hand, and Euroclear or Cedel participants,
on the other hand, will be effected through the Depository Trust Company in
accordance with the Depository Trust Company's rules on behalf of Euroclear or
Cedel, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
Cedel, as the case may be, by the counterparty in such system in accordance with
the rules and procedures and within the established deadlines (Brussels time) of
such system. Euroclear or Cedel, as the case may be, will, if the transaction
meets its settlement requirements, deliver instructions to its respective
depositary to take action to effect final settlement on its behalf by delivering
or receiving interests in the relevant Global Note in the Depository Trust
Company, and making or receiving payment in accordance with normal procedures
for same-day funds settlement applicable to the Depository Trust Company.
Euroclear participants and Cedel participants may not deliver instructions
directly to the depositories for Euroclear or Cedel.
The Depository Trust Company has advised the Company that it will take any
action permitted to be taken by a Holder of New Notes only at the direction of
one or more Participants to whose account the Depository Trust Company has
credited the interests in the Global Notes and only in respect of such portion
of the aggregate principal amount of the New Notes as to which such Participant
or Participants has or have given such direction. However, if there is an Event
of Default under the New Notes, the Depository Trust Company reserves the right
to exchange the Global Notes for legended New Notes in certificated form, and to
distribute such New Notes to its Participants.
Although the Depository Trust Company, Euroclear and Cedel have agreed to
the foregoing procedures to facilitate transfers of interests in the Global
Notes among participants in the Depository Trust Company, Euroclear and Cedel,
they are under no obligation to perform or to continue to perform such
procedures, and may discontinue such procedures at any time. The Company, the
Guarantors, the Trustee and their respective agents will not have any
responsibility for the performance by the Depository Trust Company, Euroclear or
Cedel or their respective participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means Indebtedness of a Person or any of its Subsidiaries
existing at the time such Person becomes a Restricted Subsidiary of the Company
or at the time it merges or consolidates with the Company or any of its
Restricted Subsidiaries or is assumed by the Company or any of its Restricted
Subsidiaries in connection with the acquisition of assets from such Person,
including without limitation, Indebtedness incurred by such Person in connection
with, or in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary of the Company or such acquisition, merger or consolidation.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall
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mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control. For purposes of this definition, the terms "controlling,"
"controlled by" and "under common control with" shall have correlative meanings.
"Asset Sale" means:
(1) the sale, lease (other than operating leases entered into in the ordinary
course of business), conveyance or other disposition of any assets, other
than sales of Cash Equivalents or inventory in the ordinary course of
business; provided that the sale, conveyance or other disposition of all or
substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole will be governed by the provisions of the
Indenture described above under the caption "--Repurchase at the Option of
Holders--Change of Control" and/or the provisions described above under the
caption "--Certain Covenants--Merger, Consolidation or Sale of Assets" and
not by the provisions of the Asset Sale covenant; and
(2) the issuance by any of the Company's Restricted Subsidiaries of the Equity
Interests of such Restricted Subsidiary or the sale by the Company or any
Restricted Subsidiary of Equity Interests in any Restricted Subsidiaries
(other than directors' qualifying shares).
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(a) any single transaction or series of related transactions that: (i)
involves assets having a fair market value of less than $1.0 million;
or (ii) results in net proceeds to the Company and its Restricted
Subsidiaries of less than $1.0 million;
(b) a transfer, sale, lease, conveyance or other disposition of assets
between or among the Company and its Restricted Subsidiaries;
(c) an issuance or sale of Equity Interests by a Restricted Subsidiary to
the Company or to another Restricted Subsidiary;
(d) a Restricted Payment that is permitted by the covenant described above
under the caption "--Certain Covenants--Restricted Payments;"
(e) a Permitted Lien;
(f) a sale or other disposition or abandonment of damaged, worn-out or
obsolete property in the ordinary course of business;
(g) any sale, transfer or conveyance of Equity Interests of a Restricted
Subsidiary; provided that immediately after giving effect to such sale,
transfer or conveyance, if such Restricted Subsidiary would (i) no
longer be a Restricted Subsidiary, the Investment of the Company (or
any Restricted Subsidiary) in such Person (after giving effect to such
sale, transfer or conveyance) would have been permitted to be made
pursuant to the covenant described above under the caption "--Certain
Covenants--Restricted Payments" as if made on the date of such sale,
transfer or conveyance or (ii) continue to be a Restricted Subsidiary,
the aggregate noncash consideration received by the Company or any of
its
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Restricted Subsidiaries in such sale, transfer or conveyance does not
have a fair market value, taken together with all other noncash
consideration (other than such consideration converted into cash or
Cash Equivalents) received pursuant to this clause (ii), in excess of
$10.0 million; provided, further that as part of any such sale,
transfer or conveyance pursuant to clause (i) or (ii) above (1) the
Company or any of its Restricted Subsidiaries, as the case may be,
receives consideration at the time of such sale, transfer or conveyance
(without giving effect to subsequent changes in value) at least equal
to the fair market value of the Equity Interests sold, transferred or
conveyed and (2) with regard to any such sale, transfer or conveyance
involving aggregate consideration in excess of $2.5 million, the fair
market value of such consideration is determined by the Company's Board
of Directors and evidenced by a resolution of the Board of Directors
set forth in an Officer's Certificate delivered to the Trustee;
(h) sales of accounts receivable in the ordinary course of business for
cash for financing purposes;
(i) an Asset Swap effected in compliance with the terms contained in the
covenant under the caption "--Repurchase at the Option of
Holders--Asset Sales;" and
(j) the issuance of options, warrants or other similar rights to purchase
Equity Interests of a Restricted Subsidiary to any then-serving
director or member of management of such Restricted Subsidiary in the
ordinary course of business.
"Asset Swap" means a substantially concurrent purchase and sale or exchange
of Related Business Assets between the Company or any of its Restricted
Subsidiaries and another Person; provided that any cash received must be applied
in accordance with the terms contained in the covenant under the caption
"--Repurchase at the Option of Holder--Asset Sales."
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as such term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire, whether such
right is currently exercisable or is exercisable only upon the occurrence of a
subsequent condition.
"Business Day" means a day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York are not required to be open.
"Capital Lease Obligation" means, at the time of determination, the amount
of the liability in respect of a capital lease that would at that time be
required to be capitalized on a balance sheet in accordance with GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
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(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
in the equity of such association or entity;
(3) in the case of a partnership or limited liability company, partnership or
membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets
of, the issuing Person.
"Cash Equivalents" means (i) securities issued by, or unconditionally
guaranteed or insured by, the United States Government or issued by any agency
thereof and backed by the full faith and credit of the United States Government,
in each case maturing within one year from the date of acquisition thereof
("GOVERNMENT OBLIGATIONS"); (ii) marketable direct obligations issued by any
state of the United States of America or any political subdivision thereof
maturing within one year from the date of acquisition thereof and, at the time
of acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Corporation ("S&P") or Moody's Investors Service, Inc.
("MOODY'S"); (iii) commercial paper and variable or fixed rate notes maturing no
more than six months from the acquisition thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any bank organized under
the laws of the United States of America or any state thereof or the District of
Columbia or any U.S. branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $250.0 million; (v)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (iv) above; (vi) federally tax
exempt securities rated "A" or better by S&P or "A2" or better by Moody's and
(vii) investments in money market funds with assets of $100.0 million or greater
which invest substantially all their assets in securities of the types described
in clauses (i) through (vi) above; and (viii) in the case of Foreign
Subsidiaries, substantially similar Cash Equivalents as those described in
clauses (i), (iii) and (iv) above that are available in the local currency.
"Change of Control" means the occurrence of any one or more of the
following:
(1) the sale, transfer, conveyance or other disposition (other than a Lien or
by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act) other than a Permitted Holder or a
Related Party of a Permitted Holder;
(2) the adoption by holders of the Capital Stock of the Company of a plan for
the liquidation or dissolution of the Company;
(3) prior to the first Public Equity Offering, the consummation of any
transaction (including, without limitation, any merger or consolidation)
the result of which is that the Permitted Holders and their Related Parties
are the Beneficial Owners, directly or indirectly, of less than 51% of the
total voting power of the Voting Stock of the Company;
(4) after the first Public Equity Offering, the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of
which is that any
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"person" (as defined above), other than the Permitted Holders and their
Related Parties, becomes the Beneficial Owner, directly or indirectly, of
more than 30% of the total voting power of the Voting Stock of the Company;
or
(5) the first day on which a majority of the members of the Board of Directors
of the Company are not Continuing Directors.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus:
(1) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such provision
for taxes was deducted in computing such Consolidated Net Income; plus
(2) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of
all payments associated with Capital Lease Obligations, imputed interest
with respect to Attributable Debt, commissions, discounts and commitment
and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments, if any, pursuant to
Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income; plus
(3) depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period) and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual of or reserve
for cash expenses in any future period or amortization of a prepaid cash
expense that was paid in a prior period) of such Person and its Restricted
Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income; minus
(4) non-cash items increasing such Consolidated Net Income for such period,
other than items that were accrued in the ordinary course of business, in
each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the preceding sentence, clauses (1) and (3) relating to
amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net
Income to compute Consolidated Cash Flow of such Person only to the extent (and
in the same proportion) that the Net Income (loss) of such Restricted Subsidiary
was included in calculating the Consolidated Net Income of such Person.
"Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(1) the Net Income (but not loss) of any Person that is not a Restricted
Subsidiary shall be included only to the extent of the amount of dividends
or distributions paid in cash to the specified Person or a Wholly Owned
Subsidiary thereof;
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(2) the Net Income of any Restricted Subsidiary shall be excluded to the extent
that the declaration or payment of dividends or similar distributions by
such Restricted Subsidiary of such Net Income is not at the date of
determination permitted without any prior governmental approval (that has
not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to such Restricted Subsidiary,
except to the extent of dividends or distributions paid in accordance
therewith;
(3) the Net Income of any Person acquired in a pooling of interests transaction
for any period prior to the date of such acquisition shall be excluded (it
being understood, however, that the acquisition of such Person may still be
considered for purposes of calculating the Fixed Charge Coverage Ratio in
accordance with the terms of the definition thereof); and
(4) the cumulative effect of a change in accounting principles shall be
excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date
the consolidated stockholders' equity of such Person and its consolidated
Subsidiaries as of such date, less (without duplication) amounts attributable to
Disqualified Stock of such Person.
"Consolidated Revenue" means with respect to any specified Person for any
period, the aggregate revenue of such Person and its Restricted Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the Issue Date (together with
individuals whose nomination for election to the Board of Directors is or
was recommended by CHI); or
(2) was nominated for election or elected to such Board of Directors with the
approval of a majority of the Continuing Directors who were members of such
Board at the time of such nomination or election.
"Credit Facilities" means, with respect to the Company or any Restricted
Subsidiary, one or more debt facilities or commercial paper facilities,
including, without limitation, the Senior Secured Credit Facility, in each case
with banks or other lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time
under existing or new Credit Facilities.
"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.
"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, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in
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part, on or prior to the date that is 91 days after the date on which the New
Notes mature. Notwithstanding the preceding sentence, any Capital Stock that
would constitute Disqualified Stock solely because the holders thereof have the
right to require the Company to repurchase such Capital Stock upon the
occurrence of a change of control or an asset sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
prior to the repurchase of all New Notes as may be required pursuant to the
provisions of the Indenture described under the captions "Change of Control" and
"Limitations on Asset Sales."
"Domestic Subsidiary" means a Subsidiary that is organized under the laws
of the United States, any state thereof or the District of Columbia.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries in existence on the Issue Date.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of:
(1) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized, including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of
all payments associated with Capital Lease Obligations, imputed interest
with respect to Attributable Debt, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments, if any, pursuant to Hedging Obligations; plus
(2) 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, to the
extent such interest is actually paid by such Person or one of its
Restricted Subsidiaries or such Lien is foreclosed upon; plus
(3) the product of (a) all cash dividend payments on any series of preferred
stock of such Person or any of its Restricted Subsidiaries, other than
dividend payments to the Company or a Restricted Subsidiary of the Company,
times (b) a fraction, the numerator of which is one and the denominator of
which is one minus the then current combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, in each case, on
a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any specified Person
for any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person for
such period. In the event that the specified Person or any of its Restricted
Subsidiaries incurs, assumes, repays or redeems any Indebtedness (other than
revolving credit borrowings) or issues or redeems preferred stock or
Disqualified 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
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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, repayment or
redemption of Indebtedness (and the application of the proceeds thereof), or
such issuance or redemption of preferred stock or Disqualified Stock, as if the
same had occurred at the beginning of the applicable four-quarter reference
period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified Person or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to
the Calculation Date shall be deemed to have occurred on the first day of
the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (3) of
the proviso set forth in the definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed
of prior to the Calculation Date, shall be excluded; and
(3) the Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be obligations of
the specified Person or any of its Restricted Subsidiaries following the
Calculation Date.
For the purpose of this definition, whenever pro forma effect is to be given to
an acquisition of assets, the amount of income or earnings relating thereto and
the amount of Consolidated Interest Expense associated with any Indebtedness
incurred in connection therewith, or any other calculation under this
definition, the pro forma calculations will be determined in good faith by a
responsible financial or accounting officer of the Company (including pro forma
expense and cost reductions calculated on a basis consistent with Regulation S-X
under the Securities Act). If any Indebtedness bears a floating rate of interest
and is being given pro forma effect, the interest expense on such Indebtedness
will be calculated as if the average rate for the period had been the applicable
rate for the entire period (taking into account any interest rate agreement
applicable to such Indebtedness).
"Foreign Borrowing Base" means, as of any date, an amount equal to:
(1) 85% of the face amount of all accounts receivable (net of bad debt
reserves) owned by the Company's Foreign Subsidiaries as of the end of the
most recent fiscal quarter preceding such date, calculated on a
consolidated basis and in accordance with GAAP; plus
(2) 50% of the orderly liquidation value of all property, plant and equipment
owned by the Company's Foreign Subsidiaries as of the end of the most
recent fiscal quarter preceding such date; provided, that, such liquidation
value shall be determined by an appraisal of such property, plant and
equipment conducted by an independent appraisal firm of national standing.
"Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.
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"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, through letters of credit
or reimbursement agreements in respect thereof, of all or any part of any
Indebtedness.
"Guarantors" means each of:
(1) the Company's Domestic Subsidiaries other than Non-Guarantor Subsidiaries;
and
(2) any other subsidiary that executes a Subsidiary Guarantee;
and their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under:
(1) foreign currency exchange agreements, interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates or currency exchange rates.
"Holdings" means WFS Holdings, Inc., a Delaware corporation.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, without duplication:
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof);
(3) in respect of banker's acceptances;
(4) representing Capital Lease Obligations;
(5) representing the deferred and unpaid purchase price of any property, except
any such balance that constitutes an accrued expense or trade payable; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than reimbursement
obligations with regard to letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet of the specified Person prepared in
accordance with GAAP. In addition, the term "Indebtedness" includes all
Indebtedness referred to in clauses (1) through (6) above of other Persons
secured by a Lien on any asset of such Person (whether or not such Indebtedness
is assumed by such Person), the amount of such Indebtedness being deemed to be
the lesser of the fair market value of such property or asset and the amount
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of the obligation so secured, and, to the extent not otherwise included, the
Guarantee by such Person of any Indebtedness of any other Person to the extent
of such Guarantor of such Indebtedness provided by such Person.
"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),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities of such other Persons, together with all items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP but excluding extensions of trade credit in the ordinary
course of business. If the Company or any Restricted Subsidiary of the Company
sells or otherwise disposes of any Equity Interests of any direct or indirect
Restricted Subsidiary of the Company such that, after giving effect to any such
sale or disposition, such Person is no longer a Restricted Subsidiary of the
Company, the Company shall be deemed to have made an Investment on the date of
any such sale or disposition equal to the fair market value of the Equity
Interests of such Restricted Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of the covenant described above
under the caption "--Certain Covenants--Restricted Payments."
"Issue Date" means the date of original issuance of the Original Notes.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind on such asset, whether or
not filed, recorded or otherwise perfected under applicable law, including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any agreement to give a security interest in and any filing of any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction.
"Management Agreement" means the management agreement dated March 31, 1999,
by and between Castle Harlan, Inc. and the Company, as amended as of the Issue
Date.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person and its Restricted Subsidiaries, determined in accordance with GAAP
and before any reduction in respect of preferred stock dividends, excluding,
however (without duplication):
(1) any gain (or loss), together with any related provision for taxes on such
gain (or loss), realized in connection with: (a) any Asset Sale; or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or
any of its Restricted Subsidiaries; and
(2) any extraordinary gain (or loss), together with any related provision for
taxes on such extraordinary gain (or loss).
"Net Proceeds" means the aggregate cash or Cash Equivalents proceeds
received by the Company or any of its Restricted Subsidiaries in respect of any
Asset Sale (including, without limitation, any cash or Cash Equivalents (other
than interest) received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of fees, commissions, expenses
and other direct costs relating to such Asset Sale, including, without
limitation, legal, accounting and investment banking fees, and sales or
brokerage commissions, and any relocation expenses and severance costs incurred
as a result thereof,
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taxes paid or payable as a result thereof, in each case after taking into
account any available tax credits or deductions and any tax sharing arrangements
and amounts required to be applied to the repayment of Indebtedness, other than
Indebtedness in respect of a Credit Facility or any other Indebtedness secured
by a Lien, as a result of such Asset Sale, all distributions and other payments
required to be made to minority interest holders in Subsidiaries as a result of
such Asset Sale, any reserve for adjustment in respect of the sale price of such
assets established in accordance with GAAP and any reserves in accordance with
GAAP against any liabilities associated with such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale.
"Non-Recourse Debt" means Indebtedness: (1) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise,
or (c) constitutes the lender or (2) pursuant to which the lender has no
recourse to any of the assets of the Company or any of its Restricted
Subsidiaries.
"Obligations" means any principal, interest, penalties, fees, costs,
expenses, indemnifications, reimbursements, damages and other liabilities or
amounts payable under the documentation governing any Indebtedness.
"Permitted Business" means the coordination, provision and supervision of
ground services to the aviation industry including, without limitation, cargo
services, ramp services, passenger services and technical and industry services,
and any business which is the same as or related, ancillary or complementary
thereto.
"Permitted Holder" means (a) Castle Harlan Partners III, L.P., a Delaware
limited partnership ("CHP III"), any Person controlling, controlled by, or under
common control with, CHP III and any managed account controlled by, or under
common control with CHP III, (b) Castle Harlan, Inc., a Delaware corporation,
and (c) employees, management and directors of any of the foregoing, and any
trust or individual retirement account for the benefit of any such employees,
management or directors, or members of their immediate families and any Person
controlled by any such employee, manager or director.
"Permitted Investments" means:
(1) (a) any Investment in the Company or in a Guarantor or (b) any Investment
by a Restricted Subsidiary of the Company that is not a Guarantor in
another Restricted Subsidiary of the Company that is not a Guarantor;
(2) any Investment in cash or Cash Equivalents;
(3) any Investment by the Company or any Restricted Subsidiary of the Company
in a Person, if as a result of such Investment:
(a)such Person becomes a Guarantor or, to the extent such Investment is
made by a Restricted Subsidiary of the Company that is not a Guarantor,
such Person becomes a Restricted Subsidiary of the Company that is not
a Guarantor;
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(b)such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Guarantor or to the extent such
Investment is made by a Restricted Subsidiary of the Company that is
not a Guarantor, such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially all of its assets
to, or is liquidated into, a Restricted Subsidiary of the Company that
is not a Guarantor;
(4) any Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with the
covenant described above under the caption "--Repurchase at the Option of
Holders--Asset Sales;"
(5) any acquisition of assets solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Company;
(6) Hedging Obligations;
(7) other Investments in any Unrestricted Subsidiary or in any other Person
engaged in a Permitted Business having an aggregate fair market value
(measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (7) since the Issue Date, not to
exceed $3.0 million at any time outstanding (reduced, without duplication,
by the amount of Investments made pursuant to clause (10)(b) of this
definition);
(8) Investments in securities of trade creditors or customers received pursuant
to any plan of reorganization or similar agreement upon the bankruptcy or
insolvency of such trade creditors or customers;
(9) Investments by the Company or any Guarantor in any Foreign Subsidiary of
the Company; provided that each Investment is by means of an intercompany
loan made by the Company or a Guarantor to such Foreign Subsidiary;
provided, further, that the Indebtedness of such Foreign Subsidiary
evidenced by such intercompany loan shall not be contractually subordinated
to the prior payment of any other obligations for the payment of money of
such Foreign Subsidiary; and
(10) other Investments by the Company or any Guarantor in a Foreign Subsidiary
having an aggregate fair market value (measured on the date each such
Investment was made and without giving effect to subsequent changes in
value), when taken together with all other Investments made pursuant to
this clause (10) that are at the time outstanding, not to exceed (a) 15% of
Total Tangible Assets at the time of such Investment plus (b) the amount of
Investments that are permitted to be made but have not been made under
clause (7) of this definition.
"Permitted Liens" means:
(1) Liens on any assets and property of the Company and its Subsidiaries
securing Indebtedness, guarantees of Indebtedness and other Obligations
under one or more Credit Facilities permitted by clause (1) of the second
paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance
of Preferred Stock";
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(2) Liens in favor of (a) the Company or the Guarantors or (b) any Restricted
Subsidiary that is not a Guarantor granted by, and with respect to property
or assets of, another Restricted Subsidiary that is not a Guarantor;
(3) Liens on property of a Person existing at the time such Person is merged
with or into or consolidated with the Company or any Restricted Subsidiary
of the Company; provided that such Liens were not incurred in connection
with or in contemplation of, such merger or consolidation and do not extend
to any assets other than those of the Person merged into or consolidated
with the Company or the Restricted Subsidiary;
(4) 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 not incurred in connection with or in contemplation of such
acquisition;
(5) Liens to secure the performance of statutory obligations (including,
without limitation, Liens of landlords, carriers, warehousemen, mechanics,
suppliers, materialmen and other similar Liens imposed by law), surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business (or to secure reimbursement
obligations in respect of letters of credit issued in connection with any
of the foregoing obligations);
(6) Liens to secure Indebtedness (including Acquired Debt and Capital Lease
Obligations) permitted by clause (4) of the second paragraph of the
covenant entitled "Incurrence of Indebtedness and Issuance of Preferred
Stock" covering only the assets acquired with such Indebtedness or such
assets related to the Acquired Debt;
(7) Liens existing on the Issue Date;
(8) Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently pursued, provided that any
reserve or other appropriate provision as shall be required in conformity
with GAAP shall have been made therefor;
(9) Liens on assets of Foreign Subsidiaries to secure Indebtedness permitted by
clause (11) of the second paragraph of the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Stock";
(10) Liens incurred in the ordinary course of business of the Company or any
Restricted Subsidiary of the Company with respect to obligations that do
not exceed the principal amount of $10.0 million at any one time
outstanding;
(11) Liens securing the New Notes or the Subsidiary Guarantees, if any;
(12) Liens securing Permitted Refinancing Indebtedness, provided, however, that
such Liens (a) are no less favorable to the Holders and are not more
favorable to the lienholders with respect to such Liens than the Liens in
respect of the Indebtedness being refinanced, and (b) do not extend to or
cover any property or assets of the Company or any of its Restricted
Subsidiaries not securing the Indebtedness so refinanced;
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(13) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, employment insurance or other types
of social security, including Liens securing letters of credit issued in
the ordinary course of business or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations including those arising from regulatory, contractual or
warranty requirements of the Company and its Subsidiaries, including rights
of offset and set-off (in each case exclusive of obligations for the
payment of borrowed money);
(14) Liens arising by reason of any judgment, decree or order of any court not
giving rise to an Event of Default, so long as such Lien is adequately
bonded and any appropriate legal proceedings which may have been duly
initiated for the review of such judgment, order or decree shall not have
been finally terminated or the period with which such proceedings may be
initiated shall not have expired;
(15) Survey exceptions, easements, rights of way, zoning restrictions and other
restrictions on the use of property;
(16) Liens to secure Indebtedness permitted by clauses (8), (9) and (10) of the
second paragraph of the covenant entitled "Incurrence of Indebtedness and
Issuance of Preferred Stock"; and
(17) Any extension, renewal or replacement, in whole or in part, of any Lien
described in the foregoing clauses (1) through (16); provided that any such
extension, renewal or replacement is no more restrictive in any material
respect than the Lien so extended, renewed or replaced and does not extend
to any additional property or assets.
"Permitted Refinancing Indebtedness" means any Indebtedness or Disqualified
Stock 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 or Disqualified Stock of the Company or any
of its Restricted Subsidiaries; provided that:
(1) the principal amount (or accreted value, if applicable) or mandatory
redemption amount of such Permitted Refinancing Indebtedness does not
exceed the principal amount of (or accreted value, if applicable) or
mandatory redemption amount, plus accrued interest or dividends on, the
Indebtedness or Disqualified Stock so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of contractual prepayment
charges and fees and expenses and other amounts incurred in connection
therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity or final
redemption date no earlier than the final maturity or final redemption date
of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness or Disqualified
Stock being extended, refinanced, renewed, replaced, defeased or refunded;
(3) if the Indebtedness or Disqualified Stock being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment
to the New Notes, such Permitted Refinancing Indebtedness 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 or Disqualified Stock being extended, refinanced, renewed,
replaced, defeased or refunded; and
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(4) such Indebtedness is incurred or Disqualified Stock is issued either by the
Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness or Disqualified Stock being extended, refinanced, renewed,
replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, trust,
unincorporated association, government or any agency political subdivision
thereof or any other entity.
"Public Equity Offering" means any underwritten public offering of common
stock (other than Disqualified Stock) pursuant to an effective registration
statement under the Securities Act, of any Equity Interest of the Company or
Holdings in which the gross proceeds to the Company are at least $20.0 million.
"Related Business Assets" means any assets used or useful in a Permitted
Business.
"Related Party" with respect to any Permitted Holder means:
(1) a spouse or immediate family member (in the case of an individual) of such
Permitted Holder; or
(2) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or
more controlling interest of which consist of such Permitted Holder and/or
such other Persons referred to in the immediately preceding clause (1).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Senior Secured Credit Facility" means that certain Credit Agreement, dated
as of August 12, 1999, by and among Holdings, the Company, the lenders named
therein, The Chase Manhattan Bank, as administrative agent, and DLJ Capital
Funding, Inc., as syndication agent, providing for revolving credit loans,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, supplemented, extended, renewed, restated, refunded, replaced or
refinanced from time to time, including any amendment, modification, supplement,
extension, renewal, restatement, refunding, replacement or refinancing that
increases the amount borrowable thereunder, provided such Indebtedness could be
incurred under the Indenture, or alters the maturity thereof.
"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 Act, as such Regulation is in effect on the date hereof.
"Stated Maturity" means, with respect to any installment of principal on
any series of Indebtedness, the date on which such payment of principal was
scheduled to be paid in the original documentation governing such Indebtedness,
and shall not include any contingent obligations to repay, redeem or repurchase
any such principal prior to the date originally scheduled for the payment
thereof.
"Subordinated Indebtedness" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter incurred) which is subordinate or
junior in right of payment to the New Notes pursuant to a written agreement.
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"Subsidiary" means, with respect to any Person:
(1) any corporation, association or other business entity of which more than
50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and
(2) any other Person of which at least a majority of the voting interest
(without regard to the occurrence of any contingency) is at the time
directly or indirectly owned by such Person.
"Subsidiary Guarantee" means that certain Subsidiary Guarantee executed by
the Guarantors in accordance with the terms of the Indenture.
"Total Tangible Assets" means the total consolidated tangible assets of the
Company and its Restricted Subsidiaries determined in accordance with GAAP and
as shown on the most recent balance sheet of the Company.
"Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding with
the Company or any Restricted Subsidiary of the Company unless the terms of
any such agreement, contract, arrangement or understanding are no less
favorable to the Company or such Restricted Subsidiary than those that
might be obtained at the time from Persons who are not Affiliates of the
Company;
(3) is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results; and
(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Company or any of its Restricted
Subsidiaries.
Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officer's Certificate certifying that such designation complied with the
preceding conditions and was permitted by the covenant described above under the
caption "--Certain Covenants--Restricted Payments." If, at any time, any
Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Company as of
such date and, if such Indebtedness is not permitted to be incurred as of such
date under the covenant described under the caption "Incurrence of Indebtedness
and Issuance of Preferred Stock," 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;
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provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (1) such Indebtedness is permitted under the covenant described
under the caption "--Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock," calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period; and (2) no
Default or Event of Default would be in existence immediately following such
designation.
The Board of Directors of the Company may designate any Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default to be
continuing immediately after such designation. If a Subsidiary is designated as
an Unrestricted Subsidiary, all outstanding Investments owned by the Company and
its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be
an Investment made as of the time of such designation and will either reduce the
amount available for Restricted Payments under the first paragraph of the
covenant described above under the caption "--Certain Covenants--Restricted
Payments" or reduce the amount available for future Investments under one or
more clauses of the definition of "Permitted Investments." All such outstanding
Investments will be valued at their fair market value at the time of such
designation. That designation will only be permitted if such Restricted Payment
would be permitted at that time and if such Restricted Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary. The Board of Directors may
redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the
redesignation would not cause a Default to be continuing immediately after such
designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment; by
(2) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person and/or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
"Wholly Owned Subsidiary" of any person means a 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 one or
more wholly owned subsidiaries.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material United States federal income
tax consequences of the exchange of the Original Notes for the New Notes and the
ownership and disposition of the New Notes. Except where noted, the following
deals only with New Notes held as capital assets within the meaning of section
1221 of the Internal Revenue Code of 1986, as amended (the "Code") by a holder
of New Notes that acquired the New Notes pursuant to their original issue. The
following does not deal with special situations, such as those of dealers in
securities or currencies, tax-exempt organizations, financial institutions,
insurance companies, or persons holding New Notes as part of a hedging or
conversion transaction or a straddle. Furthermore, the following is based upon
the provisions of the Code, U.S. Treasury Department regulations promulgated
thereunder, administrative pronouncements, judicial decisions and
interpretations of the foregoing as of the date hereof. Such authorities may be
repealed, revoked, or modified, possibly with retroactive effect, so as to
result in United States federal income tax consequences different from those
discussed below. In addition, except as otherwise indicated, the following does
not consider the effect of any applicable foreign, state, local or other tax
laws or estate or gift tax considerations.
As used herein, a "United States person" is:
(1) a citizen or resident of the U.S.;
(2) a corporation or partnership created or organized in or under the laws of
the U.S. or any political subdivision thereof;
(3) an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
(4) a trust if
(A) a court within the United States is able to exercise primary
supervision over the administration of the trust and
(B) one or more United States persons have the authority to control all
substantial decisions of the trust.
A U.S. Holder is a beneficial owner of a New Note who is a United States
person. A Non-U.S. Holder is a beneficial owner of a New Note who is not a U.S.
Holder.
THE EXCHANGE OFFER
The exchange of New Notes pursuant to the exchange offer will be treated as
a continuation of the corresponding Original Notes because the terms of the New
Notes are not materially different from the terms of the Original Notes.
Accordingly:
(1) such exchange will not constitute a taxable event to a holder;
(2) no gain or loss will be realized by a holder upon receipt of a New Note;
(3) the holding period of a New Note will include the holding period of the
Original Note exchanged therefor; and
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(4) the adjusted tax basis of the New Notes will be the same as the adjusted tax
basis of the Original Notes exchanged.
TAX CONSEQUENCES TO U.S. HOLDERS
ORIGINAL ISSUE DISCOUNT. The New Notes will be issued with original issue
discount ("OID") in an amount equal to the difference between the principal
amount of the New Notes and the issue price of the New Notes. U.S. Holders
should be aware that they generally must include OID in gross income in advance
of the receipt of cash attributable to that income.
The amount of OID includable in income by a U.S. Holder of a New Note is
the sum of the "daily portions" of OID with respect to the New Note for each day
during the U.S. Holder's taxable year on which it held such New Note. The daily
portion is determined by allocating to each day in any "accrual period" a pro
rata portion of the OID allocable to that accrual period. The accrual period for
a New Note may be of any length and may vary in length over the term of the New
Note, provided that each accrual period is no longer than one year and each
scheduled payment of principal or interest occurs on the first day or the final
day of an accrual period.
In general, the amount of OID allocable to an accrual period is an amount
equal to the excess, if any, of (a) the product of the New Note's "adjusted
issue price" at the beginning of such accrual period and its yield to maturity
(determined on the basis of compounding at the close of each accrual period and
properly adjusted for the length of the accrual period) over (b) the sum of any
stated interest allocable to the accrual period. OID allocable to a final
accrual period is the difference between the amount payable at maturity (other
than a payment of stated interest) and the adjusted issue price at the beginning
of the final accrual period. The adjusted issue price of a New Note at the
beginning of any accrual period is equal to its issue price increased by the
accrued OID for each prior accrual period. Under these rules, a U.S. Holder will
have to include in income increasingly greater amounts of OID in successive
accrual periods.
SALE, EXCHANGE OR DISPOSITION OF THE NEW NOTES. Upon the sale, exchange or
other disposition of a New Note, a U.S. Holder generally will recognize capital
gain or loss equal to the difference between the amount of cash and the fair
market value of property received by such U.S. Holder (except to the extent
attributable to accrued interest, which will be treated as interest) and such
U.S. Holder's adjusted tax basis in the New Note. Such capital gain or loss
generally will be long-term capital gain or loss if at the time of such sale,
exchange or other disposition the New Note has been held by the U.S. Holder for
more than 12 months, and will be short-term capital gain or loss if the New Note
has been held by the U.S. Holder for 12 months or less. In the case of certain
non-corporate taxpayers, long-term capital gain will be subject to tax at a
maximum rate of 20% and short-term capital gain will be taxable as ordinary
income at a maximum rate of 39.6%. The deductibility of capital losses is
subject to limitations.
BACKUP WITHHOLDING AND INFORMATION REPORTING. Certain noncorporate U.S.
Holders may be subject to backup withholding at a rate of 31% on payments of
principal, and interest on, and the proceeds of disposition of, a New Note.
Backup withholding will apply only if:
(1) the U.S. Holder fails to furnish its Taxpayer Identification Number ("TIN")
in the manner required;
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(2) the U.S. Holder furnishes an incorrect TIN;
(3) the Internal Revenue Service notifies the Company or other payor that the
U.S. Holder has underreported payments of interest or dividends; or
(4) under certain circumstances, the U.S. Holder fails to certify, under penalty
of perjury, that it has furnished a correct TIN and has not been notified by
the Internal Revenue Service that it is subject to backup withholding.
In general, information reporting requirements will apply to certain
payments made in respect of the New Note of a U.S. Holder, unless the U.S.
Holder is an exempt recipient or otherwise establishes an exemption. Generally,
individuals are not exempt recipients, whereas corporations and certain other
entities are exempt recipients.
If you are a U.S. Holder, any amounts withheld under the backup withholding
rules from a payment to you would be allowed as a refund or a credit against
your U.S. federal income tax liability, provided that the required information
is furnished in a timely manner to the Internal Revenue Service.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
PAYMENTS OF INTEREST. Payments of interest on the New Notes to a Non-U.S.
Holder will generally not be subject to U.S. federal income or withholding tax,
provided that:
(1) (a) the holder is not (A) a direct or indirect owner of 10% or more of the
total combined voting power of all classes of stock of the Company within
the meaning of Section 871(h)(3) of the Code or (B) a controlled foreign
corporation related to us within the meaning of Section 864(d)(4) of the
Code;
(b) such interest is not effectively connected with the conduct by that holder
of a trade or business within the United States; and
(c) we or our paying agent receives (A) from the beneficial owner of the New
Note, a properly completed Internal Revenue Service Form W-8, Form W-8BEN or
other appropriate successor form, signed under penalties of perjury, which
provides its name and address and certifies that it is a Non-U.S. Holder or
(B) from a securities clearing organization, bank or other financial
institution that holds the New Notes in the ordinary course of its trade or
business (a "Financial Institution") on behalf of the beneficial owner, a
statement certifying under penalties of perjury that it has received such a
Form W-8, Form W-8BEN or other appropriate successor form from the Non-U.S.
Holder, or that it has received from another Financial Institution a
statement that it has received a Form W-8, Form W-8BEN or other appropriate
successor form from the Non-U.S. Holder, and a copy of such form is
furnished to the payor; or
(2) the payments of interest are not effectively connected with the conduct of a
U.S. trade or business and the Non-U.S. Holder is entitled to the benefits
of an income tax treaty under which interest on the New Notes is exempt from
United States federal withholding tax and the Non-U.S. Holder provides a
properly executed Internal Revenue Service Form 1001, Form W-8BEN or other
appropriate successor form claiming the exemption.
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If payment of interest on a New Note is effectively connected with the
conduct of a trade or business in the United States by a Non-U.S. Holder, such
payment will generally be subject to United States federal income tax on a net
basis at the rates applicable to U.S. Holders (and, if you are a corporate
Non-U.S. Holder, such payments may also be subject to a 30% branch profits tax).
Payments that are subject to United States federal income tax in such a manner
will not be subject to United States federal withholding tax so long as the
Non-U.S. Holder provides us or our paying agent with a properly executed
Internal Revenue Service Form 4224, Form W-8ECI or other appropriate successor
form.
SALE, EXCHANGE OR RETIREMENT OF THE NEW NOTES. Subject to the discussion
below concerning backup withholding, if you are a Non-U.S. Holder, you will not
be subject to United States federal income or withholding tax with respect to
gain recognized on a sale, exchange or other disposition of the New Notes unless
(1) the gain is effectively connected with your conduct of a trade or business
in the United States, (2) if you are an individual, you are present in the
United States for 183 or more days in the taxable year of the disposition and
certain other requirements are met or (3) you are subject to the special rules
applicable to some former citizens and residents of the United States.
BACKUP WITHHOLDING AND INFORMATION REPORTING. Under current U.S. federal
income tax law, backup withholding at a rate of 31% will not apply to payments
of interest to a Non-U.S. Holder by us or our paying agent on a New Note if the
certifications described above under "Non-U.S. Holders--Payment of Interest" are
received, provided that we (or our paying agent) do not have actual knowledge
that the payee is a United States person. Interest paid with respect to a New
Note, and payment of the proceeds from the sale, exchange or other disposition
of a New Note to or through a United States office of a broker will be subject
to information reporting and backup withholding unless the payor receives the
appropriate certification statement. Appropriate certification procedures
require that the beneficial owner certifies as to its status as a Non-U.S.
Holder or otherwise establishes an exemption. In addition, payments of the
proceeds from the sale, exchange or other disposition of a New Note to or
through a foreign office of a broker or the foreign office of a custodian,
nominee or other agent acting on behalf of the beneficial owner of a New Note
will not be subject to information reporting or backup withholding; however, if
the broker, custodian, nominee or other agent is, for United States federal
income tax purposes, a United States person, a controlled foreign corporation or
a foreign person 50% or more of whose gross income over a specified three-year
period is from a United States trade or business, information reporting may be
required with respect to such payments. Backup withholding may apply to any
payment that the broker is required to report if the broker has actual knowledge
that the payee is a United States person.
If you are a Non-U.S. Holder, any amounts withheld under the backup
withholding rules from a payment to you would be allowed as a refund or a credit
against your U.S. federal income tax liability, provided that the required
information is furnished in a timely manner to the Internal Revenue Service.
New Treasury regulations governing the certification procedures regarding
withholding, backup withholding and information reporting on certain amounts
paid to Non-U.S. Holders are generally effective for payments made after
December 31, 2000. In general, the new Treasury regulations do not alter the
treatment of Non-U.S. Holders who satisfy current reporting requirements. The
new Treasury regulations change some procedural requirements relating to
establishing a holder's non-U.S. status, alter the procedures for claiming the
benefits of an income tax treaty and may change certain procedures relating to
intermediaries receiving payments on behalf of a beneficial owner of
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a New Note. If you are a Non-U.S. Holder you should consult your tax advisor
concerning the effect, if any, of such new Treasury regulations on the ownership
and disposition of the New Notes.
PLAN OF DISTRIBUTION
A broker-dealer that is the Holder of Original Notes that were acquired for
the account of that broker-dealer as a result of market-making or other trading
activities, other than Original Notes acquired directly from us or any of our
affiliates, may exchange those Original Notes for New Notes pursuant to the
exchange offer. This is true so long as each broker-dealer that receives New
Notes for its own account in exchange for Original Notes, where the Original
Notes were acquired by the broker-dealer as a result of market-marking or other
trading activities, acknowledges that it will deliver a prospectus in connection
with any resale of such New Notes. This prospectus, as it may be amended or
supplemented form time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Original Notes where the
Original Notes were acquired as result of market-making activities or other
trading activities. We have agreed that for a period of 180 days after
consummation of the exchange offer or such shorter period as will terminate when
all registrable securities covered hereby have been sold pursuant hereto, we
will make this prospectus, as it may be amended or supplemented from time to
time, available to any broker-dealer for use in connection with any resale,
except that the period may be suspended for a period if we and our guarantors
determine, upon the advise of counsel, that the amended or supplemented
prospectus would require disclosure of confidential information or interfere
with any of our financing, acquisition, reorganization or other material
transactions. All broker-dealers effecting transactions in the New Notes may be
required to deliver a prospectus.
We will not receive any proceeds from any sale of New Notes by
broker-dealers or any other Holder of New Notes. New Notes received by
broker-dealers for their own account in the exchange offer may be sold from time
to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any 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
resale of New Notes and any commissions or concessions received by those 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 180 days after consummation of the exchange offer or such
time as any broker-dealer no longer owns any registrable securities, we will
promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests those documents
in the letter of transmittal, except that the period may be suspended for a
period if we and our guarantors determine, upon the
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advise of counsel, that the amended or supplemented prospectus would require
disclosure of confidential information or interfere with any of our financing,
acquisition, reorganization or other material transactions. We have agreed to
pay all expenses incident to the exchange offer and to our performance of, or
compliance with, the registration rights agreements (other than commissions or
concessions of any brokers or dealers) and will indemnify the Holders of the New
Notes (including any broker-dealers) against some liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for us by
Schulte Roth & Zabel LLP, New York, New York.
EXPERTS
The consolidated financial statements of Worldwide Flight Services, Inc.
and its subsidiaries as of December 31, 1997 and 1998 and for each of the two
years in the period ended December 31, 1998, appearing in this prospectus, have
been audited by Ernst & Young LLP, independent auditors, as stated in their
report appearing herein, and are included in reliance upon such report given on
the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of MAS and its subsidiary as of
December 31, 1997 and 1998 and for each of the years in the three year period
ended December 31, 1998, have been included herein and in the registration
statement in reliance upon the report of KPMG LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-4 under the
Act with respect to our offering of the New Notes. This prospectus does not
contain all the information included in the registration statement and the
exhibits and schedules thereto. You will find additional information about us
and the New Notes in the registration statement. The registration statement and
the exhibits and schedules thereto may be inspected and copied at the public
reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the public reference
facilities of the SEC's Regional Offices: New York Regional Office, Seven World
Trade Center, Suite 1300, New York, New York 10048; and Chicago Regional Office,
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of
this material may also be obtained from the Public Reference Section of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. The SEC also maintains a site on the World Wide Web
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants, including Worldwide, that file
electronically with the SEC. Statements made in this prospectus about legal
documents may not necessarily be complete and you should read the documents
which are filed as exhibits to the registration statement or otherwise filed
with the SEC.
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If for any reason we are not required to comply with the reporting
requirements of the Securities Exchange Act of 1934, we are still required under
the indenture to furnish the holders of the New Notes with the information,
documents and other reports specified in Sections 13 and 15(d) of the Exchange
Act. In addition, we have agreed that, for so long as any Original Notes or New
Notes remain outstanding, we will furnish to the holders of those notes and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS OF WORLDWIDE FLIGHT
SERVICES, INC. AND AMR SERVICES CORPORATION
Report of Ernst & Young LLP, Independent Auditors......... F-2
Consolidated Balance Sheets--As of December 31, 1997 and
1998 and June 30, 1999 (Unaudited)..................... F-3
Consolidated Statements of Operations--Years ended
December 31, 1997 and 1998, six months ended June 30,
1998 (Unaudited), and three months ended March 31, 1999
and June 30, 1999 (Unaudited).......................... F-4
Consolidated Statements of Changes in Stockholders'
Equity--Years ended December 31, 1997 and 1998, and
three months ended March 31, 1999 and June 30, 1999
(Unaudited)............................................ F-5
Consolidated Statements of Cash Flows--Years ended
December 31, 1997 and 1998, six months ended June 30,
1999 (Unaudited), and three months ended March 31, 1999
and June 30, 1999 (Unaudited).......................... F-6
Notes to Consolidated Financial Statements................ F-7
CONSOLIDATED FINANCIAL STATEMENTS OF MIAMI AIRCRAFT SUPPORT,
INC.
Report of KPMG LLP, Independent Auditors.................. F-25
Consolidated Balance Sheets--December 31, 1997 and 1998
and June 30, 1999 (Unaudited).......................... F-26
Consolidated Statements of Income--Years ended December
31, 1996, 1997 and 1998 and for the six months ended
June 30, 1998 and June 30, 1999 (Unaudited)............ F-27
Consolidated Statements of Changes in Stockholders'
Equity--Years ended December 31, 1996, 1997 and 1998
and for the six months ended June 30, 1999
(Unaudited)............................................ F-28
Consolidated Statements of Cash Flows--Years ended
December 31, 1996, 1997 and 1998 and for the six months
ended June 30, 1998 and June 30, 1999 (Unaudited)...... F-29
Notes to Consolidated Financial Statements................ F-30
</TABLE>
F-1
<PAGE> 138
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholder of
Worldwide Flight Services, Inc.
We have audited the accompanying consolidated balance sheets of AMR
Services Corporation (the "Company"), as of December 31, 1997 and 1998, and the
related consolidated statements of operations, stockholder's equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company, at
December 31, 1997 and 1998, and the consolidated results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Dallas, Texas
July 16, 1999
F-2
<PAGE> 139
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
PREDECESSOR
AMRS WORLDWIDE
----------------- -----------
DECEMBER 31,
----------------- JUNE 30,
1997 1998 1999
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents..................... $20,544 $14,200 $ 5,984
Accounts receivable, less allowance for
doubtful accounts of $1,611, $449, and
$1,561, respectively....................... 25,625 31,255 55,364
Inventories................................... 382 554 541
Deferred income taxes......................... 3,180 2,445 4,410
Prepaid and other current assets.............. 2,374 2,786 3,225
------- ------- --------
Total current assets.................. 52,105 51,240 69,524
Equipment and property:
Equipment and property, at cost............... 63,321 68,050 72,079
Less accumulated depreciation................. 36,702 39,276 41,459
------- ------- --------
26,619 28,774 30,620
Other assets, primarily intangibles, net of
accumulated amortization...................... 6,694 8,682 35,430
------- ------- --------
Total assets.......................... $85,418 $88,696 $135,574
======= ======= ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable.............................. $10,187 $10,543 $ 18,085
Accrued salaries, wages, and benefits......... 12,423 10,317 9,850
Accrued liabilities........................... 5,412 3,681 10,246
Current portion of long-term debt............. -- 952 4,527
------- ------- --------
Total current liabilities............. 28,022 25,493 42,708
Deferred income taxes........................... 640 838 --
Long-term debt.................................. -- -- 64,491
Stockholder's equity:
Common stock.................................. 1 1 --
Additional paid-in-capital.................... 15,000 15,000 28,250
Retained earnings............................. 42,642 48,394 539
Accumulated other comprehensive income........ (887) (1,030) (414)
------- ------- --------
Total stockholder's equity............ 56,756 62,365 28,375
------- ------- --------
Total liabilities and stockholder's
equity............................. $85,418 $88,696 $135,574
======= ======= ========
</TABLE>
See accompanying notes.
F-3
<PAGE> 140
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
AMRS WORLDWIDE
----------------------------------------------- -----------
THREE MONTHS ENDED
YEAR ENDED SIX MONTHS -------------------------
DECEMBER 31, ENDED
------------------- JUNE 30, MARCH 31, JUNE 30,
1997 1998 1998 1999 1999
----------- ----------- -----------
-------- -------- (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
External customers....... $147,841 $155,443 $ 75,544 $ 38,640 $ 59,877
AMR Corporation and
affiliates............ 75,249 74,299 $ 35,360 22,835 --
-------- -------- ----------- ----------- -----------
Total operating
revenues....... 223,090 229,742 110,904 61,475 59,877
Expenses:
Salaries, wages, and
benefits.............. 144,422 154,706 75,069 39,679 39,682
Materials, supplies, and
services.............. 33,384 28,047 13,184 7,744 7,126
Equipment and facilities
rental................ 11,059 13,597 6,484 3,641 3,693
Depreciation and
amortization.......... 5,643 5,908 2,820 1,627 1,973
Other miscellaneous
expenses.............. 15,847 13,632 6,704 4,784 4,451
General and
administrative
allocated expenses.... 5,877 5,798 3,331 2,269 --
-------- -------- ----------- ----------- -----------
Total operating
expenses....... $216,232 $221,688 $ 107,592 $ 59,744 $ 56,925
-------- -------- ----------- ----------- -----------
Operating income from
continuing operations.... 6,858 8,054 3,312 1,731 2,952
Interest income (expense),
net...................... 1,421 2,160 1,093 440 (1,556)
Other income (expense),
net...................... (584) 580 -- (552) (270)
-------- -------- ----------- ----------- -----------
Income from continuing
operations before income
taxes.................... 7,695 10,794 4,405 1,619 1,126
Provision for income
taxes.................... 3,309 4,490 1,833 644 587
-------- -------- ----------- ----------- -----------
Income from continuing
operations............... 4,386 6,304 2,572 975 539
Loss from discontinued
operations, net of tax
benefit of $395 and $139,
respectively............. -- (552) -- (210) --
-------- -------- ----------- ----------- -----------
Net income................. $ 4,386 $ 5,752 $ 2,572 $ 765 $ 539
======== ======== =========== =========== ===========
</TABLE>
See accompanying notes.
F-4
<PAGE> 141
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER TOTAL
COMMON PAID-IN RETAINED COMPREHENSIVE STOCKHOLDERS'
STOCK CAPITAL EARNINGS INCOME EQUITY
------ -------- -------- ------------- -------------
PREDECESSOR
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996......... $ 1 $ 15,000 $38,256 $ (484) $ 52,773
Net income......................... -- -- 4,386 -- 4,386
Foreign currency translation....... -- -- -- (403) (403)
--------
Total comprehensive
income.................... 3,983
--- -------- -------- ------- --------
Balance at December 31, 1997......... 1 15,000 42,642 (887) 56,756
Net income......................... -- -- 5,752 -- 5,752
Foreign currency translation....... -- -- -- (143) (143)
--------
Total comprehensive
income.................... 5,609
--- -------- -------- ------- --------
Balance at December 31, 1998......... 1 15,000 48,394 (1,030) 62,365
Net income......................... -- -- 765 -- 765
Foreign currency translation....... -- -- -- 223 223
--------
Total comprehensive
income.................... 988
--- -------- -------- ------- --------
Balance at March 31, 1999
(unaudited)........................ 1 15,000 49,159 (807) 63,353
Sale of AMRS....................... (1) (15,000) (49,159) 807 (63,353)
WORLDWIDE
------------------------------------------------------------
Sale of stock to parent............ -- 28,250 -- -- 28,250
Net income (unaudited)............. -- -- 539 -- 539
Foreign currency translation
(unaudited)...................... -- -- -- (414) (414)
--- -------- -------- ------- --------
Total comprehensive income
(unaudited)............... 125
--- -------- -------- ------- --------
Balance at June 30, 1999
(unaudited)........................ -- $ 28,250 $ 539 $ (414) $ 28,375
=== ======== ======== ======= ========
</TABLE>
See accompanying notes.
F-5
<PAGE> 142
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
AMRS WORLDWIDE
---------------------------------------------- -----------
THREE MONTHS ENDED
YEAR ENDED SIX MONTHS -------------------------
DECEMBER 31, ENDED
------------------ JUNE 30, MARCH 31, JUNE 30,
1997 1998 1998 1999 1999
-------- ------- ---------- --------- --------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating Activities:
Net income.............................. $ 4,386 $ 5,752 $ 2,572 $ 765 $ 539
Adjustments to reconcile net earnings to
net cash provided by operating
activities:
Depreciation and amortization......... 5,643 6,333 2,820 1,627 1,973
Deferred income taxes................. (292) 933 467 1,584 286
Change in assets and liabilities:
Accounts receivable................... 3,969 (5,630) (7,434) (4,190) (16,831)
Other assets.......................... (357) (506) (880) 183 (1,575)
Accounts payable and accrued
liabilities......................... (658) (4,008) (2,520) (7,117) 10,007
-------- ------- ------- ------- --------
Net cash provided by (used in) operating
activities.............................. 12,691 2,874 (4,975) (7,148) (5,601)
Investing Activities:
Capital expenditures.................... (12,662) (7,219) (3,508) (1,688) (989)
Acquisition, net of cash................ -- (1,500) -- -- (83,628)
Other................................... 119 (499) 346 26 (28)
-------- ------- ------- ------- --------
Net cash used in investing activities..... (12,543) (9,218) (3,162) (1,662) (84,645)
Financing Activities:
Proceeds from long-term debt............ -- -- -- -- 68,780
Payments on long-term debt.............. -- -- -- -- (800)
Proceeds from sale of stock............. -- -- -- -- 28,250
Dividend to parent...................... -- -- -- (5,390) --
-------- ------- ------- ------- --------
Net cash provided by financing
activities.............................. -- -- -- (5,390) 96,230
Net increase (decrease) in cash and cash
equivalents............................. 148 (6,344) (8,137) (14,200) 5,984
Cash and cash equivalents at beginning of
period.................................. 20,396 20,544 20,544 14,200 --
Cash and cash equivalents at end of
period.................................. $ 20,544 $14,200 $12,407 $ -- $ 5,984
======== ======= ======= ======= ========
Supplemental Disclosures of Cash Flow
Information:
Cash paid (refunded) for income taxes..... $ 3,017 $ 3,162 $ 1,366 (1,079) 119
Cash paid for interest.................. -- -- -- -- 693
Non-cash transactions:
Note payable for acquisition.......... -- $ 914 -- -- --
</TABLE>
See accompanying notes.
F-6
<PAGE> 143
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND BASIS OF PRESENTATION
On March 31, 1999, MR Services Acquisition Corporation completed the
acquisition of all of the outstanding stock of AMR Services Corporation
("Predecessor"), a wholly owned subsidiary of AMR Services Holding Corporation,
which was a wholly owned subsidiary of AMR Corporation, the parent company of
American Airlines, Inc. ("American"). MR Services Acquisition Corporation was
immediately merged with and into AMRS, and AMRS, the surviving corporation was
renamed Worldwide Flight Services, Inc. ("Worldwide"). Worldwide is owned by WFS
Holdings, Inc. ("Holdings" or "Parent"). The acquisition was funded by an
initial capital contribution by the parent of $28.3 million and borrowings under
a term debt facility and revolving credit facility (see Note 3). The initial
purchase price was $75.0 million plus subsequent adjustments for working capital
and capital spending, all of which is described in more detail in Note 3. The
acquisition as of March 31, 1999 has resulted in a new entity as well as a
change in the basis of accounting and as a result, financial information at any
point or for any period subsequent to March 31, 1999 is not comparable to
financial information at any point or for any period prior to the acquisition.
Prior to the acquisition, some subsidiaries, divisions and branches of AMRS
were sold or transferred to AMR Corporation. As a result, the accompanying
consolidated historical financial statements of the Predecessor have been
adjusted to exclude certain subsidiaries, divisions, or branches, in order to
achieve a consistent presentation of the entities included in the acquisition as
discussed above. The excluded subsidiaries, divisions, or branches include AMR
Combs, Inc.; the logistics division (consisting of the CP19 warehouse, McKesson,
Southland, and Airbourne branches); Dalfort Aviation Services, LP; the Warsaw
operations branch; and the ground services branch in Spain servicing American
contracts. As a result, the financial statements presented herein do not
represent the legal entity AMR Services Corporation as it existed during 1997 or
1998 or at December 31, 1998 or March 31, 1999, but rather represent the entity
to be sold. The accompanying financial statements were prepared from the
historical accounting records of AMR Corporation. These financial statements
included all revenues of the Predecessor and all items of expense directly
incurred by it and expenses charged or allocated to it by AMR Corporation in the
normal course of business.
Worldwide is an independent provider of ground services which operates in
four separate areas: cargo handling and ramp, passenger and technical services.
Cargo handling activities includes the loading and unloading of cargo aircraft,
the build-up and break-down of cargo and other services. Ramp services include
loading and unloading, aircraft marshaling, aircraft push-back, cabin cleaning,
and providing heating, air-conditioning, lavatory and water services. Passenger
services include passenger ticketing, curbside and ticket counter check-in
boarding services, baggage claim and other services for passengers. Technical
services include jet bridge and ground equipment maintenance, aircraft de-icing,
freight management, aircraft fueling and other services.
Worldwide operates in airports around the world, with primary operations in
New York City, New York; Dallas, Texas; Miami, Florida; Paris, France; and Hong
Kong, China. International operations are generally organized as either foreign
branches or
F-7
<PAGE> 144
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. BUSINESS AND BASIS OF PRESENTATION (CONTINUED)
separately incorporated subsidiaries. Worldwide provides services to a
significant number of airlines around the world with typical payment terms of
30-60 days. Worldwide routinely analyzes the credit worthiness of its customers
and generally does not require collateral.
All material intercompany balances and transactions for the entity have
been eliminated in consolidation.
The financial statements of Worldwide's foreign subsidiaries and branches
are translated as if the local currency were the functional currency.
Accordingly, assets and liabilities of the foreign subsidiaries and branches are
translated at end-of-period rates. Operations are translated at average exchange
rates in effect during the period. Included in other income/(expense) net are
foreign exchange gains(losses) resulting from foreign currency transactions of
$(584,000), $440,000, $--, $(552,000), and $(270,000) for the years ended
December 31, 1997 and 1998, the six months ended June 30, 1998 and the three
months ended March 31 and June 30, 1999, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTANGIBLES (PREDECESSOR)
Intangibles result primarily from the acquisition discussed in Note 9 (the
Cyclone Acquisition) and certain prior acquisitions of freight handling
companies in Miami, Florida, and Paris, France. Intangibles are amortized over
30 years. Worldwide continually evaluates intangible assets to determine whether
current events and circumstances warrant adjustment of the carrying value or
amortization periods. See Note 3 for a description of the Worldwide acquisition
and the related intangible.
Intangible assets consist of goodwill of $6,694,000 and $6,760,000 at
December 31, 1997 and 1998 (net of accumulated amortization of $1,304,000, and
$1,678,000, respectively) and other intangibles of $-- and $1,922,000 at
December 31, 1997 and 1998, respectively (net of accumulated amortization of $--
and $492,000, respectively).
INTERIM FINANCIAL INFORMATION
The accompanying interim financial information as of June 30, 1999 and for
the three-month periods ended June 30 and March 31, 1999 and the six months
ended June 30, 1998 has not been audited but in the opinion of management of
Worldwide includes all adjustments, consisting of normal recurring adjustments,
which Worldwide considers necessary for a fair presentation of its financial
position as of June 30, 1999 and the results of operations and cash flows for
the three month periods ended June 30, 1999 and March 31, 1999 and the six-month
period ended June 30, 1998. The results of operations for theses periods are not
necessarily indicative of the results to be expected for any subsequent interim
period or for the year ended December 31, 1999. All amounts and information
appearing in the financial statements and notes for periods subsequent to
December 31, 1998, and for interim information within any year presented are
unaudited.
F-8
<PAGE> 145
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Predecessor was included in AMR Corporation's consolidated United
States federal income tax return and state income tax returns in unitary states.
Under the terms of AMR Corporation's tax sharing policy, income taxes are
allocated to AMR Corporation subsidiaries as if the subsidiaries were separate
taxable entities. The Predecessor computes its provision for deferred federal
income taxes using the liability method as if it were a separate taxpayer. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates. As part of the provisions of the
acquisition agreement with AMR Corporation, income, franchise, ad valorem, and
other tax liabilities for periods prior to March 31, 1999 remain the liability
of by AMR Corporation.
Worldwide will be included in Holdings' consolidated United States federal
income tax return and state income tax returns in unitary states. Under the
terms of Holdings' tax sharing policy, income taxes will be allocated to
Holdings' subsidiaries as if the subsidiaries were separate taxable entities.
Worldwide computes its provision for deferred federal income taxes using the
liability method as if it were a separate taxpayer. Under this method, deferred
tax assets and liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities and are measured using the
enacted tax rates. The undistributed earnings of the non-U.S. subsidiaries of
Worldwide are considered to be indefinitely reinvested and, accordingly, no
additional U.S. income taxes or non-U.S. withholding taxes have been provided.
Determination of the amount of additional taxes that would be payable if such
earnings were not considered indefinitely reinvested is not practicable.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
COMMON STOCK AND STOCK OPTIONS
The Predecessor had 1000 shares of issued, authorized, and outstanding
$1.00 par value common stock at December 31, 1997 and 1998. Worldwide has 1,000
shares of issued, authorized, and outstanding $.01 par value common stock at
June 30, 1999. Certain Worldwide employees will be covered by a stock option
plan which will grant shares of its Parent's nonvoting common stock. Such grants
will vest over various periods of time (generally five years), subject to
certain conditions. Worldwide intends to account for its stock-based
compensatory award in accordance with Accounting Principals Board Opinion No. 25
(APB 25). Under APB 25, no compensation expense is recognized if the exercise
price on the option is at or above the fair market value of the stock on the
date of grant.
F-9
<PAGE> 146
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTS RECEIVABLE
Worldwide periodically evaluates the credit worthiness of its customers as
accounts receivable balances are not collateralized. The Company has not
experienced significant credit losses.
The following summarizes the activity in the allowance for doubtful
accounts for the following periods (in thousands):
<TABLE>
<CAPTION>
BALANCE AT
BEGINNING OF BAD DEBT BALANCE AT
PERIOD PERIOD EXPENSE WRITE-OFFS END OF PERIOD
- ------ ------------ -------- ---------- -------------
<S> <C> <C> <C> <C>
Year ended December 31, 1998...... 1,611 189 (1,351) 449
Year ended December 31, 1997...... 1,350 1,076 (815) 1,611
</TABLE>
INVENTORIES
Inventories consist primarily of fuel and glycol inventories which are
carried at cost determined on a first-in, first-out basis.
COMPREHENSIVE INCOME
As of January 1, 1998, the Predecessor adopted Financial Accounting
Standards Board Statement No. 130, Reporting Comprehensive Income. Statement 130
establishes rules for the reporting and display of comprehensive income and its
components. The Statement of Shareholders' Equity presents comprehensive income
for the year ended December 31, 1998. Comprehensive income has been presented
for all periods.
3. ACQUISITIONS (UNAUDITED)
On March 31, 1999, the Predecessor was acquired from AMR Corporation for
$75.0 million plus transaction costs estimated at approximately $3.2 million.
The acquisition was financed by a $28.3 million sale of stock to the Parent and
proceeds from the issuance of $50.0 million in Term Debt (see Note 4). The
acquisition of the Predecessor was accounted for as a purchase. The stock
purchase agreement also contains provisions by which AMR Corporation may receive
up to an additional $10.0 million in purchase price based on the growth rate of
revenues received from AMR Corporation and its affiliates as measured against
certain benchmarks and certain other consideration. Finally, the stock purchase
agreement has provisions for purchase adjustments based on working capital and
capital spending at closing. These provisions are not yet resolved, but are not
expected to result in significant adjustments to the purchase price.
The purchase price is preliminary, and still subject to adjustment, but has
been allocated primarily to accounts receivable and fixed assets acquired, and
resulted in approximately $35.4 million of intangible assets, including goodwill
which is being amortized over 20 years.
F-10
<PAGE> 147
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. ACQUISITIONS (UNAUDITED) (CONTINUED)
On May 28, 1999 Worldwide entered into a definitive stock purchase
agreement to acquire the stock of Miami Aircraft Support, Inc. (MAS) for $63.0
million plus transaction costs. The acquisition of MAS is expected to close in
the third quarter of 1999, and to be accounted for as a purchase. The
acquisition is expected to be funded with proceeds from a planned debt offering
as described in Note 12, and is expected to result in intangibles, including
goodwill approximately equal to the purchase price.
4. TERM DEBT AGREEMENT AND REVOLVING CREDIT FACILITY (UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, 1999
-------------
<S> <C>
At June 30, 1999 Worldwide's long-term
debt consists of the following (in thousands):
Term A -- Debt agreement with banks due
quarterly through March 2004........................... $29,250
Term B -- Debt agreement with banks due
quarterly through March 2006........................... 19,950
$25 million revolving credit agreement due
March 2004............................................. 18,866
Other notes payable....................................... 952
-------
69,018
Less current maturities..................................... 4,527
-------
Long term debt.............................................. $64,491
=======
</TABLE>
In connection with the acquisition of the Predecessor, Worldwide entered
into a series of revolving credit and term loan agreements with a syndicate of
banks as summarized above. The revolving credit agreement provides for available
borrowings of up to $25.0 million, subject to certain limitations based on
qualifying collateral, through March, 2004. The scheduled maturities on
long-term debt for the remainder of 1999 and the next five years are as follows
(in thousands):
<TABLE>
<S> <C>
Remainder of 1999........................................... $ 2,552
2000...................................................... 4,325
2001...................................................... 5,825
2002...................................................... 7,325
2003...................................................... 8,825
2004...................................................... 28,291
Thereafter................................................ 11,875
</TABLE>
Interest on the term loans and revolving credit facilities are floating
rate and vary based on Worldwide's leverage ratio, ranging from a maximum of
2.25% (1.75% for revolving credit facility) and a minimum of 1.75% (1.00% for
revolving credit) over the prime rate or alternatively at a variable rate over
LIBOR that ranges from a maximum of 3.75% (3.25% for the revolving credit
facility) and minimum of 3.25% (2.50% for the revolving credit facility). At
June 30, 1999, the interest rate on the Term A loan and revolving credit
facility and the Term B loan were 8.25% and 8.75%, respectively. The
F-11
<PAGE> 148
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. TERM DEBT AGREEMENT AND REVOLVING CREDIT FACULTY (UNAUDITED) (CONTINUED)
same syndicate of banks also has made available to Worldwide an additional line
of credit of up to $15.0 million for qualifying acquisitions, subject to certain
conditions. The term loan and revolving credit agreements also require
maintenance of certain covenants, primarily related to Worldwide's cash flow to
debt and interest levels.
In connection with the term loan agreement, Worldwide acquired interest
rate caps that limit its exposure to floating interest rates on its term debt to
a maximum LIBOR rate of 6.5% (at June 30, 1999, LIBOR is 5.2%). The interest
rate caps have a notional amount of $50.0 million and expire in varying amounts
through March, 2003.
5. RELATED PARTY TRANSACTIONS
PREDECESSOR
Cash and cash equivalents consisted of cash held at the operations and cash
held for the Predecessor by American. American invests this cash or
alternatively provides financing for the operations of its other affiliates. As
of December 31, 1997 and 1998, the cash held for Worldwide by American was $19.7
million and $11.2 million, respectively; these amounts were immediately
available for use by the Predecessor. The balances were immediately charged or
credited upon recording certain transactions with AMR Corporation or its
affiliates. The Predecessor received interest at the average rate earned by
American's portfolio of short-term marketable securities. The aforementioned
arrangement resulted in interest income that may not be representative of what
AMRS would have received if it were not affiliated with AMR Corporation.
Interest income related to this arrangement was approximately $1.1 million and
$1.9 million for the years ended December 31, 1997 and 1998, respectively. The
interest rate, which is reset monthly, was 5.9% and 5.4% as of December 31, 1997
and 1998, respectively. The average interest rate during 1997 and 1998 was 5.9%
and 5.8%, respectively.
The Predecessor's transactions with AMR Services Holding Corporation,
American, and American Eagle Inc., a wholly owned subsidiary of AMR Corporation,
have been recorded on a basis determined by the parties which may not be
representative of the terms the Predecessor might have negotiated with third
parties.
The Company recognized revenue from affiliates primarily related to freight
handling and ramp services. General and administrative expenses allocated and
transfer priced from AMR Services Holding Corporation and AMR Corporation and
its affiliates to Worldwide, including legal, accounting, personnel, employee
benefits (including post-employment benefits), marketing, and other
administrative costs, aggregated $6.3 million, and $6.0 million for the years
ended December 31, 1997 and 1998 and $3.2 million and $2.3 million, for the six
months ended June 30, 1999 and the three month period ended March 31, 1999,
respectively. In addition, AMR Corporation and affiliates allocated
approximately $3.8 million, and $3.4 million of other operating expenses,
primarily travel expenses, computer related charges, and facilities rent for the
years ended December 31, 1997 and 1998, respectively and $1.8 million and $0.6
million, for the six months ended June 30, 1998 and the three months ended March
31, 1999, respectively.
F-12
<PAGE> 149
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. RELATED PARTY TRANSACTIONS (CONTINUED)
Certain eligible members of management participated in a defined benefit
plan sponsored by American. Worldwide was jointly and severally liable with AMR
Corporation and other members of AMR Corporation's consolidated group for
applicable funding and termination liabilities, if any, of the plan. The
accompanying financial statements do not reflect the portion of the net
obligation of the defined benefit plan sponsored by American attributable to the
employees of the Company.
WORLDWIDE (UNAUDITED)
Worldwide entered into a management agreement with Castle Harlan, Inc., as
manager, under which the manager will provide us with business and
organizational strategy, financial, investment management, advisory and merchant
and investment banking services. Castle Harlan, Inc. is an affiliate of
Holdings, which owns all of our outstanding stock. During the three months ended
June 30, 1999, we paid $312,000 to Castle Harlan, Inc. for such fee.
In connection with the acquisition of the Predecessor, Worldwide paid $2.0
million to Castle Harlan, Inc., primarily as reimbursement of expenses that
Castle Harlan, Inc. incurred in connection with the acquisition.
6. EQUIPMENT AND PROPERTY
Equipment and property are carried at cost and are depreciated using the
straight-line method over the estimated lives indicated in the table below. A
summary of equipment and property at December 31, 1997 and 1998 follows (in
thousands):
<TABLE>
<CAPTION>
DEPRECIABLE LIFE 1997 1998
---------------- ------- -------
<S> <C> <C> <C>
Buildings and improvements........... 25-30 years $10,699 $17,191
Ground equipment..................... 5-8 years 47,776 46,888
Other equipment...................... 3-10 years 4,846 3,971
------- -------
Equipment and property, at cost...... $63,321 $68,050
======= =======
</TABLE>
7. INCOME TAXES
Income before income taxes for years ended December 31, 1997 and 1998 was
$3,160,000 and $5,879,000, respectively, for U.S. operations and was $4,535,000
and $3,968,000, respectively, for foreign operations. These amounts include the
amounts allocated discontinued operations, all of which occurred in U.S.
operations.
F-13
<PAGE> 150
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. INCOME TAXES (CONTINUED)
The components of the Predecessor's income tax provision for the years
ended December 31, 1997 and 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1998
------ ------
<S> <C> <C>
Current
Federal............................................. $1,083 $1,265
Foreign............................................. 1,905 1,136
State............................................... 613 761
------ ------
3,601 3,162
Deferred.............................................. (292) 933
------ ------
Total income tax provision.................. $3,309 $4,095
====== ======
</TABLE>
The income tax provision differed from amounts computed at the statutory
federal income tax rate for the year ended December 31, 1997 and 1998 were as
follows (in thousands):
<TABLE>
<CAPTION>
1997 1998
------ ------
<S> <C> <C>
Statutory income provision............................ $2,693 $3,445
State income tax provision, net....................... 399 492
Other................................................. 217 158
------ ------
Income tax provision........................ $3,309 $4,095
====== ======
</TABLE>
Worldwide's tax provision for the three months ended June 30, 1999, varies
from the statutory tax rates primarily due to the anticipated establishment of a
valuation allowance for foreign taxes paid on branch earnings.
F-14
<PAGE> 151
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. INCOME TAXES (CONTINUED)
The components of Predecessor's deferred income taxes for the years ended
December 31, 1997 and 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1998
------ ------
<S> <C> <C>
Deferred tax assets:
Expenses deductible for tax in a different period
than books...................................... $3,180 $2,445
Foreign tax credit................................. 1,040 998
Other.............................................. 519 253
------ ------
Total deferred tax assets.................. 4,739 3,696
Deferred tax liabilities:
Undistributed earnings of foreign subsidiaries..... 1,828 1,368
Accelerated depreciation........................... 241 126
Other.............................................. 130 595
------ ------
Total deferred tax liabilities............. 2,199 2,089
------ ------
Net deferred tax asset............................... $2,540 $1,607
====== ======
</TABLE>
8. COMMITMENTS AND CONTINGENCIES
Future minimum lease payments under operating leases with initial and
remaining noncancelable lease terms in excess of one year at December 31, 1998,
are as follows (in thousands):
<TABLE>
<S> <C>
1999.................................................. $ 5,738
2000.................................................. 5,097
2001.................................................. 4,914
2002.................................................. 2,744
2003.................................................. 964
2004 and thereafter................................... 1,187
-------
$20,644
=======
</TABLE>
All major airport facilities and office spaces are leased under operating
leases which include options to renew the leases, escalation clauses, and
provisions for contingent rental fees based on operating results.
F-15
<PAGE> 152
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. CYCLONE ACQUISITION
In July 1998, the Predecessor entered into a two-stage agreement to acquire
all of the stock of Cyclone Surface Cleaning, Inc. (Cyclone). Cyclone is a start
up business which has developed a patent for concrete cleaning equipment.
Worldwide paid $1.5 million in cash and issued a $1.0 million non-interest
bearing promissory note due in July 1999 for an exclusive license to operate the
Cyclone business for 27 months and an option to acquire all of the outstanding
shares of Cyclone by October 15, 2000, for additional cash and note
consideration. The $1.0 million note was discounted to $914,000 at an imputed
interest rate of 9%. No value was assigned to the option in the original
purchase price allocation. Assets acquired consisted primarily of intangibles,
including $565,000 of goodwill. This transaction has been accounted for as a
purchase.
Exercise of the option would require Worldwide to pay Cyclone shareholders
$2.75 million in cash, issue a $3.75 million non-interest bearing promissory
note (payable over five years), and pay certain contingent amounts based upon
the revenues and operating earnings of the business.
Worldwide has elected to discontinue the Cyclone business and accordingly
the results of operations for 1998 and the three month period ended March 31,
1999 have been restated to reflect the Cyclone business as discontinued
operations. Worldwide is currently negotiating the termination of the agreements
with Cyclone and expects to terminate this agreement with minimal additional
cost.
10. FOREIGN OPERATIONS
Worldwide operates as an independent ground services provider to air cargo
and passenger airlines in North America, Europe, and Asia. The Company, however,
operated in a single business segment, as a provider of ground services to the
aviation industry. Inter-area sales are not material. Net assets by geographic
area are those assets and liabilities which are used in Worldwide's operations
in each area. Corporate level assets and liabilities are included as a component
of North and South America.
Information about Worldwide's operations in these geographic areas is as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED NORTH AND SOUTH
DECEMBER 31 AMERICA EUROPE ASIA
----------- --------------- ------- ------
<S> <C> <C> <C> <C>
Total Revenue............ 1998 $193,242 $32,596 $3,904
1997 194,703 28,387 --
Long-lived assets........ 1998 22,169 9,809 4,458
1997 21,915 8,371 --
</TABLE>
F-16
<PAGE> 153
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. SUMMARIZED FINANCIAL INFORMATION
Worldwide and its subsidiaries have operations in various countries around
the world. Domestic and international operations are either organized as
branches or separate corporate subsidiaries. Worldwide's transaction discussed
in Note 12 will result in debt securities that are unconditionally guaranteed by
current domestic subsidiaries, while all foreign subsidiaries will not guarantee
the securities. The following tables present the financial positions, results of
operations, and cash flows for the years ended December 31, 1997 and 1998 and
for the three months ended June 30, 1999 of Worldwide combined into three
categories: 1) the operations of Worldwide, the legal entity, and its
international branches, 2) domestic subsidiaries, and 3) foreign subsidiaries
(in thousands):
CONDENSED CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
COMBINED COMBINED
DOMESTIC FOREIGN
WORLDWIDE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Current assets.......... $36,947 $ 3,678 $10,615 $ -- $51,240
Intercompany
receivables........... 11,058 8,737 -- (19,795) --
Non-current assets...... 21,557 2,821 13,078 37,456
Investments in
affiliates............ 12,062 -- -- (12,062) --
------- ------- ------- -------- -------
Total assets............ $81,624 $15,236 $23,693 $(32,239) $88,696
======= ======= ======= ======== =======
Liabilities............. $19,259 $ 1,595 $ 5,477 $ -- $26,331
Intercompany payables... -- -- 19,795 (19,795) --
Stockholder's equity.... 62,365 13,641 (1,579) (12,062) 62,365
------- ------- ------- -------- -------
Total liabilities and
stockholder's
equity................ $81,624 $15,236 $23,693 $(32,239) $88,696
======= ======= ======= ======== =======
</TABLE>
F-17
<PAGE> 154
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. SUMMARIZED FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
COMBINED COMBINED
DOMESTIC FOREIGN
WORLDWIDE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues................... $186,262 $13,292 $30,188 $ -- $229,742
Operating expenses......... 182,959 11,275 27,454 -- 221,688
-------- ------- ------- ------- --------
Operating income........... 3,303 2,017 2,734 -- 8,054
Interest income
(expense)................ 3,239 (440) (639) -- 2,160
Other income (expense)..... 557 609 (586) -- 580
Equity in earnings of
subsidiaries............. 3,695 -- -- (3,695) --
-------- ------- ------- ------- --------
Income before income
taxes.................... 10,794 2,186 1,509 (3,695) 10,794
Provision for income
taxes.................... 4,490 1,275 640 (1,915) 4,490
-------- ------- ------- ------- --------
Income from continuing
operations............... 6,304 911 869 (1,780) 6,304
Loss from discontinued
operations............... 552 -- -- -- 552
-------- ------- ------- ------- --------
Net income................. $ 5,752 $ 911 $ 869 $(1,780) $ 5,752
======== ======= ======= ======= ========
</TABLE>
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
COMBINED COMBINED
DOMESTIC FOREIGN
WORLDWIDE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash provided by (used
in) operating
activities............. $ 2,369 $ 37 $ 468 $ -- $ 2,874
Cash used in investing
activities............. (2,367) (364) (6,487) -- (9,218)
Cash provided by (used
in) intercompany
financing activities... (5,828) (472) 6,300 -- --
------- ----- ------- ---- -------
Change in cash........... $(5,826) $(799) $ 281 $ -- $(6,344)
======= ===== ======= ==== =======
</TABLE>
F-18
<PAGE> 155
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. SUMMARIZED FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
COMBINED COMBINED
DOMESTIC FOREIGN
WORLDWIDE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Current assets........... $43,705 $ 2,860 $ 5,540 $ -- $52,105
Intercompany
receivable............. 1,992 9,435 -- (11,427) --
Non-current assets....... 23,323 2,996 6,994 -- 33,313
Investments in
affiliates............. 6,329 -- -- (6,329) --
------- ------- ------- -------- -------
Total assets............. $75,349 $15,291 $12,534 $(17,756) $85,418
======= ======= ======= ======== =======
Liabilities.............. 18,593 130 9,939 -- 28,662
Intercompany payable..... -- -- 11,427 (11,427) --
Stockholder's equity..... 56,756 15,161 (8,832) (6,329) 56,756
------- ------- ------- -------- -------
Total liabilities and
stockholder's equity... $75,349 $15,291 $12,534 $(17,756) $85,418
======= ======= ======= ======== =======
</TABLE>
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
COMBINED COMBINED
DOMESTIC FOREIGN
WORLDWIDE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues................ $187,947 $11,539 $23,604 $ -- $223,090
Operating expenses...... 185,181 10,084 20,967 -- 216,232
-------- ------- ------- ------- --------
Operating income........ 2,766 1,455 2,637 -- 6,858
Other income
(expense)............. (497) 250 (337) -- (584)
Interest income
(expense)............. 1,559 635 (773) -- 1,421
Equity in earnings of
subsidiaries.......... 3,867 -- -- (3,867) --
-------- ------- ------- ------- --------
Income before income
taxes................. 7,695 2,340 1,527 (3,867) 7,695
Provision for income
taxes................. 3,309 767 722 (1,489) 3,309
-------- ------- ------- ------- --------
Net Income.............. $ 4,386 $ 1,573 $ 805 $(2,378) $ 4,386
======== ======= ======= ======= ========
</TABLE>
F-19
<PAGE> 156
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. SUMMARIZED FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
COMBINED COMBINED
DOMESTIC FOREIGN
WORLDWIDE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash provided by (used
in) operating
activities............ $ 10,931 $ 2,654 $ (894) $-- $ 12,691
Cash used in investing
activities............ (10,110) (2,326) (107) -- (12,543)
Cash provided by (used
in) financing
activities............ (2,891) 1,563 1,328 -- --
-------- ------- ------ --- --------
Change in Cash.......... $ (2,070) $ 1,891 $ 327 $-- $ 148
</TABLE>
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
COMBINED COMBINED
DOMESTIC FOREIGN
WORLDWIDE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues................ $91,758 $6,886 $12,260 $ -- $110,904
Operating expenses...... 90,517 5,806 11,269 -- 107,592
------- ------ ------- ------- --------
Operating income........ 1,241 1,080 991 -- 3,312
Other income
(expense)............. -- -- -- -- --
Interest income
(expense)............. 1,104 290 (301) -- 1,093
Equity in earnings of
subsidiaries.......... 2,060 -- -- (2,060) --
------- ------ ------- ------- --------
Income before income
taxes................. 4,405 1,370 690 (2,060) 4,405
Provision for income
taxes................. 1,833 570 220 (790) 1,833
------- ------ ------- ------- --------
Net income.............. $ 2,572 $ 800 $ 470 $(1,270) $ 2,572
======= ====== ======= ======= ========
</TABLE>
F-20
<PAGE> 157
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. SUMMARIZED FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
COMBINED COMBINED
DOMESTIC FOREIGN
WORLDWIDE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash provided by (used
in) operating
activities............ $(6,130) $ 351 $ 804 $-- $(4,975)
Cash used in investing
activities............ 1,446 (482) (4,126) -- (3,162)
Cash provided by (used
in) financing
activities............ (4,212) (697) 4,909 -- --
------- ----- ------- --- -------
Change in cash.......... $(8,896) $(828) $ 1,587 $-- $(8,137)
======= ===== ======= === =======
</TABLE>
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
COMBINED COMBINED
DOMESTIC FOREIGN
WORLDWIDE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues................ $49,645 $2,524 $9,306 $ -- $61,475
Operating expenses...... 49,460 1,955 8,329 -- 59,744
------- ------ ------ ------- -------
Operating income........ 185 569 977 -- 1,731
Interest income
(expense)............. 385 170 (115) -- 440
Other income
(expense)............. -- (552) -- -- (552)
Equity in earnings of
subsidiaries.......... 1,049 -- -- (1,049) --
------- ------ ------ ------- -------
Income before income
taxes................. 1,619 187 862 (1,049) 1,619
Provision for income
taxes................. 644 77 275 (352) 644
------- ------ ------ ------- -------
Income from continuing
operations............ 975 110 587 (697) 975
Loss from discontinued
operations............ 210 -- -- -- 210
------- ------ ------ ------- -------
Net Income.............. $ 765 $ 110 $ 587 $ (697) $ 765
======= ====== ====== ======= =======
</TABLE>
F-21
<PAGE> 158
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. SUMMARIZED FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
COMBINED COMBINED
DOMESTIC FOREIGN
WORLDWIDE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash provided by (used
in) operating
activities............ $ (8,392) $ 877 $ 367 $-- $ (7,148)
Cash used in investing
activities............ (1,467) (127) (68) -- (1,662)
Cash provided by (used
in) intercompany
financing
activities............ (3,908) 141 (1,623) -- (5,390)
-------- ----- ------- --- --------
Change in Cash.......... $(13,767) $ 891 $(1,324) $-- $(14,200)
======== ===== ======= === ========
</TABLE>
CONDENSED CONSOLIDATING BALANCE SHEETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
COMBINED COMBINED
DOMESTIC FOREIGN
WORLDWIDE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Current assets.......... $ 53,874 $ 2,159 $13,491 $ -- $ 69,524
Intercompany
receivable............ 9,491 8,512 -- (18,003) --
Non-current assets...... 50,833 2,627 12,590 66,050
Investments in
affiliates............ 11,830 -- -- (11,830) --
-------- ------- ------- -------- --------
Total assets............ $126,028 $13,298 $26,081 $(29,833) $135,574
======== ======= ======= ======== ========
Current liabilities..... $ 33,162 $ 980 $ 8,566 -- $ 42,708
Intercompany payable.... -- -- 18,003 (18,003) --
Long-term debt.......... 64,491 -- -- 64,491
Stockholder's equity.... 28,375 12,318 (488) (11,830) 28,375
-------- ------- ------- -------- --------
Total liabilities and
stockholder's
equity................ $126,028 $13,298 $26,081 $(29,833) $135,574
======== ======= ======= ======== ========
</TABLE>
F-22
<PAGE> 159
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. SUMMARIZED FINANCIAL INFORMATION (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
COMBINED COMBINED
DOMESTIC FOREIGN
WORLDWIDE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues................ $47,487 $2,649 $9,741 $ -- $59,877
Operating expenses...... 46,371 2,256 8,298 -- 56,925
------- ------ ------ ------- -------
Operating income........ 1,116 393 1,443 -- 2,952
Other income (expense).. -- (91) (179) -- (270)
Interest income
(expense)............. (1,547) 130 (139) -- (1,556)
Equity in earnings of
subsidiaries.......... 1,557 -- -- (1,557) --
------- ------ ------ ------- -------
Income before income
taxes................. 1,126 432 1,125 (1,557) 1,126
Provision for income
taxes................. 587 225 368 (593) 587
------- ------ ------ ------- -------
Net Income.............. $ 539 $ 207 $ 757 $ (964) $ 539
======= ====== ====== ======= =======
</TABLE>
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
COMBINED COMBINED
DOMESTIC FOREIGN
WORLDWIDE SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash provided by (used
in) operating
activities............ $ (9,551) $(327) $4,277 $-- $ (5,601)
Cash used in investing
activities............ (84,468) (12) (165) -- (84,645)
Cash provided by (used
in) financing
activities............ 95,766 86 378 -- 96,230
-------- ----- ------ --- --------
Change in Cash.......... $ 1,747 $(253) $4,490 $-- $ 5,984
======== ===== ====== === ========
</TABLE>
12. SUBSEQUENT EVENT (UNAUDITED)
In July, 1999, the Company anticipates entering into a series of
transactions to provide financing for the MAS acquisition (described in Note 3)
and refinance its existing borrowings. Such transaction includes the placement
of $130 million in Senior Notes due 2007 in a private transaction along with
certain warrants to purchase approximately 5% of
F-23
<PAGE> 160
WORLDWIDE FLIGHT SERVICES, INC.
(FORMERLY AMR SERVICES CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. SUBSEQUENT EVENT (UNAUDITED) (CONTINUED)
the common stock of its Parent company at a purchase price of $.01 per share,
and a new long-term secured revolving credit agreement with a syndicate of
banks, totaling $75 million. These transactions are expected to close in early
August, 1999 and are expected to result in an extraordinary loss of
approximately $1.5 million from retirement of all existing long-term debt and
the termination of the related revolving credit agreement.
In August 1999, the Company acquired all of the outstanding stock of
Aerolink International, Inc.; Aerolink International Services, Inc.; Aerolink
Management, Inc.; Aerolink Maintenance, Inc. and all of the partnership
interests of Aerolink International, L.P. (collectively Aerolink) for
approximately $5.9 million plus additional consideration of up to $1.0 million,
dependent on certain conditions. This acquisition was financed with borrowings
under the senior secured credit facility.
13. QUARTERLY RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1998
Total operating revenues................. $56,748 $54,156 $58,292 $60,546
Operating income......................... 2,160 1,152 2,601 2,141
Income from continuing operations........ 1,590 982 1,984 1,748
Net income............................... 1,590 982 1,719 1,461
YEAR ENDED DECEMBER 31, 1997
Total operating revenues................. $54,657 $55,554 $56,955 $55,294
Operating income......................... 3,002 2,143 2,073 (359)
Net income............................... 1,527 990 1,745 124
</TABLE>
The net income for the third and fourth quarter of 1998 includes a loss on
discontinued operations of $265,000 and $287,000, respectively, related to
Cyclone (see Note 9).
F-24
<PAGE> 161
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Miami Aircraft Support, Inc.:
We have audited the accompanying consolidated balance sheets of Miami
Aircraft Support, Inc. and subsidiary as of December 31, 1997 and 1998, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the years in the three-year period ended December 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Miami
Aircraft Support, Inc. and subsidiary as of December 31, 1997 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1998 in conformity with generally accepted
accounting principles.
KPMG LLP
February 26, 1999, except as to note 11
which is as of May 28, 1999
Fort Lauderdale, Florida
F-25
<PAGE> 162
MIAMI AIRCRAFT SUPPORT, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1997 1998 1999
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents...................... $ 4 $ 1,212 $ 3,437
Accounts receivable, net of allowance for
doubtful accounts of $274 and $268 in 1997
and 1998, respectively....................... 8,933 9,808 6,871
Other current assets........................... 164 -- --
Deferred income taxes.......................... 391 401 116
------- ------- -------
Total current assets.................... 9,492 11,421 10,424
------- ------- -------
Property and equipment:
Ground equipment............................... 27,664 31,573 32,228
Other property and equipment................... 789 755 952
------- ------- -------
28,453 32,328 33,180
Less accumulated depreciation and
amortization................................... 15,536 18,454 20,080
------- ------- -------
Property and equipment, net...................... 12,917 13,874 13,100
Other assets..................................... 3 4 4
------- ------- -------
Total assets............................ $22,412 $25,299 $23,528
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt.............. $ 4,145 $ 3,447 $ 3,147
Current portion of capital lease obligations... 253 808 836
Accounts payable............................... 2,878 1,507 573
Accrued expenses............................... 2,346 2,915 2,720
Income tax payable............................. 731 1,106 123
Due to affiliates.............................. 10 -- --
------- ------- -------
Total current liabilities............... 10,363 9,783 7,399
------- ------- -------
Long-term debt, excluding current
portion........................................ 2,061 1,711 1,424
Capital lease obligations, excluding current
portion........................................ 257 920 575
Deferred income taxes............................ 493 553 630
------- ------- -------
Total liabilities....................... 13,174 12,967 10,028
------- ------- -------
Stockholders' equity:
Capital stock, no par value. Authorized and
issued 2,000 shares, outstanding 1,600
shares....................................... 1 1 1
Additional paid-in capital..................... 459 459 459
Retained earnings.............................. 8,840 11,934 13,102
------- ------- -------
9,300 12,394 13,562
Treasury stock, 400 shares, at cost............ (62) (62) (62)
------- ------- -------
Total stockholders' equity.............. 9,238 12,332 13,500
$22,412 $25,299 $23,528
======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-26
<PAGE> 163
MIAMI AIRCRAFT SUPPORT, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands)
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30
--------------------------- -----------------
1996 1997 1998 1998 1999
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Ground services........................... $38,020 $46,341 $56,238 $24,846 $29,568
Other..................................... 64 216 164 47 --
------- ------- ------- ------- -------
Total revenues.................... 38,084 46,557 56,402 24,893 29,568
------- ------- ------- ------- -------
Expenses:
Operating................................. 29,876 36,145 43,519 19,872 23,804
General and administrative................ 2,717 4,297 4,073 2,041 1,968
Depreciation and amortization............. 2,338 2,743 3,274 1,614 1,707
------- ------- ------- ------- -------
Total operating expenses.......... 34,931 43,185 50,866 23,527 27,479
------- ------- ------- ------- -------
Operating profit.................. 3,153 3,372 5,536 1,366 2,089
Other (income)/expenses, net:
(Gain)/loss on disposal of assets......... 53 (74) 62 (5) --
Interest expense, net..................... 589 445 494 255 203
------- ------- ------- ------- -------
Total other expense, net.......... 642 371 556 250 203
------- ------- ------- ------- -------
Income before income taxes........ 2,511 3,001 4,980 1,116 1,886
Income taxes................................ 942 1,163 1,886 402 718
------- ------- ------- ------- -------
Net income........................ $ 1,569 $ 1,838 $ 3,094 $ 714 $ 1,168
======= ======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-27
<PAGE> 164
MIAMI AIRCRAFT SUPPORT, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK
------------------ ADDITIONAL TOTAL
NUMBER OF PAID-IN RETAINED TREASURY STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS STOCK EQUITY
--------- ------ ---------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1995........................ 1,600 $ 1 $ 8 $ 5,540 $(62) $ 5,487
Net income.................. -- -- -- 1,568 -- 1,568
----- --- ---- ------- ---- -------
Balances at December 31,
1996........................ 1,600 1 8 7,108 (62) 7,055
Acquisition of International
Enterprises Group, Inc.
from affiliate under
common control (note
2)....................... -- -- 451 (107) -- 344
Net income.................. -- -- -- 1,839 -- 1,839
----- --- ---- ------- ---- -------
Balances at December 31,
1997........................ 1,600 1 459 8,840 (62) 9,238
Net income.................. -- -- -- 3,094 -- 3,094
----- --- ---- ------- ---- -------
Balances at December 31,
1998........................ 1,600 1 459 11,934 (62) 12,332
Net income (unaudited)...... -- -- -- 1,168 -- 1,168
----- --- ---- ------- ---- -------
Balances at June 30, 1999
(unaudited)................. 1,600 $ 1 $459 $13,102 $(62) $13,500
===== === ==== ======= ==== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-28
<PAGE> 165
MIAMI AIRCRAFT SUPPORT, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
--------------------------- -----------------
1996 1997 1998 1998 1999
---- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................ $ 1,569 $ 1,838 $ 3,094 $ 714 $ 1,168
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization....................... 2,338 2,743 3,274 1,614 1,707
Loss (gain) on sale/disposal of equipment........... 53 (74) 62 (5) --
Bad Debt expense.................................... -- 33 -- 18 252
Deferred income taxes............................... 224 98 50 12 362
Changes in operating assets and liabilities:
Accounts receivable............................... 1,070 (3,500) (875) 3,284 2,685
Notes receivable.................................. 365 -- -- -- --
Prepaid expenses and other current assets......... (61) (41) -- (200) --
Due from/to affiliate............................. 14 -- -- (10) --
Other assets...................................... (2) 18 -- -- --
Accounts payable.................................. (1,188) 1,543 (1,371) (2,623) (934)
Accrued expenses.................................. 369 150 734 633 (195)
Income tax payable................................ (51) 348 375 (152) (983)
Other, net........................................ -- 402 -- -- --
------- ------- ------- ------- -------
Net cash provided by operating activities....... 4,700 3,558 5,343 3,285 4,062
------- ------- ------- ------- -------
Cash flows from investing activities:
Purchase of property and equipment.................... (733) (611) (537) (204) (138)
Proceeds from sale of equipment....................... -- 522 -- -- --
------- ------- ------- ------- -------
Net cash used in investing activities........... (733) (89) (537) (204) (138)
------- ------- ------- ------- -------
Cash flows from financing activities:
Principal payments on long-term debt.................. (3,069) (3,485) (3,049) (1,622) (1,274)
Principal payments on capital lease obligations....... (472) (306) (539) (191) (425)
Borrowing from affiliates............................. (59) -- -- -- --
Payments to affiliate................................. -- (49) (10) -- --
------- ------- ------- ------- -------
Net cash used in financing activities........... (3,600) (3,840) (3,599) (1,813) (1,699)
------- ------- ------- ------- -------
Net increase (decrease) in cash................. 367 (371) 1,208 1,268 2,225
Cash and cash equivalents at beginning of year.......... 8 375 4 4 1,212
------- ------- ------- ------- -------
Cash and cash equivalents at end of year................ $ 375 $ 4 $ 1,212 $ 1,272 $ 3,437
======= ======= ======= ======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest.......................................... $ 620 $ 516 $ 563 $ 285 $ 204
======= ======= ======= ======= =======
Income taxes...................................... $ 769 $ 859 $ 1,491 $ 437 $ 1,339
======= ======= ======= ======= =======
</TABLE>
Supplemental schedule of noncash investing and financing activities:
During 1996, 1997 and 1998, the Company financed the purchase of ground
equipment in the amounts of $2,686 in 1996, $2,331 in 1997 and $3,756 in
1998, by entering into promissory note agreements totaling $2,152 in 1996,
$2,332 in 1997 and $2,001 in 1998, and capital lease obligations of $534, $0
and $1,757, in 1996, 1997 and 1998, respectively.
During the six-month period ended June 30, 1998 and 1999, the Company
financed the purchase of ground equipment in the amounts of $1,811 and $795,
respectively, by entering into promissory note agreements totalling $889 and
$687, respectively, and capital lease obligations of $922 and $108,
respectively.
See accompanying notes to consolidated financial statements.
F-29
<PAGE> 166
MIAMI AIRCRAFT SUPPORT, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Principles of Consolidation
Miami Aircraft Support, Inc. ("MAS" or the "Company") provides ground
service support and rents equipment to domestic and international air-cargo
shippers operating in the United States. The 1996 consolidated financial
statements include the accounts of the Company and its inactive wholly owned
subsidiary, O'Hare Air Taxi Service, Inc. This subsidiary was dissolved in 1997.
The 1997 and 1998 consolidated financial statements include the accounts of the
Company and its inactive wholly owned subsidiary, International Enterprises
Group, Inc. (note 2).
All significant intercompany balances and transactions have been eliminated
in consolidation.
(b) Interim Financial Information
The accompanying interim financial information as of June 30, 1999 and for
the six-month periods ended June 30, 1998 and June 30, 1999 has not been
audited. In the opinion of management of the Company, the interim financial
information includes all adjustments, consisting of normal recurring
adjustments, which the Company considers necessary for a fair presentation of
the Company's financial position as of June 30, 1999 and the results of
operations and cash flows for the six month periods ended June 30, 1998 and
1999. The results of operations for the six month period ended June 30, 1999 are
not necessarily indicative of the results to be expected for any subsequent
interim period or for the year ended December 31, 1999.
(c) Cash and Cash Equivalents
The Company considers all highly-liquid debt instruments with original
maturities of three months or less to be cash equivalents.
(d) Property and Equipment
Property and equipment are carried at cost. Depreciation and amortization
are provided on the straight-line basis over the following estimated useful
lives: ground equipment -- lesser of seven years or lease life, other property
and equipment -- five to seven years.
At the time the assets are retired or otherwise disposed of, the cost and
accumulated depreciation or amortization are removed from the related accounts
and the differences, net of proceeds, are recorded as gains or losses.
F-30
<PAGE> 167
MIAMI AIRCRAFT SUPPORT, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e) Fair Value of Financial Instruments
The fair value of financial instruments, consisting of cash and cash
equivalents, trade accounts receivables, other current assets, trade accounts
payables, accrued expenses, is based on the short maturity of these instruments
which approximates fair value at December 31, 1996, 1997 and 1998. The fair
value of long-term debt and capital lease obligations is based on current rates
offered for similar debt which approximates carrying value at December 31, 1996
and 1997.
(f) Ground Service Revenue
Ground service revenue is recognized when service is provided.
(g) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
(h) Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
(i) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
Long-lived assets used in the Company's operations are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net undiscounted cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceed the
fair value of the assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell.
F-31
<PAGE> 168
MIAMI AIRCRAFT SUPPORT, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Recently Adopted Accounting Pronouncements
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards (FAS) No. 130, "Reporting Comprehensive Income."
Comprehensive income presents a measure of all changes in stockholders' equity
except for changes resulting from transactions with stockholders in their
capacity as stockholders. The statement also requires the separate presentation
of the accumulated balance of comprehensive income other than net earnings in
the Consolidated Balance Sheets. Comprehensive income equaled net income for the
years ended December 31, 1996, 1997 and 1998.
Effective December 31, 1998, the Company adopted FAS 131, "Disclosures
About Segments of an Enterprise and Related Information." This statement
establishes standards for reporting information about a company's operating
segments and related disclosures about its products, services, geographic areas
of operations and major customers. Adoption of this statement did not impact the
Company's results of operations or financial position. The Company has
determined it operates under one reportable segment.
(k) Recent Accounting Pronouncements
In March 1998, the AICPA issued SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use," which is effective
for fiscal years beginning after December 15, 1998. SOP 98-1 outlines the
accounting treatment for certain costs related to the development or purchase of
software to be used internally and requires that costs incurred during the
preliminary project and post-implementation/ operation stages be expensed, and
costs incurred during the application development stage be capitalized and
amortized over the estimated useful life of the software. Adoption of this
statement did not have a material impact on the Company's results of operations
or financial position.
In April 1998, the AICPA also issued SOP 98-5, "Reporting on the Costs of
Start-up Activities." SOP 98-5, which is effective for fiscal years beginning
after December 15, 1998, requires that all costs of start-up activities,
including organization costs, be expensed as incurred. Adoption of this
statement did not have material impact on the Company's results of operations or
financial position.
(l) Reclassifications
Certain amounts in the 1996 and 1997 financial statements have been
reclassified to conform with the 1998 presentation.
(2) ACQUISITION
On November 1, 1997, the Company acquired from an affiliate under common
control all of the outstanding shares of this affiliate's wholly owned
subsidiary, International Enterprises Group, Inc. ("IEG"). The purchase price
amounted to $1.9 million. The Company's affiliate maintained a noncontrolling
interest in IEG since 1996. On March 27,
F-32
<PAGE> 169
MIAMI AIRCRAFT SUPPORT, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(2) ACQUISITION (CONTINUED)
1997, the affiliate obtained control of IEG when it acquired the majority
interest from an unrelated party. The acquisition of the controlling interest by
the affiliate was accounted for under the purchase method of accounting for
business combinations. The Company's subsequent acquisition of IEG was accounted
for in a manner similar to a pooling of interest, since it was acquired from an
entity under common control.
On November 1, 1997, the aforementioned affiliate forgave all amounts due
from IEG, amounting to $230,946 as of that date. This transaction was accounted
for as a capital contribution to the Company.
(3) LEASES
(a) Capital Leases
The Company leases equipment under capital leases that expire at various
dates through the year 2000. The lease agreements either provide for the
transfer of ownership at the end of the lease term or contain a bargain purchase
option. At December 31, 1997 and 1998 cost and accumulated depreciation of
equipment under capital leases was (in thousands):
<TABLE>
<CAPTION>
1997 1998
---- ------
<S> <C> <C>
Cost.................................................... $948 $2,290
Accumulated depreciation................................ 244 263
---- ------
$704 $2,027
==== ======
</TABLE>
F-33
<PAGE> 170
MIAMI AIRCRAFT SUPPORT, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(3) LEASES (CONTINUED)
The following is a schedule of future minimum lease payments under capital
leases, together with the present value of the net minimum lease payments, as of
December 31, 1998 (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
<S> <C>
1999........................................... $ 912
2000........................................... 679
2001........................................... 198
2002........................................... 74
2003........................................... 55
------
Total minimum lease payments................... 1,918
Less amount representing interest (at rates
ranging from 8.47% to 8.78%).............. 190
------
Present value of minimum lease payments........ 1,728
Less current portion......................... 808
------
Long-term portion.............................. $ 920
======
</TABLE>
(b) Operating Leases
The Company leases office and warehouse facilities under operating lease
agreements. The following is a schedule of future minimum rental payments as of
December 31, 1998, for operating leases having initial noncancelable lease terms
in excess of one year (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
<S> <C>
1999........................................... $2,210
2000........................................... 1,682
2001........................................... 1,332
2002........................................... 745
2003........................................... 494
Thereafter..................................... 29
------
$6,492
======
</TABLE>
In addition to the above minimum rental payments, some lease agreements
require contingent rental payments based on a percentage of the Company's
revenue in the
F-34
<PAGE> 171
MIAMI AIRCRAFT SUPPORT, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(3) LEASES (CONTINUED)
respective location. The Company has other operating leases with terms either
less than one year (which generally are renewed on an annual basis), or
exclusively based on a percentage of revenue. Rent expense for the years ended
December 31, 1996, 1997 and 1998, consists of the following (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
------ ------ ------
<S> <C> <C> <C>
Minimum rent.................................. $2,274 $3,776 $4,550
Contingent rent............................... 580 995 1,088
------ ------ ------
Rent expense total............................ $2,854 $4,772 $5,638
====== ====== ======
</TABLE>
(4) ACCRUED EXPENSES
Accrued expenses at December 31, 1997 and 1998 consist of the following (in
thousands):
<TABLE>
<CAPTION>
1997 1998
------ ------
<S> <C> <C>
Accrued payroll expense............................... $1,044 $1,295
Accrued workers' compensation......................... 761 762
Other................................................. 541 858
------ ------
$2,346 $2,915
====== ======
</TABLE>
(5) LINE OF CREDIT
As of December 31, 1997, the Company maintains standby letters of credit
totaling $1,029,184 under a $2 million line of credit with a bank. These letters
of credit collateralize mainly certain Company's operating lease rental
obligations to third parties and the Company's obligations to its workers'
compensation insurance carrier. The line of credit is generally renewed annually
and is secured by the Company's accounts receivable. As of December 31, 1997,
the Company had a $-0- balance under this line of credit.
F-35
<PAGE> 172
MIAMI AIRCRAFT SUPPORT, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(6) LONG-TERM DEBT
Long-term debt consists of the following at December 31 (in thousands):
<TABLE>
<CAPTION>
1997 1998
------ ------
<S> <C> <C>
Various notes payable for purchase of equipment with
interest rates ranging from 6.75% to 8.05% in 1998
and 7% to 10% in 1997, maturing at various dates
through October 2003, payable in monthly
installments including principal and interest;
secured by certain equipment with a net book value
of $4,896 and $6,525 at December 31, 1998 and 1997,
respectively........................................ $4,340 $3,706
Note payable to United National Bank, payable on
demand, but if no demand is made, then in 47 monthly
installments of $47, including interest at 8.5% per
annum. The note is secured by the Company's accounts
receivable, property and equipment.................. 1,866 1,452
------ ------
6,206 5,158
Less current portion.................................. 4,145 3,447
------ ------
Long-term debt, excluding current portion............. $2,061 $1,711
====== ======
</TABLE>
The aggregate amounts of principal maturities of debt outstanding at
December 31, 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
<S> <C>
1999........................................... $3,447
2000........................................... 1,121
2001........................................... 256
2002........................................... 170
2003........................................... 164
------
Total................................ $5,158
======
</TABLE>
F-36
<PAGE> 173
MIAMI AIRCRAFT SUPPORT, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(7) INCOME TAXES
Income tax expense for the years ended December 31, 1996, 1997 and 1998,
consists of (in thousands):
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
---------- -------- ----------
<S> <C> <C> <C>
Year ended December 31, 1996:
Federal............................ $ 559 $ 181 $ 740
State.............................. 159 43 202
---------- -------- ----------
$ 718 $ 224 $ 942
========== ======== ==========
Year ended December 31, 1997:
Federal............................ $ 831 $ 78 $ 909
State.............................. 234 20 254
---------- -------- ----------
$ 1,065 $ 98 $ 1,163
========== ======== ==========
Year ended December 31, 1998:
Federal............................ $ 1,437 $ 41 $ 1,478
State.............................. 398 10 408
---------- -------- ----------
$ 1,835 $ 51 $ 1,886
========== ======== ==========
</TABLE>
Income tax expense differed from the amounts computed by applying the U.S.
federal income tax rate of 34 percent as follows (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
-------- ---------- ----------
<S> <C> <C> <C>
Computed "expected" tax expense...... $ 853 $ 1,020 $ 1,693
State taxes, net of federal income
tax benefit........................ 133 167 269
Travel and entertainment expenses.... 36 17 16
Other................................ (80) (41) (92)
-------- ---------- ----------
Total tax expense.......... $ 942 $ 1,163 $ 1,886
======== ========== ==========
Effective tax rate................... 37.5% 38.7% 37.9%
======== ========== ==========
</TABLE>
F-37
<PAGE> 174
MIAMI AIRCRAFT SUPPORT, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(7) INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1997 and 1998, are presented below (in thousands).
<TABLE>
<CAPTION>
1997 1998
----- -------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance
for doubtful accounts............................ $ 75 $ 75
Accrued expenses, mainly workers' compensation...... 316 327
Preacquisition net operating losses of subsidiary... 501 460
----- -------
Total gross deferred tax assets............. 892 862
Deferred tax liabilities:
Property and equipment, principally due to
differences in depreciation...................... (977) (985)
Other............................................... (17) (29)
----- -------
Total gross deferred tax liabilities........ (994) (1,014)
----- -------
Net deferred tax liability.................. $(102) $ (152)
===== =======
</TABLE>
As a result of the IEG acquisition (note 2), the Company had, at December
31, 1998, approximately $1,353,000 of preacquisition net operating loss
carryforwards. These amounts can be used to reduce future taxable income of the
Company, as provided for under Internal Revenue Code Section 382 described
below. Such tax loss carryforwards expire as follows: $679,000 in 2010, $443,000
in 2011 and $231,000 in 2012, subject to the limitation noted below.
Once an ownership change is deemed to have occurred under Section 382, a
limitation on the annual utilization of net operating loss carryovers is
imposed. Under the provisions of Section 382, the utilization of the
aforementioned net operating losses is limited to a maximum of $103,550 annually
through their expiration date.
Based upon the level of historical taxable income and projections for
future taxable income over the periods in which the deferred tax assets are
deductible, and after considering the reversal of deferred tax liabilities,
management believes it is more likely than not the Company will realize the
benefits of these deductible differences.
(8) BUSINESS AND CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially expose the Company to
concentrations of credit risk consist primarily of trade accounts receivable.
The Company provides services to various customers in the aviation industry.
Although the Company is directly affected by the well being of the aviation
industry, management does not believe significant credit risk
F-38
<PAGE> 175
MIAMI AIRCRAFT SUPPORT, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(8) BUSINESS AND CONCENTRATIONS OF CREDIT RISK (CONTINUED)
exists at December 31, 1998. During 1998, three customers accounted for
approximately 46 percent of the Company's consolidated revenue. As of December
31, 1998, approximately 60 percent of trade accounts receivable originated from
five customers located in the United States. The Company estimates an allowance
for doubtful accounts based on the creditworthiness of its customers, as well as
general economic conditions. Consequently, an adverse change in those factors
could affect the Company's estimate of its bad debts.
(9) RELATED-PARTY TRANSACTIONS
During 1998, the Company provided approximately $135,000 of services to a
related party by way of common management. The revenue and related receivable as
of December 31, 1998, amounting to approximately $135,000, is included in ground
service revenue and accounts receivable, respectively.
In 1998, the Company purchased used ground equipment for $726,405 from the
aforementioned affiliate.
(10) COMMITMENTS AND CONTINGENCIES
The Company obtains insurance for workers' compensation claims. However,
the Company has elected to retain a significant portion of expected losses
through the use of deductibles. Provisions for losses expected under these
programs are recorded based upon the Company's estimate of the aggregate
liability for claims incurred. These estimates utilize the Company's prior
experience and actuarial assumptions that are provided by the Company's
insurance carrier. The total estimated liability for these losses at December
31, 1998, is $761,933 and is included in accrued expenses.
The Company is a party to various claims and legal actions arising in the
ordinary course of business. While any proceeding or litigation has an element
of uncertainty, management believes that the ultimate disposition of these
matters will not have a material adverse effect on the Company's consolidated
financial position and results of operations.
(11) SUBSEQUENT EVENTS (UNAUDITED)
On May 28, 1999, Worldwide Flight Services, Inc. ("Worldwide") contracted
to purchase 100 percent of the outstanding stock of MAS. The total purchase
price is $61 million, a portion of which is to be held in escrow for a period up
to six months to secure MAS's indemnification obligations under the agreement.
Upon consummation, an additional $2 million will be paid to MAS for distribution
to employees over an established period of time. In conjunction with the
purchase contract, the stockholder's of MAS have agreed not to compete with
Worldwide in ground service business or solicit Worldwide employees for a period
of five years. MAS anticipates the completion of the sale to Worldwide in July
1999.
F-39
<PAGE> 176
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS DATED ,
[WORLDWIDE FLIGHT SERVICES, INC. LOGO]
$130,000,000
WORLDWIDE FLIGHT SERVICES, INC.
OFFER TO EXCHANGE
2 1/4 SENIOR NOTES DUE 2007, SERIES B
FOR ANY AND ALL OUTSTANDING
2 1/4 SENIOR NOTES DUE 2007, SERIES A
--------------------
PROSPECTUS
--------------------
- --------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of Worldwide
have not changed since the date hereof.
- --------------------------------------------------------------------------------
Until (90 days from the date of this prospectus), all dealers
effecting transactions in the securities, whether or not participating in this
exchange offer, may be required to deliver a prospectus.
- --------------------------------------------------------------------------------
<PAGE> 177
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
INDEMNIFICATION UNDER THE BY-LAWS OF WORLDWIDE FLIGHT SERVICES, INC. AND MIAMI
AIRCRAFT SUPPORT, INC.
The by-law provisions of Worldwide Flight Services, Inc. and Miami Aircraft
Support, Inc. relating to indemnification of Officers and Directors are
identical. Accordingly, the description below of "Worldwide Flight Services,
Inc." or "Worldwide" applies to each of Worldwide Flight Services, Inc. and
Miami Aircraft Support, Inc.
The by-laws of Worldwide Flight Services, Inc. provide that Worldwide will
indemnify to the full extent permitted by law any person made or threatened to
be made a party to any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person or such
person's testator or intestate is or was a director, officer or employee of
Worldwide or serves or served at the request of Worldwide or any other
enterprise as a director, officer or employee. Expenses, including attorneys'
fees, incurred by any such person in defending any such action, suit or
proceeding will be paid or reimbursed by Worldwide promptly upon receipt by it
of an undertaking of such person to repay such expenses if it shall ultimately
be determined that such person is not entitled to be indemnified by Worldwide.
The rights provided to any person by the by-laws will be enforceable against
Worldwide by such person who will be presumed to have relied upon it in serving
or continuing to serve as a director, officer or employee as provided above. The
indemnification and advancement of expenses provided by, or granted pursuant to,
the by-laws of Worldwide will not be deemed exclusive and are declared expressly
to be non-exclusive of any other rights to which those seeking indemnification
or advancements of expenses may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding an
office, and, unless otherwise provided when authorized or ratified, will
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 person.
INDEMNIFICATION UNDER THE BY-LAWS OF WORLDWIDE FLIGHT FINANCE COMPANY AND
WORLDWIDE FLIGHT SECURITY SERVICE CORPORATION.
The by-law provisions of Worldwide Flight Finance Company and Worldwide
Flight Security Service Corporation relating to indemnification of Officers and
Directors are identical. Accordingly, the description below of "Worldwide
Flight" applies to each of Worldwide Flight Finance Company and Worldwide Flight
Security Service Corporation.
Worldwide Flight's by-laws provide that Worldwide Flight will indemnify its
directors and officers as permitted by law against all expense, liability and
loss paid or incurred by such person in connection with any threatened, pending
or completed action, suit or proceeding (a "Action") involving such person by
reason of the fact the he or she was a director or officer of Worldwide Flight
or is or was serving at the request or for the benefit of Worldwide Flight in
any capacity for another corporation or entity. Any indemnification will be made
unless it is determined that indemnification is not proper because the officer
or director (i) has not acted in good faith and in a manner he or she reasonably
believes to be in the best interest of Worldwide Flight and, with respect to any
criminal action or
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<PAGE> 178
proceeding, (ii) had no reasonable cause to believe his or her conduct was
unlawful. The indemnification provided by the by-laws of Worldwide Flight (i)
will not be deemed exclusive of any other rights to which those indemnified may
be entitled under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding such office, (ii) will be deemed to
create contractual rights in favor of each person seeking indemnification or
advancement of expenses and (iii) will continue as to each person who has ceased
to have the status pursuant to which he or she was entitled or was denominated
as entitled to indemnification pursuant to the by-laws and applicable law and
shall inure to the benefit of the heirs and legal representatives of each person
seeking indemnification or advancement of expenses.
INDEMNIFICATION UNDER THE DELAWARE GENERAL CORPORATION LAW
Section 145 of the Delaware General Corporation Law, authorizes a
corporation to indemnify any person who was or is a party, or is threatened to
be made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that the person is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by the person in connection with such action, suit or proceeding, if the person
acted in good faith and in a manner the person reasonably believed to be in, or
not opposed to, the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the person's
conduct was unlawful. In addition, the Delaware General Corporation Law does not
permit indemnification in any threatened, pending or completed action or suit by
or in the right of the corporation in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation,
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses, which such court
shall deem proper. To the extent that a present or former director or officer of
a corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to above, or in defense of any claim, issue
or matter, such person shall be indemnified against expenses, including
attorneys' fees, actually and reasonably incurred by such person. Indemnity is
mandatory to the extent a claim, issue or matter has been successfully defended.
The Delaware General Corporation Law also allows a corporation to provide for
the elimination or limit of the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that such provision shall not eliminate or limit
the liability of a director
(1) for any breach of the director's duty of loyalty to the
corporation or its stockholders,
(2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,
(3) for unlawful payments of dividends or unlawful stock purchases
or redemptions, or
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<PAGE> 179
(4) for any transaction from which the director derived an improper
personal benefit. These provisions will not limit the liability
of directors or officers under the federal securities laws of
the United States.
INDEMNIFICATION UNDER THE BY-LAWS OF AEROLINK INTERNATIONAL, INC., AEROLINK
MAINTENANCE, INC. AND AEROLINK MANAGEMENT, INC.
The by-law provisions of Aerolink International, Inc., Aerolink
Maintenance, Inc. and Aerolink Management, Inc. relating to indemnification of
Officers and Directors are identical. Accordingly, the description below of
"Aerolink" applies to each of Aerolink International, Inc., Aerolink
Maintenance, Inc. and Aerolink Management, Inc.
The by-laws of Aerolink provide that Aerolink will indemnify its directors
and officers as permitted by law against all expense, liability and loss paid or
incurred by such person in connection with any threatened, pending or completed
action, suit or proceeding (a "Action") involving such person by reason of the
fact the he or she was a director or officer of Aerolink or is or was serving at
the request or for the benefit of Aerolink in any capacity for another
corporation or entity. No right of indemnification shall exist with respect to
an Action brought by an officer or director and any other person entitled to
indemnification under the by-laws against Aerolink except for expenses incurred
in connection with any Action brought by such person entitled to indemnification
under the by-laws against Aerolink only if the Action is a claim for indemnity
or expenses not paid in full by Aerolink or otherwise and either (i) such person
entitled to indemnification under the by-laws is successful in whole or in part
in the Action for which expenses are claimed or (ii) the indemnification for
expenses is included in a settlement of the Action or is awarded by a court. The
rights of indemnification and advancement of expenses provided by the by-laws of
Aerolink (i) will not be deemed exclusive of any other rights, whether now
existing or hereafter created, to which those seeking indemnification or
advancement of expenses may be entitled under the Articles or by-laws of
Aerolink, any agreement, any vote of shareholders or directors or otherwise,
(ii) will be deemed to create contractual rights in favor of each person seeking
indemnification or advancement of expenses, (iii) will continue as to each
person who has ceased to have the status pursuant to which he or she was
entitled or was denominated as entitled to indemnification pursuant to the
by-laws and applicable law and shall inure to the benefit of the heirs and legal
representatives of each person seeking indemnification or advancement of
expenses and (iv) will be applicable to Actions commenced after the adoption of
such by-laws, whether arising from acts or omissions occurring before or after
the adoption of such by-laws.
INDEMNIFICATION UNDER THE PENNSYLVANIA BUSINESS CORPORATION LAW
Sections 1741 and 1742 of the Pennsylvania Business Corporation Law of
1988, as amended (the "BCL") provide that a business corporation may indemnify
directors and officers against liability they may incur as such provided that
the particular person acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal proceeding, had no reasonable cause to believe his
or her conduct was unlawful. In the case of actions against a director or
officer by or in the right of the Corporation, the power to indemnify extends
only to expenses (not judgments and amounts paid in the settlement) and such
power generally does not exist if the person otherwise entitled to
indemnification shall have been adjudged to be liable to the Corporation unless
it is judicially determined that, despite the adjudication of liability but in
view of all the circumstances of the case, the person is fairly
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<PAGE> 180
and reasonably entitled to indemnification for specified expenses. In addition,
under Sections 1743 and 1744 of the BCL, the Corporation is required to
indemnify directors and officers against expenses they may incur in defending
actions against them in such capacities if they are successful on the merits or
otherwise in the defense of such actions and a corporation may pay the expenses
of a director or officer incurred in defending an action or proceeding in
advance of the final amounts advanced unless it is ultimately determined that
such person is entitled to indemnification from the corporation.
Also, Section 1746 of the BCL grants a corporation broad authority to
indemnify its directors, officers and other agents for liabilities and expenses
incurred in such capacity, except in circumstances where the act or failure to
act giving rise to the claim for indemnification is determined by a court to
have constituted willful misconduct or recklessness. Section 1747 grants a
corporation the power to purchase and maintain insurance on behalf of any
directors, officers and other agents against any liability incurred in such
capacity, whether or not the corporation would have the power to indemnify such
directors, officers and other agents against that liability under the BCL.
INDEMNIFICATION UNDER THE BY-LAWS OF MIAMI INTERNATIONAL AIRPORT CARGO
FACILITIES & SERVICES, INC. AND INTERNATIONAL ENTERPRISES GROUP, INC.
The by-law provisions of Miami International Airport Cargo Facilities &
Services, Inc. and International Enterprises Group, Inc. relating to
indemnification of Officers and Directors are identical. Accordingly, the
description below of "Miami International" applies to each of Miami
International Airport Cargo Facilities & Services, Inc. and International
Enterprises Group, Inc.
The by-laws of Miami International provide that, except for some
circumstances, Miami International will indemnify any person made or threatened
to be made a party to any action, suit or proceeding, either by or in the right
of the Miami International or such other company, a derivative action, or by a
third-party action by reason of the fact that the person is or was a director,
officer, employee or agent of Miami International or serves or served at the
request of Miami International if either:
(a) the person is wholly successful in defending the derivative or
third-party action, or
(b) it is determined by a court of competent jurisdiction, a
majority of a quorum of the Board of Directors of Miami
International (which quorum shall not include any director who
is a party to or is otherwise involved in such action) or an
opinion of independent legal counsel that the person acted
without negligence or misconduct in the performance of his duty
to Miami International in the case of a derivative action or
acted in good faith in what he reasonably believed to be the
best interests of Miami International in the case of a
third-party action.
Additionally, in any criminal action, an opinion of independent legal
counsel will be delivered stating that the person had no reasonable cause to
believe that his action was unlawful.
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<PAGE> 181
INDEMNIFICATION UNDER THE FLORIDA BUSINESS CORPORATION ACT
In general, Florida law permits a Florida corporation to indemnify its
directors, officers, employees and agents, and persons serving at the
corporation's request in such capacities for another enterprise against
liabilities arising from conduct that such persons reasonably believed to be in,
or not opposed to, the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to believe their
conduct was unlawful. The provisions of the Florida Business Corporation Act
that authorize indemnification do not eliminate the duty of care of a director
and, inappropriate circumstances, equitable remedies such as injunctive or other
forms of nonmonetary relief will remain available under Florida law. In
addition, each director will continue to be subject to liability for (a)
violations of the criminal law, unless the director had reasonable cause to
believe his conduct was lawful or had no reasonable cause to believe his conduct
was unlawful, (b) deriving an improper personal benefit from a transaction, (c)
voting for or assenting to an unlawful distribution, and (d) willful misconduct
or a conscious disregard for the best interests of the corporation in a
proceeding by or in the right of the corporation to procure a judgment in its
favor or in a proceeding by or in the right of a shareholder. The statute does
not affect a director's responsibilities under any other law, such as the
Federal securities laws or state or Federal environmental laws.
INDEMNIFICATION UNDER THE AEROLINK INTERNATIONAL, L.P. PARTNERSHIP AGREEMENT
Aerolink Management, Inc., as general partner of Aerolink International,
L.P. Partnership, will be indemnified by the partnership but not by any limited
partner against any losses, judgments, claims and/or liabilities in connection
with any action, suit or proceeding, other than an action, suit or proceeding by
or in the right of a limited partner or the partnership, threatened, pending or
completed to which Aerolink Management, Inc., as general partner, or threatened
to be made a party. Indemnification may be sought whereby Aerolink Management,
Inc., as general partner, acted or refrained from acting in a manner that it or
its agents believed in good faith was in the best interest of the partnership,
and in a case involving a criminal proceeding, Aerolink Management, Inc., as
general partner, had no reasonable cause to believe that its actions or actions
of its agents constituted unlawful conduct.
INDEMNIFICATION UNDER THE PENNSYLVANIA REVISED UNIFORM LIMITED PARTNERSHIP ACT
Section 8510 of the Pennsylvania Revised Uniform Limited Partnership Act
provides that subject to standards and restrictions, if any, as set forth in the
partnership agreement, a limited partnership may indemnify any partner or other
person against any and all claims and demands, whether or not the limited
partnership would have power to indemnify the person under any other provision
of the law, and whether or not the liability arises out of an action by or in
the right of a limited partnership. Indemnification is not permitted, however,
in any case in which the person's conduct is judicially determined to have
constituted willful misconduct or recklessness.
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<PAGE> 182
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
3.1 Certificate of Incorporation of Worldwide Flight Services,
Inc. with all amendments (formerly known as AMR Services
Corporation and AMR Airline Services Corporation)
3.2 Amended and Restated By-Laws of Worldwide Flight Services,
Inc. (formerly known as AMR Services Corporation and AMR
Airline Services Corporation)
3.3 Certificate of Incorporation of Worldwide Flight Finance
Company with all amendments (formerly known as AMRS Holding
Corporation and AMRS Finance Company)
3.4 By-Laws of Worldwide Flight Finance Company (formerly known
as AMRS Holding Corporation and AMRS Finance Company)
3.5 Certificate of Incorporation of Worldwide Flight Security
Service Corporation with all amendments (formerly known as
AMR Services Security Service Corporation)
3.6 By-Laws of Worldwide Flight Security Service Corporation
(formerly known as AMR Services Security Service
Corporation)
3.7 Certificate of Incorporation of Aerolink International, Inc.
with all amendments
3.8 By-Laws of Aerolink International, Inc.
3.9 Certificate of Incorporation of Aerolink Maintenance, Inc.
with all amendments
3.10 By-Laws of Aerolink Maintenance, Inc.
3.11 Certificate of Incorporation of Aerolink Management, Inc.
with all amendments
3.12 By-Laws of Aerolink Management, Inc.
3.13 Certificate of Limited Partnership of Aerolink
International, L.P.
3.14 Agreement of Limited Partnership of Aerolink International,
L.P.
3.15 Amended and Restated Articles of Incorporation of Miami
International Airport Cargo Facilities & Services, Inc.
(formerly known as Miami International Container Freight
Station Inc.)
3.16 Amended and Restated By-Laws of Miami International Airport
Cargo Facilities & Services, Inc.
3.17 Certificate of Incorporation of International Enterprises
Group, Inc. with all amendments
3.18 Amended and Restated By-Laws of International Enterprises
Group, Inc.
3.19 Certificate of Incorporation of Miami Aircraft Support, Inc.
with all amendments
3.20 Amended and Restated By-Laws of Miami Aircraft Support, Inc.
</TABLE>
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<PAGE> 183
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
4.1 Indenture, dated as of August 12, 1999, among Worldwide
Flight Services, Inc., The Bank of New York as Trustee and
Guarantors
4.2 Form of 12 1/4 Senior Note due 2007, Series B (included in
exhibit 4.1)
4.3 A/B Exchange Registration Rights Agreement, dated August 12,
1999, by and among Worldwide Flight Services, Inc.,
Guarantors and Initial Purchasers
4.4 Form of Senior Guarantee (included in exhibit 4.1)
5.1 Opinion of Schulte Roth & Zabel LLP*
9.1 Form of Voting Trust Agreement, among WFS Holdings, Inc.,
Stockholders and Leonard M. Harlan
10.1 Purchase Agreement, dated August 5, 1999 by and among the
Registrant, WFS Holdings, Inc., the initial Guarantors and
the Initial Purchasers
10.2 Stock Purchase Agreement, dated May 28, 1999, among MAS
Worldwide Holding Corporation, Anthony Romeo and Charles
Micale
10.3 WFS Holdings, Inc. 1999 Stock Option Plan
10.4 Employment Agreement, effective October 1, 1998, between
Peter A. Pappas and Worldwide Flight Services, Inc.
(formerly known as AMR Services Corporation)
10.5 Executive Employment Agreement dated May 30, 1999, between
Worldwide Flight Services, Inc. and Mark Dunkerley
10.6 Executive Employment Agreement, dated March 29, 1999,
between Worldwide Flight Services, Inc. (formerly known as
AMR Services Corporation) and Scott Letier
10.7 Employment Agreement, dated December 7, 1998, between
Worldwide Flight Services, Inc. (formerly known as AMR
Services Corporation) and Olivier Bijaoui
10.8 Employment Agreement, dated November 13, 1998, between
Worldwide Flight Services, Inc. (formerly known as AMR
Services Corporation) and John Vittas
10.9 Credit Agreement dated as of August 12, 1999, among WFS
Holdings, Inc., Worldwide Flight Services, Inc., the Lenders
party thereto, The Chase Manhattan Bank, as Administrative
Agent, and DLJ Capital Funding, Inc., as Syndication Agent
10.10 Security Agreement dated as of August 12, 1999, among
Worldwide Flight Services, Inc., each subsidiary of WFS
Holdings, Inc. listed on Schedule I thereto and The Chase
Manhattan Bank, a New York banking corporation, as
administrative agent for the Secured Parties
10.11 Indemnity, Subrogation and Contribution Agreement dated as
of August 12, 1999, among Worldwide Flight Services, Inc.,
each subsidiary of WFS Holdings, Inc. listed on Schedule I
thereto and The Chase Manhattan Bank, a New York banking
corporation, as administrative agent for the Secured Parties
</TABLE>
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<PAGE> 184
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
10.12 Guarantee Agreement dated as of August 12, 1999, among WFS
Holdings, Inc., each subsidiary of Holdings listed on
Schedule I thereto and The Chase Manhattan Bank, a New York
banking corporation, as administrative agent for the Secured
Parties
10.13 Pledge Agreement dated as of August 12, 1999, among
Worldwide Flight Services, Inc., WFS Holdings, Inc., each
subsidiary of WFS Holdings, Inc. listed on Schedule I
thereto and The Chase Manhattan Bank, a New York banking
corporation, as administrative agent for the Secured Parties
12.1 Statement regarding Computation of Ratio of Earnings to
Fixed Charges of Worldwide Flight Services, Inc.
12.2 Statement regarding Computation of Ratio of Earnings to
Fixed Charges of Miami Aircraft Support, Inc.
21 Subsidiaries of Worldwide Flight Services, Inc.
23.1 Consent of Ernst & Young LLP*
23.2 Consent of KPMG LLP
23.3 Consent of Schulte Roth & Zabel LLP (incorporated by
reference in exhibit 5.1)
24 Power of Attorney (included on Signature Page of initial
filing)
25 Statement of Eligibility and Qualification on Form T-1 of
The Bank of New York, as Trustee
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery for Outstanding
12 1/4% Senior Notes due 2007, Series A, in exchange for
12 1/4% Senior Notes due 2007, Series B
</TABLE>
- ---------------
* To be filed by amendment
ITEM 22. UNDERTAKINGS.
The undersigned Registrants hereby undertake that:
(1) Prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this Registration Statement,
by any person or party who is deemed to be an underwriter within the meaning
of Rule 145(c), the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to the reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) Every prospectus: (i) that is filed pursuant to the immediately preceding
paragraph or (ii) that purports to meet the requirements of Section 10(a)(3)
of the Securities Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to
the Registration Statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
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<PAGE> 185
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, the Registrants
have been advised that in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by then is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-9
<PAGE> 186
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Worldwide
Flight Services, Inc. has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Euless, State of Texas on the 7th day of October, 1999.
WORLDWIDE FLIGHT SERVICES, INC.
By: /s/ PETER A. PAPPAS
--------------------------------------
Name: Peter A. Pappas
Title: Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Peter A. Pappas, Mark Dunkerley and A.
Scott Letier, and each of them, severally (with full power to act alone) as the
true and lawful attorney-in-fact and agent for the undersigned, with full power
of substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any all capacities, to sign any and all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in, and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute and substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLES DATE
<S> <C> <C>
/s/ PETER A. PAPPAS Chairman of the Board of October 7, 1999
- --------------------------------------------- Directors, Chief
Peter A. Pappas Executive Officer and
Director (principal
executive officer)
/s/ MARK DUNKERLEY President, Chief October 7, 1999
- --------------------------------------------- Operating Officer and
Mark Dunkerley Director
/s/ A. SCOTT LETIER Chief Financial Officer October 7, 1999
- --------------------------------------------- (principal financial and
A. Scott Letier accounting officer)
Director October 7, 1999
- ---------------------------------------------
Leonard M. Harlan
</TABLE>
II-10
<PAGE> 187
<TABLE>
<CAPTION>
SIGNATURES TITLES DATE
<S> <C> <C>
/s/ MARCEL FOURNIER Director October 7, 1999
- ---------------------------------------------
Marcel Fournier
/s/ ALBERT V. CASEY Director October 7, 1999
- ---------------------------------------------
Albert V. Casey
Director October 7, 1999
- ---------------------------------------------
Lieut. General Thomas G. McInerney
/s/ BRADLEY G. STANIUS Director October 7, 1999
- ---------------------------------------------
Bradley G. Stanius
/s/ GILBERT A. YANUCK Director October 7, 1999
- ---------------------------------------------
Gilbert A. Yanuck
</TABLE>
II-11
<PAGE> 188
Pursuant to the requirements of the Securities Act of 1933, Worldwide
Flight Finance Company has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Euless, State of Texas on the 7th day of October, 1999.
WORLDWIDE FLIGHT FINANCE COMPANY
By: /s/ PETER A. PAPPAS
--------------------------------------
Name: Peter A. Pappas
Title: Chairman of the Board and
President
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Peter A. Pappas, Mark Dunkerley and A.
Scott Letier, and each of them, severally (with full power to act alone) as the
true and lawful attorney-in-fact and agent for the undersigned, with full power
of substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any all capacities, to sign any and all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in, and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute and substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLES DATE
<S> <C> <C>
/s/ PETER A. PAPPAS Chairman of the Board of October 7, 1999
- --------------------------------------------- Directors and President
Peter A. Pappas and Director (principal
executive officer)
/s/ A. SCOTT LETIER Chief Financial Officer October 7, 1999
- --------------------------------------------- (principal financial and
A. Scott Letier accounting officer)
/s/ GARY BURTZLAFF Vice President and October 7, 1999
- --------------------------------------------- Director
Gary Burtzlaff
/s/ JAMES ENRIGHT Vice President and October 7, 1999
- --------------------------------------------- Secretary and Director
James Enright
</TABLE>
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<PAGE> 189
Pursuant to the requirements of the Securities Act of 1933, Worldwide
Flight Security Service Corporation has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Euless, State of Texas on the 7th day of October, 1999.
WORLDWIDE FLIGHT SECURITY SERVICE
CORPORATION
By: /s/ PETER A. PAPPAS
--------------------------------------
Name: Peter A. Pappas
Title: President
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Peter A. Pappas, Mark Dunkerley and A.
Scott Letier, and each of them, severally (with full power to act alone) as the
true and lawful attorney-in-fact and agent for the undersigned, with full power
of substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any all capacities, to sign any and all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in, and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute and substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLES DATE
<S> <C> <C>
/s/ PETER A. PAPPAS President and Director October 7, 1999
- --------------------------------------------- (principal executive
Peter A. Pappas officer)
/s/ A. SCOTT LETIER Chief Financial Officer October 7, 1999
- --------------------------------------------- (principal financial and
A. Scott Letier accounting officer)
/s/ GARY BURTZLAFF Vice President and October 7, 1999
- --------------------------------------------- Director
Gary Burtzlaff
/s/ PATRICIA KEARNEY Assistant Vice President October 7, 1999
- --------------------------------------------- and Director
Patricia Kearney
</TABLE>
II-13
<PAGE> 190
Pursuant to the requirements of the Securities Act of 1933, Miami
International Airport Cargo Facilities & Services, Inc. has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Euless, State of Texas on the 7th day of
October, 1999.
MIAMI INTERNATIONAL AIRPORT
CARGO FACILITIES & SERVICES, INC.
By: /s/ PETER A. PAPPAS
--------------------------------------
Name: Peter A. Pappas
Title: Chairman of the Board and
President
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Peter A. Pappas, Mark Dunkerley and A.
Scott Letier, and each of them, severally (with full power to act alone) as the
true and lawful attorney-in-fact and agent for the undersigned, with full power
of substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any all capacities, to sign any and all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in, and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute and substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLES DATE
<S> <C> <C>
/s/ PETER A. PAPPAS Chairman of the Board of October 7, 1999
- --------------------------------------------- Directors, President and
Peter A. Pappas Director (principal
executive officer)
/s/ A. SCOTT LETIER Chief Financial Officer October 7, 1999
- --------------------------------------------- (principal financial and
A. Scott Letier accounting officer)
/s/ JAMES ENRIGHT Vice President and October 7, 1999
- --------------------------------------------- Secretary and Director
James Enright
/s/ GARY BURTZLAFF Vice President and October 7, 1999
- --------------------------------------------- Director
Gary Burtzlaff
</TABLE>
II-14
<PAGE> 191
Pursuant to the requirements of the Securities Act of 1933, International
Enterprises Group, Inc. has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Euless, State of Texas on the 7th day of October, 1999.
INTERNATIONAL ENTERPRISES GROUP, INC.
By: /s/ PETER A. PAPPAS
-----------------------------------------
Name: Peter A. Pappas
Title: Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Peter A. Pappas, Mark Dunkerley and A.
Scott Letier, and each of them, severally (with full power to act alone) as the
true and lawful attorney-in-fact and agent for the undersigned, with full power
of substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any all capacities, to sign any and all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in, and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute and substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLES DATE
<S> <C> <C>
/s/ PETER A. PAPPAS Chairman of the Board of October 7, 1999
- --------------------------------------------- Directors, Chief
Peter A. Pappas Executive Officer and
Director (principal
executive officer)
/s/ MARK DUNKERLEY President, Chief October 7, 1999
- --------------------------------------------- Operating Officer and
Mark Dunkerley Director
/s/ A. SCOTT LETIER Chief Financial Officer October 7, 1999
- --------------------------------------------- and Director (principal
A. Scott Letier financial and accounting
officer)
</TABLE>
II-15
<PAGE> 192
Pursuant to the requirements of the Securities Act of 1933, Miami Aircraft
Support, Inc. has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Euless,
State of Texas on the 7th day of October, 1999.
MIAMI AIRCRAFT SUPPORT, INC.
By: /s/ PETER A. PAPPAS
--------------------------------------
Name: Peter A. Pappas
Title: Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Peter A. Pappas, Mark Dunkerley and A.
Scott Letier, and each of them, severally (with full power to act alone) as the
true and lawful attorney-in-fact and agent for the undersigned, with full power
of substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any all capacities, to sign any and all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in, and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute and substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLES DATE
<S> <C> <C>
/s/ PETER A. PAPPAS Chairman of the Board of October 7, 1999
- --------------------------------------------- Directors, Chief
Peter A. Pappas Executive Officer and
Director (principal
executive officer)
/s/ MARK DUNKERLEY Vice Chairman of the October 7, 1999
- --------------------------------------------- Board of Directors, Chief
Mark Dunkerley Operating Officer and
Director
/s/ A. SCOTT LETIER Chief Financial Officer October 7, 1999
- --------------------------------------------- and Director (principal
A. Scott Letier financial and accounting
officer)
</TABLE>
II-16
<PAGE> 193
Pursuant to the requirements of the Securities Act of 1933, Aerolink
International, Inc. has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Euless,
State of Texas on the 7th day of October, 1999.
AEROLINK INTERNATIONAL, INC.
By: /s/ PETER A. PAPPAS
--------------------------------------
Name: Peter A. Pappas
Title: Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Peter A. Pappas, Mark Dunkerley and A.
Scott Letier, and each of them, severally (with full power to act alone) as the
true and lawful attorney-in-fact and agent for the undersigned, with full power
of substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any all capacities, to sign any and all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in, and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute and substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLES DATE
- ---------- ------ ----
<S> <C> <C>
/s/ PETER A. PAPPAS Chairman of the Board of October 7, 1999
- --------------------------------------------- Directors, Chief
Peter A. Pappas Executive Officer and
Director (principal
executive officer)
/s/ MARK DUNKERLEY President, Chief October 7, 1999
- --------------------------------------------- Operating Officer and
Mark Dunkerley Director
/s/ A. SCOTT LETIER Chief Financial Officer October 7, 1999
- --------------------------------------------- and Director (principal
A. Scott Letier financial and accounting
officer)
</TABLE>
II-17
<PAGE> 194
Pursuant to the requirements of the Securities Act of 1933, Aerolink
Maintenance, Inc. has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Euless,
State of Texas on the 7th day of October, 1999.
AEROLINK MAINTENANCE, INC.
By: /s/ PETER A. PAPPAS
--------------------------------------
Name: Peter A. Pappas
Title: Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Peter A. Pappas, Mark Dunkerley and A.
Scott Letier, and each of them, severally (with full power to act alone) as the
true and lawful attorney-in-fact and agent for the undersigned, with full power
of substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any all capacities, to sign any and all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in, and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute and substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLES DATE
- ---------- ------ ----
<S> <C> <C>
/s/ PETER A. PAPPAS Chairman of the Board of October 7, 1999
- --------------------------------------------- Directors, Chief
Peter A. Pappas Executive Officer and
Director (principal
executive officer)
/s/ MARK DUNKERLEY President, Chief October 7, 1999
- --------------------------------------------- Operating Officer and
Mark Dunkerley Director
/s/ A. SCOTT LETIER Chief Financial Officer October 7, 1999
- --------------------------------------------- and Director (principal
A. Scott Letier financial and accounting
officer)
</TABLE>
II-18
<PAGE> 195
Pursuant to the requirements of the Securities Act of 1933, Aerolink
Management, Inc. has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Euless,
State of Texas on the 7th day of October, 1999.
AEROLINK MANAGEMENT, INC.
By: /s/ PETER A. PAPPAS
-----------------------------------------
Name: Peter A. Pappas
Title: Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Peter A. Pappas, Mark Dunkerley and A.
Scott Letier, and each of them, severally (with full power to act alone) as the
true and lawful attorney-in-fact and agent for the undersigned, with full power
of substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any all capacities, to sign any and all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in, and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute and substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES
- ----------
<S> <C> <C>
/s/ PETER A. PAPPAS Chairman of the Board of October 7, 1999
- --------------------------------------------- Directors, Chief Executive
Peter A. Pappas Officer and Director
(principal executive
officer)
/s/ MARK DUNKERLEY President, Chief Operating October 7, 1999
- --------------------------------------------- Officer and Director
Mark Dunkerley
/s/ A. SCOTT LETIER Chief Financial Officer October 7, 1999
- --------------------------------------------- and Director (principal
A. Scott Letier financial and accounting
officer)
</TABLE>
II-19
<PAGE> 196
Pursuant to the requirements of the Securities Act of 1933, Aerolink
International, L.P. has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Euless,
State of Texas on the 7th day of October, 1999.
AEROLINK INTERNATIONAL, L.P.
By: AEROLINK MANAGEMENT, INC.
Its general partner
/s/ PETER A. PAPPAS
-----------------------------------------
Name: Peter A. Pappas
Title: Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Peter A. Pappas, Mark Dunkerley and A.
Scott Letier, and each of them, severally (with full power to act alone) as the
true and lawful attorney-in-fact and agent for the undersigned, with full power
of substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any all capacities, to sign any and all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each said attorney-in-fact and agent full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in, and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute and substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
DATE
----
<S> <C> <C>
/s/ PETER A. PAPPAS Chairman of the Board of October 7, 1999
- --------------------------------------------- Directors, Chief Executive
Peter A. Pappas Officer and Director
(principal executive
officer)
/s/ MARK DUNKERLEY President, Chief Operating October 7, 1999
- --------------------------------------------- Officer and Director
Mark Dunkerley
/s/ A. SCOTT LETIER Chief Financial Officer October 7, 1999
- --------------------------------------------- and Director (principal
A. Scott Letier financial and accounting
officer)
</TABLE>
II-20
<PAGE> 197
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
3.1 Certificate of Incorporation of Worldwide Flight Services,
Inc. with all amendments (formerly known as AMR Services
Corporation and AMR Airline Services Corporation)
3.2 Amended and Restated By-Laws of Worldwide Flight Services,
Inc. (formerly known as AMR Services Corporation and AMR
Airline Services Corporation)
3.3 Certificate of Incorporation of Worldwide Flight Finance
Company with all amendments (formerly known as AMRS Holding
Corporation and AMRS Finance Company)
3.4 By-Laws of Worldwide Flight Finance Company (formerly known
as AMRS Holding Corporation and AMRS Finance Company)
3.5 Certificate of Incorporation of Worldwide Flight Security
Service Corporation with all amendments (formerly known as
AMR Services Security Service Corporation)
3.6 By-Laws of Worldwide Flight Security Service Corporation
(formerly known as AMR Services Security Service
Corporation)
3.7 Certificate of Incorporation of Aerolink International, Inc.
with all amendments
3.8 By-Laws of Aerolink International, Inc.
3.9 Certificate of Incorporation of Aerolink Maintenance, Inc.
with all amendments
3.10 By-Laws of Aerolink Maintenance, Inc.
3.11 Certificate of Incorporation of Aerolink Management, Inc.
with all amendments
3.12 By-Laws of Aerolink Management, Inc.
3.13 Certificate of Limited Partnership of Aerolink
International, L.P.
3.14 Agreement of Limited Partnership of Aerolink International,
L.P.
3.15 Amended and Restated Articles of Incorporation of Miami
International Airport Cargo Facilities & Services, Inc.
(formerly known as Miami International Container Freight
Station Inc.)
3.16 Amended and Restated By-Laws of Miami International Airport
Cargo Facilities & Services, Inc.
3.17 Certificate of Incorporation of International Enterprises
Group, Inc. with all amendments
3.18 Amended and Restated By-Laws of International Enterprises
Group, Inc.
3.19 Certificate of Incorporation of Miami Aircraft Support, Inc.
with all amendments
3.20 Amended and Restated By-Laws of Miami Aircraft Support, Inc.
4.1 Indenture, dated as of August 12, 1999, by and among
Worldwide Flight Services, Inc., The Bank of New York, as
Trustee and Guarantors
4.2 Form of 12 1/4 Senior Note due 2007, Series B (included in
exhibit 4.1)
</TABLE>
<PAGE> 198
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
4.3 A/B Exchange Registration Rights Agreement, dated August 12,
1999, by and among Worldwide Flight Services, Inc.,
Guarantors and Initial Purchasers
4.4 Form of Senior Guarantee (included in exhibit 4.1)
5.1 Opinion of Schulte Roth & Zabel LLP*
9.1 Form of Voting Trust Agreement, among WFS Holdings, Inc.,
Stockholders and Leonard M. Harlan
10.1 Purchase Agreement, dated August 5, 1999 by and among the
Registrant, WFS Holdings, Inc., the initial Guarantors and
the Initial Purchasers
10.2 Stock Purchase Agreement, dated May 28, 1999, among MAS
Worldwide Holding Corporation, Anthony Romeo and Charles
Micale
10.3 WFS Holdings, Inc. 1999 Stock Option Plan
10.4 Employment Agreement, effective October 1, 1998, between
Peter A. Pappas and Worldwide Flight Services, Inc.
(formerly known as AMR Services Corporation)
10.5 Executive Employment Agreement dated May 30, 1999, between
Worldwide Flight Services, Inc. and Mark Dunkerley
10.6 Executive Employment Agreement, dated March 29, 1999,
between Worldwide Flight Services, Inc. (formerly known as
AMR Services Corporation) and Scott Letier
10.7 Employment Agreement, dated December 7, 1998, between
Worldwide Flight Services, Inc. (formerly known as AMR
Services Corporation) and Olivier Bijaoui
10.8 Employment Agreement, dated November 13, 1998, between
Worldwide Flight Services, Inc. (formerly known as AMR
Services Corporation) and John Vittas
10.9 Credit Agreement dated as of August 12, 1999, among WFS
Holdings, Inc., Worldwide Flight Services, Inc., the Lenders
party thereto, The Chase Manhattan Bank, as Administrative
Agent, and DLJ Capital Funding, Inc., as Syndication Agent
10.10 Security Agreement dated as of August 12, 1999, among
Worldwide Flight Services, Inc., each subsidiary of WFS
Holdings, Inc. listed on Schedule I thereto and The Chase
Manhattan Bank, a New York banking corporation, as
administrative agent for the Secured Parties
10.11 Indemnity, Subrogation and Contribution Agreement dated as
of August 12, 1999, among Worldwide Flight Services, Inc.,
each subsidiary of WFS Holdings, Inc. listed on Schedule I
thereto and The Chase Manhattan Bank, a New York banking
corporation, as administrative agent for the Secured Parties
10.12 Guarantee Agreement dated as of August 12, 1999, among WFS
Holdings, Inc., each subsidiary of Holdings listed on
Schedule I thereto and The Chase Manhattan Bank, a New York
banking corporation, as administrative agent for the Secured
Parties
</TABLE>
<PAGE> 199
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
10.13 Pledge Agreement dated as of August 12, 1999, among
Worldwide Flight Services, Inc., WFS Holdings, Inc., each
subsidiary of WFS Holdings, Inc. listed on Schedule I
thereto and The Chase Manhattan Bank, a New York banking
corporation, as administrative agent for the Secured Parties
12.1 Statement regarding Computation of Ratios of Earnings to
Fixed Charges of Worldwide Flight Services, Inc.
12.2 Statement regarding Computation of Ratios of Earnings to
Fixed Charges of Miami Aircraft Support, Inc.
21 Subsidiaries of Worldwide Flight Services, Inc.
23.1 Consent of Ernst & Young LLP*
23.2 Consent of KPMG LLP
23.3 Consent of Schulte Roth & Zabel LLP (incorporated by
reference in exhibit 5.1)
24 Power of Attorney (included on Signature Page of initial
filing)
25 Statement of Eligibility and Qualification on Form T-1 of
The Bank of New York, as Trustee
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery for Outstanding
12 1/4% Senior Notes due 2007, Series A, in exchange for
12 1/4% Senior Notes due 2007, Series B
</TABLE>
- ---------------
* To be filed by amendment
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
AMR SERVICES CORPORATION
The undersigned, in order to form a corporation for the
purpose hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, does hereby certify as follows:
FIRST: The name of the corporation (which is hereinafter
referred to as the "Corporation") is
AMR SERVICES CORPORATION
SECOND: The registered office of the Corporation is to be
located at 100 West Tenth Street, City of Wilmington, County of New Castle,
State of Delaware. The name of its registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock
which the Corporation is authorized to issue is One Thousand (1,000), all of
which shares shall be Common Stock with a par value of One Dollar ($1.00) per
share.
FIFTH: Election of directors need not be by ballot, unless the
By-Laws of the Corporation shall so provide. In furtherance and not in
limitation of the powers conferred by the laws of the State of Delaware, the
Board of Directors is expressly authorized and empowered, without the assent or
vote of the stockholders, to make, alter, amend and repeal the By-Laws of the
Corporation, in any manner not inconsistent with the laws of the State of
Delaware or the Certificate of Incorporation of the Corporation.
<PAGE> 2
SIXTH: Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them and/or between
this Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or of any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for this Corporation
under the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders of this Corporation, as the case may be,
and also on this Corporation.
SEVENTH: Except as otherwise provided by statute, any action
which might have been taken by a vote of the stockholders at a meeting thereof
may be taken with the written consent of such of the holders of stock who would
have been entitled to vote upon the action if a meeting were held as have not
less than the minimum percentage of the total vote required for the proposed
corporate action by statute, this Certificate of Incorporation or the By-Laws of
the Corporation, as may be applicable, but in the case of the election of a
director or directors, not
<PAGE> 3
less than a majority of the stock the Corporation entitled to vote thereon;
provided that prompt notice shall be given to all stockholders of the taking of
such corporate action without a meeting if less than unanimous consent is
obtained. Meetings of stockholders may be held within or without the State of
Delaware, as the By-Laws may provide.
EIGHTH: The books of the Corporation may be kept (subject to
applicable statutes) outside the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors or in the By-Laws
of the Corporation.
NINTH: The Corporation shall, to the full extent permitted by
the General Corporation Law of the State of Delaware, as amended from time to
time, indemnify all persons whom it has the power to indemnify pursuant thereto.
TENTH: The name and address of the incorporator is David A.
Schwarte, P.O. Box 619616, DFW Airport, Texas 75261-9616.
IN WITNESS WHEREOF, I have signed and acknowledged this
Certificate this 5th day of December, 1983.
/s/ David A. Schwarte
---------------------
David A. Schwarte
<PAGE> 4
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
AMR Services Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
does hereby certify:
FIRST: That the Board of Directors of AMR Services
Corporation, by the unanimous written consent of its members, filed with the
minutes of the board, duly adopted a resolution setting forth a proposed
amendment to the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, that the Certificate of Incorporation of AMR
Services Corporation be amended by changing the First Article thereof
so that, as amended, said Article shall be and read as follows:
"FIRST: The name of the corporation is AMR Airline Services
Corporation (which is hereinafter referred to as the "Corporation")."
SECOND: That the holders of all shares of issued and
outstanding stock of the corporation have signed a written consent adopting the
amendment.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said AMR Services Corporation has caused
this certificate to be signed by Charles D. MarLett, its Corporate Secretary,
this first day of May, 1997.
/s/ Charles D. MarLett
----------------------
Charles D. MarLett
Corporate Secretary
<PAGE> 5
CERTIFICATE OF MERGER
MERGING
DALFORT AVIATION SERVICES, L.P.
a Delaware limited partnership
WITH
AMR AIRLINE SERVICES CORPORATION
a Delaware corporation
(Pursuant to Section 263 of the
Delaware General Corporation Law
and Section 17-211 of the Delaware Uniform Limited Partnership Act)
AMR Airlines Services Corporation, a corporation organized and existing
under the laws of the State of Delaware, does hereby certify:
FIRST: That the name and state of incorporation or organization of each
of the constituent parties of the merger is as follows:
Dalfort Aviation Services, L.P., a Delaware limited
partnership, and AMR Airline Services Corporation, a Delaware
corporation;
SECOND: That a Plan of Merger between the parties to the merger has
been approved, adopted, certified, executed and acknowledged by each party in
accordance with the requirements of subsection (c) of Section 263 of the
Delaware General Corporation Law and Section 17-211 of the Delaware Uniform
Limited Partnership Act;
THIRD: That the name of the surviving corporation of the merger is AMR
Airline Services Corporation;
FOURTH: The Certificate of Incorporation of AMR Airline Services
Corporation as in effect immediately prior to the effective time of the merger
shall continue to be its Certificate of Incorporation, as the surviving
corporation following the effective time of the merger, until modified in
accordance with applicable law;
FIFTH: That the executed Plan of Merger is on file at the principal
place of business of the surviving corporation, the address of which is 4255
Amon Carter Boulevard, M.D. 4235, Fort Worth, Texas 76155;
SIXTH: That a copy of the Plan of Merger will be furnished by the
surviving corporation, on request and without cost, to any stockholder of any
constituent corporation or to any partners of the limited partnership;
<PAGE> 6
SEVENTH: The merger shall be effective upon the filing of this
Certificate of Merger in the Office of the Secretary of State of the State of
Delaware.
Dated: August 26, 1997.
AMR AIRLINE SERVICES CORPORATION
By: /s/ G. James Gunn
---------------------------
G. James Gunn
Vice Chairman of the Board
<PAGE> 7
CERTIFICATE OF CHANGE OF REGISTERED AGENT
AND
REGISTERED OFFICE
* * * * *
AMR Services Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
The present registered agent of the corporation is Corporation
Service Company, 1013 Centre Road, Wilmington, DE 19805 and the present
registered office of the corporation is in the county of New Castle.
The Board of Directors of AMR Services Corporation adopted the
following resolution on the 10th day of December, 1993.
Resolved, that the registered office of Corporation Service
Company in the state of Delaware be and it hereby is changed to
Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, and the authorization of the present
registered agent of this corporation be and the same is hereby
withdrawn, and THE CORPORATION TRUST COMPANY, shall be and is hereby
constituted and appointed the registered agent of this corporation at
the address of its registered office.
IN WITNESS WHEREOF, AMR Services Corporation has caused this
statement to be signed by Thomas M. Metzler, its President and attested by
Charles D. Marlett, its Corporate Secretary this ________ day of December, 1993.
By /s/Thomas M. Metzler
----------------------
President
ATTEST:
By /s/Charles D. Marlett
---------------------
Corporate Secretary
<PAGE> 8
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
AMR Airline Services Corporation, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That the Board of Directors of AMR Airline Services
Corporation, by the unanimous written consent of its members, filed with the
minutes of the board, duly adopted a resolution setting forth a proposed
amendment to the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, that the Certificate of Incorporation of AMR Airline
Services Corporation be amended by changing the First Article thereof
so that, as amended, said Article shall be and read as follows:
"FIRST: The name of the corporation is AMR Services
Corporation (which is hereinafter referred to as the "Corporation")."
SECOND: That the holders of all shares of issued and
outstanding stock of the corporation have signed a written consent adopting the
amendment.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said AMR Airline Services Corporation has
caused this certificate to be signed by Charles D. MarLett, its Corporate
Secretary, this 16th day of January, 1998.
/s/Charles D. MarLett
----------------------
Charles D. MarLett
Corporate Secretary
<PAGE> 9
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
MR SERVICES ACQUISITION CORPORATION
INTO
AMR SERVICES CORPORATION
(Pursuant to Section 253 of the General Corporation Law
of the State of Delaware)
MR Services Acquisition Corporation (the "Corporation"), a
corporation incorporated pursuant to the provisions of the General Corporation
Law of the State of Delaware,
DOES HEREBY CERTIFY, that the Corporation owns all of the
outstanding capital stock of AMR Services Corporation ("AMRS"), a corporation
incorporated pursuant to the provisions of the General Corporation Law of the
State of Delaware, and that the Corporation, by resolutions of its Board of
Directors and the CHP III Services Holding Corporation, the sole shareholder of
the Corporation ("Holdings"), dated March 31, 1999 and March 31, 1999,
respectively, resolved to merge in to AMRS, which resolutions are in the
following words to wit:
BOARD RESOLUTIONS
I. MERGER
"WHEREAS, the Board of Directors of the Corporation has
reviewed and considered the terms of the Agreement and Plan of Merger by and
among the Corporation and its wholly owned subsidiary, AMR Services Corporation,
a Delaware corporation ("AMRS" or the "Surviving Corporation"), dated as of
March 31, 1999 (the "Agreement");
WHEREAS, the Board of Directors of the Corporation has
determined that the merger of the Corporation into AMRS is desirable and in the
best interests of the Corporation.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors
deems it advisable and in the best interests of the Corporation that the
Corporation merge itself into AMRS, a Delaware corporation and a wholly owned
subsidiary of the Corporation; and it is further
RESOLVED, that the form, terms and provisions of the Agreement
submitted to the Board of Directors of the Corporation, be and hereby are
approved by the Board of Directors in all respects; and it is further
RESOLVED, that as a result of the merger, each share of MR
will be converted to one (1) share of AMRS; and it is further
<PAGE> 10
RESOLVED, that the Board of Directors directs that the
Agreement be submitted to the Corporation's sole shareholder for adoption, and
recommends that the sole shareholder approve the Agreement in the form submitted
to the Board; and it is further
RESOLVED, that the Board of Directors and the officers of the
Corporation, are hereby authorized to execute and deliver in the name and on
behalf of the Corporation, such other documents, instruments and certificates
and to take such other actions as he or she, in his or her sole discretion deems
necessary or appropriate to carry out the full intent and purposes of the
foregoing resolutions."
II. CERTIFICATE OF INCORPORATION AND BYLAWS
RESOLVED, that the Certificate of Incorporation and Bylaws of
AMRS, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation and Bylaws of the Surviving Corporation, except
that the Corporation shall amend the Certificate of Incorporation of the
Surviving Corporation such that the Article Sixth thereof shall be deleted in
its entirety.
III. NAME CHANGE
"WHEREAS, the Board of Directors of the Corporation has deemed
it advisable and in the best interests of AMRS to amend Article first of the
Certificate of Incorporation of the Surviving Corporation to change its name
from AMR Services Corporation to Worldwide Flight Services, Inc.
NOW, THEREFORE, BE IT RESOLVED, that AMRS change its name from
AMR SERVICES CORPORATION to Worldwide Flight Services, Inc."
SOLE SHAREHOLDER RESOLUTIONS
"WHEREAS, the Board of Directors has approved an Agreement and
Plan of Merger dated as of March 31, 1999 by and among MR Services Corporation
(the "Corporation") and its wholly-owned subsidiary, AMR Services Corporation, a
Delaware corporation (the "Agreement") and has recommended that CHP III Services
Holding Corporation ("Holdings") approve such Agreement.
NOW, THEREFORE, IT IS HEREBY, RESOLVED, that Holdings hereby
votes all of the outstanding shares of the Corporation in favor of approval and
adoption, in all material respects, of the Agreement in the form approved by the
Board of Directors; and it is further
RESOLVED, that Holdings waives any requirement that such
action be taken at a special meeting and has taken this action by written
consent pursuant to Section 228 of the Delaware General Corporation Law; and it
is further
RESOLVED, that the Board of Directors and the officers of the
Corporation are hereby authorized to execute and deliver in the name and on
behalf of the corporation, such other
<PAGE> 11
documents, instruments and certificates and to take such other actions as he or
she, in his or her sole discretion deems necessary or appropriate to carry out
the full intent and purposes of the foregoing resolutions."
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be signed by Marcel Fournier, its President, as of the 31st of
March, 1999.
MR SERVICES ACQUISITION
CORPORATION
By:/s/Marcel Fournier
------------------
Name: Marcel Fournier
Title: President
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BY-LAWS
OF
WORLDWIDE FLIGHT SERVICES, INC.
ARTICLE I
Offices
Section 1.1 The registered office of Worldwide Flight
Services, Inc. (the "Corporation") shall be in the City of Wilmington, County of
New Castle, State of Delaware. The Corporation also may have offices at such
other places, within or without the State of Delaware, as the Board of Directors
determines from time to time or the business of the Corporation requires.
ARTICLE II
Stockholders
Section 2.1. Annual Meetings. An annual meeting of
stockholders shall be held for the election of directors at such date, time and
place either within or without the State of Delaware as may be designated by the
Board of Directors from time to time. Any other proper business may be
transacted at the annual meeting.
Section 2.2. Special Meetings. Special meetings of
stockholders may be called at any time by the Chairman of the Board, if any, the
Vice Chairman of the Board, if any, the President or the Board of Directors, to
be held at such date, time and place either within or without the State of
Delaware as may be stated in the notice of the meeting. Special meetings shall
also be called by the President or the Secretary promptly upon the receipt of a
written request of the holders of not less than 25% of the Corporation's
outstanding shares entitled to vote at such meeting. The request shall state the
date, time, place and purpose or purposes of the proposed meeting.
Section 2.3. Notice of Meetings. Whenever stockholders are
required or permitted to take any action at a meeting, a written notice of the
meeting shall be given which shall state the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Unless otherwise provided by law, the written
notice of any meeting shall be given not less than ten nor more than sixty days
before the date of the meeting to each stockholder entitled to vote at such
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, directed to the stockholder at such
stockholder's address as it appears on the records of the Corporation.
Section 2.4. Adjournments. Any meeting of stockholders, annual
or special, may be adjourned from time to time, to reconvene at the same or some
other place, and notice need not be given of any such adjourned meeting if the
time and place thereof are announced at
<PAGE> 2
the meeting at which the adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
Section 2.5. Quorum. At each meeting of stockholders, except
where otherwise provided by law or the certificate of incorporation or these
by-laws, the holders of a majority of the outstanding shares of stock entitled
to vote on a matter at the meeting, present in person or represented by proxy,
shall constitute a quorum. For purposes of the foregoing, where a separate vote
by class or classes is required for any matter, the holders of a majority of the
outstanding shares of such class or classes, present in person or represented by
proxy, shall constitute a quorum to take action with respect to that vote on
that matter. Two or more classes or series of stock shall be considered a single
class if the holders thereof are entitled to vote together as a single class at
the meeting. In the absence of a quorum of the holders of any class of stock
entitled to vote on a matter, the holders of such class so present or
represented may, by majority vote, adjourn the meeting of such class from time
to time in the manner provided by Section 2.4 of these by-laws until a quorum of
such class shall be so present or represented. Shares of its own capital stock
belonging on the record date for the meeting to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes; provided, however, that the foregoing shall not limit the right of the
Corporation to vote stock, including but not limited to its own stock, held by
it in a fiduciary capacity.
Section 2.6. Organization. Meetings of stockholders shall be
presided over by the Chairman of the Board, if any, or in the absence of the
Chairman of the Board by the Vice Chairman of the Board, if any, or in the
absence of the Vice Chairman of the Board by the President, or in the absence of
the President by a Vice President, or in the absence of the foregoing persons by
a chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary, or in the
absence of the Secretary an Assistant Secretary, shall act as secretary of the
meeting, but in the absence of the Secretary and any Assistant Secretary the
chairman of the meeting may appoint any person to act as secretary of the
meeting.
Section 2.7. Voting; Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
such stockholder which has voting power upon the matter in question. Each
stockholder entitled to vote at a meeting of stockholders or to express consent
or dissent to corporate action in writing without a meeting may authorize
another person or persons to act for such stockholder by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power, regardless
of whether the interest with which it is coupled is an interest in the stock
itself or an interest in the Corporation generally. A stockholder may revoke any
proxy which is not irrevocable by attending the
-2-
<PAGE> 3
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary of
the Corporation. Voting at meetings of stockholders need not be by written
ballot and need not be conducted by inspectors unless the holders of a majority
of the outstanding shares of all classes of stock entitled to vote thereon
present in person or represented by proxy at such meeting shall so determine.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. In all other matters, unless otherwise provided by law or
by the certificate of incorporation or these by-laws, the affirmative vote of
the holders of a majority of the shares present in person or represented by
proxy at the meeting and entitled to vote on the subject matter shall be the act
of the stockholders. Where a separate vote by class or classes is required, the
affirmative vote of the holders of a majority of the shares of such class or
classes present in person or represented by proxy at the meeting shall be the
act of such class or classes, except as otherwise provided by law or by the
certificate of incorporation or these by-laws.
Section 2.8. Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which record date shall not be more than sixty nor
less than ten days before the date of such meeting. If no record date is fixed
by the Board of Directors, the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the day on which the Board of Directors adopts the
resolution taking such prior action.
-3-
<PAGE> 4
In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
Section 2.9. List of Stockholders Entitled to Vote. The
Secretary shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof and may be inspected by any stockholder who is
present.
Section 2.10. Consent of Stockholders in Lieu of Meeting.
Unless otherwise provided in the certificate of incorporation or by law, any
action required by law to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted and shall be delivered to the Corporation by
delivery to (a) its registered office in the State of Delaware by hand or by
certified mail or registered mail, return receipt requested, (b) its principal
place of business, or (c) an officer or agent of the Corporation having custody
of the book in which proceedings of meetings of stockholders are recorded. Every
written consent shall bear the date of signature of each stockholder who signs
the consent and no written consent shall be effective to take the corporate
action referred to therein unless, within sixty days of the earliest dated
consent delivered in the manner required by this by-law to the Corporation,
written consents signed by a sufficient number of holders to take action are
delivered to the Corporation by delivery to (a) its registered office in the
State of Delaware by hand or by certified or registered mail, return receipt
requested, (b) its principal place of business, or (c) an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
-4-
<PAGE> 5
ARTICLE III
Board of Directors
Section 3.1. Powers; Number; Qualifications. The business and
affairs of the Corporation shall be managed by or under the direction of the
Board of Directors, except as may be otherwise provided by law or in the
certificate of incorporation. The Board of Directors shall consist of one or
more members, the number thereof to be determined from time to time by the
Board. Directors need not be stockholders.
Section 3.2. Election; Term of Office; Resignation; Removal;
Vacancies. Each director shall hold office until his or her successor is elected
and qualified or until his or her earlier resignation or removal. Any director
may resign at any time upon written notice to the Board of Directors or to the
President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein, and unless otherwise specified therein no
acceptance of such resignation shall be necessary to make it effective. Any
director or the entire Board of Directors may be removed, with or without cause,
by the holders of a majority of the shares then entitled to vote at an election
of directors Whenever the holders of any class or series of stock are entitled
to elect one or more directors by the certificate of incorporation, the
provisions of the preceding sentence shall apply, in respect to the removal
without cause of a director or directors so elected, to the vote of the holders
of the outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Unless otherwise provided in the certificate of
incorporation or these by-laws, vacancies and newly created directorships
resulting from any increase in the authorized number of directors elected by all
of the stockholders having the right to vote as a single class or from any other
cause may be filled by a majority of the directors then in office, although less
than a quorum, or by the sole remaining director. Whenever the holders of any
class or classes of stock or series thereof are entitled to elect one or more
directors by the certificate of incorporation, vacancies and newly created
directorships of such class or classes or series may be filled by a majority of
the directors elected by such class or classes or series thereof then in office,
or by the sole remaining director so elected.
Section 3.3. Regular Meetings. Regular meetings of the Board
of Directors may be held at such places within or without the State of Delaware
and at such times as the Board may from time to time determine, and if so
determined notice thereof need not be given.
Section 3.4. Special Meetings. Special meetings of the Board
of Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, if any, by the Vice
Chairman of the Board, if any, by the President or by any two directors.
Reasonable notice thereof shall be given by the person or persons calling the
meeting.
Section 3.5. Participation in Meetings by Conference Telephone
Permitted. Unless otherwise restricted by the certificate of incorporation or
these by-laws, members of the Board of Directors, or any committee designated by
the Board, may participate in a meeting of the Board or of such committee, as
the case may be, 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 by-law shall
constitute presence in person at such meeting.
-5-
<PAGE> 6
Section 3.6. Quorum; Vote Required for Action. At all meetings
of the Board of Directors one-third of the entire Board shall constitute a
quorum for the transaction of business. The vote of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
unless the certificate of incorporation or these by-laws shall require a vote of
a greater number. In case at any meeting of the Board a quorum shall not be
present, the members of the Board present may adjourn the meeting from time to
time until a quorum shall be present.
Section 3.7. Organization. Meetings of the Board of Directors
shall be presided over by the Chairman of the Board, if any, or in the absence
of the Chairman of the Board by the Vice Chairman of the Board, if any, or in
the absence of the Vice Chairman of the Board by the President, or in their
absence by a chairman chosen at the meeting. The Secretary, or in the absence of
the Secretary an Assistant Secretary, shall act as secretary of the meeting, but
in the absence of the Secretary and any Assistant Secretary the chairman of the
meeting may appoint any person to act as secretary of the meeting.
Section 3.8. Action by Directors Without a Meeting. Unless
otherwise restricted by the certificate of incorporation or these by-laws, any
action required or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof, may be taken without a meeting if all
members of the Board or of such committee, as the case may be, consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
Section 3.9. Compensation of Directors. Unless otherwise
restricted by the certificate of incorporation or these by-laws, the Board of
Directors shall have the authority to fix the compensation of directors.
ARTICLE IV
Committees
Section 4.1. Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. 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. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors or
in these bylaws, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation (except that
a committee may, to the extent authorized in the resolution or resolutions
providing for the
-6-
<PAGE> 7
issuance of shares of stock adopted by the Board of Directors, fix the
designations and any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other class
or classes of stock of the Corporation or fix the number of shares of any series
of stock or authorize the increase or decrease of the shares of any series),
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, removing or
indemnifying directors or amending these by-laws; and, unless the resolution,
these by-laws or the certificate of incorporation expressly so provides, no such
committee shall have the power or authority to declare a dividend, to authorize
the issuance of stock or to adopt a certificate of ownership and merger.
Section 4.2. Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board may adopt, amend and
repeal rules for the conduct of its business. In the absence of a provision by
the Board or a provision in the rules of such committee to the contrary, a
majority of the entire authorized number of members of such committee shall
constitute a quorum for the transaction of business, the vote of a majority of
the members present at a meeting at the time of such vote if a quorum is then
present shall be the act of such committee, and in other respects each committee
shall conduct its business in the same manner as the Board conducts its business
pursuant to Article II of these by-laws.
ARTICLE V
Officers
Section 5.1. Officers; Election. As soon as practicable after
the annual meeting of stockholders in each year, the Board of Directors shall
elect a President and a Secretary, and it may, if it so determines, elect from
among its members a Chairman of the Board and a Vice Chairman of the Board. The
Board may also elect one or more Vice Presidents, one or more Assistant Vice
Presidents, one or more Assistant Secretaries, a Treasurer and one or more
Assistant Treasurers and such other officers as the Board may deem desirable or
appropriate and may give any of them such further designations or alternate
titles as it considers desirable. Any number of offices may be held by the same
person unless the certificate of incorporation or these by-laws otherwise
provide.
Section 5.2. Term of Office; Resignation; Removal; Vacancies.
Unless otherwise provided in the resolution of the Board of Directors electing
any officer, each officer shall hold office until his or her successor is
elected and qualified or until his or her earlier resignation or removal. Any
officer may resign at any time upon written notice to the Board or to the
President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein, and unless otherwise specified therein no
acceptance of such resignation shall be necessary to make it effective. The
Board may remove any officer with or without cause at any time. Any such removal
shall be without prejudice to the contractual rights of such officer, if
<PAGE> 8
any, with the Corporation, but the election of an officer shall not of itself
create contractual rights. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise may be filled by the
Board at any regular or special meeting.
Section 5.3. Chairman of the Board. The Chairman of the Board,
if any, shall preside at all meetings of the Board of Directors and of the
stockholders at which he or she shall be present and shall have and may exercise
such powers as may, from time to time, be assigned to him or her by the Board or
as may be provided by law.
Section 5.4. Vice Chairman of the Board. In the absence of the
Chairman of the Board, the Vice Chairman of the Board, if any, shall preside at
all meetings of the Board of Directors and of the stockholders at which he or
she shall be present and shall have and may exercise such powers as may, from
time to time, be assigned to him or her by the Board or as may be provided by
law.
Section 5.5. President. In the absence of the Chairman of the
Board and Vice Chairman of the Board, the President shall preside at all
meetings of the Board of Directors and of the stockholders at which he or she
shall be present. The President shall be the chief operating officer and shall
have general charge and supervision of the business of the Corporation and, in
general, shall perform all duties incident to the office of president of a
corporation and such other duties as may, from time to time, be assigned to him
or her by the Board or as may be provided by law.
Section 5.6. Vice Presidents. The Vice President or Vice
Presidents, at the request or in the absence of the President or during the
President's inability to act, shall perform the duties of the President, and
when so acting shall have the powers of the President. If there be more than one
Vice President, the Board of Directors may determine which one or more of the
Vice Presidents shall perform any of such duties; or if such determination is
not made by the Board, the President may make such determination; otherwise any
of the Vice Presidents may perform any of such duties. The Vice President or
Vice Presidents shall have such other powers and shall perform such other duties
as may, from time to time, be assigned to him or her or them by the Board or the
President or as may be provided by law.
Section 5.7. Secretary. The Secretary shall have the duty to
record the proceedings of the meetings of the stockholders, the Board of
Directors and any committees in a book to be kept for that purpose, shall see
that all notices are duly given in accordance with the provisions of these
bylaws or as required by law, shall be custodian of the records of the
Corporation, may affix the corporate seal to any document the execution of
which, on behalf of the Corporation, is duly authorized, and when so affixed may
attest the same, and, in general, shall perform all duties incident to the
office of secretary of a corporation and such other duties as may, from time to
time, be assigned to him or her by the Board or the President or as may be
provided by law.
Section 5.8. Treasurer. The Treasurer shall have charge of and
be responsible for all funds, securities, receipts and disbursements of the
Corporation and shall deposit or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such
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<PAGE> 9
banks, trust companies or other depositories as shall, from time to time, be
selected by or under authority of the Board of Directors. If required by the
Board, the Treasurer shall give a bond for the faithful discharge of his or her
duties, with such surety or sureties as the Board may determine. The Treasurer
shall keep or cause to be kept full and accurate records of all receipts and
disbursements in books of the Corporation, shall render to the President and to
the Board, whenever requested, an account of the financial condition of the
Corporation, and, in general, shall perform all the duties incident to the
office of treasurer of a corporation and such other duties as may, from time to
time, be assigned to him or her by the Board or the President or as may be
provided by law.
Section 5.9. Other Officers. The other officers, if any, of
the Corporation shall have such powers and duties in the management of the
Corporation as shall be stated in a resolution of the Board of Directors which
is not inconsistent with these by-laws and, to the extent not so stated, as
generally pertain to their respective offices, subject to the control of the
Board. The Board may require any officer, agent or employee to give security for
the faithful performance of his or her duties.
ARTICLE VI
Stock
Section 6.1. Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by or in the name of
the Corporation by the Chairman or Vice Chairman of the Board of Directors, if
any, or the President or a Vice President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, of the Corporation,
representing the number of shares of stock in the Corporation owned by such
holder. If such certificate is manually signed by one officer or manually
countersigned by a transfer agent or by a registrar, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
If the Corporation is authorized to issue more than one class
of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications or restrictions of
such preferences and/or rights shall be set forth in full or summarized on the
face or back of the certificate which the Corporation shall issue to represent
such class or series of stock, provided that, except as otherwise provided by
law, in lieu of the foregoing requirements, there may be set forth on the face
or back of the certificate which the Corporation shall issue to represent such
class or series of stock a statement that the Corporation will furnish without
charge to each stockholder 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.
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<PAGE> 10
Section 6.2. Lost, Stolen or Destroyed Stock Certificates;
Issuance of New Certificates. The Corporation may issue a new certificate of
stock in the place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the Corporation may require the owner of the
lost, stolen or destroyed certificate, or such owner's legal representative, to
give the Corporation a bond sufficient to indemnify it against any claim that
may be made against it on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate.
ARTICLE VII
Miscellaneous
Section 7.1. Fiscal Year. The fiscal year of the Corporation
shall be determined by the Board of Directors.
Section 7.2. Seal. The Corporation may have a corporate seal
which shall have the name of the Corporation inscribed thereon and shall be in
such form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
Section 7.3. Waiver of Notice of Meetings of Stockholders,
Directors and Committees. Whenever notice is required to be given by law or
under any provision of the certificate of incorporation or these by-laws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the 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 is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be specified
in any written waiver of notice unless so required by the certificate of
incorporation or these by-laws.
Section 7.4. Indemnification of Directors, Officers and
Employees. The Corporation shall indemnify to the full extent permitted by law
any person made or threatened to be made a party to any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person or such person's testator or intestate is or was a
director, officer or employee of the Corporation or serves or served at the
request of the Corporation any other enterprise as a director, officer or
employee. Expenses, including attorneys' fees, incurred by any such person in
defending any such action, suit or proceeding shall be paid or reimbursed by the
Corporation promptly upon receipt by it of an undertaking of such person to
repay such expenses if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation. The rights provided to any person
by this by-law shall be enforceable against the Corporation by such person who
shall be presumed to have relied upon it in serving or continuing to serve as a
director, officer or employee as provided above. No amendment of this by-law
shall impair the rights of any person arising at any time with respect to
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<PAGE> 11
events occurring prior to such amendment. For purposes of this by-law, the term
"Corporation" shall include any predecessor of the Corporation and any
constituent corporation (including any constituent of a constituent) absorbed by
the Corporation in a consolidation or merger; the term "other enterprise", shall
include any corporation, partnership, joint venture, trust or employee benefit
plan; service "at the request of the Corporation" shall include service as a
director, officer or employee of the Corporation which imposes duties on, or
involves services by, such director, officer or employee with respect to an
employee benefit plan, its participants or beneficiaries; any excise taxes
assessed on a person with respect to an employee benefit plan shall be deemed to
be indemnifiable expenses; and action by a person with respect to an employee
benefit plan which such person reasonably believes to be in the interest of the
participants and beneficiaries of such plan shall be deemed to be action not
opposed to the best interests of the Corporation.
Section 7.5. Interested Directors; Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract, or transaction, or solely because his or
her or their votes are counted for such purpose, if: (1) the material facts as
to his or her relationship or interest and as to the contract or transaction are
disclosed or are known to the Board or the committee, and the Board or committee
in good faith authorizes the contract or transaction by the affirmative votes of
a majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (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 stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
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, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
Section 7.6. Form of Records. Any records maintained by the
Corporation in the regular course of its business, including its stock ledger,
books of account and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
Section 7.7. Amendment of By-Laws. These by-laws may be
amended or repealed, and new by-laws adopted, by the Board of Directors, but the
stockholders entitled to vote may adopt additional by-laws and may amend or
repeal any by-law whether or not adopted by them.
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<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
AMRS Holding Corporation
The undersigned, the sole incorporator of AMRS Holding
Corporation, a corporation organized under and by virtue of the General
Corporation Law of the State of Delaware ("DGCL") does hereby certify as
follows:
FIRST: The name of the corporation is
AMRS Holding Corporation
(which is hereinafter referred to as the "Corporation").
SECOND: The registered office of the Corporation is to be
located at 1013 Centre Road, City of Wilmington, County of New Castle, State of
Delaware 19805. The name of its registered agent at that address is Corporation
Service Company.
THIRD: The purpose of the Corporation shall be confined within
the State of Delaware to the maintenance and management of its intangible
investments and to the collection and distribution of the income from such
investments and from tangible property physically located outside the State of
Delaware, all in accordance with ss.1902 (b) (8) of Title 30 of the Delaware
Code, as the same may be amended from time to time.
FOURTH: The total number of shares of all classes of stock
which the Corporation is authorized to issue is One Thousand (1,000) shares, all
of which shares shall be Common Stock, par value of $1.00 per share, and all of
which shares shall be of one class.
<PAGE> 2
FIFTH: Election of directors need not be by written ballot,
unless the bylaws of the Corporation shall so provide. In furtherance and not in
limitation of the powers conferred by the laws of the State of Delaware, the
Board of Directors is expressly authorized and empowered, without the assent or
vote of the stockholders, to make, alter, amend and repeal the bylaws of the
Corporation, in any manner not inconsistent with the laws of the State of
Delaware or the Certificate of Incorporation of the Corporation.
SIXTH: The books of the Corporation may be kept (subject to
applicable statutes) outside the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors or in the bylaws
of the Corporation.
SEVENTH: The Corporation shall, to the fullest extent
permitted by the DGCL, as amended from time to time, indemnify all persons whom
it has the power to indemnify pursuant thereto.
EIGHTH: No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of his/her
fiduciary duty as director, provided that nothing contained in this article
shall eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the Corporation or its shareholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit.
<PAGE> 3
NINTH: The name and address of the incorporator is Charles D.
MarLett, P.O. Box 619616, MD 5675, Dallas/Fort Worth Airport, Texas 75261-9616.
IN WITNESS WHEREOF, I have signed and acknowledged this
Certificate this 8th day of January, 1993.
/s/ Charles D. MarLett
----------------------------------------
Charles D. MarLett
<PAGE> 4
CERTIFICATE OF CHANGE OF REGISTERED AGENT
AND
REGISTERED OFFICE
* * * * *
AMRS Holding Company, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
The present registered agent of the corporation is Corporation
Service Company, 1013 Centre Road, Wilmington, DE 19805 and the present
registered office of the corporation is in the county of New Castle.
The Board of Directors of AMRS Holding Company adopted the
following resolution on the 10 day of December, 1993.
Resolved, that the registered office of AMRS Holding Company
in the state of Delaware be and it hereby is changed to Corporation Trust Center
1209 Orange Street, in the City of Wilmington, County of New Castle, and the
authorization of the present registered agent of this corporation be and the
same is hereby withdrawn, and THE CORPORATION TRUST COMPANY, shall be and is
hereby constituted and appointed the registered agent of this corporation at the
address of its registered office.
IN WITNESS WHEREOF, AMRS Holding Company has caused this
statement to be signed by Thomas M. Metzler, its President and attested by
Charles D. MarLett, its Corporate Secretary this day of December ,
1993.
By /s/ Thomas M. Metzler
--------------------------------------
President
ATTEST:
By /s/ Charles D. MarLett
----------------------------------
Corporate Secretary
<PAGE> 5
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
*****
AMRS Holding Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of AMRS Holding
Corporation, by the unanimous written consent of its members, filed with the
minutes of the board, duly adopted resolutions setting forth a proposed
amendment to the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, That the Certificate of Incorporation of this
corporation be amended by changing the First Article thereof so that, as amended
said Article shall be and read as follows:
"FIRST: The name of the corporation is AMRS Finance Company
(which is hereinafter referred to as the "Corporation")."
SECOND: That the holders of all shares of issue and
outstanding stock of the corporation have signed a written consent adopting the
amendment.
<PAGE> 6
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said AMRS Holding Corporation has caused
this certificate to be signed by Thomas M. Metzler its President and attested by
Charles D. MarLett, its Corporate Secretary, this 25th day of April, 1994.
By: /s/ Thomas M. Metzler
------------------------------------
Thomas M. Metzler, President
ATTEST:
By: /s/ Charles D. MarLett
--------------------------------------
Charles D. MarLett, Secretary
<PAGE> 7
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AMRS FINANCE COMPANY
AMRS Finance Company, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
does hereby certify:
FIRST: That the Board of Directors of AMRS Finance Company, by
the unanimous written consent of its members, filed with the minutes of the
board, duly adopted a resolution setting forth a proposed amendment to the
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable. The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of AMRS
Finance Company be amended by changing the First Article thereof, so that, as
amended, said Article shall be and read as follows:
FIRST: The name of the corporation is Worldwide Flight Finance
Company (which is hereinafter referred to as the "Corporation")."
SECOND: That the holders of all shares of issued and
outstanding stock of the corporation have signed a written consent adopting the
amendment.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE> 8
IN WITNESS WHEREOF, said AMRS Finance Company has caused this
certificate to be signed by Peter A. Pappas, its President, this 31st day of
March, 1999.
/s/ Peter A. Pappas
-------------------------------------
Peter A. Pappas
President
<PAGE> 1
EXHIBIT 3.4
AMRS FINANCE COMPANY
BYLAWS
(As amended March 15, 1995)
ARTICLES I
Offices
The registered office of AMRS FINANCE COMPANY, (hereinafter the
"Corporation") in the State of Delaware is to be located in the City of
Wilmington, County of New Castle. The Corporation may have other offices within
and outside the State of Delaware.
ARTICLE II
Meetings of Stockholders
SECTION 1. Annual Meetings. An annual meeting of stockholders to elect
directors and to take action upon such other matters as may properly come
before the meeting shall be held on the third Wednesday in May of each year, or
on such other day, and at such time and at such place, within or outside the
State of Delaware, as the board of directors or the chairman of the board may
from time to time fix.
Any stockholder wishing to bring a matter before an annual meeting
must notify the Secretary of the Corporation of such fact not less than sixty
(60) nor more than ninety (90) days before the date of the meeting. Such notice
shall be in writing and shall set forth the business proposed to be brought
before the meeting, shall identify the stockholder and shall disclose the
stockholder's interest in the proposed business.
<PAGE> 2
SECTION 2. Special Meetings. A special meeting of
stockholders shall be called by the Secretary upon receipt of a request in
writing from the board of directors, the chairman of the board or the
president. Any such meeting shall be held at the principal business office of
the Corporation unless the board shall name another place therefor, at the time
specified by the body or persons calling such meeting.
SECTION 3. Nominees For Election As Director. Nominations for
election as director, other than those made by or at the direction of the board
of directors, must be made by timely notice to the secretary, setting forth as
to each nominee the information required to be included in a proxy statement
under the proxy rules of the Securities and Exchange Commission. If such
election is to occur at an annual meeting of stockholders, notice shall be
timely if it meets the requirements of such proxy rules for proposals of
security holders to be presented at an annual meeting. If such election is to
occur at a special meeting of stockholders, notice shall be timely if received
not less than five (5) days prior to such meeting.
SECTION 4. Notice of Meetings. Written notice of each meeting
of stockholders shall be given which shall state the place, date and hour of
the meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Unless otherwise provided by law, such notice
shall be mailed, postage prepaid, to each stockholder entitled to vote at such
meeting, at his address as it appears on the records of the Corporation, not
less than ten (10) nor more than sixty (60) days before the date of the
meeting. When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting at which the adjournment is taken, unless the
adjournment is for more than thirty(30) days or a new record date is fixed for
the adjourned meeting, in which case a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2
<PAGE> 3
SECTION 5. Chairman and Secretary at Meetings. At any meeting
of stockholders the chairman of the Board, or in his absence, the president, or
if neither such person is available, then a person designated by the board of
directors, shall preside at and act as chairman of the meeting. The secretary,
or in his absence a person designated by the chairman of the meeting, shall act
as secretary of the meeting.
SECTION 6. Proxies. Each stockholder entitled to vote at a
meeting of stockholders may authorize another person or persons to act for him
by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period.
SECTION 7. Quorum. At all meetings of the stockholders the
holders of one-third (1/3) of the number of shares of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum requisite for the election of directors and
the transaction of other business, except as otherwise provided by law or by
the certificate of incorporation.
If holders of the requisite number of shares to constitute a
quorum shall not be present in person or represented by proxy at any meeting of
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have the power to adjourn the meeting from time to
time until a quorum shall be present or represented. At any such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
SECTION 8. Voting. At any meeting of stockholders, except as
otherwise provide by law or by the certificate of incorporation;
3
<PAGE> 4
(a) Each holder of record of a share or shares of stock on
the record date for determining stockholders entitled to vote at such meeting
shall be entitled to one vote in person or by proxy for each share of stock so
held.
(b) Directors shall be elected by a plurality of the votes
cast by the holders of Common Stock, present in person or represented by proxy.
(c) Each other question properly presented to any meeting of
stockholders shall be decided by a majority of the votes cast on the question
entitled to vote thereon.
(d) Election of directors and the vote upon any other
question shall be by ballot only if so ordered by the chairman of the meeting
or if so requested by stockholders, present in person or represented by proxy,
entitled to vote on the question and holding at least ten percent (10%) of the
shares so entitled to vote.
SECTION 9 List of Stockholders. At least ten (10) days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder shall be prepared. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours for a period of at least 10 days prior to the meeting, or, if
not so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
4
<PAGE> 5
ARTICLE III
Directors; Number, Election, Etc.
SECTION 1. Number. The board of directors shall consist of
such number of members, not less than three (3), as the board of directors may
from time to time determine by resolution.
SECTION 2. Election, Term, Vacancies. Directors shall be
elected each year at the annual meeting of stockholders, except as hereinafter
provided, And shall hold office until the next annual election and until their
successors are duly elected and qualified. Vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, although less than
a quorum.
SECTION 3. Resignation. Any director may resign at any time
by giving written notice of such resignation to the board of directors, the
chairman of the board, the president or the secretary. Any such resignation
shall take effect at the time specified therein or, if no time be specified,
upon the receipt thereof by the board of directors or one of the above named
officers and, unless specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
SECTION 4. Removal. Any director may be removed from office
at any time, with or without cause, by a vote of a majority of the stockholders
entitled to vote at any regular meeting or at any special meeting called for
the purpose.
SECTION 5. Fees and Expenses. Directors shall receive such
fees and expenses as the board of directors shall from time to time prescribe.
5
<PAGE> 6
ARTICLE IV
Meetings of Directors
SECTION 1. Regular Meetings. Regular meetings of the board of
directors shall be held at the principal office of the Corporation, or at such
other place (within or without the State of Delaware), and at such time, as may
from time to time be prescribed by the board of directors or stockholders. A
regular annual meeting of the board of directors for the election of officers
and the transaction of other business shall be held on the same day as the
annual meeting of the stockholders or on such other day and at such time and
place as the board of directors shall determine. No notice need be given of any
regular meeting.
SECTION 2. Special Meetings. Special meetings of the board of
directors may be held at such place (within or without the State of Delaware)
and at such time as may from time to time be determined by the board of
directors or as may be specified in the call and notice of any meeting. Any
such meeting shall be held at the call of the chairman of the board, the
president, a vice president, the secretary, or two (2) or more directors.
Notice of a special meeting of directors shall be mailed to each director at
least three (3) days prior to the meeting date, provided that in lieu thereof,
notice may be given to each director personally or by telephone, or dispatched
by telegraph, at least one (1) day prior to the meeting date.
SECTION 3. Waiver of Notice. In lieu of notice of meeting, a
waiver thereof in writing, signed by the person or persons entitled to said
notice whether before or after the time stated therein, shall be deemed
equivalent thereto. Any director present in person at a meeting of the board of
directors shall be deemed to have waived notice of the time and place or
meeting, except when the director attends the meeting for the express purpose
of objecting at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
6
<PAGE> 7
SECTION 4. Action Without Meeting. Unless otherwise
restricted by the certificate of incorporation, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the board of
directors or of such committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of the proceedings of
the board of directors or of such committee.
SECTION 5. Quorum. At all meetings of the board, a majority
of the total number of directors shall constitute a quorum for the transaction
of business. The act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board of directors, except as
may be otherwise specifically provided by law.
If at any meeting there is less than a quorum present, a
majority of those present (or if only one be present, then that one), may
adjourn the meeting from time to time without further notice other than
announced at the meeting until a quorum is present. At such adjourned meeting
at which a quorum is present, any business may be transacted which might have
been transacted at the meeting as originally scheduled.
SECTION 6. Business Transacted. Unless otherwise indicated in
the notice of meeting or required by law, the certificate of incorporation or
bylaws of the corporation, any and all business may be transacted at any
directors' meeting.
7
<PAGE> 8
ARTICLE V
Powers of the Board of Directors
The management of all the property and business of the
corporation and the regulation a government of its affairs shall be vested in
the board of directors. In addition to the powers and authorities by these
bylaws and the certificate of incorporation expressly conferred on them, the
board of directors may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by law, or by the certificate of
incorporation or by these bylaws directed or required to be exercised or done
by the stockholders.
ARTICLE VI
Committees
SECTION 1. Executive Committee. The board of directors may,
by resolution passed by a majority of the whole board, designate an executive
committee, to consist of two (2) or more members. The chief executive officer
plus one (1) other member of the executive committee shall constitute a quorum.
The executive shall have and may exercise all the powers and
authority of the board of directors in the management of the business and
affairs of the Corporation, with the exception of such powers and authority as
may be specifically reserved to the board of directors by law or by resolution
adopted by the board of directors.
SECTION 2. Audit Committee. The board of directors may, by
resolution passed by a majority of the whole board, designate an audit
committee, to consist of two (2) or more members, none of the members of which
shall be employees or officers of the corporation. A majority of the members of
the audit committee shall constitute a quorum.
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<PAGE> 9
The audit committee shall from time to time review and make
recommendations to the board of directors with respect to the selection of
independent auditors, the fees to be paid such auditors, the adequacy of the
audit and accounting procedures of the Corporation, and such other matters as
may be specifically delegated to the committee by the board of directors. In
this connection the audit committee shall, at its request, meet with
representatives of the independent auditors and with the financial officers of
the corporation separately or jointly.
SECTION 3. Compensation/Nominating Committee. The board of
directors may, by resolution passed by a majority of the whole board, designate
a compensation/nominating committee, to consist of each member of the board of
directors, except that no member of the compensation/nominating committee may
be an employee or officer of the corporation. A majority of the members of the
compensation/nominating committee may be an employee or officer of majority of
the members of the committee shall constitute a quorum.
The compensation/nominating committee shall from time to time
review and make recommendations to the board of directors with respect to the
management remuneration policies of the corporation including but not limited
to salary rates and fringe benefits of elected officers, other remuneration
plans such as incentive compensation, deferred compensation and stock option
plans, directors' compensation and benefits and such other matters as may be
specifically delegated to the committee by the board of directors.
In addition, the compensation/nominating committee shall make
recommendations to the board of directors (i) concerning suitable candidates
for election to the board, (ii) with respect to assignments to board
committees, and (iii) with respect to promotions, changes and succession among
the senior management of the corporation, and shall perform such other duties
as may be specifically delegated to the committee by the board of directors.
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<PAGE> 10
SECTION 4. Committee Procedure, Seal.
(a) The executive, compensation/nominating, and audit
committees shall keep regular minutes of their meetings, which shall be
reported to to own rules of procedures.
(b) The executive compensation/nominating, and audit
committees may each authorize the seal of the Corporation to be affixed to all
papers which may require it.
(c) In the absence or disqualification of a member of any
committee, the members of that committee present at any meeting not
disqualified from voting, whether or not constituting a quorum, may unanimously
appoint another member of the board of directors to act at the meeting in the
place of such absent or disqualified member.
SECTION 5. Special Committees. The board of directors may,
from time to time, by resolution passed by a majority of the whole board,
designate one or more special committees. Each such committee shall have such
duties and may exercise such powers as are granted to it in the resolution
designating the members thereof. Each committee shall fix its own rules of
procedure.
ARTICLE VII
Indemnification
SECTION 1. Nature of Indemnity. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative by reason of the fact that he
is or was or has agreed to become a director or officer of the Corporation, or
is or was serving or has agreed to serve at the request of the Corporation as a
director or officer, of another corporation, partnership, joint venture, trust
or other enterprise, or by reason of any
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<PAGE> 11
action alleged to have been taken or omitted in such capacity, and may
indemnify any person who was or is a party or is threatened to be made a party
to such an action by reason of the fact that he is or was or has agreed to
become an employee or agent of the Corporation, or is or was serving or has
agreed to serve at the request of the Corporation as an employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or on his behalf in
connection with such action, suit or proceeding and any appeal therefrom, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding had no reasonable cause to believe his conduct
was unlawful; except that in the case of an action or suit by or in the right
of the Corporation to procure a judgment in its favor (1) such indemnification
shall be limited to expenses (including attorneys' fees), actually and
reasonably incurred by such person in the defense or settlement of such action
or suit, and (2) no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable
to the Corporation unless and only to the extent that the Delaware Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnify for such expenses which the Delaware Court of Chancery or such other
court shall deem proper.
The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably
11
<PAGE> 12
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
SECTION 2. Successful Defense. To the extent that a director,
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
Section 1 hereof or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
SECTION 3. Determination That Indemnification Is Proper. Any
indemnification of a director or officer of the Corporation under Section 1
hereof (unless ordered by a court) shall be made by the corporation unless a
determination is made that indemnification of the director or officer is not
proper in the circumstances because he has not met the applicable standard of
conduct set forth in Section 1 hereof. Any indemnification of an employee or
agent of the Corporation under Section 1 hereof (unless ordered by a court) may
be made by the corporation upon a determination that indemnification of the
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 1 hereof. Any such
determination shall be made (1) by a majority vote of the directors who are not
parties to such action, suit or proceeding, or (2) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (3) by the stockholders.
SECTION 4. Advance Payment of Expenses. Expenses incurred by
a director or officer in defending a civil or criminal action, suit or
proceeding shall be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Corporation as
12
<PAGE> 13
authorized in this Article. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate. The Board of Directors may authorize the
Corporation's counsel to represent a director, officer, employee or agent in
any action, suit or proceeding, whether or not the Corporation is a party to
such action, suit or proceeding.
SECTION 5. Procedure for Indemnification of Directors or
Officers. Any indemnification of a director or officer of the Corporation under
Sections 1 and 2, or advance of costs, charges and expenses of a director or
officer under Section 4 of this Article, shall be made promptly, and in any
event within 60 days, upon the written request of the director or officer. If
the Corporation fails to respond within 60 days, then the request for
indemnification shall be deemed to be approved. The right to indemnification
shall be deemed to be approved. The right to indemnification or advances as
granted by this Article shall be enforceable by the director or officer in any
court of competent jurisdiction if the Corporation denies such request, in
whole or in part. Such person's costs and expenses incurred in connection with
successfully establishing his right to indemnification, in whole or in part, in
any such action shall also be indemnified by the Corporation. It shall be a
defense to any such action (other than an action brought to enforce a claim for
the advance of costs, charges and expenses under Section 4 of this Article
where the required undertaking, if any, has been received by the Corporation)
that the claimant has not met the standard of conduct set forth in Section 1 of
this Article, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel, and its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in Section 1 of this
13
<PAGE> 14
Article, nor the fact that there has been an actual determination by the
Corporation (including its Board of Directors, its independent legal counsel,
and its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
SECTION 6. Survival; Preservation of Other Rights. The
foregoing indemnification provisions shall be deemed to be a contract between
the Corporation and each director, officer, employee and agent who serves in
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing
with respect to any state of facts then or previously existing or any action,
suit, or proceeding previously or thereafter brought or threatened based in
whole or in part upon any such state of facts. Such a "contract right" may not
be modified retroactively without the consent of such director, officer,
employee or agent.
The indemnification provided by this Article VII shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any by-law, agreement, vote of stockholders 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 person.
SECTION 7. Insurance. The Corporation shall purchase and
maintain insurance on behalf of any person who is or was or has agreed to
become a director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise against any liability
14
<PAGE> 15
asserted against him and incurred by him or on his behalf in any such capacity,
or arising out of his status as such, whether or not the Corporation would have
the power to indemnify him against such liability under the provisions of this
Article, provided that such insurance is available on acceptable terms, which
determination shall be made by a vote of a majority of the entire Board of
Directors.
SECTION 8. Savings Clause. If this Article or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify each director
or officer and may indemnify each employee or agent of the Corporation as to
costs, charges and expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, including an action
by or in the right of the Corporation, to the full extent permitted by any
applicable action of this Article that shall not have been invalidated and to
the full extent permitted by applicable law.
ARTICLE VIII
Officers
SECTION 1. General. The officers of the Corporation shall be
the chairman of the board, president, one or more vice presidents (which may
include executive vice presidents and senior vice presidents), a secretary, a
treasurer, and such other officers as may from time be designated and elected
by the board of directors.
SECTION 2. Directors as Officers. The chairman of the board
and any vice chairman shall be chosen by the board of directors from among
their own number. The other officers of the Corporation may or may not be
directors.
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<PAGE> 16
SECTION 3. Term. Officers of the Corporation shall be elected
by the board of directors and shall hold their respective offices during the
pleasure of the board and any officer may be removed at any time, with or
without cause, by a vote of the majority of the directors. Each officer shall
hold office from the time of his appointment and qualification until the next
annual election of officers or until his earlier resignation or removal except
that upon election thereof a shorter term may be designated by the board of
directors. Any officer may resign at any time upon written notice to the
Corporation.
SECTION 4. Compensation. The compensation of officers of the
Corporation shall be fixed, from time to time, by the board of directors.
SECTION 5. Vacancy. In case any office becomes vacant by
death, resignation, retirement, disqualification, removal from office, or any
other cause, the board of directors may abolish the office (except that of
president, secretary and treasurer) or elect an officer to fill such vacancy.
ARTICLE IX
Duties of Officers
SECTION 1. Chairman of the Board. The chairman of the board
shall have general supervisory and management powers over all officers,
employees and agents of the Corporation for the proper performance of their
duties. The chairman of the board shall preside at and act as chairman of all
meetings of the board of directors. The chairman of the board shall also have
the authority and duties usually vested in the chief executive officer of the
Corporation, if no separate office is created for a chief executive officer.
16
<PAGE> 17
SECTION 2. Vice Chairman of the Board. In the absence of the
chairman of the board or in the event of his inability or refusal to act, the
vice chairman (or in the event there be more than one vice chairman, the vice
chairmen in the order designated by the directors, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the chairman of the board, and when so acting, shall have all the authority of
and be subject to all the restrictions upon the chairman of the board. The vice
chairman shall perform such other duties and have such other authority as the
board of directors may from time to time prescribe.
SECTION 3. Chief Executive Officer. The chief executive
officer, if one be appointed and subject to the general direction of the board
of directors and the chairman of the board, shall have the general powers and
duties of supervision and management usually vested in the chief executive
officer of a corporation, and shall perform any such other duties and exercise
such authority as shall be assigned to him by the board of directors or the
chairman of the board. If no separate office is created for a chief executive
officer, the chairman of the board shall have the authority and duties usually
vested in a chief executive officer.
SECTION 4. President. The president shall be the chief
operating officer of the Corporation and shall perform such duties and exercise
such authority as shall be assigned to him by the board of directors, the
chairman of the board or the chief executive officer.
SECTION 5. Vice President. Each vice president, if one or
more be appointed (including any executive vice president and senior vice
president), shall perform such duties and exercise such authority as shall be
assigned to him by the board of directors, the chairman of the board, the chief
executive officer or the president.
SECTION 6. Secretary. The secretary shall record all
proceedings of the meetings of the Corporation, its stockholders and the board
of directors and shall perform such
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<PAGE> 18
other duties exercise such authority as shall be assigned to him by the board
of directors, the chairman of the board, the chief executive officer or the
president. Any part or all of the duties and authority of the secretary may be
delegated to one or more assistant secretaries.
SECTION 7. Controller. The controller, if one be appointed,
shall perform such duties and exercise such authority as shall be assigned to
him by the chairman of the board, the chief executive officer, the president or
such vice president as may be responsible for financial matters. Any or all of
the duties and authority of the controller may be delegated to one or more
assistant controllers.
SECTION 8. Treasurer. The treasurer shall, under the
direction of the chairman of the board, the chief executive officer, the
president or such vice president as may be responsible for financial matters,
have the custody of the funds and securities of the Corporation, subject to
such regulations as may be imposed by the board of directors. He shall deposit,
or have deposited, all monies and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the
board of directors or as may be designated by the appropriate officers pursuant
to a resolution of the board of directors. He shall disburse, or have
disbursed, the funds of the Corporation as may be ordered by the board of
directors or properly authorized officers, taking proper vouchers therefore. If
required by the board of directors he shall give the Corporation bond in such
sum and in such form and with such security as may be satisfactory to the board
of directors, for the faithful performance of the duties of his office. He
shall perform such other duties and exercise such authority as shall be
assigned to him by the board of directors, the chairman of the board, the
president or such vice president as may be responsible for financial matters.
Any or all of the duties and authority of the treasurer may be delegated to one
or more assistant treasurers.
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SECTION 9. Other Officers' Duties. Each other officer shall
perform such duties and exercise such authority as may be delegated to him by
the superior officer to whom he is made responsible by designation of the
chairman of the board, the chief executive officer or the president.
SECTION 10. Absence or Disability. The board of directors or
the chairman of the board may delegate the authority and duties of any absent
or disabled officer to any other officer or to any director for the time being.
ARTICLE X
Stock
SECTION 1 Certificates. Certificates of stock of the
Corporation shall be signed by, or in the name of the corporation by, the
chairman of the board, the president or a vice president, and by the treasurer
or an assistant treasurer, or the secretary or an assistant secretary of the
Corporation. If such certificate is countersigned, (1) by a transfer agent
other than the corporation or its employee, or (2) by a registrar other than
the Corporation or its employee, then any other signature on the certificate
may be a facsimile. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it maybe issued by the Corporation with the same effect
as if he were such officer, transfer agent, or registrar at the date of issue.
SECTION 2. Transfers. Shares of stock shall be transferable
on the books of the Corporation by the holder of record thereof in person or by
his attorney upon surrender of such
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certificate with an assignment endorsed thereon or attached thereto duly
executed and with such proof of authenticity of signatures as the Corporation
may reasonably require. The board of directors may from time to time appoint
such transfer agents or registrars as it may deem advisable and may define
their powers and duties. Any such transfer agent or registrar need not be an
employee of the Corporation.
SECTION 3. Record Holder. The Corporation may treat the
holder of record of any shares of stock as the complete owner thereof entitled
to receive dividends and vote such shares, and accordingly shall not be bound
to recognize any interest in such shares on the part of any other person,
whether or not it shall have notice thereof.
SECTION 4. Lost and Damaged Certificates. The Corporation may
issue a new certificate of stock to replace a certificate alleged to have been
lost, stolen, destroyed or mutilated upon such terms and conditions as the
board of directors may from time to time prescribe.
SECTION 5. Fixing Record Date. In order that the Corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or 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 stock
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 prior to any
other action.
ARTICLE XI
Miscellaneous
SECTION 1. Fiscal Year. The fiscal year of the Corporation
shall begin upon the first day of January and terminate upon the 31st day of
December, in each year.
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SECTION 2. Stockholder Inspection of Books and Records. The
board of directors from time to time shall determine whether and to what extent
and at what times and places and under what conditions and regulations the
accounts and books of the Corporation, or any of the records, shall be open to
the inspection of a stockholder and no stockholder shall have any right to
inspect any account, book or document of the Corporation except as conferred by
statute or authorized by resolution of the board of directors.
SECTION 3. Seal. The corporate seal shall be circular in form
and have inscribed thereon the name of the Corporation and the words "Corporate
Seal, Delaware."
ARTICLE XII
Amendments to By-Laws
Subject to the provisions of any resolution of the board of
directors creating any series of Preferred Stock, the board of directors shall
have power from time to time to make, alter or repeal by-laws, but any by-laws
made by the board of directors may be altered, amended or repealed by the
stockholders at any annual meeting of stockholders, or at any special meeting
provided that notice of such proposed alteration, amendment or repeal is
included in the notice of such special meeting.
21
<PAGE> 1
EXHIBIT 3.5
CERTIFICATE OF INCORPORATION
OF
AMR SERVICES SECURITY SERVICE CORPORATION
The undersigned, in order to form a corporation for the purpose hereinafter
stated, under and pursuant to the provisions of the General Corporation Law of
the State of Delaware, does hereby certify as follows:
FIRST: The name of the corporation (which is hereinafter referred to as the
"Corporation") is
AMR SERVICES SECURITY SERVICE CORPORATION
SECOND: The registered office of the Corporation is to be located at 1209
Orange Street, City of Wilmington, County of New Castle, State of Delaware. The
name of its registered agent at that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation is authorized to issue is One Thousand (1,000), all of which shares
shall be Common Stock with a par value of One Dollar ($1.00) per share.
FIFTH: Election of directors need not be by ballot, unless the By-Laws of
the Corporation shall so provide. In furtherance and not in limitation of the
powers conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized and empowered,
<PAGE> 2
without the assent or vote of the stockholders, to make, alter, amend and repeal
the By-Laws of the Corporation, in any manner not inconsistent with the laws of
the State of Delaware or the Certificate of Incorporation of the Corporation.
SIXTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders of this Corporation, as the case may be,
and also on this Corporation.
SEVENTH: Except as otherwise provided by statute, any action which might
have been taken by a vote of the stockholders at a meeting thereof may be taken
with the written consent of such of the holders of stock (who would have been
entitled to vote upon the action if a
<PAGE> 3
meeting were held) as have not less than the minimum percentage of the total
vote required for the proposed corporate action by statute, this Certificate of
Incorporation or the By-Laws of the Corporation, as may be applicable, but in
the case of the election of a director or directors, not less than a majority of
the stock the Corporation entitled to vote thereon; provided that prompt notice
shall be given to all stockholders of the taking of such corporate action
without a meeting if less than unanimous consent is obtained. Meetings of
stockholders may be held within or without the State of Delaware, as the By-Laws
may provide.
EIGHTH: The books of the Corporation may be kept (subject to applicable
statutes) outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the By-Laws of the
Corporation.
NINTH: No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its shareholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit.
TENTH: No Director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its shareholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit.
<PAGE> 4
ELEVENTH: The Corporation shall, to the full extent permitted by the
General Corporation Law of the State of Delaware, as amended from time to tine,
indemnify all persons whom it has the power to indemnify pursuant thereto.
TWELFTH: No director of the Corporation shall be liable to the Corporation
or its stockholders for monetary damages for breach of his or her fiduciary duty
as a director, provided that nothing contained in this Article shall eliminate
or limit the liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of the law, (iii) under Section 174 of the General Corporation Law of the State
of Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.
THIRTEENTH: The name and address of the incorporator is Charles D. MarLett,
P.O. Box 619616, MD 4C27, Dallas/Fort Worth Airport, Texas 75261-9616.
IN WITNESS WHEREOF, I have signed and acknowledged this Certificate this
31st day of March, 1989.
/s/ Charles D. MarLett
-----------------------------------------
Charles D. MarLett
<PAGE> 5
CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED
OFFICE AND REGISTERED AGENT
OF
AMR SERVICES SECURITY SERVICE CORPORATION
--------------------------------------------------
The Board of Directors of:
AMR SERVICES SECURITY SERVICE CORPORATION
a Corporation of the State of Delaware, on this 1st day of February A.D. 1992,
do hereby resolve and order that the location of the Registered Office of this
Corporation within this State be, and the same hereby is:
1013 Centre Road, in the City of Wilmington, in the County of New Castle,
Delaware, 19805.
The name of the Registered Agent therein and in charge thereof upon whom
process against the Corporation may be served, is:
CORPORATION SERVICE COMPANY.
AMR SERVICES SECURITY SERVICE CORPORATION
a Corporation of the State of Delaware, does hereby certify that the foregoing
is a true copy of a resolution adopted by the Board of Directors at a meeting
held as herein stated.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its President and Secretary, this 1st day of February, A.D. 1992.
BY: /s/ Thomas M. Metzler
-------------------------------------
President
ATTESTED BY: /s/ Charles D. MarLett
-------------------------------------
Secretary
<PAGE> 6
CERTIFICATE OF CHANGE OF REGISTERED AGENT
AND
REGISTERED OFFICE
* * * * *
AMR Services Security Services Corporation, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
The present registered agent of the corporation is Corporation Services
Company, 1013 Centre Road, Wilmington, DE 19805 and the present registered
office of the corporation is in the county of New Castle;
The Board of Directors of AMR Services Security Service corporation adopted
the following resolution on the 10th day of December, 1993.
Resolved, that the registered office of AMR Services Security Service
Corporation in the State of Delaware be and it hereby is changed to
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle, and the authorization of the present registered agent
of this corporation be and the same is hereby withdrawn, and THE
CORPORATION TRUST COMPANY, shall be and is hereby constituted and appointed
the registered agent of this corporation at the address of its registered
office.
IN WITNESS WHEREOF, AMR Services Security Service Corporation has caused
this statement to be signed by Thomas M. Metzler, its President and attested by
Charles D. MarLett, its Corporate Secretary this 17 day of December, 1993.
BY: /s/ Thomas M. Metzler
-------------------------------------
President
ATTEST:
By: /s/ Charles M. MarLett
-------------------------------
Corporate Secretary
<PAGE> 7
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AMR SERVICES SECURITY SERVICE CORPORATION
AMR Services Security Service Corporation, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That the Board of Directors of AMR Services Security Service
Corporation, by the unanimous written consent of its members, filed with the
minutes of the board, duly adopted a resolution setting forth a proposed
amendment to the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, that the Certificate of Incorporation of AMR Services Security
Service Corporation be amended by changing the First Article thereof so that, as
amended, said Article shall be and read as follows:
"FIRST: The name of the corporation is Worldwide Flight Security
Service Corporation (which is hereinafter referred to as the
"Corporation")"
SECOND: That the holders of all shares of issued and outstanding stock of
the corporation have signed a written consent adopting the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE> 8
IN WITNESS THEREOF, said AMR Services Security Service Corporation has
caused this certificate to be signed by Peter A. Pappas, its President this 31st
day of March, 1999.
/s/ Peter A. Pappas
-----------------------------------------
Peter A. Pappas
President
<PAGE> 9
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
WORLDWIDE FLIGHT SECURITY SERVICE CORPORATION
Worldwide Flight Security Service Corporation (the "Corporation"), a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, does hereby certify:
FIRST: That the Board of Directors of Worldwide Flight Security Service
Corporation, by the unanimous written consent of its members, filed with the
minutes of the board, duly adopted a resolution setting forth a proposed
amendment to the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, that the Certificate of Incorporation of the Corporation be
amended by deleting Article Sixth in its entirety.
SECOND: That the holders of all shares of issued and outstanding stock of
the corporation have signed a written consent adopting the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS THEREOF, said Worldwide Flight Security Service Corporation has
caused this certificate to be signed by Peter A. Pappas, its President this 9th
day of April, 1999.
/s/ Peter A. Pappas
-----------------------------------------
Peter A. Pappas
President
<PAGE> 1
EXHIBIT 3.6
AMR SERVICES SECURITY SERVICE CORPORATION
BYLAWS
(As amended March 15, 1995)
ARTICLES I
Offices
The registered office of AMR SERVICES SECURITY SERVICE CORPORATION,
(hereinafter the "Corporation") in the State of Delaware is to be located in the
City of Wilmington, County of New Castle. The Corporation may have other offices
within and outside the State of Delaware.
ARTICLE II
Meetings of Stockholders
Section 1. Annual Meetings. An annual meeting of stockholders to elect
directors and to take action upon such other matters as may properly come before
the meeting shall be held on the third Wednesday in May of each year, or on such
other day, and at such time and at such place, within or outside the State of
Delaware, as the board of directors or the chairman of the board may from time
to time fix.
Any stockholder wishing to bring a matter before an annual meeting must
notify the Secretary of the Corporation of such fact not less than sixty (60)
nor more than ninety (90) days before the date of the meeting. Such notice shall
be in writing and shall set forth the business proposed to be brought before the
meeting, shall identify the stockholder and shall disclose the stockholder's
interest in the proposed business.
Section 2. Special Meetings. A special meeting of stockholders shall be
called by the Secretary upon receipt of a request in writing from the board of
directors, the chairman of the
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board or the president. Any such meeting shall be held at the principal business
office of the Corporation unless the board shall name another place therefor, at
the time specified by the body or persons calling such meeting.
Section 3. Nominees For Election As Director. Nominations for election
as director, other than those made by or at the direction of the board of
directors, must be made by timely notice to the secretary, setting forth as to
each nominee the information required to be included in a proxy statement under
the proxy rules of the Securities and Exchange Commission. If such election is
to occur at an annual meeting of stockholders, notice shall be timely if it
meets the requirements of such proxy rules for proposals of security holders to
be presented at an annual meeting. If such election is to occur at a special
meeting of stockholders, notice shall be timely if received not less than five
(5) days prior to such meeting.
Section 4. Notice of Meetings. Written notice of each meeting of
stockholders shall be given which shall state the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Unless otherwise provided by law, such notice shall
be mailed, postage prepaid, to each stockholder entitled to vote at such
meeting, at his address as it appears on the records of the Corporation, not
less than ten (10) nor more than sixty (60) days before the date of the meeting.
When a meeting is adjourned to another time or place, notice need not be given
of the adjourned meeting at which the adjournment is taken, unless the
adjournment is for more than thirty (30) days or a new record date is fixed for
the adjourned meeting, in which case a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 5. Chairman and Secretary at Meetings. At any meeting of
stockholders the chairman of the Board, or in his absence, the president, or if
neither such person is available, then
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a person designated by the board of directors, shall preside at and act as
chairman of the meeting. The secretary, or in his absence a person designated by
the chairman of the meeting, shall act as secretary of the meeting.
Section 6. Proxies. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him or by proxy,
but no such proxy shall be voted or acted upon after three (3) years from its
date, unless the proxy provides for a longer period.
Section 7. Quorum. At all meetings of the stockholders the holders of
one-third (1/3) of the number of shares of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum requisite for the election of directors and the transaction
of other business, except as otherwise provided by law or by the certificate of
incorporation.
If holders of the requisite number of shares to constitute a quorum
shall not be present in person or represented by proxy at any meeting of
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have the power to adjourn the meeting from time to
time until a quorum shall be present or represented. At any such adjourned
meeting at which a quorum shall be presented or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
SECTION 8. Voting. At any meeting of stockholders, except as otherwise
provided by law or by the certificate of incorporation;
(a) Each holder of record of a share or shares of stock on the record
date for determining stockholders entitled to vote at such meeting shall be
entitled to one vote in person or by proxy for each share of stock so held.
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(b) Directors shall be elected by a plurality of the votes cast by the
holders of Common Stock, present in person or represented by proxy.
(c) Each other question properly presented to any meeting of
stockholders shall be decided by a majority of the votes cast on the question
entitled to vote thereon.
(d) Election of directors and the vote upon any other question shall be
ballot only if so ordered by the chairman of the meeting or if so requested by
stockholders, present in person or represented by proxy, entitled to vote on the
question and holding at least ten percent (10%) of the shares so entitled to
vote.
SECTION 9. List of Stockholders. At least ten (10) days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder shall be prepared. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours for a period of at least 10 days prior to the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
ARTICLE III
Directors: Number, Election, Etc.
SECTION 1. Number. The board of directors shall consist of such number
of members, not less than three (3), as the board of directors may from time
determine by resolution.
SECTION 2. Election, Term, Vacancies. Directors shall be elected each
year at the annual meeting of stockholders, except as hereinafter provided, and
shall hold office until the
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next annual election and until their successors are duly elected and qualified.
Vacancies and newly created directorships resulting from any increase in the
authorized number of directors may be filled by a majority of the directors then
in office, although less than a quorum.
SECTION 3. Resignation. Any director may resign at any time by giving
written notice of such resignation to the board of directors, the chairman of
the board, the president or the secretary. Any such resignation shall take
effect at the time specified therein or, upon the receipt thereof by the board
of directors or one of the above named officers and, unless specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
SECTION 4. Removal. Any director may be removed from office at any
time, with or without cause, by a vote of a majority of the stockholders
entitled to vote at any regular meeting or at any special meeting call for the
purpose.
SECTION 5. Fees and Expenses. Directors shall receive such fees and
expenses as the board of directors shall from time to time prescribe.
ARTICLE IV
Meetings of Directors
SECTION 1. Regular Meetings. Regular meetings of the board of directors
shall be held at the principal office of the Corporation, or at such other place
(within or without the State of Delaware), and at such time, as may from time to
time be prescribed by the board of directors or stockholders. A regular annual
meeting of the board of directors for the election of officers and the
transaction of other business shall be held on the same day as the annual
meeting of the stockholders or on such other day and at such time and place as
the board of directors shall determine. No notices need be given of any regular
meeting.
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<PAGE> 6
SECTION 2. Special Meetings. Special meetings of the board of directors
may be held at such place (within or without the State of Delaware) and at such
time as may from time to time be determined by the board of directors or as may
be specified in the call and notice of any meeting. Any such meeting shall be
held at the call of the chairman of the board, the president, a vice president,
the secretary, or two (2) or more directors. Notice of a special meeting of
directors shall be mailed to each director at least three (3) days prior to the
meeting date, provided that in lieu thereof, notice may be given to each
director personally or by telephone, or dispatched by telegraph, at least one
(1) day prior to the meeting date.
SECTION 3. Waiver of Notice. In lieu of notice of meeting, a waiver
thereof in writing, signed by the person or persons entitled to said notice
whether before or after the time stated therein, shall be deemed equivalent
thereto. Any director present in person at a meeting of the board of directors
shall be deemed to have waived notice of the time and place or meeting, except
when the director attends the meeting for the express purpose of objecting at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 4. Action Without Meeting. Unless otherwise restricted by the
certificate of incorporation, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting if all members of the board of directors or of such committee,
as the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of the proceedings of the board of directors or of such
committee.
SECTION 5. Quorum. At all meetings of the board, a majority of the
total number of directors shall constitute a quorum for the transaction of
business. The act of a majority of the
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directors present at any meeting at which there is a quorum shall be the act of
the board of directors, except as may be otherwise specifically provided by law.
If at any meeting there is less than a quorum present, a majority of
those present (or if only one be present, then that one), may adjourn the
meeting from time to time without further notice other than announced at the
meeting until a quorum is present. At such adjourned meeting at which a quorum
is present, any business may be transacted which might have been transacted at
the meeting as originally scheduled.
SECTION 6. Business Transacted. Unless otherwise indicated in the
notice of meeting or required by law, the certificate of incorporation or bylaws
of the corporation, any and all business may be transacted at any directors'
meeting.
ARTICLE V
Powers of the Board of Directors
The management of all the property and business of the corporation and
the regulation and government of its affairs shall be vested in the board of
directors. In addition to the powers and authorities by these bylaws and the
certificate of incorporation expressly conferred on them, the board of directors
may exercise all such powers of the corporation and do all such lawful acts and
things as are not by law, or by the certificate of incorporation or by these
bylaws directed or required to be exercised or done by the stockholders.
ARTICLE VI
Committees
SECTION 1. Executive Committee. The board of directors may, by
resolution passed by a majority of the whole board, designate an executive
committee, to consist of two (2) or
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more members. The chief executive officer plus one (1) other member of the
executive committee shall constitute a quorum.
The executive shall have and may exercise all the powers and authority
of the board of directors in the management of the business and affairs of the
Corporation, with the exception of such powers and authority as may be
specifically reserved to the board of directors by law or by resolution adopted
by the board of directors..
SECTION 2. Audit Committee. The board of directors may, by resolution
passed by a majority of the whole board, designate an audit committee, to
consist of two (2) or more members, none of the members of which shall be
employees or officers of the corporation. A majority of the members of the audit
committee shall constitute a quorum.
The audit committee shall from time to time review and make
recommendations to the board of directors with respect to the selection of
independent auditors, the fees to be paid such auditors, the adequacy of the
audit and accounting procedures of the Corporation, and such other matters as
may be specifically delegated to the committee by the board of directors. In
this connection the audit committee shall, at its request, meet with
representatives of the independent auditors and with the financial officers of
the corporation separately or jointly.
SECTION 3. Compensation/Nominating Committee. The board of directors
may, by resolution passed by a majority of the whole board, designate a
compensation/nominating committee, to consist of each member of the board of
directors, except that no member of the compensation/nominating committee may be
an employee or officer of the corporation. A majority of the members of the
compensation/nominating committee shall constitute a quorum.
The compensation/nominating committee shall from time to time review
and make recommendations to the board of directors with respect to the
management remuneration policies
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of the corporation, including but not limited to salary rates and fringe
benefits of elected officers, other remuneration plans such as incentive
compensation, deferred compensation and stock option plans, directors'
compensation and benefits and such other matters as may be specifically
delegated to the committee by the board of directors.
In addition, the compensation/nominating committee shall make
recommendations to the board of directors (i) concerning suitable candidates for
election to the board, (ii) with respect to assignments to board committees, and
(iii) with respect to promotions, changes and succession among the senior
management of the corporation, and shall perform such other duties as may be
specifically delegated to the committee by the board of directors.
SECTION 4. Committee Procedure, Seal.
(a) The executive, compensation/nominating, and audit committees shall
keep regular minutes of their meetings, which shall be reported to the board of
directors, and shall fix their own rules of procedures.
(b) The executive, compensation/nominating, and audit committees may
each authorize the seal of the Corporation to be affixed to all papers which may
require it.
(c) In the absence or disqualification of a member of any committee,
the members of that committee present at any meeting and not disqualified from
voting, whether or not constitution a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of such
absent or disqualified member.
SECTION 5. Special Committees. The board of directors may, from time to
time, by resolution passed by a majority of the whole board, designate one or
more special committees. Each such committee shall have such duties and may
exercise such powers as are granted to it in
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the resolution designating the members thereof. Each committee shall fix its own
rules of procedure.
ARTICLE VII
Indemnification
SECTION 1. Nature of Indemnity. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was or has agreed to become a director or officer of the Corporation, or is or
was serving or has agreed to serve at the request of the Corporation as a
director or officer, of another corporation, partnership, joint venture, trust
or other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, and may indemnify any person who was or is a party or
is threatened to be made a party to such an action by reason of the fact that he
is or was or has agreed to become an employee or agent of the Corporation, or is
or was serving or has agreed to serve at the request of the Corporation as an
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding had no reasonable cause to believe his
conduct was unlawful; except that in the case of an action or suit by or in the
right of the Corporation to procure a judgment in its favor (1) such
indemnification shall be limited to expenses (including attorneys' fees)
actually and reasonably incurred by such person in the defense or settlement of
such action or suit, and (2) no
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indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 2. Successful Defense. To the extent that a director, officer,
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section 1
hereof or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
SECTION 3. Determination That Indemnification Is Proper. Any
indemnification of a director or officer of the Corporation under Section 1
hereof (unless ordered by a court) shall be made by the corporation unless a
determination is made that indemnification of the director or officer is not
proper in the circumstances because he has not met the applicable standard of
conduct set forth in Section 1 hereof. Any indemnification of an employee or
agent of the Corporation under Section 1 hereof (unless ordered by a court) may
be made by the corporation upon a determination that indemnification of the
employee or agent is proper in the
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circumstances because he has met the applicable standard of conduct set forth in
Section 1 hereof. Any such determination shall be made (1) by a majority vote of
the directors who are not parties to such action, suit or proceeding, or (2) if
there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (3) by the stockholders.
SECTION 4. Advance Payment of Expenses. Expenses incurred by a director
or officer in defending a civil or criminal action, suit or proceeding shall be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized in this Article.
Such expenses incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the Board of Directors deems appropriate. The
Board of Directors may authorize the Corporation's counsel to represent a
director, officer, employee or agent in any action, suit or proceeding, whether
or not the Corporation is a party to such action, suit or proceeding.
SECTION 5. Procedure for Indemnification of Directors or Officers. Any
indemnification of a director or officer of the Corporation under Sections 1 and
2, or advance of costs, charges and expenses of a director or officer under
Section 4 of this Article, shall be made promptly, and in any event within 60
days, upon the written request of the director or officer. If the Corporation
fails to respond within 60 days, then the request for indemnification shall be
deemed to be approved. The right to indemnification shall be deemed to be
approved. The right to indemnification or advances as granted by this Article
shall be enforceable by the director or officer in any court of competent
jurisdiction if the Corporation denies such request, in whole or in part. Such
person's costs and expenses incurred in connection with successfully
establishing
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his right to indemnification, in whole or in part, in any such action shall also
be indemnified by the Corporation. It shall be a defense to any such action
(other than an action brought to enforce a claim for the advance of costs,
charges and expenses under Section 4 of this Article where the required
undertaking, if any, has been received by the Corporation) that the claimant has
not met the standard of conduct set forth in Section 1 of this Article, but the
burden of proving such defense shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, its independent legal
counsel, and its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in Section 1 of this Article, nor the fact that there has been an actual
determination by the Corporation (including its Board of Directors, its
independent legal counsel, and its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
SECTION 6. Survival; Preservation of Other Rights. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each director, officer, employee and agent who serves in such
capacity at any time while these provisions as well as the relevant provisions
of the Delaware Corporation Law are in effect and any repeal or modification
thereof shall not affect any right or obligation then existing with respect to
any state of facts then or previously existing or any action, suit, or
proceeding previously or thereafter brought or threatened based in whole or in
part upon any such state of facts. Such a "contract right" may not be modified
retroactively without the consent of such director, officer, employee or agent.
The indemnification provided by this Article VII shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, vote of
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stockholders 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.
SECTION 7. Insurance. The Corporation shall purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him or on his behalf in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article,
provided that such insurance is available on acceptable terms, which
determination shall be made by a vote of a majority of the entire Board of
Directors.
SECTION 8. Savings Clause. If this Article or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director or officer and may
indemnify each employee or agent of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgments, fine and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the full extent permitted by any applicable portion
of this Article that shall not have been invalidated and to the full extent
permitted by applicable law.
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ARTICLE VIII
Officers
SECTION 1. General. The officers of the Corporation shall be the
chairman of the board, president, one or more vice presidents (which may include
executive vice presidents and senior vice presidents), a secretary, a treasurer,
and such other officers as may from time to time be designated and elected by
the board of directors.
SECTION 2. Directors as Officers. The chairman of the board and any
vice chairman shall be chosen by the board of directors from among their own
number. The other officers of the Corporation may or may not be directors.
SECTION 3. Term. Officers of the Corporation shall be elected by the
board of directors and shall hold their respective offices during the pleasure
of the board and any officer may be removed at any time, with or without cause,
by a vote of the majority of the directors. Each officer shall hold office from
the time of his appointment and qualification until the next annual election of
officers or until his earlier resignation or removal except that upon election
thereof a shorter term may be designated by the board of directors. Any officer
may resign at any time upon written notice to the Corporation.
SECTION 4. Compensation. The compensation of officers of the
Corporation shall be fixed, from time to time, by the board of directors.
SECTION 5. Vacancy. In case any office becomes vacant by death,
resignation, retirement, disqualification, removal from office, or any other
cause, the board of directors may abolish the office (except that of president,
secretary and treasurer) or elect an officer to fill such vacancy.
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ARTICLE IX
Duties of Officers
SECTION 1. Chairman of the Board. The chairman of the board shall have
general supervisory and management powers over all officers, employees and
agents of the Corporation for the proper performance of their duties. The
chairman of the board shall preside at and act as chairman of all meetings of
the board of directors. The chairman of the board shall also have the authority
and duties usually vested in the chief executive officer of the Corporation, if
no separate office is created for a chief executive officer.
SECTION 2. Vice Chairman of the Board. In the absence of the chairman
of the board or in the event of his inability or refusal to act, the vice
chairman (or in the event there be more than one vice chairman, the vice
chairmen in the order designated by the directors, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the chairman of the board, and when so acting, shall have all the authority of
and be subject to all the restrictions upon the chairman of the board. The vice
chairman shall perform such other duties and have such other authority as the
board of directors may from time to time prescribe.
SECTION 3. Chief Executive Officer. The chief executive officer, if one
be appointed and subject to the general direction of the board of directors and
the chairman of the board, shall have the general powers and duties of
supervision and management usually vested in the chief executive officer of a
corporation, and shall perform any such other duties and exercise such authority
as shall be assigned to him by the board of directors or the chairman of the
board. If no separate office is created for a chief executive officer, the
chairman of the board shall have the authority and duties usually vested in a
chief executive officer.
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SECTION 4. President. The president shall be the chief operating
officer of the Corporation and shall perform such duties and exercise such
authority as shall be assigned to him by the board of directors, the chairman of
the board or the chief executive officer.
SECTION 5. Vice President. Each vice president, if one or more be
appointed (including any executive vice president and senior vice president),
shall perform such duties and exercise such authority as shall be assigned to
him by the board of directors, the chairman of the board, the chief executive
officer or the president.
SECTION 6. Secretary. The secretary shall record all proceedings of the
meetings of the Corporation, its stockholders and the board of directors and
shall perform such other duties exercise such authority as shall be assigned to
him by the board of directors, the chairman of the board, the chief executive
officer or the president. Any part or all of the duties and authority of the
secretary may be delegated to one or more assistant secretaries.
SECTION 7. Controller. The controller, if one be appointed, shall
perform such duties and exercise such authority as shall be assigned to him by
the chairman of the board, the chief executive officer, the president or such
vice president as may be responsible for financial matters. Any or all of the
duties and authority of the controller may be delegated to one or more assistant
controllers.
SECTION 8. Treasurer. The treasurer shall, under the direction of the
chairman of the board, the chief executive officer, the president or such vice
president as may be responsible for financial matters, have the custody of the
funds and securities of the Corporation, subject to such regulations as may be
imposed by the board of directors. He shall deposit, or have deposited, all
monies and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the board of directors
or as may be designated by the
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appropriate officers pursuant to a resolution of the board of directors. He
shall disburse, or have disbursed, the funds of the Corporation as may be
ordered by the board of directors or properly authorized officers, taking proper
vouchers therefor. If required by the board of directors he shall give the
Corporation bond in such sum and in such form with such security as may be
satisfactory to the board of directors, for the faithful performance of the
duties of his office. He shall perform such other duties and exercise such
authority as shall be assigned to him by the board of directors, the chairman of
the board, the president or such vice president as may be responsible for
financial matters. Any or all of the duties and authority of the treasurer may
be delegated to one or more assistant treasurers.
SECTION 9. Other Officers' Duties. Each other officer shall perform
such duties and exercise such authority as may be delegated to him by the
superior officer to whom he is made responsible by designation of the chairman
of the board, the chief executive officer or the president.
SECTION 10. Absence of Disability. The board of directors or the
chairman of the board may delegate the authority and duties of any absent or
disabled officer to any other officer or to any director for the time being.
ARTICLE X
Stock
SECTION 1. Certificates. Certificates of stock of the Corporation shall
be signed by, or in the name of the corporation by, the chairman of the board,
the president or a vice president, and by the treasurer or an assistant
treasurer, or the secretary or an assistant secretary of the Corporation. If
such certificate is countersigned, (1) by a transfer agent other than the
corporation or its employee, or (2) by a registrar other than the Corporation or
its employee, then
-18-
<PAGE> 19
any other signature on the certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.
SECTION 2. Transfers. Shares of stock shall be transferable on the
books of the Corporation by the holder of record thereof in person or by his
attorney upon surrender of such certificate with an assignment endorsed thereon
or attached thereto duly executed and with such proof of authenticity of
signatures as the Corporation may reasonably require. The board of directors may
from time to time appoint such transfer agents or registrars as it may deem
advisable and may define their powers and duties. Any such transfer agent or
registrar need not be an employee of the Corporation.
SECTION 3. Record Holder. The Corporation may treat the holder of
record of any shares of stock as the complete owner thereof entitled to receive
dividends and vote such shares, and accordingly shall not be bound to recognize
any interest in such shares on the part of any other person, whether or not it
shall have notice thereof.
SECTION 4. Lost and Damaged Certificates. The Corporation may issue a
new certificate of stock to replace a certificate alleged to have been lost,
stolen, destroyed or mutilated upon such terms and conditions as the board of
directors may from time to time prescribe.
SECTION 5. Fixing Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or 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
-19-
<PAGE> 20
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the board of directors may fix, 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 prior to any
other action.
ARTICLE XI
Miscellaneous
SECTION 1. Fiscal Year. The fiscal year of the Corporation shall begin
upon the first day of January and terminate upon the 31st day of December, in
each year.
SECTION 2. Stockholder Inspection of Books and Records. The board of
directors from time to time shall determine whether and to what extent and at
what times and places and under what conditions and regulations the accounts and
books of the Corporation, or any of the, shall be open to the inspection of a
stockholder and no stockholder shall have any right to inspect any account, book
or document of the Corporation except as conferred by statute or authorized by
resolution of the board of directors.
SECTION 3. Seal. The corporate seal shall be circular in form and have
inscribed thereon the name of the Corporation and the words "Corporate Seal,
Delaware."
ARTICLE XII
Amendments to By-Laws
Subject to the provisions of any resolution of the board of directors
creating any series of Preferred Stock, the board of directors shall have power
from time to time to make, alter or repeal by-laws, but any by-laws made by the
board of directors may be altered, amended or repealed by the stockholders at
any annual meeting of stockholders, or at any special meeting provided that
notice of such proposed alteration, amendment or repeal is included in the
notice of such special meeting.
-20-
<PAGE> 1
EXHIBIT 3.7
<TABLE>
<S> <C>
PLEASE INDICATE (CHECK ONE) TYPE CORPORATION:
ARTICLES OF INCORPORATION
(PREPARE IN ORIGINAL) [X] DOMESTIC BUSINESS CORPORATION FEE
$75.00
COMMONWEALTH OF PENNSYLVANIA [ ] DOMESTIC BUSINESS CORPORATION
DEPARTMENT OF STATE -- CORPORATION BUREAU A CLOSE CORPORATION - COMPLETE BACK
308 NORTH OFFICE BUILDING, HARRISBURG, PA 17120
[ ] DOMESTIC PROFESSIONAL CORPORATION
ENTER BOARD LICENSE NO.
- --------------------------------------------------------------- -------------------------------------------------------- ----------
010 NAME OF CORPORATION (MUST CONTAIN A CORPORATE INDICATOR UNLESS EXEMPT UNDER 15 P.S. 2908 B)
Aerolink International, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
011 ADDRESS OF REGISTERED OFFICE IN PENNSYLVANIA (P.O. BOX NUMBER NOT ACCEPTABLE)
Cargo Building #1, Greater Pittsburgh International Airport, P.O. Box 12375
- -----------------------------------------------------------------------------------------------------------------------------------
012 CITY 033 COUNTY 013 STATE 064 ZIP CODE
Pittsburgh Allegheny PA 15231 (02)
- -----------------------------------------------------------------------------------------------------------------------------------
050 EXPLAIN THE PURPOSE OR PURPOSES OF THE CORPORATION
The Corporation shall have the following purposes:
To service commercial aircraft cargo and to engage in any lawful act concerning any or all lawful business for which
corporations may be incorporated under the Act of May 5, 1933, as amended, under the provisions of which this Corporation is
incorporated.
(ATTACH 8 1/2 x 11 SHEET IF NECESSARY)
- -----------------------------------------------------------------------------------------------------------------------------------
The Aggregate Number Shares, Classes of Shares and Par Value of Shares Which the Corporation Shall have Authority to Issue:
040 Number and Class of Shares 041 Stated Par Value Per 042 Total Authorized 031 Term of Existence
1,000 common shares Share if Any $1.00 Capital $1,000.00 Perpetual
- -----------------------------------------------------------------------------------------------------------------------------------
The Name and Address of Each Incorporator, and the Number and Class of Shares Subscribed to by each Incorporator
061, 062
060 Name 063, 064 Address (Street, City, State, Zip Code) Number & Class of Shares
- ---------------------------------------- ------------------------------------------------------- ----------------------------------
Stuart R. Kaplan, Esq. 600 Grant Street, 42nd Floor One (1) Share of Common Stock
- ---------------------------------------- ------------------------------------------------------- ----------------------------------
Pittsburgh, PA 15219
- ---------------------------------------- ------------------------------------------------------- ----------------------------------
- ---------------------------------------- ------------------------------------------------------- ----------------------------------
(ATTACH 8 1/2 X 11 SHEET IF NECESSARY)
- ------------------------------------------------------------------------------------------------ ----------------------------------
IN TESTIMONY WHEREOF, THE INCORPORATOR(S) HAS (HAVE) SIGNED AND SEALED THE ARTICLES OF INCORPORATION
THIS 7th DAY OF October 1987.
--------------- ------------- --
/s/ Stuart R. Kaplan
------------------------------------------------------- -------------------------------------------------------
Stuart R. Kaplan, Sole Incorporator
------------------------------------------------------- -------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- FOR OFFICE USE ONLY -
- -----------------------------------------------------------------------------------------------------------------------------------
030 FILED 002 CODE 003 REV BOX SEQUENTIAL NO. 100 MICROFILM NUMBER
--------------------------
October 8, 1987 REVIEWED BY 31649 8763 751
-------------- ---------------- ---------------------------------
/s/ 004 SICC AMOUNT 001 CORPORATION NUMBER
--------------------------
/s/ DATE APPROVED
$75 1003354
-------------- ---------------- ---------------------------------
--------------------------
DATE REJECTED CERTIFY TO INPUT BY LOG IN LOG IN (REFILE)
[ ] REV.
--------------------------
Secretary of the Commonwealth MAILED BY DATE [ ] L & I /s/ Oct. 08 1987
Department of State ---------------- -------------- ------------------
Commonwealth of Pennsylvania [ ] OTHER VERIFIED BY LOG OUT LOG OUT (REFILE)
/s/
---------------- -------------- ------------------
P.O. [ ]
</TABLE>
<PAGE> 2
CONSENT TO USE OF SIMILAR NAME
Pursuant to 19 Pa. Code Section 17.3 (relating to use of a confusingly similar
name) the undersigned association, desiring to [x] to the use by another
association of a name which is confusingly similar to its name, hereby certifies
that:
1. The name of the association executing this Consent to Use of Similar
Name is: Aerolink International, Inc.
- --------------------------------------------------------------------------------
The (a) Address of this association's current registered office in this
Commonwealth or (b) name of its commercial registered service provider and the
county of venue is (the Department is hereby authorized to correct the following
information to conform to the records of the Department):
<TABLE>
<S> <C> <C> <C> <C>
Greater Pittsburgh International Airport,
Cargo Building No. 3,
P.O. Box 12375 Pittsburgh PA 15231 Allegheny
- --------------------------------------------- --------------- --------- -------- -------------
NUMBER AND STREET CITY STATE ZIP COUNTY
</TABLE>
c/o: N/A
-------------------------------------------------------------------------
NAME OF COMMERCIAL REGISTRANT OFFICE PROVIDER
an association represented by a commercial registered office provider, the
county in (b) shall be deemed the county in which the association is located for
venue and official publication purposes.
date of its incorporation or other organization is: October 8, 1987
statute under which it was incorporated or otherwised organized is: Act of
May 5, 1933, P.L. 364, as amended
association(s) entitled to the benefit of this Consent to Use of Similar Name is
(are): Aerolink Management, Inc. and Aerolink International L.P.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
check in this box: [ ] indicates that the association executing this Consent to
Use of Similar Name is the parent or prime affiliate of a group of association
using the same name with geographic or other designations, and that such
association is authorized to and does hereby act on behalf of all such
affiliated associations, including the following (see 19 Pa. Code 17.3(c)(6)):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TESTIMONY WHEREOF, the undersigned association has caused this consent to be
signed by a duly authorized officer this 28th day of December, 1998
Aerolink International, Inc.
-------------------------------------------
(Name of Association)
By: /s/ Terry L. Engel
----------------------------------------
Terry L. Engel (Signature)
Title: President
-------------------------------------
<PAGE> 3
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
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
AEROLINK INTERNATIONAL, INC.
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 8th day of October
in the year of our Lord one thousand
nine hundred and eighty-seven and of
the Commonwealth the two hundred
twelfth
/s/ Secretary of the Commonwealth
------------------------------------
Secretary of the Commonwealth
ECKERT SEAMANS CHERIN & MELLOTT
600 GRANT ST 42nd Floor
PITTSBURGH, PA 15219
<PAGE> 1
EXHIBIT 3.8
BY-LAWS
OF
AEROLINK INTERNATIONAL, INC.
ARTICLE I
General
Section 1. Name.
The name of the Corporation shall be AEROLINK INTERNATIONAL,
INC.
Section 2. Office.
The principal office of the Corporation shall be in the City
of Pittsburgh, County of Allegheny, Commonwealth of Pennsylvania, or such other
place or places as the Board of Directors may from time to time determine.
Section 3. Seal.
The Corporation shall have a seal which shall be circular in
form and which shall bear the name of the Corporation, AEROLINK INTERNATIONAL,
INC., its year of incorporation, "1987," and such other inscription as the Board
of Directors from time to time may determine.
Section 4. Fiscal Year.
The fiscal year of the Corporation shall be the calendar year
ending December 31, or such other fiscal year as shall be fixed by resolution of
the Board of Directors.
ARTICLE II
Shareholders
Section 1. Place of Meetings.
Each meeting of the shareholders shall be held at the
principal office of the Corporation or at such other place, within or without
the Commonwealth of Pennsylvania, as shall be designated in the notice of the
meeting.
<PAGE> 2
Section 2. Annual Meeting.
The annual meeting of the shareholders shall be held each year
on such date and at such time and place as shall be determined by a resolution
of the Board of Directors.
Section 3. Special Meetings.
Special meetings of the shareholders may be called at any time
by the President, or the Board of Directors, or the holders of not less than
one-fifth of all the shares outstanding and entitled to vote at such meeting. At
any time, upon written request of any person entitled to call a special meeting,
it shall be the duty of the Secretary to call a special meeting of the
shareholders, to be held at (i) the principal office of the Corporation or such
other place as the Board of Directors may adopt by resolution and (ii) such time
as the Secretary may fix, not less than ten or more than sixty days after the
receipt of the request. If the Secretary shall neglect or refuse to issue such
call, the person or persons making the request may do so.
Section 4. Notice of Meetings.
Written notice of every meeting of the shareholders shall be
given by, or at the direction of, the person or persons authorized to call the
meeting to each shareholder of record entitled to vote at the meeting at least
five (5) days prior to the day named for the meeting. Such notice shall be given
either personally or by sending a copy thereof through the mail or by telegram,
charges prepaid, to each shareholder at his address appearing on the books of
the Corporation or supplied by him to the Corporation for the purpose of notice.
Such notice shall specify the place, day and hour of the meeting, and, in the
case of a special meeting, the purpose of the meeting and the general nature of
the business to be transacted.
Section 5. Waiver of Notice.
A waiver of notice 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. Except in the case of a
special meeting, neither the business to be transacted nor the purpose of the
meeting need be specified in the waiver of notice of such meeting. Attendance of
a person either in person or by proxy at any meeting shall constitute a waiver
of notice of such meeting, except where such person attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting was not lawfully called or convened.
Section 6. Quorum.
The presence in person or by proxy of the holders of a
majority of the outstanding shares entitled to vote at the shareholders' meeting
shall constitute a quorum. The shareholders present at a duly organized meeting
can continue to do business until adjournment, notwithstanding the withdrawal of
the holders of enough shares to leave less than a quorum. If a meeting cannot be
organized because a quorum has not attended, those present may adjourn the
meeting to such time and place as they may determine, but, in the case of any
meeting called for
2
<PAGE> 3
the election of directors, those who attend the second of such adjourned
meetings, although less than a quorum, shall nevertheless constitute a quorum
for the purpose of electing directors.
Section 7. Adjournments of Meetings.
Adjournment or adjournments of any annual or special meeting
of the shareholders may be taken, but any meeting at which directors are to be
elected shall be adjourned only from day to day, or for such longer periods not
exceeding fifteen (15) days each as may be directed by shareholders who are
present in person or by proxy and who are entitled to cast at least a majority
of the votes which all such shareholders would be entitled to cast at an
election of directors, until such directors have been elected.
Section 8. Notice of Adjourned Meetings.
No notice of an adjourned meeting or of the business to be
transacted at an adjourned meeting need be given other than by announcement at
the meeting at which such adjournment is taken.
Section 9. Informal Action by the Shareholders.
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 action so taken, shall be signed by all of the shareholders who would
be entitled to vote at a meeting for such purpose and shall be filed with the
Secretary of the Corporation.
Section 10. Telephonic Meetings.
One or more shareholders may participate in any regular 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.
Section 11. Voting Power.
Every shareholder of record of capital stock with voting
rights shall have the right to one vote for every such share standing in his
name on the books of the Corporation. All questions shall be decided by the vote
of the majority of the capital stock represented and entitled to vote at any
meeting unless otherwise specifically provided by law or by the articles of the
Corporation.
Section 12. Proxies.
Every shareholder may vote either in person or by proxy. Every
proxy shall be executed in writing by the shareholder or by his duly authorized
attorney-in-fact 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 notice thereof has been
received by the Secretary of the Corporation. No unrevoked proxy shall be valid
after eleven months from the
3
<PAGE> 4
date of its execution unless a longer time is expressly provided therein, but in
no event shall a proxy, unless coupled with an interest, be voted on after three
years from the date of its execution. A proxy shall not be revoked by the death
or incapacity of the maker unless before the vote is counted or the authority
has exercised written notice of such death or incapacity is received by the
Secretary of the Corporation.
Section 13. Presiding Officer.
All meetings of the shareholders shall be called to order and
presided over by the President, or in his absence by the Chairman of the Board
of Directors, or in his absence by a Vice President, or in the absence of all of
them by the Treasurer, or if none of such persons is present by a chairman
elected by the shareholders.
ARTICLE III
Directors
Section 1. Number
The business and affairs of the Corporation shall be managed
by a Board of Directors, who need not be residents of the Commonwealth of
Pennsylvania or shareholders of the Corporation. The Board of Directors shall
have the power to fix the number of directors and, from time to time, by proper
resolution, to increase or decrease the number thereof without a vote of the
shareholders, provided that if the number of Directors so determined is less
than three, it shall not be less than the number of shareholders.
Section 2. Terms.
Each director shall be elected by plurality vote of the
shareholders at the annual meeting of shareholders for a term of one year and
shall hold office for the term for which he is elected and until his successor
shall have been elected and qualified.
Section 3. Director's Duties and Obligations.
A. Standard of Care. A director of the Corporation shall stand
in a fiduciary relation to the Corporation and shall perform his duties as a
director, including his duties as a member of any committee of the board upon
which he may serve, in good faith, in a manner he 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 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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<PAGE> 5
(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 he 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 he has knowledge concerning the matter in question that would cause his
reliance to be unwarranted.
B. 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 the standard
set forth in Subsection A of this Section.
C. 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 interest of the Corporation.
Section 4. Failure to Object.
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
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 of the meeting. Such right to dissent shall not be
available to a director who has voted in favor of such action.
Section 5. Compensation of Directors.
Directors, as such, shall not receive any salary for their
services, but by resolution of the Board of Directors, a fixed sum and expenses
of attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board of Directors; provided, that nothing herein shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 6. Vacancies.
Vacancies in the Board of Directors, including vacancies
resulting from an increase in the number 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
5
<PAGE> 6
successor is elected by the shareholders at the next annual meeting of the
shareholders or at any special meeting duly called for that purpose and held
prior thereto.
Section 7. Regular Meetings.
A meeting of the Board of Directors for the election of
officers and the transaction of such other business as may properly come before
the meeting shall be held, without notice, immediately after the annual meeting
of the shareholders, or after the last adjournment thereof. The Board of
Directors shall hold such other regular meetings at such times and places as it
may determine.
Section 8. Special Meetings.
The Board of Directors shall hold such special meetings as
shall be called at the direction of the Chairman of the Board of Directors,
President, or any three directors. Each such meeting shall be held at such time
and place as shall be designated in the notice of such meeting.
Section 9. Notice of Meetings.
Written notice of all meetings, except the annual meeting, of
the Board of Directors shall be given by, or at the direction off the person or
persons calling such meeting at least three days prior to the day named for the
meeting. Such notice shall be given either personally or by sending a copy
thereof through the mail or by telegram, charges prepaid, to each Director. Such
notice shall specify the place, day and hour of the meeting.
Section 10. Waiver of Notice.
A waiver of notice, in writing, signed by the person or
persons entitled to such notice, whether before or after the date stated
therein, shall be deemed equivalent to the giving of such notice. Neither the
business to be transacted nor the purpose of the meeting need be specified in
the waiver of notice of such meeting.
Section 11. Committees of Directors.
The Board of Directors may, by resolution or resolutions
passed by a majority of the Board, designate one or more committees, each
committee to consist of two or more of the directors of the Corporation, which,
to the extent provided in said resolution or resolutions, shall have and may
exercise the powers of the Board of Directors in the management of the business
and affairs of the Corporation, and may have power to authorize the seal of the
Corporation to be affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. The committees shall keep
regular minutes of their proceedings and report the same to the Board when
required.
6
<PAGE> 7
Section 12. Informal Action by the Directors or Any Committee Thereof.
Any action which may be taken at a meeting of the directors or
the members of any committee of the Board 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 the members of the committee, as the case may
be, who would be entitled to vote at such meeting and shall be filed with the
Secretary of the Corporation.
Section 13. Telephonic Meetings.
One or more directors, or members of a committee of the Board,
may participate in meetings of the Board or a committee thereof by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear and speak to each other.
Section 14. 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 15. Reports to Shareholders.
The Board of Directors shall have complete and unqualified
discretion in determining whether it shall cause to be sent to the shareholders
any reports and, if any are sent, the extent and type thereof and whether the
same shall be prepared and verified by certified public accountants, and it is
expressly provided that the Board of Directors shall be under no obligation to
send any such reports to the shareholders, or if the same are sent, to render
the same in any particular form or have them verified in any particular manner.
Section 16. Presiding Officer.
All meetings of the Board of Directors shall be called to
order and presided over by a Chairman elected by the Board of Directors, or, in
his absence, the President, or, in his absence, a member of the Board of
Directors, to be selected by the members present, shall preside. The Secretary
of the Corporation shall act as secretary at all meetings of the Board of
Directors, and in the absence of the Secretary, the Chairman of the meeting may
designate any person to act as secretary of the meeting.
Section 17. Interested Director or Officer Contracts.
No contract or other transaction between the Corporation and
(i) one or more of its officers or directors or (ii) any other entity in which
one or more of the directors or officers of the Corporation is a director or
officer or has a financial interest, shall be void or voidable solely (a) for
such reason, (b) because such director or officer is present at or participates
in the meeting of the Board of Directors at which such contract is authorized or
(c) because the vote of such
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<PAGE> 8
director or officer is counted at the meeting of the Board of Directors at which
such contract is authorized, if one of the following three conditions is
satisfied:
1. All material facts as to such contract and such director's
or officer's interest therein have been disclosed to or are known by the Board
of Directors and the Board of Directors in good faith authorizes such contract
by a vote sufficient for such purpose without counting the vote of such
interested director; or
2. All material facts as to such contract and such director's
or officer's interest therein have been disclosed to or are known by the
shareholders of the Corporation and such contract has been specifically approved
in good faith by the shareholders; or
3. Such contract is fair as to the Corporation as of the time
at which such contract is authorized, approved or ratified by the Board of
Directors or the shareholders of the Corporation.
Directors so interested may be counted when present at
meetings of the Board of Directors for the purpose of determining the existence
of a quorum.
Section 18. Limitation of Personal Liability of Directors.
To the fullest extent that the laws of the Commonwealth of
Pennsylvania, as in effect on the date of the adoption of this Section 18, or as
such laws are 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. Any amendment or repeal of this Section or adoption
of any other provision of the By-laws or 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 failure to act,
prior to the adoption of such amendment, repeal or other provision.
ARTICLE IV
Officers
Section 1. Number and Election.
The Board of Directors at its annual meeting shall elect a
Chairman of the Board, a President, one or more Vice Presidents, a Secretary,
and a Treasurer, and may elect such other officers and assistant officers and
appoint such agents as the Board may deem appropriate.
Section 2. Qualifications.
The Chairman of the Board and the President shall be members
of the Board of Directors but the other officers need not be directors.
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<PAGE> 9
Section 3. Term of Office.
Each officer and assistant officer shall hold office until the
end of the term of the Board of Directors by which he is elected and until his
successor shall have been elected.
Section 4. Chairman of the Board.
The Chairman of the Board shall preside at all meetings of the
Board of Directors at which he is present. He shall be a member ex officio of
all committees of the Board of Directors.
Section 5. President.
The President shall supervise generally all of the affairs of
the Corporation, and shall perform all duties incident to the office of
President. He shall be a member ex officio of all committees of management
appointed by him. In the absence of the Chairman of the Board, he shall preside
at meetings of the Board of Directors.
Section 6. Vice Presidents.
Each Vice President shall have such powers and perform such
duties as the President may from time to time delegate to him. At the request of
the President, any Vice President may, in the case of the absence or inability
to act of the President, temporarily act in his place. In the case of the death
of the President, or in the case of his absence or inability to act without
having designated a Vice President to act temporarily in his place, the Vice
President longest in service as Vice President shall perform the duties of the
President except as shall be otherwise designated by the Board of Directors. A
Vice President who is not a director shall not preside at any meeting of the
Board of Directors.
Section 7. Secretary.
The Secretary shall (i) attend meetings of the shareholders
and the Board of Directors, (ii) keep minutes thereof in suitable books, (iii)
send out all notices of meetings as required by law or these By-laws and (iv)
have custody and control over the seal of the Corporation. He shall be ex
officio an Assistant Treasurer. He shall, in general, perform all duties
incident to the office of Secretary.
9
<PAGE> 10
Section 8. Treasurer.
The Treasurer shall receive all money paid to the Corporation
and keep or cause to be kept accurate accounts of all money received or payments
made in books kept for that purpose. He shall (i) deposit all money received by
him in the name and to the credit of the Corporation in banks or other places of
deposit and (ii) disburse the money of the Corporation by checks or vouchers. He
shall be ex officio an Assistant Secretary. He shall, in general, perform all
duties incident to the office of Treasurer.
Section 9. Assistant Officers.
Each assistant officer shall perform such duties as may be
delegated to him by the officer to whom he is an assistant, and in the absence
or disability of such officer may perform the duties of his office.
ARTICLE V
Execution of Documents
Section 1. Checks, Notes, Etc.
The Board of Directors shall from time to time designate the
officers or agents of the Corporation who shall have power, in its name, to sign
and endorse checks and other negotiable instruments and to borrow money for the
Corporation, and in its name, to make notes or other evidences of indebtedness.
Section 2. Other Documents.
Unless otherwise authorized by the Board of Directors, all
contracts, leases, deeds, deeds of trust, mortgages, powers of attorney to
transfer stock and for other purposes, and all other documents requiring the
seal of the Corporation shall be executed for and on behalf of the Corporation
by the President, or a Vice President, and the corporate seal shall be affixed
by such person or at his direction, all of which shall be attested to by the
Secretary, or an Assistant Secretary.
ARTICLE VI
Share Certificates and Transfers
Section 1. Share Certificates.
Share certificates of the Corporation shall be in such form as
the Board of Directors may from time to time determine. Every share certificate
shall be signed by the President or a Vice President, or by any other officer
designated by the Board of Directors, and
10
<PAGE> 11
shall be countersigned by the Secretary or an Assistant Secretary and sealed
with the corporate seal.
Section 2. Loss or Destruction of Share Certificate
In case of loss or destruction of a certificate of stock, no
new certificate shall be issued in lieu thereof except upon satisfactory proof
to the Board of Directors or their delegee of such loss or destruction, and upon
the giving to the Corporation of satisfactory security against loss by bond or
otherwise. Any such new certificate shall be plainly marked "Duplicate" upon its
face,
Section 3. Transfers of Stock; Transfer Agent.
Transfers of stock shall be made only upon the books of the
Corporation and only upon surrender of the share certificate, unless such
certificate is lost or has been destroyed. The Board of Directors may appoint a
transfer agent and a registrar of transfers, and may require all stock
certificates to bear the signature of such transfer agent and of such registrar
of transfers.
ARTICLE VII
Indemnification of Directors, Officers and Employees
Section 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, liability and loss (including without limitation,
attorney's fees, judgments, fines, taxes, penalties and amounts paid in
settlement) 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, as a party or otherwise, by
reason of such person being or having been a director or officer of the
Corporation or by reason of the fact 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 brought by an Indemnitee
(as hereinafter defined) against the Corporation except as provided in the last
sentence of this Section 1. 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. An Indemnitee shall be entitled to be indemnified pursuant to this
Section 1 for expenses incurred in connection with any Action brought by such
Indemnitee against the Corporation only if the Action is a claim for indemnity
11
<PAGE> 12
or expenses under Section 3 of this Article or otherwise and either (i) the
Indemnitee is successful in whole or in part in the Action for which expenses
are claimed or (ii) the indemnification for expenses is included in a settlement
of the Action or is awarded by a court.
Section 2. Right to Advancement of Expenses.
Every Indemnitee shall be entitled as of right to have his or
her expenses in any Action (other than an Action brought by such Indemnitee
against the Corporation) paid in advance by the Corporation prior to final
disposition of such Action, subject to any obligation which may be imposed by
law or by provision in the Articles or By-laws of the Corporation, agreement or
otherwise to reimburse the Corporation in certain events.
Section 3. Right of Indemnitee to Initiate Action.
If a written claim under Section 1 or Section 2 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 Action against the Corporation 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 expenses of prosecuting such Action. It shall be
a defense to any Action to recover a claim under Section 1 of this Article 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 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 law, shall
be a defense to such Action or create a presumption that the Indemnitee's
conduct was such that indemnification is prohibited by law. The only defense to
any such Action to receive payment of expenses in advance under Section 2 of
this Article shall be failure to make an undertaking to reimburse if such an
undertaking is required by law or by provision in the Articles or By-laws of the
Corporation, agreement or otherwise.
Section 4. Insurance and Funding.
The Corporation may purchase and maintain insurance to protect
itself and any person eligible to be indemnified hereunder against any expense,
liability or loss 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 expense, liability or loss 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.
12
<PAGE> 13
Section 5. Non-Exclusivity; Nature and Extent of Rights.
The rights of indemnification and advancement of expenses
provided for in this Article (i) shall not be deemed exclusive of any other
rights, whether now existing or hereafter created, to which any Indemnitee may
be entitled under the Articles or By-laws of the Corporation, any agreement, any
vote of shareholders or directors or otherwise, (ii) shall be deemed to create
contractual rights in favor of each Indemnitee, (iii) shall continue as to each
person who has ceased to have the status pursuant to which he or she was
entitled or was denominated as entitled to indemnification hereunder and shall
inure to the benefit of the heirs and legal representatives of each Indemnitee
and (iv) shall be applicable to Actions commenced after the adoption hereof,
whether arising from acts or omissions occurring before or after the adoption
hereof. The rights of indemnification provided in this Article may not be
amended or repealed so as to limit in anyway the indemnification or the right to
advancement of expenses provided for herein with respect to any acts or
omissions occurring prior to the adoption of any such amendment or repeal.
Section 6. Effective Date.
This Article 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 prohibits 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 VIII
Amendments
Section 1. Amendments to By-laws.
These By-laws may be altered or amended by a vote of a
majority of the members of the Board of Directors at any regular or special
meeting duly convened after notice of that purpose; subject, however, to the
power of the shareholders to change or repeal the By-laws at any annual or
special meeting duly convened after notice of that purpose.
13
<PAGE> 1
EXHIBIT 3.9
<TABLE>
<S> <C> <C>
PLEASE INDICATE (CHECK ONE) TYPE CORPORATION:
ARTICLES OF INCORPORATION
(PREPARE IN TRIPLICATE) [X] DOMESTIC BUSINESS CORPORATION FEE
$75.00
COMMONWEALTH OF PENNSYLVANIA [ ] DOMESTIC BUSINESS CORPORATION
DEPARTMENT OF STATE -- CORPORATION BUREAU A CLOSE CORPORATION - COMPLETE BACK
308 NORTH OFFICE BUILDING, HARRISBURG, PA 17120
[ ] DOMESTIC PROFESSIONAL CORPORATION
ENTER BOARD LICENSE NO.
- -----------------------------------------------------------------------------------------------------------------------------------
010 NAME OF CORPORATION (MUST CONTAIN A CORPORATE INDICATOR UNLESS EXEMPT UNDER 15 P.S. 2906 B)
Aerolink Maintenance, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
011 ADDRESS OF REGISTERED OFFICE IN PENNSYLVANIA (P.O. BOX NUMBER NOT ACCEPTABLE)
Cargo Building #1, Greater Pgh. International Airport, P.O. Box 12375
- -----------------------------------------------------------------------------------------------------------------------------------
012 CITY 033 COUNTY 013 STATE 064 ZIP CODE
Pittsburgh Allegheny PA 15231 (02)
- -----------------------------------------------------------------------------------------------------------------------------------
050 EXPLAIN THE PURPOSE OR PURPOSES OF THE CORPORATION
The Corporation shall have the following purposes:
1. To provide maintenance services to commercial aircraft; and
2. To engage in any lawful act concerning any or all lawful business for which corporations may be incorporated under the Act of
May 5, 1933, P.L. 364, as amended, under the provisions of which this Corporation is incorporated.
(ATTACH 8 1/2 x 11 SHEET IF NECESSARY)
- -----------------------------------------------------------------------------------------------------------------------------------
The Aggregate Number Shares, Classes of Shares and Par Value of Shares Which the Corporation Shall have Authority to Issue:
040 Number and Class of Shares 1,000 common shares 041 Stated Par Value Per 042 Total Authorized 031 Term of Existence
Share if Any $1.00 Capital $1,000.00 Perpetual
- -----------------------------------------------------------------------------------------------------------------------------------
The Name and Address of Each Incorporator, and the Number and Class of Shares Subscribed to by each Incorporator
061, 062
060 Name 063, 064 Address (Street, City, State, Zip Code) Number & Class of Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Stuart R. Kaplan, Esq. 600 Grant Street, 42nd Floor One share of common
- -----------------------------------------------------------------------------------------------------------------------------------
Pittsburgh, PA 15219
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
(ATTACH 8 1/2 X 11 SHEET IF NECESSARY)
- -----------------------------------------------------------------------------------------------------------------------------------
IN TESTIMONY WHEREOF, THE INCORPORATOR (S) HAS (HAVE) SIGNED AND SEALED THE ARTICLES OF INCORPORATION
THIS 28th DAY OF July 1988.
/s/ -
------------------------------------------------------- -------------------------------------------------------
------------------------------------------------------- -------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- FOR OFFICE USE ONLY -
- -----------------------------------------------------------------------------------------------------------------------------------
030 FILED 002 CODE 003 REV BOX SEQUENTIAL NO. 100 MICROFILM NUMBER
--------------------------
JUL 29, 1988 REVIEWED BY 1322 88551462
-----------------------------------------------------------
/s/ 004 SICC AMOUNT 001 CORPORATION NUMBER
--------------------------
/s/ DATE APPROVED
$75 1048035
-----------------------------------------------------------
--------------------------
DATE REJECTED CERTIFY TO INPUT BY LOG IN LOG IN (REFILE)
[ ] REV.
--------------------------
Secretary of the Commonwealth MAILED BY DATE [ ] L & I /s/ JUL 29, 1988
Department of State --------------------------------------------
Commonwealth of Pennsylvania [ ] OTHER VERIFIED BY LOG OUT LOG OUT
(REFILE)
/s/
--------------------------------------------
P.O. [ ]
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
DSC5 SCL-204 (Rev. 81) 88551463
------------------------------------
P.O. [ ] CO., 427 Fourth Ave., Pgh., Department of State Number
PA 15219
------------------------------------
COMMONWEALTH OF PENNSYLVANIA CORPORATE ------------------------------------
DEPARTMENT OF STATE REGISTRY INFORMATION [ ] Number
CORPORATION BUREAU FOR
308 NORTH OFFICE BUILDING DEPARTMENTS OF STATE ------------------------------------
HARRISBURG, PA 17120 AND REVENUE ------------------ -----------------
Filing Period Inc. Date
FILING FEE: NONE (FILE IN TRIPLICATE) 3 4 5
------------------ -----------------
------------------ -----------------
Standard Report Code
Industrial
Code
------------------ -----------------
======================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------
[X] BUSINESS CORPORATION [ ] NON-PROFIT CORPORATION [ ] MOTOR VEHICLE FOR HIRE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Name of Corporation/Business Federal B.I.N.
Aerolink Maintenance, Inc. Applied For
- ----------------------------------------------------------------------------------------------------------------------
Location of Initial Registered Office in Pennsylvania (Street/Route, City, County, State, Zip Code)
Cargo Building #1, Greater Pittsburgh International Airport, P.O. Box 12376
---------------------------------------------------------------------------------------------------------------
(Street and Number or R.D. Number and Box)
Pittsburgh Allegheny PA 15231
---------------------------------------------------------------------------------------------------------------
(City or Town) (County) (State) (Zip Code)
- ----------------------------------------------------------------------------------------------------------------------
Mailing Address if different from #3 (location where correspondence, tax report forms, etc. are to be sent)
N/A
---------------------------------------------------------------------------------------------------------------
(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, Date Business Started
Post Office, State) in PA
N/A
-------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Principal Officers (President, Vice President, Secretary, Treasurer)
- ----------------------------------------------------------------------------------------------------------------------
A. Name Title Social Security Number
Terry E. Engel President
- ------------------------------------------------------------------ ------------------------- -------------------------
Home Address
108 Firth Drive, Coraopolis, PA 15108
- ----------------------------------------------------------------------------------------------------------------------
B. Name Title Social Security Number
Mathew Garland Secretary/Treasurer
- ------------------------------------------------------------------ ------------------------- -------------------------
Home Address
111 Farm Crest Drive, Oakdale, PA 15071
- ----------------------------------------------------------------------------------------------------------------------
C. Name Title Social Security Number
- ------------------------------------------------------------------ ------------------------- -------------------------
Home Address
- ----------------------------------------------------------------------------------------------------------------------
D. Name Title Social Security Number
- ------------------------------------------------------------------ ------------------------- -------------------------
Home Address
- ----------------------------------------------------------------------------------------------------------------------
Date and State of Incorporation or Organization
Date: State: Pennsylvania
- ----------------------------------------------------------------------------------------------------------------------
Applicant is Operating as:
[X] 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 Amount of Capital paid in and Date
stock? No (Yes)
If yes, amount authorized? 1,000 common shares Amount: none yet Date:
- ----------------------------------------------------------------------------------------------------------------------
Is the Corporation part of a system operating in Pennsylvania [X] No [ ] Yes
If yes, provide parent's tax number, name and subsidiary corporation.
(Attach a separate sheet listing subsidiary corporation).
Tax Number: Name:
- ----------------------------------------------------------------------------------------------------------------------
Corporation's fiscal year ends: Standard Industrial Classification Code
December 31 7600
- ----------------------------------------------------------------------------------------------------------------------
Describe principal Pa. [ ] 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.
Providing maintenance service to aircraft
- ----------------------------------------------------------------------------------------------------------------------
For Foreign Corporations Only - provide [ ]
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
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
AEROLINK MAINTENANCE, INC.
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 29th day of July in the year of our
Lord one thousand nine hundred and
eighty-eight and of the Commonwealth the
two hundred thirteenth
/s/ Secretary of the Commonwealth
---------------------------------------
Secretary of the Commonwealth
<PAGE> 1
EXHIBIT 3.10
INDEX
of
BY-LAWS of
AEROLINK MAINTENANCE, INC.
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
General
Section 1. Name.................................................................................... 1
Section 2. Office.................................................................................. 1
Section 3. Seal.................................................................................... 1
Section 4. Fiscal Year............................................................................. 1
ARTICLE II
Shareholders
Section 1. Place of Meetings....................................................................... 1
Section 2. Annual Meeting.......................................................................... 1
Section 3. Special Meetings........................................................................ 2
Section 4. Notice of Meetings...................................................................... 2
Section 5. Waiver of Notice........................................................................ 2
Section 6. Quorum.................................................................................. 2
Section 7. Adjournments of Meetings................................................................ 3
Section 8. Notice of Adjourned Meetings............................................................ 3
Section 9. Informal Action by the Shareholders..................................................... 3
Section 10. Telephonic Meetings..................................................................... 3
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 11. Voting Power............................................................................ 3
Section 12. Proxies................................................................................. 3
Section 13. Presiding Officer....................................................................... 4
ARTICLE III
Directors
Section 1. Number.................................................................................. 4
Section 2. Terms................................................................................... 4
Section 3. Director's Duties and Obligations....................................................... 4
Section 4. Failure to Object....................................................................... 5
Section 5. Compensation of Directors............................................................... 5
Section-6. Vacancies............................................................................... 6
Section 7. Regular Meetings........................................................................ 6
Section 8. Special Meetings........................................................................ 6
Section 9. Notice of Meetings...................................................................... 6
Section 10. Waiver of Notice........................................................................ 6
Section 11. Committees of Directors................................................................. 6
Section 12. Informal Action by the Directors or Any Committee Thereof............................... 7
Section 13. Telephonic Meetings..................................................................... 7
Section 14. Quorum.................................................................................. 7
Section 15. Reports to Shareholders................................................................. 7
Section 16. Presiding Officer....................................................................... 7
Section 17. Interested Director or Officer Contracts................................................ 8
Section 18. Limitation of Personal Liability of Directors........................................... 8
</TABLE>
ii
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE IV
Officers
Section 1. Number and Election..................................................................... 9
Section 2. Qualifications.......................................................................... 9
Section 3. Term of Office.......................................................................... 9
Section 4. Chairman of the Board................................................................... 9
Section 5. President............................................................................... 9
Section 6. Vice Presidents......................................................................... 9
Section 7. Secretary............................................................................... 10
Section 8. Treasurer............................................................................... 10
Section 9. Assistant Officers...................................................................... 10
ARTICLE V
Execution of Documents
Section 1. Checks, Notes, Etc...................................................................... 10
Section 2. Other Documents......................................................................... 10
ARTICLE VI
Share Certificates and Transfers
Section 1. Share Certificates...................................................................... 11
Section 2. Loss or Destruction of Share Certificate................................................ 11
Section 3. Transfers of Stock; Transfer Agent...................................................... 11
</TABLE>
iii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VII
Indemnification of Directors, Officers and Employees
Section 1. Right to Indemnification................................................................ 11
Section 2. Right to Advancement of Expenses........................................................ 12
Section 3. Right of Indemnitee to Initiate Action.................................................. 12
Section 4. Insurance and Funding................................................................... 13
Section 5. Non-Exclusivity; Nature and Extent of Rights............................................ 13
Section 6. Effective Date.......................................................................... 13
ARTICLE VIII
Amendments
Section 1. Amendments to By-laws................................................................... 13
</TABLE>
iv
<PAGE> 5
BY-LAWS
OF
AEROLINK MAINTENANCE, INC.
ARTICLE I
General
Section 1. Name.
The name of the Corporation shall be Aerolink Maintenance,
Inc.
Section 2. Office.
The principal office of the Corporation shall be in the City
of Pittsburgh, County of Allegheny, Commonwealth of Pennsylvania, or such other
place or places as the Board of Directors may from time to time determine.
Section 3. Seal.
The Corporation shall have a seal which shall be circular in
form and which shall bear the name of the Corporation, Aerolink Maintenance,
Inc., its year of incorporation, "1988," and such other inscription as the
Board of Directors from time to time may determine.
Section 4. Fiscal Year.
The fiscal year of the Corporation shall be the calendar year
ending December 31, or such other fiscal year as shall be fixed by resolution
of the Board of Directors.
ARTICLE II
Shareholders
Section 1. Place of Meetings.
Each meeting of the shareholders shall be held at the
principal office of the Corporation or at such other place, within or without
the Commonwealth of Pennsylvania, as shall be designated in the notice of the
meeting.
Section 2. Annual Meeting.
The annual meeting of the shareholders shall be held each
year on such date and at such time and place as shall be determined by a
resolution of the Board of Directors.
<PAGE> 6
Section 3. Special Meetings.
Special meetings of the shareholders may be called at any
time by the President, or the Board of Directors, or the holders of not less
than one-fifth of all the shares outstanding and entitled to vote at such
meeting. At any time, upon written request of any person entitled to call a
special meeting, it shall be the duty of the Secretary to call a special
meeting of the shareholders, to be held at (i) the principal office of the
Corporation or such other place as the Board of Directors may adopt by
resolution and (ii) such time as the Secretary may fix, not less than ten or
more than sixty days after the receipt of the request. If the Secretary shall
neglect or refuse to issue such call, the person or persons making the request
may do so.
Section 4. Notice of Meetings.
Written notice of every meeting of the shareholders shall be
given by, or at the direction of, the person or persons authorized to call the
meeting to each shareholder of record entitled to vote at the meeting at least
five (5) days prior to the day named for the meeting. Such notice shall be
given either personally or by sending a copy thereof through the mail or by
telegram, charges prepaid, to each shareholder at his address appearing on the
books of the Corporation or supplied by him to the Corporation for the purpose
of notice. Such notice shall specify the place, day and hour of the meeting,
and, in the case of a special meeting, the purpose of the meeting and the
general nature of the business to be transacted.
Section 5. Waiver of Notice.
A waiver of notice 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. Except in the case of a
special meeting, neither the business to be transacted nor the purpose of the
meeting need be specified in the waiver of notice of such meeting. Attendance
of a person either in person or by proxy at any meeting shall constitute a
waiver of notice of such meeting, except where such person attends a meeting
for the express purpose of objecting to the transaction of any business because
the meeting was not lawfully called or convened.
Section 6. Quorum.
The presence in person or by proxy of the holders of a
majority of the outstanding shares entitled to vote at the shareholders'
meeting shall constitute a quorum. The shareholders present at a duly organized
meeting can continue to do business until adjournment, notwithstanding the
withdrawal of the holders of enough shares to leave less than a quorum. If a
meeting cannot be organized because a quorum has not attended, those present
may adjourn the meeting at such time and place as they may determine, but, in
the case of any meeting called for the election of directors, those who attend
the second of such adjourned meetings, although less than a quorum, shall
nevertheless constitute a quorum for the purpose of electing directors.
-2-
<PAGE> 7
Section 7. Adjournments of Meetings.
Adjournment or adjournments of any annual or special meeting
of the shareholders may be taken, but any meeting at which directors are to be
elected shall be adjourned only from day to day, or for such longer periods not
exceeding fifteen (15) days each as may be directed by shareholders who are
present in person or by proxy and who are entitled to cast at least a majority
of the votes which all such shareholders would be entitled to cast at an
election of directors, until such directors have been elected.
Section 8. Notice of Adjourned Meetings.
No notice of an adjourned meeting or of the business to be
transacted at an adjourned meeting need be given other than by announcement at
the meeting at which such adjournment is taken.
Section 9. Informal Action by the Shareholders.
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 action so taken, shall be signed by all of the
shareholders who would be entitled to vote at a meeting for such purpose and
shall be filed with the Secretary of the Corporation.
Section 10. Telephonic Meetings.
One or more shareholders may participate in any regular 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.
Section 11. Voting Power.
Every shareholder of record of capital stock with voting
rights shall have the right to one vote for every such share standing in his
name on the books of the Corporation. All questions shall be decided by the
vote of the majority of the capital stock represented and entitled to vote at
any meeting unless otherwise specifically provided by law or by the articles of
the Corporation.
Section 12. Proxies.
Every shareholder may vote either in person or by proxy.
Every proxy shall be executed in writing by the shareholder or by his duly
authorized attorney-in-fact 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 notice
thereof has been received by the Secretary of the Corporation. No unrevoked
proxy shall be valid after eleven months from the date of its execution unless
a longer time is expressly provided therein, but in no event shall a proxy,
unless coupled with an interest, be voted on after three years from the date of
its
-3-
<PAGE> 8
execution. A proxy shall not be revoked by the death or incapacity of the
maker unless before the vote is counted or the authority has exercised written
notice of such death or incapacity is received by the Secretary of the
Corporation.
Section 13. Presiding Officer.
All meetings of the shareholders shall be called to order and
presided over by the President, or in his absence by the Chairman of the Board
of Directors, or in his absence by a Vice President, or in the absence of all
of them by the Treasurer, or if none of such persons is present by a chairman
elected by the shareholders.
ARTICLE III
Directors
Section 1. Number.
The business and affairs of the Corporation shall be managed
by a Board of Directors, who need not be residents of the Commonwealth of
Pennsylvania or shareholders of the Corporation. The Board of Directors shall
have the power to fix the number of directors and, from time to time, by proper
resolution, to increase or decrease the number thereof without a vote of the
shareholders, provided that if the number of Directors so determined is less
than three, it shall not be less than the number of shareholders.
Section 2. Terms.
Each director shall be elected by plurality vote of the
shareholders at the annual meeting of shareholders for a term of one year and
shall hold office for the term for which he is elected and until his successor
shall have been elected and qualified.
Section 3. Director's Duties and Obligations.
A. Standard of Care. A director of the Corporation shall
stand in a fiduciary relation to the Corporation and shall perform his duties
as a director, including his duties as a member of any committee of the board
upon which he may serve, in good faith, in a manner ha 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 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.
(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.
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<PAGE> 9
(3) A committee of the board upon which he 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 he has knowledge concerning the matter in question that would cause his
reliance to be unwarranted.
B. 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 the
standard set forth in Subsection A of this Section.
C. 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 interest of the Corporation.
Section 4. Failure to Object.
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 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 of the meeting. Such right to dissent shall not be
available to a director who has voted in favor of such action.
Section 5. Compensation of Directors.
Directors, as such, shall not receive any salary for their
services, but by resolution of the Board of Directors, a fixed sum and expenses
of attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board of Directors; provided, that nothing herein shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 6. Vacancies.
Vacancies in the Board of Directors, including vacancies
resulting from an increase in the number 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 at the next annual meeting of the shareholders or at any
special meeting duly called for that purpose and held prior thereto.
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<PAGE> 10
Section 7. Regular Meetings.
A meeting of the Board of Directors for the election of
officers and the transaction of such other business as may properly come before
the meeting shall be held, without notice, immediately after the annual meeting
of the shareholders, or after the last adjournment thereof. The Board of
Directors shall hold such other regular meetings at such times and places as it
may determine.
Section 8. Special Meetings.
The Board of Directors shall hold such special meetings as
shall be called at the direction of the Chairman of the Board of Directors,
President, or any three directors. Each such meeting shall be held at such time
and place as shall be designated in the notice of such meeting.
Section 9. Notice of Meetings.
Written notice of all meetings, except the annual meeting, of
the Board of Directors shall be given by, or at the direction of, the person or
persons calling such meeting at least three days prior to the day named for the
meeting. Such notice shall be given either personally or by sending a copy
thereof through the mail or by telegram, charges prepaid, to each Director.
Such notice shall specify the place, day and hour of the meeting.
Section 10. Waiver of Notice.
A waiver of notice, in writing, signed by the person or
persons entitled to such notice, whether before or after the date stated
therein, shall be deemed equivalent to the giving of such notice. Neither the
business to be transacted nor the purpose of the meeting need be specified in
the waiver of notice of such meeting.
Section 11. Committees of Directors.
The Board of Directors may, by resolution or resolutions
passed by a majority of the Board, designate one or more committees, each
committee to consist of two or more of the directors of the Corporation, which,
to the extent provided in said resolution or resolutions, shall have and may
exercise the powers of the Board of Directors in the management of the business
and affairs of the Corporation, and may have power to authorize the seal of the
Corporation to be affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. The committees shall keep
regular minutes of their proceedings and report the same to the Board when
required.
Section 12. Informal Action by the Directors or Any Committee Thereof.
Any action which may be taken at a meeting of the directors
or the members of any committee of the Board 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 the members of the committee, as the case may
be, who would be entitled to vote at such meeting and shall be filed with the
Secretary of the Corporation.
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<PAGE> 11
Section 13. Telephonic Meetings.
One or more directors, or members of a committee of the
Board, may participate in meetings of the Board or a committee thereof by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear and speak to each other.
Section 14. 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 15. Reports to Shareholders.
The Board of Directors shall have complete and unqualified
discretion in determining whether it shall cause to be sent to the shareholders
any reports and, if any are sent, the extent and type thereof and whether the
same shall be prepared and verified by certified public accountants, and it is
expressly provided that the Board of Directors shall be under no obligation to
send any such reports to the shareholders, or if the same are sent, to render
the same in any particular form or have them verified in any particular manner.
Section 16. Presiding Officer.
All meetings of the Board of Directors shall be called to
order and presided over by a Chairman elected by the Board of Directors, or, in
his absence, the President, or, in his absence, a member of the Board of
Directors, to be selected by the members present, shall preside. The Secretary
of the Corporation shall act as secretary at all meetings of the Board of
Directors, and in the absence of the Secretary, the Chairman of the meeting may
designate any person to act as secretary of the meeting.
Section 17. Interested Director or Officer Contracts.
No contract or other transaction between the Corporation and
(i) one or more of its officers or directors or (ii) any other entity in which
one or more of the directors or officers of the Corporation is a director or
officer or has a financial interest, shall be void or voidable solely (a) for
such reason, (b) because such director or officer is present at or participates
in the meeting of the Board of Directors at which such contract is authorized
or (c) because the vote of such director or officer is counted at the meeting
of the Board of Directors at which such contract is authorized, if one of the
following three conditions is satisfied:
1. All material facts as to such contract and such director's
or officer's interest therein have been disclosed to or are known by the Board
of
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<PAGE> 12
Directors and the Board of Directors in good faith authorizes such contract
by a vote sufficient for such purpose without courting the vote of such
interested director; or
2. All material facts as to such contract and such director's
or officer's interest therein have been disclosed to or are known by the
shareholders of the Corporation and such contract has been specifically
approved in good faith by the shareholders; or
3. Such contract is fair as to the Corporation as of the time
at which such contract is authorized, approved or ratified by the Board of
Directors or the shareholders of the Corporation.
Directors so interested may be counted when present at
meetings of the Board of Directors for the purpose of determining the existence
of a quorum.
Section 18. Limitation of Personal Liability of Directors.
To the fullest extent that the laws of the Commonwealth of
Pennsylvania, as in effect on the date of the adoption of this Section 18, or
as such laws are 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. Any amendment or repeal of this Section or
adoption of any other provision of the By-laws or 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 failure to act, prior to the adoption of such amendment, repeal or
other provision.
ARTICLE IV
Officers
Section 1. Number and Election.
The Board of Directors at its annual meeting shall elect a
Chairman of the Board, a President, one or more Vice Presidents, a Secretary,
and a Treasurer, and may elect such other officers and assistant officers and
appoint such agents as the Board may deem appropriate.
Section 2. Qualifications.
The Chairman of the Board and the President shall be members
of the Board of Directors but the other officers need not be directors.
Section 3. Term of Office.
Each officer and assistant officer shall hold office until
the end of the term of the Board of Directors by which he is elected and until
his successor shall have been elected.
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<PAGE> 13
Section 4. Chairman of the Board.
The Chairman of the Board shall preside at all meetings of
the Board of Directors at which he is present. He shall be a member exofficio
of all committees of the Board of Directors.
Section 5. President.
The President shall supervise generally all of the affairs of
the Corporation, and shall perform all duties incident to the office of
President. He shall be a member ex officio of all committees of management
appointed by him. In the absence of the Chairman of the Board, he shall preside
at meetings of the Board of Directors.
Section 6. Vice Presidents.
Each Vice President shall have such powers and perform such
duties as the President may from time to time delegate to him. At the request
of the President, any Vice President may, in the case of the absence or
inability to act of the President, temporarily act in his place. In the case of
the death of the President, or in the case of his absence or inability to act
without having designated a Vice President to act temporarily in his place, the
Vice President longest in service as Vice President shall perform the duties of
the President except as shall be otherwise designated by the Board of
Directors. A Vice President who is not a director shall not preside at any
meeting of the Board of Directors.
Section 7. Secretary.
The Secretary shall (i) attend meetings of the shareholders
and the Board of Directors, (ii) keep minutes thereof in suitable books, (iii)
send out all notices of meetings as required by law or these By-laws and (iv)
have custody and control over the seal of the Corporation. He shall be ex
officio an Assistant Treasurer. He shall, in general, perform all duties
incident to the office of Secretary.
Section 8. Treasurer.
The Treasurer shall receive all money paid to the Corporation
and keep or cause to be kept accurate accounts of all money received or
payments made in books kept for that purpose. He shall (i) deposit all money
received by him in the name and to the credit of the Corporation in banks or
other places of deposit and (ii) disburse the money of the Corporation by
checks or vouchers. He shall be ex officio an Assistant Secretary. He shall, in
general, perform all duties incident to the office of Treasurer.
Section 9. Assistant Officers.
Each assistant officer shall perform such duties as may be
delegated to him by the officer to whom he is an assistant, and in the absence
or disability of such officer may perform the duties of his office.
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<PAGE> 14
ARTICLE V
Execution of Documents
Section 1. Checks, Notes, Etc.
The Board of Directors shall from time to time designate the
officers or agents of the Corporation who shall have power, in its name, to
sign and endorse checks and other negotiable instruments and to borrow money
for the Corporation, and in its name, to make notes or other evidences of
indebtedness.
Section 2. Other Documents.
Unless otherwise authorized by the Board of Directors, all
contracts, leases, deeds, deeds of trust, mortgages, powers of attorney to
transfer stock and for other purposes, and all other documents requiring the
seal of the Corporation shall be executed for and on behalf of the Corporation
by the President, or a Vice President, and the corporate seal shall be affixed
by such person or at his direction, all of which shall be attested to by the
Secretary, or an Assistant Secretary.
ARTICLE VI
Share Certificates and Transfers
Section 1. Share Certificates.
Share certificates of the Corporation shall be in such form
as the Board of Directors may from time to time determine. Every share
certificate shall be signed by the President or a Vice President, or by any
other officer designated by the Board of Directors, and shall be countersigned
by the Secretary or an Assistant Secretary and sealed with the corporate seal.
Section 2. Loss or Destruction of Share Certificate.
In case of loss or destruction of a certificate of stock, no
new certificate shall be issued in lieu thereof except upon satisfactory proof
to the Board of Directors or their delegate of such loss or destruction, and
upon the giving to the Corporation of satisfactory security against loss by bond
or otherwise. Any such new certificate shall be plainly marked "Duplicate" upon
its face.
Section 3. Transfers of Stock; Transfer Agent.
Transfers of stock shall be made only upon the books of the
Corporation and only upon surrender of the share certificate, unless such
certificate is lost or has been destroyed. The Board of Directors may appoint a
transfer agent and a registrar of transfers, and may require all stock
certificates to bear the signature of such transfer agent and of such registrar
of transfers.
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<PAGE> 15
ARTICLE VII
Indemnification of Directors, Officers and Employees
Section 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, liability and loss (including without
limitation, attorney's fees, judgments, fines, taxes, penalties and amounts
paid in settlement) 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, as a party or
otherwise, by reason of such person being or having been a director or officer
of the Corporation or by reason of the fact 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 brought by an Indemnitee
(as hereinafter defined) against the Corporation except as provided in the last
sentence of this Section 1. 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. An Indemnitee shall be entitled to be indemnified pursuant to
this Section 1 for expenses incurred in connection with any Action brought by
such Indemnitee against the Corporation only if the Action is a claim for
indemnity or expenses under Section 3 of this Article or otherwise and either
(i) the Indemnitee is successful in whole or in part in the Action for which
expenses are claimed or (ii) the indemnification for expenses is included in a
settlement of the Action or is awarded by a court.
Section 2. Right to Advancement of Expenses.
Every Indemnitee shall be entitled as of right to have his or
her expenses in any Action (other than an Action brought by such Indemnitee
against the Corporation) paid in advance by the Corporation prior to final
disposition of such Action, subject to any obligation which may be imposed by
law or by provision in the Articles or By-laws of the Corporation, agreement or
otherwise to reimburse the Corporation in certain events.
Section 3. Right of Indemnitee to Initiate Action.
If a written claim under Section 1 or Section 2 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 Action against the Corporation 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 expenses of prosecuting such Action. It
shall be a defense to any Action to
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<PAGE> 16
recover a claim under Section 1 of this Article 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 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 law, shall
be a defense to such Action or create a presumption that the Indemnitee's
conduct was such that indemnification is prohibited by law. The only defense to
any such Action to receive payment of expenses in advance under Section 2 of
this Article shall be failure to make an undertaking to reimburse if such an
undertaking is required by law or by provision in the Articles or By-laws of
the Corporation, agreement or otherwise.
Section 4. Insurance and Funding.
The Corporation may purchase and maintain insurance to
protect itself and any person eligible to be indemnified hereunder against any
expense, liability or loss 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 expense, liability or loss 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.
Section 5. Non-Exclusivity; Nature and Extent of Rights.
The rights of indemnification and advancement of expenses
provided for in this Article (i) shall not be deemed exclusive of any other
rights, whether now existing or hereafter created, to which any Indemnitee may
be entitled under the Articles or By-laws of the Corporation, any agreement,
any vote of shareholders or directors or otherwise, (ii) shall be deemed to
create contractual rights in favor of each Indemnitee, (iii) shall continue as
to each person who has ceased to have the status pursuant to which he or she
was entitled or was denominated as entitled to indemnification hereunder and
shall inure to the benefit of the heirs and legal representatives of each
Indemnitee and (iv) shall be applicable to Actions commenced after the adoption
hereof, whether arising from acts or omissions occurring before or after the
adoption hereof. The rights of indemnification provided in this Article may not
be amended or repealed so as to limit in any way the indemnification or the
right to advancement of expenses provided for herein with respect to any acts
or omissions occurring prior to the adoption of any such amendment or repeal.
Section 6. Effective Date.
This Article 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 prohibits its
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<PAGE> 17
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 VIII
Amendments
Section 1. Amendments to By-laws.
These By-laws may be altered or amended by a vote of a
majority of the members of the Board of Directors at any regular or special
meeting duly convened after notice of that purpose; subject, however, to the
power of the shareholders to change or repeal the By-laws at any annual or
special meeting duly convened after notice of that purpose.
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<PAGE> 18
Aerolink Maintenance, Inc.
Unanimous Written Consent of
Initial Directors in Lieu of Organizational Meeting
The undersigned, being all of the initial directors of
Aerolink Maintenance, Inc. (the "Corporation"), do hereby consent in writing
pursuant to Section 402(7) of the Pennsylvania Business Corporation Law, as
amended, to the adoption of the resolutions and to the corporate actions
hereinafter set forth and direct that they shall, in all respects, be deemed as
valid corporate actions as though such actions and resolutions had been duly
approved and authorized at a formal organizational meeting of the initial
directors of the Corporation held on August 8, 1988.
1. Acceptance of Articles of Incorporation
RESOLVED, that the Articles of
Incorporation of the Corporation, as filed with the
Secretary of the Commonwealth of Pennsylvania on
July 29, 1988, be, and the same hereby are accepted;
and
RESOLVED, that the Secretary of the
Corporation be, and hereby is, directed to cause a
copy of the Articles of Incorporation to be filed in
the minute book of the Corporation.
2. Adoption of By-Laws
RESOLVED, that the By-laws of the
Corporation, as adopted by the incorporator of the
Corporation, be, and the same hereby are, approved,
and the actions of the incorporator in adopting such
By-laws for the Corporation be, and they hereby are,
ratified.
3. Election of Officers
The following persons are hereby elected to
the office or offices of the Corporation set
opposite their names, to serve until their
successors are elected and qualified pursuant to the
By-laws of the Corporation:
Terry L. Engel - President
Mathew Garland - Secretary and Treasurer
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<PAGE> 19
4. Adoption of Form of Stock Certificate
RESOLVED, that the form of stock
certificate for the Common Stock of the Corporation,
par value $1.00 per share, which the Secretary of
the Corporation hereby is directed to file in the
minute book of the Corporation, be and the same
hereby is, approved for use by the Corporation.
5. Adoption of Corporate Seal
RESOLVED, that a seal, the impression of
which is directed to be made on the margin of this
page for identification, be, and the same hereby is,
adopted as the Seal of the Corporation.
6. Authority to Open Bank Accounts
RESOLVED, that the proper officers of the
Corporation be, and they hereby are, authorized and
directed, in the name and on behalf of the
Corporation, to take any and all actions that they
may deem necessary or advisable in order to
establish bank accounts from time to time for the
efficient conduct of the Corporation's business; and
RESOLVED, that this Board of Directors
hereby adopts the form of any and all resolutions
required by any such bank to be adopted in
connection with the opening of any such accounts if
(i) in the opinion of the President or any Vice
President of the Corporation, the adoption of such
resolution or resolutions is necessary or advisable,
and (ii) the Secretary of the Corporation evidences
such adoption by filing with this consent, copies of
such resolutions which shall thereupon be deemed to
be adopted by this Board of Directors and
incorporated as part of this resolution; and
RESOLVED, that in connection with the
adoption of any of the foregoing resolutions, the
President of the Corporation be, and he hereby is,
authorized to designate those officers or agents of
the Corporation who may be authorized from time to
time to sign checks on any of such bank accounts;
and
RESOLVED FURTHER, that the President of the
Corporation be, and he hereby is, authorized to
borrow funds on behalf of the Corporation, from time
to time, if in the opinion of the President the
borrowing of funds is deemed to be necessary and in
the best interests of the Corporation.
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<PAGE> 20
7. Election of S Corporation Status
RESOLVED, that the proper officers of the
Corporation be, and they hereby are, authorized to
execute on behalf of the Corporation, any and all
forms and documents necessary or incidental to
permit the Corporation to become an S Corporation
for Federal and/or Pennsylvania income tax purposes,
all in accordance with any election to such status
adopted by the shareholders of the Corporation,
contingent upon approval by the Internal Revenue
Service.
8. Issuance of Stock
WHEREAS, the Board of Directors wishes to
offer for sale and issue 500 shares of the Common
Stock, par value $1.00 per share, as authorized by
the Corporation's Articles of Incorporation.
NOW, THEREFORE, BE IT RESOLVED, that the
President be, and he hereby is, authorized and
directed to offer for sale, to sell and to issue an
aggregate of 500 shares of the Common Stock of the
Corporation for an aggregate purchase price of
$500.00 payable in cash; and
RESOLVED, that the subscriptions for shares
of the Common Stock of the Corporation as
hereinafter set forth are approved:
<TABLE>
<CAPTION>
Number of Shares
Shareholder Subscribed For
----------- --------------
<S> <C>
Terry L. Engel 250
Mathew Garland 250
</TABLE>
RESOLVED, that the proper officers of the
Corporation be, and they hereby are, authorized and
directed to prepare and issue stock certificates
representing the shares of capital stock of the
Corporation and to cause such certificates to be
duly executed and delivered to the subscribers
referred to in the foregoing resolution upon receipt
of the subscription price described above.
9. Approval of Stock Assignment
RESOLVED, that the assignment by Stuart R.
Kaplan, the original subscriber to the capital stock
of the Corporation, of all of his right, title and
interest under such subscription to Terry L. Engel
be, and the same hereby is, approved upon the
understanding that such assignment was to be
incorporated into the subscription by Terry L. Engel
for the aforesaid 250 shares.
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<PAGE> 21
10. Fiscal Year
RESOLVED, that the fiscal year of the
Corporation shall be the period ending December 31.
11. Number of Directors
RESOLVED, that the number of directors for
the Corporation be, and the same hereby is, fixed at
2.
12. Regular Meetings of the Board of Directors
RESOLVED, that regular meetings of the
Board of Directors of the Corporation shall be held
at such times and at such places, within or without
the Commonwealth of Pennsylvania, as shall from time
to time be determined by the Board of Directors.
13. Ratification of Prior Actions
RESOLVED, that all of the actions of the
sole incorporator and promoters of the Corporation
taken to effect the incorporation and organization
of the Corporation and the commencement of its
business operations be, and hereby are, ratified and
approved as valid corporate action.
14. Authority to Pay Organizational Expenses
RESOLVED, that the appropriate officers of
the Corporation be, and each of them hereby is,
authorized and directed for and on behalf of the
Corporation to pay all charges and expenses
instrumental to or arising out of the organization
of the Corporation and to reimburse the persons who
have made any disbursements therefor.
IN WITNESS WHEREOF, the undersigned directors have executed
this written consent as of the day and year first above written, waiving all
notice requirements whether provided by statute or otherwise.
/s/ Terry L. Engel
------------------------------------
Terry L. Engel
/s/ Mathew Garland
------------------------------------
Mathew Garland
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<PAGE> 1
EXHIBIT 3.11
<TABLE>
<S> <C>
Microfilm Number Filed with the Department of State, on December 28, 1998
------------------------------------
Identity Number 2852613 /s/ Acting Secretary of the Commonwealth
----------------------------------- ----------------------------------------------------------
Acting Secretary of the Commonwealth
ARTICLES OF INCORPORATION FOR PROFIT OF
Aerolink Management, Inc.
Name of Corporation
A TYPE OF CORPORATION INDICATED BELOW
Indicate type of domestic corporation:
x Business-stock (15 Pa.C.S. Section 1306) Management (15 Pa.C.S. Section 2702)
- -- ---
Business-nonstock (15 Pa.C.S. Section 2102) Professional (15 Pa.C.S. Section 2903)
- --- ---
Business-statutory close (15 Pa.C.S. Section 2303) Insurance (15 Pa.C.S. Section 3101)
- --- ---
Cooperative (15 Pa.C.S. Section 7102)
-----
DSCB:15-1306/2102/2303/2702/2903/3101/7102A (Rev 91)
In compliance with the requirements of the applicable provisions of 15 Pa.C.S. (relating to corporations and unincorporated
associations) the undersigned, desiring to incorporate a corporation for profit hereby, state(s) that:
The name of the corporation is: Aerolink Management, Inc.
-------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
The (a) address of this corporation's initial registered office in this Commonwealth or (b) name of its
commercial register office provider and the county of venue is:
Cargo Building #1
(a) Greater Pittsburgh International Airport, P.O. Box 12375, Pittsburgh PA 15231 Allegheny
----------------------------------------------------------------------------------------------------
Number and Street City State Zip County
(b) c/o N/A N/A
----------------------------------------------------------------------------------------------------
Number and Street City State Zip County
For a corporation represented by a commercial registered office provider, the county in (b) shall be deemed
the county in which corporation is located for venue and official publication purposes.
The corporation is incorporated under the provisions of the Business Corporation Law of 1988.
The aggregate number of shares authorized is: 1,000 ($1.00 par) (other provisions, if any,
----------------------------
attach 8 1/2 X 11 sheet.
The name and address, including number and street, if any, of each incorporator is:
Name: Address
600 Grant Street, 44th Floor
Cynthia L. Woolheater Pittsburgh, PA 15219
---------------------------------------- ------------------------------------------------------------------
------------------------------------------------------------------
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
----------------------------------------
The specified effective date, if any, is:
-------------------------------- ------ -------------
month day year hour, if any
o Additional provisions of the articles, if any, attach an 8 1/2 X 11 sheet.
o Statutory close corporation only:
o Cooperative corporations only:
IN TESTIMONY WHEREOF, the in corporator(s) has (have) signed these Articles of Incorporation this 28th day of
December, 1998.
/s/ Cynthia L. Woolheater
- ---------------------------------------------------------- ----------------------------------------------------
(Signature) (Signature)
</TABLE>
<PAGE> 1
EXHIBIT 3.12
INDEX
of
BYLAWS of
AEROLINK MANAGEMENT, INC.
ARTICLE I General
<TABLE>
<S> <C>
Section 1.1. Name............................................................................................1
Section 1.2. Office..........................................................................................1
Section 1.3. Seal............................................................................................1
Section 1.4. Fiscal Year.....................................................................................1
ARTICLE II Shareholders
Section 2.1. Place of Meetings..............................................................................1
Section 2.2. Annual Meeting..................................................................................1
Section 2.3. Special Meetings................................................................................2
Section 2.4. Notice of Meetings..............................................................................2
Section 2.5. Waiver of-Notice................................................................................2
Section 2.6. Quorum..........................................................................................3
Section 2.7. Adjournments of Meetings........................................................................3
Section 2.8. Notice of Adjourned Meetings....................................................................3
Section 2.9. Informal Action by the Shareholders.............................................................4
Section 2.10. Telephonic Meetings............................................................................4
Section 2.11. Voting Power...................................................................................4
Section 2.12. Presiding Officer..............................................................................4
Section 2.13. Proxies........................................................................................4
Section 2.14. Reports to Shareholders........................................................................5
ARTICLE III Directors
Section 3.1. Number and Qualification........................................................................5
Section 3.2. Election and Term of Directors..................................................................6
Section 3.3. Vacancies.......................................................................................6
Section 3.4. Alternate Directors.............................................................................6
Section 3.5. Director's Duties and Obligations...............................................................6
Section 3.6. Notation of Dissent.............................................................................7
Section 3.7. Compensation of Directors.......................................................................7
Section 3.8. Regular Meetings................................................................................8
Section 3.9. Special Meetinqs................................................................................8
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
Section 3.10. Notice of Meetings.............................................................................8
Section 3.11. Place of Meeting of Directors..................................................................8
Section 3.12. Committees of Directors........................................................................8
Section 3.13. Informal Action by the Directors or Any Committee Thereof......................................9
Section 3.14. Telephonic Meetings............................................................................9
Section 3.15. Quorum and Voting Requirements at Meetings of Directors.......................................10
Section 3.16. Presiding Officer.............................................................................10
Section 3.17. Interested Director or Officer Contracts......................................................10
Section 3.18. Limitation of Personal Liability of Directors.................................................11
ARTICLE IV Officers
Section 4.1. Number and Election............................................................................11
Section 4.2. Qualifications.................................................................................11
Section 4.3. Term of Office.................................................................................11
Section 4.4. Chief Executive Officer........................................................................12
Section 4.5. President......................................................................................12
Section 4.6. Vice Presidents................................................................................12
Section 4.7. Secretary and Assistant Secretary..............................................................12
Section 4.8. Treasurer and Assistant Treasurer..............................................................13
Section 4.9. Standard of Care...............................................................................13
ARTICLE V Execution of Documents
Section 5.1. Checks, Notes etc..............................................................................13
Section 5.2. Other Documents................................................................................13
ARTICLE VI Share Certificates and Transfers
Section 6.1. Share Certificates.............................................................................13
Section 6.2. Loss or Destruction of Share Certificate.......................................................14
Section 6.3. Transfers of Stock; Transfer Agent.............................................................14
Section 6.4. Registered Shareholders........................................................................14
ARTICLE VII Indemnification of Directors, officers and Employees
Section 7.1. Right to Indemnification.......................................................................15
Section 7.2. Right to Advancement of Expenses...............................................................15
Section 7.3. Right of Indemnitee to Initiate Action.........................................................16
Section 7.4. Insurance and Funding..........................................................................16
Section 7.5. Nonexclusivity; Nature and Extent of Rights....................................................16
ARTICLE VIII Amendments
Section 8.1. Amendments to Bylaws...........................................................................17
</TABLE>
<PAGE> 3
BYLAWS
OF
AEROLINK MANAGEMENT, INC.
ARTICLE I
General
Section 1.1. Name.
The name of the Corporation shall be Aerolink Management, Inc.
Section 1.2. Office.
The principal office of the Corporation shall be at such place or places as
the Board of Directors may from time to time determine.
Section 1.3. Seal.
The Corporation may have a seal which shall be circular in form and shall
bear such inscription as the Board of Directors from time to time may determine.
Section 1.4. Fiscal Year.
The fiscal year of the Corporation shall be the calendar year ending
December 31 or such other fiscal year as shall be fixed by resolution of the
Board of Directors.
ARTICLE II
Shareholders
Section 2.1. Place of Meetings.
Each meeting of the shareholders shall be held at the principal office of
the Corporation or at such other place, within or without the Commonwealth of
Pennsylvania, as shall be designated by resolution of the Board of Directors.
Section 2.2. Annual Meeting.
The annual meeting of the shareholders shall be held each year on such date
and at such time and place as the Board of Directors shall, from time to time,
determine by resolution. At each such annual meeting, the shareholders shall
elect the Corporation's
<PAGE> 4
Board of Directors and shall transact such other business as shall properly be
presented at the meeting.
Section 2.3. Special Meetings.
Special meetings of the shareholders may be called at anytime by the Chief
Executive Officer, the President, any Vice President, the Board of Directors or,
unless provided to the contrary in the Corporation's Articles of Incorporation,
shareholders entitled to cast at least 20% of the votes that all shareholders
are entitled to cast at the particular 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.
Section 2.4. Notice of Meetings.
Written notice of every meeting of the shareholders shall be given by, or
at the direction of, the Secretary or other person as may be designated from
time to time by the Board of Directors, to each shareholder of record entitled
to vote at the meeting at least five days prior to the day named for the meeting
or such other prior notice as may be required to be given under Section 1704 of
the Pennsylvania Business Corporation Law of 1988 (the "BCL"). Such notice shall
be given 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 shareholder's address (or to his telex, TWX,
telecopier or telephone number) appearing on the books of the Corporation. 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 telegraph office or courier service for delivery to that
person or, in the case of a telex or TWX, when dispatched. 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. If
the Secretary or other person as may be designated from time to time by the
Board of Directors neglects or refuses to give notice of a meeting, the person
or persons calling the meeting may do so.
Section 2.5. Waiver of Notice.
Whenever any written notice is required to be given to shareholders by law
or pursuant to these Bylaws or the Corporation's Articles of Incorporation, a
waiver thereof in writing signed by the shareholder or shareholders entitled to
the notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of the notice. Except in the case of a special meeting,
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.
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<PAGE> 5
Attendance of a shareholder at any meeting shall constitute a waiver of
notice of the meeting except where a shareholder attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting was not lawfully called or
convened.
Section 2.6. Quorum.
A meeting of shareholders 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.
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. If a meeting cannot be organized because a quorum has not
attended, those present may, except as otherwise provided in this Article II,
adjourn the meeting to such time and place as they may determine.
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 2.6, shall nevertheless
constitute a quorum for the purpose of electing directors.
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 2.6, 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 2.7. Adjournments of Meetings.
Adjournments of any regular or special meeting of the shareholders may be
taken, but 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.
Section 2.8. Notice of Adjourned 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 of Directors fixes a new record date for
the adjourned meeting.
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<PAGE> 6
Section 2.9. Informal Action by the Shareholders.
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. If
fewer than all shareholders consent, the action shall not become effective until
after at least 10 days' written notice of the action has been given to each
shareholder entitled to vote thereon who has not consented thereto.
Section 2.10. Telephonic Meetings.
One or more shareholders may participate in a 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 pursuant to this Section 2.10 shall constitute
presence in person at the meeting.
Section 2.11. Voting Power.
Every shareholder of record shall be entitled to one vote for every share
of the common stock of the Corporation standing in his name on the books of the
Corporation. The majority of the votes cast at a duly organized meeting of
shareholders by the holders of shares entitled to vote thereon shall be required
for the taking of any corporate action to be taken by a vote of the
shareholders.
Section 2.12. Presiding Officer.
All meetings of the shareholders shall be called to order and presided over
by the Chief Executive Officer, or in his absence by the President, or in his
absence by the Chairman of the Board of Directors, or in his absence by a Vice
President, or in the absence of all of them by the Treasurer, or if none of such
persons is present, by a chairman elected by the shareholders.
Section 2.13. Proxies.
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 him by proxy. 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 for the purposes of these Bylaws. 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
4
<PAGE> 7
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.
Every proxy shall be executed in writing by the shareholder or by his duly
authorized attorney-in-fact 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.
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. As used in these By-laws, the term "proxy coupled with an
interest" includes:
(1) a vote pooling or similar arrangement among shareholders;
(2) any agreement among shareholders, or among or between the
Corporation and one or more shareholders, regarding the voting of
their shares; and
(3) An unrevoked proxy in favor of an existing or potential
creditor of a shareholder.
Section 2.14. Reports to Shareholders.
Unless otherwise agreed to between the Corporation and a shareholder
pursuant to Section 1554(c) of the BCL, the Corporation shall furnish to each
shareholder the annual financial statements described in Section 1554(a) of the
BCL pursuant to and in the manner provided in said Section 1554.
ARTICLE III
Directors
Section 3.1. Number and Qualification.
All powers vested in the Corporation by the BCL shall be exercised by, or
under the authority of, and the business and affairs of the Corporation shall be
managed by, or under the direction of, a Board of Directors, who need not be
residents of the Commonwealth of Pennsylvania or shareholders of the
Corporation, but must be natural persons of 18 years of age or older. The Board
of Directors shall consist of one or more members, as determined from time to
time by proper resolution of the Board of Directors,
5
<PAGE> 8
who shall have the power to fix the number of directors at any time and to
increase or decrease the number thereof without vote of the shareholders, to the
extent permitted by the BCL.
Section 3.2. Election and Term of Directors.
The Board of Directors shall be elected by a vote of the shareholders at
the annual meeting of the shareholders. A director may succeed himself without
limitation as to number of terms.
Section 3.3. Vacancies.
Vacancies in the Board of Directors, including vacancies resulting from an
increase in the number of directors, shall be filled by a majority of the
remaining members of the Board though less than a quorum, or by a sole remaining
director, and each person so elected shall be a director to serve for the
balance of the unexpired term. When one or more directors resigns from the Board
effective at a future date, the directors then in office, including those who
have so resigned, shall have the power by the applicable vote to fill the
vacancies and the vote thereon will take effect when said resignations become
effective. In the event the Corporation has a classified Board of Directors, any
director chosen to fill a vacancy, including a vacancy resulting in an increase
in the number of directors, shall hold office until the next selection of the
class for which such director has been chosen, and until his successor has been
selected and qualified or until his earlier death, resignation or removal.
Section 3.4. Alternate Directors.
Shareholders entitled to elect directors may select an alternate for each
such director. In the absence of a director from a meeting of the Board, his
alternate may, without any notice, attend the meeting or execute a written
consent and exercise at the meeting or in such consent the powers of the absent
director. When so exercising the powers of the absent director the alternate
shall be subject in all respects to the provisions contained in Section 1725 of
the BCL.
Section 3.5. Director's Duties and Obligations.
(a) Standard of Care. A director of the Corporation shall stand in a
fiduciary relation to the Corporation and shall perform his duties as a
director, including his duties as a member of any committee of the Board upon
which he may serve, in good faith, in a manner he 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 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:
6
<PAGE> 9
(i) One or more officers or employees of the Corporation whom the
director reasonably believes to be reliable and competent in the
matters presented.
(ii) 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.
(iii) A committee of the Board upon which he 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 he
has knowledge concerning the matter in question that would cause his
reliance to be unwarranted.
(b) 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 the standard
set forth in Subsection (a) above.
(c) 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.
Section 3.6. Notation of Dissent.
A director of the Corporation who is present at a meeting of the Board of
Directors or of a committee of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless his dissent is entered in the minutes of the meeting or unless the
director files his written dissent to the action with the secretary of the
meeting before the adjournment thereof or transmits such dissent in writing to
the Secretary of the Corporation immediately after the adjournment of the
meeting. The right to dissent shall not be available to a director who has voted
in favor of such action.
Section 3.7. Compensation of Directors.
Directors shall not receive any stated salary for their services as such;
but each director may be paid a fixed sum, together with reimbursement for all
or some of the expenses incurred, for attendance at each regular or special
meeting of the Board of Directors, in such amounts, if any, as may be approved,
from time to time, by resolution
7
<PAGE> 10
of the Board of Directors. Nothing herein contained shall be construed to
preclude any directors from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 3.8. Regular Meetings.
A meeting of the Board of Directors for the election of officers and the
transaction of such other business as may properly come before that meeting
shall be held, without notice, immediately after the annual meeting of the
shareholders, or after the last adjournment thereof. The Board of Directors
shall hold such other regular meetings at such times and places as it may
determine.
Section 3.9. Special Meetinqs.
The Board of Directors shall hold such special meetings as shall be called
at the direction of the Chief Executive Officer, the President, any Vice
President, the Secretary, or a majority of the members of the Board of
Directors. Each such meeting shall be held at such time and place as shall be
designated in the notice of such meeting.
Section 3.10. Notice of Meetings.
Meetings of the Board of Directors need not be preceded with notice of such
meetings, and neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors must be specified in any
notice of the meeting. Written notice of meetings of the Board of Directors, if
any, may be given by, or at the direction of, the person or persons calling such
meeting 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 answer back received) or courier service, charges prepaid, or by
telecopier to each director's address (or to his telex, TWX, telecopier or
telephone number) supplied by him 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 director 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.
Section 3.11. Place of Meeting of Directors.
Each regular and special meeting of directors shall be held at the
principal office of the Corporation or at such other place, within or without
the Commonwealth of Pennsylvania, as the Board of Directors may from time to
time designate or as may be designated in the notice of the meeting.
Section 3.12. Committees of Directors.
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
8
<PAGE> 11
Corporation. Any committee, to the extent provided in the resolution of the
Board of Directors or in these Bylaws, 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:
(i) The submission to shareholders of any action requiring
approval of shareholders under these By-laws.
(ii) The creation or filling of vacancies in the Board of
Directors.
(iii) The adoption, amendment or repeal of these By-laws.
(iv) The amendment or repeal of any resolution of the Board that
by its terms is amendable or repealable only by the Board.
(v) Action on matters committed by these By-laws or resolution of
the Board of Directors to another committee of the Board.
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 he or they constitute a quorum, may
unanimously appoint another director to act at the meeting in the place of the
absent or disqualified member. Each committee of the Board shall serve at the
pleasure of the Board.
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. Any provision of these Bylaws
relating or referring to action to be taken by the Board of Directors or the
procedure required therefore shall be satisfied by the taking of corresponding
action by a committee of the Board of Directors to the extent authority to take
the action has been delegated to the committee pursuant to these Bylaws.
Section 3.13. Informal Action by the Directors or Any Committee Thereof.
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 3.14. Telephonic 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
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<PAGE> 12
all persons participating in the meeting can hear each other. Participation in a
meeting pursuant to this Section 14 shall constitute presence in person at the
meeting.
Section 3. 15. Quorum and Voting Requirements at Meetings of Directors.
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.
Section 3.16. Presiding Officer.
All meetings of the Board of Directors shall be called to order and
presided over by the Chairman, who shall be a member of and elected by the Board
of Directors or, in his absence, a member of the Board of Directors to be
selected to preside by the members present. The Secretary of the Corporation
shall act as secretary at all meetings of the Board of Directors, and in the
absence of the Secretary, the Chairman of the meeting may designate any person
to act as secretary of the meeting.
Section 3.17. Interested Director or Officer Contracts.
A contract or transaction between the Corporation and any one or more of
its directors or officers or between the Corporation and another domestic or
foreign corporation for profit or not-for-profit, partnership, joint venture,
trust or other enterprise in which one or more of the Corporation's directors or
officers and directors or officers or have a financial or other interest, shall
not be void or voidable solely because (a) of such reason or interest, (b) the
director or officer is present at or participates in the meeting of the Board of
Directors that authorizes the contract or transaction, or (c) the vote of such
director or officer is counted in authorizing the contract or transaction;
provided, however, that with respect to each of the foregoing, one or more of
the following three conditions are satisfied:
(i) 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; or
(ii) The material facts as to the 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
(iii) The contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified by the Board of
Directors or the shareholders.
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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
as specified above.
Section 3.18. Limitation of Personal Liability of Directors.
To the fullest extent that the laws of the Commonwealth of Pennsylvania, as
in effect on the date of the adoption of this Section 18, or as such laws are
thereafter amended, permit elimination or limitation of the liability of
directors, no director of the Corporation shall be personally liable as such for
monetary damages for any action taken, or any failure to take any action, as a
director. Any amendment or repeal of this Section 18 or adoption of any other
provision of these By-laws or the Corporation's Articles of Incorporation 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 failure to
act, prior to the adoption of such amendment, repeal or other provision.
ARTICLE IV
Officers
Section 4.1. Number and Election.
The Board of Directors at its annual meeting shall elect a Chief Executive
Officer, a President, one or more Vice Presidents (including Senior Vice
Presidents), a Secretary, and/or an Assistant Secretary, a Treasurer and/or an
Assistant Treasurer, and may elect or appoint such other officers and assistant
officers and appoint such agents as the Board may deem appropriate.
Section 4.2. Qualifications.
The officers and assistant officers may, but need not, be directors of the
Corporation. 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 determined by or pursuant to these By-laws and any
resolutions or orders of the Board of Directors. The Chief Executive Officer,
the President, each Vice President and the Secretary of the Corporation shall be
natural persons 18 years of age or older. The Treasurer of the Corporation may
be a corporation or a natural person 18 years of age or older.
Section 4.3. Term of Office.
All officers of the Corporation shall be elected for annual terms and until
his successor has been selected and qualified, or until his earlier death,
resignation or removal. Any officer of the Corporation may be removed by the
Board of Directors with or without cause, and such removal shall be without
prejudice to the contract rights, if
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any, of any person so removed. Election or appointment of an officer shall not
of itself create contract rights.
Section 4.4. Chief Executive Officer.
The Chief Executive Officer shall serve ex-officio as Chairman of the Board
of Directors and as presiding officer at all meetings of the Board of Directors
and of the shareholders, unless some other person shall have been designated to
serve in those capacities by the Board of Directors or by the shareholders. The
Chief Executive Officer shall have plenary authority and the duty generally to
supervise and manage the affairs of the Corporation and the actions of all other
officers, shall have the authority to bind the Corporation and shall have the
authority and duty to perform all other duties ordinarily incidental to that
office, all in accordance with and subject to the policies and decisions of the
Board of Directors.
Section 4.5. President.
The President shall have such powers and perform such duties as the Chief
Executive Officer may from time to time delegate to him. In the case of the
death of the Chief Executive Officer, the President shall immediately perform
the duties of the Chief Executive Officer.
Section 4.6. Vice Presidents.
Each Vice President shall have such powers and perform such duties as the
President may from time to time delegate to him. At the request of the President
any Vice President may, (a Senior Vice President taking priority over a Vice
President) in the case of the absence or inability to act of the President,
temporarily act in his place. In the case of the death of the President, or in
the case of his absence or inability to act without having designated a Vice
President to act temporarily in his place, the Vice President longest in service
as Vice President shall perform the duties of the President except as shall be
otherwise designated by the Board of Directors. A Vice President who is not a
director shall not preside at any meeting of the Board of Directors.
Section 4.7. Secretary and Assistant Secretary.
The Secretary shall attend the meetings of the shareholders and of the
directors and keep minutes thereof. Unless some other person is delegated to
give such notice, the Secretary shall send out notices of all meetings of
shareholders and of directors. The Assistant Secretary shall perform the
functions of the Secretary in the event of the absence or disability of the
Secretary. The Secretary and the Assistant Secretary shall perform such other
duties as may be assigned to them by the Chief Executive Officer, the President
or the Board of Directors.
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Section 4.8. Treasurer and Assistant Treasurer.
The Treasurer shall have the care and custody of all the funds and
securities of the Corporation, and shall deposit the same in the name of the
Corporation in such bank or banks as the directors may elect. The Treasurer
shall perform such other duties as may be assigned to him by the Chief Executive
Officer, the President or the Board of Directors; and he shall give such bonds,
if any, for the faithful performance of his duties, as the Board of Directors
may, from time to time, determine.
Section 4.9. Standard of Care.
Subject to any contrary provision contained in the Corporation's Articles
of Incorporation, an officer of the Corporation shall perform his duties as an
officer in good faith, in a manner he 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 duties shall not be liable by reason
of having been an officer of the Corporation.
ARTICLE V
Execution of Documents
Section 5.1. Checks, Notes, etc.
The Board of Directors shall from time to time designate the officers or
agents of the Corporation who shall have the power, in its name, to sign and
endorse checks and other instruments and to borrow money for the Corporation,
and in its name, to make notes or other evidences of indebtedness.
Section 5.2. Other Documents.
Any note, mortgage, evidence of indebtedness, contract or other document,
or any assignment or endorsement thereof, executed and 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 Chief Executive
Officer, the President or a 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.
ARTICLE VI
Share Certificates and Transfers
Section 6.1. Share Certificates.
Shares of the Corporation's stock shall be represented by certificates.
Each of the Corporation's share certificates shall state that the Corporation is
incorporated under the
13
<PAGE> 16
laws of the Commonwealth of Pennsylvania, the name of the person to whom it is
issued, the number and class of shares and the designation of the series, if
any, that the certificate represents. In the event the Corporation is authorized
to issue shares of more than one class or series, the Corporation's share
certificates shall set forth upon their face or back a full or summary statement
of designations, voting rights, preferences, limitations and special rights of
the shares of each class or series authorized to be issued so far as they have
been fixed and determined, and the authority of the Board of Directors to fix
and determine the designations, voting rights, preferences, limitations and
special rights of the classes and series of the shares of the Corporation; or,
in lieu thereof, a statement that the Corporation will furnish such information
to any shareholder upon request and without charge. Every share certificate
shall be executed, by facsimile or otherwise, by or on behalf of the Corporation
in such manner as the Board of Directors may determine.
Section 6.2. Loss or Destruction of Share Certificate.
In case of loss or destruction of a certificate of stock, no new
certificate shall be issued in lieu thereof except upon satisfactory proof to
the Board of Directors or their delegate of such loss or destruction, and upon
the giving to the Corporation of satisfactory security against loss by bond or
otherwise. Any such new certificate shall be plainly marked "Duplicate" upon its
face.
Section 6.3. Transfers of Stock; Transfer Agent.
Transfers of stock shall be made only upon the books of the Corporation and
only upon surrender of the share certificate, unless such certificate is lost or
destroyed. The Board of Directors may appoint a transfer agent and a registrar
of transfers, and may require all stock certificates to bear the signature of
such transfer agent and of such registrar of transfers.
Section 6.4. Registered Shareholders.
The Corporation shall be entitled to treat the holder of record of any
share or shares as holder in fact thereof and it shall not be bound to recognize
any equitable or other interest or claim in or to any share on the part of any
other person; and the Corporation shall not be liable for any registration or
transfer of shares which are registered or to be registered in the name of a
fiduciary or nominee, and will not be committing a breach of trust in requesting
such registration or transfer, unless with actual knowledge of such facts as to
cause the participation of the Corporation in such transfer to constitute an act
of bad faith.
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ARTICLE VII
Indemnification of Directors, Officers and Employees
Section 7.1. 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, liability and loss (including without litigation, attorney's fees,
judgments, fines, taxes, penalties and amounts paid in settlement) 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 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 by reason of
the fact such person is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary or other representative of another
domestic or foreign corporation for profit or not-for-profit, partnership, joint
venture, trust, employee benefit plan or other entity or enterprise (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 brought by an Indemnitee (as hereinafter defined) against the Corporation
except as provided in the last sentence of this Section 1. 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 VII. As used in this
Article VII, "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 VII. An Indemnitee shall be entitled to
be indemnified pursuant to this Section 1 for expenses incurred in connection
with any Action brought by such Indemnitee against the Corporation only if the
Action is a claim for indemnity or expenses under Section 3 of this Article VII
or otherwise and either (i) the Indemnitee is successful in whole or in part in
the Action for which expenses are claimed or (ii) the indemnification for
expenses is included in a settlement of the Action or is awarded by a court.
Section 7.2. Right to Advancement of Expenses.
Every Indemnitee shall be entitled as of right to have his expenses in any
Action (other than an Action brought by such Indemnitee against the Corporation)
paid in advance by the Corporation prior to final disposition of such Action,
subject to any obligation which may be imposed by law or by provision of the
Corporation's Articles of Incorporation, these By-laws, an agreement or
otherwise to reimburse the Corporation in certain events.
15
<PAGE> 18
Section 7.3. Right of Indemnitee to Initiate Action.
If a written claim under Section 1 or Section 2 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 Action against the Corporation 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 expenses of prosecuting such Action. It shall be a defense to any
Action to recover a claim under Section 1 of this Article VII 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 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 law, shall
be a defense to such Action or create a presumption that the Indemnitee's
conduct was such that indemnification is prohibited by law. The only defense to
any such Action to receive payment of expenses in advance under Section 2 of
this Article VII shall be failure to make an undertaking to reimburse if such an
undertaking is required by law or by provision of the Corporation's Articles of
Incorporation, these Bylaws, an agreement or otherwise.
Section 7.4. Insurance and Funding.
The Corporation may purchase and maintain insurance to protect itself and
any person eligible to be indemnified hereunder against any expense, liability
or loss 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 expense, liability or loss 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.
Section 7.5. Nonexclusivity; Nature and Extent of Rights.
The rights of indemnification and advancement of expenses provided for in
this Article VII (i) shall not be deemed exclusive of any other rights, whether
now existing or hereafter created, to which any Indemnitee may be entitled under
the Corporation's Articles of Incorporation or these Bylaws, any agreement, any
vote of shareholders or directors or otherwise, (ii) shall be deemed to create
contractual rights in favor of each Indemnitee, (iii) shall continue as to each
person who has ceased to have the status pursuant to which he was entitled or
was denominated as entitled to indemnification hereunder and shall inure to the
benefit of the heirs and legal representatives of each Indemnitee and (iv) shall
be applicable to Actions commenced after the adoption hereof,
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whether arising from acts or omissions occurring before or after the adoption
hereof. The rights of indemnification provided in this Article VII may not be
amended or repealed so as to limit in any way the indemnification or the right
to advancement of expenses provided for herein with respect to any acts or
omissions occurring prior to the adoption of any such amendment or repeal.
ARTICLE VIII
Amendments
Section 8.1. Amendments to Bylaws.
Except with respect to those matters that are by statute reserved
exclusively to the shareholders, the Board of Directors may adopt, amend or
repeal these Bylaws by a vote of a majority of all votes cast on the adoption,
amendment or repeal at any regular or special meeting duly convened for that
purpose; subject, however, to the power of the shareholders by a vote of a
majority of all votes cast to change or repeal these Bylaws at any annual or
special meeting duly convened for such purpose. Any meeting of shareholders for
the purpose of changing or repealing these Bylaws shall be preceded by the
giving of written notice to each shareholder stating that the purpose or one of
the purposes of the meeting is to consider the adoption, amendment or repeal of
these Bylaws, and such notice shall contain or include a copy of the proposed
amendment or a summary of the changes to be effected thereby. Any change in
these Bylaws shall take effect when adopted unless otherwise provided in the
resolution effecting the change.
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<PAGE> 1
EXHIBIT 3.13
<TABLE>
<S> <C>
_________________________ Filed with the Department of State on December 29, 1998
_________________________ /s/
--------------------------------------------
Secretary of the Commonwealth
CERTIFICATE OF LIMITED PARTNERSHIP
DSCB:15:8511 (Rev 90)
In compliance with the requirements of 15 Pa.C.S. SS. (relating to
certificate of limited partnership), the undersigned desiring to form a limited
partnership, hereby certifies that:
The name of the limited partnership is: Aerolink International L.P.
- ---------------------------------------------------------------------------------------------------------------------
The (a) address of this limited partnership's initial registered office in this
Commonwealth or (b) name of its commercial registered office provider and the
county of venue is:
Pittsburgh International Airport,
(a) Cargo Building No. 3 P.O. Box 12375, Pittsburgh PA 15231 Allegheny
----------------------------------------------------------------------------------------------------------------
Number and Street City State Zip County
(b) c/o: N/A
------------------------------------------------------------------------------------------------------------
Name of Commercial Registered Office Provider
</TABLE>
For a limited partnership represented by a commercial registered office
provider, the county in (b) shall be deemed the county in which the limited
partnership is located for venue and official publication purposes.
The name and business address of each general partner of the partnership is:
Name Address
Aerolink Management, Inc. Pittsburgh International Airport
- --------------------------------------------------------------------------------
Cargo Building No. 3
- --------------------------------------------------------------------------------
P.O. Box 12375
- --------------------------------------------------------------------------------
Pittsburgh, PA 15231
- --------------------------------------------------------------------------------
(Check, and if appropriate complete one of the following):
X The formation of the limited partnership shall be effective upon filing
- ---- this Certificate of Limited Partnership in the Department of State.
The formation of the limited partnership shall be effective on:
- ---- at -------
<PAGE> 2
IN TESTIMONY WHEREOF the undersigned general partner(s) of the limited
partnership has (have) executed this Certificate of Limited Partnership this
20th day of December, 1998.
Aerolink Management, Inc.,
its sole General Partner
By: /s/ Terry Engel
- ---------------------------------- ------------------------------------
(Signature) Terry Engel, (Signature)
CEO
- ---------------------------------- ----------------------------------
(Signature) (Signature)
-2-
<PAGE> 1
EXHIBIT 3.14
AGREEMENT OF LIMITED PARTNERSHIP
OF
AEROLINK INTERNATIONAL L.P.
DATED: DECEMBER 28, 1998
FEDERAL TIN: 25-6449621
<PAGE> 2
Agreement of Limited Partnership
of
Aerolink International L.P.
Table of Contents
<TABLE>
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Page
----
<S> <C>
ARTICLE I GENERAL DEFINITIONS...............................................................................2
Section 1.1. Definitions...............................................................................2
ARTICLE II NAME; FORMATION; ORGANIZATIONAL CERTIFICATES.....................................................5
Section 2.1. Name......................................................................................5
Section 2.2. Formation of Limited Partnership..........................................................5
Section 2.3. Organizational and Other Certificates.....................................................5
Section 2.4. Statutory Compliance......................................................................5
ARTICLE III PURPOSE.........................................................................................7
Section 3.1. Purpose...................................................................................7
ARTICLE IV TERM ...........................................................................................7
Section 4.1. Term......................................................................................7
ARTICLE V PRINCIPAL OFFICE..................................................................................7
Section 5.1. Principal Office..........................................................................7
ARTICLE VI MANAGEMENT.......................................................................................7
Section 6.1. General Partner...........................................................................7
Section 6.2. Powers of the General Partner.............................................................8
Section 6.3. Tax Controversies.........................................................................9
Section 6.4. Limitations on Authority.................................................................10
ARTICLE VII CAPITAL........................................................................................11
Section 7.1. Initial Capital Contributions............................................................11
Section 7.2. Withdrawals from Capital Accounts........................................................11
Section 7.3. Capital Accounts.........................................................................11
Section 7.4. Determination of and Adjustments to Book Value and Capital Accounts......................12
ARTICLE VIII PROFITS LOSSES AND DISTRIBUTIONS..............................................................13
Section 8.1. Positive Cash Flow.......................................................................13
Section 8.2. Distribution of Positive Cash Flow.......................................................14
Section 8.3. Determination of Net Book Profits and Net Book Losses....................................15
Section 8.4. Allocation of Net Book Profits and Net Book Losses.......................................16
Section 8.5. Allocations to Comply With Applicable Treasury Regulations...............................16
Section 8.6. Federal Income Tax Allocations...........................................................18
</TABLE>
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<TABLE>
<S> <C>
Section 8.7. Allocation of Taxable Income and Loss and Tax Credits on the Transfer of a
Partnership Interest....................................................................19
Section 8.8. Special Tax Audit Allocations............................................................19
Section 8.9. Interest.................................................................................19
Section 8.10. Credits.................................................................................19
ARTICLE IX BOOKS OF ACCOUNT, RECORDS AND REPORTS...........................................................19
Section 9.1. Books and Records........................................................................19
Section 9.2. Tax Information..........................................................................20
Section 9.3. Annual Reports...........................................................................20
Section 9.4. Accounting Principals....................................................................20
ARTICLE X FISCAL YEAR......................................................................................20
Section 10.1. Fiscal Year.............................................................................20
ARTICLE XI LIABILITY OF GENERAL PARTNER; EXCULPATION; INDEMNIFICATION; REIMBURSEMENT.......................21
Section 11.1. Liability of General Partner............................................................21
Section 11.2. Exculpation.............................................................................21
Section 11.3. Indemnification.........................................................................21
Section 11.4. Reimbursement...........................................................................21
ARTICLE XII RIGHTS AND LIMITATIONS OF LIMITED PARTNERS; MEETINGS; AMENDMENTS...............................21
Section 12.1. Limited Assessment......................................................................21
Section 12.2. No Right to Manage......................................................................22
Section 12.3. Priority................................................................................22
Section 12.4. Death, Disability, etc. of a Limited Partner............................................22
Section 12.5. Meetings................................................................................22
Section 12.6. Voting Rights of Limited Partners.......................................................23
Section 12.7. Proposal and Adoption of Amendments Generally...........................................24
Section 12.8. Limitations on Amendments...............................................................25
Section 12.9. Amendments on Admission or Withdrawal of Partners.......................................25
ARTICLE XIII TRANSFERS BY LIMIT D PARTNERS; REPURCHASE OF INTERESTS........................................26
Section 13.1. Prohibited Transfers....................................................................26
Section 13.2. Compliance with Securities Laws.........................................................26
Section 13.3. Transfer................................................................................27
Section 13.4. Admission of Substitute Limited Partner.................................................27
Section 13.5. Status of Transferee....................................................................27
Section 13.6. Election to Treat Transferee as a Partner...............................................27
Section 13.7. Death, Bankruptcy, Incompetence, etc. of a Limited Partner..............................27
Section 13.8. Transferee(s)...........................................................................28
Section 13.9. Tax Elections...........................................................................28
ARTICLE XIV CHANGES TO THE GENERAL PARTNER.................................................................28
</TABLE>
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<TABLE>
<S> <C>
Section 14.1. Removal of the General Partner..........................................................28
Section 14.2. Withdrawal..............................................................................29
Section 14.3. Transfer of Interest....................................................................29
Section 14.4. Continuing Liability....................................................................29
Section 14.5. Admission of Successor General Partner..................................................29
Section 14.6. Effect of Bankruptcy, Dissolution, Etc. of the General Partner..........................30
Section 14.7. Appointment of Additional General Partner...............................................30
ARTICLE XV DISSOLUTION OF THE PARTNERSHIP..................................................................31
Section 15.1. Events of Dissolution...................................................................31
Section 15.2. Election to Continue the Partnership....................................................31
ARTICLE XVI ADDITIONAL PROVISIONS CONCERNING DISSOLUTION OF THE PARTNERSHIP................................32
Section 16.1. Winding Up Affairs; Liquidation.........................................................32
Section 16.2. Time for Liquidation....................................................................32
Section 16.3. Required Reports........................................................................32
Section 16.4. Termination.............................................................................33
Section 16.5. Distribution of Proceeds From the Liquidation of the Partnership........................33
Section 16.6. Capital Account Adjustments.............................................................33
Section 16.7. Compliance With Treasury Regulations....................................................33
ARTICLE XVII NOTICES.......................................................................................34
Section 17.1. Notices.................................................................................34
ARTICLE XVIII REPRESENTATIONS AND WARRANTIES...............................................................34
Section 18.1. The General Partner.....................................................................34
Section 18.2. Limited Partners........................................................................35
ARTICLE XIX MISCELLANEOUS..................................................................................36
Section 19.1. Arbitration.............................................................................36
Section 19.2. Certificates, etc.......................................................................37
Section 19.3. Power of Attorney.......................................................................37
Section 19.4. Partners' Relationship Inter Se.........................................................37
Section 19.5. Partition Waived........................................................................37
Section 19.6. Entire Agreement........................................................................37
Section 19.7. Governing Law...........................................................................37
Section 19.8. Binding Effect..........................................................................37
Section 19.9. Gender and Number.......................................................................38
Section 19.10. Captions...............................................................................38
Section 19.11. Severance..............................................................................38
Section 19.12. Execution of Instruments; Reliance by Third Parties....................................38
Section 19.13. Counterparts...........................................................................38
</TABLE>
iii
<PAGE> 5
AGREEMENT OF LIMITED PARTNERSHIP
OF
AEROLINK INTERNATIONAL L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP (this "AGREEMENT") is made and
entered into as of the 28th day of December, 1998 by and between AEROLINK
MANAGEMENT, INC., a Pennsylvania corporation, as the General Partner (the
"GENERAL PARTNER"), and the Persons whose names are set forth in Exhibit "A" to
this Agreement as the limited partners (hereinafter such Persons are referred to
as the "LIMITED PARTNERS").
W I T N E S S E T H:
WHEREAS, the parties to this Agreement desire to form a limited partnership
organized as described herein and to set forth in writing the agreement pursuant
to which AEROLINK INTERNATIONAL L.P., a Pennsylvania limited partnership (the
"PARTNERSHIP") will conduct its business; and
WHEREAS, a business trust known as Aerolink International (the "TRUST") has
previously been established as a business trust under and in accordance with the
Pennsylvania Business Trust Act, Chapter 95 of the Pennsylvania Consolidated
Statutes (15 Pa. C.S.A. Section 9501 et seq.) which has been classified as a
partnership for federal income tax purposes; and
WHEREAS, the owners of the beneficial interests in the Trust desire to
merge the Trust into the Partnership with the Partnership being the surviving
entity in order to convert the trust into a limited partnership; and
WHEREAS, upon consummation of the merger of the Trust into the Partnership,
the Partnership shall be deemed for federal income tax purposes to be the
continuation of the partnership which was the Trust.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
agree as follows:
1
<PAGE> 6
ARTICLE I
GENERAL DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Act" shall mean the Federal Securities Act of 1933, as amended.
"Agreement" shall mean this Agreement of Limited Partnership of the
Partnership.
"Arbitrators" shall mean the persons selected pursuant to Section 19.1 to
settle any controversy, dispute or claim under this Agreement.
"Book Value" shall mean, with respect to any Partnership asset, the asset's
book value as carried on the books and records of the Partnership, determined in
compliance with the provisions of applicable Treasury Regulations, including
Treasury Regulation Section 1.704-1(b)(2)(iv), and more particularly described
in Section 7.4 hereof.
"Capital Account" shall mean the capital account established for each
Partner and maintained pursuant to the terms of this Agreement in accordance
with the provisions of applicable Treasury Regulations, including Treasury
Regulation Section 1.704-1(b)(2)(iv).
"Capital Contribution" shall mean the capital contributed or deemed
contributed to the Partnership by the Partners as described in Section 7.1.
"Capital Transaction" shall mean the sale or other disposition of property
of the Partnership not in the ordinary course of business (including destruction
or condemnation of any substantial part of the property of the Partnership) and
any refinancing of any mortgage, deed of trust or similar loan with respect to
property of the Partnership and any such sale, disposition or refinancing of
property or indebtedness of a partnership in which the Partnership owns an
interest.
"Claim Statement" shall mean the written statement submitted by an
aggrieved party or parties to the General Partner pursuant to Section 19.1 of
this Agreement setting forth (i) the controversy, dispute or claim under this
Agreement which is to be submitted to arbitration, (ii) the resolution or relief
sought and (iii) one qualified reputable individual willing and able to act as
an arbitrator.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Counterstatement" shall mean the counterstatement delivered by an opposing
party or parties to the General Partner (with a copy to the aggrieved party or
parties) within ten (10) business days after the receipt of a Claim Statement
pursuant to Section 19.1 of this Agreement.
2
<PAGE> 7
"Depreciation" shall mean, for each fiscal year or other period, the
depreciation, amortization or other cost recovery expense determined pursuant to
Section 8.3(a) hereof.
"Effective Date" shall mean the effective date of the merger of the Trust
into the Partnership.
"Fiscal Year" shall mean the Fiscal Year identified in Section 10.1.
"General Partner" shall mean Aerolink Management, Inc., a Pennsylvania
corporation, and its successors and permitted assigns.
"Gross Fair Market Value" shall mean the fair market value of an asset as
reasonably determined by the General Partner without taking into account any
liabilities which are secured by such asset or which are otherwise associated
with such asset.
"Limited Partner" means each of the Limited Partners of the Partnership as
shown on Exhibit "A" to this Agreement.
"Minimum Gain" shall mean the aggregate amount of gain (of whatever
character), computed with respect to each property of the Partnership that
secures a Third Party Nonrecourse Liability of the Partnership, that would be
recognized by the Partnership if, in a taxable transaction, the Partnership were
to dispose of such property in full satisfaction of such Third Party Nonrecourse
Liability. The amount of Minimum Gain and the amount of any Partner's share of
Minimum Gain shall be determined in accordance with the provisions of applicable
Treasury Regulations, including Treasury Regulation Section 1.704-2(d).
"Net Book Losses" and "Net Book Profits" shall have the meanings ascribed
to such terms in Section 8.3 hereof.
"Net Fair Market Value" shall mean, in connection with the contribution of
an asset to the Partnership by a Partner and/or in connection with the
distribution of an asset by the Partnership to a Partner, the Gross Fair Market
Value of such asset reduced by any liabilities (i) assumed by such Partner or
the Partnership or (ii) subject to which such Partner or the Partnership takes
such asset.
"Nonrecourse Deduction" all mean an allocation of loss and/or expense (or
item thereof) attributable to Third Party Nonrecourse Liabilities, determined in
accordance with the provisions of applicable Treasury Regulations, including
Treasury Regulation Sections 1.704-2(b) and (c).
"Participating Percentage" shall mean, with respect to each Partner the
percentage shown under the heading "Participating Percentage" on Exhibit "A" to
this Agreement.
"Partner Nonrecourse Deduction" shall mean an allocation of loss and/or
expense (or item thereof) attributable to Partner Nonrecourse Liabilities,
determined in accordance with
3
<PAGE> 8
the provisions of applicable Treasury Regulations, including Treasury Regulation
Section 1.704-2(i)(2).
"Partner Nonrecourse Liabilities" shall mean liabilities of the Partnership
which are nonrecourse debt (as defined in applicable Treasury Regulations,
including Treasury Regulation Section 1.704-2(b)(4)) but with respect to which
one or more Partners (or the affiliate of any Partner) bears the economic risk
of loss (as defined in applicable Treasury Regulations, including Treasury
Regulation Section 1.752-2).
"Partner Nonrecourse Liability Minimum Gain" shall mean the aggregate
amount of gain (of whatever character), computed with respect to each property
of the Partnership which secures a Partner Nonrecourse Liability of the
Partnership, that would be recognized by the Partnership if, in a taxable
transaction, the Partnership were to dispose of such property for no
consideration other than full satisfaction of such Partner Nonrecourse
Liability. The amount of Partner Nonrecourse Liability Minimum Gain and the
amount of any Partner's share of Partner Nonrecourse Liability Minimum Gain
shall be determined in accordance with the provisions of applicable Treasury
Regulations, including Treasury Regulation Section 1.704-2(i)(3).
"Partners" shall mean the partners of the Partnership.
"Partnership" shall mean the limited partnership governed by this
Agreement.
"Partnership Act" shall mean the Pennsylvania Revised Uniform Limited
Partnership Act.
"Person" shall mean an individual person or persons, corporation,
partnership, trust, joint venture, proprietorship, estate, or other incorporated
or unincorporated enterprise, entity or organization of any kind whatsoever.
"Positive Cash Flow" shall have the meaning ascribed to it in Section 8.1
below.
"Requisite Limited Partners" means Limited Partners holding partnership
interests consisting of at least 51% of the aggregate partnership interests of
the Partnership.
"Special Limited Partner" shall mean the status of a General Partner if
such Partner is removed as a General Partner of the Partnership, as more fully
described in Section 14.1 below.
"Substitute Limited Partner" shall mean any Person admitted as a Limited
Partner of the Partnership in substitution of another Limited Partner in
accordance with the provisions of this Agreement.
"Tax Matters Partner" shall mean the Partner designated in Section 6.3 of
this Agreement as the Tax Matters Partner as defined in Code Section 6231(a)(7).
4
<PAGE> 9
"Third Party Nonrecourse Liabilities" shall mean liabilities of the
Partnership which are nonrecourse liabilities (as defined in applicable Treasury
Regulations, including Treasury Regulation Section 1.704-2(b)(3)) in which are
not Partner Nonrecourse Liabilities.
"Total Minimum Gain" shall mean the aggregate of the Minimum Gain and the
Partner Nonrecourse Liability Minimum Gain.
"Treasury Regulations" shall mean any applicable regulations promulgated
under the Internal Revenue Code.
ARTICLE II
NAME; FORMATION; ORGANIZATIONAL CERTIFICATES
Section 2.1. Name. The name of the Partnership shall be "Aerolink
International L. P." The business of the Partnership shall be conducted under
this name and such other registered fictitious names as the General Partner
shall determine are appropriate.
Section 2.2. Formation of Limited Partnership. The Partnership shall
commence existence as a limited partnership by filing a certificate of limited
partnership with the Secretary of State of the Commonwealth of Pennsylvania.
With this Agreement, the Partners hereby agree to confirm their agreement and
form a limited partnership pursuant to the provisions of the Partnership Act for
the purposes and upon the terms and conditions set forth herein.
Section 2.3. Organizational and Other Certificates. The General Partner
shall execute and file with the Secretary of State of Commonwealth of
Pennsylvania all documents, certificates and instruments required, necessary or
appropriate in connection with the amendment of the certificate of limited
partnership and the organization of the Partnership and the conduct of its
business.
Section 2.4. Statutory Compliance.
(a) The Partnership shall exist under and be governed by the
applicable laws of the Commonwealth of Pennsylvania. The Partners shall make all
filings and disclosures required by, and shall otherwise comply with, all such
laws. Except as otherwise provided in this Agreement or required by law, the
rights, duties, status and liabilities of the Partners, and the formation,
administration, dissolution and continuation or termination of the Partnership,
shall be as provided in the Partnership Act.
(b) Upon the request of the General Partner, the Limited
Partners shall execute, acknowledge, swear to and deliver all certificates and
other instruments and perform such additional acts consistent with the terms of
this Agreement as may be necessary to enable the General Partner to form,
qualify, continue, conduct the business of, and terminate the Partnership as a
limited partnership under the laws of the Commonwealth of Pennsylvania, and to
qualify, register, continue and terminate the Partnership as a limited
partnership in the Commonwealth of Pennsylvania in accordance with the
provisions of this Agreement.
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ARTICLE III
PURPOSE
Section 3.1. Purpose. The purposes of the Partnership shall be to engage in
any lawful acts or business activities for which limited partnerships may be
organized under and in accordance with the provisions of the Partnership Act
including, without limitation, ground handling of cargo for air shipment and
other business.
ARTICLE IV
TERM
Section 4.1. Term. The term of the Partnership shall be from the date
hereof to December 31, 2053, unless sooner terminated as hereinafter provided.
ARTICLE V
PRINCIPAL OFFICE
Section 5.1. Principal Office. The principal office of the Partnership
shall be Cargo Building #1, Greater Pittsburgh International Airport, P.O. Box
12375, Pittsburgh, Pennsylvania 15231. The General Partner may change or
relocate the principal office of the Partnership and establish other or
additional places of business of the Partnership by giving written notice
thereof to the Limited Partners.
ARTICLE VI
MANAGEMENT
Section 6.1. General Partner. The General Partner shall have the right,
authority and obligation to manage the Partnership for the purposes of the
Partnership as set forth in this Agreement; and, except as otherwise expressly
provided in this Agreement, the decision-making authority and plenary authority
to implement the purposes of the Partnership shall reside with the General
Partner.
Section 6.2. Powers of the General Partner.
(a) The General Partner is hereby authorized and empowered to
carry out and implement the purposes of the Partnership; and, in accordance
therewith, the General Partner shall have all the rights and powers of a partner
in a General Partnership. The powers of
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the General Partner shall include, but shall not be limited to, the following
powers, as the General Partner deems necessary or advisable:
(i) to exercise any or all of the rights, powers and
obligations of the Partnership with respect to any partnership in which the
Partnership is a partner;
(ii) to engage personnel, attorneys, accountants and other
persons and/or agents as the General Partner deems necessary or advisable.
(iii) to hold in the form of cash, awaiting distribution
or desirable investments, such portions of the Partnership funds as the General
Partner deems advisable;
(iv) to invest in stocks, bonds, mortgages, securities or
other intangible personal property as the General Partner deems advisable;
(v) to enter into leases for any length of time, including
such leases which extend beyond the term of the Partnership, and to acquire,
own, develop, manage, lease, mortgage, convey and deal in any manner with, real
property and interests therein, including, but not limited to, easements,
covenants and rights of way and the sale and resultant leasing back of any such
real property;
(vi) to sell, exchange, lease, encumber, option or
otherwise dispose of all or any portion of the assets held by the Partnership,
and to make, execute and deliver deeds, mortgages, leases, assignments and other
documents necessary to further the purposes of the Partnership;
(vii) to vote by person or proxy any and all stock owned
by the Partnership and to participate in any reorganization or merger of
companies or corporations whose stock is held by the Partnership; to exercise
any and all conversion, subscription and other rights of whatever nature,
including (but not by way of limitation) stock options with respect to any
stocks, bonds or other securities and, for the purpose of exercising such
rights, the power to sell or otherwise dispose of all or any part of the
Partnership's assets, or to borrow for the purpose of making payment;
(viii) to open, maintain and close bank accounts and to
draw checks and other orders for the payment of money;
(ix) to borrow money from one or more of the Partners or
any third party and to make, issue, accept, endorse and execute promissory
notes, drafts, bills of exchange, loan agreements and other instruments and
evidences of indebtedness, and to secure the payment thereof by mortgage,
confession of judgment, hypothecation, pledge or other assignment of or
arrangement of security interests in all or any part of the property then owned
or thereafter acquired by or for the Partnership;
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(x) to take actions and incur expenses on behalf of the
Partnership in connection with the conduct of the affairs of the Partnership and
to provide reimbursement for any such expenses advanced for the Partnership by
the General Partner or by a Limited Partner if the General Partner has approved
such expense;
(xi) to enter into, make and perform contracts, agreements
and other undertakings as the General Partner deems necessary or advisable for
the conduct of the affairs of the Partnership, including, without limitation, an
agreement for the payment by the Partnership to the General Partner of a
reasonable sum in consideration of services rendered by the General Partner to
the Partnership, which payments may be determined without regard to the income
of the Partnership;
(xii) to use any portion of the assets or property of the
Partnership for the purposes of the Partnership as set forth in this Agreement;
(xiii) to continue the business of the Partnership upon
the death, retirement or insanity of a General Partner in the event that an
individual is admitted as an additional or successor General Partner pursuant to
Section 14.5 or 14.7 of this Agreement;
(xiv) to adjust, compromise and settle or refer to
arbitration any claim in favor of or against the Partnership or any business or
asset of the Partnership, and to institute, prosecute or defend any and all such
legal proceedings as the General Partner deems advisable;
(xv) to file all tax returns and forms, and to make all
tax elections on behalf of the Partnership;
(xvi) to do any and all things necessary to carry out the
purposes of this Agreement.
(b) The Limited Partners specifically approve and consent to
the exercise by the General Partner of the powers described in paragraph (a) of
this Section.
(c) If there is ever more than one General Partner, the
General Partners shall make all decisions necessary to manage the Partnership by
vote of the holders of a majority in interest of all general partnership
interests of the General Partners in the Partnership.
Section 6.3. Tax Controversies. The General Partner shall be the "Tax
Matters Partner" for the purposes of Code Section 6231(a)(7). Should there be
any question or controversy with the Internal Revenue Service or other taxing
authority involving the Partnership, the Tax Matters Partner shall act as the
agent of the Partnership to resolve such question or controversy and may, on
behalf of the Partnership, incur any expenses such Partner deems necessary or
advisable in the interest of the Partners in connection with any such question
or controversy, including professional fees and the cost of any protest,
litigation and/or appeals.
Section 6.4. Limitations on Authority. The General Partner shall not take
any actions which would cause any Limited Partner to be liable for any amounts
in excess of the amounts which such Limited Partner is expressly obligated to
contribute to the capital of the Partnership pursuant to this Agreement.
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ARTICLE VII
CAPITAL
Section 7.1. Initial Capital Contributions. This Agreement contemplates
that the Partners (or their predecessors in interest) will make contributions of
cash and other property to the Partnership in exchange for interests in the
Partnership by merging the Trust into the Partnership and surrendering for
cancellation all beneficial interests in the Trust. Upon formation of the
Partnership, the Partners shall contribute to the capital of the Partnership as
their "Initial Capital Contributions" the amounts shown on Exhibit "A" to this
Agreement. In addition, on the Effective Date the Partners shall be deemed, for
federal income tax purposes and for purposes of the calculations of Capital
Accounts and Participating Percentages hereunder, to have contributed to the
capital of the Partnership their respective capital account balances in the
Trust as of the instant immediately prior to the consummation of the merger of
the Trust into the Partnership.
Section 7.2. Withdrawals from Capital Accounts. No Partner shall be
entitled to receive interest on or to withdraw any amount from such Partner's
Capital Account other than as expressly provided herein.
Section 7.3. Capital Accounts. A Capital Account shall be established and
maintained for each Partner in compliance with the provisions of applicable
Treasury Regulations, including Treasury Regulation Section 1.704-1(b)(2)(iv).
In general, such Capital Accounts shall be maintained as follows:
(a) General Rules. Each Partner's Capital Account shall be (i)
credited with the amount of money contributed by such Partner to the
Partnership, (ii) credited or debited, as the case may be, with such Partner's
allocation of income, gain, loss and expense made to such Partner pursuant to
the terms of this Agreement, and (iii) debited with the amount of cash and the
Net Fair Market Value of property distributed to such Partner pursuant to the
terms of this Agreement.
(b) Special Rules. If any Partner's interest in the
Partnership is sold, exchanged or liquidated, the following special rules shall
apply when determining the Capital Account balances of any new or remaining
Partners:
(i) The Capital Account of a selling or exchanging Partner
shall be carried over to the transferee Partner.
(ii) If such sale or exchange (together with such other
sales or exchanges of interests in the Partnership as occur during any relevant
time period) causes a termination of the Partnership within the meaning of Code
Section 708(b)(1)(B), the Capital Account of the selling or exchanging Partner
shall be carried over to the transferee Partner, and the Capital Accounts of all
Partners (as constituted after such transfer) shall carry over to the
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deemed new partnership in accordance with applicable Treasury Regulations,
including Treasury Regulation Section 1.708-1(b)(1)(iv)(1).
(iii) If the Partnership has in effect at the time of any
sale or exchange an election under Code Section 754, there shall not be made to
the Capital Account of the Partner who receives the special tax basis adjustment
under Code Section 743 a corresponding adjustment except to the extent such a
special tax basis adjustment would be reflected in a Partner's respective
Capital Account pursuant to applicable Treasury Regulations, including Treasury
Regulation Section 1.704-1(b)(2)(iv)(m).
(iv) If a Partner's interest in the Partnership is
redeemed by the Partnership through a distribution in complete liquidation of
such interest, except as provided in paragraph (a) of this Section, the Capital
Accounts of the remaining Partners shall be adjusted only to the extent required
by applicable Treasury Regulations, including Treasury Regulation Section
1.704-1(b)(2)(iv)(m).
Section 7.4. Determination of and Adjustments to Book Value and Capital
Accounts. When determining the Book Value of the assets of the Partnership and
the appropriate balances in each Partner's respective Capital Account resulting
from any adjustments to such Book Value, in accordance with the provisions of
applicable Treasury Regulations, including Treasury Regulation Section
1.704-1(b)(2)(iv), the following accounting rules shall apply:
(a) The initial Book Value of any asset contributed by a
Partner to the Partnership shall be its Gross Fair Market Value on the date of
contribution.
(b) The Book Values of all Partnership assets shall be
adjusted to equal their respective Gross Fair Market Values, as of the following
times:
(i) the acquisition of an interest (including an
additional interest) in the Partnership by any new or existing Partner in
exchange for more than a de minimis capital contribution to the Partnership if
the General Partner determines that such adjustment is necessary or appropriate
to reflect the relative economic interests of the Partners with respect to the
Partnership;
(ii) the distribution by the Partnership to a Partner of
more than a de minimis amount of money or other Partnership property if the
General Partner determines that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Partners with respect to the
Partnership;
(iii) the liquidation of the Partnership within the
meaning of applicable Treasury Regulations, including Treasury Regulation
Section 1.704-1(b)(2)(ii)(g); or
(iv) the occurrence of any other event (including, without
limitation, a refinancing of any property of the Partnership) if the General
Partner determines that such adjustment is necessary or appropriate to reflect
the economic interests of the Partners with respect to the Partnership and is
not prevented by applicable Treasury Regulations.
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(c) The Book Value of any Partnership asset distributed to any
Partner shall be adjusted to equal its Gross Fair Market Value on the date of
such distribution.
(d) The Book Value of Partnership assets shall not be
increased or decreased to reflect any adjustments to the adjusted tax basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), except to
the extent that such adjustments are taken into account in determining and
maintaining capital accounts pursuant to applicable Treasury Regulations,
including Treasury Regulation Section 1.704-1(b)(2)(iv)(m); provided, however,
that Book Value shall not be adjusted pursuant to this provision to the extent
that such adjustment was previously reflected in the Book Value of the
Partnership's assets.
(e) If the Book Value of an asset has been determined or
adjusted pursuant to the foregoing provisions of this Section, such Book Value
shall thereafter be reduced by the Depreciation taken into account with respect
to such asset for purposes of computing the Net Book Profits and the Net Book
Losses of the Partnership pursuant to the terms of this Agreement.
ARTICLE VIII
PROFITS, LOSSES AND DISTRIBUTIONS
Section 8.1. Positive Cash Flow. The term "Positive Cash Flow" as used in
this Agreement shall mean the gross cash receipts generated from the operation
of the business of the Partnership from all sources, including, without
limitation, all revenue and income obtained from the sale of the assets or
property of the Partnership as well as the proceeds from all refinancing of
mortgages or replacements of existing mortgages encumbering the property of the
Partnership available to the Partnership after (i) the payment or accrual for
payment of all current operating expenditures in connection therewith,
including, without limitation, interest and principal payments due on loans and
other charges due pursuant to any mortgages encumbering the property of the
Partnership, expenses and commissions, (ii) making provision for the reasonable
working capital requirements of the Partnership and (iii) in the case of a
Capital Transaction, debt repayment, accrued operating and capital expenses,
broker's commissions, financing fees and other normal and customary closing
costs, but (iv) disregarding in determining Positive Cash Flow depreciation,
amortization, other noncash items and amounts to be distributed to the Partners
pursuant to the terms of this Agreement. The General Partner's determination
with respect to provisions for reasonable working capital requirements of the
Partnership shall be conclusive.
Section 8.2. Distribution of Positive Cash Flow.
(a) Positive Cash Flow of the Partnership, including Positive
Cash Flow from any Capital Transaction, shall be distributed to the extent
available, not less often than annually, among the Partners, pro rata in
proportion to their relative Participating Percentages.
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(b) The foregoing provisions of this Section to the contrary
notwithstanding, the General Partner shall have the right to apply any Positive
Cash Flow to be distributed to a Partner against any amounts due from, or
required to be contributed by, such Partner to the Partnership. Such application
of any Positive Cash Flow shall be deemed to be a distribution to such Partner,
followed by a payment or contribution to the Partnership, as the case may be.
(c) Notwithstanding anything to the contrary set forth in this
Section, any Positive Cash Flow which arises during the liquidation of the
Partnership shall be distributed in accordance with the provisions of this
Agreement dealing with the distribution of proceeds from the liquidation of the
Partnership.
(d) Any amount paid by the Partnership for or with respect to
any Partner on account of any withholding tax or other tax payable with respect
to the income, profits or distributions of the Partnership pursuant to the Code,
the U.S. Treasury Regulations, or any state or local statute, regulation or
ordinance requiring such payment (a "Withholding Tax Act") shall be treated as a
distribution to such Partner for all purposes of this Agreement, consistent with
the character or source of the income, profits or cash which gave rise to the
payment or withholding obligation, except to the extent such amount is treated
as a Tax Payment Loan (as defined in the next sentence). To the extent that the
amount required to be remitted by the Partnership under the Withholding Tax Act
exceeds the amount then otherwise distributable to such Partner, the excess
shall constitute a loan from the Partnership to such Partner (a "Tax Payment
Loan") which shall be payable upon demand and shall bear interest, from the date
that the Partnership makes the payment to the relevant taxing authority, at the
short-term applicable federal rate (as established from time to time by the
Internal Revenue Service) or, in the event that the Partnership must borrow
funds to make such payment, at a borrowing cost equal to the Partnership's
borrowing cost. So long as any Tax Payment Loan or the interest thereon remains
unpaid, the Partnership shall make future distributions due to such Partner
under this Agreement by applying the amount of any such distribution first to
the payment of any unpaid interest on all Tax Payment Loans of such Partner and
then to the repayment of the principal of all Tax Payment Loans of such Partner.
The General Partner shall have the authority to take all actions necessary to
enable the Partnership to comply with the provisions of any Withholding Tax Act
applicable to the Partnership and to carry out the provisions of this Section
8.2(d). Nothing in this Section 8.2(d) shall create any obligation on the
General Partner to advance funds to the Partnership or to borrow funds from
third parties to make any payments on account of any liability of the
Partnership under a Withholding Tax Act.
Section 8.3. Determination of Net Book Profits and Net Book Losses. For
purposes of computing the amount of any items of income, gain, loss or expense
to be reflected in the Partners' Capital Accounts (hereinafter the net of such
items being referred to as the "Net Book Profits" or the "Net Book Losses" of
the Partnership), the determination, recognition and classification of such
items shall be the same as their determination, recognition and classification
for Federal income tax purposes, with the following modifications:
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(a) Any item of expense attributable to depreciation,
amortization or other cost recovery with respect to any asset of the Partnership
(hereinafter "Depreciation") shall be in an amount which bears the same ratio to
the Book Value of such asset at the beginning of the applicable period as the
Federal income tax deduction for depreciation, amortization or other cost
recovery with respect to such asset for such applicable period bears to the
adjusted tax basis of such asset at the beginning of such period; provided that
if the Federal income tax deduction attributable to depreciation, amortization
or other cost recovery for such applicable period with respect to any asset is
zero, the Depreciation with respect to such asset for such applicable period
shall be determined with reference to the Book Value of such asset as of the
beginning of such applicable period using any reasonable method selected by the
General Partner.
(b) Any item of income, gain, loss or expense attributable to
the taxable disposition of any property with an adjusted tax basis which is
different from the Book Value of such property shall be determined as if the
adjusted tax basis of such property as of the date of such disposition were
equal in amount to the Book Value of such property.
(c) If the Partnership's adjusted tax basis in an item of
depreciable property is adjusted pursuant to Code Section 50(c)(1) to reflect
any investment tax credit available with respect to such asset, the amount of
such adjustment shall be treated as a Partnership expense and shall be allocated
in the ratio in which the investment tax credit (or qualified investment in such
property) which gave rise to such basis adjustment is allocated. Any restoration
of such adjusted tax basis pursuant to Code Section 50(c)(2) occurring as the
result of any recapture of previously allowed investment tax credit with respect
to any Partnership property shall be treated as Partnership income and shall be
allocated in the ratio in which was allocated the investment tax credit (or
qualified investment in such property the disposition of which gave rise to such
restoration of adjusted tax basis).
(d) All expenditures of the Partnership not deductible in
computing its taxable income and not properly chargeable to capital accounts,
and any otherwise nondeductible organization and syndication expense of the
Partnership (as described in Code Section 709) shall be treated as Partnership
expenses.
(e) Revenue of the Partnership which is exempt from Federal
income tax shall be included in the Net Book Profits or the Net Book Losses of
the Partnership without regard to the fact that such revenue is not includible
in gross income for Federal income tax purposes.
(f) Payments made to any Partner which are treated for Federal
income tax purposes as guaranteed payments pursuant to Code Section 707(c) shall
be treated as Partnership expenses; provided that such payments shall be treated
as capital expenditures of the Partnership to the extent such payments are
required to be capitalized under the Code and any applicable Treasury
Regulations thereunder.
(g) In the event the Book Value of any Partnership asset is
adjusted pursuant to the terms of this Agreement, the amount of such adjustment
shall be treated as gain or loss (as appropriate) from a sale of such asset.
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Section 8.4. Allocation of Net Book Profits and Net Book Losses. For
purposes of maintaining the Capital Accounts of the Partners and determining the
rights of the Partners among themselves with respect to the assets of the
Partnership, the Net Book Profits or Net Book Losses of the Partnership for each
applicable period shall be allocated among the Partners in the order of priority
set forth below. Each item of such income, gain, loss or expense giving rise to
such Net Book Profits or Net Book Losses of the Partnership for such period
shall be allocated among the Partners in the same proportion that such Net Book
Profits or Net Book Losses of the Partnership for such period are allocated
among the Partners.
(a) Allocation of Net Book Profits. Net Book Profits for any
period shall be allocated among the Partners pro rata in proportion to each
Partner's Participating Percentage.
(b) Allocation of Net Book Losses. Net Book Losses for any
period shall be allocated among the Partners pro rata in proportion to each
Partner's Participating Percentage, subject, however, to the provisions of
Sections 8.5 and 8.6 below.
Section 8.5. Allocations to Comply With Applicable Treasury Regulations. In
order to comply with the provisions of applicable Treasury Regulations,
including Treasury Regulation Section 1.704-2, the following special allocations
of income, gain, loss and expense shall be made notwithstanding any other
provision of this Agreement.
(a) Deficit Capital Account Allocations. In accordance with
applicable Treasury Regulations, including Treasury Regulation Section
1.704-1(b)(2)(ii)(d), no allocation of expenses or losses shall be made pursuant
to the terms of this Agreement to the extent such allocation would cause or
increase a net deficit balance in a Partner's Capital Account as of the end of
the period to which such allocation relates in excess of any dollar amount of
such net deficit balance that such Partner it obligated to restore under this
Agreement. Such expenses and losses shall instead be allocated among the other
Partners not subject to this limitation in accordance with their relative
Participating Percentages. For purposes of this paragraph (a), the following
rules shall apply:
(i) each Partner's net deficit balance in such Partner's
respective Capital Account shall be determined by adding to such Capital Account
balance the amount of such Partner's share (as determined pursuant to applicable
Treasury Regulations, including Treasury Regulation Section 1.704-2) of the
Total Minimum Gain of the Partnership as of the end of the period with respect
to which such determination is being made; and
(ii) in determining whether an allocation of loss or
expense would cause or increase a net deficit balance in a Partner's respective
Capital Account as of the end of the period to which such allocation relates,
the initial balance in such Partner's respective Capital Account shall be
treated as if it reflected an amount equal to the excess of any distributions
that, as of the end of such period, reasonably are expected to be made to such
Partner in any future period over the Net Book Profits reasonably expected to be
allocated to such Partner during (or prior to) the period in which such
distributions are expected to be made.
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(b) Qualified Income Offset Provision. If a Partner
unexpectedly receives an adjustment, allocation or distribution pursuant to this
Agreement which causes or increases a net deficit balance in such Partner's
respective Capital Account as of the end of the period to which such adjustment,
allocation or distribution relates in excess of any dollar amount of such net
deficit balance that such Partner is obligated to restore pursuant to this
Agreement, such Partner will be allocated items of gross income and gain in an
amount and manner sufficient to eliminate such net deficit balance as quickly as
possible. The rules set forth in subparagraph (a)(i) and (a)(ii) of this Section
shall apply for purposes of determining whether any adjustment, allocation or
distribution would cause or increase a net deficit balance in any Partner's
Capital Account.
(c) Special Allocations of Nonrecourse Deductions.
Notwithstanding any other provision in this Agreement, in compliance with
applicable Treasury Regulations, including Treasury Regulation Section 1.704-2,
allocations of Nonrecourse Deductions shall be made among the Partners in
accordance with the Participating Percentages of the Partners.
(d) Minimum Gain Chargeback Provision. If there is a net
decrease in the Minimum Gain of the Partnership (as determined pursuant to
applicable Treasury Regulations, including Treasury Regulation Section
1.704-2(f)) during any period, then each Partner shall be allocated items of
gross income and gain in accordance with the provisions of applicable Treasury
Regulations, including Treasury Regulation Section 1.704-2(f).
(e) Special Allocations of Partner Nonrecourse Deductions.
Notwithstanding any other provision in this Agreement, in compliance with
applicable Treasury Regulations, including Treasury Regulation Section
1.704-2(i)(1), allocations of Partner Nonrecourse Deductions shall be made among
the Partners in accordance with the ratios in which the Partners (or the
affiliates of any Partners) share the economic risk of loss with respect to the
Partner Nonrecourse Liabilities to which such Partner Nonrecourse Deductions are
attributable (determined in accordance with the provisions of applicable
Treasury Regulations, including Treasury Regulation Section 1.752-2(a)).
(f) Partner Nonrecourse Liability Minimum Gain Chargeback
Provision. If there is a net decrease in the Partner Nonrecourse Liability
Minimum Gain (as determined pursuant to applicable Treasury Regulations,
including Treasury Regulation Section 1.704-2(i)) during any period, then each
Partner shall be allocated items of income and gain in accordance with the
provisions of applicable Treasury Regulations, including Treasury Regulation
Section 1.704-2(i)(3).
(g) Subsequent Allocations. Any special allocations of items
of income, gain, loss or expense made pursuant to this Section shall be taken
into account in computing subsequent allocations of income, gain, loss and
expense pursuant to this Agreement, so that the net amount of any item of
income, gain, loss and expense allocated to each Partner pursuant to this
Agreement shall, to the extent possible, be equal to the amount of such items of
income, gain, loss and expense that would have been allocated to such Partner
pursuant to this
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Agreement if the special allocations of income, gain, loss or expense required
by this Section had not been made.
(h) Interpretation of these Provisions. The provisions of this
Section are intended to comply with the provisions of applicable Treasury
Regulations, including Treasury Regulation Sections 1.704-1(b)(2) and 1.704-2,
and shall be interpreted consistently therewith.
Section 8.6. Federal Income Tax Allocations. The allocations of income,
gain, loss and expense made pursuant to the previous Sections are allocations of
book income which are made for accounting purposes to determine the respective
balances in the Capital Accounts of the Partners and to establish the rights of
the Partners among themselves with respect to the assets of the Partnership.
These allocations may be different from the allocations among the Partners of
the income, gain, loss, deduction, tax preference and tax credits of the
Partnership for Federal income tax purposes. Allocations of income, gain, loss,
deduction, tax preference and tax credits of the Partnership for Federal income
tax purposes for each taxable year shall be made among the Partners as follows:
(a) General Rules Regarding Allocations of Income, Loss, Etc.
In general, for Federal income tax purposes, all items of income, gain, loss,
deduction and tax preference of the Partnership for each taxable year shall be
allocated among the Partners in the same manner as the items of income, gain,
loss and expense which gave rise to such items of income, gain, loss, deduction
and tax preference for Federal income tax purposes are allocated among the
Partners pursuant to the terms of this Agreement.
(b) Special Rules Where Tax Basis Differs From Book Value. If
the Partnership's adjusted tax basis for Federal income tax purposes of any of
its property differs from the Book Value of such property at the beginning of
any taxable year, in determining each Partner's distributive share of the
taxable income or loss (or items thereof) of the Partnership, each item of
income, gain, loss or deduction with respect to such property shall be allocated
among the Partners in such a manner as will take into account (as required by
Code Section 704(c) and any applicable Treasury Regulations thereunder or by
other applicable Treasury regulations including Treasury Regulation Section
1.704-1(b)(4)(i)) the difference between the adjusted tax basis for Federal
income tax purposes of such property and its Book Value, all as of the beginning
of such taxable year.
Section 8.7. Allocation of Taxable Income and Loss and Tax Credits on the
Transfer of a Partnership Interest. The items of income, gain, loss, expense,
deduction, tax preference and/or tax credit allocable under the terms of this
Agreement to any interest in the Partnership which may have been transferred
during any period shall be allocated among the persons who were the holders of
such interest during such period in a manner which takes into account the
varying interests of the Partners in the Partnership during such period, all in
accordance with any Treasury Regulations promulgated under Code Section 706(d);
provided, that the allocation of gain or loss on the disposition of any property
in which the Partnership has a direct or indirect interest shall, to the extent
not prohibited under such regulations, be allocated
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among the Partners who are Partners in the Partnership on the date the event
giving rise to such gain or loss occurs in accordance with the provisions of
this Agreement otherwise dealing with Federal income tax allocations.
Section 8.8. Special Tax Audit Allocations. Notwithstanding anything
contained in this Agreement to the contrary, in the event that the taxable
income of the Partnership for Federal income tax purposes (or any item thereof)
is adjusted as the result of an adjusted in a manner which reflects such
adjustments as though corresponding book adjustments had been originally
reflected in the Net Book Profits or Net Book Losses of the Partnership
determined pursuant to the terms of this Agreement.
Section 8.9. Interest. If, pursuant to applicable law, a portion of the
amounts paid on any Partner notes issued with respect to capital contributions
to the Partnership shall be deemed to constitute interest rather than principal
for Federal income tax purposes, the interest income attributable thereto shall
be allocated to the Partners who shall have made such deemed interest payments
on such Partner notes; and the amount of such interest income shall be taken
into account in determining the amount of capital contributions made by such
Partner to the Partnership.
Section 8.10. Credits. All investment tax credits, targeted job credits and
other tax credits available to the Partnership shall, subject to applicable
Treasury Regulations and provisions of the Code, be allocated among the Partners
in proportion to the respective Partner's Participating Percentage.
ARTICLE IX
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 9.1. Books and Records. Proper and complete records and books of
account shall be kept by the Partnership. The Partnership books and records
shall be kept on the cash method of accounting or on such other acceptable
method as the General Partner shall determine. The books and records shall at
all times be maintained at the principal office of the Partnership and shall be
open to the reasonable inspection and examination of the Partners or their duly
authorized representatives during normal business hours.
Section 9.2. Tax Information. As soon as available after the end of each
fiscal year of the Partnership, the General Partner shall send or cause to be
sent to each Partner such tax information as shall be necessary for the
preparation by such Partner of his, her or its Federal income tax return, state
income tax return and other tax returns. The Partners acknowledge that because
of the nature of the Partnership, it may be difficult or impossible accurately
to set forth on Form K-1 and other tax forms which the Partnership may file
and/or provide to the Partners the actual interests of the Partners in the
Partnership's income, losses and capital. The Partners agree among themselves
that no information on any such form will be evidence of the true interest in
the Partnership of any Partner.
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Section 9.3. Annual Reports. If requested in writing by a Partner or in the
sole discretion of the General Partner, as soon as available after the end of
each fiscal year, the General Partner shall cause to be prepared and transmitted
to each Partner a report containing (i) a balance sheet of the Partnership
showing the financial condition of the Partnership at the close of such year;
(ii) a statement of income of the Partnership showing the results of operations
during such year; (iii) a cash flow statement of the Partnership showing the
cash receipts and disbursements of the Partnership during such year; (iv) a
statement showing each Partner's share of the profits or losses of the
Partnership for such year for Federal income tax purposes; and (v) such other
financial information as the General Partner deems appropriate.
Section 9.4. Accounting Principals. Except as otherwise provided in this
Agreement, all books and records of the Partnership shall be kept, and all
financial statements furnished to the Partners hereunder shall be prepared, in
accordance with sound and generally accepted accounting principles consistently
applied.
ARTICLE X
FISCAL YEAR
Section 10.1. Fiscal Year. The Fiscal Year of the Partnership shall end on
December 31 of each year.
ARTICLE XI
LIABILITY OF GENERAL PARTNER; EXCULPATION;
INDEMNIFICATION; REIMBURSEMENT
Section 11.1. Liability of General Partner. To the extent that assets of
the Partnership are insufficient to satisfy any and all of the Partnership's
liabilities, the General Partner shall bear such liability.
Section 11.2. Exculpation. The General Partner shall not be liable to the
Partnership or any other Partner for losses or liability arising from the
conduct of the affairs of the Partnership or from the conduct of an employee or
agent of the General Partner or the Partnership, so long as such losses or
liability do not arise from the gross negligence, willful misconduct or fraud of
the General Partner.
Section 11.3. Indemnification. The General Partner shall be indemnified by
the Partnership (but not by any Limited Partner) against any losses, judgments,
claims and/or liabilities (including expenses actually incurred by the General
Partner, attorneys' fees actually incurred by the General Partner and amounts
actually paid by the General Partner in settlement of any claim incurred or
sustained by the General Partner) in connection with any action, suit or
proceeding (other than an action, suit or proceeding by or in the right of a
Limited Partner or the Partnership) threatened, pending or completed to which
the General Partner is a party or
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threatened to be made a party by reason of the performance of its duties under
and in accordance with this Agreement, provided that with respect to the matter
for which indemnification is sought, the General Partner acted (or refrained
from acting) in a manner that it and/or its agents believed in good faith was in
the best interests of the Partnership, and in a case involving a criminal
proceeding, the General Partner had no reasonable cause to believe that its
actions (or the actions of its agents) constituted unlawful conduct.
Section 11.4. Reimbursement. The General Partner shall be entitled to
current reimbursement out of Partnership funds for all costs and expenses
reasonably incurred to third parties while acting on behalf of the Partnership
in accordance with this Agreement.
ARTICLE XII
RIGHTS AND LIMITATIONS OF LIMITED PARTNERS; MEETINGS;
AMENDMENTS
Section 12.1. Limited Assessment. Except as provided in this Agreement, no
Limited Partner shall be subject to assessment nor shall any Limited Partner be
personally liable for, or bound by, any expenses, liabilities or obligations of
the Partnership beyond such Limited Partner's Initial Capital Contribution.
Section 12.2. No Right to Manage. Except as specifically provided in this
Agreement, the Limited Partners shall take no part in, or interfere in any
manner with, the management, control, conduct or operation of the Partnership,
nor have any right, power or authority to act for or bind the Partnership.
Section 12.3. Priority. No Limited Partner shall have priority over any
other Limited Partner either as to the return of capital contributions or any
other distributions from the Partnership, unless otherwise specifically provided
herein.
Section 12.4. Death, Disability, etc. of a Limited Partner. The Partnership
shall not be dissolved by (i) the death, disability, insanity, adjudication of
incompetence, bankruptcy, insolvency or withdrawal of any Limited Partner, (ii)
the assignment by any Limited Partner of its interest in the Partnership, or
(iii) the admission of a Substitute Limited Partner.
Section 12.5. Meetings.
(a) Place of Meetings. Meetings of Partners may be held in
such place within or without the Commonwealth of Pennsylvania as may be
specified in the notice of such meeting.
(b) Call of Meetings. A meeting of the Partners for any
matters on which the Limited Partners are entitled to vote or consent may be
called by the written notice of the General Partner or by the written notice of
the Requisite Limited Partners.
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(i) Written notification of such meeting shall be issued
by the General Partner no later than ten (10) days before the date of such
meeting. Any such notice shall state the purpose of the proposed meeting and the
matters proposed to be acted upon thereat. Meetings shall be held at the
principal office of the Partnership or at such other place as may be designated
by the General Partner, or by means of any telecommunications system. Such
meetings shall be held on a date not less than fifteen (15) days nor more than
sixty (60) days after the receipt by the General Partner of a written request
for such a meeting signed by the Requisite Limited Partners. In addition, the
General Partner may, and upon receipt of a request in writing signed by the
Requisite Limited Partners shall, submit any matter upon which the Limited
Partners are entitled to vote to the Limited Partners for a vote by written
consent without a meeting (including, without limitation, for the purpose of
proposing an amendment to the Partnership Agreement). The affirmative vote of
the Requisite Limited Partners shall be required for the approval of any matter
submitted for a vote of the Limited Partners.
(ii) Notification of any meeting to be held pursuant to
this Section shall be given to each Limited Partner at such Limited Partner's
record address or at such other address which such Limited Partner may have
furnished in writing to the General Partner. Such notification shall state the
place, date and hour of the meeting and shall indicate that the notification is
being issued at or by the direction of the Partner or Partners calling the
meeting. The notification shall state the purpose or purposes of the meeting. If
a meeting is adjourned to another time or place, the General Partner shall give
notification of the adjourned meeting. The presence in person or by proxy of the
Requisite Limited Partners shall constitute a quorum at all meetings of the
Limited Partners; provided, however, that if there be no such quorum, the
Requisite Limited Partners present or represented by proxy may adjourn the
meeting from time to time, until a quorum shall have been obtained. No
notification of the time, place or purpose of any meeting of Limited Partners
need be given to any Limited Partner who attends in person or is represented by
proxy, except for a Limited Partner attending a meeting for the express purpose
of objecting at the beginning of the meeting to the transaction of any business
on the grounds that the meeting is not lawfully called or convened, or to any
Limited Partner entitled to such notification who, in writing, executed and
filed with the records of the meeting, either before or after the time thereof,
waives such notification.
(iii) For the purpose of determining the Limited Partners
entitled to vote on, or to vote at, any meeting of the Limited Partners, or any
adjournment thereof, or to vote by written consent without a meeting, the
General Partner or the Limited Partners requesting such meeting or vote may fix,
in advance, a date as the record date of any such determination of Limited
Partners. Such date shall not be more than fifty (50) days nor less than ten
(10) days before any such meeting or submission of a matter to the Limited
Partners for a vote by written consent.
(iv) At each meeting of Limited Partners, the Limited
Partners present or represented by proxy shall elect such officers and adopt
such rules for the conduct of such meeting as they shall deem appropriate.
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Section 12.6. Voting Rights of Limited Partners.
(a) The Requisite Limited Partners may:
(i) approve the amendment of this Agreement, subject to
the conditions that such amendment (1) may not in any manner allow the Limited
Partners to take part in the control of the Partnership's business or otherwise
modify their limited liability, and (2) may not change the interest of any
Partner in the capital, profits, losses or cash distributions of the Partnership
or amend or modify the provisions of this Agreement dealing with distributions
of Positive Cash Flow, liquidation distributions and/or amendments to this
Agreement, without the written consent of each Partner affected thereby;
(ii) approve the removal of the General Partner for cause,
subject to the provisions set forth in this Agreement dealing with the removal
of the General Partner;
(iii) propose and approve a successor General Partner,
subject to the provisions set forth in this Agreement dealing with the admission
of a successor General Partner; and
(iv) propose and approve the dissolution of the
Partnership.
(b) A Limited Partner shall be entitled to cast one vote for
each percentage point of Participating Percentage which such Limited Partner
owns (i) at a meeting, in person, by written proxy or by a signed writing
directing the manner in which such Limited Partner desires that such Limited
Partner's vote be cast, which writing must be received by the General Partner
prior to such meeting, or (ii) without a meeting, by a signed writing directing
the manner in which such Limited Partner desires that such Limited Partner's
vote be cast, which writing must be received by the General Partner prior to the
date upon which the votes of the Limited Partners are to be counted. Every proxy
must be signed by the Limited Partner or such Limited Partner's
attorney-in-fact. No proxy shall be valid after the expiration of 12 months from
the date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Limited Partner executing it. Only the votes of
Limited Partners of record on the notification date or such other record date as
may be set pursuant to the terms of this Agreement, whether at a meeting or
otherwise, shall be counted. In connection with any such vote, the General
Partner shall be empowered to establish reasonable rules pertaining to the
validity and use of proxies by the Limited Partners.
Section 12.7. Proposal and Adoption of Amendments Generally.
(a) Amendments to this Agreement may be proposed in the
following manner:
(i) by the General Partner, who shall give to the Limited
Partners:
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(1) the text of such proposed amendment;
(2) a statement of the purpose of such amendment; and
(3) an opinion of counsel obtained by the General
Partner to the effect that such amendment is permitted by the Partnership Act,
will not impair the limited liability of any Limited Partner and will not
adversely affect the classification of or cause a termination of the Partnership
as a partnership for Federal income tax purposes.
(ii) by the Requisite Limited Partners, who shall submit
to the General Partner the text of such proposed amendment, together with a
statement of the purpose of such amendment and an opinion from counsel obtained
by such Requisite Limited Partners, satisfactory in form and substance to the
counsel of the Partnership, to the effect that such amendment is permitted by
the Partnership Act, will not impair the limited liability of the Limited
Partners and will not adversely affect the classification or cause the
termination of the Partnership as a partnership for Federal income tax purposes.
The General Partner shall, within twenty (20) days after receipt of any proposal
under this clause (ii), give to all Limited Partners the text of such proposed
amendment, such statement of purpose and such opinion of counsel, together with
the views, if any, of the General Partner with respect to such proposed
amendment.
(b) Amendments proposed pursuant to this Section shall be
adopted if consented to by the General Partner and by Requisite Limited
Partners.
(c) The General Partner shall, within a reasonable time after
the adoption of any amendment to this Agreement, make any official filings,
recordings and publications required or desirable to reflect such amendment,
including any required filing or recordation of an amended certificate of
limited partnership of the Partnership.
Section 12.8. Limitations on Amendments. Notwithstanding any other
provision of this Agreement, no amendment to this Agreement may:
(a) Without the consent of such affected Partner, enlarge the
obligations of any Partner under this Agreement or convert the interest of any
Limited Partner into the interest of a General Partner;
(b) Allow the Limited Partners to take part in the control of
the Partnership's business or otherwise modify the then limited liability of any
Limited Partner;
(c) Create any additional class of Partnership interest
without the consent of all Partners;
(d) Modify the order and method or percentage amounts provided
herein for allocations of profits and losses and distributions of Positive Cash
Flow or the proceeds from the liquidation of the Partnership, without the
consent of each Partner adversely affected by such modification; or
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(e) Amend the provisions of this Agreement dealing with making
amendments to this Agreement without the consent of all Partners.
Section 12.9. Amendments on Admission or Withdrawal of Partners.
(a) Amendments to admit Substitute Limited Partners shall be
adopted if the conditions specified in this Agreement regarding the admission of
such Partners shall have been satisfactorily complied with and the amendment
shall have been signed by the General Partner, by the person to be substituted
and by the assigning Limited Partner or such Limited Partner's attorney-in-fact.
(b) Amendments to reflect the admission and/or designation of
a successor General Partner shall be adopted if the conditions specified in this
Agreement regarding the admission and/or designation of such a Partner shall
have been satisfactorily completed and the amendment shall have been signed by
such successor General Partner.
(c) Amendments for the removal or withdrawal of the General
Partner, if the business of the Partnership is continued, shall be adopted if
the conditions specified in this Agreement dealing with such removal or
withdrawal of the General Partner shall have been satisfactorily completed and
the amendment shall have been signed by the successor General Partner.
ARTICLE XIII
TRANSFERS BY LIMITED PARTNERS; REPURCHASE OF INTERESTS
Section 13.1. Prohibited Transfers. Except as set forth in the next
sentence of this Section 13.1, no Limited Partner may transfer (whether by gift
or sale), pledge or encumber all or any part of his respective interest in the
Partnership without the express written consent of the General Partner, which
consent may be withheld at the complete discretion of the General Partner.
Notwithstanding the foregoing, a Limited Partner may transfer all or any part of
his partnership interest to (a) such Limited Partner's spouse or issue, (b) a
trust or trusts created for the benefit of one or more of such Limited Partner
and such Limited Partner's spouse or issue, (c) a family limited partnership in
which (i) the Limited Partner, or an entity controlled by the Limited Partner,
is the managing general partner and (ii) the other partners of the family
limited partnership are one or more of the Limited Partner, his spouse, issue
and a trust or trusts created for the benefit of one or more of such Limited
Partner, his spouse and issue, (d) another Partner, (e) one or more successor
trustees of any trust which is a Partner, (f) the personal representative or the
persons entitled to the estate of a deceased Partner or (g) a beneficiary upon
whom devolves under the terms of the governing instrument a remainder interest
in a trust which was a Partner.
Section 13.2. Compliance with Securities Laws. No Partnership interest has
been registered under the Securities Act of 1933, as amended, or under any state
securities law. A Limited Partner may not transfer all or any part of its or his
Partnership interest except in
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compliance with applicable Federal and state securities laws. A transfer, for
purposes of this Agreement, shall be deemed to include, but not be limited to,
any sale, transfer, assignment, pledge, creation of a security interest or other
disposition. The General Partner shall have no obligation to register any
Limited Partner's interest under the Securities Act of 1933, as amended, or the
securities laws of any state, or to make any exemption therefrom available to
any Limited Partner or Substitute Limited Partner. Any certificates or other
documents representing the interest in the Partnership may bear a legend
outlining the above restrictions on transfer. Further, the Partnership will make
notations on its records of the foregoing restrictions on transfer. If a
transfer agent is ever appointed, the Partnership will issue appropriate
stop-transfer instructions to its transfer agent respecting the limitations on
transfer outlined herein.
Section 13.3. Transfer. A Limited Partner's interest in the Partnership may
not be transferred in whole or in part unless, in addition to satisfaction of
the conditions in Sections 13.1 and 13.4, the transferor has, if requested by
the General Partner, furnished the Partnership with evidence acceptable to the
General Partner that such transfer complies with applicable Federal and state
securities laws and this Agreement and does not cause a termination of the
Partnership under Section 708 of the Code. Transfers will be recognized by the
Partnership effective the first or sixteenth day of the calendar month during
which the above conditions are satisfied. Any transfer in contravention of this
Article shall be void and ineffectual and shall not bind the Partnership.
Section 13.4. Admission of Substitute Limited Partner. Except as
specifically provided in this Agreement, unless the General Partner otherwise
consents thereto, a transferee of an interest in the Partnership shall become a
Substitute Limited Partner only after the transferee:
(a) Adopts and approves in writing all the terms and
provisions of this Agreement then in effect; and
(b) Assumes the obligations, if any, of the transferor to the
Partnership.
A Substitute Limited Partner is liable for the obligations of such Substitute
Limited Partner's assignor to make contributions as provided in and under this
Agreement.
Section 13.5. Status of Transferee. A nonadmitted transferee of an interest
in the Partnership or other interest in the Partnership of a Limited Partner
shall be entitled to receive only that share of distributions to which its
transferor would otherwise be entitled with respect to the interest in the
Partnership transferred, and shall have no right to obtain any information on
account of the Partnership's transactions, to inspect the Partnership books or
to vote with the Limited Partners on any matter. Partnership may, however, in
the discretion of the General Partner furnish the transferee with pertinent tax
information at the end of each fiscal year of the Partnership.
Section 13.6. Election to Treat Transferee as a Partner. The General
Partner may elect to treat a transferee of a Partnership interest who has not
become a Substitute Limited
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Partner as a Substitute Limited Partner in the place of its transferor should
the General Partner, in its absolute discretion, deem that such treatment is in
the best interest of the Partnership.
Section 13.7. Death, Bankruptcy, Incompetence, etc. of a Limited Partner.
Upon the death, dissolution, adjudication of bankruptcy, insanity or
adjudication of incompetence of a Limited Partner, such Partner's executors,
administrators or legal representatives shall have all the rights of a Limited
Partner, for the purpose of settling or managing such Partner's estate,
including such power as such Limited Partner possessed to constitute a successor
as a transferee of its interest in the Partnership and to join with such
transferee in making the application to substitute such transferee as a Partner.
However, such executors, administrators or legal representatives will not have
the right to become Substitute Limited Partners in the place of their
predecessor in interest except to the extent provided in Section 13.1 or unless
the General Partner shall so-consent.
Section 13.8. Transferee(s). Any transfer, bequest or gift of an interest
in the Partnership hereunder is conditioned upon the transferee(s) (or, in the
case of a trust, the trustee(s)) being sui juris and mentally competent.
Section 13.9. Tax Elections. In the event of the transfer of any interest
in the Partnership or the distribution of property to any Partner, the
Partnership may, at the determination of the General Partner, file an election
under Code Section 754 to cause the basis of the Partnership's assets to be
adjusted for Federal income tax purposes as provided by Code Sections 734 and
743.
ARTICLE XIV
CHANGES TO THE GENERAL PARTNER
Section 14.1. Removal of the General Partner.
(a) The Requisite Limited Partners, by written notice to the
General Partner, may call a meeting for the purpose of removing the General
Partner, for subjecting the Partnership to an action for, or otherwise injuring
the Partnership as a result of, such General Partner's (A) gross negligence
which results in a material uninsured loss to the Partnership, (B) breach of
fiduciary duty, (C) fraud, willful misconduct, or any grossly negligent conduct
in the performance of such General Partner's duties as General Partner, or (D)
uncured breach of any material representation or warranty by the General Partner
contained in this Agreement. Such notice shall be given to all Partners,
including, the General Partner, not less than thirty (30) days prior to the date
set for such meeting, and shall set forth in reasonable detail the allegedly
improper conduct. If the Requisite Limited Partners vote at such meeting to
remove the General Partner, such General Partner shall have seven (7) days in
which to object to such removal by written notice to the Limited Partners. If
the General Partner does not object within such seven (7) day period, the
removal shall be effective as of the expiration of such period. If the General
Partner objects, such objection shall be in the form of a Claim Statement under
the arbitration
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provisions of this Agreement, and the removal shall be determined by binding
arbitration in accordance with the arbitration provisions of this Agreement.
(b) Upon the removal of the General Partner pursuant to this
Section, the General Partner shall become a Special Limited Partner and as such
will not have any right to participate in the management of the affairs of the
Partnership. Such Special Limited Partner shall not share in any rights or
interests given to the Limited Partners. Instead, such Special Limited Partner
shall retain its share of the net profits or net losses, cash flow, and capital
interest which are allocated to such General Partner as if it remained the
General Partner of the Partnership. Neither the removed General Partner nor any
affiliate of the removed General Partner shall be entitled to receive any fees
under this Agreement following such removal.
Section 14.2. Withdrawal. A General Partner may unilaterally withdraw as
the General Partner of the Partnership at any time by giving thirty (30) days'
written notice of its intent to withdraw as such General Partner to all of the
then current Limited Partners, provided that such withdrawal does not affect the
status for Federal income tax purposes of the Partnership or otherwise
materially adversely affect the Limited Partners. Upon the withdrawal of the
General Partner pursuant to the provisions of this Section, the interests in the
Partnership of such General Partner shall convert to that of a Special Limited
Partner as though the General Partner had been removed as the General Partner of
the Partnership pursuant to the immediately preceding Section.
Section 14.3. Transfer of Interest. Except as otherwise provided herein,
the General Partner may not assign, transfer, mortgage or sell any portion of
its interest in the Partnership, or enter into any agreement as the result of
which any Person shall become interested in the Partnership, without the consent
of the Requisite Limited Partners; provided, however, this Section shall not
apply to a sale, transfer or assignment pursuant to a removal of a General
Partner in accordance with this Article. A transferee of a General Partner's
interest in the Partnership shall not thereby become a General Partner without
the consent of the Requisite Limited Partners.
Section 14.4. Continuing Liability. No removal or withdrawal under this
Article shall relieve a General Partner of any then existing obligation owing by
that General Partner to the Partnership or any Partner nor shall it constitute a
waiver of any claim the Partnership or any Partner may have against the removed
General Partner. In the event a General Partner withdraws from the Partnership
or sells, transfers or assigns its entire interest pursuant to this Article,
such General Partner shall be, and shall remain, liable for all obligations and
liabilities incurred by the General Partner and the Partnership prior to the
effective date of such occurrence and shall be free of any obligation or
liability incurred on account of the activities of the Partnership after such
time.
Section 14.5. Admission of Successor General Partner. The Limited Partners
may, after the removal or withdrawal of the General Partner as the General
Partner of the Partnership, designate a successor Person to be the General
Partner. Such Person shall become the successor General Partner only upon
meeting the following conditions:
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(a) The admission of such person shall have been consented to
by Limited Partners holding a majority of the then outstanding aggregate
Participating Percentages;
(b) If the designated Person is a corporation or other entity,
it shall have provided the Partnership with evidence satisfactory to counsel for
the Partnership of its authority to become the General Partner;
(c) Counsel for the Partnership, at the expense of the
Partnership, shall have rendered an opinion that the admission of the designated
Person is in conformity with the Partnership Act and that none of the actions
taken in connection with the admission of the designated Person will cause the
termination or dissolution of the Partnership or will cause it to be classified
other than as a Partnership for Federal income tax purposes; and
(d) Any required or appropriate amendments and filings
required under the Partnership Act shall have been properly performed.
Section 14.6. Effect of Bankruptcy, Dissolution, Etc. of the General
Partner. Upon the happening of any of the following events, a General Partner
shall immediately cease to be a General Partner of the Partnership, and his, her
or its interest as such General Partner shall immediately become that of a
Special Limited Partner subject to all of the terms and conditions set forth
above in this Article regarding the conversion of the General Partner into a
Special Limited Partner:
(i) the filing of a petition of bankruptcy with respect to
such General Partner, the same not being discharged within ninety (90) days from
the date of such filing;
(ii) a receiver being appointed to manage the property of
such General Partner; or
(iii) a creditor of such General Partner attaching such
General Partner's interest in the Partnership and such attachment not being
discharged or vacated within ninety (90) days from the date it became effective.
Section 14.7. Appointment of Additional General Partner. The General
Partner may appoint an additional General Partner with the consent of the
Requisite Limited Partners, provided that such appointment shall not affect the
respective economic interest in the Partnership of any Partner without such
Partner's written consent.
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ARTICLE XV
DISSOLUTION OF THE PARTNERSHIP
Section 15.1. Events of Dissolution. The happening of any one of the
following events shall work an immediate dissolution of the Partnership:
(a) the expiration of the term of the Partnership;
(b) the election of the Requisite Limited Partners and of the
General Partner to dissolve the Partnership;
(c) the termination of the business of the Partnership;
(d) the entry of a final judgment, order or decree of a court
of competent jurisdiction adjudicating the Partnership to be a bankrupt and the
expiration of the period, if any, allowed by applicable law in which to appeal
therefrom;
(e) at the happening of any of the following events with
respect to a General Partner (provided, however, that (1) the Partners may elect
to continue the Partnership pursuant to the terms set forth below in this
Article, and (2) the Partnership shall continue if there is another General
Partner of the Partnership):
(i) the withdrawal of the General Partner as the General
Partner of the Partnership without a successor General Partner being appointed
pursuant to the terms of this Agreement;
(ii) the filing of a petition of bankruptcy with respect
to any General Partner, the same not being discharged within ninety (90) days
from the date of such filing;
(iii) a receiver being appointed to manage the property of
any General Partner;
(iv) a creditor of any General Partner attaching such
General Partner's interest in the Partnership and such attachment not being
discharged or vacated within ninety (90) days from the date it becomes
effective; or
(v) the death, insanity, retirement, resignation, removal
or other withdrawal as a General Partner of any General Partner who is an
individual or the dissolution of any General Partner which is an entity.
Section 15.2. Election to Continue the Partnership. In the event of the
happening of any of the events described in paragraph (e) of the immediately
preceding Section to any General Partner, within one hundred and twenty (120)
days of the happening of the first of such events, the Limited Partners may
elect, upon the vote of the Requisite Limited Partners, to continue the
Partnership. In the event of such election, the Partnership shall not terminate
but
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shall continue upon the selection, by the Requisite Limited Partners, of a
successor General Partner, which selection shall be done concurrently with the
election to continue the Partnership business.
ARTICLE XVI
ADDITIONAL PROVISIONS CONCERNING DISSOLUTION OF THE
PARTNERSHIP
Section 16.1. Winding Up Affairs; Liquidation. In the event of the
dissolution of the Partnership for any reason, if no election is made pursuant
to the immediately preceding Article to continue the Partnership, the General
Partner, or if the General Partner is bankrupt and without at least one
qualified successor, a liquidating agent or committee selected by the
affirmative vote or written concurrence of the Requisite Limited Partners, shall
commence to wind up the affairs of the Partnership and to liquidate its assets.
Allocations of income, gain, loss, expense, deductions, tax preference items and
tax credits shall continue to be made among the Partners during the period of
liquidation in accordance with the provisions set forth above in this Agreement
dealing with such allocations. The General Partner or such liquidating agent or
committee, as the case may be, shall have the full right and unlimited
discretion to determine the time, manner and terms of (i) any sale or sales of
Partnership assets pursuant to such liquidation, having due regard to the
activity and condition of the relevant market and general financial and economic
conditions, and (ii) an in-kind liquidating distributions to Partners, so long
as any nonratable distributions of property interests result in the distributees
receiving value in accordance with the terms of this Article.
Section 16.2. Time for Liquidation. A reasonable time shall be allowed for
the orderly liquidation of the assets of the Partnership and the discharge of
its liabilities so as to enable the General Partner or the liquidating agent or
committee, as the case may be, to minimize the normal losses attendant upon such
a liquidation.
Section 16.3. Required Reports. If requested by the Requisite Limited
Partners, the General Partner or the liquidating agent or committee, as the case
may be, shall furnish each Partner with a statement audited and certified by a
responsible firm of certified public accountants showing (i) the net profit or
net loss of the Partnership from the date of the last annual statement submitted
to the Partners pursuant to the terms of this Agreement, to the date of the
final distribution of the proceeds of the liquidation to the Partners and (ii)
the manner in which the proceeds of liquidation were distributed.
Section 16.4. Termination. The Partnership shall terminate when all
property owned by the Partnership shall have been disposed of or distributed and
the net proceeds from sales of properties, after satisfaction of liabilities to
creditors, shall have been distributed among the Partners as aforesaid. The
establishment of any reserves in accordance with the provisions of this Article
shall not have the effect of extending the term of the Partnership.
29
<PAGE> 34
Section 16.5. Distribution of Proceeds From the Liquidation of the
Partnership. The net proceeds of liquidation and any other funds or property of
the Partnership shall be distributed and applied to the extent available in the
following order of priority:
(a) to the payment of debts and liabilities of the
Partnership, including any debts and liabilities to a Partner arising under this
Agreement;
(b) to the setting up of any reserves which the General
Partner or the liquidating agent or committee, as the case may , deems
reasonably necessary for contingent or unforeseen liabilities or obligations of
the Partnership; and
(c) to the Partners with net positive balances in their
respective Capital Accounts in the proportion that the balance in the Capital
Account of each Partner with a net positive balance in such Partner's respective
Capital Account bears to the balances in the Capital Accounts of all Partners
with net positive balances in their respective Capital Accounts.
Section 16.6. Capital Account Adjustments. For purposes of the preceding
Section, the respective balance in the Capital Account of each Partner shall be
determined (i) after allocating all income, gain, loss and expense of the
Partnership pursuant to the terms of this Agreement and (ii) after taking into
account all prior distributions to the Partners. In addition, if property is
distributed in kind to the Partners, for purposes of the preceding Section, any
unsold Partnership property shall be valued by the General Partner or the
liquidating agent or committee, as the case may be, to determine the gain or
loss which would have resulted if the property were sold for its fair market
value, and, to the extent not previously reflected in the Partners' Capital
Accounts, the respective balance of the Capital Account of each Partner shall be
adjusted to reflect such gain or loss that would have been allocated to such
Partner if such property had been sold at its then fair market value.
Section 16.7. Compliance With Treasury Regulations. In the event the
Partnership or any General Partner's interest in the Partnership is "liquidated"
within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g), the
following action shall be taken by the later to occur of (i) the last day of the
Partnership's taxable year in which such liquidation occurred or (ii) the 90th
day following the date of such liquidation:
(a) If any General Partner has a deficit balance in his, her
or its Capital Account at the time of the liquidation of the Partnership or the
liquidation of such General Partner's interest in the Partnership (after giving
effect to all contributions, distributions and allocations for all taxable years
including the year during which such liquidation occurs), such General Partner
shall contribute to the capital of the Partnership funds in an amount equal to
the deficit balance in his, her or its Capital Account. Nothing contained in
this Agreement shall require any Limited Partner to contribute to the
Partnership any amounts with respect to a deficit balance in such Partner's
respective Capital Account.
(b) If the Partnership is actually liquidated, distributions
shall be made to the Partners who have positive Capital Account balances in
compliance with Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(2).
30
<PAGE> 35
(c) In the discretion of the General Partner or the
liquidating agent or committee, as the case may be, distributions pursuant to
this Section 16.7 may be distributed to a trust of which the General Partner or
the liquidating agent or committee is the trustee (hereinafter the "Trustee")
established for the benefit of the Partners for the purposes of liquidating
Partnership assets, collecting amounts owed to the Partnership, and paying any
contingent or unforeseen liabilities or obligations of the Partnership so long
as an opinion of counsel is obtained to the effect that such trust will not be
taxed as an association taxable as a corporation. The assets of any such trust
shall be distributed to the Partners from time to time, in the reasonable
discretion of the Trustee, in the same proportions as the amount distributed to
such trust by the Partnership would otherwise have been distributed to the
Partners pursuant to this Agreement; and a portion or all of such assets may be
withheld by the Trustee to provide a reasonable reserve for liabilities.
ARTICLE XVII
NOTICES
Section 17.1. Notices. All notices and demands required or permitted under
this Agreement shall be in writing and may be personally delivered or sent by
certified or registered mail, Federal Express or comparable courier service,
postage or freight prepaid, to the Partners at their addresses as shown from
time to time on the records of the Partnership. Any Partner may specify a
different address by notifying the General Partner in writing of such different
address. Any notice personally delivered shall be effective upon the date of
delivery. Any notice mailed or sent by air courier as provided herein shall be
deemed given and become effective on the second business day following the date
so sent.
ARTICLE XVIII
REPRESENTATIONS AND WARRANTIES
Section 18.1. The General Partner. As of the date hereof each of the
statements in this Section shall be a true, accurate and full disclosure of all
facts relevant to the matters contained herein, and such warranties and
representations shall survive the execution of this Agreement. The General
Partner hereby represents and warrants that:
(a) There are no disputes, claims, actions, suits or
proceedings, arbitrations or investigations, either administrative or judicial,
pending or, to the knowledge of the General Partner threatened or contemplated,
against or affecting the General Partner or its business, operations, financial
condition or assets or its ability to consummate the transactions contemplated
herein, at law or in equity or otherwise, before or by any court or governmental
agency or body, domestic or foreign, or before an arbitrator of any kind. The
General Partner is not in default in respect of any judgment, order, writ,
injunction, or decree of any court or governmental agency or body, domestic or
foreign, or of an arbitrator of any kind, and the
31
<PAGE> 36
execution and delivery of this Agreement by the General Partner and the
performance by the General Partner of its obligations hereunder, will not
constitute an event of default under any agreement by which the General Partner
or its properties are bound or result in any encumbrance upon the properties or
assets of the General Partner; and
(b) The General Partner is acquiring its interest in the
Partnership for investment and without a view to the distribution thereof.
Section 18.2. Limited Partners. As of the date each Limited Partner
executes this Agreement, each of the statements made with respect to such
Limited Partner in this Section shall be a true, accurate and full disclosure of
all facts relevant to the matters contained herein, and such warranties and
representations and covenants shall survive the execution of this Agreement.
Each Limited Partner hereby represents and warrants that:
(a) Such Limited Partner is acquiring such Limited Partner's
interest in the Partnership for investment and without a view to the
distribution thereof;
(b) If such Limited Partner is not an individual, it is duly
organized and validly existing under appropriate state law and has the requisite
power and authority to enter into and carry out the terms and conditions of this
Agreement;
(c) All actions required to be taken by such Limited Partner
to consummate the transactions contemplated by this Agreement have been taken by
such Limited Partner and no further approval of any board, court or other body
is necessary in order to permit such Limited Partner to consummate the
transactions contemplated by the Agreement; and
(d) There are no disputes, claims, actions, suits or
proceedings, arbitrations or investigations, either administrative or judicial,
pending or, to the knowledge of such Limited Partner threatened or contemplated,
against or affecting such Limited Partner or such Limited Partner's business,
operations, financial condition or assets or its ability to consummate the
transactions contemplated herein, at law or in equity or otherwise, before or by
any court or governmental agency or body, domestic or foreign, or before an
arbitrator of any kind. Such Limited Partner is not in default in respect of any
judgment, order, writ, injunction, or decree of any court or governmental agency
or body, domestic or foreign, or of an arbitrator of any kind, and the execution
and delivery of this Agreement by such Limited Partner and such Limited
Partner's performance of such Limited Partner's obligations hereunder, will not
constitute an event of default under any agreement by which such Limited Partner
or such Limited Partner's properties is bound or result in any encumbrance upon
the properties or assets of such Limited Partner.
32
<PAGE> 37
ARTICLE XIX
MISCELLANEOUS
Section 19.1. Arbitration. Any controversy, dispute or claim under this
Agreement shall be finally determined by arbitration held in Pittsburgh,
Pennsylvania, in accordance with the following procedure:
The aggrieved party or parties shall submit in writing to the General Partner
(with a copy to the opposing party or parties) a statement ("Claim Statement")
describing such matter or dispute and the resolution or relief sought and naming
one qualified reputable individual willing and able to act as an arbitrator. A
counterstatement ("Counterstatement") from the opposing party or parties shall
be delivered to the General Partner (with copy to the aggrieved party(ies) and
the arbitrator named by such party(ies)) within ten (10) business days after
receipt of the Claim Statement, or the right to file the Counterstatement shall
be irrevocably waived. Any Counterstatement shall name one qualified reputable
individual willing and able to act as an arbitrator. If two arbitrators have
been so appointed, the two arbitrators so appointed shall jointly select (or
cause to be selected) a third arbitrator within ten (10) business days after the
date of the Counter statement. If three arbitrators will decide the dispute,
they (the "Arbitrators") shall confer within ten (10) business days after the
selection or other determination of the third arbitrator. The Arbitrators -may,
if they so desire and agree (or if no Counterstatement is filed, the sole
arbitrator may) invite submission of further statements or evidence, hold
hearings in Pittsburgh, Pennsylvania, and/or consult outside experts for
assistance in deciding such matter or dispute, but it is the parties' intent
that the Arbitrators (or sole arbitrator) reach a decision promptly and at least
by twenty (20) business days after the selection of the third arbitrator or the
failure to timely file a Counterstatement. Should any hearings be held by the
Arbitrators (or the sole arbitrator), the parties to the dispute may be present
with the full right on their part to cross examine. Prior to the commencement of
any hearings, the parties to the dispute shall each have the right to conduct
discovery proceedings in the manner and within the scope provided for in the
Federal Rules of Civil Procedure. The majority decision of the Arbitrators (or
the decision of the sole arbitrator) as to each and all matter(s) or dispute(s)
so submitted for decision shall be final and binding upon all parties hereto. In
resolving any matter or dispute, the Arbitrators (or sole arbitrator) may
fashion any remedy or resolution permissible at law and/or in equity, and the
parties hereby release any and all errors which may occur in such proceedings
and the Arbitrators (or sole arbitrator) from any and all liability for actions
taken or omissions made in good faith in such capacity. The parties to the
dispute shall bear equally the fees of, and expenses incurred by, the
Arbitrators (or sole arbitrator) in resolving any and all such matters and
disputes. A business day shall mean any day other than Saturday, Sunday and days
on which banks in Pennsylvania are prohibited from doing business. Without
limiting the foregoing, the Arbitrators (or sole arbitrator) shall have all of
the powers accorded to arbitrators in commercial arbitrations under rules of the
American Arbitration Association.
Section 19.2. Certificates, etc. At the expense of the Partnership, the
General Partner shall promptly have prepared and executed all legally required
applications, registrations, publications, certificates and affidavits (and
amendments thereof) for filing with the proper
33
<PAGE> 38
governmental authorities and arrange for the proper advertisement, publication
and filing thereof for record.
Section 19.3. Power of Attorney. Each Partner who is a party hereto or
executes and delivers an addendum joining in this Agreement, hereby makes,
constitutes and appoints the General Partner, with full power of substitution,
the Partner's true and lawful attorney for the Partner and in the Partner's
name, place and stead and for the Partner's use and benefit, to sign, execute,
certify, acknowledge, file and record any documents, financing statements or
other instruments referred to in the immediately preceding Section, or required
by law, in Pennsylvania or any other jurisdiction, of the Partnership or the
Partners, or appropriate to effectuate fully the provisions of this Agreement.
The foregoing grant of authority shall be irrevocable and shall constitute a
power coupled with an interest; provided, however, that each Partner may revoke
this power by an instrument in writing executed and delivered to the General
Partner after the dissolution and winding-up of the Partnership in accordance
with the terms of this Agreement or after the permitted assignment or transfer
of the Partner's entire interest in the Partnership.
Section 19.4. Partners' Relationship Inter Se. Nothing herein contained
shall be construed to constitute any Partner the agent of any other Partner,
except as expressly provided herein.
Section 19.5. Partition Waived. The Partners agree that the Partnership
property is not and will not be suitable for partition. Accordingly, each of the
Partners hereby irrevocably waives any and all rights that such Partner may have
to maintain any action for partition of any of the Partnership property.
Section 19.6. Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof. It
supersedes any prior or contemporaneous agreements or understandings among the
parties, and it may not be modified or amended in any manner other than as set
forth herein.
Section 19.7. Governing Law. This Agreement and the rights of the parties
hereunder shall be governed by and interpreted in accordance with the laws of
the Commonwealth of Pennsylvania.
Section 19.8. Binding Effect. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, heirs, administrators, executors,
successors and assigns.
Section 19.9. Gender and Number. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in either the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter.
Section 19.10. Captions. Captions contained in this Agreement are inserted
only as a matter of convenience and in no way define, limit or extend the scope
of any provision hereof.
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<PAGE> 39
Section 19.11. Severance. If any provision of this Agreement or the
application of such provision to any Person or circumstance shall be held
invalid, the remainder of this Agreement, or the application of such provisions
to Persons or circumstances other than those to which it is held invalid, shall
not be affected thereby; and this Agreement shall be construed so as to be
enforceable to the maximum extent allowed at law or in equity.
Section 19.12. Execution of Instruments; Reliance by Third Parties. Any
form of execution on behalf of the Partnership, including, without limitation,
execution of any note, mortgage, evidence of indebtedness, contract or other
instrument or writing, or any assignment or endorsement thereof executed or
entered into between the Partnership and any Person shall be executed on behalf
of the Partnership by any one or more of the General Partners. Third parties
dealing with the Partnership shall be entitled to rely conclusively upon the
power and authority of each General Partner. Any Person having occasion to
transact business with the Partnership or being called upon to transfer any
property, funds or value to or from the name or account of the Partnership shall
be entitled to rely on instructions, assignments or any document or instrument
signed or purporting to be signed in accordance with this Section by one or more
of the General Partners without inquiry as to the authority of the General
Partner and without inquiry as to the validity of any transfer to or from the
name or account of the Partnership. At the time of transfer, the Person shall be
entitled to assume that (i) the Partnership continues in existence under the
laws of the Commonwealth of Pennsylvania and (ii) this Agreement continues in
full force and effect without amendment, so long as such Person has received no
actual notice to the contrary.
Section 19.13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument. In addition, this Agreement may contain
more than one counterpart of the signature page, and this Agreement may be
executed by the affixing of the signatures of each of the Partners to one of
such counterparts. All of such counterparts shall be read as though one, and
they shall have the same force and effect as though all the signers had signed a
single page.
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<PAGE> 40
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement as of the date first written above.
GENERAL PARTNER:
Aerolink Management, Inc.
By: /s/ Terry L. Engel
-------------------------------
Terry L. Engel
Chief Executive Officer
LIMITED PARTNERS:
/s/ Terry L. Engel
-------------------------------
Terry L. Engel
/s/ Laura M. Engel
-------------------------------
Laura M. Engel
<PAGE> 1
EXHIBIT 3.15
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
MIAMI INTERNATIONAL CONTAINER FREIGHT STATION, INC.
The Articles of Incorporation of Miami International Container Freight
Station, Inc. originally filed with the Secretary of the State of Florida on
June 14, 1985, are amended and restated to read as follows:
ARTICLE I. NAME
The Name of the corporation is Miami International Container Freight
Station, Inc.
ARTICLE II. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence on the date of filing of
these Articles of Incorporation.
ARTICLE III. PURPOSE
The purpose for which the corporation is organized is to engage in
every aspect and phase of the business of a container freight station, and to
engage in every aspect and phase of related businesses.
ARTICLE IV. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to have
outstanding at any time is 7,500 shares of common stock having a par value of
$1.00 per share. The consideration to be paid for each share shall be fixed by
the board of directors and may be
<PAGE> 2
paid in whole or in part in cash or other property, tangible or intangible, or
in labor or services actually performed for the corporation, with a value, in
the judgment of the directors, equivalent to or greater than the full par value
of the shares.
ARTICLE V. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 6485 N.W. 20th Street, Miami, Florida 33122, and the name of the
corporation's initial registered agent at that address is Susanne Fontana.
ARTICLE VI. INITIAL BOARD OF DIRECTORS
The corporation shall have two directors initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws but shall never be less than one. The names and street addresses
of the initial directors are:
Name Address
Susanne Fontana 2335 Northwest 107th Avenue
Miami, Florida 33172
Claude Bijaoui 191 N.E. 18th Avenue
North Miami Beach, Florida 33179
ARTICLE VII. INCORPORATOR
The name and street address of the incorporator are:
Name Address
Multi-Tronics Systems 2335 Northwest 107th Avenue
Engineering, Inc. Miami, Florida 33172
a Florida corporation
-2-
<PAGE> 3
The incorporator of the corporation assigns to this corporation its rights under
Section 607.161, Florida Statues, to constitute a corporation, and it assigns to
those persons designated by the board of directors any rights it may have as
incorporator to acquire any of the capital stock of this corporation, this
assignment becoming effective on the date corporate existence begins.
ARTICLE VIII. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in
the board of directors and the shareholders, except that the board of directors
may not amend or repeal any bylaw adopted by the shareholders if the
shareholders specifically provide that the bylaw is not subject to amendment or
repeal by the directors.
ARTICLE IX. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal
any provision in these Articles of Incorporation in the manner prescribed by
law, and all rights conferred on shareholders are subject to this reservation.
These Articles may be amended prior to the issuance of shares of the corporation
by the unanimous approval or consent of the board of directors. Thereafter,
every amendment shall be approved by the board of directors, proposed by them to
the shareholders, and approved at a shareholders' meeting by the holders of a
majority of the shares entitled to vote on the matter or in such other manner as
may be provided by law.
The foregoing Amended and Restated Articles of Incorporation were
adopted by written statement of the Incorporator of Miami International
Container Freight Station, Inc. dated 8-23, 1985, prior to the issuance of
shares pursuant to Section 607.187(2) of the Florida Statutes.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the undersigned Incorporator has executed these
Amended and Restated Articles of Incorporation this 23rd day of August, 1985.
MULTI-TRONICS SYSTEMS ENGINEERING, INC.
a Florida corporation, Incorporator
By: /s/ Susanne Fontana
------------------------------------
Susanne Fontana, President
-4-
<PAGE> 5
STATE OF FLORIDA
COUNTY OF DADE
The foregoing instrument was acknowledged before me this 23rd day of
August, 1985, by Susanne Fontana, President of Multi-Tronics Systems
Engineering, Inc., a Florida corporation, Incorporator.
/s/ Notary Public
----------------------------------------
Notary Public, State of Florida at Large
(Affix notarial seal) My commission expires:
-5-
<PAGE> 6
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
MIAMI INTERNATIONAL CONTAINER
FREIGHT STATION, INC.
a Florida corporation
Article I of the Articles of Incorporation of Miami International
Container Freight Station, Inc., a Florida corporation, hereinafter referred to
as the "Corporation," is amended as follows:
ARTICLE I. NAME.
The name of the corporation is Miami International Airport Cargo
Facilities & Services, Inc.
The foregoing Amendment to the Articles of Incorporation of the
Corporation was duly adopted and approved by means of a unanimous written
consent of the shareholders and directors of the Corporation dated April 20,
1987, pursuant to Section 607.181(3) of the Florida Statutes.
IN WITNESS WHEREOF, the undersigned President and Secretary of the
Corporation have executed these Articles of Amendment this 20th day of April,
1987.
MIAMI INTERNATIONAL CONTAINER
FREIGHT STATION, INC.,
a Florida corporation
Attest:
/s/ Susanne Fontana By: /s/ Claude Bijaoui
- --------------------------- -----------------------------------
Susanne Fontana, Secretary Claude Bijaoui, President
<PAGE> 7
STATE OF FLORIDA )
) Section:
COUNTY OF DADE )
BEFORE ME, a Notary Public authorized to administer oaths and take
acknowledgments in the State and County set forth above, personally appeared
Claude Bijaoui known to me and known by me to be the person who executed the
foregoing Amendments to the Articles of Incorporation as President of Miami
International Container Freight Station, Inc., a Florida corporation, and he
acknowledged before me that he executed the Articles of Amendment as President
of said Corporation and that the seal affixed to the foregoing Articles of
Amendment is the official seal of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal in the State and County aforesaid this 20th day of April, 1987.
/s/ Notary Public
-------------------------------
Notary Public
State of Florida at Large
My Commission Expires:
-2-
<PAGE> 8
UNANIMOUS WRITTEN CONSENT OF
SHAREHOLDER AND DIRECTOR OF
MIAMI INTERNATIONAL AIRPORT CARGO FACILITIES & SERVICES, INC.
a Florida corporation
IN LIEU OF AN ANNUAL JOINT MEETING
The undersigned, constituting the sole shareholder and sole director of
MIAMI INTERNATIONAL AIRPORT CARGO FACILITIES & SERVICES, INC., a Florida
corporation, hereinafter referred to as the "Corporation," consents to the
corporate actions specified below and adopts the following resolutions by
written consent, pursuant to the terms of Section 607.394 and 607.134 of the
Florida Statutes:
RESOLVED, that the following individual is elected to serve as sole
member of the board of directors of the Corporation until the next
annual meeting of the sole shareholder or until his successors are duly
elected, qualified and seated:
Claude Bijaoui
RESOLVED, that the following individuals are elected to serve in the
offices set forth opposite their respective names until the next annual
meeting of the sole director or until their successors are duly
elected, qualified and seated:
Claude Bijaoui President/Secretary/Treasurer
Annick Lint Executive Vice President
<PAGE> 9
IN WITNESS WHEREOF, the undersigned sole shareholder and sole director
has executed this Consent this 17th day of August, 1988.
SOLE SHAREHOLDER:
AIR TRANSPORT SERVICES, INC.
a Florida corporation
By: /s/ Claude Bijaoui
-----------------------------------
Claude Bijaoui, President
SOLE DIRECTOR:
/s/ Claude Bijaoui
--------------------------------------
Claude Bijaoui
-2-
<PAGE> 1
EXHIBIT 3.16
AMENDED AND RESTATED
BYLAWS OF
MIAMI INTERNATIONAL AIRPORT CARGO
FACILITIES & SERVICES, INC.
A FLORIDA CORPORATION
ARTICLE I - OFFICES
The principal office of Miami International Airport Cargo
Facilities & Services, Inc. (the "Corporation") shall be established and
maintained at 1651 N.W. 68th Avenue, Building 706, Suite 207, Miami, Florida
33122. The Corporation may also have offices at such places within or without
the State of Florida as the Board of Directors ("Board") may from time to time
establish.
ARTICLE II - SHAREHOLDERS
1. PLACE OF MEETINGS
Meetings of shareholders shall be held at the
principal office of the Corporation or at such place within or without the State
of Florida as the Board shall authorize.
2. ANNUAL MEETING
The annual meeting of shareholders shall be held
during the month of February in each year at a date and time as set by the Board
by resolution, to elect a Board and transact such other business as may properly
come before the meeting.
3. SPECIAL MEETINGS
Special meetings of the shareholders may be called by
the Board or by the President or at the written request of shareholders owning
50% of the stock entitled to vote at such meeting. A meeting requested by
shareholders shall be called for a date not less than ten (10) nor more than
sixty (60) days after the request is made. The Secretary shall issue the call
for the meeting unless the President, the Board or the shareholders requesting
the meeting shall designate another to make said call.
4. NOTICE OF MEETINGS
Written notice of each meeting of shareholders shall
state the purpose of the meeting and the time and place of the meeting. Notice
shall be mailed to each shareholder entitled to vote at such meeting at his last
address as it appears on the records of the Corporation, not less than ten (10)
nor more than sixty (60) days before the date set for such meeting. Such notice
shall be sufficient for the meeting and any adjournment thereof. If any
shareholder shall
1
<PAGE> 2
transfer his stock after such notice has been given, it shall not be necessary
to notify the transferee. Any shareholder may waive notice of any meeting either
before, during or after the meeting.
5. RECORD DATE
The Board may fix a record date not more than seventy
(70) days prior to the date set for a meeting of shareholders as the date as of
which the shareholders of record who are entitled to notice of and to vote at
such meeting and any adjournment thereof shall be determined.
6. VOTING
Every shareholder shall be entitled at each meeting
and upon each proposal presented at each meeting to one vote for each share of
voting stock recorded in his name on the books of the Corporation on the record
date as fixed by the Board and if no record date was fixed, on the date of the
meeting. The record of shareholders shall be produced at the meeting, upon the
request of any shareholder. Upon the demand of any shareholder, the vote for
directors and the vote upon any question before the meeting shall be by ballot.
All elections for directors shall be decided by plurality vote; all other
questions shall be decided by a majority of the votes cast.
7. QUORUM
The presence, in person or by proxy, of shareholders
holding a majority of the stock of the Corporation entitled to vote shall
constitute a quorum at all meetings of the shareholders. In case a quorum shall
not be present at any meeting, a majority in interest of the shareholders
entitled to vote thereat, present in person or by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until the requisite amount of stock entitled to vote shall be
present. At any such adjourned meeting at which the requisite amount of stock
entitled to vote shall be represented, any business may be transacted which
might have been transacted at the meeting as originally noticed; but only those
shareholders entitled to vote at the meeting as originally noticed shall be
entitled to vote at any adjournment or adjournments thereof. Once a quorum is
present at a shareholders' meeting, it is not broken by the subsequent
withdrawal of any shareholder(s).
8. PROXIES
At any shareholders' meeting or any adjournment
thereof, any shareholder of record entitled to vote thereat may be represented
and vote by proxy appointed in a written instrument. No such proxy shall be
voted after three years from the date of the instrument unless the instrument
provides for a longer period. In the event that any such instrument provides for
two or more persons to act as proxies, a majority of such persons present at the
meeting, or if only one be present, that one, shall have all the powers
conferred by the instrument upon all the persons so designated unless the
instrument shall otherwise provide. In the event that any such instrument
provides for an even number of persons to act as proxies, or if the number of
persons
2
<PAGE> 3
designated to act as proxies by such an instrument present at any meeting is
even, and if said persons disagree on their proposed vote, and are equally
divided, no vote pursuant to said instrument shall be cast unless the instrument
provides a mechanism to break the deadlock. Unless the instrument provides
otherwise, any proxy is revocable by either (i) attendance by the giver of the
proxy at the meeting for which the proxy was given and the exercise thereat of
the privilege of voting by the giver of the proxy; or (ii) delivery to the
Secretary of an instrument revoking the proxy, which revocation shall be
effective upon delivery.
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS
The business of the Corporation shall be managed and
its corporate powers exercised by a Board consisting of at least two directors,
each of whom shall be of full age. It shall not be necessary for directors to be
shareholders.
2. ELECTION AND TERM OF DIRECTORS
Directors shall be elected at the annual meeting of
shareholders and each director elected shall hold office until his successor has
been duly elected and qualified, or until his prior resignation or removal.
3. VACANCIES
If the office of any director, member of a committee
or other officer becomes vacant, the remaining directors in office, by a
majority vote, may appoint any qualified person to fill such vacancy, who shall
hold office for the unexpired term and until his successor shall have been duly
elected and qualified.
4. REMOVAL OF DIRECTORS
Any or all of the directors may be removed with or
without cause by vote of a majority of all the stock outstanding and entitled to
vote at a special meeting of shareholders called for that purpose.
5. NEWLY CREATED DIRECTORSHIPS
The number of directors may be increased by amendment
of these Bylaws by the affirmative vote of a majority of the directors or, by
the affirmative vote of a majority in interest of the shareholders, at the
annual meeting or at a special meeting called for that purpose, and by like vote
the additional directors may be chosen at such meeting to hold office until
their successors are duly elected and qualified.
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<PAGE> 4
6. RESIGNATION
A director may resign at any time by giving written
notice to the Board, the President or the Secretary of the Corporation. Unless
otherwise specified in the notice, the resignation shall take effect upon
receipt thereof by the Board or such officer, and the acceptance of the
resignation shall not be necessary to make it effective.
7. QUORUM OF DIRECTORS
A majority of the directors in office shall
constitute a quorum for the transaction of business. If at any meeting of the
Board there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum is obtained, and no further
notice thereof need be given other than by announcement at the meeting which
shall be so adjourned.
8. PLACE AND TIME OF BOARD MEETINGS
The Board may hold its meetings at the office of the
Corporation or at such other places, either within or without the State of
Florida, as it may from time to time determine.
9. REGULAR ANNUAL MEETING
A regular annual meeting of the Board shall be held
immediately following the annual meeting of shareholders at the place of such
annual meeting of shareholders.
10. NOTICE OF MEETINGS OF THE BOARD
Regular meetings of the Board may be held without
notice at such time and place as it shall from time to time determine. Special
meetings of the Board shall be held upon notice to the directors and may be
called by the President upon notice to each director by mailing such notice at
least five days prior to the meeting; or orally, or by personal service or by
telegram at least two days prior to the meeting; special meetings shall be
called by the President or by the Secretary in a like manner on written request
of one director. Notice of a meeting need not be given to any director who
submits a waiver of notice whether before or after the meeting or who attends
the meeting without protesting the lack of notice to him prior thereto or at its
commencement. The notice of any Board meeting need not specify the purpose of
the meeting.
11. EXECUTIVE AND OTHER COMMITTEES
The Board, by resolution, may designate two or more
of their number to one or more committees, which, to the extent provided in said
resolution or these Bylaws, may exercise the powers of the Board in the
management of the business of the Corporation.
12. COMPENSATION
No compensation shall be paid to directors, as such,
for their services, but by resolution of the Board a fixed sum and expenses for
actual attendance at each regular or
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<PAGE> 5
special meeting of the Board may be authorized. Nothing herein contained shall
be construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
13. CONFERENCE TELEPHONE
Any one or more members of the Board or any committee
thereof may participate in a meeting of such Board or committee by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Such
participation shall constitute presence in person at such meeting.
ARTICLE IV - OFFICERS
1. ELECTION AND TERM
(a) The Board may elect or appoint a Chairman of the
Board, a President, a Secretary and a Treasurer, and such other officers as it
may determine, who shall have such duties and powers as hereinafter provided.
(b) Unless otherwise provided in the resolution of
election or appointment, each officer shall hold office until the regular annual
meeting of the Board to be held immediately following the annual meeting of the
shareholders and until his successor has been duly elected and qualified, or
until his prior resignation or removal.
2. REMOVAL, RESIGNATION, SALARY, ETC.
(a) Any officer elected or appointed by the Board may
be removed by the Board with or without cause.
(b) In the event of the death, resignation or removal
of an officer, the Board in its discretion may elect or appoint a successor to
fill the unexpired term.
(c) Any two or more offices may be held by the same
person.
(d) The salaries of all officers shall be fixed by
the Board.
3. CHAIRMAN
The Chairman of the Board, if one be elected, shall
preside at all meetings of the Board and he shall have and perform such other
duties as from time to time may be assigned to him by the Board or the executive
committee.
4. PRESIDENT
The President shall be the Corporation's chief
executive officer and shall have the general powers and duties of supervision
and management usually vested in the office of President of a Corporation. He
shall preside at all meetings of the shareholders if present
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<PAGE> 6
thereat, and if the Chairman of the Board is absent or there is no Chairman of
the Board, at all meetings of the Board, and shall have general supervision,
direction and control of the business of the Corporation.
5. VICE-PRESIDENT
During the absence or disability of the President,
the Vice-President, of if there are more than one, the First Vice-President,
shall have all the powers and functions of the President. Each Vice-President
shall perform such other duties as the Board shall prescribe.
6. SECRETARY
The Secretary shall attend all meetings of the Board
and of the shareholders, record all votes and minutes of all proceedings in a
book to be kept for that purpose, give or cause to be given notice of meetings
of shareholders and of special meetings of the Board, keep in safe custody the
seal of the Corporation and affix it to any instrument when authorized by the
Board, when required prepare or cause to be prepared and available at each
meeting of shareholders a certified list in alphabetical order of the names of
shareholders entitled to a vote thereat, indicating the number of shares of each
respective class held by each, keep all the documents and records of the
Corporation as required by law or otherwise in a proper and safe manner, and
perform such other duties as may be prescribed by the Board, or assigned to
him(her) by the President.
7. ASSISTANT SECRETARY
During the absence or disability of the Secretary,
the Assistant Secretary, or if there are more than one, the one so designated by
the Secretary or by the Board, shall have all the powers and functions of the
Secretary.
8. TREASURER
The Treasurer shall have the custody of the corporate
funds and securities, keep full and accurate accounts of receipts and
disbursements in the corporate books, deposit all money and other valuables in
the name and to the credit of the Corporation in such depositories as may be
designated by the Board, disburse the funds of the Corporation as may be ordered
or authorized by the Board and preserve proper vouchers for such disbursements,
render to the President and Board at the regular meetings of the Board, or
whenever they require it, an account of all his(her) transactions as Treasurer
and of the financial condition of the Corporation, render a full financial
report at the annual meeting of the shareholders if so requested, and perform
such other duties as are given to him(her) by these Bylaws or as from time to
time are assigned to him(her) by the Board or the President.
9. ASSISTANT TREASURER
During the absence or disability of the Treasurer,
the Assistant Treasurer, or if there are more than one, the one so designated by
the Secretary or by the Board, shall have all the powers and functions of the
Treasurer.
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<PAGE> 7
10. SURETIES AND BONDS
In case the Board shall so require, any officer or
agent of the Corporation shall execute to the Corporation a bond in such sum and
with such surety or sureties as the Board may direct, conditioned upon the
faithful performance of his(her) duties to the Corporation and including
responsibility for negligence and for the accounting for all property, funds or
securities of the Corporation which may come into his(her) hands.
ARTICLE V - CERTIFICATES FOR SHARES
1. CERTIFICATES
The shares of the Corporation shall be represented by
certificates, which certificates shall be numbered and entered in the books of
the Corporation as they are issued. They shall exhibit the holder's name and the
number of shares represented thereby and shall be signed by the President or a
Vice-President and by the Treasurer or the Secretary and shall bear the
corporate seal. When such certificates are signed by a transfer agent or an
assistant transfer agent or by a transfer clerk acting on behalf of the
Corporation and a registrar, the signatures of such officers may be facsimiles.
2. LOST OR DESTROYED CERTIFICATES
The Board may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation, alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate to be lost or destroyed. When authorizing such issue of a new
certificate or certificates, the Board may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his(her) legal representatives, to advertise the
same in such manner as it shall require and/or give the Corporation a bond in
such sum and with such surety or sureties as it may direct so as to indemnify
the Corporation against any claim that may be made against it with respect to
the certificate alleged to have been lost or destroyed.
3. TRANSFERS OF SHARES
Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and upon payment of any applicable transfer taxes, the Corporation
shall issue a new certificate to the person entitled thereto, and cancel the old
certificate; every such transfer shall be entered on the transfer books of the
Corporation.
4. CLOSING TRANSFER BOOKS
The Board shall have the power to close the share
transfer books of the Corporation for a period of not more than ten (10) days
during the thirty (30) day period immediately preceding (a) any shareholders'
meeting, or (b) any date upon which shareholders shall be called upon to or have
a right to take action without a meeting, or (c) any date fixed for
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<PAGE> 8
the payment of a dividend or any other form of distribution, and only those
shareholders of record at the time when the transfer books are closed, shall be
recognized as such for the purpose of (i) receiving notice of or voting at such
meeting, or (ii) allowing them to take such action without a meeting, or (iii)
entitling them to receive such dividend or other form of distribution.
ARTICLE VI - DIVIDENDS
The Board may declare dividends upon the capital stock of the
Corporation out of funds legally therefor at any regular or special meeting as
and when it deems expedient. Before declaring any dividend there may be set
apart out of the funds of the Corporation available for dividends, such sum or
sums as the Board from time to time in their discretion deem proper for working
capital or as a reserve fund to meet contingencies or for equalizing dividends
or for such other purposes as the Board shall deem conducive to the interests of
the Corporation.
ARTICLE VII - CORPORATE SEAL
The seal of the Corporation shall be circular in form and bear
the name of the Corporation, the year of its organization and the words
"CORPORATE SEAL, FLORIDA". The seal may be used by causing it to be impressed
directly on the instrument or writing to be sealed, or upon adhesive substance
affixed thereto. The seal on the certificates for shares or on any corporate
obligation for the payment of money may be facsimile, engraved or printed.
ARTICLE VIII - EXECUTION OF INSTRUMENTS
All corporate instruments and documents shall be signed or
countersigned, executed, verified or acknowledged by such officer or officers or
other person or persons as the Board may from time to time designate.
All checks, drafts or other orders for payment of money, notes
or other evidences of indebtedness issued in the name of the Corporation shall
be signed by such officer(s) or agent(s) of the Corporation and in such manner
as shall be determined from time to time by resolution of the Board.
ARTICLE IX - FISCAL YEAR
The fiscal year shall end on December 31 of each year.
ARTICLE X - NOTICE AND WAIVER OF NOTICE
Whenever any notice is required by these Bylaws to be given,
personal notice is not meant unless expressly so stated, and any notice so
required shall be deemed to be sufficient if given by depositing the same in a
post office box in a sealed post-paid wrapper, addressed to the person entitled
thereto at his last known post office address, and such notice shall be deemed
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<PAGE> 9
to have been given on the day of such mailing. Shareholders not entitled to vote
shall not be entitled to receive notice of any meetings except as otherwise
provided by statute.
Whenever any notice is required to be given under the
provisions of any law, or under the provisions of the Articles of Incorporation
of the Corporation or these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE XI - CONSTRUCTION
Whenever a conflict arises between the language of these
Bylaws and the Articles of Incorporation, the Articles of Incorporation shall
govern.
ARTICLE XII - ACTION WITHOUT MEETINGS
Any action of the directors or any committee of the Board may
be taken without a meeting if consent in writing, setting forth the action so
taken, shall be signed by all persons who would be entitled to vote on such
action at a meeting, and filed with the Secretary of the Corporation as part of
the proceedings of the directors or such committee, as the case may be.
ARTICLE XIII - INDEMNITY
Every person (and the heirs, executors and administrators of
such person) who is or was a director, officer, employee or agent of the
Corporation or of any other company, including another corporation, partnership,
joint venture, trust or other enterprise on which such person serves or served
at the request of the Corporation shall be indemnified by the Corporation
against all judgments, payments in settlement (whether or not approved by
court), fines, penalties and other reasonable costs and expenses (including
attorneys' fees and costs) imposed upon or incurred by such person in connection
with or resulting from any action, suit, proceeding, investigation or claim,
civil, criminal, administrative, legislative or other (including any criminal
action, suit or proceeding in which such person enters a plea of guilty or nolo
contendere or its equivalent), or any appeal relating thereto which is brought
or threatened either by or in the right of the Corporation or such other company
(herein called a "Derivative Action") or by any other person, governmental
authority or instrumentality (herein called a "Third-Party Action") and in which
such person is made a party or is otherwise involved by reason of his being or
having been such director, officer, employee or agent or by reason of any action
or omission or alleged action or omission by such person in his capacity as such
director, officer, employee or agent if either (a) such person is wholly
successful, on the merits or otherwise, in defending such derivative or
third-party action or (b) in the judgment of a court of competent jurisdiction
or, in the absence of such a determination, in the judgment of a majority of a
quorum of the Board (which quorum shall not include any director who is a party
to or is otherwise involved in such action), or, in the absence of such a
disinterested quorum, in the opinion of independent legal counsel (i) in the
case of a Derivative Action, such person acted without negligence or misconduct
in the performance of his duty to the Corporation or such other company or (ii)
in the case of a Third-
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<PAGE> 10
Party Action, such person acted in good faith in what he reasonably believed to
be the best interests of the Corporation or such other company, and in addition,
in any criminal action, had no reasonable cause to believe that his action was
unlawful; provided that, in the case of a Derivative Action, such
indemnification shall not be made in respect of any payment to the Corporation
or such other company or any shareholder thereof in satisfaction of judgment or
in settlement unless either (x) a court of competent jurisdiction has approved
such settlement, if any, and the reimbursement of such payment or (y) if the
court in which such action has been instituted lacks jurisdiction to grant such
approval or such action is settled before the institution of judicial
proceedings, in the opinion of independent legal counsel the applicable standard
of conduct specified herein before has been met, such action was without
substantial merit, such settlement was in the best interests of the Corporation
or such other company and the reimbursement of such payment is permissible under
applicable law. In case such person is successful on the merits or otherwise in
defending part of such action, or in the judgment of such a court or such quorum
of the Board or in the opinion of such counsel has met the applicable standard
of conduct specified in the preceding sentence with respect to part of such
action, he(she) shall be indemnified by the Corporation against the judgments,
settlements, payments, fines, penalties, and other costs and expenses
attributable to such part of such action.
The foregoing rights of indemnification shall be in addition
to any rights which any such director, officer, employee or agent may otherwise
be entitled under the Articles of Incorporation, any agreement or vote of
shareholders or at law or in equity or otherwise.
In any case in which, in the judgment of a majority of such a
disinterested quorum of the Board, any such director, officer or employee will
be entitled to indemnification under the foregoing provisions of this Article,
such amounts as they deem necessary to cover the reasonable costs and expenses
incurred by such person in connection with the action, suit, proceeding,
investigation or claim prior to final disposition thereof may be advanced to
such person upon receipt of an undertaking by or on behalf of such person to
repay such amounts if it is ultimately determined that he(she) is not so
entitled to indemnification.
ARTICLE XIV - AMENDMENT
These Bylaws may be altered, amended or repealed and new
Bylaws may be adopted by either the Board or the shareholders, but the Board may
not alter, amend or repeal any Bylaw adopted by the shareholders if the
shareholders specifically prescribe in such Bylaw that it shall not be altered,
amended or repealed by the Board.
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<PAGE> 1
EXHIBIT 3.17
ARTICLE OF INCORPORATION
OF
INTERNATIONAL ENTERPRISES GROUP, INC.
We, the undersigned, hereby associate ourselves for the purpose of
becoming a corporation under the laws of the State of Florida, and under the
statute of the State of Florida providing for the formation, rights, privileges,
immunities and liabilities of incorporating for profit it is:
ARTICLE I
THE NAME OF THE CORPORATION SHALL BE:
INTERNATIONAL ENTERPRISES GROUP, INC.
ARTICLE II
The corporation shall engage in any activity or business permitted
under the laws of the State of Florida and the United States of America.
ARTICLE III
The maximum number of shares which the corporation is authorized to
issue and have outstanding at any one time is 500 shares of common stock (shall
have a par value of $1.00 per share).
All stock is to be issued as fully paid and exempt from assessment.
ARTICLE IV
The pledge, sale, transfer or other disposition of the capital stock
may be governed and restricted by the By-Laws or written agreement amongst the
stockholders which shall be on file in the offices of the corporation so named
in Article VII herein.
<PAGE> 2
The By-Laws may provide for cumulative voting by a stockholders at all
elections of the directors of the corporation.
ARTICLE V
The amount of capital with which this corporation may begin business
shall not be less than Five Hundred ($500.00) Dollars.
ARTICLE VI
The existence of the corporation is perpetual.
ARTICLE VIII
The initial post office address and registered offices of the
corporation in the State of Florida shall be 13125 S.W. 104 Terrace, Miami, Fla
33186. The Board of Directors may from time to time move the principal offices
to any other address within the State of Florida. The registered agent is:
Carlos Ronaldo Vimo. Address: 13125 S.W. 104 Terrace, Miami, Fla 33186
ARTICLE VIII
The business of the corporation shall be managed by a Board of
Directors consisting of not less than (2) nor more than (5) directors. A quorum
for the holding of a meeting of the Board of Directors, and for the transaction
of any business properly carried out by the directors on behalf of the
corporation, shall consist of a majority of the members thereof. But, the
directors, by unanimous consent in writing, included in the minutes of the
corporation, may consent to the doing of any act and such consent in writing
shall have the same force and effect as though a formal meeting had been held
pursuant to call being duly made and as though the said act had been completed
and authorized at a meeting at which a quorum had been present, and/or such
duties may be delegated to an "Executive Committee".
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<PAGE> 3
ARTICLE IX
The names and post office addresses of the members of the first Board
of Directors and slate of corporate offices are as follows:
<TABLE>
<CAPTION>
Name Title Address
---- ----- -------
<S> <C> <C>
CARLOS RONALDO VIMO President 13125 S.W. 104 Terrace, Miami, Fla 33186
JOSE MAGANA Sec. & Treasurer 1800 West 54 Street, #220, Hlh, Fla 33012
</TABLE>
ARTICLE X
The names and post office addresses of the subscribers to the Articles
of Incorporation, and the number of shares of stock that they agree to take are
as follows:
<TABLE>
<CAPTION>
Name Address Shares Cash Value
---- ------- ------ ----------
<S> <C> <C> <C>
CARLOS RONALDO VIMO 13125 SW 104 Terr. Miami 55 $275.00
JOSE MAGANA 1800 W. 54 St. #220 Hlh 45 $225.00
</TABLE>
ARTICLE XI
The stock of the corporation may be issued pursuant to the provisions
under # 1244 of the Internal Revenue Code in order for the stockholders of the
corporation may receive the benefits thereunder.
IN WITNESS WHEREOF: We have hereunder set our hands and seals this 8th
day of May, 1989.
/s/Carlos Rinaldo Vimo (Seal)
----------------------
/s/Jose Magana (Seal)
----------------------
(Seal)
------------------------------
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<PAGE> 4
STATE OF FLORIDA:
COUNTY OF DADE
I hereby certify that on this day personally appeared before me, an officer duly
authorized to take acknowledgments and administer oaths in the State of Florida,
CARLOS RONALDO VIMO AND JOSE MAGANA, to me well known to be the persons
described in and who executed the foregoing Articles of Incorporation, and who
acknowledged before me that they executed the same freely and voluntarily for
the purpose therein expressed.
WITNESS: my hand and official seal this 08 day of May 1989, at Miami,
County of Dade, State of Florida.
/s/ Notary Public
-------------------------------------
Notary Public, State of Florida at Large
My Commission Expires:
--------------
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<PAGE> 5
STATE OF FLORIDA
DEPARTMENT OF STATE
Certificate Designating Place of Business or Domicile for the Service
of Process Within This State, Naming Agent Upon Whom Process may be Served and
Names and Addresses of the Officers and Directors.
----------------------------
The following is submitted, in compliance with Chapter 48.091, Florida
Statutes:
INTERNATIONAL ENTERPRISES GROUP, INC.
a corporation organized (or organizing) under the laws of the State of Florida
with in its principal office at 13125 SW 104 Terrace in the city of Miami,
County of DADE State of FLORIDA, has named CARLOS RONALDO VIMO, located at 13125
SW 104 Terrace (Street Address & Number of Building., P.O Box address not
acceptable) City of MIAMI, County of DADE State of Florida, as its agent to
accept service of process within this state.
OFFICERS:
<TABLE>
<CAPTION>
NAME TITLE SPECIFIC ADDRESS
<S> <C> <C>
CARLOS RONALDO VIMO (P) 13125 S.W. 104 Terrace, Miami, Fla 33186
----------------------- ----------------------------------------
JOSE MAGANA (S) 1800 West 54 Street # 220, Hialeah, Fla 33012
----------------------- ---------------------------------------------
JOSE MAGANA (T) 1800 West 54 Street # 220, Hialeah, Fla 33012
----------------------- ---------------------------------------------
(V)
-----------------------
</TABLE>
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<PAGE> 6
Directors:
<TABLE>
<CAPTION>
Name Specific Address
<S> <C>
CARLOS RONALDO VIMO 13125 S.W. 104 Terr. Miami, Fla 33186
----------------------- -------------------------------------
JOSE MAGANA 1800 West 54 Street #220, Hialeah, Fl 33012
----------------------- -------------------------------------------
</TABLE>
By /s/
----------------------
(Corporate Officer)
ACCEPTANCE:
I agree as Resident Agent to accept Service of Process; to keep office
open during prescribed hours; to post my name ( and any other officers of said
corporation authorized to accept service of process as the above Florida
designated address) in some conspicuous place in office as required by Law.
Filling Fee: /s/
- -------------------------- ---------------------------------
(Resident Agent)
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<PAGE> 7
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION OF
INTERNATIONAL ENTERPRISES GROUP, INC.
To: Department of State
Tallahassee, Florida 32314
Pursuant to the provisions of Section 607.1006 of the Florida Statutes,
the undersigned corporation adopts the following articles of amendments to its
articles of incorporation:
1. The name of the corporation is International Enterprises Group, Inc.
2. The following amendment of the articles of incorporation is adopted
by the shareholder of the corporation on March 28, 1996 in the manner prescribed
by the Florida Business Corporation Act, ss.607.1006:
ARTICLE III
The maximum number of shares which the corporation is
authorized to issue and have outstanding at any one time is
1,000 shares of common stock, (shall have a par value of $1.00
per share).
3. The number of shares of the corporation outstanding at the time of
adoption was 500; and the number of shares entitled to vote on the amendment was
500.
4. The designation and number of outstanding shares of each class
entitled to vote on the amendment as a class were as follows:
Class Number of shares
Common 500
5. The number of shares voted for the amendment was 500 and the number
of shares voted against the amendment were none.
6. The number of shares of each class entitled to vote as a class voted
for and against the amendment, respectively, was: N/A
7. The manner in which any exchange, reclassification, or cancellation
of issued shares provided for in the amendment is to be effected is as follows:
N/A
8. The manner in which the amendment effects as change in the amount of
stated capital, and the amount of stated capital as changed by the amendment are
as follows: N/A
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<PAGE> 8
Dated: March 28, 1996.
INTERNATIONAL ENTERPRISES GROUP, INC.
By: /s/ Carlos Rinaldo Vimo
-------------------------
Print Name: Carlos Rinaldo Vimo
-------------------
Title: President
(Corporate Seal)
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<PAGE> 1
EXHIBIT 3.18
AMENDED AND RESTATED
BYLAWS OF
INTERNATIONAL ENTERPRISES GROUP, INC.
A FLORIDA CORPORATION
ARTICLE I - OFFICES
The principal office of International Enterprises Group, Inc.
(the "Corporation") shall be established and maintained at 9100 South Dadeland
Boulevard, One Datran Center, Suite 1250, Miami Florida 33156. The Corporation
may also have offices at such places within or without the State of Florida as
the Board of Directors ("Board") may from time to time establish.
ARTICLE II - SHAREHOLDERS
1. PLACE OF MEETINGS
Meetings of shareholders shall be held at the
principal office of the Corporation or at such place within or without the State
of Florida as the Board shall authorize.
2. ANNUAL MEETING
The annual meeting of shareholders shall be held
during the month of February in each year at a date and time as set by the Board
by resolution, to elect a Board and transact such other business as may properly
come before the meeting.
3. SPECIAL MEETINGS
Special meetings of the shareholders may be called by
the Board or by the President or at the written request of shareholders owning
50% of the stock entitled to vote at such meeting. A meeting requested by
shareholders shall be called for a date not less than ten (10) nor more than
sixty (60) days after the request is made. The Secretary shall issue the call
for the meeting unless the President, the Board or the shareholders requesting
the meeting shall designate another to make said call.
4. NOTICE OF MEETINGS
Written notice of each meeting of shareholders shall
state the purpose of the meeting and the time and place of the meeting. Notice
shall be mailed to each shareholder entitled to vote at such meeting at his last
address as it appears on the records of the Corporation, not less than ten (10)
nor more than sixty (60) days before the date set for such meeting. Such notice
shall be sufficient for the meeting and any adjournment thereof. If any
shareholder shall transfer his stock after such notice has been given, it shall
not be necessary to notify the
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transferee. Any shareholder may waive notice of any meeting either before,
during or after the meeting.
5. RECORD DATE
The Board may fix a record date not more than seventy
(70) days prior to the date set for a meeting of shareholders as the date as of
which the shareholders of record who are entitled to notice of and to vote at
such meeting and any adjournment thereof shall be determined.
6. VOTING
Every shareholder shall be entitled at each meeting
and upon each proposal presented at each meeting to one vote for each share of
voting stock recorded in his name on the books of the Corporation on the record
date as fixed by the Board and if no record date was fixed, on the date of the
meeting. The record of shareholders shall be produced at the meeting, upon the
request of any shareholder. Upon the demand of any shareholder, the vote for
directors and the vote upon any question before the meeting shall be by ballot.
All elections for directors shall be decided by plurality vote; all other
questions shall be decided by a majority of the votes cast.
7. QUORUM
The presence, in person or by proxy, of shareholders
holding a majority of the stock of the Corporation entitled to vote shall
constitute a quorum at all meetings of the shareholders. In case a quorum shall
not be present at any meeting, a majority in interest of the shareholders
entitled to vote thereat, present in person or by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until the requisite amount of stock entitled to vote shall be
present. At any such adjourned meeting at which the requisite amount of stock
entitled to vote shall be represented, any business may be transacted which
might have been transacted at the meeting as originally noticed; but only those
shareholders entitled to vote at the meeting as originally noticed shall be
entitled to vote at any adjournment or adjournments thereof. Once a quorum is
present at a shareholders' meeting, it is not broken by the subsequent
withdrawal of any shareholder(s).
8. PROXIES
At any shareholders' meeting or any adjournment
thereof, any shareholder of record entitled to vote thereat may be represented
and vote by proxy appointed in a written instrument. No such proxy shall be
voted after three years from the date of the instrument unless the instrument
provides for a longer period. In the event that any such instrument provides for
two or more persons to act as proxies, a majority of such persons present at the
meeting, or if only one be present, that one, shall have all the powers
conferred by the instrument upon all the persons so designated unless the
instrument shall otherwise provide. In the event that any such instrument
provides for an even number of persons to act as proxies, or if the number of
persons designated to act as proxies by such an instrument present at any
meeting is even, and if said
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<PAGE> 3
persons disagree on their proposed vote, and are equally divided, no vote
pursuant to said instrument shall be cast unless the instrument provides a
mechanism to break the deadlock. Unless the instrument provides otherwise, any
proxy is revocable by either (i) attendance by the giver of the proxy at the
meeting for which the proxy was given and the exercise thereat of the privilege
of voting by the giver of the proxy; or (ii) delivery to the Secretary of an
instrument revoking the proxy, which revocation shall be effective upon
delivery.
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS
The business of the Corporation shall be managed and
its corporate powers exercised by a Board consisting of at least two directors,
each of whom shall be of full age. It shall not be necessary for directors to be
shareholders.
2. ELECTION AND TERM OF DIRECTORS
Directors shall be elected at the annual meeting of
shareholders and each director elected shall hold office until his successor has
been duly elected and qualified, or until his prior resignation or removal.
3. VACANCIES
If the office of any director, member of a committee
or other officer becomes vacant, the remaining directors in office, by a
majority vote, may appoint any qualified person to fill such vacancy, who shall
hold office for the unexpired term and until his successor shall have been duly
elected and qualified.
4. REMOVAL OF DIRECTORS
Any or all of the directors may be removed with or
without cause by vote of a majority of all the stock outstanding and entitled to
vote at a special meeting of shareholders called for that purpose.
5. NEWLY CREATED DIRECTORSHIPS
The number of directors may be increased by amendment
of these Bylaws by the affirmative vote of a majority of the directors or, by
the affirmative vote of a majority in interest of the shareholders, at the
annual meeting or at a special meeting called for that purpose, and by like vote
the additional directors may be chosen at such meeting to hold office until
their successors are duly elected and qualified.
6. RESIGNATION
A director may resign at any time by giving written
notice to the Board, the President or the Secretary of the Corporation. Unless
otherwise specified in the notice, the
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<PAGE> 4
resignation shall take effect upon receipt thereof by the Board or such officer,
and the acceptance of the resignation shall not be necessary to make it
effective.
7. QUORUM OF DIRECTORS
A majority of the directors in office shall
constitute a quorum for the transaction of business. If at any meeting of the
Board there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum is obtained, and no further
notice thereof need be given other than by announcement at the meeting which
shall be so adjourned.
8. PLACE AND TIME OF BOARD MEETINGS
The Board may hold its meetings at the office of the
Corporation or at such other places, either within or without the State of
Florida, as it may from time to time determine.
9. REGULAR ANNUAL MEETING
A regular annual meeting of the Board shall be held
immediately following the annual meeting of shareholders at the place of such
annual meeting of shareholders.
10. NOTICE OF MEETINGS OF THE BOARD
Regular meetings of the Board may be held without
notice at such time and place as it shall from time to time determine. Special
meetings of the Board shall be held upon notice to the directors and may be
called by the President upon notice to each director by mailing such notice at
least five days prior to the meeting; or orally, or by personal service or by
telegram at least two days prior to the meeting; special meetings shall be
called by the President or by the Secretary in a like manner on written request
of one director. Notice of a meeting need not be given to any director who
submits a waiver of notice whether before or after the meeting or who attends
the meeting without protesting the lack of notice to him prior thereto or at its
commencement. The notice of any Board meeting need not specify the purpose of
the meeting.
11. EXECUTIVE AND OTHER COMMITTEES
The Board, by resolution, may designate two or more
of their number to one or more committees, which, to the extent provided in said
resolution or these Bylaws, may exercise the powers of the Board in the
management of the business of the Corporation.
12. COMPENSATION
No compensation shall be paid to directors, as such,
for their services, but by resolution of the Board a fixed sum and expenses for
actual attendance at each regular or special meeting of the Board may be
authorized. Nothing herein contained shall be construed to
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<PAGE> 5
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
13. CONFERENCE TELEPHONE
Any one or more members of the Board or any committee
thereof may participate in a meeting of such Board or committee by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Such
participation shall constitute presence in person at such meeting.
ARTICLE IV - OFFICERS
1. ELECTION AND TERM
(a) The Board may elect or appoint a Chairman of
the Board, a President, a Secretary and a Treasurer, and such other officers as
it may determine, who shall have such duties and powers as hereinafter provided.
(b) Unless otherwise provided in the resolution
of election or appointment, each officer shall hold office until the regular
annual meeting of the Board to be held immediately following the annual meeting
of the shareholders and until his successor has been duly elected and qualified,
or until his prior resignation or removal.
2. REMOVAL, RESIGNATION, SALARY, ETC.
(a) Any officer elected or appointed by the
Board may be removed by the Board with or without cause.
(b) In the event of the death, resignation or
removal of an officer, the Board in its discretion may elect or appoint a
successor to fill the unexpired term.
(c) Any two or more offices may be held by the
same person.
(d) The salaries of all officers shall be fixed
by the Board.
3. CHAIRMAN
The Chairman of the Board, if one be elected, shall
preside at all meetings of the Board and he shall have and perform such other
duties as from time to time may be assigned to him by the Board or the executive
committee.
4. PRESIDENT
The President shall be the Corporation's chief
executive officer and shall have the general powers and duties of supervision
and management usually vested in the office of President of a Corporation. He
shall preside at all meetings of the shareholders if present thereat, and if the
Chairman of the Board is absent or there is no Chairman of the Board, at all
5
<PAGE> 6
meetings of the Board, and shall have general supervision, direction and control
of the business of the Corporation.
5. VICE-PRESIDENT
During the absence or disability of the President,
the Vice-President, of if there are more than one, the First Vice-President,
shall have all the powers and functions of the President. Each Vice-President
shall perform such other duties as the Board shall prescribe.
6. SECRETARY
The Secretary shall attend all meetings of the Board
and of the shareholders, record all votes and minutes of all proceedings in a
book to be kept for that purpose, give or cause to be given notice of meetings
of shareholders and of special meetings of the Board, keep in safe custody the
seal of the Corporation and affix it to any instrument when authorized by the
Board, when required prepare or cause to be prepared and available at each
meeting of shareholders a certified list in alphabetical order of the names of
shareholders entitled to a vote thereat, indicating the number of shares of each
respective class held by each, keep all the documents and records of the
Corporation as required by law or otherwise in a proper and safe manner, and
perform such other duties as may be prescribed by the Board, or assigned to
him (her) by the President.
7. ASSISTANT SECRETARY
During the absence or disability of the Secretary,
the Assistant Secretary, or if there are more than one, the one so designated by
the Secretary or by the Board, shall have all the powers and functions of the
Secretary.
8. TREASURER
The Treasurer shall have the custody of the corporate
funds and securities, keep full and accurate accounts of receipts and
disbursements in the corporate books, deposit all money and other valuables in
the name and to the credit of the Corporation in such depositories as may be
designated by the Board, disburse the funds of the Corporation as may be ordered
or authorized by the Board and preserve proper vouchers for such disbursements,
render to the President and Board at the regular meetings of the Board, or
whenever they require it, an account of all his (her) transactions as Treasurer
and of the financial condition of the Corporation, render a full financial
report at the annual meeting of the shareholders if so requested, and perform
such other duties as are given to him (her) by these Bylaws or as from time to
time are assigned to him (her) by the Board or the President.
9. ASSISTANT TREASURER
During the absence or disability of the Treasurer,
the Assistant Treasurer, or if there are more than one, the one so designated by
the Secretary or by the Board, shall have all the powers and functions of the
Treasurer.
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<PAGE> 7
10. SURETIES AND BONDS
In case the Board shall so require, any officer or
agent of the Corporation shall execute to the Corporation a bond in such sum and
with such surety or sureties as the Board may direct, conditioned upon the
faithful performance of his(her) duties to the Corporation and including
responsibility for negligence and for the accounting for all property, funds or
securities of the Corporation which may come into his(her) hands.
ARTICLE V - CERTIFICATES FOR SHARES
1. CERTIFICATES
The shares of the Corporation shall be represented by
certificates, which certificates shall be numbered and entered in the books of
the Corporation as they are issued. They shall exhibit the holder's name and the
number of shares represented thereby and shall be signed by the President or a
Vice-President and by the Treasurer or the Secretary and shall bear the
corporate seal. When such certificates are signed by a transfer agent or an
assistant transfer agent or by a transfer clerk acting on behalf of the
Corporation and a registrar, the signatures of such officers may be facsimiles.
2. LOST OR DESTROYED CERTIFICATES
The Board may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation, alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate to be lost or destroyed. When authorizing such issue of a new
certificate or certificates, the Board may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his(her) legal representatives, to advertise the
same in such manner as it shall require and/or give the Corporation a bond in
such sum and with such surety or sureties as it may direct so as to indemnify
the Corporation against any claim that may be made against it with respect to
the certificate alleged to have been lost or destroyed.
3. TRANSFERS OF SHARES
Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and upon payment of any applicable transfer taxes, the Corporation
shall issue a new certificate to the person entitled thereto, and cancel the old
certificate; every such transfer shall be entered on the transfer books of the
Corporation.
4. CLOSING TRANSFER BOOKS
The Board shall have the power to close the share
transfer books of the Corporation for a period of not more than ten (10) days
during the thirty (30) day period immediately preceding (a) any shareholders'
meeting, or (b) any date upon which shareholders shall be called upon to or have
a right to take action without a meeting, or (c) any date fixed for
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<PAGE> 8
the payment of a dividend or any other form of distribution, and only those
shareholders of record at the time when the transfer books are closed, shall be
recognized as such for the purpose of (i) receiving notice of or voting at such
meeting, or (ii) allowing them to take such action without a meeting, or (iii)
entitling them to receive such dividend or other form of distribution.
ARTICLE VI - DIVIDENDS
The Board may declare dividends upon the capital stock of the
Corporation out of funds legally therefor at any regular or special meeting as
and when it deems expedient. Before declaring any dividend there may be set
apart out of the funds of the Corporation available for dividends, such sum or
sums as the Board from time to time in their discretion deem proper for working
capital or as a reserve fund to meet contingencies or for equalizing dividends
or for such other purposes as the Board shall deem conducive to the interests of
the Corporation.
ARTICLE VII - CORPORATE SEAL
The seal of the Corporation shall be circular in form and bear
the name of the Corporation, the year of its organization and the words
"CORPORATE SEAL, FLORIDA". The seal may be used by causing it to be impressed
directly on the instrument or writing to be sealed, or upon adhesive substance
affixed thereto. The seal on the certificates for shares or on any corporate
obligation for the payment of money may be facsimile, engraved or printed.
ARTICLE VIII - EXECUTION OF INSTRUMENTS
All corporate instruments and documents shall be signed or
countersigned, executed, verified or acknowledged by such officer or officers or
other person or persons as the Board may from time to time designate.
All checks, drafts or other orders for payment of money, notes
or other evidences of indebtedness issued in the name of the Corporation shall
be signed by such officer(s) or agent(s) of the Corporation and in such manner
as shall be determined from time to time by resolution of the Board.
ARTICLE IX - FISCAL YEAR
The fiscal year shall end on December 31 of each year.
ARTICLE X - NOTICE AND WAIVER OF NOTICE
Whenever any notice is required by these Bylaws to be given,
personal notice is not meant unless expressly so stated, and any notice so
required shall be deemed to be sufficient if given by depositing the same in a
post office box in a sealed post-paid wrapper, addressed to the person entitled
thereto at his last known post office address, and such notice shall be deemed
8
<PAGE> 9
to have been given on the day of such mailing. Shareholders not entitled to vote
shall not be entitled to receive notice of any meetings except as otherwise
provided by statute.
Whenever any notice is required to be given under the
provisions of any law, or under the provisions of the Articles of Incorporation
of the Corporation or these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE XI - CONSTRUCTION
Whenever a conflict arises between the language of these
Bylaws and the Articles of Incorporation, the Articles of Incorporation shall
govern.
ARTICLE XII - ACTION WITHOUT MEETINGS
Any action of the directors or any committee of the Board may
be taken without a meeting if consent in writing, setting forth the action so
taken, shall be signed by all persons who would be entitled to vote on such
action at a meeting, and filed with the Secretary of the Corporation as part of
the proceedings of the directors or such committee, as the case may be.
ARTICLE XIII - INDEMNITY
Every person (and the heirs, executors and administrators of
such person) who is or was a director, officer, employee or agent of the
Corporation or of any other company, including another corporation, partnership,
joint venture, trust or other enterprise on which such person serves or served
at the request of the Corporation shall be indemnified by the Corporation
against all judgments, payments in settlement (whether or not approved by
court), fines, penalties and other reasonable costs and expenses (including
attorneys' fees and costs) imposed upon or incurred by such person in connection
with or resulting from any action, suit, proceeding, investigation or claim,
civil, criminal, administrative, legislative or other (including any criminal
action, suit or proceeding in which such person enters a plea of guilty or nolo
contendere or its equivalent), or any appeal relating thereto which is brought
or threatened either by or in the right of the Corporation or such other company
(herein called a "Derivative Action") or by any other person, governmental
authority or instrumentality (herein called a "Third-Party Action") and in which
such person is made a party or is otherwise involved by reason of his being or
having been such director, officer, employee or agent or by reason of any action
or omission or alleged action or omission by such person in his capacity as such
director, officer, employee or agent if either (a) such person is wholly
successful, on the merits or otherwise, in defending such derivative or
third-party action or (b) in the judgment of a court of competent jurisdiction
or, in the absence of such a determination, in the judgment of a majority of a
quorum of the Board (which quorum shall not include any director who is a party
to or is otherwise involved in such action), or, in the absence of such a
disinterested quorum, in the opinion of independent legal counsel (i) in the
case of a Derivative Action, such person acted without negligence or misconduct
in the performance of his duty to the Corporation or such other company or (ii)
in the case of a Third-
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<PAGE> 10
Party Action, such person acted in good faith in what he reasonably believed to
be the best interests of the Corporation or such other company, and in addition,
in any criminal action, had no reasonable cause to believe that his action was
unlawful; provided that, in the case of a Derivative Action, such
indemnification shall not be made in respect of any payment to the Corporation
or such other company or any shareholder thereof in satisfaction of judgment or
in settlement unless either (x) a court of competent jurisdiction has approved
such settlement, if any, and the reimbursement of such payment or (y) if the
court in which such action has been instituted lacks jurisdiction to grant such
approval or such action is settled before the institution of judicial
proceedings, in the opinion of independent legal counsel the applicable standard
of conduct specified herein before has been met, such action was without
substantial merit, such settlement was in the best interests of the Corporation
or such other company and the reimbursement of such payment is permissible under
applicable law. In case such person is successful on the merits or otherwise in
defending part of such action, or in the judgment of such a court or such quorum
of the Board or in the opinion of such counsel has met the applicable standard
of conduct specified in the preceding sentence with respect to part of such
action, he (she) shall be indemnified by the Corporation against the judgments,
settlements, payments, fines, penalties, and other costs and expenses
attributable to such part of such action.
The foregoing rights of indemnification shall be in addition
to any rights which any such director, officer, employee or agent may otherwise
be entitled under the Articles of Incorporation, any agreement or vote of
shareholders or at law or in equity or otherwise.
In any case in which, in the judgment of a majority of such a
disinterested quorum of the Board, any such director, officer or employee will
be entitled to indemnification under the foregoing provisions of this Article,
such amounts as they deem necessary to cover the reasonable costs and expenses
incurred by such person in connection with the action, suit, proceeding,
investigation or claim prior to final disposition thereof may be advanced to
such person upon receipt of an undertaking by or on behalf of such person to
repay such amounts if it is ultimately determined that he (she) is not so
entitled to indemnification.
ARTICLE XIV - AMENDMENT
These Bylaws may be altered, amended or repealed and new
Bylaws may be adopted by either the Board or the shareholders, but the Board may
not alter, amend or repeal any Bylaw adopted by the shareholders if the
shareholders specifically prescribe in such Bylaw that it shall not be altered,
amended or repealed by the Board.
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<PAGE> 1
EXHIBIT 3.19
CERTIFICATE OF INCORPORATION
OF
MIAMI AIRCRAFT SUPPORT, INC.
* * * * *
1. The name of the corporation is MIAMI AIRCRAFT SUPPORT, INC.
2. The address of its registered office in the State of
Delaware is No. 100 West Tenth Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
3. The nature of the business or purposes to be conducted or
promoted is:
To engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
To manufacture, purchase or otherwise acquire, invest in, own,
mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade, deal
in and deal with goods, wares and merchandise and personal property of every
class and description.
To acquire, and pay for in cash, stock or bonds of this
corporation or otherwise, the good will, rights, assets and property, and to
undertake or assume the whole or any part of the obligations or liabilities of
any person, firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in
respect of, mortgage or otherwise dispose of letters patent of the United States
or any foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trade-marks and trade names, relating to
or useful in connection with any business of this corporation.
To acquire by purchase, subscription or otherwise, and to
receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage,
pledge or otherwise dispose of or deal in
<PAGE> 2
and with any of the shares of the capital stock, or any voting trust
certificates in respect of the shares of capital stock, scrip, warrants, rights,
bonds, debentures, notes, trust receipts, and other securities obligations,
choses in action and evidences of indebtedness or interest issued or created by
any corporations, joint stock companies, syndicates, associations, firms, trusts
or persons, public or private, or by the government of the United States of
America, or by any foreign government, or by any state, territory, province,
municipality or other political subdivision or by any governmental agency, and
as owner thereof to possess and exercise all the rights, powers and privileges
of ownership, including the right to execute consents and vote thereon, and to
do any and all acts and things necessary or advisable for the preservation,
protection, improvement and enhancement in value thereof.
To borrow or raise money for any of the purposes of the
corporation and, from time to time without limit as to amount, to draw, make,
accept, endorse, execute and issue promissory notes, drafts, bills of exchange,
warrants bonds, debentures and other negotiable or non-negotiable instruments
and evidences of indebtedness, and to secure the payment of any thereof and of
the interest thereon by mortgage upon or pledge, conveyance or assignment in
trust of the whole or any part of the property of the corporation, whether at
the time owned or thereafter acquired, and to sell, pledge or otherwise dispose
of such bonds or other obligations of the corporation for its corporate
purposes.
To purchase, receive, take by grant, gift, devise, bequest or
otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and
otherwise deal in and with real or personal property, or any interest therein,
wherever situated, and to sell, convey, lease, exchange, transfer or otherwise
dispose of, or mortgage or pledge, all or any of the corporation's property and
assets, or any interest therein, wherever situated.
-2-
<PAGE> 3
In general, to possess and exercise all the powers and
privileges granted by the General Corporation Law of Delaware or by any other
law of Delaware or by this certificate of incorporation together with any powers
incidental thereto, so far as such powers and privileges are necessary or
convenient to the conduct, promotion or attainment of the business or purposes
of the corporation.
The business and purposes specified in the foregoing clauses
shall, except where otherwise expressed, be in nowise limited or restricted by
reference to, or inference form, the terms of any other clause in this
certificate of incorporation, but the business and purposes specified in each of
the foregoing clauses of this article shall be regarded as independent business
and purposes.
4. The total number of shares of stock which the corporation
shall have authority to issue is two thousand (2,000); all of such shares shall
be without par value.
At all elections of directors of the corporation, each
stockholder shall be entitled to as many votes as shall equal the number of
votes which (except for such provision as to cumulative voting) he would be
entitled to cast for the election of directors with respect to his shares of
stock multiplied by the number of directors to be elected by him, and he may
cast all of such votes for a single director or may distribute them among the
number to be voted for, or for any two or more of them as he may see fit.
5A. The name and mailing address of each incorporator is
as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
K. L. Husfelt 100 West Tenth Street
Wilmington, Delaware 19801
B. A. Schuman 100 West Tenth Street
Wilmington, Delaware 19801
M. A. Ferrucci 100 West Tenth Street
Wilmington, Delaware 19801
</TABLE>
-3-
<PAGE> 4
5B. The name and mailing address of each person, who is to
serve as a director until the first annual meeting of the stockholders or until
a successor is elected and qualified, is as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
Robert Fleming 15412 Sharecraft Drive
Miami Lakes, Florida 33014
Tony Romeo 11810 S.W. 123rd Avenue
Miami, Florida
</TABLE>
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers
conferred by statute, the board of directors is expressly authorized to make,
alter or repeal the by-laws of the corporation.
8. Elections of directors need not be by written ballot unless
the by-laws of the corporation shall so provide.
Meetings of stockholders may be held within or without the
State of Delaware, as the by-laws may provide. The books of the corporation may
be kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the board of directors or in the by-laws of the corporation.
9. The corporation reserves the right to amend, alter, change
or repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
-4-
<PAGE> 5
WE, THE UNDERSIGNED, being each of the incorporators
hereinbefore named, for the purpose of forming a corporation pursuant to the
General Corporation Law of the State of Delaware, do have this certificate,
hereby declaring and certifying that this is our act and all the facts stated
herein are true, and accordingly have hereunto set our names this 6th day of
February, 1981.
/s/ K. L. HUSFELT
----------------------------------
K. L. Husfelt
/s/ B. A. SCHUMAN
----------------------------------
B. A. Schuman
/s/ M. A. FERRUCCI
----------------------------------
M. A. Ferrucci
-5-
<PAGE> 1
EXHIBIT 3.20
AMENDED AND RESTATED BY-LAWS
OF
MIAMI AIRCRAFT SUPPORT, INC.
ARTICLE I
Offices
Section 1.1 The registered office of Miami Aircraft Support, Inc. (the
"Corporation") shall be in the City of Wilmington, County of New Castle, State
of Delaware. The Corporation also may have offices at such other places, within
or without the State of Delaware, as the Board of Directors determines from time
to time or the business of the Corporation requires.
ARTICLE II
Stockholders
Section 2.1. Annual Meetings. An annual meeting of stockholders shall be
held for the election of directors at such date, time and place either within or
without the State of Delaware as may be designated by the Board of Directors
from time to time. Any other proper business may be transacted at the annual
meeting.
Section 2.2. Special Meetings. Special meetings of stockholders may be
called at any time by the Chairman of the Board, if any, the Vice Chairman of
the Board, if any, the President or the Board of Directors, to be held at such
date, time and place either within or without the State of Delaware as may be
stated in the notice of the meeting. Special meetings shall also be called by
the President or the Secretary promptly upon the receipt of a written request of
the holders of not less than 25% of the Corporation's outstanding shares
entitled to vote at such meeting. The request shall state the date, time, place
and purpose or purposes of the proposed meeting.
Section 2.3. Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at such stockholder's address as it
appears on the records of the Corporation.
<PAGE> 2
Section 2.4. Adjournments. Any meeting of stockholders, annual or special,
may be adjourned from time to time, to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 2.5. Quorum. At each meeting of stockholders, except where
otherwise provided by law or the certificate of incorporation or these by-laws,
the holders of a majority of the outstanding shares of stock entitled to vote on
a matter at the meeting, present in person or represented by proxy, shall
constitute a quorum. For purposes of the foregoing, where a separate vote by
class or classes is required for any matter, the holders of a majority of the
outstanding shares of such class or classes, present in person or represented by
proxy, shall constitute a quorum to take action with respect to that vote on
that matter. Two or more classes or series of stock shall be considered a single
class if the holders thereof are entitled to vote together as a single class at
the meeting. In the absence of a quorum of the holders of any class of stock
entitled to vote on a matter, the holders of such class so present or
represented may, by majority vote, adjourn the meeting of such class from time
to time in the manner provided by Section 2.4 of these by-laws until a quorum of
such class shall be so present or represented. Shares of its own capital stock
belonging on the record date for the meeting to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes; provided, however, that the foregoing shall not limit the right of the
Corporation to vote stock, including but not limited to its own stock, held by
it in a fiduciary capacity.
Section 2.6. Organization. Meetings of stockholders shall be presided over
by the Chairman of the Board, if any, or in the absence of the Chairman of the
Board by the Vice Chairman of the Board, if any, or in the absence of the Vice
Chairman of the Board by the President, or in the absence of the President by a
Vice President, or in the absence of the foregoing persons by a chairman
designated by the Board of Directors, or in the absence of such designation by a
chairman chosen at the meeting. The Secretary, or in the absence of the
Secretary an Assistant Secretary, shall act as secretary of the meeting, but in
the absence of the Secretary and any Assistant Secretary the chairman of the
meeting may appoint any person to act as secretary of the meeting.
Section 2.7. Voting; Proxies. Unless otherwise provided in the certificate
of incorporation, each stockholder entitled to vote at any meeting of
stockholders shall be entitled to one vote for each share of stock held by such
stockholder which has voting power upon the matter in question. Each stockholder
entitled to vote at a meeting of stockholders or to express consent or dissent
to corporate action in writing without a meeting may authorize another person or
persons to act for such stockholder by proxy, but no such proxy shall be voted
or acted upon after three years from its date, unless the proxy provides for a
longer period. A duly executed proxy shall be irrevocable if it states that it
is irrevocable and if, and only as long as, it is coupled
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with an interest sufficient in law to support an irrevocable power, regardless
of whether the interest with which it is coupled is an interest in the stock
itself or an interest in the Corporation generally. A stockholder may revoke any
proxy which is not irrevocable by attending the meeting and voting in person or
by filing an instrument in writing revoking the proxy or another duly executed
proxy bearing a later date with the Secretary of the Corporation. Voting at
meetings of stockholders need not be by written ballot and need not be conducted
by inspectors unless the holders of a majority of the outstanding shares of all
classes of stock entitled to vote thereon present in person or represented by
proxy at such meeting shall so determine. Directors shall be elected by a
plurality of the votes of the shares present in person or represented by proxy
at the meeting and entitled to vote on the election of directors. In all other
matters, unless otherwise provided by law or by the certificate of incorporation
or these by-laws, the affirmative vote of the holders of a majority of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the subject matter shall be the act of the stockholders. Where a
separate vote by class or classes is required, the affirmative vote of the
holders of a majority of the shares of such class or classes present in person
or represented by proxy at the meeting shall be the act of such class or
classes, except as otherwise provided by law or by the certificate of
incorporation or these by-laws.
Section 2.8. Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
In order that the Corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
law, shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation by delivery
to its registered office in the State of Delaware, its principal place of
business, or an officer or agent of the Corporation having custody of the book
in which proceedings of meetings of stockholders are recorded. Delivery made to
the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is
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required by law, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the day on which the Board of Directors adopts the resolution
taking such prior action.
In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
or the stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
Section 2.9. List of Stockholders Entitled to Vote. The Secretary shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present.
Section 2.10. Consent of Stockholders in Lieu of Meeting. Unless otherwise
provided in the certificate of incorporation or by law, any action required by
law to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted and shall be delivered to the Corporation by delivery to (a) its
registered office in the State of Delaware by hand or by certified mail or
registered mail, return receipt requested, (b) its principal place of business,
or (c) an officer or agent of the Corporation having custody of the book in
which proceedings of meetings of stockholders are recorded. Every written
consent shall bear the date of signature of each stockholder who signs the
consent and no written consent shall be effective to take the corporate action
referred to therein unless, within sixty days of the earliest dated consent
delivered in the manner required by this by-law to the Corporation, written
consents signed by a sufficient number of holders to take action are delivered
to the Corporation by delivery to (a) its registered office in the State of
Delaware by hand or by certified or registered mail, return receipt requested,
(b) its principal place of business, or (c) an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
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ARTICLE III
Board of Directors
Section 3.1. Powers; Number; Qualifications. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors, except as may be otherwise provided by law or in the certificate of
incorporation. The Board of Directors shall consist of one or more members, the
number thereof to be determined from time to time by the Board. Directors need
not be stockholders.
Section 3.2. Election; Term of Office; Resignation; Removal; Vacancies.
Each director shall hold office until his or her successor is elected and
qualified or until his or her earlier resignation or removal. Any director may
resign at any time upon written notice to the Board of Directors or to the
President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein, and unless otherwise specified therein no
acceptance of such resignation shall be necessary to make it effective. Any
director or the entire Board of Directors may be removed, with or without cause,
by the holders of a majority of the shares then entitled to vote at an election
of directors Whenever the holders of any class or series of stock are entitled
to elect one or more directors by the certificate of incorporation, the
provisions of the preceding sentence shall apply, in respect to the removal
without cause of a director or directors so elected, to the vote of the holders
of the outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Unless otherwise provided in the certificate of
incorporation or these by-laws, vacancies and newly created directorships
resulting from any increase in the authorized number of directors elected by all
of the stockholders having the right to vote as a single class or from any other
cause may be filled by a majority of the directors then in office, although less
than a quorum, or by the sole remaining director. Whenever the holders of any
class or classes of stock or series thereof are entitled to elect one or more
directors by the certificate of incorporation, vacancies and newly created
directorships of such class or classes or series may be filled by a majority of
the directors elected by such class or classes or series thereof then in office,
or by the sole remaining director so elected.
Section 3.3. Regular Meetings. Regular meetings of the Board of Directors
may be held at such places within or without the State of Delaware and at such
times as the Board may from time to time determine, and if so determined notice
thereof need not be given.
Section 3.4. Special Meetings. Special meetings of the Board of Directors
may be held at any time or place within or without the State of Delaware
whenever called by the Chairman of the Board, if any, by the Vice Chairman of
the Board, if any, by the President or by any two directors. Reasonable notice
thereof shall be given by the person or persons calling the meeting.
Section 3.5. Participation in Meetings by Conference Telephone Permitted.
Unless otherwise restricted by the certificate of incorporation or these
by-laws, members of the Board of Directors, or any committee designated by the
Board, may participate in a meeting of the Board or of such committee, as the
case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
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each other, and participation in a meeting pursuant to this by-law shall
constitute presence in person at such meeting.
Section 3.6. Quorum; Vote Required for Action. At all meetings of the Board
of Directors one-third of the entire Board shall constitute a quorum for the
transaction of business. The vote of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board unless the
certificate of incorporation or these by-laws shall require a vote of a greater
number. In case at any meeting of the Board a quorum shall not be present, the
members of the Board present may adjourn the meeting from time to time until a
quorum shall be present.
Section 3.7. Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, if any, or in the absence of the
Chairman of the Board by the Vice Chairman of the Board, if any, or in the
absence of the Vice Chairman of the Board by the President, or in their absence
by a chairman chosen at the meeting. The Secretary, or in the absence of the
Secretary an Assistant Secretary, shall act as secretary of the meeting, but in
the absence of the Secretary and any Assistant Secretary the chairman of the
meeting may appoint any person to act as secretary of the meeting.
Section 3.8. Action by Directors Without a Meeting. Unless otherwise
restricted by the certificate of incorporation or these by-laws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
Section 3.9. Compensation of Directors. Unless otherwise restricted by the
certificate of incorporation or these by-laws, the Board of Directors shall have
the authority to fix the compensation of directors.
ARTICLE IV
Committees
Section 4.1. Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. 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. In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the Board of Directors or in these bylaws,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the
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Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
certificate of incorporation (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the Board of Directors, fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the Corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
Corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, removing or indemnifying directors or amending
these by-laws; and, unless the resolution, these by-laws or the certificate of
incorporation expressly so provides, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock or to adopt
a certificate of ownership and merger.
Section 4.2. Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board may adopt, amend and repeal
rules for the conduct of its business. In the absence of a provision by the
Board or a provision in the rules of such committee to the contrary, a majority
of the entire authorized number of members of such committee shall constitute a
quorum for the transaction of business, the vote of a majority of the members
present at a meeting at the time of such vote if a quorum is then present shall
be the act of such committee, and in other respects each committee shall conduct
its business in the same manner as the Board conducts its business pursuant to
Article II of these by-laws.
ARTICLE V
Officers
Section 5.1. Officers; Election. As soon as practicable after the annual
meeting of stockholders in each year, the Board of Directors shall elect a
President and a Secretary, and it may, if it so determines, elect from among its
members a Chairman of the Board and a Vice Chairman of the Board. The Board may
also elect one or more Vice Presidents, one or more Assistant Vice Presidents,
one or more Assistant Secretaries, a Treasurer and one or more Assistant
Treasurers and such other officers as the Board may deem desirable or
appropriate and may give any of them such further designations or alternate
titles as it considers desirable. Any number of offices may be held by the same
person unless the certificate of incorporation or these by-laws otherwise
provide.
Section 5.2. Term of Office; Resignation; Removal; Vacancies. Unless
otherwise provided in the resolution of the Board of Directors electing any
officer, each officer shall hold office until his or her successor is elected
and qualified or until his or her earlier resignation or removal. Any officer
may resign at any time upon written notice to the Board or to the President or
the Secretary of the Corporation. Such resignation shall take effect at the time
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specified therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. The Board may remove any
officer with or without cause at any time. Any such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
Corporation, but the election of an officer shall not of itself create
contractual rights. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise may be filled by the Board at any
regular or special meeting.
Section 5.3. Chairman of the Board. The Chairman of the Board, if any,
shall preside at all meetings of the Board of Directors and of the stockholders
at which he or she shall be present and shall have and may exercise such powers
as may, from time to time, be assigned to him or her by the Board or as may be
provided by law.
Section 5.4. Vice Chairman of the Board. In the absence of the Chairman of
the Board, the Vice Chairman of the Board, if any, shall preside at all meetings
of the Board of Directors and of the stockholders at which he or she shall be
present and shall have and may exercise such powers as may, from time to time,
be assigned to him or her by the Board or as may be provided by law.
Section 5.5. President. In the absence of the Chairman of the Board and
Vice Chairman of the Board, the President shall preside at all meetings of the
Board of Directors and of the stockholders at which he or she shall be present.
The President shall be the chief operating officer and shall have general charge
and supervision of the business of the Corporation and, in general, shall
perform all duties incident to the office of president of a corporation and such
other duties as may, from time to time, be assigned to him or her by the Board
or as may be provided by law.
Section 5.6. Vice Presidents. The Vice President or Vice Presidents, at the
request or in the absence of the President or during the President's inability
to act, shall perform the duties of the President, and when so acting shall have
the powers of the President. If there be more than one Vice President, the Board
of Directors may determine which one or more of the Vice Presidents shall
perform any of such duties; or if such determination is not made by the Board,
the President may make such determination; otherwise any of the Vice Presidents
may perform any of such duties. The Vice President or Vice Presidents shall have
such other powers and shall perform such other duties as may, from time to time,
be assigned to him or her or them by the Board or the President or as may be
provided by law.
Section 5.7. Secretary. The Secretary shall have the duty to record the
proceedings of the meetings of the stockholders, the Board of Directors and any
committees in a book to be kept for that purpose, shall see that all notices are
duly given in accordance with the provisions of these bylaws or as required by
law, shall be custodian of the records of the Corporation, may affix the
corporate seal to any document the execution of which, on behalf of the
Corporation, is duly authorized, and when so affixed may attest the same, and,
in general, shall perform all duties incident to the office of secretary of a
corporation and such other duties as may, from time to time, be assigned to him
or her by the Board or the President or as may be provided by law.
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Section 5.8. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation and shall deposit or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by or under
authority of the Board of Directors. If required by the Board, the Treasurer
shall give a bond for the faithful discharge of his or her duties, with such
surety or sureties as the Board may determine. The Treasurer shall keep or cause
to be kept full and accurate records of all receipts and disbursements in books
of the Corporation, shall render to the President and to the Board, whenever
requested, an account of the financial condition of the Corporation, and, in
general, shall perform all the duties incident to the office of treasurer of a
corporation and such other duties as may, from time to time, be assigned to him
or her by the Board or the President or as may be provided by law.
Section 5.9. Other Officers. The other officers, if any, of the Corporation
shall have such powers and duties in the management of the Corporation as shall
be stated in a resolution of the Board of Directors which is not inconsistent
with these by-laws and, to the extent not so stated, as generally pertain to
their respective offices, subject to the control of the Board. The Board may
require any officer, agent or employee to give security for the faithful
performance of his or her duties.
ARTICLE VI
Stock
Section 6.1. Certificates. Every holder of stock in the Corporation shall
be entitled to have a certificate signed by or in the name of the Corporation by
the Chairman or Vice Chairman of the Board of Directors, if any, or the
President or a Vice President, and by the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary, of the Corporation, representing the
number of shares of stock in the Corporation owned by such holder. If such
certificate is manually signed by one officer or manually countersigned by a
transfer agent or by a registrar, any other signature on the certificate may be
a facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent or registrar at the date of issue.
If the Corporation is authorized to issue more than one class of stock or
more than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face or back of
the certificate which the Corporation shall issue to represent such class or
series of stock, provided that, except as otherwise provided by law, in lieu of
the foregoing requirements, there may be set forth on the face or back of the
certificate which the Corporation shall issue to represent such class or series
of stock a statement that the Corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and relative,
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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.
Section 6.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. The Corporation may issue a new certificate of stock in the place
of any certificate theretofore issued by it, alleged to have been lost, stolen
or destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate, or such owner's legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
ARTICLE VII
Miscellaneous
Section 7.1. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 7.2. Seal. The Corporation may have a corporate seal which shall
have the name of the Corporation inscribed thereon and shall be in such form as
may be approved from time to time by the Board of Directors. The corporate seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
in any other manner reproduced.
Section 7.3. Waiver of Notice of Meetings of Stockholders, Directors and
Committees. Whenever notice is required to be given by law or under any
provision of the certificate of incorporation or these by-laws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the 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
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors or members of a committee of directors need be specified in any
written waiver of notice unless so required by the certificate of incorporation
or these by-laws.
Section 7.4. Indemnification of Directors, Officers and Employees. The
Corporation shall indemnify to the full extent permitted by law any person made
or threatened to be made a party to any action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person or such person's testator or intestate is or was a director, officer
or employee of the Corporation or serves or served at the request of the
Corporation any other enterprise as a director, officer or employee. Expenses,
including attorneys' fees, incurred by any such person in defending any such
action, suit or proceeding shall be paid or reimbursed by the Corporation
promptly upon receipt by it of an undertaking of such person to repay such
expenses if it shall ultimately be determined that such person is not entitled
to be indemnified by the Corporation. The rights provided to any person by this
by-law shall be
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enforceable against the Corporation by such person who shall be presumed to have
relied upon it in serving or continuing to serve as a director, officer or
employee as provided above. No amendment of this by-law shall impair the rights
of any person arising at any time with respect to events occurring prior to such
amendment. For purposes of this by-law, the term "Corporation" shall include any
predecessor of the Corporation and any constituent corporation (including any
constituent of a constituent) absorbed by the Corporation in a consolidation or
merger; the term "other enterprise", shall include any corporation, partnership,
joint venture, trust or employee benefit plan; service "at the request of the
Corporation" shall include service as a director, officer or employee of the
Corporation which imposes duties on, or involves services by, such director,
officer or employee with respect to an employee benefit plan, its participants
or beneficiaries; any excise taxes assessed on a person with respect to an
employee benefit plan shall be deemed to be indemnifiable expenses; and action
by a person with respect to an employee benefit plan which such person
reasonably believes to be in the interest of the participants and beneficiaries
of such plan shall be deemed to be action not opposed to the best interests of
the Corporation.
Section 7.5. Interested Directors; Quorum. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract, or transaction, or solely because his or her or their
votes are counted for such purpose, if: (1) the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board or the committee, and the Board or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (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 stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; 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, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
Section 7.6. Form of Records. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of account
and minute books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotographs or any other information storage device,
provided that the records so kept can be converted into clearly legible form
within a reasonable time. The Corporation shall so convert any records so kept
upon the request of any person entitled to inspect the same.
Section 7.7. Amendment of By-Laws. These by-laws may be amended or
repealed, and new by-laws adopted, by the Board of Directors, but the
stockholders entitled to vote may adopt additional by-laws and may amend or
repeal any by-law whether or not adopted by them.
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<PAGE> 1
Exhibit 4.1 EXECUTION COPY
===============================================================================
INDENTURE
DATED AS OF AUGUST 12, 1999
AMONG
WORLDWIDE FLIGHT SERVICES, INC.,
ISSUER,
WORLDWIDE FLIGHT FINANCE COMPANY
WORLDWIDE FLIGHT SECURITY SERVICE CORPORATION
MIAMI INTERNATIONAL AIRPORT CARGO FACILITIES & SERVICES, INC.
MIAMI AIRCRAFT SUPPORT, INC.
INTERNATIONAL ENTERPRISES GROUP, INC.,
AS GUARANTORS
AND
THE BANK OF NEW YORK,
AS TRUSTEE
------------------
UP TO $300,000,000
12 1/4% SENIOR NOTES DUE 2007, SERIES A
12 1/4% SENIOR NOTES DUE 2007, SERIES B
===============================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
----------- -------
<S> <C>
Section 310(a)................................................................................ 7.03; 7.10; 13.01
(b)................................................................................ 7.03; 7.10; 13.01;
Section 13.02
(c)................................................................................ 7.03; 13.01
Section 311(a)................................................................................ 7.11; 13.01
(b)................................................................................ 7.11; 13.01
(c)................................................................................ 13.01
Section 312(a)................................................................................ 13.01
(b)................................................................................ 13.01; 13.03
(c)................................................................................ 13.01; 13.03
Section 313(a)................................................................................ 7.06; 13.01
(b)(1)............................................................................. 13.01
(b)(2)............................................................................. 7.06; 7.07; 13.01
(c)................................................................................ 7.06; 13.01; 13.02
(d)................................................................................ 7.06; 13.01
Section 314(a)................................................................................ 13.01; 13.02
(b)................................................................................ 13.01
(c)................................................................................ 13.01
(d)................................................................................ 13.01
(e)................................................................................ 13.01
(f)................................................................................ 13.01
Section 315(a)................................................................................ 13.01
(b)................................................................................ 13.01; 13.02
(c)................................................................................ 13.01
(d)................................................................................ 13.01
(e)................................................................................ 13.01
Section 316(a)(1)(A).......................................................................... 6.05; 13.01
(a)(1)(B).......................................................................... 13.01
(a)(2)............................................................................. 13.01
(b)................................................................................ 13.01
(c)................................................................................ 13.01
Section 317 .................................................................................. 13.01
</TABLE>
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NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE> 3
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TABLE OF CONTENTS
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ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE................................................... 1
SECTION 1.01 Definitions......................................................................... 1
SECTION 1.02 Incorporation by Reference of Trust Indenture Act................................... 22
SECTION 1.03 Rules of Construction............................................................... 22
ARTICLE TWO THE SECURITIES............................................................................... 22
SECTION 2.01 Form and Dating..................................................................... 22
SECTION 2.02 Execution and Authentication........................................................ 23
SECTION 2.03 Registrar and Paying Agent.......................................................... 24
SECTION 2.04 Paying Agent to Hold Assets in Trust................................................ 24
SECTION 2.05 Holder Lists........................................................................ 25
SECTION 2.06 Transfer and Exchange............................................................... 25
SECTION 2.07 Replacement Securities.............................................................. 25
SECTION 2.08 Outstanding Securities.............................................................. 26
SECTION 2.09 Treasury Securities................................................................. 26
SECTION 2.10 Temporary Securities................................................................ 26
SECTION 2.11 Cancellation........................................................................ 26
SECTION 2.12 Defaulted Interest.................................................................. 27
SECTION 2.13 CUSIP Number........................................................................ 27
SECTION 2.14 Deposit of Moneys................................................................... 27
SECTION 2.15 Book-Entry Provisions for Global Securities......................................... 27
SECTION 2.16 Registration of Transfers and Exchanges............................................. 28
SECTION 2.17 Issuance of Additional Securities................................................... 31
ARTICLE THREE REDEMPTION................................................................................. 32
SECTION 3.01 Notices to Trustee.................................................................. 32
SECTION 3.02 Selection of Securities to Be Redeemed.............................................. 32
SECTION 3.03 Notice of Redemption................................................................ 32
SECTION 3.04 Effect of Notice of Redemption...................................................... 33
SECTION 3.05 Deposit of Redemption Price......................................................... 33
SECTION 3.06 Securities Redeemed in Part......................................................... 33
SECTION 3.07 Optional Redemption................................................................. 34
ARTICLE FOUR COVENANTS................................................................................... 34
SECTION 4.01 Payment of Securities............................................................... 34
SECTION 4.02 Maintenance of Office or Agency..................................................... 34
SECTION 4.03 Limitations on Transactions with Affiliates......................................... 35
SECTION 4.04 Limitation on Incurrence of Additional Indebtedness and Issuance of
Preferred Stock..................................................................... 36
SECTION 4.05 Limitation on Asset Sales........................................................... 37
SECTION 4.06 Limitation on Restricted Payments................................................... 40
SECTION 4.07 Compliance with Laws................................................................ 43
SECTION 4.08 Payment of Taxes and Other Claims................................................... 43
SECTION 4.09 Notice of Defaults.................................................................. 43
SECTION 4.10 Maintenance of Properties and Insurance............................................. 43
SECTION 4.11 Compliance Certificate.............................................................. 44
SECTION 4.12 Reports to Holders.................................................................. 44
SECTION 4.13 Waiver of Stay, Extension or Usury Laws............................................. 45
SECTION 4.14 Change of Control................................................................... 45
SECTION 4.15 Prohibition on Incurrence of Certain Types of Indebtedness.......................... 46
</TABLE>
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SECTION 4.16 Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries........................................................................ 46
SECTION 4.17 Limitation on Liens................................................................. 48
SECTION 4.18 Conduct of Business................................................................. 48
SECTION 4.19 Corporate Existence................................................................. 48
SECTION 4.20 Limitation on Sale and Leaseback Transactions....................................... 48
SECTION 4.21 [Intentionally Omitted]............................................................. 49
SECTION 4.22 Payments for Consent................................................................ 49
SECTION 4.23 Future Subsidiary Guarantors........................................................ 49
ARTICLE FIVE MERGERS, CONSOLIDATIONS AND ASSET SALES; SUCCESSORS......................................... 49
SECTION 5.01 Merger, Consolidation and Sale of Assets............................................ 49
SECTION 5.02 Successor Substituted............................................................... 51
ARTICLE SIX DEFAULT AND REMEDIES......................................................................... 51
SECTION 6.01 Events of Default................................................................... 51
SECTION 6.02 Acceleration........................................................................ 52
SECTION 6.03 Other Remedies...................................................................... 53
SECTION 6.04 Waiver of Past Default.............................................................. 53
SECTION 6.05 Control by Majority................................................................. 53
SECTION 6.06 Limitation on Suits................................................................. 53
SECTION 6.07 Rights of Holders to Receive Payment................................................ 54
SECTION 6.08 Collection Suit by Trustee.......................................................... 54
SECTION 6.09 Trustee May File Proofs of Claim.................................................... 54
SECTION 6.10 Priorities.......................................................................... 54
SECTION 6.11 Undertaking for Costs............................................................... 55
ARTICLE SEVEN TRUSTEE.................................................................................... 55
SECTION 7.01 Duties of Trustee................................................................... 55
SECTION 7.02 Certain Rights of Trustee........................................................... 56
SECTION 7.03 Individual Rights of Trustee........................................................ 57
SECTION 7.04 Trustee's Disclaimer................................................................ 57
SECTION 7.05 Notice of Defaults.................................................................. 57
SECTION 7.06 Reports by Trustee to the Holders................................................... 57
SECTION 7.07 Compensation and Indemnity.......................................................... 57
SECTION 7.08 Replacement of Trustee.............................................................. 58
SECTION 7.09 Successor Trustee by Merger, Etc.................................................... 59
SECTION 7.10 Eligibility; Disqualification....................................................... 59
SECTION 7.11 Preferential Collection of Claims Against Company................................... 59
ARTICLE EIGHT [THIS ARTICLE HAS BEEN INTENTIONALLY OMITTED].............................................. 60
ARTICLE NINE DISCHARGE OF INDENTURE; DEFEASANCE.......................................................... 60
SECTION 9.01 Termination of the Company's Obligations............................................ 60
SECTION 9.02 Legal Defeasance and Covenant Defeasance............................................ 61
SECTION 9.03 Conditions to Legal Defeasance or Covenant Defeasance............................... 62
SECTION 9.04 Application of Trust Money.......................................................... 63
SECTION 9.05 Repayment to Company................................................................ 63
SECTION 9.06 Reinstatement....................................................................... 64
ARTICLE TEN AMENDMENTS, SUPPLEMENTS AND WAIVERS.......................................................... 64
SECTION 10.01 In General.......................................................................... 64
SECTION 10.02 Without Consent of Holders.......................................................... 64
SECTION 10.03 With Majority Consent of Holders.................................................... 65
</TABLE>
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SECTION 10.04 Compliance with Trust Indenture Act................................................. 66
SECTION 10.05 Revocation and Effect of Consents................................................... 66
SECTION 10.06 Notation on or Exchange of Securities............................................... 66
SECTION 10.07 Trustee to Sign Amendments, etc..................................................... 66
ARTICLE ELEVEN GUARANTEE................................................................................. 67
SECTION 11.01 Unconditional Guarantee............................................................. 67
SECTION 11.02 Severability........................................................................ 67
SECTION 11.03 Limitation of Guarantor's Liability................................................. 67
SECTION 11.04 Execution of Guarantee.............................................................. 68
SECTION 11.05 [Intentionally omitted]............................................................. 68
SECTION 11.06 Release of Guarantor from Subsidiary Guarantee...................................... 68
ARTICLE TWELVE [THIS ARTICLE HAS BEEN INTENTIONALLY OMITTED]............................................. 68
ARTICLE THIRTEEN MISCELLANEOUS........................................................................... 68
SECTION 13.01 Trust Indenture Act Controls........................................................ 68
SECTION 13.02 Notices............................................................................. 69
SECTION 13.03 Communications by Holders with Other Holders........................................ 70
SECTION 13.04 Certificate and Opinion as to Conditions Precedent.................................. 70
SECTION 13.05 Statements Required in Certificate or Opinion....................................... 70
SECTION 13.06 Rules by Trustee, Paying Agent, Registrar........................................... 70
SECTION 13.07 Governing Law....................................................................... 70
SECTION 13.08 No Recourse Against Others.......................................................... 71
SECTION 13.09 Successors.......................................................................... 71
SECTION 13.10 Counterpart Originals............................................................... 71
SECTION 13.11 Severability........................................................................ 71
SECTION 13.12 No Adverse Interpretation of Other Agreements....................................... 71
SECTION 13.13 Legal Holidays...................................................................... 71
SECTION 13.14 No Personal Liability of Directors, Officers, Employees and Stockholders............ 71
SECTION 13.15 Table of Contents, Headings, etc.................................................... 71
SIGNATURES .......................................................................................... S-1
EXHIBIT A Form of Series A Security................................................................. A-1
EXHIBIT B Form of Series B Security................................................................. B-1
EXHIBIT C Form of Legend for Global Securities...................................................... C-1
EXHIBIT D Form of Transfer Certificate.............................................................. D-1
EXHIBIT E Form of Transfer Certificate for Institutional Accredited Investors....................... E-1
EXHIBIT F Form of Supplemental Indenture............................................................ F-1
EXHIBIT G Form of Officers' Certificate............................................................. G-1
</TABLE>
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NOTE: This Table of Contents shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 6
INDENTURE dated as of August 12, 1999, among WORLDWIDE FLIGHT
SERVICES, INC., a Delaware corporation (the "Company" or "Worldwide"), as
issuer, the GUARANTORS named herein and THE BANK OF NEW YORK, a New York
banking corporation, as trustee (the "Trustee").
The Securities are being sold in connection with the
acquisition by the Company of Miami Aircraft Support, Inc., a Delaware
corporation ("MAS"), pursuant to that certain Stock Purchase Agreement (the
"Stock Purchase Agreement"), dated as of May 28, 1999, by and among MAS
Worldwide Holding Corporation ("MAS Holding"), a direct wholly owned subsidiary
of the Company, Anthony Romeo and Charles Micale, the sole shareholders of MAS.
The Stock Purchase Agreement provides for the acquisition (the "Acquisition")
of MAS by MAS Holding.
The Company has executed that certain Purchase Agreement,
dated as of August 5, 1999, by and among the Company, the guarantors listed
therein and the Initial Purchasers (as hereinafter defined) (the "Purchase
Agreement"). The Company has also executed that certain A/B Exchange
Registration Rights Agreement, dated as of the date hereof, by and among the
Company, the guarantors listed therein and the Initial Purchasers (the
"Registration Rights Agreement").
Each party hereto agrees as follows for the benefit of each
other party and for the equal and ratable benefit of the holders of the
Securities (the "Holders"):
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Acceleration Notice" see Section 6.02.
"Acquired Debt" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary
of the Company or at the time it merges or consolidates with the Company or any
of its Restricted Subsidiaries or is assumed by the Company or any of its
Restricted Subsidiaries in connection with the acquisition of assets from such
Person, including, without limitation, Indebtedness incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary of the Company or such acquisition, merger or
consolidation.
"Additional Securities" means, subject to the Company's
compliance with Article 4, 12 1/4% Senior Notes due 2007 issued from time to
time after the Issue Date up to a maximum aggregate amount of $170,000,000
(other than pursuant to Sections 2.06, 2.07, 3.06 and 4.05 of this Indenture
and other than Exchange Securities issued pursuant to the Exchange Offer).
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control," as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise; provided that beneficial ownership of
10% or more of the Voting Stock of a Person shall be deemed to be control. For
purposes of this definition, the terms "controlling," "controlled by" and
"under common control with" shall have correlative meanings.
"Affiliate Transaction" see Section 4.03.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Sale" means:
<PAGE> 7
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(1) the sale, lease (other than operating leases entered into in
the ordinary course of business), conveyance or other
disposition of any assets, other than sales of Cash
Equivalents or inventory in the ordinary course of business;
provided that the sale, conveyance or other disposition of
all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole will be governed by
Section 4.14 and/or Section 5.01 and not by the provisions of
Section 4.05; and
(2) the issuance by any of the Company's Restricted Subsidiaries
of the Equity Interests of such Restricted Subsidiary or the
sale by the Company or any Restricted Subsidiary of Equity
Interests in any Restricted Subsidiaries (other than
directors' qualifying shares).
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(a) any single transaction or series of related
transactions that: (i) involves assets having a fair
market value of less than $1.0 million; or (ii)
results in net proceeds to the Company and its
Restricted Subsidiaries of less than $1.0 million;
(b) a transfer, sale, lease, conveyance or other
disposition of assets between or among the Company
and its Restricted Subsidiaries;
(c) an issuance or sale of Equity Interests by a
Restricted Subsidiary to the Company or to another
Restricted Subsidiary;
(d) a Restricted Payment that is permitted by Section
4.06;
(e) a Permitted Lien;
(f) a sale or other disposition or abandonment of
damaged, worn-out or obsolete property in the
ordinary course of business;
(g) any sale, transfer or conveyance of Equity Interests
of a Restricted Subsidiary; provided that
immediately after giving effect to such sale,
transfer or conveyance, if such Restricted
Subsidiary would (i) no longer be a Restricted
Subsidiary, the Investment of the Company (or any
Restricted Subsidiary) in such Person (after giving
effect to such sale, transfer or conveyance) would
have been permitted to be made pursuant to Section
4.06 as if made on the date of such sale, transfer
or conveyance or (ii) continue to be a Restricted
Subsidiary, the aggregate noncash consideration
received by the Company or any of its Restricted
Subsidiaries in such sale, transfer or conveyance
does not have a fair market value, taken together
with all other noncash consideration (other than
such consideration converted into cash or Cash
Equivalents) received pursuant to this clause (ii),
in excess of $10.0 million; provided further that as
part of any such sale, transfer or conveyance
pursuant to clause (i) or (ii) above (1) the Company
or any of its Restricted Subsidiaries, as the case
may be, receives consideration at the time of such
sale, transfer or conveyance (without giving effect
to subsequent changes in value) at least equal to
the fair market value of the Equity Interests sold,
transferred or conveyed and (2) with regard to any
such sale, transfer or conveyance involving
aggregate consideration in excess of $2.5 million,
the fair market value of such consideration is
determined by the Company's Board of Directors and
evidenced by a resolution of the Board of Directors
set forth in an Officer's Certificate delivered to
the Trustee;
(h) sales of accounts receivable in the ordinary course
of business for cash for financing purposes;
(i) an Asset Swap effected in compliance with Section
4.05; and
<PAGE> 8
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(j) the issuance of options, warrants or other similar
rights to purchase Equity Interests of a Restricted
Subsidiary to any then-serving director or member of
management of such Restricted Subsidiary in the
ordinary course of business.
"Asset Sale Offer" has the meaning provided in Section
4.05(A).
"Asset Sale Offer Amount" has the meaning provided in Section
4.05(A).
"Asset Sale Offer Payment Date" has the meaning provided in
Section 4.05(B).
"Asset Sale Offer Trigger Date" means the 361st day after an
Asset Sale.
"Asset Swap" means a substantially concurrent purchase and
sale or exchange of Related Business Assets between the Company or any of its
Restricted Subsidiaries and another Person; provided that any cash received
must be applied in accordance with the terms contained in Section 4.05.
"Attributable Debt" in respect of a sale and leaseback
transaction means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance
with GAAP.
"Bankruptcy Law" means Title 11, United States Code or any
similar Federal, state or foreign law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in
Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating
the beneficial ownership of any particular "person" (as such term is used in
Section 13(d)(3) of the Exchange Act), such "person" shall be deemed to have
beneficial ownership of all securities that such "person" has the right to
acquire, whether such right is currently exercisable or is exercisable only
upon the occurrence of a subsequent condition.
"Board of Directors" means, as to any Person, the board of
directors of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and
to be in full force and effect on the date of such certification.
"Business Day" means a day other than a Saturday, a Sunday or
a day on which banking institutions in New York, New York are not required to
be open.
"Calculation Date" has the meaning ascribed such term in the
definition of "Fixed Charge Coverage Ratio" in this Section 1.01.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of
a capital lease that would at that time be required to be capitalized on a
balance sheet in accordance with GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other
equivalents (however designated) in the equity of such
association or entity;
<PAGE> 9
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(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or
limited); and
(4) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) securities issued by, or
unconditionally guaranteed or insured by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof ("Government Obligations"); (ii) marketable direct
obligations issued by any state of the United States of America or any
political subdivision thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation ("S&P") or
Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper and
variable or fixed rate notes maturing no more than six months from the
acquisition thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit
or bankers' acceptances maturing within one year from the date of acquisition
thereof issued by any bank organized under the laws of the United States of
America or any state thereof or the District of Columbia or any U.S. branch of
a foreign bank having at the date of acquisition thereof combined capital and
surplus of not less than $250.0 million; (v) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications
specified in clause (iv) above; (vi) federally tax exempt securities rated "A"
or better by S&P or "A2" or better by Moody's; (vii) investments in money
market funds with assets of $100.0 million or greater which invest
substantially all their assets in securities of the types described in clauses
(i) through (vi) above; and (viii) in the case of Foreign Subsidiaries,
substantially similar Cash Equivalents as those described in clauses (i), (iii)
and (iv) above that are available in the local currency.
"Change of Control" means the occurrence of any one or more
of the following:
(1) the sale, transfer, conveyance or other disposition (other
than a Lien or by way of merger or consolidation), in one or
a series of related transactions, of all or substantially all
of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act) other than a Permitted Holder
or a Related Party of a Permitted Holder;
(2) the adoption by holders of the Capital Stock of the Company
of a plan for the liquidation or dissolution of the Company;
(3) prior to the first Public Equity Offering, the consummation
of any transaction (including, without limitation, any merger
or consolidation) the result of which is that the Permitted
Holders and their Related Parties are the Beneficial Owners,
directly or indirectly, of less than 51% of the total voting
power of the Voting Stock of the Company;
(4) after the first Public Equity Offering, the consummation of
any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as
defined above), other than the Permitted Holders and their
Related Parties, becomes the Beneficial Owner, directly or
indirectly, of more than 30% of the total voting power of the
Voting Stock of the Company; or
(5) the first day on which a majority of the members of the Board
of Directors of the Company are not Continuing Directors.
"Change of Control Offer" has the meaning provided in Section
4.14(a).
"Change of Control Payment Date" has the meaning provided in
Section 4.14(b).
<PAGE> 10
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"Company" has the meaning ascribed to such term in the
introductory paragraphs to this Indenture.
"Consolidated Cash Flow" means, with respect to any Person
for any period, the Consolidated Net Income of such Person for such period
plus:
(1) provision for taxes based on income or profits of such Person
and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was deducted in
computing such Consolidated Net Income; plus
(2) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or
accrued and whether or not capitalized (including, without
limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable
Debt, commissions, discounts and commitment and other fees
and charges incurred in respect of letters of credit or
bankers' acceptance financings, and net payments, if any,
pursuant to Hedging Obligations), to the extent that any such
expense was deducted in computing such Consolidated Net
Income; plus
(3) depreciation, amortization (including amortization of
goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and
other non-cash expenses (excluding any such non-cash expense
to the extent that it represents an accrual of or reserve for
cash expenses in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of such
Person and its Restricted Subsidiaries for such period to the
extent that such depreciation, amortization and other
non-cash expenses were deducted in computing such
Consolidated Net Income; minus
(4) non-cash items increasing such Consolidated Net Income for
such period, other than items that were accrued in the
ordinary course of business, in each case, on a consolidated
basis and determined in accordance with GAAP.
Notwithstanding the preceding sentence, clauses (1) and (3)
relating to amounts of a Restricted Subsidiary of a Person will be added to
Consolidated Net Income to compute Consolidated Cash Flow of such Person only
to the extent (and in the same proportion) that Net Income of such Restricted
Subsidiary was or would have been included in calculating the Consolidated Net
Income of such Person.
"Consolidated Net Income" means, with respect to any
specified Person for any period, the aggregate of the Net Income of such Person
and its Restricted Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; provided that:
(1) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary shall be included only to the extent of
the amount of dividends or distributions paid in cash to the
specified Person or a Wholly Owned Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded
to the extent that the declaration or payment of dividends or
similar distributions by such Restricted Subsidiary of such
Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been
obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation
applicable to such Restricted Subsidiary, except to the
extent of dividends or distributions paid in accordance
therewith;
<PAGE> 11
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(3) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of
such acquisition shall be excluded (it being understood,
however, that the acquisition of such Person may still be
considered for purposes of calculating the Fixed Charge
Coverage Ratio in accordance with the terms of the definition
thereof); and
(4) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as
of any date the consolidated stockholders' equity of such Person and its
consolidated Subsidiaries as of such date, less (without duplication) amounts
attributable to Disqualified Stock of such Person.
"Consolidated Revenue" means, with respect to any specified
Person for any period, the aggregate revenue of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP.
"Continuing Directors" means, as of any date of
determination, any member of the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the Issue Date
(together with individuals whose nomination for election to
the Board of Directors is or was recommended by Castle
Harlan, Inc.); or
(2) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office" means the principal corporate trust
office of the Trustee, at which at any particular time its corporate trust
business shall be administered, which office at the date hereof is located at
101 Barclay Street, Floor 21 West, New York, New York 10286, except that, with
respect to presentation of Securities for payment or for registration of
transfer or exchange, such term shall mean the office or agency of the Trustee
at which, at any particular time, its corporate agency business shall be
conducted.
"Covenant Defeasance" has the meaning provided in Section
9.02(c).
"Credit Facilities" means, with respect to the Company or any
Restricted Subsidiary, one or more debt facilities or commercial paper
facilities, including, without limitation, the Senior Secured Credit Facility,
in each case with banks or other lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time under existing or new Credit Facilities.
"Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy Law.
"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.
"Depositary" means, with respect to the Securities issued in
the form of one or more Global Securities, DTC or another Person designated as
Depositary by the Company, or a successor of the foregoing, which must be a
clearing agency registered under the Exchange Act.
"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, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the
<PAGE> 12
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holder thereof, in whole or in part, on or prior to the date that is 91 days
after the date on which the Notes mature. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders thereof have the right to require the Company to repurchase
such Capital Stock upon the occurrence of a change of control or an asset sale
shall not constitute Disqualified Stock if the terms of such Capital Stock
provide that the Company may not repurchase or redeem any such Capital Stock
pursuant to such provisions prior to the repurchase of all Notes as may be
required pursuant to the provisions contained in Sections 4.05 and 4.14 below.
"Domestic Subsidiary" means a Subsidiary that is organized
under the laws of the United States, any state thereof or the District of
Columbia.
"DTC" means The Depository Trust Company, its nominees and
their respective successors and assigns.
"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).
"Event of Default" has the meaning provided in Section 6.01.
"Excess Proceeds" has the meaning provided in Section
4.05(A).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto.
"Exchange Offer" has the meaning provided in the Registration
Rights Agreement.
"Exchange Securities" means the 12 1/4% Senior Notes due
2007, Series B of the Company and warrants to purchase 74,750 shares of
Holdings, to be issued in exchange for the Initial Securities pursuant to the
Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and
its Restricted Subsidiaries in existence on the Issue Date.
"Final Maturity Date" means August 15, 2007.
"Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or
accrued and whether or not capitalized, including, without
limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable
Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers'
acceptance financings, and net payments, if any, pursuant to
Hedging Obligations; plus
(2) 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, to the extent such
interest is actually paid by such Person or one of its
Restricted Subsidiaries or such Lien is foreclosed upon; plus
(3) the product of (a) all cash dividend payments on any series
of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments to the Company or
a Restricted Subsidiary of the Company, times (b) a fraction,
the numerator of which is one and the denominator of which is
one minus the then current combined federal, state and local
statutory tax
<PAGE> 13
-8-
rate of such Person, expressed as a decimal, in each case, on
a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means, with respect to any
specified Person for any period, the ratio of the Consolidated Cash Flow of
such Person and its Restricted Subsidiaries for such period to the Fixed
Charges of such Person for such period. In the event that the specified Person
or any of its Restricted Subsidiaries incurs, assumes, repays or redeems any
Indebtedness (other than revolving credit borrowings) or issues or redeems
preferred stock or Disqualified 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, repayment or redemption of Indebtedness (and the application of the
proceeds thereof), or such issuance or redemption of preferred stock or
Disqualified Stock, as if the same had occurred at the beginning of the
applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge
Coverage Ratio:
(1) acquisitions that have been made by the specified Person or
any of its Restricted Subsidiaries, including through mergers
or consolidations and including any related financing
transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the
Calculation Date shall be deemed to have occurred on the
first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be
calculated without giving effect to clause (3) of the proviso
set forth in the definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the Calculation
Date, shall be excluded; and
(3) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, shall
be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of
the specified Person or any of its Restricted Subsidiaries
following the Calculation Date.
For the purpose of this definition, whenever pro forma effect
is to be given to an acquisition of assets, the amount of income or earnings
relating thereto and the amount of consolidated interest expense associated
with any Indebtedness incurred in connection therewith, or any other
calculation under this definition, the pro forma calculations will be
determined in good faith by a responsible financial or accounting officer of
the Company (including pro forma expense and cost reductions calculated on a
basis consistent with Regulation S-X under the Securities Act). If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness will be calculated as if the
average rate for the period had been the applicable rate for the entire period
(taking into account any interest rate agreement applicable to such
Indebtedness).
"Foreign Borrowing Base" means, as of any date, an amount
equal to:
(1) 85% of the face amount of all accounts receivable (net of bad
debt reserves) owned by the Company's Foreign Subsidiaries as
of the end of the most recent fiscal quarter preceding such
date, calculated on a consolidated basis and in accordance
with GAAP; plus
(2) 50% of the orderly liquidation value of all property, plant
and equipment owned by the Company's Foreign Subsidiaries as
of the end of the most recent fiscal quarter preceding such
date; provided that such liquidation value shall be
determined by an appraisal of such property, plant and
equipment conducted by an independent appraisal firm of
national standing.
"Foreign Subsidiary" means any Subsidiary that is not a
Domestic Subsidiary.
<PAGE> 14
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"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
"Global Securities" means one or more Reg. S Global
Securities and 144A Global Securities.
"Government Securities" 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 and which have a remaining weighted average life to maturity of not
less than one year from the date of investment.
"guarantee" means a guarantee other than by endorsement of
negotiable instruments for collection in the ordinary course of business,
direct or indirect, in any manner including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof, of all or any part of any Indebtedness.
"Guarantee" means the guarantee of the Obligations of the
Company with respect to the Securities by each Guarantor pursuant to the terms
of this Indenture, a form of which is attached hereto as part of Exhibit A and
Exhibit B.
"Guarantors" means each of:
(1) the Company's Domestic Subsidiaries other than Non-Guarantor
Subsidiaries; and
(2) any other subsidiary that executes a Subsidiary Guarantee;
and their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under:
(1) foreign currency exchange agreements, interest rate swap
agreements, interest rate cap agreements and interest rate
collar agreements; and
(2) other agreements or arrangements designed to protect such
Person against fluctuations in interest rates or currency
exchange rates.
"Holder" means the registered holder of any Security.
"MAS Holding" means WFS Holdings, Inc., a Delaware
corporation.
"incur" has the meaning provided in Section 4.04.
"Indebtedness" means, with respect to any specified Person,
any indebtedness of such Person, without duplication:
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect
thereof);
(3) in respect of banker's acceptances;
<PAGE> 15
-10-
(4) representing Capital Lease Obligations;
(5) representing the deferred and unpaid purchase price of any
property, except any such balance that constitutes an accrued
expense or trade payable; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than reimbursement
obligations with regard to letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet of the specified Person prepared in
accordance with GAAP. In addition, the term "Indebtedness" includes all
Indebtedness referred to in clauses (1) through (6) above of other Persons
secured by a Lien on any asset of such Person (whether or not such Indebtedness
is assumed by such Person), the amount of such Indebtedness being deemed to be
the lesser of the fair market value of such property or asset and the amount of
the obligation so secured, and, to the extent not otherwise included, the
Guarantee by such Person of any Indebtedness of any other Person to the extent
of such Guarantee of such Indebtedness provided by such Person.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Initial Purchasers" means, collectively, Donaldson, Lufkin &
Jenrette Securities Corporation and Chase Securities, Inc., each an "Initial
Purchaser."
"Initial Securities" means the 12 1/4% Senior Notes due 2007,
Series A, of the Company and warrants to purchase 74,750 shares of common stock
of Holdings.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Interest Payment Date" means each semiannual interest
payment date on February 15 and August 15 of each year, commencing February 15,
2000.
"Interest Record Date" for the interest payable on any
Interest Payment Date (except a date for payment of defaulted interest) means
the February 1 or August 1 (whether or not a Business Day), as the case may be,
immediately preceding such Interest Payment Date.
"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), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities of such other Persons, together with all
items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP but excluding extensions of trade credit in
the ordinary course of business. If the Company or any Restricted Subsidiary of
the Company sells or otherwise disposes of any Equity Interests of any direct
or indirect Restricted Subsidiary of the Company such that, after giving effect
to any such sale or disposition, such Person is no longer a Restricted
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Restricted Subsidiary not sold or
disposed of in an amount determined as provided in the penultimate paragraph of
Section 4.06.
"Issue Date" means August 12, 1999, the date of first
issuance of the Securities.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind on such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any agreement to give a security interest in and any filing
of any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction.
<PAGE> 16
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"Liquidated Damages" has the meaning provided in the
Registration Rights Agreement.
"Management Agreement" means the management agreement dated
March 31, 1999, by and between Castle Harlan, Inc. and the Company, as amended
as of the Issue Date.
"Net Income" means, with respect to any Person, the net
income (loss) of such Person and its Restricted Subsidiaries, determined in
accordance with GAAP and before any reduction in respect of preferred stock
dividends, excluding, however (without duplication):
(1) any gain (or loss), together with any related provision for
taxes on such gain (or loss), realized in connection with:
(a) any Asset Sale; or (b) the disposition of any securities
by such Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries; and
(2) any extraordinary gain (or loss), together with any related
provision for taxes on such extraordinary gain (or loss).
"Net Proceeds" means the aggregate cash or Cash Equivalents
proceeds received by the Company or any of its Restricted Subsidiaries in
respect of any Asset Sale (including, without limitation, any cash or Cash
Equivalents (other than interest) received upon the sale or other disposition
of any non-cash consideration received in any Asset Sale), net of fees,
commissions, expenses and other direct costs relating to such Asset Sale,
including, without limitation, legal, accounting and investment banking fees,
and sales or brokerage commissions, and any relocation expenses and severance
costs incurred as a result thereof, taxes paid or payable as a result thereof,
in each case after taking into account any available tax credits or deductions
and any tax sharing arrangements and amounts required to be applied to the
repayment of Indebtedness, other than Indebtedness in respect of a Credit
Facility or any other Indebtedness secured by a Lien, as a result of such Asset
Sale, all distributions and other payments required to be made to minority
interest holders in Subsidiaries as a result of such Asset Sale, any reserve
for adjustment in respect of the sale price of such assets established in
accordance with GAAP and any reserves in accordance with GAAP against any
liabilities associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
"Non-Guarantor Subsidiary" has the meaning provided in
Section 4.23.
"Non-Recourse Debt" means Indebtedness: (1) as to which
neither the Company nor any of its Restricted Subsidiaries (a) provides credit
support of any kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or indirectly liable as a
guarantor or otherwise, or (c) constitutes the lender or (2) pursuant to which
the lender has no recourse to any of the assets of the Company or any of its
Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
costs, expenses, indemnifications, reimbursements, damages and other
liabilities or amounts payable under the documentation governing any
Indebtedness.
"Offering" means the offer and sale of the Units, each
consisting of $1,000 principal amount of Notes and one warrant to purchase
0.575 of a share of common stock of Holdings, pursuant to the Offering
Memorandum.
"Offering Memorandum" means the offering memorandum dated
August 5, 1999, relating to the Offering.
"Officer" of any Person means the Chairman of the Board, the
President, any Executive Vice President, Senior Vice President or Vice
President (whether or not such title is preceded or followed by one or more
<PAGE> 17
-12-
words or phrases), the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of such Person.
"Officers' Certificate" of any Person means a certificate
signed on behalf of such Person or the general partner, in the case of a
limited partnership, or member, in the case of a limited liability company, of
such Person by an Officer of such Person, that meets the requirements set forth
in Sections 13.04 and 13.05 of this Indenture.
"144A Global Security" means a permanent global security in
registered form representing the aggregate principal amount of Securities sold
in reliance on Rule 144A.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Company. The counsel may be an
employee of or counsel to the Company.
"Participant" has the meaning set forth in Section 2.15(a).
"Paying Agent" has the meaning provided in Section 2.03.
"Payment Default" has the meaning provided in Section
6.01(v)(a).
"Permitted Business" means the coordination, provision and
supervision of ground services to the aviation industry including, without
limitation, cargo services, ramp services, passenger services and technical and
industry services, and any business which is the same as or related, ancillary
or complementary thereto.
"Permitted Holder" means (a) Castle Harlan Partners III,
L.P., a Delaware limited partnership ("CHP III"), any Person controlling,
controlled by, or under common control with, CHP III and any managed account
controlled by, or under common control with CHP III, (b) Castle Harlan, Inc., a
Delaware corporation, and (c) employees, management and directors of any of the
foregoing, and any trust or individual retirement account for the benefit of
any such employees, management or directors, or members of their immediate
families and any Person controlled by any such employee, manager or director.
"Permitted Indebtedness" means, so long as no Default shall
have occurred and be continuing or would occur or be continuing immediately
after giving effect thereto, the incurrence of any of the following:
(1) the incurrence by the Company and any Restricted Subsidiary
of Indebtedness under one or more Credit Facilities; provided
that the aggregate principal amount of all Indebtedness of
the Company outstanding under all Credit Facilities after
giving effect to such incurrence does not exceed an amount
equal to the sum of (A) (1) $75.0 million less (2) (without
duplication) the aggregate amount applied by the Company or
any of its Subsidiaries since the Issue Date to repay
Indebtedness under a Credit Facility as a result of asset
dispositions which are required by this Indenture to be
accompanied by a corresponding permanent commitment
reduction, plus (B) additional Indebtedness incurred under
one or more Credit Facilities in an aggregate amount not
exceeding in the aggregate the amount of Indebtedness that is
permitted to be incurred, but has not been incurred, under
clauses (4) and (10) of this definition;
(2) the incurrence by the Company and its Subsidiaries of
Existing Indebtedness;
(3) the incurrence by the Company and (through the making of the
Subsidiary Guarantees) of the Guarantors of Indebtedness
represented by the Notes in an aggregate principal amount of
$130.0 million at any time outstanding;
(4) (a) Acquired Debt of the Company and its Restricted
Subsidiaries and (b) the incurrence by the Company or any of
its Restricted Subsidiaries of Indebtedness represented by
Capital Lease Obligations, mortgage financings or purchase
money obligations, in each case, incurred for the
<PAGE> 18
-13-
purpose of financing all or any part of the purchase price or
cost of construction or improvement of property, plant or
equipment used in the business of the Company or such
Restricted Subsidiary; provided that the aggregate principal
amount at any time outstanding of all Indebtedness
outstanding under clauses (a) and (b) after giving effect to
such incurrence does not exceed $10.0 million (reduced by the
aggregate amount of additional Indebtedness incurred under
one or more Credit Facilities then in effect that represents
such additional Indebtedness under the immediately preceding
clause (1)(B)) (it being understood that any Indebtedness
incurred under this clause (4) shall, at the option of the
Company, cease to be deemed incurred or outstanding for
purposes of this clause (4) but shall be deemed to be
incurred under the first paragraph of Section 4.04 from and
after the first date on which the Company or such Restricted
Subsidiary could have incurred such Indebtedness under such
paragraph without reliance on this clause (4));
(5) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in
exchange for, or the net proceeds of which are used to
refund, refinance or replace, Indebtedness (other than
intercompany Indebtedness) that was permitted by this
Indenture to be incurred under the first paragraph of Section
4.04 or clauses (2), (3) or (10) of this definition;
(6) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among
the Company and any of its Restricted Subsidiaries; provided
that:
(a) if the Company or any Guarantor is the obligor on
such Indebtedness, such Indebtedness must be
expressly subordinated upon the occurrence and
during the continuation of an Event of Default, to
the prior payment in full in cash or Cash
Equivalents of all Obligations with respect to the
Notes, in the case of the Company, or the Subsidiary
Guarantee of such Guarantor, in the case of a
Guarantor; and
(b) (i) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness
being held by a Person other than the Company or a
Restricted Subsidiary thereof and (ii) any sale or
other transfer of any such Indebtedness to a Person
that is other than the Company or a Restricted
Subsidiary thereof; shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by
the Company or any such Restricted Subsidiary, as
the case may be, that was not permitted by this
clause (6) (provided that for purposes of this
clause (6), a pledge of Equity Interests under the
Credit Facilities shall not be considered a sale,
transfer or issuance of such Equity Interests);
(7) shares of preferred stock (or other Capital Stock having
preferential rights similar to preferred stock) of a
Restricted Subsidiary of the Company issued to the Company or
another Restricted Subsidiary of the Company; provided that
any subsequent event which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary of the
Company shall be deemed, in each case, to be an Investment by
the Company or any such Restricted Subsidiary in the issuer
of such preferred stock (or other Capital Stock having
preferential rights similar to preferred stock) (provided
that for purposes of this clause (7), a pledge of Equity
Interests under the Credit Facilities shall not be considered
a sale, transfer or issuance of such Equity Interests);
(8) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred in the
ordinary course of business for the purpose of fixing or
hedging interest rate risk or foreign currency valuation
risk, but excluding Hedging Obligations entered into for
speculative purposes;
(9) (a) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or any Restricted Subsidiary that
was permitted to be incurred by another provision of this
definition and (b) the guarantee by a Restricted Subsidiary
of the Company that is not a Guarantor of Indebtedness of any
other Restricted Subsidiary of the Company that is not a
Guarantor;
<PAGE> 19
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(10) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate
principal amount (or accreted value, as applicable) at any
time outstanding, including, without duplication, all
Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to
this clause (10), not to exceed $10.0 million (reduced by the
aggregate amount of additional Indebtedness incurred under
one or more Credit Facilities then in effect that represents
such additional Indebtedness under the immediately preceding
clause (1)(B) (it being understood that any Indebtedness
incurred under this clause (10) shall, at the option of the
Company, cease to be deemed incurred or outstanding for
purposes of this clause (10) but shall be deemed to be
incurred for purposes of the first paragraph of Section 4.04
from and after the first date on which the Company or such
Restricted Subsidiary could have incurred such Indebtedness
under such paragraph without reliance on this clause (10));
(11) Indebtedness of the Company's Foreign Subsidiaries in an
aggregate principal amount at any time outstanding not to
exceed the Foreign Borrowing Base at the time of such
incurrence;
(12) the accrual of interest, accretion or amortization of
original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the
same terms, and the payment of dividends on Disqualified
Stock or preferred stock (or other Capital Stock having
preferential rights similar to preferred stock) in the form
of additional shares of the same class of Disqualified Stock
or preferred stock (or other Capital Stock having
preferential rights similar to preferred stock); provided, in
each such case, that the amount thereof is included in Fixed
Charges of the Company as accrued;
(13) Indebtedness in respect of standby letters of credit and
performance, surety and appeal bonds and completion
guarantees provided by the Company or any Restricted
Subsidiary in the ordinary course of business or pursuant to
self-insurance obligations and not in connection with the
borrowing of money or the obtaining of advances of credit;
(14) Indebtedness 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 that
the maximum assumable liability in respect of the principal
amount of all such Indebtedness 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; and
(15) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds in the
ordinary course of business; provided that such Indebtedness
is extinguished within five Business Days of incurrence.
"Permitted Investments" means:
(1) (a) any Investment in the Company or in a Guarantor or (b)
any Investment by a Restricted Subsidiary of the Company that
is not a Guarantor in another Restricted Subsidiary of the
Company that is not a Guarantor;
(2) any Investment in cash or Cash Equivalents;
(3) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment:
<PAGE> 20
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(a) such Person becomes a Guarantor or, to the extent
such Investment is made by a Restricted Subsidiary
of the Company that is not a Guarantor, such Person
becomes a Restricted Subsidiary of the Company that
is not a Guarantor;
(b) such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the
Company or a Guarantor, or to the extent such
Investment is made by a Restricted Subsidiary of the
Company that is not a Guarantor, such Person is
merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets
to, or is liquidated into, a Restricted Subsidiary
of the Company that is not a Guarantor;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to
and in compliance with Section 4.05;
(5) any acquisition of assets solely in exchange for the issuance
of Equity Interests (other than Disqualified Stock) of the
Company;
(6) Hedging Obligations;
(7) other Investments in any Unrestricted Subsidiary or in any
other Person engaged in a Permitted Business having an
aggregate fair market value (measured on the date each such
Investment was made and without giving effect to subsequent
changes in value), when taken together with all other
Investments made pursuant to this clause (7) since the Issue
Date, not to exceed $3.0 million at any time outstanding
(reduced, without duplication, by the amount of Investments
made pursuant to clause (10)(b) of this definition);
(8) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar
agreement upon the bankruptcy or insolvency of such trade
creditors or customers;
(9) Investments by the Company or any Guarantor in any Foreign
Subsidiary of the Company; provided that each Investment is
by means of an intercompany loan made by the Company or a
Guarantor to such Foreign Subsidiary; provided further that
the Indebtedness of such Foreign Subsidiary evidenced by such
intercompany loan shall not be contractually subordinated to
the prior payment of any other obligations for the payment of
money of such Foreign Subsidiary; and
(10) other Investments by the Company or any Guarantor in a
Foreign Subsidiary having an aggregate fair market value
(measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when
taken together with all other Investments made pursuant to
this clause (10) that are at the time outstanding, not to
exceed (a) 15% of Total Tangible Assets at the time of such
Investment plus (b) the amount of Investments that are
permitted to be made but have not been made under clause (7)
of this definition.
"Permitted Liens" means:
(1) Liens on any assets and property of the Company and its
Subsidiaries securing Indebtedness, guarantees of
Indebtedness and other Obligations under one or more Credit
Facilities permitted by clause (1) of the definition of
"Permitted Indebtedness;"
(2) Liens in favor of (a) the Company or the Guarantors or (b)
any Restricted Subsidiary that is not a Guarantor granted by,
and with respect to property or assets of, another Restricted
Subsidiary that is not a Guarantor;
<PAGE> 21
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(3) Liens on property of a Person existing at the time such
Person is merged with or into or consolidated with the
Company or any Restricted Subsidiary of the Company; provided
that such Liens were not incurred in connection with or in
contemplation of, such merger or consolidation and do not
extend to any assets other than those of the Person merged
into or consolidated with the Company or the Restricted
Subsidiary;
(4) 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 not incurred in connection with
or in contemplation of such acquisition;
(5) Liens to secure the performance of statutory obligations
(including, without limitation, Liens of landlords, carriers,
warehousemen, mechanics, suppliers, materialmen and other
similar Liens imposed by law), surety or appeal bonds,
performance bonds or other obligations of a like nature
incurred in the ordinary course of business (or to secure
reimbursement obligations in respect of letters of credit
issued in connection with any of the foregoing obligations);
(6) Liens to secure Indebtedness (including Acquired Debt and
Capital Lease Obligations) permitted by clause (4) of the
definition of "Permitted Indebtedness" covering only the
assets acquired with such Indebtedness or such assets related
to the Acquired Debt;
(7) Liens existing on the Issue Date;
(8) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly
instituted and diligently pursued, provided that any reserve
or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor;
(9) Liens on assets of Foreign Subsidiaries to secure
Indebtedness permitted by clause (11) of the definition of
"Permitted Indebtedness;"
(10) Liens incurred in the ordinary course of business of the
Company or any Restricted Subsidiary of the Company with
respect to obligations that do not exceed the principal
amount of $10.0 million at any one time outstanding;
(11) Liens securing the Notes or the Subsidiary Guarantees, if any;
(12) Liens securing Permitted Refinancing Indebtedness, provided
that such Liens (a) are no less favorable to the Holders and
are not more favorable to the lienholders with respect to
such Liens than the Liens in respect of the Indebtedness
being refinanced, and (b) do not extend to or cover any
property or assets of the Company or any of its Restricted
Subsidiaries not securing the Indebtedness so refinanced;
(13) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, employment
insurance or other types of social security, including Liens
securing letters of credit issued in the ordinary course of
business or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds
and other similar obligations including those arising from
regulatory, contractual or warranty requirements of the
Company and its Subsidiaries, including rights of offset and
set-off (in each case exclusive of obligations for the
payment of borrowed money);
(14) Liens arising by reason of any judgment, decree or order of
any court not giving rise to an Event of Default, so long as
such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review
of such judgment, order or decree shall not
<PAGE> 22
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have been finally terminated or the period with which such
proceedings may be initiated shall not have expired;
(15) Survey exceptions, easements, rights of way, zoning
restrictions and other restrictions on the use of property;
(16) Liens to secure Indebtedness permitted by clauses (8), (9)
and (10) of the definition of "Permitted Indebtedness;" and
(17) Any extension, renewal or replacement, in whole or in part,
of any Lien described in the foregoing clauses (1) through
(16); provided that any such extension, renewal or
replacement is no more restrictive in any material respect
than the Lien so extended, renewed or replaced and does not
extend to any additional property or assets.
"Permitted Refinancing Indebtedness" means any Indebtedness
or Disqualified Stock 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 or Disqualified
Stock of the Company or any of its Restricted Subsidiaries; provided that:
(1) the principal amount (or accreted value, if applicable) or
mandatory redemption amount of such Permitted Refinancing
Indebtedness does not exceed the principal amount of (or
accreted value, if applicable) or mandatory redemption
amount, plus accrued interest or dividends on, the
Indebtedness or Disqualified Stock so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of
contractual prepayment charges and fees and expenses and
other amounts incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity
or final redemption date no earlier than the final maturity
or final redemption date of, and has a Weighted Average Life
to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness or Disqualified Stock
being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness or Disqualified Stock being extended,
refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness is subordinated in right of payment
to, the Notes on terms at least as favorable to the Holders
of Notes as those contained in the documentation governing
the Indebtedness or Disqualified Stock being extended,
refinanced, renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred or Disqualified Stock is issued
either by the Company or by the Restricted Subsidiary who is
the obligor on the Indebtedness or Disqualified Stock being
extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership,
joint venture, association, joint stock company, limited liability company,
trust, unincorporated association, government or any agency political
subdivision thereof or any other entity.
"Physical Securities" means one or more certificated
Securities in registered form.
"principal" of a debt security means the principal of the
security, plus, when appropriate, the premium, if any, on the security.
"Private Placement Legend" means the legend initially set
forth on the Initial Securities in the form set forth on Exhibit A hereto.
<PAGE> 23
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"Public Equity Offering" means any underwritten public
offering of common stock (other than Disqualified Stock) pursuant to an
effective registration statement under the Securities Act, of any Equity
Interest of the Company or Holdings in which the gross proceeds to the Company
are at least $20.0 million.
"Purchase Agreement" has the meaning ascribed to such term in
the introductory paragraphs to this Indenture.
"Qualified Institutional Buyer" or "QIB" means a "qualified
institutional buyer" as that term is defined in Rule 144A.
"Redemption Date" when used with respect to any Security to
be redeemed, means the date fixed for such redemption pursuant to this
Indenture.
"redemption price" when used with respect to any Security to
be redeemed, means the price fixed for such redemption pursuant to this
Indenture as set forth in the form of Security annexed hereto as Exhibit A.
"Reg. S Global Security" means a global security in registered
form representing the aggregate principal amount of Securities sold pursuant to
Regulation S under the Securities Act.
"Registrar" has the meaning provided in Section 2.03.
"Registration" means a registered exchange offer for the
Securities by the Company or other registration of the Securities under the
Securities Act pursuant to and in accordance with the terms of the Registration
Rights Agreement.
"Registration Date" has the meaning provided in Section 4.12.
"Registration Rights Agreement" has the meaning ascribed to
such term in the introductory paragraphs to this Indenture.
"Related Business Assets" means any assets used or useful in a
Permitted Business.
"Related Party" with respect to any Permitted Holder means:
(1) a spouse or immediate family member (in the case of an
individual) of such Permitted Holder; or
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons
beneficially holding an 80% or more controlling interest of
which consist of such Permitted Holder and/or such other
Persons referred to in the immediately preceding clause (1).
"Responsible Officer" shall mean, when used with respect to
the Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such Person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Payment" has the meaning provided in Section 4.06.
"Restricted Security" has the meaning assigned to such term
in Rule 144(a)(3) under the Securities Act; provided that the Trustee shall be
entitled to request and conclusively rely on an Opinion of Counsel with respect
to whether or not any Security constitutes a Restricted Security.
<PAGE> 24
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"Restricted Subsidiary" of a Person means any Subsidiary of
the relevant Person that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard and Poor's Corporation.
"SEC" or "Commission" means the Securities and Exchange
Commission.
"Securities" means, collectively, the Initial Securities, the
Transfer Restricted Securities, the Unrestricted Securities and any Additional
Securities, in each instance, that are treated as a single class of securities,
as amended or supplemented from time to time in accordance with the terms of
this Indenture.
"Securities Act" means the Securities Act of 1933, as
amended, or any successor statute or statutes thereto.
"Senior Secured Credit Facility" means that certain Credit
Agreement, dated as of August 12, 1999, by and among Holdings, the Company, the
lenders named therein, The Chase Manhattan Bank, as administrative agent, and
DLJ Capital Funding, Inc., as syndication agent, providing for revolving credit
loans, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case
as amended, modified, supplemented, extended, renewed, restated, refunded,
replaced or refinanced from time to time, including any amendment,
modification, supplement, extension, renewal, restatement, refunding,
replacement or refinancing that increases the amount borrowable thereunder,
provided such Indebtedness could be incurred under this Indenture, or alters
the maturity thereof.
"Separation Date" means the earliest to occur of (i) 180 days
after the closing of the Offering, (ii) the date on which a registration
statement with respect to a registered exchange offer for the Notes is declared
effective under the Securities Act, (iii) the date on which a shelf
registration statement with respect to the Notes is declared effective under
the Securities Act, (iv) such date as the Initial Purchasers in their sole
discretion shall determine and (v) the occurrence of a Change of Control or an
Event of Default.
"Shelf Registration Statement" has the meaning provided in the
Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Exchange Act, as such Regulation is in effect on
the date hereof.
"Stated Maturity" means, with respect to any installment of
principal on any series of Indebtedness, the date on which such payment of
principal was scheduled to be paid in the original documentation governing such
Indebtedness, and shall not include any contingent obligations to repay, redeem
or repurchase any such principal prior to the date originally scheduled for the
payment thereof.
"Subordinated Indebtedness" means any Indebtedness of the
Company (whether outstanding on the Issue Date or thereafter incurred) which is
subordinate or junior in right of payment to the Notes pursuant to a written
agreement.
"Subsidiary" means, with respect to any Person:
(1) any corporation, association or other business entity of
which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of that Person (or a
combination thereof); and
<PAGE> 25
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(2) any other Person of which at least a majority of the voting
interest (without regard to the occurrence of any
contingency) is at the time directly or indirectly owned by
such Person.
"Subsidiary Guarantee" means (a) that certain Subsidiary
Guarantee executed by the Guarantors in accordance with the delivery of the
Securities and (b) any supplemental indenture executed by Restricted
Subsidiaries of the Company pursuant to which such Subsidiaries became
Guarantors of the Company's Obligations under the Securities.
"TIA" means the Trust Indenture Act of 1939, as amended, as
in effect on the date of this Indenture (except as provided in Section 10.03)
until such time as this Indenture is qualified under the TIA, and thereafter as
in effect on the date on which this Indenture is qualified under the TIA.
"Total Tangible Assets" means the total consolidated tangible
assets of the Company and its Restricted Subsidiaries determined in accordance
with GAAP and as shown on the most recent balance sheet of the Company.
"Transfer Restricted Securities" means the Transfer
Restricted Securities as defined in the Registration Rights Agreement and any
similar securities issued in compliance with Section 2.02 in accordance with
any other registration rights agreement.
"Trustee" means the party named as such in the first
paragraph of this Indenture until a successor replaces it in accordance with
the provisions of this Indenture and thereafter means such successor.
"United States Government Obligations" means direct
non-callable obligations of the United States for the payment of which the full
faith and credit of the United States is pledged.
"United States Legal Tender" means such coin or currency of
the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts.
"Units" means 130,000 units consisting of $130,000,000
aggregate principal amount of Notes and Warrants to purchase an aggregate of
74,750 shares of common stock of Holdings.
"Unrestricted Securities" means one or more Securities that
do not and are not required to bear the Private Placement Legend in the form
set forth in Exhibit A hereto, including, without limitation, the Exchange
Securities and any Securities registered under the Securities Act pursuant to
and in accordance with the Registration Rights Agreement.
"Unrestricted Subsidiary" means any Subsidiary of the Company
that is designated by the Board of Directors as an Unrestricted Subsidiary
pursuant to a Board Resolution, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary
of the Company unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable
to the Company or such Restricted Subsidiary than those that
might be obtained at the time from Persons who are not
Affiliates of the Company;
(3) is a Person with respect to which neither the Company nor any
of its Restricted Subsidiaries has any direct or indirect
obligation to (a) subscribe for additional Equity Interests
or (b) maintain or preserve such Person's financial condition
or to cause such Person to achieve any specified levels of
operating results; and
<PAGE> 26
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(4) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the Company
or any of its Restricted Subsidiaries.
Any designation of a Subsidiary of the Company as an
Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officer's Certificate certifying that such designation
complied with the preceding conditions and was permitted by Section 4.06. If,
at any time, any Unrestricted Subsidiary fails to meet the preceding
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. If such Indebtedness is not permitted to be
incurred as of such date pursuant to Section 4.04, the Company shall be in
default of such covenant. The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (1)
such Indebtedness is permitted under Section 4.04, calculated on a pro forma
basis as if such designation had occurred at the beginning of the four-quarter
reference period; and (2) no Default or Event of Default would be in existence
immediately following such designation.
The Board of Directors of the Company may designate any
Subsidiary to be an Unrestricted Subsidiary if that designation would not cause
a Default to be continuing immediately after such designation. If a Subsidiary
is designated as an Unrestricted Subsidiary, all outstanding Investments owned
by the Company and its Restricted Subsidiaries in the Subsidiary so designated
will be deemed to be an Investment made as of the time of such designation and
will either reduce the amount available for Restricted Payments under the first
paragraph of Section 4.06 or reduce the amount available for future Investments
under one or more clauses of the definition of "Permitted Investments." All
such outstanding Investments will be valued at their fair market value at the
time of such designation. That designation will only be permitted if such
Restricted Payment would be permitted at that time and if such Restricted
Subsidiary otherwise meets the definition of an "Unrestricted Subsidiary." The
Board of Directors may redesignate any Unrestricted Subsidiary to be a
Restricted Subsidiary if the redesignation would not cause a Default to be
continuing immediately after 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.
"Warrants" means warrants to purchase an aggregate of 74,750
shares of common stock of Holdings.
"Weighted Average Life to Maturity" means, when applied to
any Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the
amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal,
including payment at final maturity, in respect thereof, by
(b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the
making of such payment; by
(2) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person and/or by one or more Wholly Owned
Restricted Subsidiaries of such Person.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person, all of the outstanding capital stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned
by such Person and/or by one or more Wholly Owned Subsidiaries of such Person.
<PAGE> 27
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SECTION 1.02 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Securities and the
Guarantees.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" with respect to the Securities means the Company, a
Guarantor or any other obligor on the 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
and not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted
accounting principles in effect from time to time, and any
other reference in this Indenture to "generally accepted
accounting principles" refers to GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions;
(6) references to sections of or rules under the Securities Act,
the Exchange Act, the TIA or any other applicable law shall
be deemed to include substitute, replacement or successor
sections or rules adopted by the SEC from time to time;
(7) references to any contract, instrument or agreement shall be
deemed to include any amendments, modifications or
supplements thereto; and
(8) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article,
Section or other subdivision.
ARTICLE TWO
THE SECURITIES
SECTION 2.01 Form and Dating.
(1) General. The Initial Securities and the Trustee's certificate
of authentication thereof shall be substantially in the form
of Exhibit A hereto, which is hereby incorporated in and
expressly made a part of this Indenture. The Exchange
Securities and the Trustee's certificate of authentication
thereof shall be substantially in the form of Exhibit B
hereto, which is hereby incorporated in and expressly made a
part of this Indenture. The Securities may have notations,
legends or
<PAGE> 28
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endorsements required by law, stock exchange rules or usage.
The Company shall approve the forms of the Securities and any
notation, legend or endorsement on them. The Securities shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Securities shall
constitute, and are hereby expressly made, a part of this
Indenture and the Company, the Guarantors and the Trustee, by
their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of the Securities or
Subsidiary Guarantee conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern
and be controlling. Global Securities shall bear the legend
set forth in Exhibit C hereto. The aggregate principal amount
of the Global Securities may from time to time be increased
or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary, as hereinafter
provided.
(2) Global Securities. Each Global Security shall represent such
of the outstanding Exchange Securities as shall be specified
therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Exchange Securities
from time to time endorsed thereon and that the aggregate
principal amount of outstanding Exchange Securities
represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Security to reflect
the amount of any increase or decrease in the aggregate
principal amount of outstanding Exchange Securities
represented thereby shall be made by the Trustee or the
custodian, at the direction of the Trustee, in accordance
with written instructions given by the Holder thereof as
required by Section 2.06 hereof.
SECTION 2.02 Execution and Authentication.
One Officer shall sign the Securities of the Company by
manual or facsimile signature.
If such Officer whose signature is on a Security was an
Officer at the time of such execution but no longer holds that office at the
time the Trustee authenticates the Security, the Security shall be valid
nevertheless.
A Security shall not be valid until an authorized signatory
of the Trustee manually signs the certificate of authentication on the
Security. Such signature shall be conclusive evidence that the Security has
been authenticated under this Indenture. A Security shall be dated the date of
its authentication.
The Trustee shall authenticate (i) Initial Securities issued
by the Company for original issue in an aggregate principal amount not to
exceed $300.0 million in one or more series; provided that the aggregate
principal amount of Initial Securities on the Issue Date shall not exceed
$130.0 million; and provided further that the Company complies with Section
4.04, (ii) upon cancellation of the Initial Securities issued by the Company,
Securities issued by the Company for original issue in an aggregate amount not
to exceed $300.0 million in one or more series; provided that the aggregate
principal amount of Exchange Securities on the date of exchange of Initial
Securities to Exchange Securities shall not exceed $130.0 million; and provided
further that the Company complies with Section 4.04, (iii) Transfer Restricted
Securities from time to time only in exchange for a like principal amount of
the same type of Initial Securities and (iv) Unrestricted Securities from time
to time (A) in exchange for a like principal amount of the same type of Initial
Securities or a like principal amount of the same type of Transfer Restricted
Securities or (B) as the Company may determine in accordance with this
Indenture, in each case upon a written order of the Company in the form of an
Officers' Certificate. Each such written order shall specify the amount of and
the type of Securities to be authenticated and the date on which the Securities
are to be authenticated, whether the Securities are to be Initial Securities,
Exchange Securities, Transfer Restricted Securities or Unrestricted Securities
and whether the Securities are to be issued as Physical Securities or Global
Securities and such other information as the Trustee may reasonably request.
The aggregate principal amount of Securities outstanding at any time may not
exceed $300.0 million, except as provided in Sections 2.07 and 2.08.
<PAGE> 29
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In the event that the Company shall issue and the Trustee
shall authenticate any Securities issued under this Indenture subsequent to the
Issue Date pursuant to clauses (ii) and (iii) of the first sentence of the
immediately preceding paragraph, the Company shall use its reasonable best
efforts to obtain the same "CUSIP" number for such Securities as is printed on
the Securities outstanding at such time; provided that if any series of
Securities issued under this Indenture subsequent to the Issue Date is
determined, pursuant to an Opinion of Counsel of the Company in a form
reasonably satisfactory to the Trustee, to be a different class of security
than the Securities outstanding at such time for federal income tax purposes,
the Company may obtain a "CUSIP" number for such Securities that is different
than the "CUSIP" number printed on the Securities then outstanding.
Notwithstanding the foregoing, all Securities issued under
this Indenture shall vote and consent together on all matters (as to which any
of such Securities may vote or consent) as one class and no series of
Securities will have the right to vote or consent as a separate class on any
matter.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Securities. Unless otherwise provided
in the appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent shall have the same rights as an Agent to deal with the
Company and Affiliates of the Company.
The Securities shall be issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03 Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough
of Manhattan, The City of New York, where (a) Securities may be presented or
surrendered for registration of transfer or for exchange (the "Registrar"), (b)
Securities may be presented or surrendered for payment (the "Paying Agent") and
(c) notices and demands in respect of the Securities and this Indenture may be
served. The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company, upon notice to the Trustee, may appoint one
or more co-Registrars and one or more additional Paying Agents. The term
"Paying Agent" includes any additional Paying Agent and the term "Registrar"
includes any co-Registrar. Except as provided herein, the Company or any
Guarantor may act as Paying Agent, Registrar or co-Registrar.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture, which shall incorporate the
provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall promptly notify the
Trustee of the name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, or fails to give the foregoing notice,
the Trustee shall act as such and shall be entitled to appropriate compensation
in accordance with Section 7.07.
The Company initially appoints the Trustee as Registrar and
Paying Agent until such time as the Trustee has resigned or a successor has
been appointed. The Company initially appoints DTC to act as Depositary with
respect to the Global Securities. The Company may appoint a successor Registrar
and/or Paying Agent without prior notice to the Holders and the Company or any
of its Subsidiaries may act as Paying Agent or Registrar.
SECTION 2.04 Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that each Paying Agent shall hold in trust for the
benefit of the Holders or the Trustee all assets held by the Paying Agent for
the payment of principal of, or interest on, the Securities, and shall notify
the Trustee of any Default by the Company in making any such payment. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it
to the Trustee and to account for any assets distributed. Upon distribution to
the Trustee of all assets that shall have been delivered by the Company to the
Paying Agent (if other than the
<PAGE> 30
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Company), the Paying Agent shall have no further liability for such assets. If
the Company or any Guarantor or any of their respective Affiliates acts as
Paying Agent, it shall, on or before each due date of the principal of or
interest on the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal or interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and will promptly notify the Trustee in writing of its
action or failure so to act.
SECTION 2.05 Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee at least five days before each Interest Record Date and
at such other times as the Trustee may request in writing a list as of such
date and in such form as the Trustee may reasonably require of the names and
addresses of Holders, which list may be conclusively relied upon by the
Trustee.
SECTION 2.06 Transfer and Exchange.
Subject to the provisions of Sections 2.15 and 2.16, when
Securities are presented to the Registrar with a request to register the
transfer of such Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized denominations of the same
series, the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transaction are met; provided that the
Securities surrendered for transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing. To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate Securities (and
each of the Guarantors shall execute a Guarantee thereon) at the Registrar's
written request. No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith payable by the transferor of such Securities (other than any such
transfer taxes or other governmental charge payable upon exchanges or transfers
pursuant to Section 2.10, 3.06, 4.05, 4.14 or 10.05). The Registrar shall not
be required to register the transfer or exchange of any Security (i) during a
period beginning at the opening of business 15 days before the mailing of a
notice of redemption of Securities and ending at the close of business on the
day of such mailing and (ii) selected for redemption in whole or in part
pursuant to Article Three hereof, except the unredeemed portion of any Security
being redeemed in part.
Prior to the registration of any transfer by a Holder as
provided herein, the Company, the Trustee and any Agent shall treat the Person
in whose name the Security is registered as the owner thereof for all purposes
whether or not the Security shall be overdue, and neither the Company, the
Trustee nor any Agent shall be affected by notice to the contrary. Any Holder
of a beneficial interest in a Global Security shall, by acceptance of such
beneficial interest in a Global Security, agree that transfers of beneficial
interests in such Global Security may be effected only through a book-entry
system maintained by the Depositary (or its agent), and that ownership of a
beneficial interest in a Global Security shall be required to be reflected in a
book entry.
SECTION 2.07 Replacement Securities.
If evidence of a mutilated Security is surrendered to the
Trustee 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 Trustee's requirements for
replacement of Securities are met. If required by the Company or the Trustee,
such Holder must provide an indemnity bond or other indemnity, sufficient in
the judgment of both the Company and the Trustee, to protect the Company, the
Trustee and any Agent from any loss which any of them may suffer if a Security
is replaced. The Company may charge such Holder for its reasonable expenses in
replacing a Security, including reasonable fees and expenses of counsel.
Every replacement Security is an additional obligation of the
Company and the Guarantors.
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SECTION 2.08 Outstanding Securities.
Securities outstanding at any time are all the Securities
that have been authenticated by the Trustee except those canceled by it, those
delivered to it for cancellation and those described in this Section 2.08 as
not outstanding. Subject to Section 2.09, a Security does not cease to be
outstanding because the Company or any of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other
than a mutilated Security surrendered for replacement), it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser. A mutilated Security ceases
to be outstanding upon surrender of such Security and replacement thereof
pursuant to Section 2.07.
If on a Redemption Date, Asset Sale Offer Payment Date or the
Final Maturity Date the Paying Agent holds money sufficient to pay all of the
principal and interest due on the Securities payable on that date, and is not
prohibited from paying such money to the Holders pursuant to the terms of this
Indenture, then on and after that date such Securities cease to be outstanding
and interest on them ceases to accrue.
SECTION 2.09 Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company, a Guarantor, or any of their Affiliates shall
be disregarded, except that, for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Securities that a Responsible Officer of the Trustee actually knows are so
owned shall be disregarded.
The Company shall promptly notify the Trustee, in writing,
when the Company, a Guarantor or any of their Affiliates repurchases or
otherwise acquires Securities and of the aggregate principal amount of such
Securities so repurchased or otherwise acquired.
SECTION 2.10 Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities
upon receipt of a written order of the Company in the form of an Officers'
Certificate. The Officers' Certificate shall specify the amount of temporary
Securities to be authenticated and the date on which the temporary Securities
are to be authenticated.
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 upon receipt of a written
order of the Company pursuant to Section 2.02 definitive Securities in exchange
for temporary Securities. Holders of temporary Securities shall be entitled to
the benefits of this Indenture.
SECTION 2.11 Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for transfer, exchange or payment.
The Trustee, or at the direction of the Trustee, the Registrar or the Paying
Agent, and no one else, shall cancel, and at the written direction of the
Company, dispose of and deliver evidence of such disposal of all Securities
surrendered for transfer, exchange, payment or cancellation. Subject to Section
2.07, the Company may not issue new Securities to replace Securities that it
has paid or delivered to the Trustee for cancellation. If the Company or any
Guarantor shall acquire any of the Securities, such acquisition shall not
operate as a redemption or satisfaction of the Indebtedness represented by such
Securities unless and until the same are surrendered to the Trustee for
cancellation pursuant to this Section 2.11.
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SECTION 2.12 Defaulted Interest.
After giving effect to any applicable grace period, the
Company shall pay interest on overdue principal from time to time on demand at
the applicable rate of interest then borne by the Securities. The Company
shall, to the extent lawful, pay interest on overdue installments of interest
(without regard to any applicable grace periods) at the rate of interest then
borne by the Securities.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest, plus (to the extent lawful)
any interest payable on the defaulted interest to the Persons who are Holders
on a subsequent special record date, which date shall be the fifteenth day
preceding the date fixed by the Company for the payment of defaulted interest
or the next succeeding Business Day if such date is not a Business Day. At
least 15 days before the subsequent special record date, the Company shall mail
to each Holder, with a copy to the Trustee, a notice that states the subsequent
special record date, the payment date and the amount of defaulted interest, and
interest payable on such defaulted interest, if any, to be paid.
Notwithstanding the foregoing, any interest which is paid
prior to the expiration of the 30-day period set forth in Section 6.01(i) shall
be paid to Holders as of the Interest Record Date for the Interest Payment Date
for which interest has not been paid.
SECTION 2.13 CUSIP Number.
The Company in issuing the Securities will use a "CUSIP"
number and the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Securities, and that reliance may be
placed only on the other identification numbers printed on the Securities. The
Company shall promptly notify the Trustee of any changes in CUSIP numbers.
SECTION 2.14 Deposit of Moneys.
Prior to 10:00 a.m., New York time, on each Interest Payment
Date, Redemption Date, Asset Sale Offer Payment Date and the Final Maturity
Date, the Company shall deposit with the Paying Agent in immediately available
funds money sufficient to make cash payments, if any, due on such Interest
Payment Date, Redemption Date, Asset Sale Offer Payment Date or Final Maturity
Date, as the case may be, in a timely manner which permits the Paying Agent to
remit payment to the Holders on such Interest Payment Date, Redemption Date,
Asset Sale Offer Payment Date or Final Maturity Date, as the case may be.
SECTION 2.15 Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be
registered in the name of the Depositary or the nominee of such Depositary,
(ii) be delivered to the Trustee as custodian for such Depositary and (iii)
bear legends as set forth in Exhibit C.
Members of, or participants in, the Depositary
("Participants") shall have no rights under this Indenture with respect to any
Global Security held on their behalf by the Depositary, or the Trustee as its
custodian, or under the Global Security, and the Depositary may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of the Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and Participants, the operation of
customary practices governing the exercise of the rights of a beneficial holder
of any Security.
(b) Transfers of Global Securities shall be limited to
transfers in whole, but not in part, to the Depositary, its successors or their
respective nominees. Interests of beneficial owners in the Global Securities
may be transferred or exchanged for Physical Securities in accordance with the
rules and procedures of the Depositary
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and the provisions of Section 2.16; provided that Physical Securities shall be
transferred to all beneficial owners in exchange for their beneficial interests
in Global Securities if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for any Global Security and a
successor Depositary is not appointed by the Company within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depositary to issue Physical
Securities.
(c) In connection with the transfer of Global Securities
as an entirety to beneficial owners pursuant to paragraph (b) of this Section
2.15, the Global Securities shall be deemed to be surrendered to the Trustee
for cancellation, and the Company shall execute, and the Trustee shall upon
written instructions from the Company authenticate and deliver, to each
beneficial owner identified by the Depositary in exchange for its beneficial
interest in the Global Securities, an equal aggregate principal amount of
Physical Securities of authorized denominations.
(d) Any Physical Security constituting a Restricted
Security delivered in exchange for an interest in a Global Security pursuant to
paragraph (b) of this Section 2.15 shall, except as otherwise provided by
Section 2.16, bear the Private Placement Legend.
(e) The Holder of any Global Security may grant proxies
and otherwise authorize any Person, including Participants and Persons that may
hold interests through Participants, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
SECTION 2.16 Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Securities. When
Physical Securities are presented to the Registrar with a request:
(i) to register the transfer of the Physical Securities;
or
(ii) to exchange such Physical Securities for an equal
principal amount of Physical Securities of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
the requirements under this Indenture as set forth in this Section 2.16 for
such transactions are met; provided that the Physical Securities presented or
surrendered for Registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the
Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
(II) in the case of Physical Securities the offer
and sale of which have not been registered under the
Securities Act, such Physical Securities shall be
accompanied, in the sole discretion of the Company, by the
following additional information and documents, as
applicable:
(A) if such Physical Security is being delivered to the
Registrar by a Holder for Registration in the name
of such Holder, without transfer, a certification
from such Holder to that effect (substantially in
the form of Exhibit D hereto); or
(B) if such Physical Security is being transferred to a
QIB in accordance with Rule 144A, a certification to
that effect (substantially in the form of Exhibit D
hereto); or
(C) if such Physical Security is being transferred to an
Institutional Accredited Investor, delivery of a
certification to that effect (substantially in the
form of Exhibit D hereto) and a transferee letter of
representation substantially in the form of Exhibit
E hereto and, at
<PAGE> 34
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the option of the Company, an Opinion of Counsel
reasonably satisfactory to the Company to the effect
that such transfer is in compliance with the
Securities Act; or
(D) if such Physical Security is being transferred in
reliance on Rule 144 under the Securities Act,
delivery of a certification to that effect
(substantially in the form of Exhibit D hereto) and,
at the option of the Company, an Opinion of Counsel
reasonably satisfactory to the Company to the effect
that such transfer is in compliance with the
Securities Act; or
(E) if such Physical Security is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification
to that effect (substantially in the form of Exhibit
D hereto) and, at the option of the Company, an
Opinion of Counsel reasonably acceptable to the
Company to the effect that such transfer is in
compliance with the Securities Act.
(b) Restrictions on Transfer of a Physical Security for
a Beneficial Interest in a Global Security. A Physical Security, the offer and
sale of which has not been registered under the Securities Act, may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Registrar
of a Physical Security, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Registrar, together with:
(A) certification, substantially in the form of Exhibit
D hereto, that such Physical Security is being
transferred (I) to a QIB or (II) to an Institutional
Accredited Investor or (III) in a transaction
otherwise exempt from registration under the
Securities Act and, with respect to (II) or (III),
at the option of the Company, an Opinion of Counsel
reasonably acceptable to the Company to the effect
that such transfer is in compliance with the
Securities Act; and
(B) written instructions directing the Registrar to
make, or to direct the Depositary to make, an
endorsement on the applicable Global Security to
reflect an increase in the aggregate amount of the
Securities represented by the Global Security,
then the Registrar shall cancel such Physical Security and cause, or direct the
Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Registrar, the principal
amount of Securities represented by the applicable Global Security to be
increased accordingly. If no Global Security is then outstanding, the Company
shall, unless either of the events in the proviso to Section 2.15(b) have
occurred and are continuing, issue and the Trustee shall, upon written
instructions from the Company in accordance with Section 2.02, authenticate
such a Global Security in the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The
transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depositary in accordance with this Indenture
(including the restrictions on transfer set forth herein) and the procedures of
the Depositary therefor. Upon receipt by the Registrar of written instructions,
or such other instruction as is customary for the Depositary, from the
Depositary or its nominee, requesting the Registration of transfer of an
interest in a Global Security to another type of Global Security, together with
the applicable Global Securities (or, if the applicable type of Global Security
required to represent the interest as requested to be transferred is not then
outstanding, only the Global Security representing the interest being
transferred), the Registrar shall cancel such Global Securities (or Global
Security) and the Company shall issue and the Trustee shall, upon written
instructions from the Company in accordance with Section 2.02, authenticate new
Global Securities of the types so canceled (or the type so canceled and
applicable type required to represent the interest as requested to be
transferred) reflecting the applicable increase and decrease of the principal
amount of Securities represented by such types of Global Securities, giving
effect to such transfer. If the applicable type of Global Security required to
represent the interest as requested to be transferred is not outstanding at the
time of such request, the Company shall issue and the Trustee shall, upon
written instructions
<PAGE> 35
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from the Company in accordance with Section 2.02, authenticate a new Global
Security of such type in principal amount equal to the principal amount of the
interest requested to be transferred.
(d) Transfer of a Beneficial Interest in a Global
Security for a Physical Security.
(i) Any Person having a beneficial interest in
a Global Security may upon request exchange such beneficial interest for a
Physical Security; provided that prior to the Registration, a transferee that is
a QIB or Institutional Accredited Investor may not exchange a beneficial
interest in a Global Security for a Physical Security. Upon receipt by the
Registrar of written instructions, or such other form of instructions as is
customary for the Depositary, from the Depositary or its nominee on behalf of
any Person (subject to the previous sentence) having a beneficial interest in a
Global Security and upon receipt by the Trustee of a written order or such other
form of instructions as is customary for the Depositary or the Person designated
by the Depositary as having such a beneficial interest containing registration
instructions and, in the case of any such transfer or exchange of a beneficial
interest in Securities the offer and sale of which have not been registered
under the Securities Act, the following additional information and documents:
(A) if such beneficial interest is being transferred in
reliance on Rule 144 under the Securities Act,
delivery of a certification to that effect
(substantially in the form of Exhibit D hereto) and,
at the option of the Company, an Opinion of Counsel
reasonably satisfactory to the Company to the effect
that such transfer is in compliance with the
Securities Act; or
(B) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification
to that effect (substantially in the form of Exhibit
D hereto) and, at the option of the Company, an
Opinion of Counsel reasonably satisfactory to the
Company to the effect that such transfer is in
compliance with the Securities Act,
then the Registrar will cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Registrar, the aggregate
principal amount of the applicable Global Security to be reduced and, following
such reduction, the Company will execute and, upon receipt of an authentication
order in the form of an Officers' Certificate in accordance with Section 2.02,
the Trustee will authenticate and deliver to the transferee a Physical Security
in the appropriate principal amount.
(ii) Securities issued in exchange for a
beneficial interest in a Global Security pursuant to this Section 2.16(d) shall
be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Registrar in writing. The Registrar shall deliver
such Physical Securities to the Persons in whose names such Physical Securities
are so registered.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture, a Global
Security may not be transferred as a whole except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.
(f) Private Placement Legend. Upon the transfer,
exchange or replacement of Securities not bearing the Private Placement Legend,
the Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless, and the Trustee is hereby authorized to
deliver Securities without the Private Placement Legend if, (i) there is
delivered to the Trustee an Opinion of Counsel reasonably satisfactory to the
Company and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the
<PAGE> 36
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Securities Act; (ii) such Security has been sold pursuant to an effective
registration statement under the Securities Act (including pursuant to a
Registration) to a person who is not an Affiliate of the Issuer; or (iii) the
date of such transfer, exchange or replacement is two years after the later of
(x) the Issue Date and (y) the last date that the Company or any affiliate (as
defined in Rule 144 under the Securities Act) of the Company was the owner of
such Securities (or any predecessor thereto).
(g) General. By its acceptance of any Security bearing
the Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in
the Private Placement Legend and agrees that it will transfer such Security
only as provided in this Indenture.
The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of
any interest in any Security (including any transfers between or among
Participants or beneficial owners of interest in any Global Security) other
than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by the terms of, this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.15 or this Section
2.16. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon
the giving of reasonable prior written notice to the Registrar.
SECTION 2.17 Issuance of Additional Securities.
The Company shall be entitled, subject to its compliance with
the covenants contained in Section 4.04, to issue Additional Securities under
this Indenture which shall have identical terms as the Initial Securities
issued on the Issue Date, other than with respect to the date of issuance,
issue price and amount of interest payable on the first payment date applicable
thereto (and, if such Additional Securities shall be issued in the form of
Physical Securities or Global Securities, other than with respect to transfer
restrictions). The Initial Securities issued on the Issue Date, any Additional
Securities and all Exchange Securities issued in exchange therefor shall be
treated as a single class for all purposes under this Indenture.
With respect to any Additional Securities, the Company shall
set forth in a resolution of the Board of Directors of the Company and an
Officers' Certificate, a copy of each of which shall be delivered to the
Trustee, the following information:
(1) the aggregate principal amount of such Additional Securities
to be authenticated and delivered pursuant to this Indenture;
(2) the issue price, the issue date, the CUSIP and/or ISIN number
of such Additional Securities and the amount of interest
payable on the first payment date applicable thereto;
provided that no Additional Securities may be issued at a
price that would cause such Additional Securities to have
"original issue discount" within the meaning of Section 1273
of the Internal Revenue Code of 1986, as amended; and
(3) whether such Additional Securities shall be Physical
Securities or Global Securities and issued in the form of
Initial Securities or shall be issued in the form of Exchange
Securities.
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ARTICLE THREE
REDEMPTION
SECTION 3.01 Notices to Trustee.
If the Company wants to redeem Securities pursuant to
paragraph 7 or 8 of the Securities at the applicable redemption price set forth
thereon, it shall notify the Trustee in writing of the Redemption Date and the
principal amount of Securities to be redeemed, together with an Officers'
Certificate stating that such redemption will comply with the conditions
contained herein.
SECTION 3.02 Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed at any
time, the Trustee will select Securities for redemption as follows:
(1) if the Securities are listed, in compliance with the
requirements of the principal national securities exchange on
which the Securities are listed; or
(2) if the Securities are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem appropriate.
No Securities 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 to be redeemed at
its registered address. Notices of redemption may not be conditional.
If any Security is to be redeemed in part only, the notice of
redemption that relates to that Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in principal amount
equal to the unredeemed portion of the original Security will be issued in the
name of the Holder thereof upon cancellation of the original Security.
Securities called for redemption become due on the date fixed for redemption.
On and after the redemption date, interest ceases to accrue on Securities or
portions of them called for redemption.
SECTION 3.03 Notice of Redemption.
At least 30 days but not more than 60 days before a
Redemption Date, the Company shall mail a notice of redemption by first-class
mail to each Holder whose Securities are to be redeemed at such Holder's
registered address.
Each notice of redemption shall identify the Securities to be
redeemed (including the CUSIP number thereon) and shall state:
(1) the paragraph of the Securities pursuant to which the
Securities are being redeemed;
(2) the Redemption Date;
(3) the redemption price;
(4) the name and address of the Paying Agent to which the
Securities are to be surrendered for redemption;
(5) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
<PAGE> 38
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(6) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases
to accrue on and after the Redemption Date and the only
remaining right of the Holders is to receive payment of the
redemption price upon surrender to the Paying Agent; and
(7) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that,
after the Redemption Date, upon surrender of such Security, a
new Security or Securities in principal amount equal to the
unredeemed portion thereof will be issued.
At the Company's written request, the Trustee shall give the
notice of redemption on behalf of the Company, in the Company's name and at the
Company's expense; provided that the Company shall give notice of redemption to
the Trustee at least 10 days before the date the notice of redemption is
requested by the Company to be mailed to the Holders (unless a shorter notice
period shall be agreed to by the Trustee in writing).
SECTION 3.04 Effect of Notice of Redemption.
Once a notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the redemption
price. Upon surrender to the Paying Agent, such Securities shall be paid at the
redemption price, plus accrued interest thereon, if any, to the Redemption
Date, but interest installments whose maturity is on or prior to such
Redemption Date shall be payable to the Holders of record at the close of
business on the relevant Interest Record Date. The Trustee or Paying Agent
shall promptly return to the Company any money deposited with the Trustee or
the Paying Agent by the Issuers in excess of the amount necessary to pay the
redemption price of, and accrued and unpaid interest on, all Securities to be
redeemed.
SECTION 3.05 Deposit of Redemption Price.
Prior to 10:00 a.m., New York time, on the Redemption Date,
the Company shall deposit with the Paying Agent (or if the Company is Paying
Agent, shall, on or before the Redemption Date, segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest, if any,
on all Securities to be redeemed on that date other than Securities or portions
thereof called for redemption on that date which have been delivered by the
Company to the Trustee for cancellation.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Securities or the portions of Securities called for redemption. If a
Security is redeemed on or after an Interest Record Date but on or prior to the
related Interest Payment Date, then any accrued and unpaid interest shall be
paid to the person in whose name such Security was registered at the close of
business on such record date. Upon surrender of a Security for redemption in
accordance with the notice given pursuant to Section 3.03 hereof, such Security
shall be purchased by the Company at the redemption price, together with
accrued and unpaid interest to the redemption date.
If any Security surrendered for redemption in the manner
provided in the Securities shall not be so paid on the Redemption Date due to
the failure of the Company to deposit with the Paying Agent money sufficient to
pay the redemption price thereof, the principal and accrued and unpaid
interest, if any, thereon shall, until paid or duly provided for, bear interest
as provided in Sections 2.12 and 4.01 with respect to any payment default.
SECTION 3.06 Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Company shall issue and the Trustee shall authenticate for the Holder a new
Security equal in principal amount to the unredeemed portion of the Security
surrendered.
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SECTION 3.07 Optional Redemption.
(a) At any time prior to August 15, 2002, the Company
may on any one or more occasions redeem up to 35% of the aggregate principal
amount of Securities originally issued under this Indenture at a redemption
price of 112.250% of the principal amount thereof, plus accrued and unpaid
interest to the redemption date, with the net cash proceeds of one or more
Public Equity Offerings; provided that
(1) at least 65% of the aggregate principal amount of
Securities issued on the Issue Date remains outstanding immediately
after the occurrence of each such redemption (excluding Securities
held by the Company and its Subsidiaries); and
(2) each such redemption must occur within 90 days of the
date of the closing of such Public Equity Offering.
(b) Except as set forth in paragraph (a) of this Section
3.07, the Securities will not be redeemable at the Company's option prior to
August 15, 2003. After August 15, 2003, the Company may redeem the Securities,
in whole or from time to time 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 thereon, if any, to
the applicable redemption date, if redeemed during the twelve-month period
beginning on August 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2003................................................. 106.125%
2004................................................. 104.594%
2005................................................. 103.063%
2006................................................. 101.531%
2007 and thereafter.................................. 100.000%
</TABLE>
ARTICLE FOUR
COVENANTS
SECTION 4.01 Payment of Securities.
The Company shall pay the principal of and interest on (and
to the extent applicable, any Liquidated Damages with respect to) the
Securities in the manner provided in the Securities and the Registration Rights
Agreement. An installment of principal or interest shall be considered paid on
the date due if the Trustee or Paying Agent (other than the Company, a
Guarantor or any of their respective Affiliates) holds on that date money
designated for and sufficient to pay the installment in full and is not
prohibited from paying such money to the Holders pursuant to the terms of this
Indenture.
The Company shall pay cash interest on overdue principal and
on overdue installments of interest at the same rate per annum borne by the
applicable Securities, to the extent lawful, as provided in Section 2.12.
SECTION 4.02 Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The
City of New York, the office or agency required under Section 2.03. The Company
shall give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Company shall
fail to maintain any such required office or agency or shall fail to furnish
the Trustee with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the address of the Trustee set forth in
Section 13.02. The Company hereby initially designates the Trustee at its
address set forth in Section 13.02 as its office or agency in the Borough of
Manhattan, The City of New York, for such purposes.
<PAGE> 40
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SECTION 4.03 Limitations on Transactions with Affiliates.
(A) The Company will not, and will not permit any of its
Restricted Subsidiaries to sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate (each, an
"Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less
favorable to the Company or such 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
(2) the Company delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving
aggregate consideration in excess of $2.5 million, a
resolution of the Board of Directors set forth in an
Officer's Certificate certifying that such Affiliate
Transaction or series of related Affiliate
Transactions complies with this covenant and that
such Affiliate Transaction or series of related
Affiliate Transactions has been approved by a
majority of the disinterested members of the Board
of Directors; and
(b) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million,
an opinion as to the fairness to the Company or such
Restricted Subsidiary, as the case may be, of such
Affiliate Transaction or series of related Affiliate
Transactions from a financial point of view issued
by an accounting, appraisal or investment banking
firm of national standing.
(B) The following items shall not be deemed to be
Affiliate Transactions and, therefore, will not be subject to the provisions of
the prior paragraph:
(1) any employment, consulting, stock option, stock repurchase,
employee benefit, indemnification, compensation (including
the payment of reasonable and customary fees to Directors of
the Company or any of its Restricted Subsidiaries who are not
employees of any such Person), business expense reimbursement
or other employee-related agreements, arrangements or plans
entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business;
(2) transactions between or among the Company and its Restricted
Subsidiaries;
(3) any agreement, including, without limitation, the Management
Agreement (provided that all obligations of the Company under
the Management Agreement are subordinated to the prior
payment in full in cash or Cash Equivalents of all
Obligations with respect to the Notes upon the occurrence and
during the continuation of an Event of Default), as in effect
as of the Issue Date or any amendment thereto or any
transaction contemplated thereby (including pursuant to any
amendment thereto) or any replacement agreement thereto so
long as any such amendment or replacement agreement is not
materially more disadvantageous to the Holders taken as a
whole than the original agreements as in effect on the Issue
Date;
(4) the entering into, and any payment pursuant to, any
tax-sharing agreement existing at the time of such payment
between the Company and any other Person with which it files
a consolidated tax return or with which the Company is part
of a consolidated group for tax purposes, provided that any
such payment relates solely to taxes and, in each case, is
not in excess of the tax liability that would have been
payable by the Person making such payment on a stand-alone
basis;
<PAGE> 41
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(5) payment by the Company or any of its Restricted Subsidiaries
to Castle Harlan, Inc. of fees for advisory services in
connection with financings, acquisitions or divestitures or
other investment banking activities upon terms no less
favorable than the Company or any of its Restricted
Subsidiaries could obtain from a nationally recognized
investment banking firm for a comparable transaction, in each
case, which fees pursuant to this clause (5) are approved by
a majority of the Board of Directors in good faith; and
(6) Restricted Payments that are permitted by Section 4.06(B).
SECTION 4.04 Limitation on Incurrence of Additional Indebtedness and
Issuance of Preferred Stock.
The Company 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 the Company will not issue any
Disqualified Stock and will not permit any of its Restricted Subsidiaries to
issue any shares of preferred stock; provided that the Company and any
Guarantor may incur Indebtedness (including Acquired Debt) or issue
Disqualified Stock or preferred stock (or other Capital Stock having
preferential rights similar to 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 (or other Capital Stock having preferential rights similar to
preferred stock) is issued would have been at least 2.0 to 1, determined on a
pro forma basis (including a pro forma application of the net proceeds
therefrom), as if such additional Indebtedness had been incurred, or such
Disqualified Stock or preferred stock (or other Capital Stock having
preferential rights similar to preferred stock) had been issued, as the case
may be, at the beginning of such four-quarter period.
Notwithstanding the foregoing, the provisions set forth in
the immediately preceding paragraph will not prohibit the Company or any
Restricted Subsidiary to incur Permitted Indebtedness.
For purposes of determining compliance with this Section
4.04, in the event that an item of proposed Indebtedness meets the criteria of
more than one of the categories of Permitted Indebtedness, or is entitled to be
incurred pursuant to the first paragraph of this Section 4.04, the Company
will, in its sole discretion, be permitted to classify such item of
Indebtedness on the date of its incurrence in any manner that complies with
this Section 4.04. Indebtedness under Credit Facilities outstanding on the
Issue Date shall be deemed to have been incurred on such date in reliance on
the exception provided by clause (1) of the definition of "Permitted
Indebtedness" in Section 1.01. Subject to the other terms of this Indenture,
any Indebtedness incurred in accordance with this covenant may be incurred
under the Credit Facilities.
For purposes of this Section 4.04, "Acquired Debt" shall be
deemed to have been incurred by the Company or one of its Restricted
Subsidiaries, as the case may be, at the time an acquired Person becomes a
Restricted Subsidiary (or is merged into the Company or any of its Restricted
Subsidiaries) or at the time of the acquisition of assets, as the case may be;
and, to avoid duplication, guarantees, Liens, letters of credit or other
obligations supporting Indebtedness otherwise included in the determination of
any particular amount of Indebtedness under this Section 4.04 shall not be
included.
For purposes of determining compliance with any U.S.
dollar-denominated restriction on the incurrence of Indebtedness, the U.S.
dollar-equivalent principal amount of Indebtedness denominated in a foreign
currency shall be calculated based on the relevant currency exchange rate in
effect on the date such Indebtedness was incurred, in the case of term
Indebtedness, or first committed, in the case of revolving credit Indebtedness;
provided that if such Indebtedness is incurred to refinance other Indebtedness
denominated in a foreign currency, and such refinancing would cause the
applicable U.S. dollar-denominated restriction to be exceeded if calculated at
the relevant currency exchange rate in effect on the date of such refinancing,
such U.S. dollar-denominated restriction shall be deemed not to have been
exceeded so long as the principal amount of such refinancing Indebtedness does
not exceed the principal amount of such Indebtedness being refinanced. The
principal amount of any Indebtedness incurred to refinance other Indebtedness,
if incurred in a different currency from the Indebtedness
<PAGE> 42
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being refinanced, shall be calculated based on the currency exchange rate
between the currency in which such Permitted Refinancing Indebtedness is
denominated and the currency applicable to the Indebtedness being refinanced
that is in effect on the date of such refinancing.
SECTION 4.05 Limitation on Asset Sales.
(A) The Company will not, and will not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless:
(1) the Company (or such Restricted Subsidiary) receives
consideration at the time of such Asset Sale (without giving
effect to subsequent changes in value) at least equal to the
fair market value of the assets or Equity Interests issued or
sold or otherwise disposed of;
(2) with respect to any such Asset Sale involving aggregate
consideration in excess of $2.5 million, such fair market
value is determined by the Company's Board of Directors and
evidenced by a resolution of the Board of Directors set forth
in an Officer's Certificate delivered to the Trustee; and
(3) at least 75% of the consideration therefor received by the
Company or such Restricted Subsidiary is in the form of cash
or Cash Equivalents. For purposes of this provision, each of
the following shall be deemed to be cash:
(a) any Indebtedness or other liabilities, of the
Company or any Restricted Subsidiary (other than
liabilities that are by their terms subordinated to
the Notes or any Subsidiary Guarantee) that are
assumed by the transferee of any such assets
pursuant to an agreement that releases the Company
or such Restricted Subsidiary from further
liability; and
(b) any currencies, securities, notes or other
obligations received by the Company or any such
Restricted Subsidiary from such transferee (or any
Person on behalf of such transferee in respect of
such Asset Sale) and that are converted by the
Company or such Restricted Subsidiary into cash or
Cash Equivalents within 60 days after the closing of
such Asset Sale (to the extent of the cash or Cash
Equivalents received in that conversion).
Within 360 days after the receipt of any Net Proceeds from an
Asset Sale, the Company or any Restricted Subsidiary may, at its option, apply
such Net Proceeds, or enter into a legally binding agreement:
(1) to prepay or repay permanently Indebtedness of the Company or
Restricted Subsidiaries under the Senior Secured Credit
Facility or any other Indebtedness secured by a Lien and, if
the Indebtedness repaid is revolving credit Indebtedness, to
correspondingly reduce commitments with respect thereto to
the extent the aggregate of all such revolving commitments
exceeds $40.0 million;
(2) to acquire all or substantially all of the assets of, or a
majority of the Voting Stock of, another Permitted Business
or to make a Permitted Investment pursuant to clause (7) of
the definition of "Permitted Investments" in Section 1.01;
(3) to make a capital expenditure;
(4) to acquire other properties or other assets (other than
Indebtedness, cash or Cash Equivalents or Capital Stock) that
are used or useful in a Permitted Business; or
(5) to make any combination of (1) through (4) above.
<PAGE> 43
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Pending the final application of any such Net Proceeds, the
Company or such Restricted Subsidiary may temporarily reduce outstanding
Indebtedness 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 preceding paragraph will constitute excess proceeds
("Excess Proceeds"). When the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company shall make an offer to all Holders of Notes (an "Asset
Sale Offer") and the Company may also make a similar offer to all holders of
other Indebtedness that is pari passu with the Notes containing provisions
similar to those set forth in this Indenture with respect to offers to purchase
or redeem with the proceeds of sales of assets to purchase the maximum
principal amount of Notes and such other pari passu Indebtedness that may be
purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer
will be equal to 100% of principal amount plus accrued and unpaid interest, if
any, to the date of purchase, and will be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Company may use
such Excess Proceeds for any purpose not otherwise prohibited by this
Indenture. If the aggregate principal amount of Notes and such other pari passu
Indebtedness tendered in such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset
Sale Offer, the amount of Excess Proceeds shall be reset at zero.
Each Asset Sale Offer will be mailed to the record Holders as
shown on the register of Holders within 25 days following the Asset Sale Offer
Trigger Date, with a copy to the Trustee, and shall comply with the procedures
set forth in this Indenture. Upon receiving notice of the Asset Sale Offer,
Holders may elect to tender their Securities in whole or in part in integral
multiples of $1,000 in exchange for cash. To the extent Holders properly tender
Securities in an amount exceeding the maximum principal amount of Notes and
such other pari passu Indebtedness that may be purchased out of the Excess
Proceeds, Securities of tendering Holders will be purchased on a pro rata basis
(based on amounts tendered). An Asset Sale Offer shall remain open for a period
of 20 Business Days or such longer period as may be required by law.
(B) Each notice of an Asset Sale Offer pursuant to this
Section 4.05 shall be mailed or caused to be mailed, by first class mail, by
the Company not more than 25 days after the Asset Sale Offer Trigger Date to
all Holders at their last registered addresses as of a date within 15 days of
the mailing of such notice, with a copy to the Trustee. The notice shall
contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Asset Sale Offer and shall state the
following terms:
(1) that the Asset Sale Offer is being made pursuant to this
Section 4.05 and that all Securities and all other
Indebtedness that is pari passu with the Securities
containing provisions similar to those set forth in the
Indenture with respect to offers to purchase or to redeem
with the proceeds of the sale of assets tendered will be
accepted for payment; provided that if the aggregate
principal amount of Securities tendered in an Asset Sale
Offer and the aggregate payment amount of such other pari
passu Indebtedness exceeds the aggregate amount of the Asset
Sale Offer, the Company shall select the Securities and such
other pari passu Indebtedness to be purchased on a pro rata
basis based on the amounts tendered (with such adjustments as
may be deemed appropriate by the Company so that only
Securities in denominations of $1,000 or multiples thereof
shall be purchased);
(2) the purchase price (including the amount of accrued interest)
and the purchase date (which shall be at least 20 and not
more than 30 Business Days from the date of mailing of notice
of such Asset Sale Offer, or such longer period as required
by law) (the "Asset Sale Offer Payment Date");
(3) that any Security not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in making payment therefor,
any Security accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest after the Asset Sale
Offer Payment Date;
<PAGE> 44
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(5) that Holders electing to have a Security purchased pursuant
to an Asset Sale Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the
Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day prior to the
Asset Sale Offer Payment Date;
(6) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than five Business Days
prior to the Asset Sale Offer Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Securities
the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Security
purchased; and
(7) that Holders whose Securities are purchased only in part will
be issued new Securities in a principal amount equal to the
unpurchased portion of the Securities surrendered; provided
that each Security purchased and each new Security issued
shall be in an original principal amount of $1,000 or
integral multiples thereof.
On or before 10:00 a.m., New York time, on the Asset Sale
Offer Payment Date, the Company shall (i) accept for payment Securities or
portions thereof validly tendered pursuant to the Asset Sale Offer which are to
be purchased in accordance with item (B)(1) above, (ii) deposit with the Paying
Agent United States Legal Tender sufficient to pay the purchase price plus
accrued interest, if any, of all Securities to be purchased and (iii) deliver
to the Trustee Securities so accepted together with an Officers' Certificate
stating the Securities or portions thereof being purchased by the Company. The
Paying Agent shall promptly mail to the Holders so accepted payment in an
amount equal to the purchase price plus accrued interest, if any. For purposes
of this Section 4.05, the Trustee shall act as the Paying Agent.
Any amounts remaining after the purchase of Securities
pursuant to an Asset Sale Offer shall be returned by the Trustee to the
Company.
The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Securities pursuant to an Asset Sale Offer. To the extent that
the provisions of any securities laws or regulations conflict with this Section
4.05, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.05 by virtue thereof.
(C) The Company will not, and will not permit any
Restricted Subsidiary to, engage in any Asset Swaps, unless:
(1) at the time of entering into such Asset Swap and immediately
after giving effect to such Asset Swap, no Default or Event
of Default shall have occurred and be continuing;
(2) in the event such Asset Swap involves the transfer by the
Company or any Restricted Subsidiary of the Company of assets
having an aggregate fair market value, as determined by the
Board of Directors in good faith, in excess of $2.5 million,
the terms of such Asset Swap have been approved by a majority
of the members of the Board of Directors whose resolution
with respect thereto shall be delivered to the Trustee; and
(3) in the event such Asset Swap involves the transfer by the
Company or any Restricted Subsidiary of the Company of assets
having an aggregate fair market value, as determined by a
majority of the members of the Board of Directors in good
faith, in excess of $10.0 million, the Company has received
an opinion issued by an accounting, appraisal or investment
banking firm of nationally recognized standing that such
Asset Swap is fair to the Company or such Restricted
Subsidiary, as the case may be, from a financial point of
view.
<PAGE> 45
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SECTION 4.06 Limitation on Restricted Payments.
(A) (i) The Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other
payment or distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests other than declarations or payments of
dividends, distributions or such other payments payable (a) in Equity Interests
(other than Disqualified Stock) of the Company or (b) to the Company or a
Restricted Subsidiary of the Company;
(2) purchase, redeem or otherwise acquire or retire for
value any Equity Interests of the Company or any direct or indirect parent of
the Company or any Restricted Subsidiary of the Company (other than any such
Equity Interests owned by the Company or any Restricted Subsidiary of the
Company or in exchange for other Equity Interests (other than Disqualified
Stock) of the Company);
(3) make any voluntary or optional principal payment, or
purchase, redeem, defease or otherwise acquire or retire for value, any
Indebtedness that (a) is subordinate in right of payment to the Subsidiary
Guarantees, with respect to the Guarantors or (b) otherwise constitutes
Subordinated Indebtedness, except a payment of principal at the Stated Maturity
thereof or pursuant to any required sinking fund payments; or
(4) make any Restricted Investment (all such payments
and other actions set forth in clauses (1) through (4) above being collectively
referred to as "Restricted Payments");
(ii) unless, at the time of and immediately after giving effect to such
Restricted Payment:
(1) no Default or Event of Default shall have occurred
and be continuing; and
(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, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in Section 4.04; and
(3) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issue Date (excluding Restricted Payments permitted by
clauses (2), (3), (4) and (9) of Section 4.06(B)), is less than the sum,
without duplication, of
(a) 50% of the Consolidated Net Income of the
Company for the period (taken as one
accounting period) from the beginning of
the first fiscal quarter commencing after
the Issue Date 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
(b) 100% of the aggregate net cash proceeds
received by the Company from any Person
(other than a Subsidiary of the Company)
since the Issue Date (i) as a contribution
to its common equity capital, (ii) from the
issuance or sale of Equity Interests of the
Company (other than Disqualified Stock)
and/or (iii) from the issuance or sale of
convertible or exchangeable Disqualified
Stock or convertible or exchangeable debt
securities of the Company that have been
converted into or exchanged for such Equity
Interests (other than Equity Interests (or
Disqualified Stock or debt securities) sold
to a Subsidiary of the Company), together
with the aggregate cash received by the
Company or any of its Subsidiaries at the
time of such conversion or exchange (in any
case, other than net cash proceeds received
from an issuance or sale of such Capital
Stock
<PAGE> 46
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to an employee of the Company or any of its
Restricted Subsidiaries to the extent such
sale is financed by loans from or guaranteed
by the Company or any Restricted Subsidiary
unless such loans have been repaid (or such
guarantee has been released or discharged)
on or prior to the date of determination);
plus
(c) to the extent that any Restricted Investment
that was made after the Issue Date is sold
or otherwise liquidated or repaid, the
lesser of (i) the cash (including Cash
Equivalents) return of capital with respect
to such Restricted Investment, including any
cash or Cash Equivalents received as a
result of the sale of any property received
upon the sale or other liquidation or
repayment of such Restricted Investment
within 60 days after the receipt of such
property (less the cost of disposition, if
any) and (ii) the initial amount of such
Restricted Investment; plus
(d) upon the redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary, the
fair market value (as determined by the
Board of Directors in good faith) of such
Unrestricted Subsidiary as of the date it is
redesignated; provided that for purposes of
this clause (d), the fair market value of
any redesignated Unrestricted Subsidiary
shall be reduced by the amount that any such
redesignation replenishes or increases the
amount of Restricted Investments permitted
to be made pursuant to clause (7) of the
definition of "Permitted Investments" in
Section 1.01.
(B) Notwithstanding the foregoing, the provisions set
forth in the immediately preceding paragraph will not prohibit:
(1) the payment of any dividend or distribution within
60 days after the date of declaration thereof, if at said date of declaration
such payment would have complied with the provisions of this Indenture;
(2) the redemption, repurchase, retirement, defeasance
or other acquisition of any Indebtedness or of any Equity Interests of the
Company or of any Restricted Subsidiary in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Subsidiary of
the Company) of, Equity Interests of the Company (other than Disqualified
Stock); provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from Section 4.06(A) (ii) (3) (b);
(3) the payment of principal or the defeasance,
redemption, retirement, repurchase or other acquisition of Indebtedness with
the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;
(4) the payment of any dividend, distribution or other
payment by a Restricted Subsidiary of the Company to the holders of its common
Equity Interests or the repurchase by a Restricted Subsidiary of the Company of
its common Equity Interests, in each case, on a pro rata basis, provided that
no Default or Event of Default shall have occurred and be continuing (i) in the
case of any dividend, distribution or other payment, at the time of, and
immediately after giving effect to, the declaration of such dividend,
distribution or other payment or (ii) in the case of any repurchase, at the
time of, and immediately after giving effect to, such repurchase;
(5) the repurchase, redemption or other acquisition or
retirement for value of (i) any Equity Interests of the Company or any
Restricted Subsidiary of the Company held by any member (present or former) of
the Company's or any of its Subsidiaries' management (or their estates or
beneficiaries thereunder) pursuant to any management equity subscription
agreement or stock option agreement or other compensation or severance
arrangement in effect as of the Issue Date or entered into or created
thereafter without violating this Indenture or (ii) any Equity Interests of the
Company or any of its Restricted Subsidiaries to the extent necessary, in the
good faith judgment of the Board of Directors of the Company, to prevent the
loss or secure the renewal or reinstatement of any license, permit or
authorization held by the Company or any of its Restricted Subsidiaries under
any applicable
<PAGE> 47
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law or governmental regulation or the policies of any applicable governmental
authority or other regulatory body; provided, that the amount of any such
repurchase, redemption, acquisition or retirement for value pursuant to this
clause (ii) shall not exceed the fair market value of the Equity Interests being
repurchased, redeemed, acquired or otherwise retired; provided, further that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests pursuant to immediately preceding clauses (i) and (ii) shall
not exceed $2.0 million in any calendar year (with up to $1.0 million of any
unused amount in any calendar year being carried over to the succeeding calendar
year subject to a maximum of $3.0 million in any calendar year, after giving
effect to any unused amounts carried over to a succeeding calendar year);
(6) the payment or distribution to dissenting
equityholders (other than Affiliates of the Company or any of its Subsidiaries)
pursuant to applicable law, pursuant to or in connection with a consolidation,
merger or transfer of all, or substantially all, of the assets or property of
the Company that is not prohibited by this Indenture;
(7) the declaration or payment of dividends on the
common stock of the Company following any Public Equity Offering of such common
stock, or of the common stock of Holdings, of up to, in each case, 6% per annum
of the net cash proceeds received by the Company, or contributed by Holdings to
the equity capital of the Company, in all such Public Equity Offerings;
provided that, at the time of the declaration of any such dividends and
immediately after giving effect to such declaration, no Default or Event of
Default shall have occurred and be continuing;
(8) the repurchase of any Subordinated Indebtedness
pursuant to an offer to purchase in the event of a change of control in
accordance with provisions similar to Section 4.14; provided that (i) at the
time any such Subordinated Indebtedness is accepted for payment pursuant to the
offer to purchase and immediately after giving effect to such repurchase, no
Default or Event of Default shall have occurred and be continuing and (ii)
prior to or simultaneously with the making of the offer to purchase such
Subordinated Indebtedness, the Company has made the Change of Control Offer as
provided in Section 4.14 with respect to the Notes and has repurchased all
Notes validly tendered for payment in connection with such Change of Control
Offer;
(9) loans and advances to employees, officers and
directors of the Company and its Restricted Subsidiaries the proceeds of which
are used to purchase Equity Interests of the Company or its Restricted
Subsidiaries and other loans and advances to employees and officers in the
ordinary course of business for bona fide business purposes, provided that the
aggregate principal amount of all such loans and advances made pursuant to this
clause (9) does not exceed $2.0 million at any one time outstanding; and
(10) the declaration or payment of any dividends or
distributions or the making of loans or other payments to Holdings to enable
Holdings to pay reasonable and customary fees to directors of Holdings.
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 its
Restricted Subsidiaries, as the case may be, pursuant to the Restricted
Payment. The fair market value of any non-cash assets or securities that are
required to be valued by this Section 4.06 in excess of $2.5 million shall be
determined by a majority of the members of the Board of Directors whose
resolution with respect thereto shall be delivered to the Trustee. The Board of
Directors' determination must be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $10.0 million. Not later than 10 days after the date
of making any Restricted Payment (but not including any Restricted Payment
described in the preceding paragraph) of more than $2.5 million, the Company
shall deliver to the Trustee an Officer's Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.06 were computed, together with a copy,
of any fairness opinion or appraisal required by this Indenture.
In making the computations required by this Section 4.06, (i)
the Company may use audited financial statements for the portions of the
relevant period for which audited financial statements are available on the
date of determination and unaudited financial statements and other current
financial data based on the books and
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records of the Company for the remaining portion of such period and (ii) the
Company will be permitted to rely in good faith on the financial statements and
other financial data derived from its books and records that are available on
the date of determination. If the Company makes a Restricted Payment that, at
the time of the making of such Restricted Payment, would in the good faith
determination of the Company be permitted under the requirements of this
Indenture, such Restricted Payment will be deemed to have been made in
compliance with this Indenture notwithstanding any subsequent adjustments made
in good faith to the Company's financial statements which adjustments affect any
of the financial data used to make the calculations with respect to such
Restricted Payment.
SECTION 4.07 Compliance with Laws.
The Company shall comply, and shall cause each of its
Restricted Subsidiaries to comply, with all applicable statutes, rules,
regulations, orders and restrictions of the United States of America, all
states and municipalities thereof, and of any governmental department,
commission, board, regulatory authority, bureau, agency and instrumentality of
the foregoing, in respect of the conduct of their respective businesses and the
ownership of their respective properties, except for such noncompliances as are
not in the aggregate reasonably likely to have a material adverse effect on the
financial condition or results of operations of the Company and its Restricted
Subsidiaries, taken as a whole.
SECTION 4.08 Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all material taxes,
assessments and governmental charges levied or imposed upon the Company or any
Restricted Subsidiary or upon the income, profits or property of the Company or
any Restricted Subsidiary and (2) all lawful claims for labor, materials and
supplies which, in each case, if unpaid, are reasonably likely to become a
material liability, or material Lien upon the property, of the Company or any
Restricted Subsidiary; provided that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings and for which appropriate provision has been
made.
SECTION 4.09 Notice of Defaults.
Upon becoming aware of any Default or Event of Default, the
Company shall and in any event within 15 calendar days deliver an Officers'
Certificate to the Trustee specifying the Default or Event of Default and what
action the Company is proposing to take with respect thereto.
SECTION 4.10 Maintenance of Properties and Insurance.
(a) Subject to Article Five, the Company shall cause all
material properties owned by or leased to it or any Restricted Subsidiary and
necessary in the conduct of its business or the business of any Restricted
Subsidiary to be maintained and kept in normal condition, repair and working
order (other than ordinary wear and tear); provided that nothing in this
Section 4.10 shall prevent the Company or any Restricted Subsidiary from
discontinuing the use, operation or maintenance of any of such properties, or
disposing of any of them, if such discontinuance or disposal is, in the
judgment of the Board of Directors of the Company or the Restricted Subsidiary
concerned, or of an Officer (or other agent employed by the Company or of any
Restricted Subsidiary) of the Company or such Restricted Subsidiary having
managerial responsibility for any such property, desirable in the conduct of
the business of the Company or any Restricted Subsidiary.
(b) The Company shall maintain, and shall cause the
Restricted Subsidiaries to maintain, insurance with responsible carriers
against such risks and in such amounts, and with such deductibles, retentions,
self-insured amounts and co-insurance provisions as, in the judgment of the
Company, may be necessary.
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SECTION 4.11 Compliance Certificate.
The Company shall deliver to the Trustee within 90 days after
the close of each fiscal year a certificate signed by the principal executive
officer, principal financial officer or principal accounting officer of the
Company stating that a review of the activities of the Company has been made
under the supervision of the signing officers with a view to determining
whether a Default or Event of Default has occurred and whether or not the
signers have actual knowledge of any Default or Event of Default by the Company
that occurred during such fiscal year and is continuing. If they do know of
such a Default or Event of Default, the certificate shall describe all such
Defaults or Events of Default, their status and the action the Company is
taking or proposes to take with respect thereto. The first certificate to be
delivered by the Company pursuant to this Section 4.11 shall be for the fiscal
year ending December 31, 1999.
SECTION 4.12 Reports to Holders.
So long as any Securities are outstanding, at all times from
and after the earlier of (i) the date of the commencement of an Exchange Offer
or the effectiveness of the Shelf Registration Statement (the "Registration
Date") and (ii) the date 180 days after the Issue Date, in either case, whether
or not the Company is then required to file reports with the Commission, the
Company will file with the Commission (to the extent accepted by the
Commission):
(1) all quarterly and annual financial information that would
be required to be contained in a filing with the SEC on Forms 10-Q and
10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information
only, a report on the annual financial statements by the Company's
certified independent accountants; and
(2) all current reports that would be required to be filed
with the SEC on Form 8-K if the Company were required to file such
reports.
If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, or if any of the Company's Subsidiaries are not
Guarantors, then the quarterly and annual financial information required by the
preceding paragraph shall include a reasonably detailed presentation, either on
the face of the financial statements or in the footnotes thereto, of the
financial condition and results of operations of the Company and its Restricted
Subsidiaries that are Guarantors separate from the financial condition and
results of operations of the Subsidiaries that are not Guarantors and from the
Unrestricted Subsidiaries of the Company.
In addition, whether or not required by the SEC, the Company
will file a copy of all of the information and reports referred to in clauses
(1) and (2) of this Section 4.12 with the SEC for public availability within
the time periods specified in the SEC rules and regulations (unless the SEC
will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. For all reporting
periods commencing after August 12, 1999, the Issuer shall include in each Form
10-Q and Form 10-K a presentation, which need not be audited, of sales,
operating income, interest expense, depreciation and amortization, and capital
expenditures for such operating period and the twelve months ended on the last
day of such reporting period, on a pro forma basis consistent with Article 11
of Regulation S-X of the Exchange Act.
The Company will also be required (a) to supply the Trustee
and each Holder of Securities, or supply to the Trustee for forwarding to each
such Holder, without cost to such Holder, copies of such reports and other
documents within 20 days after the date on which the Company files such reports
and documents with the Commission or the date on which the Company would be
required to file such reports and documents if the Company were so required and
(b) if filing such reports and documents with the Commission is not accepted by
the Commission or is prohibited under the Exchange Act, to supply at the
Company's cost copies of such reports and documents to any prospective Holder
of Securities promptly upon written request. In addition, at all times prior to
the earlier of the Registration Date and the date 180 days after the Issue
Date, the Company will, at its cost, deliver to each Holder of the Securities
quarterly and annual reports substantially equivalent to those that would be
required
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by the Exchange Act. Furthermore, at all times prior to the Registration Date,
the Company will supply at the Company's cost copies of such reports and
documents to any prospective Holder of Securities promptly upon written request
and as required by Rule 144A(d)(4) under the Securities Act.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein
or determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.13 Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Guarantors covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law or any usury law or other law, which would prohibit
or forgive the Company or such Guarantor from paying all or any portion of the
principal of and/or interest, if any, on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect
the covenants or the performance of this Indenture; and (to the extent that it
may lawfully do so) the Company and each Guarantor hereby expressly waive all
benefit or advantage of any such law, and covenants that it 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.
SECTION 4.14 Change of Control.
(a) Upon the occurrence of a Change of Control, each
Holder will have the right to require that the Company purchase all or a
portion (equal to $1,000 or an integral multiple thereof) of such Holder's
Securities pursuant to the offer described below (the "Change of Control
Offer"), at a purchase price in cash equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest to the date of purchase.
(b) Within 30 days following the date upon which the
Change of Control occurred, the Company must send, by first class mail, a
notice to each Holder, with a copy to the Trustee, which notice shall govern
the terms of the Change of Control Offer. Such notice shall state:
(1) that the Change of Control Offer is being made pursuant
to this Section 4.14 and that all Securities tendered and not
withdrawn will be accepted for payment;
(2) the purchase price (including the amount of accrued
interest) and the purchase date, which must be no earlier than 30 days
nor later than 60 days from the date such notice is mailed, other than
as may be required by law (the "Change of Control Payment Date");
(3) that any Security not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in making payment
therefor, any Security accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(5) that Holders electing to have a Security purchased
pursuant to a Change of Control Offer will be required to surrender
the Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying
Agent at the address specified in the notice prior to the close of
business on the third Business Day prior to the Change of Control
Payment Date;
(6) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than five Business Days prior
to the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of the Securities the Holder
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delivered for purchase and a statement that such Holder is withdrawing
his election to have such Securities purchased;
(7) that Holders whose Securities are purchased only in part
will be issued new Securities in a principal amount equal to the
unpurchased portion of the Securities surrendered; provided that each
Security purchased and each new Security issued shall be in an
original principal amount of $1,000 or integral multiples thereof; and
(8) the circumstances and relevant facts regarding such Change
of Control.
On or before 10:00 a.m., New York time, on the Change of
Control Payment Date, the Company shall (i) accept for payment Securities or
portions thereof validly tendered pursuant to the Change of Control Offer, (ii)
deposit with the Paying Agent an amount equal to the Change of Control Payment
in respect of all Securities or portions thereof so tendered and (iii) deliver
or cause to be delivered to the Trustee Securities so accepted together with an
Officers' Certificate stating the aggregate principal amount of Securities or
portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to the Holders tendering the Change of Control Payment for such
Securities, and the Trustee shall promptly authenticate and mail (or cause to
be transferred by book entry) to such Holders new Securities equal in principal
amount to any unpurchased portion of the Securities surrendered, if any;
provided that each such new Security will be in a principal amount of $1,000 or
an integral multiple thereof. Any Securities not so accepted shall be promptly
mailed by the Company to the Holder thereof. For purposes of this Section 4.14,
the Trustee shall act as the Paying Agent.
The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Securities pursuant to a Change of Control Offer.
The provisions described above that require the Company to
make a Change of Control Offer following a Change of Control will be applicable
regardless of whether or not any other provisions of this Indenture are
applicable.
The Company 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 this Section 4.14.
SECTION 4.15 Prohibition on Incurrence of Certain Types of Indebtedness.
The Company will not incur, create, issue, assume or
guarantee any Indebtedness that is contractually subordinate in right of
payment to any other Indebtedness of the Company other than Indebtedness
permitted by clause (1) of the definition of "Permitted Indebtedness" unless
such Indebtedness is also contractually subordinated in right of payment to the
Notes on substantially similar terms. No Guarantor will incur, create, issue,
assume or guarantee any Indebtedness that is contractually subordinate in right
of payment to any other Indebtedness of such Guarantor other than Indebtedness
permitted by clause (1) of the definition of "Permitted Indebtedness" unless
such Indebtedness is also contractually subordinated in right of payment to
such Guarantor's Subsidiary Guarantee on substantially similar terms.
SECTION 4.16 Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries.
(A) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or permit to exist
or become effective any consensual encumbrance or restriction on the ability of
such Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Equity
Interests to the Company or any of the Company's Restricted
Subsidiaries, or pay any Indebtedness owed to the Company or
any of the Company's Restricted Subsidiaries;
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(2) make loans or advances to the Company or any of the Company's
Restricted Subsidiaries; or
(3) transfer any of its properties or assets to the Company or
any of the Company's Restricted Subsidiaries.
(B) However, the preceding restrictions will not apply
to encumbrances or restrictions existing under or by reason of:
(1) agreements, including, without limitation, those with respect
to Existing Indebtedness and the Credit Facilities in each
case, as in effect on the Issue Date and any amendments,
modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive, in any
material respect, taken as a whole, with respect to such
dividend and other payment restrictions than those contained
in such agreements as in effect on the Issue Date;
(2) this Indenture, the Subsidiary Guarantees and the Notes;
(3) applicable law;
(4) any instrument governing Acquired Debt or Capital Stock of a
Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition
(except to the extent such Acquired Debt was incurred in
connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so
acquired;
(5) customary non-assignment provisions restricting subletting,
assignment or transfer in licenses, leases or other
agreements entered into in the ordinary course of business;
(6) purchase money or capital lease obligations for property or
assets acquired in the ordinary course of business that
impose restrictions on the property or assets so acquired of
the nature described in Section 4.16(A)(3);
(7) any agreement for the sale or other disposition of all or
substantially all of the Equity Interests of, or property and
assets of, any Restricted Subsidiary that restricts
dividends, distributions, loans, advances or transfers by
such Restricted Subsidiary pending its sale or other
disposition;
(8) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive,
in any material respect, taken as a whole, than those
contained in the agreements governing the Indebtedness being
refinanced;
(9) Liens not prohibited by this Indenture that limit the right
of the Company or any of its Restricted Subsidiaries to
transfer property or assets subject to such Lien;
(10) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other
similar agreements entered into in the ordinary course of
business;
(11) restrictions on cash or other deposits imposed by customers
under contracts entered into in the ordinary course of
business;
(12) provisions in agreements or instruments which prohibit the
payment of dividends or the making of other distributions
with respect to any Capital Stock of a Person other than on a
pro rata basis;
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(13) restrictions on the ability of any Restricted Subsidiary to
make dividends or other distributions resulting from the
operation of reasonable and customary covenants including,
without limitation, negative pledge covenants, contained in
documentation governing Indebtedness incurred by such
Restricted Subsidiary in compliance with this Indenture; and
(14) provisions contained in any licenses, permits or leases with
airports or airport regulatory authorities entered into in
the ordinary course of business that restrict the ability of
any Restricted Subsidiary of the Company to make loans or
advances or to transfer any of its properties or assets to
Persons other than the Company or any other Person which
owns, directly or indirectly, any Equity Interests in such
Restricted Subsidiary.
SECTION 4.17 Limitation on Liens.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien of any kind securing any Indebtedness on any asset now
owned or hereafter acquired, unless the Notes or such Guarantee, as the case
may be, are directly secured equally and ratably with (or prior to, in the case
of Subordinated Indebtedness) the Indebtedness secured by such Lien; provided
that the foregoing restriction shall not apply to any Permitted Lien.
In the event that the Lien, the existence of which gives rise
to a Lien securing the Note or a Subsidiary Guarantee pursuant to the
provisions of this covenant, ceases to exist, the Lien securing the Notes or
such Subsidiary Guarantee required by this covenant shall automatically be
released and the Trustee shall execute appropriate documentation.
SECTION 4.18 Conduct of Business.
The Company will not, and will not permit any Restricted
Subsidiaries to, engage in any businesses which are not the same, similar or
reasonably related or complementary to the Permitted Businesses.
SECTION 4.19 Corporate Existence.
Except as otherwise permitted by Article Five, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate, partnership or
other existence of each of its Restricted Subsidiaries in accordance with the
respective organizational documents of each Restricted Subsidiary and the
rights (charter and statutory) of the Company and each of its Restricted
Subsidiaries; provided that the Company shall not be required to preserve any
such right or corporate existence of any Restricted Subsidiary if the Board of
Directors of the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the Permitted Businesses of the Company and
its Restricted Subsidiaries, taken as a whole, and that the loss thereof is
not, and will not be, adverse in any material respect to the Holders.
SECTION 4.20 Limitation on Sale and Leaseback Transactions.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, enter into any sale and leaseback transaction;
provided that the Company or any Restricted Subsidiary of the Company may enter
into a sale and leaseback transaction if:
(1) the Company or that Restricted Subsidiary, as applicable,
could have incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback
transaction under the Fixed Charge Coverage Ratio test in
Section 4.04;
(2) the gross proceeds consisting of cash and Cash Equivalents of
that sale and leaseback transaction are at least equal to the
fair market value (in the case of gross cash proceeds in
excess of $1.0 million as determined in good faith by the
Board of Directors and set forth in an Officers'
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Certificate delivered to the Trustee), of the property that is
the subject of such sale and leaseback transaction; and
(3) the transfer of assets in that sale and leaseback transaction
is permitted by, and the Company applies the proceeds of such
transaction in compliance with, Section 4.05.
The restrictions contained in this Section 4.20 shall not
restrict or limit in any way one or more sale and leaseback transactions that
(i) singly or in the aggregate relate to assets having in the aggregate (in the
case of related transactions) a fair market value not exceeding $1.0 million;
(ii) are solely between or among any of the Company and any Guarantors; or
(iii) are solely between or among any Restricted Subsidiary of the Company that
is not a Guarantor and other Restricted Subsidiaries that are not Guarantors.
SECTION 4.21 [Intentionally Omitted].
SECTION 4.22 Payments for Consent.
The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder of Securities 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 and is paid to all Holders that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
SECTION 4.23 Future Subsidiary Guarantors.
If the Company or any of its Restricted Subsidiaries acquires
or creates another Domestic Subsidiary after the Issue Date or if any Foreign
Subsidiary becomes a Domestic Subsidiary, then (a) that newly acquired or
created Restricted Subsidiary must become a Guarantor and execute a
Supplemental Indenture, substantially in the form of Exhibit F attached hereto,
and (b) the Company shall deliver (i) an Officer's Certificate substantially in
the form of Exhibit G attached hereto and (ii) an Opinion of Counsel to the
Trustee, each within 10 Business Days of the date on which such Subsidiary was
acquired or created; provided that this covenant shall not apply to any
Subsidiary that has been properly designated as an Unrestricted Subsidiary;
provided further the Company may, at its option, elect to have any such newly
acquired or created Restricted Subsidiary not become a Guarantor (a
"Non-Guarantor Subsidiary"); provided that, and for so long as, (1) none of the
total assets, stockholders' equity or Consolidated Cash Flow of such Restricted
Subsidiary exceeds $500,000 and (2) none of the total assets, stockholders'
equity or Consolidated Cash Flow of such Restricted Subsidiary together with
all other Non-Guarantor Subsidiaries, considered as a single Person, exceeds
$1.0 million in the aggregate.
ARTICLE FIVE
MERGERS, CONSOLIDATIONS AND ASSET SALES; SUCCESSORS
SECTION 5.01 Merger, Consolidation and Sale of Assets.
(A) The Company may not, directly or indirectly: (1)
consolidate or merge with or into another Person (whether or not the Company is
the surviving Person); or (2) sell, assign, transfer, convey or otherwise
dispose of all or substantially all of its properties or assets (determined on
a consolidated basis for the Company and its Restricted Subsidiaries), in one
or more related transactions, to another Person; unless:
(i) either: (a) the Company is the surviving Person; or (b) the
Person formed by or surviving any such consolidation or
merger (if other than the Company) or to which such sale,
assignment, transfer, conveyance or other disposition shall
have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the
District of Columbia;
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(ii) the Person formed by or surviving any such consolidation or
merger (if other than the Company) or the Person to which
such sale, assignment, transfer, conveyance or other
disposition shall have been made assumes all the obligations
of the Company under the Notes, this Indenture and the
Registration Rights Agreement pursuant to a supplemental
indenture reasonably satisfactory to the Trustee;
(iii) immediately after giving effect to such transaction no Default
or Event of Default exists; and
(iv) except in the case of a merger of the Company with a Wholly
Owned Restricted Subsidiary, the Company or the Person formed
by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment,
transfer, conveyance or other disposition shall have been
made:
(a) will have, on a pro forma basis after giving effect
to the transaction, Consolidated Net Worth equal to
or greater than the Consolidated Net Worth of the
Company immediately preceding the transaction; and
(b) will, on the date of such transaction after giving
pro forma effect thereto, and to any related
financing transactions as if the same had occurred
at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in Section 4.04.
In addition, the Company may not, directly or indirectly,
lease all or substantially all of its properties or assets, in one or more
related transactions, to any other Person. This Section 5.01 will not apply to
a sale, assignment, transfer, conveyance or other disposition of assets between
or among the Company and any of its Wholly Owned Subsidiaries.
Notwithstanding the foregoing clauses (ii), (iii) and (iv),
(a) any Restricted Subsidiary may consolidate with, merge into or transfer all
or part of its property and assets to the Company or any other Restricted
Subsidiary and (b) the Company may merge with an Affiliate incorporated solely
for the purpose of reincorporating the Company in another jurisdiction.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Restricted Subsidiaries of the Company, the Capital Stock of which
constitutes all or substantially all of the properties and assets of the
Company, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.
(B) Each Guarantor (other than any Guarantor whose
Guarantee is to be released in accordance with the terms of the Guarantee and
this Indenture in connection with any transaction complying with the provisions
of Section 4.05) will not, and the Company will not cause or permit any
Guarantor to, sell or otherwise dispose of all or substantially all of its
assets, or consolidate with or merge with or into any Person (whether or not
such Guarantor is the surviving Person, and whether or not such Person is
affiliated with such Guarantor) other than the Company or any other Guarantor
unless: (1) immediately after giving effect to that transaction, no Default or
Event of Default exists; and (2) either: (a) the Person acquiring the property
in any such sale or disposition or the Person formed by or surviving any such
consolidation or merger assumes all the Obligations of that Guarantor under its
Guarantee pursuant to a supplemental indenture reasonably satisfactory to the
Trustee; or (b) the Net Proceeds of such sale or other disposition are applied
in accordance with Section 4.05. Notwithstanding the immediately preceding
sentence, (a) any Guarantor may consolidate with, merge into or transfer all or
part of its property and assets to the Company or any other Guarantor and (b)
any Guarantor formed solely for the purpose of merging with and into any other
Person, may merge with or into such Person.
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SECTION 5.02 Successor Substituted.
Upon any consolidation, combination or merger or any transfer
of all or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing corporation, the
successor Person formed by such consolidation or into which the Company is
merged or to which such conveyance, lease or transfer is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture and the Securities with the same effect as if such
surviving entity had been named as such.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01 Events of Default.
Each of the following is an event of default (an "Event of
Default"):
(i) default for 30 days in the payment when due of
interest or liquidated damages (as required by the Registration Rights
Agreement) on the Securities;
(ii) default in payment when due of the principal of or
premium, if any, on the Securities;
(iii) (a) failure by the Company or any Guarantor to
comply with the provisions described under Article Five or (b) failure of the
Company to make or consummate a Change of Control Offer pursuant to Section
4.14 or (c) failure of the Company to make or consummate an Asset Sale Offer
pursuant to Section 4.05;
(iv) failure by the Company or any of its Restricted
Subsidiaries for 60 days after receipt of written notice by the Trustee to the
Company specifying the default to comply with any of the other agreements in
this Indenture or the Securities;
(v) default under the terms of any Indebtedness for
money borrowed by the Company or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries) whether such Indebtedness or guarantee now exists, or is created
after the Issue Date, if that default:
(a) is caused by a failure to pay principal of such
Indebtedness when due at final stated maturity after the
expiration of the grace period provided in such Indebtedness
on the date of such default (a "Payment Default"); or
(b) results in the acceleration of such Indebtedness
prior to its final maturity,
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been
a Payment Default or the maturity of which has been so accelerated, aggregates
$5.0 million or more;
(vi) failure by the Company or any Significant Subsidiary
or group of Restricted Subsidiaries that, taken together (as of the latest
audited consolidated financial statements for the Company and its Restricted
Subsidiaries), would constitute a Significant Subsidiary, to pay one or more
final judgments which exceed in the aggregate $5.0 million (net of any amounts
for which a reputable and creditworthy insurance company has assumed the
defense of or acknowledged liability for in writing), which judgments are not
paid, bonded, discharged or stayed for a period of 60 consecutive days;
(vii) except as permitted by the provisions contained
herein, any Subsidiary Guarantee shall be held in any judicial proceeding by a
court of competent jurisdiction to be unenforceable or invalid or shall cease
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for any reason to be in full force and effect or any Guarantor shall deny or
disaffirm in writing that it has any further liability under its Subsidiary
Guarantee;
(viii) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Company or any Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary, a bankrupt
or insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company or any
Significant Subsidiary or group of Restricted Subsidiaries that, taken together
(as of the latest audited consolidated financial statements for the Company and
its Restricted Subsidiaries), would constitute a Significant Subsidiary, under
the U.S. Federal Bankruptcy Code or any other applicable federal, state or
foreign law, or appointing a receiver, liquidator, assignee, trustee or
sequestrator (or other similar official) of the Company or any Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary, or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and the continuance of any such decree or order unstayed and in
effect for a period of 60 consecutive days; and
(ix) the institution by the Company or any Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary, of
proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to
the institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization or
relief under the U.S. Federal Bankruptcy Code or any other applicable federal,
state or foreign law, or the consent by it to the filing of any such petition
or to the appointment of a receiver, liquidator, assignee, trustee or
sequestrator (or other similar official) of the Company or any Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary, or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of its inability to pay
its debts generally as they become due.
SECTION 6.02 Acceleration.
In the case of an Event of Default under Section 6.01(viii)
or (ix), all outstanding Securities will become due and payable immediately
without further action or notice. If any other Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Securities may declare all the Securities to be due and
payable by notice in writing to the Company and the Trustee specifying the
respective Event of Default and that it is a notice of acceleration (the
"Acceleration Notice") and the same shall become immediately due and payable.
In the event of an Acceleration Notice because an Event of
Default has occurred and is continuing as a result of the acceleration of any
Indebtedness described in clause (v) of Section 6.01, the Acceleration Notice
shall be automatically annulled and rescinded if the holders of any
Indebtedness described in such clause (v) have rescinded the declaration of
acceleration in respect of such Indebtedness within 30 days of the date of such
declaration and if (i) the annulment of the acceleration of the Securities
would not conflict with any judgment or decree binding on the Company or its
property and issued by a court of competent jurisdiction, and (ii) all existing
Events of Default, except nonpayment of principal or interest on the Securities
that became due solely because of the acceleration of the Securities, have been
cured or waived. The Trustee may withhold from the Holders notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
At any time after the date of the Acceleration Notice the
Holders of a majority in aggregate principal amount of the Securities then
outstanding may rescind and cancel such declaration and its consequences if (i)
the annulment of the acceleration of the Securities would not conflict with any
judgment or decree binding on the Company or its property and issued by a court
of competent jurisdiction, and (ii) all existing Events of Default,
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except nonpayment of principal or interest on the Securities that became due
solely because of the acceleration of the Securities, have been cured or waived.
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity 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 Holder in exercising any
right or remedy maturing 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 Default.
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 Default or Event of Default
and its consequences under this Indenture except a continuing Default or Event
of Default in the payment of interest on, or the principal of, the Securities.
SECTION 6.05 Control by Majority.
The Holders may not enforce this Indenture or the Securities
except as provided herein and under the Trust Indenture Act. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Securities may direct the Trustee in its exercise of any trust or power.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture or that the Trustee determines may be unduly prejudicial to
the rights of another Holder, or that may involve the Trustee in personal
liability; provided that the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction. In the event the
Trustee takes any action or follows any direction pursuant to this Indenture,
the Trustee shall be entitled to indemnification satisfactory to it in its sole
discretion against any loss or expense caused by taking such action or
following such direction. This Section 6.05 shall be in lieu of ss.
316(a)(1)(A) of the TIA, and such ss. 316(a)(1)(A) of the TIA is hereby
expressly excluded from this Indenture and the Securities, as permitted by the
TIA.
SECTION 6.06 Limitation on Suits.
A Holder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(i) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal
amount of the then outstanding Securities make a written request to
the Trustee to pursue a remedy;
(iii) such Holder or Holders offer and, if requested, provide
to the Trustee indemnity satisfactory to the Trustee against any loss,
liability, claim, damage or expense;
(iv) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity with respect to such request; and
(v) during such 60-day period the Holders of a majority in
principal amount of the outstanding Securities do not give the Trustee
a direction which, in the opinion of the Trustee, is inconsistent with
the request.
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A Holder may not use this Indenture to prejudice the rights
of another Holder or to obtain a preference or priority over such other Holder.
Holders may not enforce this Indenture or the Securities except as provided in
this Indenture.
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 premium, if any or
interest on a Security, on or after the respective due dates expressed in the
Security, 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
the Holder.
SECTION 6.08 Collection Suit by Trustee.
If an Event of Default in payment of principal or interest
specified in Section 6.01(i) or (ii) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Securities for the whole amount of
principal and accrued interest remaining unpaid, together with interest overdue
on principal and to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate per
annum borne by the Securities and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.09 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company or any
other obligor upon the Securities, their respective creditors or their
respective property and shall be entitled and empowered to collect and receive
any moneys or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agent and counsel, and any other amounts due the Trustee under Section
7.07. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.10 Priorities.
If the Trustee collects any money or property pursuant to
this Article Six, 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 for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
Third: to the Company.
The Trustee, upon prior written notice to the Company, may
fix a record date and payment date for any payment to the Holders pursuant to
this Section 6.10.
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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 and expenses, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 shall not apply to a suit by the
Trustee, a suit by a Holder or group of Holders of more than 10% in aggregate
principal amount of the then-outstanding Securities, or to any suit instituted
by any Holder for the enforcement of the payment of the principal or interest
on any Securities on or after the respective due dates expressed in the
Security.
ARTICLE SEVEN
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 its exercise, as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture
and no others, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
(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; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts
stated therein).
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(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) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to paragraphs (a), (b) and (c) of this Section.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability. The Trustee shall be under no obligation to exercise any of its
rights and powers under this Indenture at the request, order or direction of
any of the Holders unless such Holders shall have
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offered to the Trustee reasonable security or indemnity satisfactory to it
against any loss, liability or expense that might be incurred by the Trustee in
compliance with such request, order or direction.
(f) The Trustee shall not be liable for interest on any
money received by it except as set forth herein or as the Trustee may otherwise
agree in writing with the Company. Money held in trust by the Trustee need not
be segregated from other funds except to the extent required by law.
SECTION 7.02 Certain Rights of Trustee.
(a) The Trustee may conclusively rely upon any document,
certificate, opinion, report, notice, request, direction, order, note or other
evidence of indebtedness, whether in its original or facsimile form, 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 or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel of its selection and the advice or opinion of
such counsel with respect to legal matters relating in any way to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.
(c) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be authorized or
within the rights or powers conferred upon it by this Indenture; provided that
the Trustee's conduct does not constitute willful misconduct, negligence or bad
faith.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
(f) Except with respect to Section 4.01, the Trustee
shall have no duty to inquire as to the performance of the Company's covenants
in Article Four hereof. In addition, the Trustee shall not be deemed to have
knowledge of any Default or Event of Default except (i) any Event of Default
occurring pursuant to Sections 6.01(i), 6.01(ii) and 4.01 or (ii) any Default
or Event of Default of which a Responsible Officer of the Trustee shall have
received written notification at the Corporate Trust Office of the Trustee and
such notice references the Securities and this Indenture or obtained actual
knowledge.
(g) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction.
(h) 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, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, personally
or by agent or attorney at the sole cost of the Company and shall incur no
liability or additional liability of any kind by reason of such inquiry or
investigation.
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(i) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
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 any Affiliate of the Company with the same rights it would have if
it were not Trustee. However, the Trustee must comply with Sections 7.10 and
7.11 of this Indenture. In addition, if the Trustee has any conflicting
interest within the meaning of Section 310 of the TIA it must eliminate such
conflict within 90 days, or resign. Any Agent may do the same with like rights
and duties.
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 or any money paid to the Company or upon the Company's
direction under any provision of this Indenture, it shall not be responsible
for the use or application of any money received by any Paying Agent other than
the Trustee, and it shall not be responsible for any statement or recital
herein or any statement in the Securities or any other document in connection
with the sale of the Securities or pursuant to this Indenture other than its
certificate of authentication.
SECTION 7.05 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and
if it is actually known to a Responsible Officer of the Trustee, the Trustee
shall mail to each Holder of Securities a notice of the Default or Event of
Default within 90 days after it is known to a Responsible Officer, or written
notice of it is received by the Trustee. Except in the case of a Default or
Event of Default in payment of principal of, premium, if any, or interest on
any Security, the Trustee may withhold the notice if and so long as a committee
of its Responsible Officers in good faith determines that withholding the
notice is in the interests of the Holders.
SECTION 7.06 Reports by Trustee to the Holders.
After each June 15, beginning with the June 15 following the
date hereof and for so long as the Securities remain outstanding, and in any
event prior to August 15 in each year, the Trustee shall mail to the Holders a
brief report dated as of such reporting date that complies with TIA Section
313(a) (but if no event described in TIA Section 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted). The
Trustee also shall comply with TIA Section 313(b)(2). The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the
Holders shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Securities are listed in accordance with TIA Section
313(d). The Company shall promptly notify the Trustee whenever the Securities
become listed on any stock exchange or delisted therefrom.
SECTION 7.07 Compensation and Indemnity.
The Company shall pay to the Trustee such reasonable
compensation, as the Company and the Trustee shall from time to time agree in
writing, for its acceptance of this Indenture and its performance of services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. Except as otherwise provided
herein, in addition to compensating the Trustee for its services, the Company
shall reimburse the Trustee promptly upon request for all reasonable
out-of-pocket expenses incurred or made by it in accordance with any provision
of this Indenture (except any such expenses as may be attributable to the
Trustee's
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negligence or bad faith). Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee and any
predecessor Trustee against any and all losses, liabilities, claims, damages or
expenses incurred by it in connection with the acceptance or administration of
its duties under this Indenture, including the reasonable costs and expenses of
enforcing this Indenture against the Company (including this Section 7.07) and
defending itself against any claim (whether asserted by the Company or any
Holder or any other person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Company within a
reasonable time of a claim of which a Responsible Officer has received written
notice shall not relieve the Company of its obligations hereunder, except to
the extent such failure shall materially prejudice the Company. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel of its selection and the Company shall pay
the reasonable fees and expenses of such counsel. The Company need not
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee's own negligence or bad faith. In
addition, the Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
The payment obligations of the Company under this Section
7.07 shall survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay principal
and interest on particular Securities. For purposes of this section, such Lien
shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 6.01(iv) hereof, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of
administration under the Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
SECTION 7.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders constituting a majority in principal amount of the then outstanding
Securities may remove the Trustee by so notifying the Trustee and the Company
in writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent
or an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a receiver or other public officer takes charge of
the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly appoint
a successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in aggregate
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principal amount of the then outstanding Securities may, at the expense of the
Company, appoint a successor Trustee to replace the successor Trustee appointed
by the Company.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders owning at least 10% in aggregate principal amount of
the then outstanding Securities may, at the expense of the Company, petition
any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a
Security who has been a Holder of a Security for at least six months, fails to
comply with Section 7.10, such Holder of a Security may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee (including its agents and counsel) hereunder have been
paid and subject to the Lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Company's obligations under Section 7.07 hereof shall continue for the benefit
of the retiring Trustee.
SECTION 7.09 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of 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,
and such successor Trustee may adopt the certificate of authentication of any
predecessor with respect to securities that have been authenticated by the
predecessor but not delivered, and such certificate shall have full force for
the purposes of this Indenture.
SECTION 7.10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements and
comply with Sections 310(a) and (b) of the TIA. Each successor Trustee shall be
a corporation organized and doing business under the laws of the United States
of America, any state thereof or the District of Columbia that is authorized
under such laws to exercise corporate trustee power, that is subject to
supervision or examination by Federal or state authorities and that has a
combined capital and surplus of at least $50.0 million as set forth in its most
recent published annual report of condition, subject to supervision or
examination by Federal or state authority; provided that if Section 310(a) of
the TIA or the rules and regulations of the Commission under the TIA at any
time permit a corporation organized and doing business under the laws of any
other jurisdiction to serve as trustee of an indenture qualified under the TIA,
this Section 7.10 shall be automatically deemed amended to permit a corporation
organized and doing business under the laws of any such jurisdiction to serve
as Trustee hereunder. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. Neither the Company nor any Person directly or
indirectly controlling, controlled by or under common control with the Company
may serve as Trustee. If at any time the Trustee with respect to any series of
Securities shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
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 and comply with TIA Section 311 to
the extent required thereby.
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ARTICLE EIGHT
[THIS ARTICLE HAS BEEN INTENTIONALLY OMITTED]
ARTICLE NINE
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 9.01 Termination of the Company's Obligations.
(A) The Company may terminate its, and its Guarantors',
obligations under the Securities and this Indenture, except those obligations
referred to in Section 9.01(B), if all Securities previously authenticated and
delivered (other than destroyed, lost or stolen Securities which have been
replaced or paid or Securities for whose payment United States Legal Tender or
non-callable United States Government Obligations, or a combination thereof,
has theretofore been deposited with the Trustee or the Paying Agent in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company, as provided in Section 9.05) have been delivered to the Trustee for
cancellation and the Company has paid all sums payable by it hereunder, or if:
(a) either (i) pursuant to Article Three, the Company shall
have given notice to the Trustee and mailed a notice of redemption to
each Holder of the redemption of all of the Securities under
arrangements satisfactory to the Trustee for the giving of such notice
or (ii) all Securities have otherwise become due and payable
hereunder;
(b) the Company shall have irrevocably deposited or caused to
be deposited with the Trustee or a trustee satisfactory to the
Trustee, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, as trust funds in trust solely
for the benefit of the Holders for that purpose, United States Legal
Tender or non-callable United States Government Obligations, or a
combination thereof, in such amount as is sufficient without
consideration of reinvestment of such interest, to pay and discharge
the principal and interest on the outstanding Securities to maturity
or redemption, as well as the Trustee's fees and expenses; provided
that the Trustee shall have been irrevocably instructed to apply such
United States Legal Tender to the payment of said principal and
interest with respect to the Securities; provided further that no
deposits made pursuant to this Section 9.01(b) shall cause the Trustee
to have a conflicting interest as defined in and for the purposes of
the TIA; provided further that, as confirmed by an Opinion of Counsel,
no such deposit shall result in the Company, the Trustee or the trust
becoming or being deemed to be an "investment company" under the
Investment Company Act of 1940;
(c) no Default or Event of Default with respect to this
Indenture or the Securities shall have occurred and be continuing on
the date of such deposit or shall occur as a result of such deposit
and such deposit will not result in a breach or violation of, or
constitute a default under, the Senior Secured Credit Facility or any
other material instrument to which the Company is a party or by which
it is bound (other than a Default or Event of Default resulting from
the incurrence of Indebtedness, all or a portion of which will be used
to defease the Securities concurrently with such incurrence);
(d) the Company shall have paid all other sums payable by it
hereunder; and
(e) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent providing for or relating to the termination of
the Company's obligations under the Securities and this Indenture have
been complied with. Such Opinion of Counsel shall also state that such
satisfaction and discharge does not result in a default under any
agreement or instrument then known to such counsel that binds or
affects the Company.
Notwithstanding the foregoing paragraph, the Company's
obligations in Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 9.05 and 9.06
shall survive until the Securities are no longer outstanding pursuant to the
last
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paragraph of Section 2.08. After the Securities are no longer outstanding, the
Company's obligations in Sections 7.07, 9.05 and 9.06 shall survive such
satisfaction and discharge.
After such delivery or irrevocable deposit, the Trustee upon
request shall acknowledge in writing the discharge of the Company's obligations
under the Securities and this Indenture except for those surviving obligations
specified above.
(B) The Company may not discharge any of its obligations
with regard to outstanding Securities or discharge any of the obligations of
the Guarantors with regard to the Subsidiary Guarantees that relate to:
(a) the rights of Holders of outstanding Securities to
receive payments in respect of the principal of, premium, if any, and
interest on such Securities when such payments are due from the trust
referred to below;
(b) the Company's obligations with respect to the Securities
concerning issuing temporary Securities, registration of Securities,
mutilated, destroyed, lost or stolen Securities and the maintenance of
an office or agency for payment and money for security payments held
in trust;
(c) the rights, powers, trusts, duties and immunities of the
Trustee, and the Company's obligations in connection therewith; and
(d) the Legal Defeasance obligations contained in this
Article Nine.
SECTION 9.02 Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option and at any time, elect to
have either paragraph (b) or (c) below be applied to all outstanding Securities
upon compliance with the conditions set forth in Section 9.03.
(b) Upon exercise under paragraph (a) hereof of the option
applicable to this paragraph (b), the Company and, if it so selects, each of the
Guarantors, shall, subject to the satisfaction of the conditions set forth in
Section 9.03, be deemed to have been discharged from its obligations with
respect to all outstanding Securities on the date the conditions set forth below
are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding Securities, which shall
thereafter be deemed to be "outstanding" only for the purposes of Section 9.04
hereof and the other Sections of this Indenture referred to in (i) and (ii)
below, and to have satisfied all its other obligations under such 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 Section 9.04 hereof,
and as more fully set forth in such Section, payments in respect of
the principal of and interest on such Securities when such payments
are due;
(ii) the Company's obligations with respect to such
Securities under Article Two and Section 4.02 hereof;
(iii) the rights, powers, trusts, duties and immunities of
the Trustee hereunder and the Company's obligations in connection
therewith; and
(iv) this Article Nine.
Subject to compliance with this Article Nine, the Company may
exercise its option under this paragraph (b) notwithstanding the prior exercise
of its option under paragraph (c) hereof.
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(c) Upon the Company's exercise under paragraph (a)
hereof of the option applicable to this paragraph (c), the Company shall,
subject to the satisfaction of the conditions set forth in Section 9.03 hereof,
be released from its obligations under the covenants contained in Sections 4.03
through 4.06, inclusive, Sections 4.08 through 4.10, inclusive, Sections 4.12
through 4.20, inclusive, and Article Five 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 or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Securities shall not be deemed outstanding for accounting purposes). For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Securities, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event or Default under Section 6.01(iii)
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 paragraph (a) hereof of the option applicable to this paragraph
(c), subject to the satisfaction of the conditions set forth in Section 9.03
hereof, Sections 6.01(iv), 6.01(v) and 6.01(vi) shall not constitute Events of
Default.
SECTION 9.03 Conditions to Legal Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of
either Section 9.02(b) or 9.02(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 U.S. dollars,
non-callable Government Securities, or a combination thereof, in such amounts
as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants selected by the Company, to pay the principal
of, premium, if any, and interest on the outstanding Securities on the stated
maturity or on the applicable redemption date, as the case may be, and the
Company must specify whether the Securities are being defeased to maturity or
to a particular redemption date;
(b) in the case of Legal Defeasance, the Company shall
have delivered to the Trustee an opinion of counsel 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 Issue
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, 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 Covenant Defeasance, the Company
shall have delivered to the Trustee an opinion of counsel 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 either: (a) on the date of such deposit (other than a Default
or Event of Default arising in connection with the borrowing of funds to be
applied to such deposit); or (b) or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period ending
on the 91st day after the date of deposit;
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(e) such Legal Defeasance or Covenant Defeasance will
not result in a breach or violation of, or constitute a default under the
Senior Secured Credit Facility or any other material agreement or instrument
(other than the Indenture) to which the Company or any of its Restricted
Subsidiaries is a party or by which the Company or any of its Restricted
Subsidiaries is bound;
(f) the Company must have delivered to the Trustee an
opinion of counsel to the effect that after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company must deliver to the Trustee an Officer's
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over the other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and
(h) the Company must deliver to the Trustee an Officer's
Certificate and an opinion of counsel, each stating that all conditions
precedent relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
Notwithstanding the foregoing, the Opinion of Counsel
required by clause (b) above with respect to a Legal Defeasance need not be
delivered if all Securities not theretofore delivered to the Trustee for
cancellation (x) have become due and payable, (y) will become due and payable
on the maturity date within one year or (z) 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.
SECTION 9.04 Application of Trust Money.
The Trustee or Paying Agent shall hold in trust United States
Legal Tender or United States Government Obligations deposited with it pursuant
to this Indenture, and shall apply the deposited United States Legal Tender and
the money from United States Government Obligations in accordance with this
Indenture to the payment of principal of and interest on the Securities. Unless
otherwise agreed in writing between the Company and the Trustee, the Trustee
shall deposit any United States Legal Tender that it holds pursuant to this
Indenture for a period longer than one Business Day in an overnight money
market account at any bank organized under the laws of the United States of
America or any state thereof having combined capital and surplus of not less
than $250 million. All interest earned on such funds held in the account shall
be remitted to the account.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the United States Legal
Tender or United States Government Obligations deposited pursuant to Section
9.03 hereof or the principal and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the account of the
Holders of the outstanding Securities.
Anything in this Article Nine to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon the Company's request any United States Legal Tender or United States
Government Obligations held by it as provided in Section 9.03 hereof which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof that would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 9.05 Repayment to Company.
Subject to this Article Nine, the Trustee and the Paying
Agent shall promptly pay to the Company upon request any excess United States
Legal Tender or United States Government Obligations held by them at any time
and thereupon shall be relieved from all liability with respect to such money.
The Trustee and the Paying Agent shall pay to the Company upon request any
money held by them for the payment of principal, premium, if any, or interest
that remains unclaimed for two years; provided that the Trustee or such Paying
Agent, before being required to make any payment, may at the expense of the
Company cause to be published once in a newspaper of
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general circulation in The City of New York or mail to each Holder entitled to
such money notice that such money remains unclaimed and that after a date
specified therein which shall be at least 30 days from the date of such
publication or mailing any unclaimed balance of such money then remaining will
be repaid to the Company. After payment to the Company, Holders entitled to such
money must look to the Company for payment as general creditors unless an
applicable law designates another Person.
SECTION 9.06 Reinstatement.
If the Trustee or Paying Agent is unable to apply any United
States Legal Tender or United States Government Obligations in accordance with
this Article Nine by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article Nine until such time as the
Trustee or Paying Agent is permitted to apply all such United States Legal
Tender or United States Government Obligations in accordance with this Article
Nine; provided that if the Company has made any payment of interest on or
principal of any Securities because of the reinstatement of their obligations,
the Company shall be subrogated to the rights of the Holders of such Securities
to receive such payment from the United States Legal Tender or United States
Government Obligations held by the Trustee or Paying Agent.
ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01 In General.
Except as provided in Sections 10.02, 10.03 and 10.04, this
Indenture or the Securities may be amended, supplemented or otherwise modified
with the consent of the Company and the Holders of at least a majority in
principal amount of the Securities then outstanding (including consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, the Securities), and any existing Default or Event of Default or
compliance with any provision of the Indenture or the Securities may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Securities (including consents obtained in connection with a
purchase of, or tender offer or exchange offer for, the Securities.)
It shall not be necessary for the consent of the Holders
under this Section 10.03 to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such consent
approves the substance thereof.
SECTION 10.02 Without Consent of Holders.
The Company, each Guarantor and the Trustee may amend,
supplement, waive or otherwise modify provisions of this Indenture, the
Securities or the Guarantees without notice to or consent of any Holder:
(a) to cure any ambiguity, to correct or supplement any
provision in this Indenture that may be defective or inconsistent with any
other provisions in this Indenture, or to make any other provisions with
respect to matters or questions arising under this Indenture; provided that
such actions taken pursuant to this clause (a) do not, in the opinion of the
Trustee, adversely affect the interests of the Holders in any material respect;
(b) to evidence the succession of another Person to the
Company or any Guarantor and the assumption by any such successor of the
covenants of the Company or any Guarantor in this Indenture and in the
Securities in the case of a merger or consolidation or sale of all or
substantially all of the Company's assets;
(c) to add to the covenants of the Company or any
Guarantor for the benefit of the Holders, or to surrender any right or power
herein conferred upon the Company or any Guarantor or to make any change that
does not adversely affect the legal rights under the Indenture of any such
Holder;
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(d) to provide for uncertificated Securities in addition
to or in place of the certificated Securities;
(e) to evidence and provide for the acceptance of
appointment under this Indenture by a successor Trustee;
(f) to comply with any requirements of the Commission in
order to effect and maintain the qualification of this Indenture under the TIA;
(g) to release any Guarantor from its Guarantee
(including in connection with a sale of all of the Capital Stock or all or
substantially all of the assets of such Guarantor) pursuant to the requirements
of Section 11.06 or to add a Guarantor pursuant to the requirements of Section
4.23; or
(h) to provide for the issuance of Securities subsequent
to the Issue Date pursuant to Section 2.02.
In formulating its opinion on the matters in clause (a), the
Trustee will be entitled to be provided with and rely on such evidence as it
deems appropriate, including, without limitation, on an Opinion of Counsel.
SECTION 10.03 With Majority Consent of Holders.
Subject to Sections 6.07 and 10.01, the Company and each
Guarantor, when authorized by a resolution of their respective Boards of
Directors, and the Trustee may amend or supplement this Indenture or the
Securities then outstanding (including consents obtained in connection with a
tender offer or exchange offer for Securities), or waive any existing default
or compliance with any provision hereof or thereof, with the written consent of
the Holders of at least a majority in principal amount of the outstanding
Securities (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, Securities).
Notwithstanding the preceding paragraph, without the consent
of each Holder affected, an amendment, supplement or waiver, including a waiver
pursuant to Section 6.04, may not:
(a) reduce the principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity
of any Security or alter the provisions with respect to the redemption of the
Securities (other than provisions relating to the repurchase of Securities at
the Holders' option under Sections 4.05 or 4.14);
(c) reduce the rate of or change the time for payment of
interest on any Security;
(d) 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);
(e) make any Security payable in money other than that
stated in the Securities;
(f) make any change in the provisions of Section 6.04;
(g) waive a redemption payment with respect to any
Security (other than a payment required by one of the covenants described under
Section 4.05 or 4.14); or
(h) make any change in the preceding amendment and
waiver provisions.
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It shall not be necessary for the consent of the Holders
under this Section 10.03 to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section
10.03 becomes effective, the Company shall mail to the Holders affected thereby
a notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.
SECTION 10.04 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 10.05 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of that Security or portion of that Security that evidences
the same debt as the consenting Holder's Security, even if notation of the
consent is not made on any Security. Subject to the following paragraph, any
such Holder or subsequent Holder may revoke the consent as to such Holder's
Security or portion of such Security by notice to the Trustee or the Company
received before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Securities
have consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then,
notwithstanding the last sentence of the immediately preceding paragraph, those
persons who were Holders at such record date (or their duly designated
proxies), and only those persons, shall be entitled to consent to such
amendment, supplement or waiver or to revoke any consent previously given,
whether or not such persons continue to be Holders of such Securities after
such record date. No such consent shall be valid or effective for more than 90
days after such record date.
After an amendment, supplement or waiver becomes effective,
it shall bind every Holder, unless it makes a change described in any of
clauses (a) through (h) of Section 10.03. In that case the amendment,
supplement or waiver shall bind each Holder of a Security who has consented to
it and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security.
SECTION 10.06 Notation on or Exchange of Securities.
If an amendment, supplement or waiver 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
about the changed terms and return it to the Holder. Alternatively, if the
Company or the Trustee so determine, 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 issue a new Security
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 10.07 Trustee to Sign Amendments, etc.
The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article Ten is
authorized or permitted by this Indenture and that such amendment, supplement
or waiver constitutes the legal, valid and binding obligation of the Company
and each Guarantor, enforceable in accordance with its terms (subject to
customary exceptions). The Trustee may, but shall not be obligated to, execute
any such amendment, supplement or waiver which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
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ARTICLE ELEVEN
GUARANTEE
SECTION 11.01 Unconditional Guarantee.
Each Guarantor, jointly and severally, hereby unconditionally
guarantees to each Holder of a Security authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns that: the principal
of and interest on the Securities will be promptly paid in full when due,
subject to any applicable grace period, whether at maturity, by acceleration or
otherwise, and interest on the overdue principal and interest on any overdue
interest on the Securities and all other obligations of the Company to the
Holders or the Trustee hereunder or under the Securities will be promptly paid
in full or performed, and in the case of any extension of time of payment, or
renewal of any securities, the same shall be paid in full when due or performed
in accordance with the terms of such extension or renewal, all in accordance
with the terms hereof and thereof; subject, however, to the limitations set
forth in Section 11.03. Each Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any action
to enforce the same, any waiver or consent by any Holder of the Securities with
respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of
such Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that the Guarantee
will not be discharged except by complete performance of the obligations
contained in the Securities and this Indenture. If any Holder or the Trustee is
required by any court or otherwise to return to the Company or any Guarantor or
any custodian, trustee, liquidator or other similar official acting in relation
to the Company or a Guarantor, any amount paid by the Company or a Guarantor to
the Trustee or such Holder, the Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Guarantor
further agrees that, as between such Guarantor, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article Six for the purpose
of the Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby,
and (y) in the event of any acceleration of such obligations as provided in
Article Six, such obligations (whether or not due and payable) shall become due
and payable by such Guarantor for the purpose of the Guarantee.
SECTION 11.02 Severability.
(a) In case any provision of this Article Eleven shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
(b) No stockholder, member, officer, director, employee
or incorporator, past, present or future, or any Guarantor, as such, shall have
any personal liability under this Note Guarantee by reason of his, her or its
status as such stockholder, member, officer, director, employee or
incorporator.
SECTION 11.03 Limitation of Guarantor's Liability.
Each Guarantor, and by its acceptance hereof each Holder and
the Trustee, hereby confirms that it is the intention of all such parties that
the Guarantee pursuant to this Article Eleven does not constitute a fraudulent
transfer or conveyance for purposes of Title 11 of the United States Code, as
amended, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer
Act or any similar U.S. Federal or state or other applicable law. To effectuate
the foregoing intention, each Holder and each Guarantor hereby irrevocably
agrees that the obligations of a Guarantor under its Guarantee shall be limited
to the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Guarantor, and after giving effect to any collections
from or payments made by or on behalf of such Guarantor in respect of the
obligations of such Guarantor pursuant to Section 11.04, result in the
obligations of such Guarantor not constituting such a fraudulent transfer or
conveyance.
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SECTION 11.04 Execution of Guarantee.
Each Guarantor hereby agrees to execute a guarantee to be
endorsed on and made a part of each Security ordered to be authenticated and
delivered by the Trustee. Each Guarantor hereby agrees that its guarantee set
forth in Section 11.01 shall remain in full force and effect notwithstanding
any failure to endorse on each Security a guarantee. Each such guarantee shall
be signed on behalf of each Guarantor by its Officer prior to the
authentication of the Security on which it is endorsed, and the delivery of
such Security by the Trustee, after the authentication thereof hereunder, shall
constitute due delivery of such guarantee on behalf of such Guarantor. Such
signature upon the guarantee may be a manual or facsimile signature of such
Officer and may be imprinted or otherwise reproduced on the guarantee, and in
case such Officer who shall have signed the guarantee shall cease to be such
Officer before the Security on which such guarantee is endorsed shall have been
authenticated and delivered by the Trustee or disposed of by the Company, such
Security nevertheless may be authenticated and delivered or disposed of as
though the Person who signed the guarantee had not ceased to be such officer of
such Guarantor.
SECTION 11.05 [Intentionally omitted].
SECTION 11.06 Release of Guarantor from Subsidiary Guarantee.
The Subsidiary Guarantee of a Guarantor will be automatically
and unconditionally released without any action on the part of the Trustee or
any Holder: (a) in connection with any sale or other disposition of all or
substantially all of the assets of that Guarantor (including by way of merger
or consolidation), if the Company applies the Net Proceeds of that sale or
other disposition, in accordance with Section 4.05; or (b) in connection with
any sale of all of the Capital Stock of a Guarantor, provided the Company
applies the Net Proceeds of that sale in accordance with Section 4.05; or (c)
if the Company designates any Restricted Subsidiary that is a Guarantor as an
Unrestricted Subsidiary.
In addition, concurrently with any Legal Defeasance or
Covenant Defeasance, the Guarantors shall be released from all of their
Obligations under their Subsidiaries' Guarantees.
ARTICLE TWELVE
[THIS ARTICLE HAS BEEN INTENTIONALLY OMITTED]
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01 Trust Indenture Act Controls.
This Indenture is subject to the provisions of the TIA that
are required to be a part of any indenture subject to the TIA. If any provision
of this Indenture modifies any TIA provision that may be so modified, such TIA
provision shall be deemed to apply to this Indenture as so modified; provided
that this Section shall not of itself require that this Indenture or the
Trustee be qualified under the TIA or constitute any admission or
acknowledgment by any party hereto that any such qualification is required
prior to the time this Indenture and the Trustee are required by the TIA to be
so qualified. If any provision of this Indenture excludes any TIA provision
that may be so excluded, such TIA provision shall be excluded from this
Indenture.
The provisions of TIA Sections 310 through 317 that impose
duties on any Person (including the provisions automatically deemed included
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
<PAGE> 74
-69-
SECTION 13.02 Notices.
Any notice or communication shall be sufficiently given if in
writing (which may be via facsimile) and delivered in person, by facsimile and
confirmed by overnight courier, or mailed by first-class mail addressed as
follows:
if to the Company and the Guarantors:
Worldwide Flight Services, Inc.
1001 West Euless Boulevard, Suite 320
Euless, Texas 76040
Attention: Chief Financial Officer
Facsimile: (817) 963-8479
Telephone: (817) 931-5189
with copies to:
Schulte Roth & Zabel LLP
900 Third Avenue, 23rd Floor
New York, New York 10022
Attention: Frederic L. Ragucci, Esq.
Facsimile: (212) 593-5955
Telephone: (212) 756-2000
if to the Trustee: Van Brown
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Facsimile: (212) 815-5915
Telephone: (212) 815-6286
Each party by notice to the others may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication mailed, first-class, postage
prepaid, to a Holder, including any notice delivered in connection with TIA
Section 310(b), TIA Section 313(c), TIA Section 314(a) and TIA Section 315(b),
shall be mailed to such Holder at the address set forth on the list maintained
pursuant to Section 2.05 and shall be sufficiently given to him if so mailed
within the time prescribed. To the extent required by the TIA, any notice or
communication shall also be mailed to any Person described in TIA Section
313(c).
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
Except for a notice to the Trustee, which is deemed given only when received,
if a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
<PAGE> 75
-70-
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice.
SECTION 13.03 Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other person shall
have the protection of TIA Section 312(c).
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 after the date
hereof, the Company shall furnish to the Trustee at the request of the Trustee:
(1) an Officers' Certificate in form and substance
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, 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 satisfactory
to the Trustee stating that, in the opinion of such counsel, all such
conditions precedent have been complied with, and such other opinions
as the Trustee may reasonably require.
SECTION 13.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person 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 person, 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
person, such condition or covenant has been complied with; provided
that with respect to matters of fact an Opinion of Counsel may rely on
an Officers' Certificate or certificates of public officials.
SECTION 13.06 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Paying Agent or Registrar may make reasonable rules for
its functions.
SECTION 13.07 Governing Law.
This Indenture and the Securities will be governed by, and
construed in accordance with, the laws of the State of New York but without
giving effect to applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.
<PAGE> 76
-71-
SECTION 13.08 No Recourse Against Others.
No director, officer, employee, stockholder or member of the
Company, as such, shall have any liability for any obligations of the Company
under the Securities or this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
SECTION 13.09 Successors.
All agreements of a party to this Indenture contained in this
Indenture shall bind such party's successors.
SECTION 13.10 Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 13.11 Severability.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and a Holder shall have no claim therefor against any party
hereto.
SECTION 13.12 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement. Any such indenture, loan or debt agreement
may not be used to interpret this Indenture.
SECTION 13.13 Legal Holidays.
If a payment date is a not a Business Day at a place of
payment, payment may be made at that place on the next succeeding Business Day,
and no interest shall accrue for the intervening period.
SECTION 13.14 No Personal Liability of Directors, Officers, Employees
and Stockholders.
No director, officer, employee, incorporator or stockholder
of the Company or any Guarantor, as such, shall have any liability for any
obligations of the Company or the Guarantors under the Securities, the
Indenture, the Subsidiary Guarantees or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for issuance of the Securities. The waiver may not be
effective to waive liabilities under the federal securities laws.
SECTION 13.15 Table of Contents, Headings, etc.
The Table of Contents and Headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture, and shall in no way
modify or restrict any of the terms or provisions hereof.
[Remainder of page intentionally left blank; signature pages follow]
<PAGE> 77
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
COMPANY:
WORLDWIDE FLIGHT SERVICES, INC.
By: /s/ Peter A. Pappas
-----------------------------------------
Name: Peter A. Pappas
Title: Chief Executive Officer
GUARANTORS:
WORLDWIDE FLIGHT FINANCE COMPANY
By: /s/ Peter A. Pappas
-----------------------------------------
Name: Peter A. Pappas
Title: President
WORLDWIDE FLIGHT SECURITY SERVICE
CORPORATION
By: /s/ Peter A. Pappas
-----------------------------------------
Name: Peter A. Pappas
Title: President
MIAMI INTERNATIONAL AIRPORT CARGO
FACILITIES & SERVICES, INC.
By: /s/ Peter A. Pappas
-----------------------------------------
Name: Peter A. Pappas
Title: President
MIAMI AIRCRAFT SUPPORT, INC.
By: /s/ Peter A. Pappas
-----------------------------------------
Name: Peter A. Pappas
Title: President
INTERNATIONAL ENTERPRISES GROUP, INC.
By: /s/ Peter A. Pappas
-----------------------------------------
Name: Peter A. Pappas
Title: President
S-1
<PAGE> 78
TRUSTEE:
THE BANK OF NEW YORK
By: /s/ Van K. Brown
---------------------------------------
Name: Van K. Brown
Title: Assistant Vice President
S-2
<PAGE> 79
EXHIBIT A
WORLDWIDE FLIGHT SERVICES, INC.
12 1/4% Senior Note due 2007, Series A
CUSIP Number: 981587 AA6
No. 1 $130,000,000
WORLDWIDE FLIGHT SERVICES, INC., a Delaware corporation (the
"COMPANY", which term includes any successor), for value received promises to
pay to Cede & Co. or registered assigns, the principal sum of One Hundred
Thirty Million Dollars ($130,000,000.00), on August 15, 2007.
Interest Payment Dates: February 15 and August 15, commencing
on February 15, 2000.
Interest Record Dates: February 1 and August 1.
Reference is made to the further provisions of this Security
contained herein and the Indenture (as defined), which will for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to
be signed manually or by facsimile by its duly authorized officers.
WORLDWIDE FLIGHT SERVICES, INC.
By: /s/ Peter A. Pappas
-----------------------------------------
Name: Peter A. Pappas
Title: Chief Executive Officer
Dated: August 12, 1999
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 12 1/4% Senior Notes due 2007, Series A,
described in the within-mentioned Indenture.
Dated: August 12, 1999
THE BANK OF NEW YORK,
as Trustee
By:
-----------------------------------------
Authorized Signatory
Exh. A-3
<PAGE> 80
[REVERSE OF SECURITY]
WORLDWIDE FLIGHT SERVICES, INC.
12 1/4% Senior Note due 2007, Series A
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
(B) IT HAS ACQUIRED THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR (C) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT (AN "IAI")),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S OF THE SECURITIES
ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS
SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT,
(F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED
STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S
UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING
THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN
VIOLATION OF THE FOREGOING.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS SECURITY IS NOT
Exh. A-4
<PAGE> 81
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, AND TRANSFERS OF INTERESTS IN THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.16 OF THE INDENTURE.
Exh. A-5
<PAGE> 82
1. Interest.
The Company promises to pay interest on the principal amount
of this Security at the rate per annum shown above. Cash 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 August 12, 1999. The Company will
pay interest semi-annually in arrears on each Interest Payment Date, commencing
February 15, 2000. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
In addition, after giving effect to any applicable grace
period, the Company shall pay interest on overdue principal and on overdue
installments of interest to the extent lawful from time to time on demand, in
each case at the rate borne by this Security.
The Securities are not entitled to the benefit of any
mandatory sinking fund.
2. Method of Payment.
The Company shall pay interest on the Securities (except
defaulted interest) to the persons who are the registered Holders at the close
of business on the Interest Record Date immediately preceding the Interest
Payment Date even if the Securities are canceled on registration of transfer or
registration of exchange after such Interest Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and interest in United States Legal Tender (as
defined in the Indenture referred to below). However, the Company may pay
principal and interest by wire transfer of Federal funds (provided that the
Paying Agent shall have received wire instructions on or prior to the relevant
Interest Record Date), or interest by check payable in such United States Legal
Tender. The Company may deliver any such interest payment to the Paying Agent
or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, The Bank of New York (the "Trustee") will act as
Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to the Holders. The Company may, subject to certain
exceptions, act as Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated
as of August 12, 1999 (the "Indenture"), by and among the Company, the
Guarantors and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. This Security is one of a duly
authorized issue of Securities of the Company designated as its 12 1/4% Senior
Notes due 2007 issued under the Indenture. The aggregate principal amount of
Securities which may be issued under the Indenture is limited (except as
otherwise provided in the Indenture) to $300.0 million in one or more series;
provided that the aggregate principal amount of Initial Securities on the Issue
Date shall not exceed $130.0 million. 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, as amended (the "TIA"), as in effect on the
date of the Indenture (except as otherwise indicated in the Indenture) until
such time as the Indenture is qualified under the TIA, and thereafter as in
effect on the date on which the Indenture is qualified under the TIA.
Notwithstanding anything to the contrary herein, the Securities are subject to
all such terms, and Holders are referred to the Indenture and the TIA for a
statement of them. In the event of any inconsistency between the terms of this
Security and the terms of the Indenture, to the extent permitted by law, the
terms of the Indenture shall control.
5. Guarantee.
The obligations of the Company hereunder are guaranteed on a
senior basis by the Guarantors.
Exh. A-6
<PAGE> 83
6. Optional Redemption.
The Securities will be redeemable, at the Company's option,
in whole at any time or in part from time to time, after August 15, 2003, upon
not less than 30 nor more than 60 days' notice, at the following redemption
prices (expressed as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on August 15, of the year set forth
below, plus, in each case, accrued and unpaid interest thereon, if any, to the
date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
----------------------- ----------
<S> <C>
2003 .................. 106.125%
2004................... 104.594%
2005................... 103.063%
2006................... 101.531%
--------
2007 and thereafter.... 100.000%
</TABLE>
7. Optional Redemption upon Public Equity Offerings.
At any time, or from time to time, on or prior to August 15,
2002, the Company may, at its option, use the net cash proceeds of one or more
Public Equity Offerings (as defined below) to redeem up to 35% of the initial
aggregate principal amount of Securities issued on the Issue Date, at a
redemption price equal to 112.250% of the principal amount thereof plus accrued
and unpaid interest thereon to the date of redemption; provided that at least
65% of the initial aggregate principal amount of Securities issued in the
Offering remains outstanding immediately after any such redemption. In order to
effect the foregoing redemption with the proceeds of any Public Equity
Offering, the Company shall make such redemption not more than 90 days after
the consummation of any such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering"
means an underwritten public offering of common stock of the Company pursuant
to a registration statement filed with the Commission in accordance with the
Securities Act, in which the gross proceeds to the Company are at least $20.0
million.
8. Selection and Notice of Redemption.
In the event that less than all of the Securities are to be
redeemed at any time, selection of such Securities for redemption will be made
by the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which such Securities are listed or, if such
Securities are not then listed on a national securities exchange, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided, however, that no Securities of a principal amount of $1,000 or less
shall be redeemed in part; provided, further, that if a partial redemption is
made with the proceeds of a Public Equity Offering, selection of the Securities
or portions thereof for redemption shall be made by the Trustee only on a pro
rata basis or on as nearly a pro rata basis as is practicable (subject to DTC
procedures), unless such method is otherwise prohibited. Notice 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. 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. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Security. On and after the
redemption date, interest will cease to accrue on Securities or portions
thereof called for redemption as long as the Company has deposited with the
Paying Agent funds in satisfaction of the applicable redemption price pursuant
to the Indenture.
9. Change of Control Offer.
Following the occurrence of a Change of Control, the Company
shall, within 30 days, make a Change of Control Offer for all Securities then
outstanding at a purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Change of Control
Exh. A-7
<PAGE> 84
Payment Date (subject to the right of Holders of record on the relevant Interest
Record Date to receive interest due on the relevant Interest Payment Date).
10. Limitation on Disposition of Assets.
The Company is, subject to certain conditions, obligated to
make an Asset Sale Offer for Securities at a purchase price equal to 100% of
the principal amount thereof, plus accrued and unpaid interest thereon, if any,
to the Asset Sale Offer Payment Date (subject to the right of Holders of record
on the Interest Relevant Record Date to receive interest due on the relevant
Interest Payment Date) with the excess proceeds of certain asset dispositions.
11. Denominations; Transfer; Exchange.
The Securities are in registered, global form, without
coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder
shall register the transfer of or exchange of Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange of any Securities or portions thereof selected for redemption, except
the unredeemed portion of any Security being redeemed in part.
12. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the
owner of it for all purposes.
13. Unclaimed Funds.
If funds for the payment of principal or interest remain
unclaimed for two years, the Trustee and the Paying Agent will repay the funds
to the Company at its written request. After that, all liability of the Trustee
and such Paying Agent with respect to such funds shall cease.
14. Legal Defeasance and Covenant Defeasance.
The Company may be discharged from its obligations under the
Indenture and the Securities, except for certain provisions thereof, and may be
discharged from obligations to comply with certain covenants contained in the
Indenture and the Securities, in each case upon satisfaction of certain
conditions specified in the Indenture.
15. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture and the
Securities may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without
notice to or consent of any Holder, the Company, any Guarantor and the Trustee
may amend or supplement the Indenture and the Securities to, among other
things, cure any ambiguity, defect or inconsistency, provide for uncertificated
Securities in addition to or in place of certificated Securities or comply with
any requirements of the SEC in connection with the qualification of the
Indenture under the TIA, or make any other change that does not materially
adversely affect the rights of any Holder of a Security.
16. Restrictive Covenants.
The Indenture contains certain covenants that, among other
things, limit the ability of the Company and the Restricted Subsidiaries to
make restricted payments, to incur indebtedness, to create liens, to sell
Exh. A-8
<PAGE> 85
assets, to permit restrictions on dividends and other payments by Restricted
Subsidiaries to the Company, to consolidate, merge or sell all or substantially
all of its assets or to engage in transactions with affiliates or certain other
related persons. The limitations are subject to a number of important
qualifications and exceptions. The Company must report annually to the Trustee
on compliance with such limitations.
17. Defaults and Remedies.
If an Event of Default arising from certain events of
bankruptcy or insolvency occurs and is continuing, the Securities then
outstanding shall become due and payable immediately without further action or
notice. If any other Event of Default occurs and is continuing the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes,
may declare all the Notes due and payable in the manner provided therefore in
the Indenture. Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee is not obligated to
enforce the Indenture or the Securities unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Securities then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Securities notice of certain
continuing Defaults or Events of Default if it determines that withholding
notice is in their interest.
18. Trustee Dealings with Company.
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 the Company or its respective Affiliates as if it were not the
Trustee.
19. No Recourse Against Others.
No director, officer, employee, stockholder or incorporator
of the Company or any Guarantor, as such, shall have any liability for any
obligation of the Company or the Guarantors under the Securities or the
Indenture or the Subsidiary Guarantees or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each Holder of a Security
by accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
20. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on this Security.
21. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder
of a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
22. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the Securities as a convenience to the Holders. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
23. Registration Rights.
Pursuant to the Registration Rights Agreement, the Company
will be obligated upon the occurrence of certain events to consummate an
exchange offer pursuant to which the Holder of this Security shall
Exh. A-9
<PAGE> 86
have the right to exchange this Security for a 12 1/4% Senior Note due 2007,
Series B, of the Company which has been registered under the Securities Act, in
like principal amount and having terms identical in all material respects to the
Initial Securities. The Holders shall be entitled to receive certain additional
interest payments in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with the terms of
the Registration Rights Agreement.
24. Governing Law.
The Indenture and the Securities will be governed by, and
construed in accordance with, the laws of the State of New York but without
giving effect to applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.
[Remainder of page intentionally left blank]
Exh. A-10
<PAGE> 87
[FORM OF GUARANTEE]
SENIOR GUARANTEE
Each of the Guarantors (capitalized terms used herein have
the meanings given such terms in the Indenture referred to in the Security upon
which this notation is endorsed) hereby unconditionally guarantees on a senior
basis (such guarantee being referred to herein as the "Guarantee") the due and
punctual payment of the principal of, premium, if any, and interest on the
Securities, whether at maturity, by acceleration or otherwise, the due and
punctual payment of interest on the overdue principal, premium and interest on
the Securities, and the due and punctual performance of all other obligations
of the Company to the Holders or the Trustee, all in accordance with the terms
set forth in Article Eleven of the Indenture.
The obligations of the Guarantor to the Holders and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth in
Article Eleven of the Indenture.
This Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Securities upon which
this Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
This Guarantee shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law.
This Guarantee is subject to release upon the terms set forth
in the Indenture.
[Signatures on the following page]
Exh. A-11
<PAGE> 88
GUARANTORS:
WORLDWIDE FLIGHT FINANCE COMPANY
By:
---------------------------------------
Name:
Title:
WORLDWIDE FLIGHT SECURITY SERVICE
CORPORATION
By:
---------------------------------------
Name:
Title:
MIAMI INTERNATIONAL AIRPORT CARGO
FACILITIES & SERVICES, INC.
By:
---------------------------------------
Name:
Title:
MIAMI AIRCRAFT SUPPORT, INC.
By:
---------------------------------------
Name:
Title:
INTERNATIONAL ENTERPRISES GROUP, INC.
By:
---------------------------------------
Name:
Title:
Exh. A-12
<PAGE> 89
ASSIGNMENT FORM
I or we assign and transfer this Security to
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
- -------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint
--------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
------------------- ------------------------------------
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
-------------------------------------
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
Exh. A-13
<PAGE> 90
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.05 or Section 4.14 of the Indenture, check the
appropriate box:
Section 4.05 [ ]
Section 4.14 [ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to [Section 4.05] or [Section 4.14] of the
Indenture, state the amount: $
----------
Dated: Your Signature:
------------------- -----------------------
Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
- ------------------------------
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
Exh. A-14
<PAGE> 91
EXHIBIT B
[FORM OF SERIES B SECURITY]
WORLDWIDE FLIGHT SERVICES, INC.
12 1/4% Senior Note due 2007, Series B
CUSIP Number: ___________
No. ___ $130,000,000
WORLDWIDE FLIGHT SERVICES, INC., a Delaware corporation (the
"Company", which term includes any successor), for value received promises to
pay to Cede & Co. or registered assigns, the principal sum of One Hundred
Thirty Million Dollars ($130,000,000.00), on August __, 2007.
Interest Payment Dates: February 15 and August 15, commencing
on February 15, 2000.
Interest Record Dates: February 1 and August 1.
Reference is made to the further provisions of this Security contained
herein and the Indenture (as defined), which will for all
purposes have the same effect as if set forth at this place.
Exh. B-1
<PAGE> 92
(REVERSE OF SECURITY)
WORLDWIDE FLIGHT SERVICES, INC.
12 1/4% Senior Note due 2007, Series B
1. Interest.
The Company promises to pay interest on the principal amount
of this Security at the rate per annum shown above. Cash 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 August 12, 1999. The Company will
pay interest semi-annually in arrears on each Interest Payment Date, commencing
February 15, 2000. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
In addition, the Company shall pay interest on overdue
principal and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful from time to time on demand, in
each case at the rate borne by this Security.
The Securities are not entitled to the benefit of any
mandatory sinking fund.
2. Method of Payment.
The Company shall pay interest on the Securities (except
defaulted interest) to the persons who are the registered Holders at the close
of business on the Interest Record Date immediately preceding the Interest
Payment Date even if the Securities are canceled on registration of transfer or
registration of exchange after such Interest Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and interest in United States Legal Tender.
However, the Company may pay principal and interest by wire transfer of Federal
funds (provided that the Paying Agent shall have received wire instructions on
or prior to the relevant Interest Record Date), or interest by check payable in
such United States Legal Tender. The Company may deliver any such interest
payment to the Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, The Bank of New York (the "Trustee") will act as
Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to the Holders. The Company may, subject to certain
exceptions, act as Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated
as of August 12, 1999 (the "Indenture"), by and among the Company, the
Guarantors and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. This Security is one of a duly
authorized issue of Securities of the Company designated as its 12 1/4% Senior
Notes due 2007 issued under the Indenture. The aggregate principal amount of
Securities which may be issued under the Indenture is limited (except as
otherwise provided in the Indenture) to $300.0 million in one or more series;
provided that the aggregate principal amount of Initial Securities on the Issue
Date shall not exceed $130.0 million. 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, as amended (the "TIA"), as in effect on the
date of the Indenture (except as otherwise indicated in the Indenture) until
such time
Exh. B-2
<PAGE> 93
as the Indenture is qualified under the TIA, and thereafter as in effect on the
date on which the Indenture is qualified under the TIA. Notwithstanding
anything to the contrary herein, the Securities are subject to all such terms,
and Holders are referred to the Indenture and the TIA for a statement of them.
In the event of any inconsistency between the terms of this security and the
terms of this Indenture, to the extent permitted by law, the terms of the
Indenture shall control.
5. Guarantee.
The obligations of the Company hereunder are guaranteed on a
senior basis by the Guarantors.
6. Optional Redemption.
The Securities will be redeemable, at the Company's option,
in whole at any time or in part from time to time, on and after August 15,
2003, upon not less than 30 nor more than 60 days' notice, at the following
redemption prices (expressed as percentages of the principal amount thereof) if
redeemed during the twelve-month period commencing on August 15, of the year
set forth below, plus, in each case, accrued and unpaid interest thereon, if
any, to the date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
----------------------------- ------------------
<S> <C>
2003........................... 106.125%
2004........................... 104.594%
2005........................... 103.063%
2006........................... 101.531%
2007 and thereafter............ 100.000%
</TABLE>
7. Optional Redemption upon Public Equity Offerings.
At any time, or from time to time, on or prior to August 15,
2002, the Company may, at its option, use the net cash proceeds of one or more
Public Equity Offerings (as defined below) to redeem up to 35% of the initial
aggregate principal amount of Securities issued in the Offering, at a
redemption price equal to 112.250% of the principal amount thereof plus accrued
and unpaid interest thereon and Liquidated Damages, if any, to the date of
redemption; provided that at least 65% of the initial aggregate principal
amount of Securities issued in the Offering remains outstanding immediately
after any such redemption. In order to effect the foregoing redemption with the
proceeds of any Public Equity Offering, the Company shall make such redemption
not more than 90 days after the consummation of any such Public Equity
Offering.
As used in the preceding paragraph, "Public Equity Offering"
means an underwritten public offering of common stock of the Company pursuant
to a registration statement filed with the Commission in accordance with the
Securities Act, in which the gross proceeds to the Company are at least $20.0
million.
8. Selection and Notice of Redemption.
In the event that less than all of the Securities are to be
redeemed at any time, selection of such Securities for redemption will be made
by the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which such Securities are listed or, if such
Securities are not then listed on a national securities exchange, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no Securities of a principal amount of $1,000 or less shall be
redeemed in part; provided, further, that if a partial redemption is made with
the proceeds of a Public Equity Offering, selection of the Securities or
portions thereof for redemption shall be made by the Trustee only on a pro rata
basis or on as nearly a pro rata basis as is practicable (subject to DTC
procedures), unless such method is otherwise prohibited. Notice 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. If any Security is to be redeemed in part only, the notice
of
Exh. B-3
<PAGE> 94
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Security. On and after the
redemption date, interest will cease to accrue on Securities or portions
thereof called for redemption as long as the Company has deposited with the
Paying Agent funds in satisfaction of the applicable redemption price pursuant
to the Indenture.
9. Change of Control Offer.
Following the occurrence of a Change of Control, the Company
shall, within 30 days, make a Change of Control Offer for all Securities then
outstanding at a purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Change of Control Payment Date (subject to the right of Holders of record
on the relevant Interest Record Date to receive interest due on the relevant
Interest Payment Date).
10. Limitation on Disposition of Assets.
The Company is, subject to certain conditions, obligated to
make an Asset Sale Offer for Securities at a purchase price equal to 100% of
the principal amount thereof, plus accrued and unpaid interest thereon, if any,
to the Asset Sale Offer Payment Date (subject to the right of Holders of record
on the Interest Relevant Record Date to receive interest due on the relevant
Interest Payment Date) with the excess proceeds of certain asset dispositions.
11. Denominations; Transfer; Exchange.
The Securities are in registered, global form, without
coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder
shall register the transfer of or exchange of Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange of any Securities or portions thereof selected for redemption, except
the unredeemed portion of any Security being redeemed in part.
12. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the
owner of it for all purposes.
13. Unclaimed Funds.
If funds for the payment of principal or interest remain
unclaimed for two years, the Trustee and the Paying Agent will repay the funds
to the Company at its written request. After that, all liability of the Trustee
and such Paying Agent with respect to such funds shall cease.
14. Legal Defeasance and Covenant Defeasance.
The Company may be discharged from its obligations under the
Indenture and the Securities, except for certain provisions thereof, and may be
discharged from obligations to comply with certain covenants contained in the
Indenture and the Securities, in each case upon satisfaction of certain
conditions specified in the Indenture.
15. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture and the
Securities may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the
Exh. B-4
<PAGE> 95
consent of the Holders of a majority in aggregate principal amount of the
Securities then outstanding. Without notice to or consent of any Holder, the
Company, any Guarantor and the Trustee may amend or supplement the Indenture
and the Securities to, among other things, cure any ambiguity, defect or
inconsistency, provide for uncertificated Securities in addition to or in place
of certificated Securities or comply with any requirements of the SEC in
connection with the qualification of the Indenture under the TIA, or make any
other change that does not materially adversely affect the rights of any Holder
of a Security.
16. Restrictive Covenants.
The Indenture contains certain covenants that, among other
things, limit the ability of the Company and the Restricted Subsidiaries to
make restricted payments, to incur indebtedness, to create liens, to sell
assets, to permit restrictions on dividends and other payments by Restricted
Subsidiaries to the Company, to consolidate, merge or sell all or substantially
all of its assets or to engage in transactions with affiliates or certain other
related persons. The limitations are subject to a number of important
qualifications and exceptions. The Company must report annually to the Trustee
on compliance with such limitations.
17. Defaults and Remedies.
If an Event of Default arising from certain events of
bankruptcy or insolvency occurs and is continuing, the Securities then
outstanding shall become due and payable immediately without further action or
notice. If any other Event of Default occurs and is continuing the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes,
may declare all the Notes due and payable in the manner provided therefore in
the Indenture. Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee is not obligated to
enforce the Indenture or the Securities unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Securities then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Securities notice of certain
continuing Defaults or Events of Default if it determines that withholding
notice is in their interest.
18. Trustee Dealings with Company.
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 the Company or its respective Affiliates as if it were not the
Trustee.
19. No Recourse Against Others.
No director, officer, employee, stockholder or incorporator
of the Company or any Guarantor, as such, shall have any liability for any
obligation of the Company or the Guarantors under the Securities or the
Indenture or the Subsidiary Guarantees or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each Holder of a Security
by accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
20. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on this Security.
21. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder
of a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
Exh. B-5
<PAGE> 96
22. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the Securities as a convenience to the Holders. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
23. Governing Law.
The Indenture and the Securities will be governed by, and
construed in accordance with, the laws of the State of New York but without
giving effect of applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.
[Remainder of page intentionally left blank; signature page follows]
Exh. B-6
<PAGE> 97
IN WITNESS WHEREOF, the Company has caused this Security to
be signed manually or by facsimile by its duly authorized officers.
WORLDWIDE FLIGHT SERVICES, INC.
By:
-----------------------------------------
Name:
Title:
Dated: August 12, 1999
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 12 1/4% Senior Notes due 2007, Series B,
described in the within-mentioned Indenture.
Dated: August 12, 1999
THE BANK OF NEW YORK,
as Trustee
By:
-----------------------------------------
Authorized Signatory
Exh. B-7
<PAGE> 98
[FORM OF GUARANTEE]
SENIOR GUARANTEE
The Guarantor (capitalized terms used herein have the
meanings given such terms in the Indenture referred to in the Security upon
which this notation is endorsed) hereby unconditionally guarantees on a senior
basis (such guaranty being referred to herein as the "Guarantee") the due and
punctual payment of the principal of, premium, if any, and interest on the
Securities, whether at maturity, by acceleration or otherwise, the due and
punctual payment of interest on the overdue principal, premium and interest on
the Securities, and the due and punctual performance of all other obligations
of the Company to the Holders or the Trustee, all in accordance with the terms
set forth in Article Eleven of the Indenture.
The obligations of the Guarantor to the Holders and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth in
Article Eleven of the Indenture.
This Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Securities upon which
this Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
This Guarantee shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law.
This Guarantee is subject to release upon the terms set forth
in the Indenture.
[ ]
By:
--------------------------------------
Name:
Title:
Exh. B-8
<PAGE> 99
ASSIGNMENT FORM
I or we assign and transfer this Security to
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
- -------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint_______________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
------------------ ---------------------------------
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
- --------------------
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
Exh. B-9
<PAGE> 100
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.05 or Section 4.14 of the Indenture, check the
appropriate box:
Section 4.05 ]
Section 4.14 ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to [Section 4.05] or [Section 4.14] of the
Indenture, state the amount: $_____________
Dated: Your Signature:
------------------ ----------------------------------
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
- -------------------------
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
Exh. B-10
<PAGE> 101
EXHIBIT C
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder
shall bear a legend (which would be in addition to any other legends required
in the case of a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY.
THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, AND TRANSFERS OF INTERESTS IN
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE
WITH THE RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE INDENTURE.
<PAGE> 1
EXHIBIT 4.3
EXECUTION COPY
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
Dated as of August 12, 1999
by and among
WORLDWIDE FLIGHT SERVICES, INC.
as Issuer
WORLDWIDE FLIGHT FINANCE COMPANY
WORLDWIDE FLIGHT SECURITY SERVICE CORPORATION
MIAMI INTERNATIONAL AIRPORT CARGO FACILITIES & SERVICES, INC.
MIAMI AIRCRAFT SUPPORT, INC.
INTERNATIONAL ENTERPRISES GROUP, INC.
as Guarantors
and
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
and
CHASE SECURITIES INC.
as Initial Purchasers
- --------------------------------------------------------------------------------
<PAGE> 2
This Registration Rights Agreement (this "AGREEMENT") is made and entered
into as of August 12, 1999, by and among Worldwide Flight Services, Inc., a
Delaware corporation (the "COMPANY"), Worldwide Flight Finance Company, a
Delaware corporation, Worldwide Flight Security Service Corporation, a Delaware
corporation, Miami International Airport Cargo Facilities & Services, Inc. a
Florida corporation, Miami Aircraft Support, Inc., a Delaware corporation and
International Enterprises Group, Inc., a Florida corporation (each a "GUARANTOR"
and, collectively, the "GUARANTORS"), Donaldson, Lufkin & Jenrette Securities
Corporation and Chase Securities Inc. (each an "INITIAL PURCHASER" and,
collectively, the "INITIAL PURCHASERS"), each of whom has agreed to purchase the
Company's 12 1/4% Series A Senior Notes due 2007 (the "SERIES A NOTES") pursuant
to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated August 5,
1999 (the "PURCHASE AGREEMENT"), by and among the Company, WFS Holdings, Inc.,
the Guarantors and the Initial Purchasers. In order to induce the Initial
Purchasers to purchase the Series A Notes, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Initial Purchasers set
forth in Section 2 of the Purchase Agreement. Capitalized terms used herein and
not otherwise defined shall have the meaning assigned to them in the Indenture,
dated August 12, 1999, between the Company, the guarantors listed therein and
The Bank of New York, as Trustee, relating to the Series A Notes and the Series
B Notes (as defined below) (the "INDENTURE").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 of the Act.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
BUSINESS DAY: means a day other than a Saturday, a Sunday or a day on which
banking institutions in New York, New York are not required to be open.
CERTIFICATED SECURITIES: Physical Securities, as defined in the Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
<PAGE> 3
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes of
this Agreement upon the occurrence of (a) the filing and effectiveness under the
Act of the Exchange Offer Registration Statement relating to the Series B Notes
to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer
Registration Statement continuously effective and the keeping of the Exchange
Offer open for a period not less than the period required pursuant to Section
3(b) hereof and (c) the delivery by the Company to the Registrar under the
Indenture of Series B Notes in the same aggregate principal amount as the
aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The exchange and issuance by the Company of a principal
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes that are tendered by such Holders in connection with such
exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers propose to
sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act and pursuant to Regulation S under
the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
PROSPECTUS: The prospectus included in a Registration Statement at the time
such Registration Statement is declared effective, as amended or supplemented by
any prospectus supplement and by all other amendments thereto, including
post-effective amendments, and all material incorporated by reference into such
Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company and the
Guarantors relating to (a) an offering of Series B Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) that is filed
pursuant to the provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements to such registration statement
(including post-effective amendments) and all exhibits and material incorporated
by reference therein.
-2-
<PAGE> 4
REGULATION S: Regulation S promulgated under the Act.
RULE 144: Rule 144 promulgated under the Act.
SERIES B NOTES: The Company's 12 1/4% Series B Senior Notes due 2007 to be
issued pursuant to the Indenture: (i) in the Exchange Offer or (ii) as
contemplated by Section 6(b) hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in
effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Series A Note, until the earliest to
occur of (a) the date on which such Series A Note is exchanged in the Exchange
Offer for a Series B Note which is entitled to be resold to the public by the
Holder thereof without complying with the prospectus delivery requirements of
the Act, (b) the date on which such Series A Note has been disposed of in
accordance with a Shelf Registration Statement (and the purchasers thereof have
been issued Series B Notes), or (c) the date on which such Series A Note is
distributed to the public pursuant to Rule 144 under the Act (and purchasers
thereof have been issued Series B Notes) and each Series B Note until the date
on which such Series B Note is disposed of by a Broker-Dealer pursuant to the
"Plan of Distribution" contemplated by the Exchange Offer Registration Statement
(including the delivery of the Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Guarantors shall (i) cause the Exchange Offer
Registration Statement to be filed with the Commission as soon as practicable
after the Closing Date, but in no event later than 60 days after the Closing
Date (such 60th day being the "FILING DEADLINE"), (ii) use its best efforts to
cause such Exchange Offer Registration Statement to become effective at the
earliest possible time, but in no event later than 180 days after the Closing
Date (such 180th day being the "EFFECTIVENESS DEADLINE"), (iii) in connection
with the foregoing, (A) file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause it to become
effective, (B) file, if applicable, a post-effective amendment to such Exchange
Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause
all necessary filings, if any, in connection with the registration and
qualification of the Series B Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange
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<PAGE> 5
Offer and (iv) upon the effectiveness of such Exchange Offer Registration
Statement, commence and Consummate the Exchange Offer. The Exchange Offer shall
be on the appropriate form permitting (i) registration of the Series B Notes to
be offered in exchange for the Series A Notes that are Transfer Restricted
Securities and (ii) resales of Series B Notes by Broker-Dealers that tendered
into the Exchange Offer Series A Notes that such Broker-Dealer acquired for its
own account as a result of market making activities or other trading activities
(other than Series A Notes acquired directly from the Company or any of its
Affiliates) as contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall use their respective best efforts
to cause the Exchange Offer Registration Statement to be effective continuously,
and shall keep the Exchange Offer open for a period of not less than the minimum
period required under applicable federal and state securities laws to Consummate
the Exchange Offer; provided, however, that in no event shall such period be
less than 20 Business Days. The Company and the Guarantors shall cause the
Exchange Offer to comply with all applicable federal and state securities laws.
No securities other than the Series B Notes shall be included in the Exchange
Offer Registration Statement. The Company and the Guarantors shall use their
respective best efforts to cause the Exchange Offer to be Consummated on the
earliest practicable date after the Exchange Offer Registration Statement has
become effective, but in no event later than 30 business days thereafter (such
30th Business Day being the "CONSUMMATION DEADLINE").
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any Affiliate of the Company) may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy, rules or regulations after the
date of this Agreement. See the Shearman & Sterling no-action letter (available
July 2, 1993).
Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company and
Guarantors shall permit the use of the Prospectus contained in the Exchange
Offer Registration Statement by such Broker-Dealer to satisfy such prospectus
delivery requirement for a period of 180 days (which period may be suspended
pursuant to Section 4(d) below) following the Consummation Deadline. To the
extent necessary to ensure that the Prospectus contained in the Exchange Offer
Registration Statement is available for sales of Series B Notes by
Broker-Dealers, the Company and the Guarantors agree to use their respective
best efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented, amended and current as required by and subject to the
provisions of Sections 6(a)
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<PAGE> 6
and (c) hereof and in conformity with the requirements of this Agreement, the
Act and the policies, rules and regulations of the Commission as announced from
time to time, for a period of 180 days from the Consummation Deadline (which
period may be suspended pursuant to Section 4(d) below) or such shorter period
as will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold pursuant thereto. The Company and the
Guarantors shall provide sufficient copies of the latest version of such
Prospectus to such Broker-Dealers, promptly upon request, and in no event later
than three days after such request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
applicable law (after the Company and the Guarantors have complied with the
procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer
Restricted Securities shall notify the Company within 20 Business Days following
the Consummation Deadline that (A) based on advice of counsel (which may be
internal counsel) such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer, (B) such Holder may not resell the Series B
Notes acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder or (C)
such Holder is a Broker-Dealer and holds Series A Notes acquired directly from
the Company or any of its Affiliates, then the Company and the Guarantors shall:
(x) cause to be filed, on or prior to 30 days after the earlier of (i)
the date on which the Company determines that the Exchange Offer
Registration Statement cannot be filed as a result of clause (a)(i) above
and (ii) the date on which the Company receives the notice specified in
clause (a)(ii) above, (such earlier date, the "FILING DEADLINE"), a shelf
registration statement pursuant to Rule 415 under the Act (which may be an
amendment to the Exchange Offer Registration Statement (the "SHELF
REGISTRATION STATEMENT")), relating to all Transfer Restricted Securities;
and
(y) shall use their respective best efforts to cause such Shelf
Registration Statement to become effective on or prior to 60 days after the
Filing Deadline for the Shelf Registration Statement (such 60th day the
"EFFECTIVENESS DEADLINE").
If, after the Company has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law (i.e., clause
(a)(i) above), then the filing of the Exchange Offer Registration Statement
shall be deemed to satisfy the requirements of clause (x) above; provided that,
in such event, the Company shall remain obligated to meet the Effectiveness
Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii)
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<PAGE> 7
hereof, the Company and the Guarantors shall use their respective best efforts
to keep any Shelf Registration Statement required by this Section 4(a)
continuously effective, supplemented, amended and current as required by and
subject to the provisions of Sections 6(b) and (c) hereof and in conformity with
the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of at
least two years (as may be extended pursuant to Section 6(d)) following the
Closing Date, or such shorter period as will terminate when all Transfer
Restricted Securities covered by such Shelf Registration Statement have been
sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
(c) Expiration Rights. Holders that do not give the written notice within
the 20 Business Days set forth in Section 4(a) hereof, if required to be given,
will no longer have any registration rights pursuant to this Section 4 and will
not be entitled to any liquidated damages with respect to any such filing
pursuant to Section 5 hereof in respect of the Company's and the Guarantor's
obligations with respect to the Shelf Registration Statement. Notwithstanding
the foregoing, no Affiliate of the Company shall be required to give such
written notice or deliver an opinion in order to maintain its registration
rights pursuant to this Section 4.
(d) Suspension. The Company and the Guarantors will have the ability to
suspend the Shelf Registration Statement or, after the Consummation Deadline,
the Exchange Offer Registration Statement (a "Suspension Period"), if the
Company and the Guarantors determine, in their reasonable best judgment, upon
written advice of counsel, that the continued effectiveness and use of the Shelf
Registration Statement or the Exchange Offer Registration Statement, as the case
may be, would require the disclosure of confidential information or interfere
with any financing, acquisition, reorganization or other material transaction
involving the Company. A Suspension Period shall commence on and include the
date that the Company and the Guarantors give notice that the Shelf Registration
Statement or the Exchange Offer Registration Statement, as the case may be, is
no longer effective or the Prospectus included therein is no longer usable for
offers and sales of Transfer Restricted Securities covered by such Registration
Statement and continue until holders of such Transfer Restricted Securities
either receive the copies of the supplemented or amended prospectus contemplated
by Section 6(c) hereof or are advised in writing by the Company and the
Guarantors that use of the Prospectus may be resumed. Any suspensions with
respect to the Shelf Registration Statement, taken as a whole, may not exceed 60
days in the aggregate. Any suspension with respect to the Exchange
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<PAGE> 8
Offer Registration Statement shall not be limited in the aggregate but each such
Suspension Period shall continue only for as long as reasonably necessary to
avoid disclosure of any such confidential information, to avoid any such
interference or to amend the Registration Statement or supplement the Prospectus
to comply with the requirements of the Act.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated on or prior to the Consummation Deadline or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable with
resales of Transfer Restricted Securities during the respective periods
specified in Section 3 or Section 4, as applicable without being succeeded
immediately by a post-effective amendment to such Registration Statement that
cures such failure and that is itself declared effective within 15 Business Days
of filing such post-effective amendment to the Registration Statement (each such
event referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then
the Company and the Guarantors hereby jointly and severally agree to pay to each
Holder of Transfer Restricted Securities affected thereby liquidated damages
("LIQUIDATED DAMAGES") in an amount equal to $0.05 per week per $1,000 in
principal amount of Transfer Restricted Securities held by such Holder for each
week or portion thereof that the Registration Default continues for the first
90-day period immediately following the occurrence of such Registration Default.
The amount of the Liquidated Damages shall increase by an additional $0.05 per
week per $1,000 in principal amount of Transfer Restricted Securities with
respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of Liquidated Damages of $0.35 per week per
$1,000 in principal amount of Transfer Restricted Securities; provided that the
Company and the Guarantors shall in no event be required to pay Liquidated
Damages for more than one Registration Default at any given time.
Notwithstanding anything to the contrary set forth herein, (1) upon filing of
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (i) above, (2) upon the effectiveness of
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (ii) above, (3) upon Consummation of the
Exchange Offer, in the case of (iii) above, or (4) upon the filing of a
post-effective amendment to the Registration Statement or an additional
Registration Statement that causes the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement) to again be declared
effective or made usable in the case of (iv) above, the Liquidated Damages
payable with respect to the Transfer Restricted Securities as a result of such
clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued Liquidated Damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which Liquidated Damages
are due cease to be Transfer Restricted Securities, all obligations of the
Company and the Guarantors to pay Liquidated Damages with respect to securities
shall
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<PAGE> 9
survive until such time as such obligations with respect to such securities
shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company and the Guarantors shall (x) comply with all applicable
provisions of Section 6(c) below, (y) use their respective best efforts to
effect such exchange and to permit the resale of Series B Notes by
Broker-Dealers that tendered in the Exchange Offer Series A Notes that such
Broker-Dealer acquired for its own account as a result of its market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its Affiliates) being sold in accordance
with the intended method or methods of distribution thereof, and (z) comply with
all of the following provisions:
(i) If, following the date hereof there has been announced a change in
Commission policy with respect to exchange offers, such as the Exchange
Offer, that in the reasonable opinion of counsel to the Company raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company and the Guarantors hereby agree to seek
a no-action letter or other favorable decision from the Commission allowing
the Company and the Guarantors to Consummate an Exchange Offer for such
Transfer Restricted Securities. The Company and the Guarantors hereby agree
to use its reasonable best efforts in pursuing the issuance of such a
decision to the Commission staff level. In connection with the foregoing,
the Company and the Guarantors hereby agree to take all such other actions
as may be requested by the Commission or otherwise required in connection
with the issuance of such decision, including without limitation (A)
participating in telephonic conferences with the Commission, (B) delivering
to the Commission staff an analysis prepared by counsel to the Company
setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C)
diligently pursuing a resolution (which need not be favorable) by the
Commission staff;
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker Dealer) shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company and the Guarantors (which may be contained in
the letter of transmittal contemplated by the Exchange Offer Registration
Statement) to the effect that (A) it is not an Affiliate of the Company,
(B) it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the Series B Notes to be issued in the Exchange Offer and
(C) it is acquiring the Series B Notes in its ordinary course of business.
As a condition to its participation in the Exchange Offer each Holder using
the Exchange Offer to participate in a distribution of the Series B Notes
shall acknowledge and agree that, if the resales are of Series B Notes
obtained by such Holder in exchange for Series A Notes acquired directly
from the Company or an Affiliate thereof, it (1) could not, under
Commission policy as in effect
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<PAGE> 10
on the date of this Agreement, rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and
Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted
in the Commission's letter to Shearman & Sterling dated July 2, 1993, and
similar no-action letters (including, if applicable, any no-action letter
obtained pursuant to clause (i) above), and (2) must comply with the
registration and prospectus delivery requirements of the Act in connection
with a secondary resale transaction and that such a secondary resale
transaction must be covered by an effective registration statement
containing the selling security holder information required by Item 507 or
508, as applicable, of Regulation S-K; and
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as
interpreted in the Commission's letter to Shearman & Sterling dated July 2,
1993, and, if applicable, any no-action letter obtained pursuant to clause
(i) above, (B) including a representation that neither the Company nor any
Guarantor has entered into any arrangement or understanding with any Person
to distribute the Series B Notes to be received in the Exchange Offer and
that, to the best of the Company's and each Guarantor's information and
belief, each Holder participating in the Exchange Offer is acquiring the
Series B Notes in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the
Series B Notes received in the Exchange Offer and (C) any other undertaking
or representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above, if applicable.
(b) Shelf Registration Statement. In connection with the Shelf Registration
Statement, the Company and the Guarantors shall:
(i) comply with all the provisions of Section 6(c) below and use their
respective reasonable best efforts to effect such registration to permit
the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated
in the information furnished to the Company pursuant to Section 4(b)
hereof), and pursuant thereto the Company and the Guarantors will prepare
and file with the Commission a Registration Statement relating to the
registration on any appropriate form under the Act, which form shall be
available for the sale of the Transfer Restricted Securities in accordance
with the intended method or methods of distribution thereof within the time
periods and otherwise in accordance with the provisions hereof; and
(ii) issue, upon the request of any Holder or purchaser of Series A
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to the
aggregate principal amount of
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<PAGE> 11
Series A Notes sold pursuant to the Shelf Registration Statement and
surrendered to the Company for cancellation; the Company shall register
Series B Notes on the Shelf Registration Statement for this purpose and
issue the Series B Notes to the purchaser(s) of securities subject to the
Shelf Registration Statement in the names as such purchaser(s) shall
designate.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement, the Company and the
Guarantors shall:
(i) use their respective reasonable best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that would cause
any such Registration Statement or the Prospectus contained therein (A) to
contain an untrue statement of material fact or omit to state any material
fact necessary to make the statements therein, with regard to the
Prospectus, in light of the circumstances in which they were made, not
misleading or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the
Company and the Guarantors shall file promptly an appropriate amendment to
such Registration Statement curing such defect, and, if Commission review
is required, use their respective best efforts to cause such amendment to
be declared effective as soon as practicable;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may
be necessary to keep such Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as the case may be;
cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under
the Act, and to comply fully with Rules 424, 430A and 462, as applicable,
under the Act in a timely manner; and comply with the provisions of the Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth
in such Registration Statement or supplement to the Prospectus;
(iii) advise each Holder promptly and, if requested by such Holder,
confirm such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to
any applicable Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, and (D)
of the existence of any fact or the
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<PAGE> 12
happening of any event that makes any statement of a material fact made in
the Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Registration
Statement in order to make the statements therein not misleading, or that
requires the making of any additions to or changes in the Prospectus in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. If at any time the Commission
shall issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities
or Blue Sky laws, the Company and the Guarantors shall use their respective
best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(iv) subject to Section 6(c)(i), if any fact or event contemplated by
Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to each Holder whose Transfer Restricted Securities have
been included in a Shelf Registration Statement, before filing with the
Commission, copies of any Registration Statement or any Prospectus included
therein or any amendments or supplements to any such Registration Statement
or Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review and comment of such Holders in connection with such
sale, if any, for a period of at least five Business Days, and the Company
will not file any such Registration Statement or Prospectus or any
amendment or supplement to any such Registration Statement or Prospectus
(including all such documents incorporated by reference) to which such
Holders shall reasonably object within five Business Days after the receipt
thereof. A Holder shall be deemed to have reasonably objected to such
filing if such Registration Statement, amendment, Prospectus or supplement,
as applicable, as proposed to be filed, contains an untrue statement of a
material fact or omits to state any material fact necessary to make the
statements therein, with regard to the Prospectus, in light of the
circumstances in which they were made, not misleading or fails to comply
with the applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to each Holder whose Transfer Restricted
Securities have been included in a Shelf Registration Statement in
connection with such exchange or sale, if any, make the Company's and the
Guarantors' representatives available for discussion of such
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<PAGE> 13
document and other customary due diligence matters, and include such
information in such document prior to the filing thereof as such Holders
may reasonably request;
(vii) make available, at reasonable times, for inspection by each
Holder whose Transfer Restricted Securities have been included in a Shelf
Registration Statement and any attorney or accountant retained by such
Holders, all financial and other records, pertinent corporate documents of
the Company and the Guarantors and cause the Company's and the Guarantors'
officers, directors and employees to supply all information reasonably
requested by any such Holder, attorney or accountant in connection with
such Registration Statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its effectiveness;
(viii) if requested by any Holder whose Transfer Restricted Securities
have been included in a Shelf Registration Statement in connection with
such exchange or sale, promptly include in any Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such Holders may reasonably request to have
included therein, including, without limitation, information relating to
the "Plan of Distribution" of the Transfer Restricted Securities; and make
all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be included in such Prospectus supplement or post-effective
amendment;
(ix) furnish to each Holder upon request in connection with such,
exchange or sale, without charge, at least one copy of the Registration
Statement, as first filed with the Commission, and of each amendment
thereto, including all documents incorporated by reference therein and all
exhibits (including exhibits incorporated therein by reference);
(x) deliver to each Holder upon request without charge, as many copies
of the Prospectus (including each preliminary prospectus) and any amendment
or supplement thereto as such Holder reasonably may request; the Company
and the Guarantors hereby consent to the use (in accordance with law and
subject to Section 6(d) hereof) of the Prospectus and any amendment or
supplement thereto by each selling Holder in connection with the offering
and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
(xi) upon the request of any Holder, enter into such agreements
(including underwriting agreements) and make such representations and
warranties and take all such other actions in connection therewith in order
to expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any applicable Registration Statement contemplated
by this Agreement as may be reasonably requested by any Holder in
connection with any sale or resale pursuant to any applicable Registration
Statement. In such connection, the Company and the Guarantors shall:
(A) upon request of any Holder, furnish (or in the case of
paragraphs (2) and (3), use its reasonable best efforts to cause to be
furnished) to
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<PAGE> 14
each Holder, upon Consummation of the Exchange Offer or upon the
effectiveness of the Shelf Registration Statement, as the case may be:
(1) a certificate, dated such date, signed on behalf of the
Company and each Guarantor by (x) the President or any Vice President
and (y) a principal financial or accounting officer of the Company and
such Guarantor, confirming, as of the date thereof, the matters set
forth in Sections 6(aa), 9(a) and 9(b) of the Purchase Agreement and
such other similar matters as such Holders may reasonably request;
(2) an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration Statement,
as the case may be, of counsel for the Company and the Guarantors
covering matters similar to those set forth in paragraph (e) of Section
9 of the Purchase Agreement and such other matter as such Holder may
reasonably request, and in any event including a statement to the
effect that such counsel has participated in conferences with officers
and other representatives of the Company and the Guarantors,
representatives of the independent public accountants for the Company
and the Guarantors and have considered the matters required to be
stated therein and the statements contained therein, although such
counsel has not independently verified the accuracy, completeness or
fairness of such statements; and that such counsel advises that, on the
basis of the foregoing, no facts came to such counsel's attention that
caused such counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or any
post-effective amendment thereto became effective and, in the case of
the Exchange Offer Registration Statement, as of the date of
Consummation of the Exchange Offer, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
that the Prospectus contained in such Registration Statement as of its
date and, in the case of the opinion dated the date of Consummation of
the Exchange Offer, as of the date of Consummation, contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Without
limiting the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial data included in
any Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated the date of Consummation
of the Exchange Offer, or as of the date of effectiveness of the Shelf
Registration Statement, as the case may be, from the Company's
independent accountants, in the customary form and covering matters of
the type customarily covered in comfort letters to underwriters in
connection with
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<PAGE> 15
underwritten offerings, and affirming the matters set forth in the
comfort letters delivered pursuant to Section 9(g) of the Purchase
Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence compliance with
the matters covered in clause (A) above and with any customary
conditions contained in any agreement entered into by the Company and
the Guarantors pursuant to this clause (xi);
(xii) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders and their counsel in connection with the
registration and qualification of the Transfer Restricted Securities under
the securities or Blue Sky laws of such jurisdictions as the selling
Holders may request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable Registration Statement;
provided, however, that neither the Company nor any Guarantor shall be
required to register or qualify as a foreign corporation where it is not
now so qualified or to take any action that would subject it to the service
of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any jurisdiction
where it is not now so subject;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and to register such
Transfer Restricted Securities in such denominations and such names as the
selling Holders may request at least two Business Days prior to such sale
of Transfer Restricted Securities;
(xiv) use their respective best efforts to cause the disposition of the
Transfer Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities, subject
to the proviso contained in clause (xii) above;
(xv) provide a CUSIP number for all Transfer Restricted Securities not
later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which are
in a form eligible for deposit with The Depository Trust Company;
(xvi) otherwise use their respective best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 under the Act (which need
not be audited) covering a twelve-month period beginning
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<PAGE> 16
after the effective date of the Registration Statement (as such term is
defined in paragraph (c) of Rule 158 under the Act);
(xvii) cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement required by this
Agreement and, in connection therewith, cooperate with the Trustee and the
Holders to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute and use its best efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other forms
and documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner; and
(xviii) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (including any notice
referred to in Section 4(d) hereof) (in each case, a "SUSPENSION NOTICE"), such
Holder will forthwith discontinue disposition of Transfer Restricted Securities
pursuant to the applicable Registration Statement until (i) such Holder has
received copies of the supplemented or amended Prospectus contemplated by
Section 6(c)(iv) hereof, or (ii) such Holder is advised in writing by the
Company that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings that are incorporated by reference in
the Prospectus (in each case, the "RECOMMENCEMENT DATE"). Each Holder receiving
a Suspension Notice hereby agrees that it will either (i) destroy any
Prospectuses, other than permanent file copies, then in such Holder's possession
which have been replaced by the Company with more recently dated Prospectuses or
(ii) deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Holder's possession of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of the Suspension Notice. The time period regarding the effectiveness of
such Registration Statement set forth in Section 3 or 4 hereof, as applicable,
shall be extended by a number of days equal to the number of days in the period
from and including the date of delivery of the Suspension Notice to the date of
delivery of the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors' performance
of or compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses; (ii) all fees and
expenses of compliance with federal securities and state Blue Sky or securities
laws; (iii) all expenses of printing (including printing certificates for the
Series B Notes to be issued in the Exchange Offer and printing of Prospectuses),
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Company, the
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<PAGE> 17
Guarantors and in the event of a Shelf Registration Statement filed pursuant to
Section 4(a)(i), to the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing the Series B Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company and the Guarantors (including the
expenses of any special audit and comfort letters required by or incident to
such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities who are tendering Series A Notes in the Exchange Offer and/or selling
or reselling Series A Notes or Series B Notes pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be O'Melveny & Myers LLP,
unless another firm shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors agree, jointly and severally, to
indemnify and hold harmless each Holder, its directors, officers and each
Person, if any, who controls such Holder (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act), from and against any and all losses,
claims, damages, liabilities, judgments, (including without limitation, any
reasonable legal or other expenses incurred in connection with investigating or
defending any matter, including any action that could give rise to any such
losses, claims, damages, liabilities or judgments) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, preliminary prospectus or Prospectus (or any amendment
or supplement thereto) provided by the Company to any Holder or any prospective
purchaser of Series B Notes or registered Series A Notes, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by an untrue statement or omission or alleged untrue statement or
omission that is based upon information relating to any of the Holders furnished
in writing to the Company by any of the Holders; provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Holder asserting any losses, claims, damages,
liabilities or judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
any material misstatement or
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<PAGE> 18
omission or alleged material misstatement or omission was cured in the
Prospectus, as so amended or supplemented.
(b) Each Holder of Transfer Restricted Securities agrees, severally and not
jointly, to indemnify and hold harmless the Company and the Guarantors, and
their respective directors and officers, and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company, or the Guarantors to the same extent as the foregoing indemnity
from the Company and the Guarantors set forth in Section 8(a) above, but only
with reference to information relating to such Holder furnished in writing to
the Company by such Holder expressly for use in any Registration Statement. In
no event shall any Holder, its directors, officers or any Person who controls
such Holder be liable or responsible for any amount in excess of the amount by
which the total amount received by such Holder with respect to its sale of
Transfer Restricted Securities pursuant to a Registration Statement exceeds (i)
the amount paid by such Holder for such Transfer Restricted Securities and (ii)
the amount of any damages that such Holder, its directors, officers or any
Person who controls such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in writing
and the indemnifying person shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 8(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying person, (ii) the indemnifying person shall have failed to
assume the defense of such action or employ counsel reasonably satisfactory to
the indemnified party or (iii) the named parties to any such action (including
any impleaded parties) include both the indemnified party and the indemnifying
person, and the indemnified party shall have been advised by such counsel that
the joint representation of such parties could be inadvisable due to potential
conflicts of interest or because there may be one or more legal defenses
available to such indemnified party which are different from or additional to
those available to the indemnifying party (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of the
indemnified party. In any such case, the indemnifying person shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) for all
indemnified parties and all such fees and expenses shall be reimbursed as they
are incurred. Such firm shall be designated in writing by a
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<PAGE> 19
majority of the Holders, in the case of the parties indemnified pursuant to
Section 8(a), and by the Company and Guarantors, in the case of parties
indemnified pursuant to Section 8(b). The indemnifying person shall indemnify
and hold harmless the indemnified party from and against any and all losses,
claims, damages, liabilities and judgments by reason of any settlement of any
action effected with its written consent. No indemnifying person shall, without
the prior written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any pending
or threatened action in respect of which the indemnified party is a party and
indemnity or contribution has been, or would be entitled to be, sought hereunder
by the indemnified party, unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability on
claims that are the subject matter of such action and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section 8
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
person, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors, on the one hand, and the Holders, on the other hand, from their sale
of Transfer Restricted Securities or (ii) if the allocation provided by clause
8(d)(i) is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Company and the Guarantors, on the one hand,
and of the Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the Company and the Guarantors, on the one hand, and of the Holder, on
the other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or such Guarantor, on the one hand, or by the Holder, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, the Guarantors and each Holder agree that it would not be just
and equitable if contribution pursuant to this Section 8(d) were determined by
pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action that
could have given rise to such losses, claims, damages, liabilities or judgments.
Notwithstanding the provisions of this Section 8, no Holder, its directors, its
officers or any Person, if any, who controls such Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of Transfer Restricted
Securities pursuant to a Registration
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<PAGE> 20
Statement exceeds (i) the amount paid by such Holder for such Transfer
Restricted Securities and (ii) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(d) are several in proportion to the respective principal amount of
Transfer Restricted Securities held by each Holder hereunder and not joint.
SECTION 9. RULE 144A AND RULE 144
The Company and each Guarantor agree with each Holder, for so long as any
Transfer Restricted Securities remain outstanding and during any period in which
the Company or such Guarantor (i) is not subject to Section 13 or 15(d) of the
Exchange Act, to make available, upon request of any Holder, to such Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of
the Exchange Act, to make all filings required thereby in a timely manner in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors acknowledge and agree that any
failure by the Company and/or the Guarantors to comply with their respective
obligations under Sections 3 and 4 hereof may result in material irreparable
injury to the Initial Purchasers or the Holders for which there is no adequate
remedy at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, the Initial Purchasers or
any Holder may obtain such relief as may be required to specifically enforce the
Company's and the Guarantor's obligations under Sections 3 and 4 hereof. The
Company and the Guarantors further agree to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Guarantor will,
on or after the date of this Agreement, enter into any agreement with respect to
its securities that is inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof. Neither the
Company nor any Guarantor has previously entered into any agreement granting any
registration rights with respect to its securities to any Person. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's and the
Guarantors' securities under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section
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<PAGE> 21
10(c)(i), the Company has obtained the written consent of Holders of all
outstanding Transfer Restricted Securities and (ii) in the case of all other
provisions hereof, the Company has obtained the written consent of Holders of a
majority of the outstanding principal amount of Transfer Restricted Securities
(excluding Transfer Restricted Securities held by the Company or its
Affiliates). Notwithstanding the foregoing, a waiver or consent to departure
from the provisions hereof that relates exclusively to the rights of Holders
whose Transfer Restricted Securities are being tendered pursuant to the Exchange
Offer, and that does not affect directly or indirectly the rights of other
Holders whose Transfer Restricted Securities are not being tendered pursuant to
such Exchange Offer, may be given by the Holders of a majority of the
outstanding principal amount of Transfer Restricted Securities subject to such
Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party beneficiaries
to the agreements made hereunder between the Company and the Guarantors, on the
one hand, and the Initial Purchasers, on the other hand, and shall have the
right to enforce such agreements directly to the extent they may deem such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(e) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company or the Guarantors:
Worldwide Flight Services, Inc.
1001 West Euless Boulevard, Suite 320
Euless, Texas 76040
Attention: Peter A. Pappas
with a required copy to:
Castle Harlan, Inc.
150 East 58th St., 37th Floor
New York, New York 10155
Attention: Leonard M. Harlan and Marcel Fournier
and
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Attention: Marc Weingarten
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the
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<PAGE> 22
mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express
assignment, subsequent Holders; provided, that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Transfer
Restricted Securities in violation of the terms hereof or of the Purchase
Agreement or the Indenture. If any transferee of any Holder shall acquire
Transfer Restricted Securities in any manner, whether by operation of law
or otherwise, such Transfer Restricted Securities shall be held subject to
all of the terms of this Agreement, and by taking and holding such Transfer
Restricted Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of
this Agreement, including the restrictions on resale set forth in this
Agreement and, if applicable, the Purchase Agreement, and such Person shall
be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the registration rights granted
with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
[Remainder of page intentionally left blank; signature pages follow]
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<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
WORLDWIDE FLIGHT SERVICES, INC.
By: /s/ Peter A. Pappas
-------------------------------------
Name: Peter A. Pappas
Title: Chief Executive Officer
WORLDWIDE FLIGHT FINANCE COMPANY
By: /s/ Peter A. Pappas
-------------------------------------
Name: Peter A. Pappas
Title: President
WORLDWIDE FLIGHT SECURITY SERVICE
CORPORATION
By: /s/ Peter A. Pappas
-------------------------------------
Name: Peter A. Pappas
Title: President
MIAMI INTERNATIONAL AIRPORT
CARGO FACILITIES & SERVICES, INC.
By: /s/ Peter A. Pappas
-------------------------------------
Name: Peter A. Pappas
Title: President
MIAMI AIRCRAFT SUPPORT, INC.
By: /s/ Peter A. Pappas
-------------------------------------
Name: Peter A. Pappas
Title: President
INTERNATIONAL ENTERPRISES GROUP, INC.
By: /s/ Peter A. Pappas
-------------------------------------
Name: Peter A. Pappas
Title: President
S-1
<PAGE> 24
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CHASE SECURITIES INC.
BY: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Justin Vorwerk
-------------------------------
Name: Justin Vorwerk
Title: Managing Director
S-2
<PAGE> 1
EXHIBIT 9.1
FORM OF VOTING TRUST AGREEMENT
Voting Trust Agreement, dated as of _______ ___, 1999, among
WFS Holdings, Inc., a Delaware corporation (the "Company"), each of the
stockholders listed on the signature pages hereto (the "Stockholders") and
Leonard M. Harlan and any successor appointed as provided in this Agreement, as
Voting Trustee (the "Voting Trustee").
RECITALS
In order to secure the investment by Castle Harlan Partners
III, L.P., for which the Voting Trustee is the investment manager, in the
Company's capital stock, each of the Stockholders deems it advisable to deposit
the number of shares of voting Common Stock, par value $.01 per share of the
Company ("Voting Common Stock") set forth opposite his name on Appendix A hereto
(such shares, the "Shares") with the Voting Trustee, and the Voting Trustee has
consented to act under this Agreement for the purposes herein provided. Such
Shares, including any other shares of stock entitled to vote in the election of
directors generally that may be issued in respect of, in exchange for, or in
substitution of any Shares transferred to the Voting Trustee pursuant to Section
1 hereof together with any Shares that may be otherwise acquired by the
Stockholders during the term hereof, are hereinafter referred to collectively as
the "Trust Shares".
In consideration of the premises and of the mutual
undertakings of the parties hereinafter set forth, a voting trust (the "Trust")
in respect of the Trust Shares is hereby created and established, subject to the
following terms and conditions, to all and every one of which the parties hereto
expressly assent and agree.
1. DEPOSIT OF SHARES
Transfer of Shares. Each Stockholder agrees that, concurrently
with the execution and delivery of this Agreement and until the expiration or
termination of this Agreement, such Stockholder will transfer and assign, or
cause to be transferred and assigned, to the Voting Trustee his respective Trust
Shares and will deposit or cause to be deposited hereunder, with the Voting
Trustee, the certificates for such Trust Shares, all of which certificates, if
not registered in the name of the Voting Trustee, shall be duly endorsed in
blank or accompanied by proper instruments of assignment and transfer thereof
duly executed in blank. Each Stockholder agrees that until the termination of
this Agreement no Trust Shares of the Company, including Trust Shares issued
upon conversion of Non-Voting Common Stock of the Company, par value $.01 per
share, shall be held by such Stockholder, but all such Trust Shares shall be
deposited with the Voting Trustee in accordance with the terms and conditions of
this Agreement.
2. VOTING TRUST CERTIFICATES
(a) Issue of Certificates. Subject to the provisions of
Section 4 hereof, the Voting Trustee shall from time to time issue to each
Stockholder, with respect to the Trust Shares so deposited hereunder, a Voting
Trust Certificate or Voting Trust Certificates, each in the form of Exhibit A
hereto, for the number of shares equal to that deposited by such Stockholder,
which
<PAGE> 2
Certificate or Certificates shall refer to the provisions of this Agreement and
be registered on the books of the Trust in such Stockholder's name.
(b) Transfer of Certificates. Voting Trust Certificates shall,
to the extent permitted by law and the terms of this Agreement, be transferable
in the same manner as negotiable instruments; provided, however, that ownership
of such Voting Trust Certificates shall be transferable on the books of the
Trust only upon (i) the surrender of such Voting Trust Certificates, properly
endorsed by the registered holders and (ii) the delivery to the Voting Trustee
(A) by the proposed transferee, of a valid undertaking, in form and substance
satisfactory to the Voting Trustee, to become, and such transferee becomes,
bound by the terms of this Agreement and (B) by the proposed transferor, of an
opinion of counsel or no action letter as provided in Section 4 hereof. Each
Stockholder agrees to cause any transferee of its Trust Shares to become bound
by the terms of this Agreement.
3. STOCKHOLDERS AGREEMENT
(a) Limitations on Transfer. All Voting Trust Certificates
issued hereunder shall be entitled to the rights under, and subject to the
limitations on transfer, right of first offer, tag along rights, and drag-along
rights and all other terms provided, with respect to the Trust Shares now or
hereafter transferred to the Voting Trustee hereunder, in the Stockholders
Agreement among the Company and certain of its stockholders (the "Stockholders
Agreement"), and the Management Stock Buyback Agreement entered into in
connection therewith (the "Buyback Agreement") a copy of each of which is on
file with the Company.
(b) Notices. Any notice required to be given by any
Stockholder to the Company or others under the Stockholders Agreement or the
Buyback Agreement with respect to the purchase or sale of any Trust Shares
transferred hereunder shall be given to the Voting Trustee who shall promptly
transmit such notice to the Company, and the Company shall thereafter give all
notices required under such Stockholders Agreement or Buyback Agreement to be
given to others, including the other stockholders of the Company.
4. REGISTRATION OF CERTIFICATES
Certificates Not Registered. The Voting Trustee will not
register the Voting Trust Certificates under the Securities Act of 1933, as
amended (the "Securities Act"), or under the securities laws of any state in
reliance upon each Stockholder's representation hereby made that he or it will
hold the Voting Trust Certificates subject to all applicable provisions of the
Securities Act and such state laws and all applicable rules and regulations
promulgated thereunder, and will not offer, sell, transfer or otherwise dispose
of said Voting Trust Certificates or any part thereof unless he or it shall have
first obtained (i) an opinion of counsel, in form and substance satisfactory to
the Voting Trustee, to the effect that such disposition will not result in a
violation of any federal or state law applicable to the offer and sale of
securities, or (ii) written advice from the Securities and Exchange Commission
or any successor thereto that it will take no action with respect to any such
proposed disposition of said Voting Trust Certificates.
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<PAGE> 3
5. REPLACEMENT OF CERTIFICATES
Issue of Replacement Certificates. In case any Voting Trust
Certificate shall be mutilated, lost destroyed or stolen, the Voting Trustee may
issue and deliver in exchange therefor and upon cancellation of the mutilated
Voting Trust Certificate, or in lieu of the lost, destroyed or stolen Voting
Trust Certificate, a new Voting Trust Certificate or Voting Trust Certificates
representing a like number of Trust Shares, upon the production of evidence of
such loss, destruction or theft, satisfactory to the Voting Trustee, receipt of
an indemnity satisfactory to the Voting Trustee and compliance also with such
other reasonable conditions as the Voting Trustee may prescribe.
6. STOCK CERTIFICATES HELD BY VOTING TRUSTEES
(a) Surrender of Certificates. The certificates for Trust
Shares deposited with the Voting Trustee shall, if not registered in the name of
the Voting Trustee, be surrendered to the Company and canceled and new
certificates therefor issued to and in the name of the Voting Trustee. Notation
shall be made on the face of all certificates issued in the name of the Voting
Trustee that they are issued pursuant to this Agreement, and such fact shall
also be noted in the records of stock ownership of the Company.
(b) Trust Shares Held in Trust. All Trust Shares deposited
with the Voting Trustee hereunder shall be held in trust for the Stockholders
and their respective heirs, executors, administrators and assigns, and used and
applied by the Voting Trustee and its successors in office for the purposes of
and in accordance with this Agreement and shall remain subject to the
Stockholders Agreement.
(c) Transfer of Shares. The Voting Trustee may cause any Trust
Shares at any time held by it under this Agreement to be transferred to any name
or names other than the name of the Voting Trustee herein named, if such
transfer becomes necessary by reason of any change in the person holding the
office of Voting Trustee as hereinafter provided.
7. DIVIDENDS; SUBSCRIPTION RIGHTS
(a) Dividends. The Company is hereby authorized and directed,
and the Company hereby agrees, to pay all distributions and dividends that are
payable (and to which the holders of the capital stock shall be entitled) in
cash, shares (other than shares entitled to vote in the election of directors
generally (the "Voting Stock")) or other property directly to the registered
holder of the Voting Trust Certificate evidencing the Trust Shares on which such
distributions, redemption payments or dividends are declared. All Voting Stock
issued as dividends or otherwise in respect of the Trust Shares of the Company
shall also be subject to this Agreement. The stock certificates for such Voting
Stock shall be issued in the name of and delivered to the Voting Trustee to be
held hereunder, subject to all of the provisions hereof, and the Voting Trustee
shall issue additional Voting Trust Certificates in respect of such shares to
the Stockholders entitled thereto.
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<PAGE> 4
(b) Distribution of Capital Stock. In case the Company shall
at any time issue any stock or other securities to which the holders of the
capital stock of the Company shall be entitled to subscribe by way of preemptive
right or otherwise, or any Stockholder shall be otherwise entitled (including,
without limitation, pursuant to the Stockholders Agreement) to purchase any
shares of capital stock of the Company, the Voting Trustee shall promptly give
notice of such right so to subscribe or purchase and of the terms thereof to
such Stockholder at his or its address registered with the Voting Trustee; and
such Stockholder upon providing the Voting Trustee with funds in the requisite
amount, shall have the right, subject to such reasonable regulations as may be
prescribed by the Voting Trustee, to instruct the Voting Trustee to subscribe
for or purchase such stock or other securities, or any part thereof; and to the
extent that such Stockholder shall fail to exercise such rights the Voting
Trustee shall be entitled, in its absolute discretion, to permit such rights so
to subscribe or purchase to lapse. The Voting Trustee shall act on behalf of any
Stockholder in this regard only upon receiving proper instructions in writing
from such Stockholder; any failure of such Stockholder to deliver a written
instruction to the Voting Trustee shall be treated as a negative instruction
from such Stockholder to the Voting Trustee. Upon receiving proper affirmative
instructions in writing, the Voting Trustee shall subscribe for or purchase such
stock or other securities (but only out of funds provided by such Stockholder
for the purpose) and shall distribute the same to the instructing Stockholder,
except that any shares of Voting Stock of the Company, when so subscribed for or
purchased and received by the Voting Trustee, shall not be distributed but shall
be held hereunder, subject to all the provisions hereof, and the Voting Trustee
shall issue new or additional Voting Trust Certificates in respect of such
Voting Stock to such Stockholder.
8. ACTIONS BY VOTING TRUSTEE
(a) Proxy. A proxy may be given to any person other than the
Voting Trustee provided that such proxy may be voted only in accordance with
specific instructions given by the Voting Trustee.
(b) Agents. The Voting Trustee may at any time or from time to
time appoint an agent or agents and may delegate to such agent or agents the
performance of any administrative duty of the Voting Trustee, including, without
limitation, the appointment of a domestic bank or other institution to act as
custodian of the Trust Shares held by it hereunder. The fees of such agent or
agents shall constitute an expense of the Voting Trustee.
9. LIABILITY OF VOTING TRUSTEE; INDEMNIFICATION
(a) No Liability. The Voting Trustee assumes no liability as a
Stockholder, its interest hereunder being that of trustee only. In voting the
stock represented by the stock certificates held by it hereunder (which it may
do either in person or by proxy as aforesaid), the Voting Trustee will vote and
act in all matters in accordance with its best good faith judgment and the terms
of this Agreement, without taking into consideration the preferences of the
Stockholders; but it assumes no responsibility or liability in respect of any
action taken by it or taken in pursuance of its vote so cast, and the Voting
Trustee shall not incur any responsibility as trustee or otherwise by reason of
any error of fact or law, mistake of judgment, or of any matter or thing done or
suffered or omitted to be done under this Agreement, except for its own
individual gross negligence or willful misconduct.
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<PAGE> 5
(b) Agents. The Voting Trustee shall not be answerable for the
default or misconduct of any agent or attorney appointed by it in pursuance
hereof if such agent or attorney shall have been selected with reasonable care.
(c) Expenses. The Voting Trustee shall not be entitled to any
compensation for its services, but shall be reimbursed by the Stockholders for
any reasonable expenses (other than counsel, advisors' and agents' fees) paid or
incurred in the administration of the trust hereunder.
(d) Indemnity. The Stockholders hereby jointly and severally
agree that they will at all times protect, indemnify and save harmless the
Voting Trustee from any loss, cost or expense of any kind or character
whatsoever incurred in connection with this Agreement and the Trust created
hereunder except those, if any, arising from the gross negligence or willful
misconduct of the Voting Trustee, and will at all times themselves undertake,
assume full responsibility for, and pay all costs and expenses of any suit or
litigation of any character, including any proceedings before any governmental
agency, with respect to the Trust Shares or this Agreement and, if the Voting
Trustee shall be made a party thereto, the Stockholders will pay all costs and
expenses, including counsel fees, to which the Voting Trustee may be subject by
reason thereof. The Voting Trustee may consult with counsel and other advisors,
and the opinions of such counsel and advisors shall be full and complete
authorization and protection in respect of any action taken or omitted or
suffered by the Voting Trustee hereunder in good faith and in accordance with
such opinions.
(e) Survival. Notwithstanding any other provision hereof, the
provisions of this Section 9 shall survive the termination of this Agreement.
10. VOTING DISCRETION
(a) Voting Discretion. Until the termination of this Agreement
and the actual delivery of stock certificates in exchange for Voting Trust
Certificates hereunder, the Voting Trustee shall possess and shall be entitled
in its discretion, not subject to any review, to exercise in person or by proxy,
in respect of any and all Trust Shares at any time deposited under this
Agreement, all rights and powers of every name and nature, including the right
to vote thereon or to consent to any and every act of the Company, in the same
manner and to the same extent as if he were the absolute owner of such stock in
its own right.
(b) Permitted Actions. Without limiting the generality of the
foregoing paragraph (a), the Voting Trustee is specifically authorized to vote
for or consent to any of the following:
(i) the appointment, election, removal or replacement
of directors or officers of the Company;
(ii) the sale or disposal in the normal course of
business of any part or parts of the property, assets or business of the
Company;
(iii) any changes or amendments in or to the
Certificate of Incorporation or By-Laws of the Company;
5
<PAGE> 6
(iv) any loans to officers, directors or Stockholders
of the Company;
(v) any indemnification of officers, directors or
agents of the Company;
(vi) (a) an increase or decrease in the authorized
capital of the Company, (b) the creation or authorization of any class of
capital stock of the Company, (c) the issuance or sale of any shares of capital
stock or rights to acquire capital stock of the Company or any subsidiary of the
Company (by conversion, exercise of a warrant or option or otherwise);
(vii) the incurrence of any indebtedness for borrowed
money;
(viii) the declaration or payment of any dividend or
other distribution to the stockholders of the Company;
(ix) (a) entering into any transaction of merger,
consolidation or amalgamation, or liquidation, winding up or dissolution, (b)
the conveyance, sale, lease, transfer or other disposition of, in a transaction
or related series of transactions, substantially all of the Company's or any of
its subsidiaries' property, business or assets, (c) acquisition by purchase or
otherwise of all of the capital stock or other evidences of beneficial ownership
of the Company or any of its subsidiaries, or (d) any recapitalization or
similar restructuring transaction;
(x) the acquisition, directly or indirectly, of a
significant amount of assets other than in the ordinary course of business;
(xi) the sale or disposition of, directly or
indirectly, a significant amount of assets other than in the ordinary course of
business;
(xii) adoption of any stock option plan for employees
or any material changes in any such stock option plan or any other executive
compensation plan of the Company or any of its subsidiaries;
(xiii) any change in the annual compensation of any
officer of the Company;
(xiv) any extraordinary transaction, including any
transaction that changes or would change the nature of the business of the
Company or its subsidiaries; and
(xv) any other action that, by the terms of the
Delaware General Corporation Law of the State of Delaware or the Certificate of
Incorporation or By-laws of the Company, permits or requires a vote or approval
of the holders of the capital stock of the Company; and
(xvi) any action with respect to any of the foregoing
that any Stockholder might lawfully take.
(xvii) any other proposal to be voted on or consented
to by stockholders of the Company;
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<PAGE> 7
11. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder hereby represents and warrants to the Voting
Trustee as follows:
(a) Authority Relative to This Agreement. Such Stockholder has
all requisite power and authority to enter into this Agreement and to perform
its obligations hereunder. This Agreement has been duly authorized, executed and
delivered by such Stockholder and, assuming this Agreement constitutes a valid
and binding obligation of the other parties hereto, constitutes a legal, valid
and binding obligation of such Stockholder, enforceable against such Stockholder
in accordance with its terms, except to the extent that the enforceability
thereof may be limited by: (i) applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws from time to time in
effect affecting generally the enforcement of creditors' rights and remedies;
and (ii) general principles of equity, including, without limitation, principles
of reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in equity or at law).
(b) No Conflict. (i) The execution and delivery of this
Agreement by such Stockholder and performance of its obligations hereunder do
not (A) conflict with or violate any laws applicable to such Stockholder or by
which such Trust Shares held by such Stockholder are bound or affected or (B)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the Trust Shares held by such
Stockholder pursuant to, any note, bond, mortgage, indenture, contract, lease,
license, permit, franchise or other instrument or obligation to which such
Stockholder is a party or by which such Stockholder or the Trust Shares held by
such Stockholder are bound or affected.
(ii) The execution and delivery of this Agreement by such
Stockholder does not, and the performance of this Agreement by such Stockholder
will not, require any consent, authorization or approval or other action by, or
notice to or filing with, any governmental authority or other person.
(c) Title to the Trust Shares. As of the date hereof, each
Stockholder is the record and beneficial owner of the number of Trust Shares set
forth opposite such Stockholder's name on Appendix A hereto free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, contracts, limitations on such Stockholder's voting rights, charges and
other encumbrances of any nature whatsoever. Except as provided in this
Agreement, such Stockholder has not appointed or granted (and will not, after
the date hereof, appoint or grant) any proxy, which appointment or grant is
still effective, with respect to the shares set forth opposite such
Stockholder's name on Appendix A hereto.
12. TERM AND TERMINATION OF THIS AGREEMENT
(a) Term. Unless terminated sooner pursuant to paragraph (b)
below, this Agreement shall continue in effect for the maximum period permitted
by applicable law as in effect on the date hereof.
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<PAGE> 8
(b) Termination. This Agreement shall terminate (i) upon the
consummation of an Initial Public Offering, and (ii) when the Voting Trustee
fails to maintain voting control over at least 20% (including, without
limitation, Voting Stock owned by CHP III or any other person affiliated with
the Voting Trustee) of the outstanding Voting Stock of the Company. For purposes
of this Agreement, the term "Initial Public Offering" shall mean one or more
public offerings of any Shares of the Company, the aggregate proceeds to the
Company of which are at least $20 million, pursuant to a registration statement
filed with, and declared effective by, the Securities and Exchange Commission,
upon the consummation of which the Shares are listed on a United States
securities exchange or included in the NASDAQ National Market, other than a
registration on Form S-4 or S-8 (or their equivalents).
(c) Irrevocable. Subject to the foregoing paragraph (b),
during the term of this Agreement the Trust hereby created shall be irrevocable
and no Trust Shares held by the Voting Trustee pursuant to the terms of this
Agreement shall be transferred to or upon the order of the holder of a Voting
Trust Certificate evidencing the beneficial ownership thereof prior to the
termination of this Agreement.
13. DELIVERY OF STOCK CERTIFICATES UPON TERMINATION OF THIS AGREEMENT
(a) Stock Certificates. Upon termination of this Agreement,
the Voting Trustee, in exchange for and upon surrender of any Voting Trust
Certificates then outstanding, shall, in accordance with the terms hereof,
deliver certificates for capital stock of the Company of the series or class and
in the amount called for by such Voting Trust Certificate and either registered
in the name of the holder thereof or duly endorsed in blank or accompanied by
proper instruments of assignment and transfer thereof duly executed in blank to
the holder thereof, and the Voting Trustee may require the holder of such Voting
Trust Certificate to surrender the same for such exchange.
(b) Obligations of Trust. After any termination of this
Agreement as above provided with respect to all Trust Shares, and delivery by
the Voting Trustee of any stock or other property then held hereunder in
exchange for outstanding Voting Trust Certificates as provided in this Section
13, all further obligations or duties of the Voting Trustee under this Agreement
or any provision hereof shall cease.
14. RESIGNATION; SUCCESSOR TRUSTEE
The Voting Trustee may resign at any time by providing the
Company and each Stockholder with written notice to such effect thirty (30) days
prior to the effective date of such resignation. If for any reason Castle Harlan
Inc. shall cease to serve as Voting Trustee hereunder, the immediate successor
in such capacity shall be as determined by Castle Harlan Inc. in a written
notice to the Company on behalf of each Stockholder, provided that (i) the
person serving as Voting Trustee may at any time, and from time to time, replace
or designate a successor and (ii) each such successor shall be an officer of
Castle Harlan Inc. or an officer of Castle Harlan Partners III, L.P. ("CHP
III"). Each such successive designated person shall, upon assuming the duties
hereunder upon a vacancy occurring in the office of Voting Trustee, be the
Voting Trustee.
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<PAGE> 9
15. INTERESTS ALLOWED AS VOTING TRUSTEE
The Voting Trustee is the investment manager of CHP III and
may act in a comparable capacity for any successor thereto or assignee thereof.
The Stockholders acknowledge that the Voting Trustee will vote the Trust Shares
in a manner identical to the manner in which the Voting Stock owned by CHP III
or its successor or assignee shall be voted. The Voting Trustee may be a
creditor or stockholder of the Company and may act as a director, officer or
employee of, or consultant or advisor to, the Company and receive compensation
therefor. In addition, the Voting Trustee and any firm of which it may be a
member, and any of its affiliates, may contract with the Company or have a
pecuniary interest in any matter or transaction to which the Company may be a
party, or in which the Company may be in any way concerned.
16. EFFECT OF AGREEMENT UPON REPRESENTATIVES, SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be binding
upon the Voting Trustee and each Stockholder and their respective legal
representatives, successors and assigns.
17. MISCELLANEOUS
(a) Notices. All notices to be given to the owners of Voting
Trust Certificates shall be given by mailing the same in a sealed postpaid
envelope to the registered owners of Voting Trust Certificates addressed to
their respective addresses as shown on the books of the Trust, and any notice
whatsoever when mailed by or on behalf of the Voting Trustee to such registered
owners of Voting Trust Certificates as herein provided shall have the same
effect as though personally served on all holders of Voting Trust Certificates.
All notices to be given to the Voting Trustee shall be given by serving a copy
thereof upon him personally or by mailing the same in a sealed postpaid envelope
addressed to him at his address set forth below or to such other address as he
shall from time to time in writing designate.
(b) Filing of Agreement and Stockholder List. Until the
termination of this Agreement, one original counterpart hereof together with a
list of the names and addresses of all Stockholders indicating the number of
Trust Shares transferred to the Trust shall be filed at each of (i) the
principal office of the Company and (ii) the registered office of the Company in
the State of Delaware, and each such counterpart and list shall be open for the
inspection of any holder of any Voting Trust Certificate or any Stockholder of
the Company upon reasonable request, daily during business hours. Changes to the
list and amendments to this Agreement shall be promptly filed in the same
locations as they occur.
(c) Amendment. If at any time it is deemed advisable for the
parties hereto to amend or revoke this Agreement, it may be amended or revoked
by an agreement executed by the Voting Trustee, the Company and the holder or
holders of all of the Voting Trust Certificates.
(d) Acknowledgment of Obligations. The Voting Trustee accepts
the trust created hereby subject to all the terms and conditions herein
contained and agrees that it will exercise the powers and perform the duties of
Voting Trustee as set forth herein according to its best judgment.
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<PAGE> 10
(e) Entire Agreement; Amendments and Waivers. This Agreement
sets forth the entire understanding of the parties with respect to the subject
matter hereof. The failure of any party to seek redress for the violation of or
to insist upon the strict performance of any term of this Agreement shall not
constitute a waiver of such term and such party shall be entitled to enforce
such term without regard to such forbearance. This Agreement may be amended only
by the written consent of each party hereto, and each party hereto may take any
action herein prohibited or omit to take action herein required to be performed
by it, and any breach of or compliance with any covenant, agreement, warranty or
representation may be waived only by the written waiver of the party against
whom such action or inaction may negatively affect, but, in any case, such
consent or waiver shall only be effective in the specific instance and for the
specific purpose for which given.
(f) Section Headings. The section headings contained herein
are included for convenience of reference only and shall not constitute a part
of this Agreement for any purpose.
(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
(h) Applicable Law; Consent to Jurisdiction. This Agreement
and the validity and performance of the terms hereof shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
principles of conflicts of law or choice of law. The parties hereto hereby agree
that all actions or proceedings arising directly or indirectly from or in
connection with this Agreement shall be litigated only in the Supreme Court of
the State of New York or the United States District Court for the Southern
District of New York located in New York County, New York. To the extent
permitted by applicable law, the parties hereto consent to the jurisdiction and
venue of the foregoing courts and consent that any process or notice of motion
or other application to either of said courts or a judge thereof may be served
inside or outside the State of New York or the Southern District of New York by
registered mail, return receipt requested, directed to such party at its address
set forth in this Agreement (and service so made shall be deemed complete five
days after the same has been posted as aforesaid) or by personal service or in
such other manner as may be permissible under the rules of said courts.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement, or any part thereof, is held by a court of
competent jurisdiction or any foreign federal, state, county or local government
or any other governmental, regulatory or administrative agency or authority to
be invalid, void, unenforceable or against public policy for any reason, 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.
(j) Assignment; Binding Effect. Except as otherwise provided
in this Agreement, no right under this Agreement shall be assignable and any
attempted assignment in violation of this provision shall be void. This
Agreement, and the rights and obligations of the parties hereunder, shall be
binding upon and inure to the benefit of any and all successors, permitted
assigns, personal representatives and all other legal representatives, in
whatsoever capacity, by operation of law or otherwise, of the parties hereto, in
each case with the same force and effect as if the foregoing persons were named
herein as parties hereto.
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<PAGE> 11
(k) Specific Performance. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, the
non-breaching party would be irreparably harmed and could not be made whole by
monetary damages. It is accordingly agreed that the parties hereto shall and do
hereby waive the defense in any action for specific performance that a remedy at
law would be adequate and that the parties hereto, in addition to any other
remedy to which they may be entitled at law or in equity, shall be entitled to
compel specific performance of this Agreement in any action instituted in the
Supreme Court of the State of New York or the United States District Court for
the Southern District of New York, or, in the event such courts shall not have
jurisdiction of such action, in any court of the United States or any state
thereof having subject matter jurisdiction of such action.
11
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed as of the date first above written.
WFS HOLDINGS, INC.
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
----------------------------------------
Leonard M. Harlan
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
<PAGE> 13
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
STOCKHOLDERS:
[For Entities]
---------------------------------------------
By:
------------------------------------------
Name:
Title:
[For Individuals]
---------------------------------------------
Name:
<PAGE> 14
APPENDIX A
Name and Address Number of Shares
---------------- ----------------
<PAGE> 15
EXHIBIT A
THIS VOTING TRUST CERTIFICATE HAS BEEN ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND NO INTEREST
THEREIN MAY BE TRANSFERRED EXCEPT IN COMPLIANCE, ESTABLISHED TO SATISFACTION OF
THE ISSUER, WITH SAID ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER
BY THE SECURITIES AND EXCHANGE COMMISSION.
THIS VOTING TRUST CERTIFICATE AND THE SECURITIES REPRESENTED
HEREBY MAY BE SUBJECT TO RESTRICTIONS ON TRANSFER, SALE, DRAG ALONG RIGHTS, TAG
ALONG RIGHTS AND RIGHTS OF FIRST OFFER PURSUANT TO A STOCKHOLDERS AGREEMENT ON
FILE WITH THE COMPANY.
VOTING TRUST CERTIFICATE
WFS HOLDINGS, INC.
No.
------------------------------
Shares:
--------------------------
Class: Common Stock
This certificate is evidence that ___________________________
has deposited ______________ shares of voting Common Stock, par value $0.01 per
share, of WFS Holdings, Inc.., a Delaware corporation (the "Company"), with the
Voting Trustee hereinafter named in accordance with the terms of the Voting
Trust Agreement (the "Agreement") dated as of February _, 1999, among the
Company, each of the Stockholders listed on the signature pages thereof and the
person whose name appears below as Voting Trustee (the "Trustee").
This certificate and the interest represented hereby is
transferable on the books of the Trust only in accordance with the terms of the
Agreement and any holder of this Certificate takes the same subject to all of
the terms and conditions of such Agreement.
IN WITNESS WHEREOF, the Trustee has signed this certificate
this ___ day of [ ] 19[ ].
VOTING TRUSTEE
----------------------------------------
[ ]
<PAGE> 1
EXHIBIT 10.1
===============================================================================
WORLDWIDE FLIGHT SERVICES, INC.
AND
WFS HOLDINGS, INC.
AS ISSUERS
WORLDWIDE FLIGHT FINANCE COMPANY
WORLDWIDE FLIGHT SECURITY SERVICE CORPORATION
MIAMI INTERNATIONAL AIRPORT CARGO FACILITIES & SERVICES, INC.
AS INITIAL GUARANTORS
$130,000,000
130,000 UNITS CONSISTING OF
12 1/4% SERIES A SENIOR NOTES DUE 2007 OF WORLDWIDE FLIGHT
SERVICES, INC. AND WARRANTS TO PURCHASE 74,750 SHARES OF
COMMON STOCK OF WFS HOLDINGS, INC.
PURCHASE AGREEMENT
AUGUST 5, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
AND
CHASE SECURITIES INC.
AS INITIAL PURCHASERS
===============================================================================
<PAGE> 2
$130,000,000
130,000 Units Consisting of
12 1/4% Series A Senior Notes due 2007
of Worldwide Flight Services, Inc.
and
Warrants to purchase 74,750 shares of Common Stock
of WFS Holdings, Inc.
PURCHASE AGREEMENT
August 5, 1999
Donaldson, Lufkin & Jenrette
Securities Corporation
Chase Securities Inc.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Worldwide Flight Services, Inc., a Delaware corporation (the
"COMPANY"), and WFS Holdings, Inc., a Delaware corporation ("HOLDINGS" and,
together with the Company, the "ISSUERS"), propose to issue and sell to
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and Chase Securities
Inc. ("CHASE"; DLJ and Chase are each individually referred to herein as an
"INITIAL PURCHASER" and, collectively, as the "INITIAL PURCHASERS") 130,000
units (the "UNITS"), each consisting of $1,000 in aggregate principal amount of
the 12 1/4% Series A Senior Notes due 2007 of the Company (the "SERIES A
NOTES"), together with the Subsidiary Guarantees described below, and one
warrant (the "WARRANTS") to purchase 0.575 of a share of common stock (the
"COMMON STOCK") of Holdings, subject to the terms and conditions set forth
herein. The Series A Notes are to be issued pursuant to the provisions of an
indenture (the "INDENTURE"), to be dated as of the Closing Date (as defined
below), among the Company, the Guarantors (as defined below) and The Bank of New
York, as trustee (the "TRUSTEE"). The Series A Notes and the Series B Notes (as
defined below) issuable in exchange therefor are collectively referred to herein
as the "NOTES." The Notes will be initially guaranteed (the "SUBSIDIARY
GUARANTEES") by each of the domestic subsidiaries of the Company listed on Part
I of Schedule A attached hereto (each, a "GUARANTOR" and, collectively, the
"GUARANTORS"). The Warrants will be issued pursuant to a warrant agreement (the
"WARRANT AGREEMENT"), to be dated as of the Closing Date, between Holdings and
The Bank of New York, as warrant agent (the "WARRANT AGENT"), which shall
reflect the terms of the Warrants set forth in the Offering Memorandum (as
defined below) and shall otherwise be in form customary for transactions of this
type and shall otherwise be reasonably acceptable in form and substance to the
Initial Purchasers and their counsel and the Issuers and their counsel. Shares
of voting common stock
<PAGE> 3
of Holdings issuable upon exercise of the Warrants are collectively referred to
herein as the "WARRANT SHARES". The Units, the Notes, the Warrants and the
Warrant Shares are collectively referred to herein as the "SECURITIES."
The Units are being issued and sold in connection with a
series of transactions, including (i) the acquisition by MAS Worldwide Holding
Corporation ("MAS HOLDING"), a direct wholly owned subsidiary of the Company, of
all of the outstanding capital stock of Miami Aircraft Support, Inc., a Delaware
corporation ("MAS"), pursuant to a stock purchase agreement by and among MAS
Holding, Anthony Romeo and Charles Micale (Mr. Romeo and Mr. Micale are each
individually referred to herein as a "SELLER" and, collectively, as the
"SELLERS"), dated as of May 28, 1999 (the "STOCK PURCHASE AGREEMENT" and,
together with all other documents related thereto, the "ACQUISITION DOCUMENTS"),
(ii) the entering into of a credit agreement by the Company with The Chase
Manhattan Bank, Chase Securities Inc. and DLJ Capital Funding, Inc. (the "CREDIT
AGREEMENT" and, together with all other documents related thereto, the "CREDIT
DOCUMENTS"); and (iii) the repayment by the Company of certain existing
indebtedness as specified in the Offering Memorandum with a portion of the net
proceeds from the sale of the Units to the Initial Purchasers (all documentation
related to the release, discharge or termination, as the case may be, of the
existing indebtedness shall be referred to herein as the "REPAYMENT DOCUMENTS").
This Agreement, the Indenture, the Securities, the Warrant
Agreement, the Common Stock Registration Rights Agreement (as defined below),
the Registration Rights Agreement (as defined below), the Acquisition Documents,
the Credit Documents and the Repayment Documents are hereinafter sometimes
referred to collectively as the "OPERATIVE DOCUMENTS."
1. Offering Memorandum. The Units will be offered and sold to
the Initial Purchasers pursuant to one or more exemptions from the registration
requirements under the Securities Act of 1933, as amended (the "ACT"). The
Company and the Guarantors have prepared a preliminary offering memorandum,
dated July 23, 1999 relating to the Series A Notes (the "PRELIMINARY OFFERING
MEMORANDUM"), and the Issuers and the Guarantors have prepared a final offering
memorandum, dated August 5, 1999 relating to the Units (the "OFFERING
MEMORANDUM").
Upon original issuance thereof, and until such time as the
same is no longer required pursuant to the Indenture, the Series A Notes (and
all securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
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(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB"), (B) IT HAS ACQUIRED THIS SECURITY IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A) (1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT (AN "IAI")),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES,
(B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN
OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR
904 OF REGULATION S OF THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF
THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION, AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN
VIOLATION OF THE FOREGOING."
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Upon original issuance thereof, and until such time as the
same is no longer required pursuant to the Warrant Agreement, the Warrants (and
all securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS WARRANT (OR ITS PREDECESSOR) AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB"), (B) IT HAS ACQUIRED THIS WARRANT IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A) (1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
WARRANT OR THE WARRANT SHARES EXCEPT (A) TO HOLDINGS OR ANY OF
ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI THAT,
PRIOR TO SUCH TRANSFER, FURNISHES THE WARRANT AGENT A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS WARRANT OR THE WARRANT SHARES
(THE FORM OF WHICH CAN BE OBTAINED FROM THE WARRANT AGENT) AND
AN OPINION OF COUNSEL ACCEPTABLE TO HOLDINGS THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO HOLDINGS) OR (G) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND
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<PAGE> 6
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
WARRANT OR THE WARRANT SHARES OR AN INTEREST HEREIN OR THEREIN
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE WARRANT AGREEMENT CONTAINS A PROVISION REQUIRING
THE WARRANT AGENT TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY
IN VIOLATION OF THE FOREGOING."
2. Agreements to Sell and Purchase. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Issuers agree to issue
and sell to the Initial Purchasers, and each Initial Purchaser agrees, severally
and not jointly, to purchase from the Issuers, all of the Units in the amounts
set forth opposite the name of such Initial Purchaser on Schedule B hereto at a
purchase price equal to $945.33 per Unit (the "PURCHASE PRICE").
3. Terms of Offering. The Initial Purchasers have advised the
Issuers that each Initial Purchaser will make offers (the "EXEMPT RESALES") of
the Units purchased hereunder on the terms set forth in the Offering Memorandum,
as amended or supplemented, solely to (i) persons whom such Initial Purchaser
reasonably believes to be "qualified institutional buyers" as defined in Rule
144A under the Act ("QIBs") and (ii) persons permitted to purchase the Units in
offshore transactions in reliance upon Regulation S under the Act (each, a
"REGULATION S PURCHASER") (such persons specified in clauses (i) and (ii) being
referred to herein as the "ELIGIBLE PURCHASERS"). The Initial Purchasers will
offer the Units to Eligible Purchasers initially at a price equal to $975.33 per
Unit. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A
Notes will have the registration rights set forth in the registration rights
agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date,
in substantially the form of Exhibit A hereto, for so long as such Series A
Notes constitute "TRANSFER RESTRICTED SECURITIES" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company and the Guarantors will agree to file with the Securities and
Exchange Commission (the "COMMISSION") under the circumstances set forth
therein, (i) a registration statement under the Act (the "EXCHANGE OFFER
REGISTRATION STATEMENT") relating to the Company's 12 1/4% Series B Senior Notes
(the "SERIES B NOTES"), to be offered in exchange for the Series A Notes (such
offer to exchange being referred to as the "EXCHANGE OFFER") and the Subsidiary
Guarantees thereof and (ii) a shelf registration statement pursuant to Rule 415
under the Act (the "SHELF REGISTRATION STATEMENT" and, together with the
Exchange Offer Registration Statement, the "REGISTRATION STATEMENTS") relating
to the resale by certain holders of the Series A Notes and to use its best
efforts to cause such Registration Statements to be declared and remain
effective and
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<PAGE> 7
usable for the periods specified in the Registration Rights Agreement and to
consummate the Exchange Offer.
Holders (including subsequent transferees) of the Warrants and
the Warrant Shares will have the rights set forth in the Warrant Agreement and
in a common stock registration rights agreement (the "COMMON STOCK REGISTRATION
RIGHTS AGREEMENT"), to be dated the Closing Date, and which will reflect the
registration and other rights with respect to the Warrants set forth in the
Offering Memorandum and shall otherwise be in form customary for transactions of
this type and shall otherwise be reasonably acceptable in form and substance to
the Initial Purchasers and their counsel and the Issuers and their counsel.
Pursuant to the Common Stock Registration Rights Agreement, Holdings will agree
to grant to the holders of the Warrants the right, under certain circumstances,
to include in a registration statement filed by the Company (the "WARRANT
REGISTRATION STATEMENT") the Warrant Shares.
4. Delivery and Payment.
(a) Delivery of, and payment of the Purchase Price for, the
Units shall be made at the offices of Schulte Roth & Zabel LLP, New York, New
York or such other location as may be mutually acceptable. Such delivery and
payment shall be made at 9:00 a.m. New York City time, on August 12, 1999 or at
such other time on the same date or such other date as shall be agreed upon by
the Initial Purchasers and the Issuers in writing. The time and date of such
delivery and the payment for the Units are herein called the "CLOSING DATE."
(b) One or more Units in definitive global form, registered
in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"),
having (i) an aggregate principal amount corresponding to the aggregate
principal amount of the Notes sold (a "GLOBAL NOTE") and (ii) an aggregate
amount of Warrants sold (a "Global Warrant" and, together with the Global Notes,
the "GLOBAL UNITS"), shall be delivered by the Issuers to the Initial Purchasers
(or as DLJ directs) in each case with any transfer taxes thereon duly paid by
the Issuers against payment by the Initial Purchasers of the Purchase Price
thereof by wire transfer in same day funds to the order of the Company. The
Global Units shall be made available to the Initial Purchasers for inspection
not later than 9:30 a.m., New York City time, on the business day immediately
preceding the Closing Date.
5. Agreements of the Issuers and the Guarantors. Each of the
Issuers and the Guarantors hereby agrees with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if
requested by any Initial Purchaser, confirm such advice in writing, (i) of the
issuance by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Securities for offering or
sale in any jurisdiction designated by the Initial Purchasers pursuant to
Section 5(e) hereof, or the initiation of any proceeding by any state securities
commission or any other federal or state regulatory authority for such purpose
and (ii) of the happening of any event during the period referred to in Section
5(c) below that makes any statement of a material fact made in the Offering
Memorandum untrue or that requires any additions to or changes in the Offering
Memorandum in order to make the statements therein not
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<PAGE> 8
misleading. The Issuers and the Guarantors shall use their best efforts to
prevent the issuance of any stop order or order suspending the qualification or
exemption of any of the Securities under any state securities or Blue Sky laws
and, if at any time any state securities commission or other federal or state
regulatory authority shall issue an order suspending the qualification or
exemption of any of the Securities under any state securities or Blue Sky laws,
the Issuers and the Guarantors shall use their best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons
identified by any Initial Purchaser to the Issuers as many copies of the
Offering Memorandum, and any amendments or supplements thereto, as such Initial
Purchaser may reasonably request for the time period specified in Section 5(c).
Subject to each Initial Purchaser's compliance with their representations and
warranties and agreements set forth in Section 7 hereof, the Issuers consent to
the use of the Offering Memorandum, and any amendments and supplements thereto
required pursuant hereto, by the Initial Purchasers in connection with Exempt
Resales.
(c) During such period as in the opinion of counsel for the
Initial Purchasers an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers and in connection with
market-making activities of the Initial Purchasers for so long as any Units are
outstanding, (i) not to make any amendment or supplement to the Offering
Memorandum of which the Initial Purchasers shall not previously have been
advised or to which the Initial Purchasers shall reasonably object after being
so advised and (ii) to prepare promptly upon the Initial Purchasers' reasonable
request, any amendment or supplement to the Offering Memorandum which may be
necessary or advisable in connection with such Exempt Resales or such
market-making activities.
(d) If, during the period referred to in Section 5(c) above,
any event shall occur or condition shall exist as a result of which, in the
opinion of counsel to the Initial Purchasers, it becomes necessary to amend or
supplement the Offering Memorandum in order to make the statements therein, in
the light of the circumstances when such Offering Memorandum is delivered to an
Eligible Purchaser, not misleading, or if, in the opinion of counsel to the
Initial Purchasers, it is necessary to amend or supplement the Offering
Memorandum to comply with any applicable law, forthwith to prepare an
appropriate amendment or supplement to such Offering Memorandum so that the
statements therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Memorandum will comply with applicable law, and to furnish to the Initial
Purchasers and such other persons as the Initial Purchasers may designate such
number of copies thereof as the Initial Purchasers may reasonably request.
(e) Prior to the sale of all Units pursuant to Exempt
Resales as contemplated hereby, to cooperate with the Initial Purchasers and
counsel to the Initial Purchasers in connection with the registration or
qualification of the Units for offer and sale to the Initial Purchasers and
pursuant to Exempt Resales under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may request and to continue such
registration or qualification in effect so long as required for Exempt Resales
and to file such consents to service
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<PAGE> 9
of process or other documents as may be necessary in order to effect such
registration or qualification; provided, however, that none of the Issuers or
any Guarantor shall be required in connection therewith to qualify as a foreign
corporation in any jurisdiction in which it is not now so qualified or to take
any action that would subject it to general consent to service of process or
taxation other than as to matters and transactions relating to the Offering
Memorandum or Exempt Resales, in any jurisdiction in which it is not now so
subject.
(f) So long as the Securities are outstanding, (i) to mail
and make generally available as soon as practicable after the end of each fiscal
year to the record holders of the Securities a financial report of the Company,
MAS and their respective subsidiaries on a consolidated basis (and a similar
financial report of all unconsolidated subsidiaries, if any), all such financial
reports to include a consolidated balance sheet, a consolidated statement of
operations, a consolidated statement of cash flows and a consolidated statement
of stockholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
the Company's independent public accountants and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period (except
for the last quarterly period of each fiscal year) to such holders, a
consolidated balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for such period, and
for the period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding periods of
the preceding year.
(g) So long as any of the Securities remain outstanding and
during any period in which the Issuers and the Guarantors are not subject to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), to make available to any holder of the Securities in connection
with any sale thereof and any prospective purchaser of such Securities from such
holder, the information ("RULE 144A INFORMATION") required by Rule 144A(d)(4)
under the Act.
(h) So long as the Securities are outstanding, to furnish to
the Initial Purchasers as soon as available copies of any annual reports,
quarterly reports and current reports filed by the Issuers 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 reports, documents, information or other
communications as shall be furnished by the Issuers or any of the Guarantors to
the holders of such Securities as may be required by the Indenture or the
Warrant Agreement, as the case may be, or furnished to the Trustee pursuant to
the Indenture or filed with the Commission or any national securities exchange
on which any class of securities of the Issuers or any of the Guarantors is
listed and such other publicly available information concerning the Issuers, MAS
and/or their respective subsidiaries as the Initial Purchasers may reasonably
request.
(i) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of the obligations of the Issuers
and the Guarantors under this Agreement, including: (1) the fees, disbursements
and expenses of counsel to the Issuers and the
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<PAGE> 10
Guarantors and independent public accountants of the Issuers and the Guarantors
in connection with the sale and delivery of the Units to the Initial Purchasers
and pursuant to Exempt Resales, and all other fees and expenses (other than fees
and disbursements of counsel to the Initial Purchasers, unless otherwise stated
herein) in connection with the preparation, printing, filing and distribution of
the Preliminary Offering Memorandum, the Offering Memorandum and all amendments
and supplements to any of the foregoing (including financial statements),
including the mailing and delivering of copies thereof to the Initial Purchasers
and each Initial Purchaser's respective designees in the quantities specified by
the Initial Purchasers, (2) all costs and expenses related to the transfer and
delivery of the Units to the Initial Purchasers and pursuant to Exempt Resales,
including any transfer or other taxes payable thereon, (3) all costs of printing
or producing this Agreement, the other Operative Documents and any other
agreements or documents in connection with the offering, purchase, sale or
delivery of the Units, (4) all expenses in connection with the registration or
qualification of the Units for offer and sale under the securities or Blue Sky
laws of the several states and all costs of printing or producing any
preliminary and supplemental Blue Sky memoranda in connection therewith
(including the filing fees and fees and disbursements of counsel for the Initial
Purchasers in connection with such registration or qualification and memoranda
relating thereto), (5) the cost of printing certificates representing the Units,
(6) all expenses and listing fees in connection with the application for
quotation of the Units in the National Association of Securities Dealers, Inc.
("NASD") Automated Quotation System - PORTAL ("PORTAL"), (7) the fees and
expenses of the Trustee and the Trustee's counsel in connection with the
Indenture, the Notes and the Subsidiary Guarantees, (8) the fees and expenses of
the Warrant Agent and the Warrant Agent's counsel in connection with the Warrant
Agreement, (9) the costs and charges of any transfer agent, registrar and/or
depositary (including DTC), (10) any fees charged by rating agencies for the
rating of the Notes, (11) all costs and expenses of the Exchange Offer and any
Registration Statement, as set forth in the Registration Rights Agreement, (12)
all costs and expenses of the Warrant Registration Statement, as set forth in
the Warrant Agreement, (13) all other costs and expenses incident to the
performance of the obligations of the Issuers and the Guarantors hereunder for
which provision is not otherwise made in this Section and (14) all costs and
expenses in connection with the "road show" related to the offering of the Units
(including all costs and expenses of the Initial Purchasers up to a maximum of
$50,000.00 in connection therewith).
(j) To use its best efforts to effect the inclusion of the
Securities in PORTAL and to maintain the listing of the Securities on PORTAL for
so long as the Securities are outstanding.
(k) To obtain the approval of DTC for "book-entry" transfer
of the Securities, and to comply with all of its agreements set forth in the
representation letters of the Issuers and the Guarantors to DTC relating to the
approval of the Securities by DTC for "book-entry" transfer.
(l) For a period of 90 days from the Closing Date, not to
offer, sell, contract to sell or otherwise transfer or dispose of any debt
securities of the Issuers or any subsidiary or any warrants, rights or options
to purchase or otherwise acquire debt securities of the Issuers or any
subsidiary substantially similar to the Securities (other than (i) the
Securities
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and (ii) commercial paper issued in the ordinary course of business),
without the prior written consent of the Initial Purchasers provided, however,
that borrowings under a credit facility shall not be restricted by this clause
(l).
(m) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Units to the Initial Purchasers or
pursuant to Exempt Resales in a manner that would require the registration of
any such sale of the Units under the Act.
(n) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of any
Securities.
(o) Except as stated in the Preliminary Offering Memorandum
and the Offering Memorandum, not to take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Securities to facilitate the
sale or resale of the Securities.
(p) To cause the Exchange Offer to be made in the
appropriate form to permit Series B Notes and guarantees thereof by the
Guarantors registered pursuant to the Act to be offered in exchange for the
Series A Notes and the Subsidiary Guarantees and to comply with all applicable
federal and state securities laws in connection with the Exchange Offer.
(q) To cause the Warrant Registration Statement, if required
under the Warrant Agreement, to be made on the appropriate form and to comply
with all applicable federal and state securities laws in connection therewith.
(r) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(s) To comply with all of its agreements set forth in the
Warrant Agreement and the Common Stock Registration Rights Agreement.
(t) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by it prior
to the Closing Date and to satisfy all conditions precedent to the delivery of
the Units.
6. Representations, Warranties and Agreements of the Issuers
and the Guarantors. As of the date hereof, each of the Issuers and the
Guarantors represents and warrants to, and agrees with, each of the Initial
Purchasers that:
(a) The Offering Memorandum does not, and any supplement or
amendment to them will not, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
contained in this paragraph (a) shall not apply to statements in or omissions
from the Preliminary Offering Memorandum or the Offering Memorandum (or any
supplement or
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amendment thereto) based upon information relating to the Initial Purchasers
furnished to the Issuers in writing by the Initial Purchasers expressly for use
therein. No stop order preventing the use of the Preliminary Offering Memorandum
or the Offering Memorandum, or any amendment or supplement thereto, or any order
asserting that any of the transactions contemplated by this Agreement are
subject to the registration requirements of the Act, has been issued.
(b) Each of the Issuers, MAS and their respective
subsidiaries has been duly incorporated, is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation and has the
corporate power and authority to carry on its business as described in the
Preliminary Offering Memorandum and the Offering Memorandum and to own, lease
and operate its properties, and each is duly qualified and is in good standing
as a foreign corporation authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Issuers, MAS and their respective subsidiaries,
taken as a whole, or materially adversely effect the validity or enforceability
of, or the rights of the Initial Purchasers under, this Agreement or the other
Operative Documents (a "MATERIAL ADVERSE EFFECT").
(c) All outstanding shares of capital stock of the Issuers
and MAS have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights.
(d) The entities listed on Part II of Schedule A hereto are
the only Domestic Subsidiaries (as such term is defined in the Offering
Memorandum), direct or indirect, of the Company and MAS. The entities listed on
Part III of Schedule A hereto are the only Foreign Subsidiaries (as such term is
defined in the Offering Memorandum), direct or indirect, of the Company and MAS.
Except as disclosed in the Offering Memorandum, all of the outstanding shares of
capital stock of each of the Company's and MAS' subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable, and are
owned by the Company or MAS, as the case may be, directly or indirectly through
one or more subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature (each, a "LIEN").
(e) This Agreement has been duly authorized, executed and
delivered by the Issuers and each of the Guarantors.
(f) The Indenture has been duly authorized by the Company
and each of the Guarantors and, on the Closing Date, will have been validly
executed and delivered by the Company and each of the Guarantors. When the
Indenture has been duly executed and delivered by the Company and each of the
Guarantors, the Indenture will be a valid and binding agreement of the Company
and each Guarantor, enforceable against the Company and each Guarantor in
accordance with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally, (ii) rights of acceleration, if applicable, and the availability of
equitable remedies may be limited by equitable principles of
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<PAGE> 13
general applicability and (iii) provisions of the Indenture requiring any waiver
of stay or extension laws may be unenforceable under principles of public
policy. On the Closing Date, the Indenture will conform, in all material
respects, to the requirements of the Trust Indenture Act of 1939, as amended
(the "TIA" or "TRUST INDENTURE ACT"), and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder.
(g) Each of the Issuers has duly and validly authorized the
issuance of the Notes and the Warrants as a Unit. On the Closing Date, the Units
will conform, in all material respects, as to legal matters to the description
thereof contained in the Offering Memorandum.
(h) The Series A Notes have been duly authorized and, on the
Closing Date, will have been validly executed and delivered by the Company. When
the Series A Notes have been issued, executed and authenticated in accordance
with the provisions of the Indenture and delivered to and paid for by the
Initial Purchasers in accordance with the terms of this Agreement, the Series A
Notes will be entitled to the benefits of the Indenture and the Registration
Rights Agreement and will be valid and binding obligations of the Company,
enforceable in accordance with their terms except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally, (ii) rights of acceleration, if applicable, and the
availability of equitable remedies may be limited by equitable principles of
general applicability and (iii) provisions of the Indenture requiring any waiver
of stay or extension laws may be unenforceable under principles of public
policy. On the Closing Date, the Series A Notes will conform, in all material
respects, as to legal matters to the description thereof contained in the
Offering Memorandum.
(i) On the Closing Date, the Series B Notes will have been
duly authorized by the Company. When the Series B Notes are issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Series B Notes will be entitled to the benefits of the Indenture
and the Registration Rights Agreement and will be the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally,
(ii) rights of acceleration, if applicable, and the availability of equitable
remedies may be limited by equitable principles of general applicability and
(iii) provisions of the Indenture requiring any waiver of stay or extension laws
may be unenforceable under principles of public policy.
(j) On the Closing Date, the Warrants will have been duly
authorized by Holdings and, on the Closing Date, will have been validly
delivered by Holdings. When the Warrants are issued, the Warrants will be valid
and binding obligations of Holdings, enforceable against Holdings in accordance
with their terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally,
and (ii) rights of acceleration, if applicable, and the availability of
equitable remedies may be limited by equitable principles of general
applicability. On the Closing Date, the Warrants will conform, in all material
respects, as to legal matters to the description thereof contained in the
Offering Memorandum.
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<PAGE> 14
(k) On the Closing Date, the Warrant Shares will have been
duly and validly authorized for issuance by Holdings, and when issued pursuant
to the terms of the Warrants and the Warrant Agreement will be fully paid and
non-assessable and will not be subject to any preemptive or similar rights. On
the Closing Date, the Warrant Shares will conform, in all material respects, as
to legal matters to the description thereof contained in the Offering
Memorandum.
(l) The Subsidiary Guarantee to be endorsed on the Series A
Notes by each Guarantor has been duly authorized by such Guarantor and, on the
Closing Date, will have been duly executed and delivered by each such Guarantor.
When the Series A Notes have been issued, executed and authenticated in
accordance with the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, the Subsidiary
Guarantee of each Guarantor endorsed thereon will be entitled to the benefits of
the Indenture and the Registration Rights Agreement and will be the valid and
binding obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally, (ii) rights of acceleration, if applicable, and the availability of
equitable remedies may be limited by equitable principles of general
applicability and (iii) provisions of the Indenture requiring any waiver of stay
or extension laws may be unenforceable under principles of public policy. On the
Closing Date, the Subsidiary Guarantees to be endorsed on the Series A Notes
will conform, in all material respects, as to legal matters to the description
thereof contained in the Offering Memorandum.
(m) The Subsidiary Guarantee to be endorsed on the Series B
Notes by each Guarantor has been duly authorized by such Guarantor and, when
issued, will have been duly executed and delivered by each such Guarantor. When
the Series B Notes have been issued, executed and authenticated in accordance
with the terms of the Exchange Offer and the Indenture, the Subsidiary Guarantee
of each Guarantor endorsed thereon will be entitled to the benefits of the
Indenture and the Registration Rights Agreement and will be the valid and
binding obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally, (ii) rights of acceleration, if applicable, and the availability of
equitable remedies may be limited by equitable principles of general
applicability and (iii) provisions of the Indenture requiring any waiver of stay
or extension laws may be unenforceable under principles of public policy. When
the Series B Notes are issued, authenticated and delivered, the Subsidiary
Guarantees to be endorsed on the Series B Notes will conform, in all material
respects, as to legal matters to the description thereof in the Offering
Memorandum.
(n) The Registration Rights Agreement has been duly
authorized by the Company and each of the Guarantors and, on the Closing Date,
will have been duly executed and delivered by the Company and each of the
Guarantors. When the Registration Rights Agreement has been duly executed and
delivered, the Registration Rights Agreement will be a valid and binding
agreement of the Company and each of the Guarantors, enforceable against the
Company and each Guarantor in accordance with its terms except as (i) the
enforceability thereof
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<PAGE> 15
may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally, (ii) rights of acceleration, if applicable, and the
availability of equitable remedies may be limited by equitable principles of
general applicability and (iii) rights to indemnification, contribution and
liquidated damages under the Registration Rights Agreement may be limited by
public policy. On the Closing Date, the Registration Rights Agreement will
conform, in all material respects, as to legal matters to the description
thereof in the Offering Memorandum.
(o) On the Closing Date, the Warrant Agreement will have
been duly and validly authorized by Holdings and, when duly executed and
delivered by Holdings, will be a valid and binding agreement of Holdings,
enforceable against it in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally, (ii) rights of acceleration, if
applicable, and the availability of equitable remedies may be limited by
equitable principles of general applicability and (iii) rights to
indemnification, contribution and liquidated damages thereunder may be limited
by public policy. On the Closing Date, the Warrant Agreement will conform, in
all material respects, as to legal matters to the description thereof in the
Offering Memorandum.
(p) On the Closing Date, the Common Stock Registration
Rights Agreement will have been duly and validly authorized by Holdings and,
when duly executed and delivered by Holdings, will be a valid and binding
agreement of Holdings, enforceable against it in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights, (ii) rights of
acceleration, if applicable, and the availability of equitable remedies may be
limited by equitable principles of general applicability and (iii) to the extent
that rights to indemnification, contribution and liquidated damages thereunder
may be limited by public policy. On the Closing Date, the Common Stock
Registration Rights Agreement will conform, in all material respects, as to
legal matters to the description thereof in the Offering Memorandum.
(q) (i) The Stock Purchase Agreement has been duly
authorized, executed and delivered by the Sellers and MAS Holding and
constitutes a valid and binding agreement of each Seller and MAS Holding,
enforceable against the Sellers and MAS Holding in accordance with its terms
except as (1) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (2) rights
of acceleration, if applicable, and the availability of equitable remedies may
be limited by equitable principles of general applicability; (ii) neither the
Company, MAS Holding nor any of their respective subsidiaries has received any
notice or is aware of any circumstances that would cause either or both of the
Sellers to terminate or give either or both of the Sellers the right to
terminate the Stock Purchase Agreement; (iii) neither the Company, MAS Holding
nor any of their respective subsidiaries is aware of any fact or circumstance
that would cause them not to proceed with the completion of the transactions
contemplated by and contained in the Stock Purchase Agreement; (iv) the
representations and warranties of MAS Holding and the Sellers contained in the
Stock Purchase Agreement are true and correct in all material respects (except
for any such representations and warranty which relates solely to an earlier
date, as to which such representation and warranty was true and correct in all
material respects as of such earlier date);
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<PAGE> 16
and (v) there have been no material amendments, alterations, modifications, or
waivers of any provisions of the Stock Purchase Agreement.
(r) The Credit Documents have been duly authorized by the
Company and each of its subsidiaries, as the case may be, and on the Closing
Date, will have been duly executed and delivered by the Company and each such
subsidiary, as the case may be. All of the conditions for funding under the
Credit Agreement have been satisfied or are capable of being satisfied or waived
on or before the Closing Date and the Company has no reason to believe that
funds will not be advanced under the Credit Agreement on the Closing Date in
amounts contemplated by the Offering Memorandum. When the Credit Documents have
been duly executed and delivered, the Credit Documents will be a valid and
binding agreement of the Company and each of its subsidiaries party thereto, as
the case may be, enforceable against the Company and each such subsidiary, as
the case may be, in accordance with the terms thereof except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration, if
applicable, and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, the Credit
Documents will conform, in all material respects, as to legal matters to the
description thereof in the Offering Memorandum.
(s) None of the Issuers, MAS nor any of their respective
subsidiaries is in violation of its respective charter or by-laws or in default
in the performance of any obligation, agreement, covenant or condition contained
in any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Issuers, MAS and their respective
subsidiaries, taken as a whole, to which the Issuers, MAS or any of their
respective subsidiaries is a party or by which the Issuers, MAS or any of their
respective subsidiaries or their respective property is bound.
(t) The execution, delivery and performance of this
Agreement and the other Operative Documents by the Issuers, MAS and each of
their respective Subsidiaries, as applicable, the compliance by the Issuers, MAS
and their respective Subsidiaries with all provisions hereof and thereof, as
applicable, and the consummation of the transactions contemplated hereby and
thereby, as applicable, will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under any federal or
state securities law in connection with the performance by the Company of its
obligations under the Registration Rights Agreement or the performance by
Holdings of its obligations under the Common Stock Registration Rights
Agreement), (ii) conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter or by-laws of the Issuers, MAS or
any of their respective subsidiaries, as applicable, or any indenture, loan
agreement, mortgage, lease or other agreement or instrument to which the
Issuers, MAS or any of their respective subsidiaries, as applicable, is a party
or by which the Issuers, MAS or any of their respective subsidiaries or each of
their respective property is bound, as applicable, (iii) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree of
any court or any governmental body or agency having jurisdiction over the
Issuers, MAS or any of their respective subsidiaries or each of their respective
property, as applicable, (iv) result in the imposition or creation of (or the
obligation to
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<PAGE> 17
create or impose) a Lien under, any agreement or instrument to which the
Issuers, MAS or any of their respective subsidiaries, as applicable, is a party
or by which the Issuers, MAS or any of their respective subsidiaries or each of
their respective property is bound, as applicable, or (v) result in the
termination, suspension or revocation of any Authorization (as defined below) of
the Issuers, MAS or any of their respective subsidiaries, as applicable, or
result in any other impairment of the rights of the holder of any such
Authorization, except in the case of clauses (i) through (v) for such conflicts,
breaches, violations, liens, terminations, suspensions or revocations which,
singly or in the aggregate, would not and could not reasonably be expected to
have a Material Adverse Effect.
(u) There are no legal or governmental proceedings pending
or threatened to which the Issuers, MAS or any of their respective subsidiaries
is a party or to which any of its respective property is subject, which is
reasonably likely to result, singly or in the aggregate, in a Material Adverse
Effect.
(v) None of the Issuers, MAS nor any of their respective
subsidiaries has violated any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), any provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or any provisions of the Foreign
Corrupt Practices Act or the rules and regulations promulgated thereunder,
except for such violations which, singly or in the aggregate, would not have a
Material Adverse Effect.
(w) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a Material Adverse Effect.
(x) Each of the Issuers, MAS and their respective
subsidiaries has such permits, licenses, consents, exemptions, franchises,
authorizations and other approvals (each, an "AUTHORIZATION") of, and has made
all filings with and notices to, all governmental or regulatory authorities and
self-regulatory organizations and all courts and other tribunals, including
without limitation, under any applicable Environmental Laws, as are necessary to
own, lease, license and operate its respective properties and to conduct its
business, except where the failure to have any such Authorization or to make any
such filing or notice would not, singly or in the aggregate, have a Material
Adverse Effect. Each such Authorization is valid and in full force and effect
and each of the Issuers, MAS and their respective subsidiaries is in compliance
with all the terms and conditions thereof and with the rules and regulations of
the authorities and governing bodies having jurisdiction with respect thereto;
and no event has occurred (including, without limitation, the receipt of any
notice from any authority or governing body) which allows or, after notice or
lapse of time or both, would allow, revocation, suspension or termination of any
such Authorization or results or, after notice or lapse of time or both, would
result in any other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that are
burdensome to the Issuers, MAS or any of their respective
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<PAGE> 18
subsidiaries; except where such failure to be valid and in full force and effect
or to be in compliance, the occurrence of any such event or the presence of any
such restriction would not, singly or in the aggregate, have a Material Adverse
Effect.
(y) The accountants of the Issuers, Ernst & Young LLP, and
the accountants of MAS, KPMG, LLP, that have reviewed and/or certified the
financial statements and supporting schedules included in the Preliminary
Offering Memorandum and the Offering Memorandum are independent public
accountants with respect to the Issuers and MAS, as required by the Act and the
Exchange Act. The historical financial statements, together with related
schedules and notes, set forth in the Preliminary Offering Memorandum and the
Offering Memorandum comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the Act.
(z) The historical financial statements, together with
related schedules and notes forming part of the Offering Memorandum (and any
amendment or supplement thereto), present fairly the consolidated financial
position, results of operations and changes in financial position of the
Company, MAS and their respective subsidiaries on the basis stated in the
Offering Memorandum at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data set forth
in the Offering Memorandum (and any amendment or supplement thereto) are, in all
material respects, accurately presented and prepared on a basis consistent with
such financial statements and the books and records of the Company and MAS.
(aa) The pro forma financial statements included in the
Preliminary Offering Memorandum and the Offering Memorandum have been prepared
on a basis consistent with the historical financial statements of the Company,
MAS and their respective subsidiaries and give effect to assumptions used in the
preparation thereof on a reasonable basis and in good faith and present fairly
the historical and proposed transactions contemplated by the Preliminary
Offering Memorandum and the Offering Memorandum; and such pro forma financial
statements comply as to form in all material respects with the requirements
applicable to pro forma financial statements included in registration statements
on Form S-1 under the Act. The other pro forma financial and statistical
information and data included in the Offering Memorandum are, in all material
respects, accurately presented and prepared on a basis consistent with the pro
forma financial statements.
(bb) Each of the Issuers is not and, after giving effect to
the offering and sale of the Units and the application of the net proceeds
thereof as described in the Offering Memorandum, will not be, an "investment
company," as such term is defined in the Investment Company Act of 1940, as
amended.
(cc) There are no contracts, agreements or understandings
between the Issuers or any Guarantor and any person granting such person the
right to require the Issuers or such Guarantor to file a registration statement
under the Act with respect to any securities of the
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<PAGE> 19
Issuers or such Guarantor or to require the Issuers or such Guarantor to include
such securities with the Securities registered pursuant to any registration
statement.
(dd) None of the Issuers, MAS nor any of their respective
subsidiaries nor any agent thereof acting on the behalf of them has taken, and
none of them will take, any action that might cause this Agreement or the
issuance or sale of the Units to violate Regulation T (12 C.F.R. Part 220),
Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the
Board of Governors of the Federal Reserve System.
(ee) No "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Act (i) has imposed (or has informed the Issuers or any Guarantor that it is
considering imposing) any condition (financial or otherwise) on any Issuer's or
any Guarantor's retaining any rating assigned to the Issuer or any Guarantor,
any securities of any Issuer or any Guarantor or (ii) has indicated to any
Issuer or any Guarantor that it is considering (1) the downgrading, suspension,
or withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (2) any change in
the outlook for any rating of any Issuer, any Guarantor or any securities of any
Issuer or any Guarantor.
(ff) Since the respective dates as of which information is
given in the Offering Memorandum other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there has not occurred any material adverse change
or any development involving a prospective material adverse change in the
condition, financial or otherwise, or the earnings, business, management or
operations of the Issuers, MAS and their respective subsidiaries, taken as a
whole, (ii) there has not been any material adverse change or any development
involving a prospective material adverse change in the capital stock or in the
long-term debt of the Issuers, MAS or any of their respective subsidiaries, and
(iii) none of the Issuers, MAS nor any of their respective subsidiaries has
incurred any material liability or obligation, direct or contingent.
(gg) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, contains all the information specified in,
and meeting the requirements of, Rule 144A(d)(4) under the Act.
(hh) When the Securities are issued and delivered pursuant
to this Agreement, none of the Securities will be of the same class (within the
meaning of Rule 144A under the Act) as any security of any Issuer or any
Guarantors that is listed on a national securities exchange registered under
Section 6 of the Exchange Act or that is quoted in a United States automated
inter-dealer quotation system.
(ii) No form of general solicitation or general advertising
(as defined in Regulation D under the Act) was used by any Issuer, the
Guarantors or any of their respective representatives (other than the Initial
Purchasers, as to whom the Issuers and the Guarantors make no representation) in
connection with the offer and sale of the Units contemplated hereby, including,
but not limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio, or
any seminar or
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<PAGE> 20
meeting whose attendees have been invited by any general solicitation or general
advertising. No securities of the same class as the Units have been issued and
sold by the Issuers within the six-month period immediately prior to the date
hereof.
(jj) Prior to the effectiveness of any Registration
Statement, the Indenture is not required to be qualified under the TIA.
(kk) None of the Issuers, the Guarantors nor any of their
respective affiliates or any person acting on its or their behalf (other than
the Initial Purchasers, as to whom the Issuers and the Guarantors make no
representation) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S under the Act ("REGULATION S") with respect
to the Units.
(ll) The Units offered and sold in reliance on Regulation S
have been and will be offered and sold only in offshore transactions.
(mm) The sale of the Units pursuant to Regulation S is not
part of a plan or scheme to evade the registration provisions of the Act.
(nn) The Issuers, the Guarantors and their respective
affiliates and all persons acting on their behalf (other than the Initial
Purchasers, as to whom the Issuers and the Guarantors make no representation)
have complied with and will comply with the offering restrictions requirements
of Regulation S in connection with the offering of the Units outside the United
States and, in connection therewith, the Offering Memorandum will contain the
disclosure required by Rule 902(g).
(oo) The Units sold in reliance on Regulation S will be
represented upon issuance by a temporary global security that may not be
exchanged for definitive securities until the expiration of the 40-day or
one-year, as the case may be, restricted period referred to in Rule 903(b)(3) of
the Act and only upon certification of beneficial ownership of such Units by
non-U.S. persons or U.S. persons who purchased such Units in transactions that
were exempt from the registration requirements of the Act.
(pp) No registration under the Act of the Units is required
for the sale of the Units to the Initial Purchasers as contemplated hereby or
for the Exempt Resales assuming the accuracy of the Initial Purchasers'
representations and warranties and agreements set forth in Section 7 hereof.
(qq) Each certificate signed by any officer of any Issuer or
any Guarantor and delivered to the Initial Purchasers or counsel for the Initial
Purchasers shall be deemed to be a representation and warranty by such Issuer or
such Guarantor to the Initial Purchasers as to the matters covered thereby.
(rr) The Company, MAS and their respective subsidiaries have
good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material to the
business of the Company, MAS and
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<PAGE> 21
their respective subsidiaries, in each case free and clear of all Liens and
defects, except such as are described in the Offering Memorandum or such as do
not materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company, MAS and their
respective subsidiaries; and any real property and buildings held under lease by
the Company, MAS and their respective subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company, MAS and their respective subsidiaries, in each case
except as described in the Offering Memorandum.
(ss) The Company, MAS and their respective subsidiaries own
or possess, or can acquire on reasonable terms, all patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks and trade names ("INTELLECTUAL
PROPERTY") currently employed by them in connection with the business now
operated by them, except where the failure to own or possess or otherwise be
able to acquire such intellectual property would not, singly or in the
aggregate, have a Material Adverse Effect; and neither the Company, MAS nor any
of their respective subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of such intellectual
property which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect.
(tt) The Company, MAS and each of their respective
subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent and customary
in the businesses in which they are engaged; and neither the Company, MAS nor
any of their respective subsidiaries (i) has received notice from any insurer or
agent of such insurer that substantial capital improvements or other material
expenditures will have to be made in order to continue such insurance or (ii)
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers at a cost that would not reasonably be expected
to have a Material Adverse Effect.
(uu) There is no (i) significant unfair labor practice
complaint, grievance or arbitration proceeding pending or threatened against the
Company, MAS or any of their respective subsidiaries before the National Labor
Relations Board or any state or local labor relations board, (ii) strike, labor
dispute, slowdown or stoppage pending or, to the Company's knowledge, threatened
against the Company, MAS or any of their respective subsidiaries or (iii) union
representation question existing with respect to the employees of the Company,
MAS or any of their respective subsidiaries, except in the case of clauses (i),
(ii) and (iii) for such actions which, singly or in the aggregate, would not
have a Material Adverse Effect. To the best knowledge of the Company, no
collective bargaining organizing activities are taking place with respect to the
Company, MAS or any of their respective subsidiaries at any of their facilities.
(vv) The Company, MAS and each of their respective
subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurance that
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<PAGE> 22
(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.
(ww) All material tax returns required to be filed by the
Company, MAS and each of their respective subsidiaries in any jurisdiction have
been filed, other than those filings being contested in good faith, and all
material taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due pursuant to such returns or pursuant to
any assessment received by the Company, MAS or any of their respective
subsidiaries have been paid, other than those being contested in good faith and
for which adequate reserves have been provided.
(xx) All indebtedness of the Company, MAS and their
respective Subsidiaries that will be repaid with the proceeds of the issuance
and sale of the Units was incurred, and the indebtedness represented by the
Units is being incurred, for proper purposes and in good faith and each of the
Company and its Subsidiaries was, at the time of the incurrence of such
indebtedness that will be repaid with the proceeds of the issuance and sale of
the Units, and will be on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Units) solvent, and had at
the time of the incurrence of such indebtedness that will be repaid with the
proceeds of the issuance and sale of the Units and will have on the Closing Date
(after giving effect to the application of the proceeds from the issuance of the
Units) sufficient capital for carrying on their respective business and were, at
the time of the incurrence of such indebtedness that will be repaid with the
proceeds of the issuance and sale of the Units, and will be on the Closing Date
(after giving effect to the application of the proceeds from the issuance of the
Units) able to pay their respective debts as they mature.
(yy) Each of the Company, MAS and their respective
subsidiaries has (i) undertaken such review and assessment of its respective
business and operations as it deems appropriate with respect to Year 2000
Compliance, established an appropriate plan and timetable for addressing Year
2000 Compliance issues on a timely basis and (ii) as from the date of this
Agreement shall implement that plan substantially in accordance with that
timetable. The aggregate costs to and charges by the Company, MAS and their
respective subsidiaries related to Year 2000 Compliance shall not be an amount
which has a Material Adverse Effect. For purposes of this subparagraph (yy)
"Year 2000 Compliance" shall mean all that computer hardware and software that
are material to the business and operations of the Company, MAS and their
respective subsidiaries, taken as a whole, and over which the Company has sole
and direct control, will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000
including functions with respect to any leap year.
(zz) No action has been taken and no law, statute, rule or
regulation or order has been enacted, adopted or issued by any governmental
agency or body which prevents the execution, delivery and performance of any of
the Operative Documents, the issuance of the
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Securities, or suspends the sale of the Units in any jurisdiction referred to in
Section 5(e); and no injunction, restraining order or other order or relief of
any nature by a federal or state court or other tribunal of competent
jurisdiction has been issued with respect to any Issuer or any of its
subsidiaries which would prevent or suspend the issuance or sale of the Units in
any jurisdiction referred to in Section 5(e).
(aaa) Except as disclosed in the Offering Memorandum, no
relationship, direct or indirect, exists between or among any Issuer, MAS or any
of their respective subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Issuers, MAS or their respective
subsidiaries on the other hand, which would be required by the Act to be
described in the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 filed with the
Commission.
(bbb) As of the Closing Date, International Enterprises
Group, Inc., a Florida corporation ("IEG"), the wholly owned domestic subsidiary
of MAS, will not be a "significant subsidiary" as defined in Article 1, Rule
1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such
Regulation is in effect on the date hereof.
(ccc) Holdings is a holding company and does not have any
significant operations or assets other than its ownership of all of the capital
stock of the Company.
Each of the Issuers and the Guarantors acknowledges that the
Initial Purchasers and, for purposes of the opinions to be delivered to the
Initial Purchasers pursuant to Section 9 hereof, counsel to the Issuers and the
Guarantors and counsel to the Initial Purchasers will rely upon the accuracy and
truth of the foregoing representations and hereby consents to such reliance.
7. Initial Purchasers' Representations and Warranties. Each of
the Initial Purchasers, severally and not jointly, represents and warrants to
the Issuers and the Guarantors, and agrees that:
(a) Each Initial Purchaser is either a QIB or an Accredited
Institution, in either case, with such knowledge and experience in financial and
business matters as is necessary in order to evaluate the merits and risks of an
investment in the Units.
(b) Each Initial Purchaser (A) is not acquiring the Units
with a view to any distribution thereof or with any present intention of
offering or selling any of the Units in a transaction that would violate the Act
or the securities laws of any state of the United States or any other applicable
jurisdiction and (B) will be reoffering and reselling the Units only to (x) QIBs
in reliance on the exemption from the registration requirements of the Act
provided by Rule 144A and (y) in offshore transactions in reliance upon
Regulation S under the Act.
(c) Each Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by it or any of its representatives in
connection with the offer and sale of the Units pursuant hereto, including, but
not limited to, articles, notices or other communications published in any
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<PAGE> 24
newspaper, magazine or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
(d) Each Initial Purchaser agrees that, in connection with
Exempt Resales, it will solicit offers to buy the Units only from, and will
offer to sell the Units only to, Eligible Purchasers. Each Initial Purchaser
further agrees that it will offer to sell the Units only to, and will solicit
offers to buy the Units only from (A) Eligible Purchasers that it reasonably
believe are QIBs, and (B) Regulation S Purchasers, in each case, that agree or
are deemed to have agreed that (x) the Units purchased by them may be resold,
pledged or otherwise transferred within the time period referred to under Rule
144(k) (taking into account the provisions of Rule 144(d) under the Act, if
applicable) under the Act, as in effect on the date of the transfer of such
Units, only (I) to the Issuers or any of their subsidiaries, (II) to a person
whom the seller reasonably believes is a QIB purchasing for its own account or
for the account of a QIB in a transaction meeting the requirements of Rule 144A
under the Act, (III) in an offshore transaction (as defined in Rule 902 under
the Act) meeting the requirements of Rule 904 of the Act, (IV) in a transaction
meeting the requirements of Rule 144 under the Act, (V) to an Accredited
Investor that, prior to such transfer, (A) in the case of the Series A Notes,
furnishes the Trustee a signed letter containing certain representations and
agreements relating to the registration of transfer of such Series A Notes (the
form of which may be obtained from the Trustee) or (B) in the case of the
Warrants, furnish the Warrant Agent a signed letter containing certain
representations and agreements relating to the registration of transfer of such
Warrants (the form of which may be obtained from the Warrant Agent) and, with
respect to the Series A Notes if such transfer is in respect of an aggregate
principal amount of Series A Notes less than $250,000, an opinion of counsel
acceptable to the Company that such transfer is in compliance with the Act, (VI)
in accordance with another exemption from the registration requirements of the
Act (and based upon an opinion of counsel acceptable to the Issuers) or (VII)
pursuant to an effective registration statement and, in each case, in accordance
with the applicable securities laws of any state of the United States or any
other applicable jurisdiction and (y) they will deliver to each person to whom
such Units or an interest therein is transferred a notice substantially to the
effect of the foregoing.
(e) Each Initial Purchaser and its respective affiliates or
any person acting on its or their behalf have not engaged or will not engage in
any directed selling efforts within the meaning of Regulation S with respect to
the Units.
(f) The Units offered and sold by each of the Initial
Purchasers pursuant hereto in reliance on Regulation S have been and will be
offered and sold only in offshore transactions.
(g) The sale of the Units offered and sold by each of the
Initial Purchasers pursuant hereto in reliance on Regulation S is not part of a
plan or scheme to evade the registration provisions of the Act.
(h) Each Initial Purchaser agrees that it has not offered
or sold and will not offer or sell the Units in the United States or to, or for
the benefit or account of, a U.S. Person
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<PAGE> 25
(other than a distributor), in each case, as defined in Rule 902 under the Act
(i) as part of its distribution at any time and (ii) otherwise until 40 days or
one-year, as the case may be, after the later of the commencement of the
offering of the Units pursuant hereto and the Closing Date, other than in
accordance with Regulation S of the Act or another exemption from the
registration requirements of the Act. Each Initial Purchaser agrees that, during
such 40-day or one-year, as the case may be, restricted period and prior to the
completion of the Exempt Resales, it will not cause any advertisement with
respect to the Units (including any "tombstone" advertisement) to be published
in any newspaper or periodical or posted in any public place and will not issue
any circular relating to the Units, except such advertisements as are permitted
by and include the statements required by Regulation S.
(i) Each Initial Purchaser agrees that, at or prior to
confirmation of a sale of Units by it to any distributor, dealer or person
receiving a selling concession, fee or other remuneration during the 40-day or
one-year, as the case may be, restricted period referred to in Rule 903(b)(3)
under the Act, it will send to such distributor, dealer or person receiving a
selling concession, fee or other remuneration a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the "SECURITIES
ACT"), and may not be offered and sold within the United
States or to, or for the account or benefit of, U.S. persons
(i) as part of your distribution at any time or (ii)
otherwise until 40 days or one-year, as the case may be,
after the later of the commencement of the Offering and the
Closing Date, except in either case in accordance with
Regulation S under the Securities Act (or Rule 144A, if
available, or to Accredited Institutions in transactions that
are exempt from the registration requirements of the
Securities Act). Terms used above have the meanings assigned
to them in Regulation S."
(j) Each Initial Purchaser agrees that the Units offered
and sold in reliance on Regulation S will be represented upon issuance by global
securities that may not be exchanged for definitive securities until the
expiration of the 40-day or one-year, as the case may be, restricted period
referred to in Rule 903(b)(3) of the Act and only upon certification of
beneficial ownership of such Units by non-U.S. persons or U.S. persons who
purchased such Units in transactions that were exempt from the registration
requirements of the Act.
Each Initial Purchaser acknowledges that the Issuers and the
Guarantors and, for purposes of the opinions to be delivered to each Initial
Purchaser pursuant to Section 9 hereof, counsel to the Issuers and the
Guarantors and counsel to the Initial Purchasers will rely upon the accuracy and
truth of the foregoing representations and the Initial Purchasers hereby consent
to such reliance.
8. Indemnification.
(a) The Issuers and each Guarantor agree, jointly and
severally, to indemnify and hold harmless each of the Initial Purchasers, their
respective directors, officers and each person, if any, who controls such
Initial Purchaser within the meaning of Section 15 of
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<PAGE> 26
the Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, liabilities and judgments (including, without limitation, any
reasonable legal or other expenses incurred in connection with investigating or
defending any matter, including any action, that could give rise to any such
losses, claims, damages, liabilities or judgments) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Offering Memorandum (or any amendment or supplement thereto), the Preliminary
Offering Memorandum or any Rule 144A Information provided by the Issuers or any
Guarantor to any holder or prospective purchaser of Units pursuant to Section
5(h) or caused by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to the Initial Purchasers
furnished in writing to the Issuers by the Initial Purchasers; provided,
however, that the foregoing indemnity agreement with respect to any Preliminary
Offering Memorandum shall not inure to the benefit of any Initial Purchaser who
failed to deliver a Final Offering Memorandum, as then amended or supplemented
(so long as the Final Offering Memorandum and any amendment or supplement
thereto was provided by the Issuers to the Initial Purchasers in the requisite
quantity and on a timely basis to permit proper delivery on or prior to the
Closing Date) to the person asserting any losses, claims, damages, liabilities
or judgments caused by any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Memorandum, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured in the Final Offering Memorandum, as so amended or
supplemented.
(b) Each of the Initial Purchasers, severally and not
jointly, agrees to indemnify and hold harmless the Issuers and the Guarantors,
and their respective directors and officers and each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Issuers or the Guarantors, to the same extent as the foregoing
indemnity from the Issuers and the Guarantors to the Initial Purchasers but only
with reference to information that such Initial Purchaser furnished in writing
to the Issuers by such Initial Purchaser expressly for use in the Preliminary
Offering Memorandum or the Offering Memorandum and not with respect to the
information provided by any other Initial Purchaser.
(c) In case any action shall be commenced involving any
person in respect of which indemnity may be sought pursuant to Section 8(a) or
8(b) (the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Initial Purchasers shall not
be required to assume the defense of such action pursuant to this Section 8(c),
but may employ separate counsel and participate in the defense thereof, but the
fees and expenses of such counsel, except as provided below, shall be at the
expense of the Initial Purchasers). Any indemnified party shall have the right
to employ
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<PAGE> 27
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that the joint representation of such parties could be
inadvisable due to potential conflicts of interest or because there may be one
or more legal defenses available to such indemnified party which are different
from or additional to those available to the indemnifying party (in which case
the indemnifying party shall not have the right to assume the defense of such
action on behalf of the indemnified party). In any such case, the indemnifying
party shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all indemnified parties and all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by
DLJ, in the case of the parties indemnified pursuant to Section 8(a), and by the
Issuers, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action effected with its written consent. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is a party and indemnity or contribution has been, or
would be entitled to be, sought hereunder by the indemnified party, unless such
settlement, compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability on claims that are the subject matter of
such action and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act, by or on behalf of the indemnified
party.
(d) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers and the Guarantors, on the one hand, and the Initial Purchasers, on the
other hand, from the offering of the Units or (ii) if the allocation provided by
clause 8(d)(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
8(d)(i) above but also the relative fault of the Issuers and the Guarantors, on
the one hand, and the Initial Purchasers, on the other hand, in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Issuers and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand,
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Units (after underwriting discounts and commissions, but before
deducting expenses) received by the Issuers, and the total discounts and
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<PAGE> 28
commissions received by the Initial Purchasers bear to the total price to
investors of the Units, in each case as set forth in the table on the cover page
of the Offering Memorandum. The relative fault of the Issuers and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand,
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Issuers or the
Guarantors, on the one hand, or the Initial Purchasers, on the other hand, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Issuers, the Guarantors and the Initial Purchasers agree
that it would not be just and equitable if contribution pursuant to this Section
8(d) were determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such indemnified party in connection with investigating or defending any
matter, including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, an Initial Purchaser shall not be required to contribute any amount
in excess of the amount by which the total discounts and commissions received by
such Initial Purchaser exceeds the amount of any damages which the Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute pursuant to
this Section 8(d) are several in proportion to the respective principal amount
of Series A Notes purchased by each of the Initial Purchasers hereunder and not
joint.
(e) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
9. Conditions of Initial Purchasers' Obligations. The
obligations of the Initial Purchasers to purchase the Units under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Issuers
and the Guarantors contained in this Agreement shall be true and correct on the
Closing Date with the same force and effect as if made on and as of the Closing
Date.
(b) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice have
been given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a possible
change that does not indicate the direction of the possible change
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<PAGE> 29
in, any rating of any Issuer or any Guarantor or any securities of any Issuer or
any Guarantor (including, without limitation, the placing of any of the
foregoing ratings on credit watch with negative or developing implications or
under review with an uncertain direction) by any "nationally recognized
statistical rating organization" as such term is defined for purposes of Rule
436(g)(2) under the Act, (ii) there shall not have occurred any change, nor
shall any notice have been given of any potential or intended change, in the
outlook for any rating of any Issuer or any Guarantor or any securities of any
Issuer or any Guarantor by any such rating organization and (iii) no such rating
organization shall have given notice that it has assigned (or is considering
assigning) a lower rating to the Notes (or the Units) than that on which the
Notes (or the Units) were marketed.
(c) Since the respective dates as of which information is
given in the Offering Memorandum other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement not approved in advance by the Initial Purchasers and
their counsel), (i) there shall not have occurred any change or any development
involving a prospective change in the condition, financial or otherwise, or the
earnings, business, management or operations of the Issuers, MAS and their
respective subsidiaries, taken as a whole, (ii) there shall not have been any
change or any development involving a prospective change in the capital stock or
in the long-term debt of the Issuers or any of their subsidiaries and (iii) none
of the Issuers nor any of their subsidiaries shall have incurred any liability
or obligation, direct or contingent, the effect of which, in any such case
described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market the
Units on the terms and in the manner contemplated in the Offering Memorandum.
(d) The Initial Purchasers shall have received on the
Closing Date a certificate dated the Closing Date, signed by the President or
Chief Executive Officer and the Chief Financial Officer, Treasurer, Secretary,
Assistant Secretary or any Vice President of the Issuers and each of the
Guarantors, confirming the matters set forth in Sections 6(ff), 9(a) and 9(b)
and stating that each of the Issuers and the Guarantors has complied with all
the agreements and satisfied all of the conditions herein contained and required
to be complied with or satisfied on or prior to the Closing Date.
(e) The Initial Purchasers shall have received on the
Closing Date an opinion (satisfactory to each of you and counsel for the Initial
Purchasers), dated the Closing Date, of Schulte Roth & Zabel LLP, counsel for
the Issuers and the Guarantors, to the effect that:
(i) Each of the Issuers and the Guarantors ((the
"DESIGNATED GUARANTORS"), which term excludes Miami International Airport Cargo
Facilities & Services Inc. ("MIAMI INTERNATIONAL") and International Enterprises
Group, Inc., a Florida corporation ("IEG")), is incorporated and validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation and has the corporate power and authority to carry on its business
as described in the Offering Memorandum and to own, lease and operate its
properties.
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<PAGE> 30
(ii) All of the outstanding shares of capital stock
of the Issuers have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights.
(iii) (a) All of the outstanding shares of capital
stock of each of the Designated Guarantors have been duly authorized and validly
issued and are fully paid and non-assessable and are owned of record, by the
Company, free and clear of any Lien (except for the Liens described in the
Offering Memorandum), and (b) to the best of such counsel's knowledge, all of
the outstanding shares of capital stock of MAS have been duly authorized and
validly issued and are fully paid and non-assessable and are owned of record, by
the Company, free and clear of any Lien, except as disclosed in the Offering
Memorandum.
(iv) Each of the Issuers has duly and validly
authorized the issuance of the Notes and the Warrants as a Unit.
(v) The Series A Notes have been duly authorized by
the Company and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, will be entitled to
the benefits of the Indenture and will be valid and binding obligations of the
Company, enforceable in accordance with their terms except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally; (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability; and (z) a waiver of rights under any usury or stay law
may be unenforceable; we express no opinion, however, as to the applicability
(and, if applicable, the effect) of Section 548 of the United States Bankruptcy
Code or any comparable provision of state law to the questions addressed above
or on the conclusions expressed with respect thereto.
(vi) The Warrants have been duly authorized by
Holdings and, on the Closing Date, when countersigned by the Warrant Agent and
issued and delivered in accordance with the terms of this Agreement and the
Warrant Agreement, the Warrants will be valid and binding obligations of
Holdings, enforceable against Holdings in accordance with their terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally, and (ii) rights of
acceleration, if applicable, and the availability of equitable remedies may be
limited by equitable principles of general applicability.
(vii) The Warrant Shares have been duly and validly
authorized for issuance by Holdings, and when issued and delivered upon payment
of the exercise price pursuant to the terms of the Warrants and the Warrant
Agreement will be fully paid and non-assessable and will not be subject to any
preemptive or similar rights.
(viii) The Subsidiary Guarantees of the Designated
Guarantors have been duly authorized and, when the Series A Notes are executed
and authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchasers in accordance with the terms
of this Agreement, the Subsidiary Guarantees endorsed
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<PAGE> 31
thereon will be entitled to the benefits of the Indenture and will be valid and
binding obligations of the Designated Guarantors, enforceable against the
Designated Guarantors in accordance with their terms and, assuming due
authorization thereof, and, when the Series A Notes are executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Initial Purchasers in accordance with the terms of this
Agreement, the Subsidiary Guarantee for Miami International endorsed thereon
will be entitled to the benefits of the Indenture and will be a valid and
binding obligation of Miami International, enforceable against it in accordance
with its terms; except as (x) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally;
(y) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability; and (z) a waiver of
rights under any usury or stay law may be unenforceable; we express no opinion,
however, as to the applicability (and, if applicable, the effect) of Section 548
of the United States Bankruptcy Code or any comparable provision of state law to
the questions addressed above or on the conclusions expressed with respect
thereto.
(ix) The Indenture has been duly authorized,
executed and delivered by the Company and each Designated Guarantor and,
assuming due authorization thereof by Miami International, has been duly
executed and delivered by Miami International, and (assuming due authorization,
execution and delivery thereof by the Trustee) is a valid and binding agreement
of the Company and each such Designated Guarantor, enforceable against the
Company and each Designated Guarantor in accordance with its terms except as (x)
the enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally; (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability; and (z) a waiver of rights under any usury or stay law
may be unenforceable; we express no opinion, however, as to the applicability
(and, if applicable, the effect) of Section 548 of the United States Bankruptcy
Code or any comparable provision of state law to the questions addressed above
or on the conclusions expressed with respect thereto.
(x) This Agreement has been duly authorized,
executed and delivered by the Issuers and the Designated Guarantors and,
assuming due authorization thereof by Miami International, has been duly
executed and delivered by Miami International.
(xi) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and the Designated Guarantors,
and assuming due authorization thereof by Miami International, has been duly
executed and delivered by Miami International, and (assuming due authorization,
execution and delivery thereof by the Initial Purchasers) is a valid and binding
agreement of the Company and each Designated Guarantor, enforceable against the
Company and each Designated Guarantor in accordance with its terms, except as
(x) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally; (y) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability; and (z) rights to indemnification,
contribution and liquidated damages under the Registration Rights Agreement may
be limited by public policy.
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<PAGE> 32
(xii) The Warrant Agreement has been duly and validly
authorized, executed and delivered by Holdings, and is a valid and binding
agreement of Holdings, enforceable against it in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally, (ii) rights of
acceleration, if applicable, and the availability of equitable remedies may be
limited by equitable principles of general applicability and (iii) rights to
indemnification, contribution and liquidated damages thereunder may be limited
by public policy.
(xiii) The Common Stock Registration Rights Agreement
has been duly and validly authorized, executed and delivered by Holdings, and is
a valid and binding agreement of Holdings, enforceable against it in accordance
with its terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights, (ii) rights
of acceleration, if applicable, and the availability of equitable remedies may
be limited by equitable principles of general applicability and (iii) to the
extent that rights to indemnification, contribution and liquidated damages
thereunder may be limited by public policy.
(xiv) The Stock Purchase Agreement has been duly
authorized, executed and delivered by MAS Holding and (assuming due
authorization, execution and delivery thereof by the Sellers) is a valid and
binding agreement of MAS Holding, enforceable against MAS Holding in accordance
with its terms, except as (a) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(b) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability.
(xv) The Credit Agreement has been duly authorized,
executed and delivered by the Company and the Designated Guarantors and
(assuming due authorization, execution and delivery by parties thereto other
than the Company and the Designated Guarantors) is a valid and binding agreement
of the Company and each such Designated Guarantor, enforceable against the
Company and each such guarantor in accordance with its terms, except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability.
(xvi) The Series B Senior Notes have been duly
authorized.
(xvii) The statements under the captions "Related
Party Transactions," "Description of the Senior Secured Credit Facility,"
"Description of Units," "Description of Notes," "Description of Warrants" and
"Plan of Distribution" in the Offering Memorandum, insofar as such statements
constitute a summary of the legal matters, documents or proceedings referred to
therein, fairly present in all material respects such legal matters, documents
and proceedings, and the statements made in the Offering Memorandum under the
heading "Material United States Federal Income Tax Consequences," insofar as
they summarize certain federal income tax laws of the United States, constitute
a fair summary of the principal U.S. federal income tax consequences of an
investment in the Series A Notes.
-31-
<PAGE> 33
(xviii) The execution, delivery and performance of this
Agreement, the Stock Purchase Agreement, the Warrant Agreement, the Common Stock
Registration Rights Agreement, the Registration Rights Agreement, the Securities
and the Indenture by Holdings, the Issuers and each of the Designated
Guarantors, as applicable, the compliance by the Issuers and each of the
Designated Guarantors with all provisions hereof and thereof, as applicable, and
the consummation of the transactions contemplated hereby and thereby, as
applicable, will not: (a) require any consent, approval, authorization or other
order of, or qualification with, any court or governmental body or agency
(except such as may be required under any U.S. federal securities laws other
than as set forth in sub-paragraph (xxii) of this Section 9(e) or Blue Sky or
state securities laws); (b) conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the charter or by-laws of the
Issuers or any of the Designated Guarantors, as applicable, or any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to the Issuers and the Designated Guarantors, taken as a whole, to
which the Issuers or any of the Designated Guarantors, as applicable, is a party
or by which the Issuers or any of the Designated Guarantors or their respective
property is bound, as applicable; (c) violate or conflict with any applicable
law or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Issuers, any of their
subsidiaries or their respective property, as applicable; (d) result in the
imposition or creation of (or the obligation to create or impose) a Lien under
any agreement or instrument to which the Issuers or any of their subsidiaries is
a party, as applicable, or by which the Issuers or any of their subsidiaries or
their respective property is bound, as applicable; or (e) result in the
termination, suspension or revocation of any Authorization (as defined below) of
the Issuers or any of their subsidiaries, as applicable, or result in any other
impairment of the rights of the holder of any such Authorization, except where
any such termination, suspension or revocation would not, singly or in the
aggregate, have a Material Adverse Effect.
(xix) Each of the Issuers is not and, after giving
effect to the offering and sale of the Units and the application of the net
proceeds thereof as described in the Offering Memorandum, will not be, an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
(xx) To such counsel's knowledge, there are no
contracts, agreements or understandings between the Issuers or any Guarantor and
any person granting such person the right to require the Issuers or such
Guarantor to file a registration statement under the Act with respect to any
securities of the Issuers or such Guarantor or to require the Issuers or such
Guarantor to include such securities with the Units registered pursuant to any
Registration Statement (other than in the Registration Rights Agreement or the
Common Stock Registration Rights Agreement).
(xxi) The Indenture complies as to form in all
material respects with the requirements of the TIA, and the rules and
regulations of the Commission applicable to an indenture which is qualified
thereunder. It is not necessary in connection with the offer, sale and delivery
of the Units to the Initial Purchasers in the manner contemplated by this
Agreement or in connection with the Exempt Resales to qualify the Indenture
under the TIA.
-32-
<PAGE> 34
(xxii) No registration under the Act of the Units is
required for the sale of the Units to the Initial Purchasers as contemplated by
this Agreement or for the Exempt Resales assuming (i) that each Initial
Purchaser is a QIB or a Regulation S Purchaser, (ii) the accuracy of, and
compliance with, such Initial Purchasers' representations and agreements
contained in Section 7 of this Agreement, and (iii) the accuracy of the
representations of the Issuers and the Guarantors set forth in Sections 5(h) and
(m) and 6(gg), (hh), (ii), (jj), (kk) and (mm) of this Agreement.
The opinion of Schulte Roth & Zabel LLP described in Section
9(e) above shall be rendered to you at the request of the Issuers and the
Designated Guarantors and shall so state therein. In addition, Schulte Roth &
Zabel LLP shall state that it has participated in the preparation of the
Offering Memorandum and any amendments or supplements thereto, if applicable,
and that although such counsel has not independently verified the accuracy,
completeness or fairness of the statements contained therein, except as stated
in paragraph (xvii), no facts have come to such counsel's attention to cause it
to believe that, as of the date of the Offering Memorandum or as of the Closing
Date, the Offering Memorandum, as amended or supplemented, if applicable (except
for the financial statements and other financial data included therein or
omitted therefrom, as to which such counsel need not express any belief)
contained or contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(f) Berger, Davis & Singerman, special Florida counsel for
the Company, shall have furnished to the Initial Purchasers an opinion in a form
acceptable to the Initial Purchasers and their counsel, dated the Closing Date.
(g) The Initial Purchasers shall have received on the
Closing Date an opinion, dated the Closing Date, of O'Melveny & Myers LLP,
counsel for the Initial Purchasers, in form and substance reasonably
satisfactory to the Initial Purchasers.
(h) The Initial Purchasers shall have received, at the time
this Agreement is executed and at the Closing Date, letters dated the date
hereof or the Closing Date, as the case may be, in form and substance
satisfactory to the Initial Purchasers from Ernst & Young LLP and KPMG, LLP,
independent public accountants of the Issuers and MAS, respectively, containing
the information and statements of the type ordinarily included in accountants'
"comfort letters" to the Initial Purchasers with respect to the financial
statements and certain financial information contained in the Offering
Memorandum.
(i) The Securities shall have been approved by the NASD for
trading and duly listed in PORTAL.
(j) The Initial Purchasers shall have received a
counterpart, conformed as executed, of the Indenture which shall have been
entered into by the Company, the Guarantors and the Trustee.
-33-
<PAGE> 35
(k) The Company and the Guarantors shall have executed the
Registration Rights Agreement and the Initial Purchasers shall have received an
original copy thereof, duly executed by the Company and the Guarantors.
(l) Holdings shall have executed the Warrant Agreement and
the Common Stock Registration Rights Agreement and the Initial Purchasers shall
have received an original copy thereof, duly executed by Holdings.
(m) The Company and the Guarantors, as the case may be,
shall have executed the Credit Documents and the Initial Purchasers shall have
received a copy thereof, duly executed by the Company and such Guarantors, as
the case may be and all conditions to funding under the Credit Documents which
are required to be performed or complied with by the Company and the Guarantors,
as the case may be, shall have been satisfied or waived by the lenders party to
the Credit Documents or their agent.
(n) (i) All conditions to the purchase of equity securities
of MAS pursuant to and contained in the Stock Purchase Agreement shall have been
satisfied without waiver (unless such waiver is not materially adverse in any
manner to the Initial Purchasers) and (ii) substantially simultaneously
herewith, MAS Holding shall have purchased from the Sellers one-hundred percent
(100%) of the outstanding capital stock of MAS.
(o) The Initial Purchasers shall have received an original
counterpart to this Agreement, duly executed by MAS and its subsidiary.
(p) No court of competent jurisdiction shall have entered
any order, decree or rule or taken any other action restraining, enjoining
(temporarily or permanently) or otherwise prohibiting the consummation of the
transaction contemplated by the Stock Purchase Agreement or the transactions
contemplated by the Credit Agreement.
(q) None of the Issuers nor the Guarantors shall have
failed at or prior to the Closing Date to perform or comply in any material
respect with any agreement herein contained and required to be performed or
complied with by the Issuers or the Guarantors, as the case may be, at or prior
to the Closing Date.
(r) The Initial Purchasers shall have received an FAA
opinion from Boros & Garofalo, P.C., the Issuers' special counsel on FAA
matters, in a form reasonably satisfactory to the Initial Purchasers.
(s) The Company shall have received an equity contribution
of $10.0 million from Holdings.
10. Effectiveness of Agreement and Termination. (a) This
Agreement shall become effective upon the execution and delivery of this
Agreement by the parties hereto.
(b) This Agreement may be terminated at any time on or
prior to the Closing Date by the Initial Purchasers by written notice to the
Issuers if any of the following has
-34-
<PAGE> 36
occurred: (i) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in the Initial
Purchasers' judgment, is material and adverse and, in the Initial Purchasers'
judgment, makes it impracticable to market the Units on the terms and in the
manner contemplated in the Offering Memorandum, (ii) the suspension or material
limitation of trading in securities or other instruments on the New York Stock
Exchange, the American Stock Exchange, the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange, the Chicago Board of Trade or the Nasdaq
National Market or limitation on prices for securities or other instruments on
any such exchange or the Nasdaq National Market, (iii) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which in
the Initial Purchasers' opinion materially and adversely affects, or will
materially and adversely affect, the business, prospects, financial condition or
results of operations of the Issuers, MAS and their respective subsidiaries,
taken as a whole, (v) the declaration of a banking moratorium by either federal
or New York State authorities or (vi) the taking of any action by any federal,
state or local government or agency in respect of its monetary or fiscal affairs
which in the Initial Purchasers' opinion has a material adverse effect on the
financial markets in the United States.
(c) If on the Closing Date any one or more of the Initial
Purchasers shall fail or refuse to purchase the Units which it or they have
agreed to purchase hereunder on such date and the aggregate number of Units
which such defaulting Initial Purchaser or Initial Purchasers, as the case may
be, agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Units to be purchased on such date by all Initial
Purchasers, each non-defaulting Initial Purchaser shall be obligated severally,
in the proportion which the number of Units set forth opposite its name in
Schedule B bears to the aggregate number of Units which all the non-defaulting
Initial Purchasers, as the case may be, have agreed to purchase, or in such
other proportion as the non-defaulting Initial Purchasers may specify, to
purchase the Units which such defaulting Initial Purchaser or Initial
Purchasers, as the case may be, agreed but failed or refused to purchase on such
date; provided that in no event shall the aggregate number of Units which any
Initial Purchaser has agreed to purchase pursuant to Section 2 hereof be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such number of Units without the written consent of such Initial Purchaser. If
on the Closing Date any Initial Purchaser or Initial Purchasers shall fail or
refuse to purchase the Units and the aggregate number of Units with respect to
which such default occurs is more than one-tenth of the aggregate number of
Units to be purchased by all Initial Purchasers and arrangements satisfactory to
the Initial Purchasers and the Issuers for purchase of such Units are not made
within 48 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Initial Purchaser and the Issuers.
In any such case which does not result in termination of this Agreement, either
the non-defaulting Initial Purchasers or the Issuers shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Offering Memorandum or any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Initial Purchaser from liability in respect of
any default of any such Initial Purchaser under this Agreement.
-35-
<PAGE> 37
11. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Issuers or any
Guarantor, to Worldwide Flight Services Inc., 4255 Amon Carter Blvd., MD 4237,
Fort Worth, Texas 76155, Attention: Peter A. Pappas, with a required copy to
Castle Harlan, Inc., 150 East 58th Street, 37th Floor, New York, New York 10155
Attention: Leonard M. Harlan and Marcel Fournier and Schulte Roth & Zabel LLP,
900 Third Avenue, New York, New York 10022 Attention: Marc Weingarten, and (ii)
if to the Initial Purchasers, to both (a) Donaldson, Lufkin & Jenrette
Securities Corporation, 277 Park Avenue, New York, New York 10172, Attention:
Syndicate Department and (b) Chase Securities Inc., 270 Park Avenue, 4th Floor,
New York, New York 10017, Attention: Gerald Murray, or in any case to such other
address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Issuers, the Guarantors
and the Initial Purchasers set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Units, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of any Initial Purchaser, the officers
or directors of any Initial Purchaser, any person controlling any Initial
Purchaser, the Issuers, any Guarantor, the officers or directors of the Issuers
or any Guarantor, or any person controlling the Issuers or any Guarantor, (ii)
acceptance of the Units and payment for them hereunder and (iii) termination of
this Agreement.
If for any reason the Units are not delivered by or on behalf
of the Issuers as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 10(c)), the Issuers and each Guarantor,
jointly and severally, agree to reimburse the Initial Purchasers for all
out-of-pocket expenses (including the fees and disbursements of counsel)
incurred by them. Notwithstanding any termination of this Agreement, the Issuers
shall be liable for all expenses which it has agreed to pay pursuant to Section
5(i) hereof.
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Issuers, the
Guarantors, the Initial Purchasers, each Initial Purchaser's directors and
officers, any controlling persons referred to herein, the directors of the
Issuers and the Guarantors and their respective successors and assigns, all as
and to the extent provided in this Agreement, and no other person shall acquire
or have any right under, or by virtue of, this Agreement. The term "successors
and assigns" shall not include a purchaser of any of the Units from the Initial
Purchasers merely because of such purchase.
This Agreement shall be governed and construed in accordance
with the laws of the State of New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
[Remainder of page intentionally left blank; signature pages to follow]
-36-
<PAGE> 38
Please confirm that the foregoing correctly sets forth the
agreement among the Issuers, the Guarantors and the Initial Purchasers.
Very truly yours,
WORLDWIDE FLIGHT SERVICES, INC.
By: /s/ Peter A. Pappas
------------------------
Name: Peter A. Pappas
Title: Chief Executive Officer
WORLDWIDE FLIGHT FINANCE COMPANY
By: /s/ Peter A. Pappas
------------------------
Name: Peter A. Pappas
Title: President
WORLDWIDE FLIGHT SECURITY SERVICE CORPORATION
By: /s/ Peter A. Pappas
------------------------
Name: Peter A. Pappas
Title: President
MIAMI INTERNATIONAL AIRPORT CARGO
FACILITIES & SERVICES, INC.
By: /s/ Peter A. Pappas
------------------------
Name: Peter A. Pappas
Title: President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CHASE SECURITIES INC.
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Justin Vorwerk
--------------------------
Name: Justin Vorwerk
Title: Managing Director
-37-
<PAGE> 39
WFS HOLDINGS, INC.
By: /s/ Marcel Fournier
-----------------------------
Name: Marcel Fournier
Title: President and Treasurer
AGREED TO AND ACCEPTED AS OF
THE CLOSING DATE:
MIAMI AIRCRAFT SUPPORT, INC.
By: /s/ Peter A. Pappas
----------------------------
Name: Peter A. Pappas
Title: President
INTERNATIONAL ENTERPRISES
GROUP, INC.
By: /s/ Peter A. Pappas
----------------------------
Name: Peter A. Pappas
Title: President
-38-
<PAGE> 40
SCHEDULE A
GUARANTORS
PART I - Initial Guarantors
Worldwide Flight Finance Company
Worldwide Flight Security Service Corporation
Miami International Airport Cargo Facilities & Services, Inc.
PART II - Domestic Subsidiaries
Of the Company:
Worldwide Flight Finance Company
Worldwide Flight Security Service Corporation
Miami International Airport Cargo Facilities & Services, Inc.
Of MAS:
International Enterprises Group, Inc.
PART III - Foreign Subsidiaries
Worldwide Flight Services (U.K.) Limited
Worldwide Flight Services Fueling (Hong Kong) Limited
Worldwide Flight Services and Logistics of Mexico, S.A. de C.V.
Worldwide Flight Services France Holding, S.A.*
Societe de Fret et de Services*
SF Maintenance SARL**
SF Formation SARL**
Etudes Realisation et de Services Informatiques SARL**
SFS Servicios Aeroportuarios, S.A.***
- --------------------------
* Its directors own 6 shares and 12 shares, respectively, each representing
less than 1%.
** Worldwide Flight Services France Holding, S.A. owns 490 shares and Societe
de Fret et de Services owns 10 shares of each.
*** Worldwide Flight Services France Holding, S.A. owns 1746 shares and
Worldwide Flight Services and Societe de Fret de Services each owns 2
shares.
Schedule A
<PAGE> 41
SCHEDULE B
<TABLE>
<CAPTION>
Initial Purchasers Number of Units
------------------ ---------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation............. 87,100
Chase Securities Inc............................................ 42,900
-------
Total........................................................... 130,000
=======
</TABLE>
Exhibit A-1
<PAGE> 1
EXHIBIT 10.2
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
Among
MAS Worldwide Holding Corporation, a Delaware corporation,
as Buyer
and
ANTHONY ROMEO,
and
CHARLES MICALE,
as Sellers
OF
MIAMI AIRCRAFT SUPPORT, INC.
Dated as of May 28, 1999
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
SECTION 1. SALE AND PURCHASE.................................................1
(a) Sale and Purchase...............................................1
(b) Purchase Price..................................................1
SECTION 2. THE CLOSING.......................................................2
(a) Time and Place of Closing.......................................2
(b) Delivery and Payment............................................2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS WITH RESPECT TO
STOCK OWNERSHIP, AUTHORITY, NO VIOLATION, ETC.....................2
(a) Stock Ownership.................................................2
(b) No Violation, Etc...............................................2
(c) No Other Agreements to Sell Assets or Business..................3
(d) Litigation......................................................3
(e) Authority; Execution and Delivery...............................3
SECTION 4. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF ROMEO................4
(a) No Conflicts, Consents, Etc.....................................4
(b) Organization and Good Standing..................................4
(c) Capitalization..................................................5
(d) Articles of Incorporation and By-laws...........................5
(e) Financial Statements............................................5
(f) Absence of Undisclosed Liabilities and Obligations..............6
(g) Absence of Certain Changes or Events............................6
(h) Tax Matters.....................................................9
(i) Accounts Receivable............................................11
(j) Inventories....................................................11
(k) Equipment......................................................11
(l) Lists of Properties, Contracts and Personnel Data..............11
(m) Copies of Documents............................................14
(n) Tangible Properties............................................15
(o) Validity of Contracts..........................................15
(p) Intellectual Properties........................................16
(q) Environmental Matters..........................................16
(r) Insurance......................................................18
(s) Labor Matters..................................................19
(t) Employment Benefits............................................19
(u) Litigation.....................................................21
</TABLE>
ii
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
(v) Compliance with Laws..........................................21
(w) No Brokers....................................................22
(x) Transactions with Certain Persons.............................22
(y) Assets........................................................22
(z) Books and Records.............................................22
(aa) Consequences of Acquisition...................................23
(bb) Other Property................................................23
(cc) Successor-in-Interest.........................................23
(dd) Year 2000.....................................................23
(ee) Foreign Corrupt Practices Act.................................23
(ff) Disclosure....................................................24
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER..........................24
(a) Consents, No Conflicts, Etc...................................24
(b) Organization and Good Standing................................24
(c) Authority, Execution and Delivery.............................24
(d) No Brokers....................................................24
(e) Financing.....................................................25
(f) Disclosure....................................................25
SECTION 6. CERTAIN COVENANTS AND AGREEMENTS................................25
(a) Conduct of the Company's Business.............................25
(b) Access to the Company's Business..............................25
(c) Non-competition...............................................26
(d) Corporate Names...............................................27
(e) Nondisclosure.................................................27
(f) Changes in Representations and Warranties.....................27
(g) Mutual Cooperation............................................28
(h) Further Assurances............................................28
(i) No Solicitation...............................................28
(j) Interim Financial Statements..................................28
(k) Certain Intercompany Accounts.................................29
(l) Consents and Permits..........................................29
(m) Interim Operating Reporting...................................29
(n) Antitrust Compliance..........................................29
(o) Indebtedness..................................................29
(p) Employment and Non-Competition Agreements.....................30
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER..............................30
(a) Representations and Warranties True at the Closing Date.......30
(b) Seller's Performance..........................................31
(c) Approvals and Consents........................................31
(d) Stock Certificates............................................31
(e) Litigation....................................................31
(f) No Change in Law..............................................32
</TABLE>
iii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
(g) Opinion of Sellers' Counsel...................................32
(h) Settlement of Certain Accounts................................32
(i) Consulting Agreements.........................................32
(j) [Omitted.]....................................................32
(k) Release; Resignations.........................................32
(l) Proceedings and Documents Satisfactory........................32
(m) HSR...........................................................33
(n) Nonforeign Persons............................................33
(o) Funding.......................................................33
(p) Material Adverse Effect.......................................33
(q) Indebtedness..................................................33
(r) Net Working Capital...........................................33
(s) Corporate Documents...........................................33
(t) Escrow Agreement..............................................33
SECTION 8. CONDITIONS TO OBLIGATIONS OF SELLERS............................34
(a) Representations and Warranties True at the Closing Date.......34
(b) Buyer's Performance...........................................34
(c) Litigation....................................................34
(d) No Change in Law..............................................34
(e) HSR...........................................................34
(f) Opinion of Buyer's Counsel....................................34
(g) Consulting Agreements.........................................34
(h) Capital Contribution..........................................34
SECTION 9. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION, ETC............................................35
(a) Survival of Representations, Warranties, Etc..................35
(b) Nature of Seller's Liability..................................35
(c) Seller's Agreement to Indemnify...............................35
(d) Buyer's Agreement to Indemnify................................37
(e) Third Party Claims............................................37
SECTION 10. TERMINATION AND ABANDONMENT....................................38
(a) Termination...................................................38
(b) Liability Upon Termination....................................38
(c) Termination by Buyer..........................................38
(d) Termination by Sellers........................................39
SECTION 11. PAYMENT OF CERTAIN EXPENSES....................................39
SECTION 12. REMEDIES.......................................................39
SECTION 13. NOTICES, ETC...................................................40
</TABLE>
iv
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 14. ENTIRE AGREEMENT; AMENDMENT..............................41
SECTION 15. ASSIGNMENT...............................................41
SECTION 16. PRESS RELEASES...........................................41
SECTION 17. GENERAL..................................................42
SECTION 18. SEVERABILITY.............................................42
SECTION 19. JURY TRIAL WAIVER........................................42
SECTION 20. ATTORNEY'S FEES..........................................42
</TABLE>
v
<PAGE> 6
DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Adjustment Amount................................................. 29
Affiliate......................................................... 8
Agreement......................................................... 1
Balance Sheet..................................................... 6
Balance Sheet Date................................................ 6
Buyer............................................................. 1
CAA............................................................... 17
CERCLA............................................................ 17
Closing........................................................... 2
Closing Date...................................................... 2
Closing Statement................................................. 33
Code.............................................................. 10
Common Stock...................................................... 1
Company........................................................... 1
Company Financial Statements...................................... 5
Company Knowledge................................................. 10
Company Personnel................................................. 7
Computer Software................................................. 12
Computer Software Licenses........................................ 12
Consulting Agreements............................................. 1
CWA............................................................... 17
DOT............................................................... 21
Employee Plans.................................................... 13
Encumbrance....................................................... 2
Environmental Claims.............................................. 18
Environmental Condition........................................... 17
Environmental Law................................................. 17
ERISA............................................................. 13
ERISA Affiliate................................................... 20
ESA............................................................... 26
Escrow Agreement.................................................. 2
Excluded Assets................................................... 12
FAA............................................................... 21
Family Member..................................................... 9
FCPA.............................................................. 23
Financing......................................................... 25
Financing Letters................................................. 25
Governmental Authority............................................ 17
Hazardous Substances.............................................. 17
HSR Act........................................................... 3
IEG............................................................... 1
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
IEG Common Stock.................................................... 5
Indemnified Party................................................... 37
Indemnifying Party.................................................. 37
Intellectual Properties............................................. 12
Licenses............................................................ 12
Litigation.......................................................... 42
Losses.............................................................. 35
MAS................................................................. 1
MAS Business........................................................ 26
Material Adverse Effect............................................. 4
Micale.............................................................. 1
Ninety Day Period................................................... 30
Non-Competition Period.............................................. 26
Nonsolicitation Period.............................................. 28
Notice of Claim..................................................... 37
OSHA................................................................ 17
Pension Plan........................................................ 14
Permits............................................................. 14
Person.............................................................. 3
Purchase Price...................................................... 1
Release............................................................. 18
Retirement Plan..................................................... 13
RCRA................................................................ 17
Romeo............................................................... 1
Romeo Aircraft Business............................................. 27
Seller.............................................................. 1
Sellers............................................................. 1
Seller's Shares..................................................... 1
Shares.............................................................. 1
Tax................................................................. 9
Working Capital..................................................... 33
</TABLE>
ii
<PAGE> 8
Annex I SHARES SOLD AND PURCHASE PRICE ALLOCATION
iii
<PAGE> 9
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of May 28, 1999
(together with the Schedules, Annexes and Exhibits hereto, this "Agreement"), is
by and among MAS Worldwide Holding Corporation, a Delaware corporation
("Buyer"), Anthony Romeo, an individual ("Romeo") and Charles Micale, an
individual ("Micale") (Romeo and Micale each individually a "Seller" and
collectively, the "Sellers"), the beneficial and record owners of one hundred
percent (100%) of the issued and outstanding shares of common stock, without par
value (the "Common Stock"), of Miami Aircraft Support, Inc., a Delaware
corporation ("MAS"). MAS and International Enterprise Group, Inc., a Florida
corporation and wholly-owned subsidiary of MAS ("IEG"), are collectively
referred to herein as the "Company," and references herein to the "Company"
shall be deemed references to each of MAS and IEG unless the context otherwise
requires.
WHEREAS, Micale desires to sell all of the shares of Common
Stock owned by Micale and Romeo desires to sell all of the shares of Common
Stock owned by Romeo, each as set forth on Annex I hereto (collectively, the
"Shares") and Buyer desires to purchase such Shares for the consideration
provided herein;
WHEREAS, Buyer desires that MAS enter into a consulting
agreement with each of Romeo and Paula Romeo substantially in the form of
Exhibit II hereto (the "Consulting Agreements") and each of Romeo and Paula
Romeo desires to be a consultant to MAS on the terms and conditions of their
respective Consulting Agreement following the Closing Date;
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties and agreements contained herein, Sellers and
Buyer hereby agree as follows:
SECTION 1. SALE AND PURCHASE.
(a) Sale and Purchase. On the terms and subject to the
conditions of this Agreement, on the Closing Date (as defined in Section 2(a)),
each Seller will sell, convey, transfer and deliver to Buyer, and Buyer will
purchase from such Seller, the number of Shares set forth opposite such Seller's
name on Annex I hereto, which Shares represent one hundred percent (100%) of the
outstanding shares of capital stock of MAS. As to each Seller, the Shares being
sold by such Seller are sometimes referred to herein as such "Seller's Shares."
(b) Purchase Price. On the terms and subject to the conditions
of this Agreement, in consideration of the sale of the Shares, Buyer agrees to
pay to Sellers on the Closing Date the purchase price (the "Purchase Price"),
which shall consist of a sum in cash equal to Sixty One Million Dollars
($61,000,000), subject to adjustment as provided in Section 6(o) and Section
7(r). $59.5 million of the Purchase Price (less any adjustments pursuant to
Section 6(o) or 7(r)) shall be payable by wire transfer of immediately available
funds to such bank account or bank accounts as Sellers shall theretofore
designate in writing to Buyer, or by
<PAGE> 10
such other means as are agreed upon by Sellers and Buyer, and $1.5 million of
the Purchase Price shall be paid into escrow pursuant to the Escrow Agreement in
the form of Exhibit III hereto (the "Escrow Agreement"). The Purchase Price
shall be allocated among the Sellers as set forth on Annex I hereto.
SECTION 2. THE CLOSING.
(a) Time and Place of Closing. On the terms and subject to the
conditions contained in this Agreement, the closing of the purchase and sale of
the Shares (the "Closing") shall take place at the offices of Schulte Roth &
Zabel, LLP, 900 Third Avenue, New York, New York 10022 as soon as practicable
following the execution of this Agreement, and in any event within 30 days
following satisfaction of all closing conditions, or at such other place or time
as the Buyer and Sellers may agree in writing (the "Closing Date"). At the
Closing there shall have been delivered to Buyer and Seller the opinions,
certificates and other documents and instruments required to be delivered
hereunder.
(b) Delivery and Payment. At the Closing, each Seller shall
deliver (or cause to be delivered) to Buyer stock certificates representing the
number of such Seller's Shares set forth opposite such Seller's name on Annex I
hereto, duly endorsed or accompanied by duly executed stock powers in blank and
having all necessary stock transfer tax stamps affixed thereto at the expense of
Sellers in form suitable for transfer of valid title thereto to Buyer free and
clear of any Encumbrances (as defined herein), and the certificates and opinions
to be delivered pursuant to Section 7 hereof, against payment of the Purchase
Price by Buyer to Sellers and into escrow (as provided in Section 1(b)) and the
certificates and opinions to be delivered pursuant to Section 8 hereof.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS WITH
RESPECT TO STOCK OWNERSHIP, AUTHORITY, NO VIOLATION, ETC.
Each Seller hereby severally, and not jointly, represents and
warrants to Buyer, as follows:
(a) Stock Ownership. Such Seller is the beneficial and record
owner of such Seller's Shares, free and clear of any lien, pledge, option,
security interest, claim, charge, third party right or any other restriction or
encumbrance of any nature whatsoever (each an "Encumbrance"), and will transfer
to Buyer good and marketable title to such Shares, free and clear of any
encumbrance.
(b) No Violation, Etc. Neither such Seller's execution and
delivery of this Agreement, the consummation of the transactions contemplated
herein nor compliance by such Seller with any of the provisions hereof will (i)
result in the creation of any Encumbrance upon such Seller's Shares under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, agreement, or any other instrument or obligation to which
such Seller is a party or by which Seller or Seller's Shares may be bound or
affected, or otherwise or (ii) violate any order, writ, injunctions, decree,
statute, rule or regulation applicable to such Seller or such Seller's Shares.
Except with respect to the expiration of the applicable
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<PAGE> 11
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), if applicable, or as otherwise disclosed on Schedule
4(a) hereto, no consent, approval, authorization, order, filing, registration or
qualification of or with any court, governmental authority or third Person (as
herein defined) is required to be obtained by such Seller in connection with the
execution and delivery by Sellers of this Agreement or consummation by Sellers
of the transactions contemplated herein in the manner contemplated hereby.
(c) No Other Agreements to Sell Assets or Business. None of
the Company or any Seller has any legal obligation, absolute or contingent, to
any other individual, corporation, partnership, trust, limited liability
company, association, joint venture or any similar entity (each, a "Person") to
(i) sell such Seller's Shares (other than the sales contemplated hereby), (ii)
sell any assets of the Company (other than sales of inventory in the ordinary
course of the business of the Company), (iii) issue, sell or otherwise transfer
any capital stock or any security convertible into or exchangeable for capital
stock of the Company (other than the sales contemplated hereby), (iv) effect any
merger, consolidation or other reorganization of the Company or (v) enter into
any agreement with respect to any of the foregoing.
(d) Litigation. There is no action, claim, suit or proceeding
pending or, to the knowledge of such Seller, threatened by or against or
affecting such Seller or such Seller's Shares and, to the knowledge of such
Seller, there is no investigation pending or threatened against or affecting
such Seller or such Seller's Shares, in each case before any court or
governmental or regulatory authority or body, that could effect the ability of
such Seller to sell and transfer such Seller's Shares or otherwise to consummate
the transactions contemplated by this Agreement at the Closing. There are no
writs, decrees, injunctions or orders of any court or governmental or regulatory
agency, authority or body outstanding against such Seller with respect to such
Seller's Shares.
(e) Authority; Execution and Delivery. Each Seller has the
power, capacity and authority to enter into this Agreement, to sell such
Seller's Shares in accordance with the terms hereof, and to perform fully such
Seller's obligations hereunder. This Agreement has been duly executed and
delivered by each Seller and constitutes (and with respect to Romeo only,
Romeo's Consulting Agreement when executed and delivered by Romeo will
constitute) the legal, valid and binding obligation of such Seller enforceable
against such Seller in accordance with its terms, except as the enforcement
hereof (or thereof) may be limited by bankruptcy, insolvency, or other similar
laws affecting the enforcement of creditors' rights in general or by general
principles of equity.
SECTION 4. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF ROMEO.
Romeo hereby represents and warrants to Buyer as follows:
(a) No Conflicts, Consents, Etc. Except as disclosed on
Schedule 4(a) hereto, neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor compliance by Sellers
or the Company with any of the provisions
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<PAGE> 12
hereof will (i) violate or conflict with any of the provisions of the Articles
of Incorporation or By-laws of the Company, (ii) violate, conflict with, result
in a breach of any provision of, constitute a default (or an event which, with
the giving of notice or lapse of time, or both, would constitute a default)
under, or result in the acceleration of performance under, or termination or
cancellation or in a right of termination or cancellation of, or result in being
declared void, voidable, without further binding effect or subject to amendment
or modification of any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, deed of trust, license, agreement, contract or any
other instrument or commitment or obligation to which the Company is a party, or
by which the Company or any of its assets or properties may be bound or
affected; no such violation, conflict, breach, termination, cancellation or
default could reasonably be expected to (A) have a "Material Adverse Effect" (as
herein defined), unless otherwise indicated on Schedule 4(a) or (B) impair
either Seller's ability to execute, deliver or perform its obligations under
this Agreement, (iii) result in the creation of any Encumbrance upon the Shares
or any of the capital stock, assets or properties of the Company, (iv) violate
any order, writ, injunction, decree, judgment, ruling, statute, rule or
regulation applicable to the Company, or any of its assets or properties, which
violation could reasonably be expected to have a Material Adverse Effect, (v)
require any consent, approval, permission or other authorization of, or notice
to, or declaration or filing or registration by or with any court, arbitrator or
governmental, administrative, or regulatory authority other than the expiration
of the waiting period under the HSR Act, if applicable or (vi) have a Material
Adverse Effect on any Permit (as defined below) that is required for the conduct
of the business of the Company. Except as disclosed on Schedule 4(a) hereto, no
consent, approval, permission or other authorization of, or notice to, or
declaration, filing or registration with, any governmental or regulatory
authority is necessary to enable the Company to continue to conduct its
business, properties and operations after the Closing in a manner which is
consistent with that in which it is presently conducted. As used in this
Agreement, the term "Material Adverse Effect" shall mean any event or condition
that would have a material adverse effect upon the business, financial
condition, results of operations, relations with suppliers, customers or
employees, or prospects of the Company.
(b) Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. IEG is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida. The Company has all
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted and is duly
qualified and in good standing to do business in each jurisdiction (domestic,
foreign or otherwise) where such qualification is necessary under applicable
law. The Company has not received any notice or assertion from the Secretary of
State or comparable official of any jurisdiction to the effect that the Company
is required to be qualified or otherwise authorized to do business therein, in
which the Company has not qualified or obtained such authorization.
(c) Capitalization. (i) MAS's authorized capital stock
consists exclusively of 2,000 shares of Common Stock of which 2,000 shares of
such Common Stock are issued and outstanding and constitute the Shares. IEG's
authorized capital stock consists exclusively of 1,000 shares of common stock
with a par value of one dollar ($1.00) per share of which 1,000 shares are
issued and outstanding (the "IEG Common Stock"). MAS is the exclusive record and
4
<PAGE> 13
beneficial owner of all of the IEG Common Stock. Except as set forth Schedule
4(c) hereto, the Company has no direct or indirect subsidiaries, nor does it
hold any equity interests or any convertible securities, directly or indirectly,
in any other Person. Schedule 4(c) hereto lists all shareholder agreements to
which the Company or any Seller is a party, if any, all of which will be
terminated at the Closing.
(ii) All of the Shares have been duly authorized and are
validly issued, fully paid and nonassessable. The issuance and sale of all such
Shares have been in full compliance with all applicable federal and state
securities laws. There are no existing subscriptions, warrants, rights, options,
calls, contacts, understandings, commitments, restrictions or arrangements of
any character whatsoever, or agreements to grant the same, relating to the
issuance, sale, delivery or transfer, or voting of any Shares or of any other
capital stock of the Company (or IEG), and the Company (or IEG) does not have
any outstanding securities convertible into or exchangeable or exercisable for
any shares of capital stock of the Company (or IEG) or any subscriptions,
warrants, rights, options, calls, contracts, understandings, commitments,
restrictions or arrangements of any character whatsoever with respect to the
issuance, sale or delivery of such convertible securities.
(d) Articles of Incorporation and By-laws. Sellers have
delivered to Buyer copies of the Articles of Incorporation of MAS and IEG,
including any amendments thereto through the date hereof (certified as of a
recent date by the Secretary of State of the State of Delaware and the Secretary
of State of the State of Florida, respectively), and the By-laws (certified as
of the date hereof by the Secretary of each of MAS and IEG), which copies are
complete and correct as of the date hereof. The Company is not in default in the
performance, observation or fulfillment of its Articles of Incorporation or
By-laws except where such default would not, individually or in the aggregate,
have a Material Adverse Effect.
(e) Financial Statements. Sellers have delivered to Buyer
true, correct, and complete copies of the following consolidated financial
statements of the Company (including any related notes to such financial
statements) (the "Company Financial Statements"), each of which has been
prepared in accordance with GAAP consistently applied throughout the periods
indicated (subject to year-end adjustments), and has been prepared from and is
in accordance with the books and records of the Company and fairly presents the
financial position and results of operations of the Company as of the dates and
for the periods indicated, subject, in the case of unaudited interim financial
statements, to normal year-end adjustments in accordance with FASB Current Text
Accounting Standards as of June 1, 1997, Volume 1-General Standards, Section
173-Interim Financial Reporting:
(i) audited balance sheets of the Company as at December
31, 1997 and December 31, 1998, in each case certified by the Company's
independent certified public accountants;
(ii) audited statements of income and retained earnings
and statements of changes of cash flows of the Company for the twelve months
ended December 31, 1996, the
5
<PAGE> 14
twelve months ended December 31, 1997 and the twelve months ended December 31,
1998, in each case certified by the Company's independent certified public
accountants; and
(iii) unaudited balance sheet of the Company as at March
31, 1999 and unaudited statement of income and retained earnings and statement
of changes of cash flows of the Company for the two months ended March 31, 1999.
The audited balance sheet of the Company as at December 31, 1998 (the "Balance
Sheet Date") is herein referred to as the "Balance Sheet."
(f) Absence of Undisclosed Liabilities and Obligations. Except
as disclosed on the Schedules hereto or to the extent such liabilities or
obligations would not, individually or in the aggregate, have a Material Adverse
Effect, the Company does not have any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise, and whether due or to
become due) other than (i) liabilities reflected or reserved against on the
Balance Sheet, and (ii) liabilities of a type customarily reflected in a
corporate balance sheet prepared in accordance with GAAP that have arisen in the
ordinary course of business as a result of arms-length negotiations since the
Balance Sheet Date.
(g) Absence of Certain Changes or Events. Except as disclosed
on Schedule 4(g) hereto, since the Balance Sheet Date, there has not been any:
(i) change in the condition (financial or otherwise),
assets, liabilities, operations, earnings or business of the Company, except for
changes which have been in the ordinary course of business which, in accordance
with GAAP applied in a manner consistent with such application on the Balance
Sheet Date, have been fully recorded in the books and records of the Company and
which would not, individually or in the aggregate, have a Material Adverse
Effect;
(ii) change in the number of shares of capital stock
issued and outstanding or any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, securities, property or
otherwise) in respect of, or any split, combination or reclassification of, the
capital stock of the Company, or any redemption or other acquisition by the
Company of any shares of its capital stock;
(iii) other than pursuant to an existing collective
bargaining agreement at one facility, employment agreements, corporate policies,
practices and procedures or existing plans and arrangement each as described or
required to be described on Schedules 4(l)(vii), 4(l)(viii) or 4(l)(ix) hereto
(A) increase in the compensation payable or to become payable by the Company to
any of its officers, directors, employees, independent contractors or agents
(collectively, "Company Personnel") whose total compensation for services
rendered to the Company is currently at an annual rate of more than $50,000, any
increase to any station manager or any increase of general applicability in the
compensation payable to Company Personnel, (B) bonus, incentive compensation,
service award or other like benefit, granted, made or accrued, contingently or
otherwise, of or to the credit of Company Personnel, or (C) employee
6
<PAGE> 15
welfare, pension, retirement, profit-sharing or similar payment or arrangement
made or agreed to by the Company;
(iv) strikes, picketing, unfair labor practices, demands
for recognition, petitions or other labor disputes (other than grievance
procedures in the ordinary course of business), or any controversies or
unsettled grievances threatened between the Company and any Company Personnel or
any collective bargaining organization representing or seeking to represent
Company Personnel;
(v) addition to or modification of the employee benefit
plans, arrangements or practices described on Schedule 4(l)(viii) hereto, other
than (A) contributions made for the fiscal year ended December 31, 1998 in
accordance with the normal practices of the Company or (B) the extension of
coverage to other Company Personnel who became eligible after December 31, 1998;
(vi) establishment, agreement to establish or any change
in any pension, retirement or welfare plan for the benefit of any Company
Personnel not theretofore in effect;
(vii) mortgage, pledge or subjection to any Encumbrance of
any of the assets, tangible or intangible, of the Company except (A) the lien of
current real and personal property taxes incurred but not yet due and payable,
(B) materialmen's or like liens or obligations arising in the ordinary course of
business securing obligations not yet due and payable, or (C) purchase money
security interests or similar liens arising in the ordinary course of business
in an amount not to exceed in the case of this clause (C), $100,000, in the
aggregate;
(viii) sale, assignment or transfer of any assets,
tangible or intangible, of the Company which are material, singly or in the
aggregate, to the Company other than in the ordinary course of business and
consistent with past practice or any conducting of business other than in the
ordinary course and consistent with past practice, or any acquisition of all or
any part of the assets, properties, stock or business of any Person other than
in the ordinary course of business and consistent with past practice;
(ix) change by the Company in accounting methods,
principles or practices, except as required by GAAP;
(x) cancellation of any debt or waiver of any claim or
right of significant value to the Company, whether or not in the ordinary course
of business;
(xi) amendment, cancellation or termination by the Company
of any contract, agreement or other instrument which is material to the Company
or its business;
(xii) liability incurred by the Company, except
liabilities incurred in the ordinary course of business consistent in both kind
and amount with past practices of the Company and which would not, individually
or in the aggregate, have a Material Adverse Effect;
7
<PAGE> 16
(xiii) payment, discharge or satisfaction of any claims,
liabilities or obligations (absolute, accrued, contingent or otherwise) of the
Company other than in the ordinary course of business and consistent with past
practice;
(xiv) capital expenditure or the execution of any lease
with respect to any aspect of the business of the Company, or any incurring
liability therefor, involving payments in excess of $100,000 in the aggregate,
including all forward commitments to purchase equipment or inventory (including,
without limitation, fuel);
(xv) borrowing of money by the Company or guaranteeing of
any indebtedness of others by the Company other than in the ordinary course of
business and consistent with past practice;
(xvi) lending of any money or otherwise pledging the
credit of the Company to any party other than the Company;
(xvii) failure to operate the business of the Company in
the ordinary course so as to preserve the business intact, to keep available to
the Company the services of the Company Personnel, and to preserve for Buyer the
goodwill of the suppliers, customers and others having business relations with
the Company except where such failure would not, individually or in the
aggregate, have a Material Adverse Effect;
(xviii) cancellation of, or failure to continue, insurance
coverages of the Company;
(xix) failure to pay any current obligations of the
Company in accordance with the general practices of the Company, except for
those being contested in good faith and disclosed on Schedule 4(g) hereto;
(xx) damage, destruction or casualty loss, whether covered
by insurance or not which would, individually or in the aggregate, have a
Material Adverse Effect;
(xxi) transaction entered into with any Affiliate (an
"Affiliate," for the purposes of this Agreement, shall include with respect to
any Person, a director or officer of such Person or any other Person which
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person) of the Company,
Romeo, Micale or any member of Romeo's or Micale's family (related by blood or
marriage) (each, a "Family Member"), including any dividend payment;
(xxii) other event or condition of any character which,
individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect;
(xxiii) made or changed any tax election, changed any
annual tax accounting period, adopted or changed any method of tax accounting,
filed any amended Tax Return, entered into any closing agreement, settled any
Tax claim or assessment, surrendered any right to claim a Tax refund, consented
to any extension or waiver of the limitation period
8
<PAGE> 17
applicable to any Tax claim or assessment or taken or omitted to be taken any
other action, if any such action or omission would have the effect of increasing
the Tax liability or reducing any net operating loss, net capital loss,
investment tax credit, or any other credit or tax attribute which could reduce
Taxes (including, without limitation, deductions and credits related to
alternative minimum taxes);
(xxiv) hiring or firing of any employees having a title of
"manager" (or any employee having a comparable or more senior title) without the
consent of Buyer (not to be unreasonably withheld); or
(xxv) agreement by Romeo or the Company to do any of the
foregoing.
(h) Tax Matters. Except as disclosed on Schedule 4(h) or where
the nondisclosure or breach of any representation or warranty contained in this
Section 4(h) would not, individually or in the aggregate, result in a Loss (as
defined herein) in excess of $20,000:
(i) The Company has duly filed all Tax reports and returns
(or extensions relating thereto) required to be filed by it, including, without
limitation, all federal, state, local and foreign Tax returns and reports and
has complied with all of its obligations to withhold, collect and pay over Taxes
to all governmental authorities. All such returns and reports are accurate and
complete and were prepared in conformity with the applicable laws and
regulations. For the purposes of this Agreement, any federal, state, local,
foreign, income, sales, use, excise, stamp, franchise, transfer, payroll,
property (personal or real), occupancy, withholding or other tax, charge, levy,
fee, other assessment, unemployment insurance premiums or other charge in the
nature of a tax, together with any related fines, additions, interest or
penalty, is referred to as a "Tax".
(ii) The Company has (A) paid in full all Taxes required
to be shown to be due on such returns (including without limitation any
estimated tax returns) or shown to be due on any assessment, reassessment,
deficiency notice, 30-day letter or similar notice received by it and (B) made
adequate provision (by the establishment of express reserves on the Company
financial statements, other than deferred taxes) for all Taxes relating to or
arising in connection with any period ending on or before the Closing Date. The
Company has no liability for Taxes other than in respect to its current taxable
year (other than deferred taxes) and the reserves for Taxes for the current year
are reflected in the March 31, 1999 balance sheet and are adequate as of March
31, 1999.
(iii) There are no tax liens upon any property or assets
of the Company, except liens for current Taxes not yet due or delinquent or the
validity of which is being contested in good faith by appropriate proceedings
and which are disclosed on Schedule 4(h) hereto. The Company had delivered to
Buyer true and complete copies of all returns and reports for all taxable years
of the Company since January 1, 1995, together with true and complete copies of
all reports of taxing authorities relating to examination of such returns. All
Taxes which the Company has been required to collect or withhold have been duly
collected or withheld and, to the extent required, have been paid to the proper
taxing authorities on a timely basis.
9
<PAGE> 18
(iv) The Company is not a party to any pending action or
proceeding by any governmental authority in connection with the assessment of
any Tax, and no claim for assessment, reassessment or collection of any Tax has
been asserted against the Company that has not been paid. To the Company's
knowledge, there is no valid basis for assessment, deficiency notice, 30-day
letter or similar intention to assess any Tax to be issued the Company by any
governmental authority. As used in this Agreement, the "Company's knowledge"
refers to the knowledge of Romeo, Paula Romeo, Ken Silva and Jeff Kinsella, in
each case assuming such person has made reasonable inquiry in view of their
authority.
(v) The federal income tax returns and all other material
tax returns of the Company have been closed by applicable statute for all
periods to and including the last period set forth on Schedule 4(h) hereto and
examined by all relevant tax authorities for all periods set forth on Schedule
4(h) hereto. The results of such examinations for all taxable periods to and
including the period set forth on Schedule 4(h) hereto are properly reflected in
the Company Financial Statements and all deficiencies proposed or assessed as a
result of such examinations have been paid and settled. There are no pending, or
to the Company's knowledge, threatened audits, investigations or claims for or
relating to any liability in respect of Taxes. Except as set forth on Schedule
4(h), there are no outstanding agreements or waivers extending any statutory
period of limitations applicable to any federal income tax return or other tax
return of the Company for any period. The Company has not filed a statement
under Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"Code"), (or any comparable state income tax provision), consenting to have the
provisions of Section 341(f)(2) (collapsible corporations provisions) of the
Code (or any comparable state income tax provision) apply to any disposition of
any of the Company's assets or property. The Company is not required to include
in income any adjustment pursuant to Section 481(a) of the Code by reason of a
voluntary change in accounting method initiated by the Company, and the Internal
Revenue Service has not proposed any such adjustment or change in accounting
method, except as set forth on Schedule 4(h). To the Company's knowledge, no
property of the Company is property which Buyer or the Company is or will be
required to treat as owned by another Person pursuant to the provisions of
Section 168(f) (safe harbor leasing provisions) of the Code as in effect prior
to the enactment of the Tax Reform Act of 1986. The Company is not a party to
any tax-sharing agreement or similar arrangement. The Company is not a party to
any contract providing for an "excess parachute payment" as defined in Section
280G of the Code and none of the transactions contemplated by this Agreement
will give rise to any such "excess parachute payment". The Company does not have
any liability for any Tax as a result of the application of Section 1.1502-6 of
the Treasury Regulations promulgated under the Code, as transferee or successor,
or otherwise.
(i) Accounts Receivable. The accounts receivable reflected on
the Balance Sheet, or thereafter earned and recorded by the Company, (i) have
arisen only from bona fide transactions entered into in the ordinary course of
business of the Company and (ii) except with respect to accounts receivable that
become uncollectable as a result of the bankruptcy or insolvency of the relevant
account-debtor of the Company following the Closing Date, such accounts
receivable have been collected or are collectible in the ordinary course of the
Company's business at the aggregate gross recorded amounts thereof less, in the
case of accounts receivable reflected on the Balance Sheet, the allowance for
uncollectable accounts, returns and
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trade allowances set forth therein, and in the case of accounts receivable
thereafter recorded, an allowance for uncollectable accounts, returns and trade
allowances recorded in a manner consistent with the reserve set forth in the
Balance Sheet.
(j) Inventories. The inventories reflected on the Balance
Sheet, or thereafter acquired by the Company, consist of items of a quality and
quantity usable or saleable in the normal and usual course of the business of
the Company and have a fair market value at least equal to the values at which
such items are carried on its books. The values at which such inventories are
carried on the Balance Sheet reflect the normal inventory valuation policy of
the Company (including the writing down of the value of slow-moving or obsolete
inventory or inventory of below standard quality to realizable market value in
accordance with GAAP), stating inventories at the lower of cost or market on a
first-in, first-out basis.
(k) Equipment. The present quantity of all assets of the
Company consisting of equipment, whether reflected in the Company Financial
Statements or otherwise, is reasonable and warranted in the present course of
the business conducted by the Company. Except as set forth on Schedule 4(k) or
any other Schedule hereto, all of such equipment (except for leased equipment
for which the lessors have valid security interest) is free and clear of any
Encumbrance. The Company has delivered to Buyer an inventory dated May 13, 1999
listing all of its equipment and a listing of the book value of each item of
equipment with a book value in excess of $1,000 as of December 31, 1998. No such
equipment is located outside the United States.
(l) Lists of Properties, Contracts and Personnel Data.
Schedules 4(l)(i) through 4(l)(xv) hereto contain accurate lists and a brief
summary description of the following:
(i) Schedule 4(l)(i). Qualification. All jurisdictions in
which the Company is duly qualified to do business as a foreign corporation;
(ii) Schedule 4(l)(ii). Real Property. All leases of real
property to which the Company is a party; all premises occupied by the Company
under rental arrangements without leases (including in each case the amount of
rent and the type of occupancy); and all contracts to which the Company is a
party for the sale or purchase of real property;
(iii) Schedule 4(l)(iii). Intellectual Properties:
Computer Software. (A) All patent of any description and pending applications
therefor, all registrations of trademarks and of other marks, all registrations
of trade names, labels or other trade rights, all pending applications for any
such registrations or entries of the foregoing, all copyright registrations
(including, for Computer Software (as defined below)) and pending applications
therefor, all other copyrights, trademarks, and other marks, trade names, trade
secrets, inventions, know-how, databases, customer lists and other trade rights,
and all other inventions, formulae and designs, whether or not patentable
(collectively, "Intellectual Properties"), in the case of each of the foregoing,
whether U.S. or foreign, all to the extent that the foregoing items are material
to the business of the Company (except that all patents and patent applications,
and trademark and copyright registrations, whether or not material, are also
included) and are owned in whole or in part or used by the Company, and all
licenses relating thereto other than the Computer Software
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<PAGE> 20
Licenses (as hereinafter defined); and (B) all material proprietary computer
software (including, without limitation, all computer programs object code,
source code, user interface, data bases and documentation) owned in whole or in
part or used by the Company (the "Computer Software"), and all licenses relating
thereto (other than licenses for commercially available software for personal
computers) ("Computer Software Licenses"; the Intellectual Property Licenses and
the Computer Software Licenses being collectively referred to as the
"Licenses");
(iv) Schedule 4(l)(iv). Personal Property. The most
current available register of personal property owned or leased by the Company
as of a recent date indicating the current aggregate depreciated book value of
owned items (with detail as to items with a book value over $1,000 as of
December 31, 1998 to be provided prior to Closing) and the terms and annual
lease payments of leased items; provided, however, that the personal property
listed under the title "Excluded Assets" on Schedule 4(l)(iv) will not be owned
by the Company on the Closing Date and shall not be transferred to Buyer.
(v) Schedule 4(l)(v). Insurance. (A) All policies of
insurance in force with respect to the Company, including, without restricting
the generality of the foregoing, those covering properties, buildings,
machinery, equipment, furniture, fixtures, operations and lives of, or
performance of their duties by, Company Personnel setting forth the insurers,
expiration dates, descriptions and amounts of coverage, deductibles and annual
premiums as of the Balance Sheet Date; and (B) all self-insurance programs of
the Company;
(vi) Schedule 4(l)(vi). Other Contracts. All written and
oral agreements, contracts and commitments relating to the business of the
Company not otherwise listed in any other Schedule hereto with an annual payment
in excess of $40,000, individually or $200,000 in the aggregate (but in any
event including all equipment Leases) or which cannot be canceled upon ninety
(90) days' notice in the case of contracts requiring payments by the Company
(other than purchase orders entered into in the ordinary course of business at
standard prices) and (A) any agreements under which the Company has limited or
restricted the Company's right to compete with any Person in any respect; (B)
any contract or agreement to indemnify any person or guaranty any obligation of
a third party (other than pursuant to Company contracts entered into with
customers, facility lessors and airports in the ordinary course of business and
on customary terms); (C) contract for the grant to any person of any
preferential rights to purchase any of the businesses the Company; (D) joint
venture agreement; (E) contract relating to the acquisition by the Company of
any operating business or the capital stock of any person; or (F) consulting
contracts (or any oral consulting contracts);
(vii) Schedule 4(l)(vii). Labor Agreements. All written
and oral collective bargaining or other labor contracts, employment or
termination agreements, compensation agreements, bonus or incentive agreements,
consulting or similar agreements and collective bargaining agreements relating
to Company Personnel;
(viii) Schedule 4(l)(viii). ERISA. All pension,
retirement, savings, profit sharing, medical, dental, health, disability, life,
death benefit, group insurance, deferred compensation, stock option, stock
purchase, restricted stock, bonus or incentive, severance pay,
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<PAGE> 21
and any other employee benefit plan, trust, arrangement, contract, agreement,
policy or commitment, including, without limitation, any "employee benefit plan"
as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") under which current or former Company Personnel are
entitled to participate or have participated by reason of their relationship
with the Company, and (i) to which the Company is a party or a sponsor or a
fiduciary thereof or by which the Company (or any of its rights, properties or
assets) is bound or (ii) with respect to which the Company has any obligation to
make payments or contributions, or may otherwise have any liability (the
"Employee Plans"); identifying (a) each such plan which provides any benefits
after termination of employment other than a plan which is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA (a "Retirement Plan")
and (b) each such plan that is a Retirement Plan;
(ix) Schedule 4(l)(ix). Compensation. The names and
current annual rates of compensation of all Company Personnel whose current
aggregate annual rates of compensation including bonuses are $50,000 or more,
together with a summary (containing estimates to the extent necessary) of
existing bonuses, additional compensation (whether current or deferred) and
other like benefits, if any, paid to such persons in the fiscal year ended
December 31, 1998, or subsequent thereto;
(x) Schedule 4(l)(x). Powers of Attorney. The names of all
Persons holding powers of attorney from the Company;
(xi) Schedule 4(l)(xi). Marketable Securities. All
marketable securities and all other notes or other obligations evidenced by
written instruments owned by the Company;
(xii) Schedule 4(l)(xii). Indebtedness. All notes,
debentures, bonds, letters of credit, bankers' acceptances and other instruments
evidencing indebtedness (including capital leases, guarantees, lines of credit
and indebtedness with recourse limited to certain assets of the Company) of the
Company;
(xiii) Schedule 4(l)(xiii). Bank Accounts. The name of
each institution in which the Company has a bank account or safe-deposit box,
the number of any such account or box, and the names of all Persons authorized
to draw or to have access thereto;
(xiv) Schedule 4(l)(xiv). Agents. The name of each agent,
if any, other than a regular employee or a commission salesman of the Company
who has been paid a commission in connection with obtaining any contract or
order of the Company since January 1, 1997, indicating the amount of such
commission and the contract or order to which it related; and
(xv) Schedule 4(l)(xv). Licenses and Permits. All
licenses, permits, consents, franchises, approvals, concessions, authorities
(including, without limitation, all easements, rights of way and similar
authorities), authorizations and certificates (including, but not limited to,
all of the forgoing pursuant to any Environmental Law (as defined below)) and
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<PAGE> 22
pending applications therefore of, by, or with any Governmental Authority (as
defined herein) which are material to the Company of its business (collectively,
"Permits").
(m) Copies of Documents. The Company previously delivered or
made available to Buyer or to Schulte, Roth & Zabel, LLP, counsel to Buyer, true
and complete copies of:
(i) all leases, agreements, contracts, undertakings,
commitments, arrangements and plans listed on Schedules 4(l)(ii), 4(l)(iv),
4(l)(vi) and 4(l)(vii);
(ii) with respect to each Employee Plan listed on
Schedule 4(l)(viii), (1) current plan documents, subsequent plan amendments, or
any and all other documents that establish or describe the existence of the
plan, trust, arrangement, contract, policy or commitment; (2) current summary
plan descriptions and summaries of material modifications; (3) the most recent
tax qualified determination letters, if any, received from or applications
pending with the Internal Revenue Service; (4) the three most recent Form 5500
Annual Reports, including related Schedules and audited financial statements and
opinions of independent certified public accountants; (5) with respect to each
Employee Plan that is a defined contribution plan, the most recent annual and
quarterly or monthly valuations; (6) with respect to each Employee Plan that is
a "single-employer plan" within the meaning of Section 4001(a)(15) of ERISA (a
"Pension Plan"), a copy of the most recent actuarial valuation report; and (7)
the most recent nondiscrimination testing results under Sections 401(a)(4),
401(k) and 410(b) of the Code.
(iii) all Intellectual Properties and Computer Software
listed on Schedule 4(l)(iii);
(iv) all Permits listed on Schedule 4(l)(xv);
(v) all policies of insurance listed on Schedule
4(l)(v);
(vi) all instruments evidencing a power of attorney
listed on Schedule 4(l)(x);
(vii) all securities, notes, debentures, bonds, bankers'
acceptances, letters of credit and other instruments of indebtedness listed on
Schedule 4(l)(xi) and Schedule 4(l)(xii); and
(viii) any environmental reports or studies prepared by
or on behalf of the Company or Sellers.
(n) Tangible Properties. The Company owns no real property.
(i) The Company has good, valid and marketable title to all of the personal
properties and tangible assets which it purports to own (including those
reflected in the Balance Sheet, except as since sold or otherwise disposed of in
the ordinary course of business), free and clear of all Encumbrances of any
nature whatsoever, except for (A) the lien of taxes not yet due and payable, (B)
such imperfections of title and encumbrances, if any, which are not substantial
in amount and as do
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<PAGE> 23
not detract from the value, or interfere with the present or contemplated use,
of the properties of the Company, respectively, or otherwise impair in any
material respect the business operations of the Company and (C) as otherwise set
forth on Schedule 4(n) hereto; (ii) except where the failure to so perform could
not, individually or in the aggregate, have a Material Adverse Effect, the
Company has in all respects performed all the obligations required to be
performed by it to the date hereof under said leases and possesses and quietly
enjoys said properties under said leases, and (iii) such properties are not
subject to any Encumbrances, easements, rights of way, building or use
restrictions, exceptions, reservations, or limitations that interfere with or
impair in any material respect the present and continued use thereof in the
usual and normal conduct of the business of the Company. The Company has not
received written or, to the Company's knowledge, oral notice of (i) any
violation of any applicable zoning regulation, ordinance or other law, order,
regulation or requirement relating to the operations of leased properties of the
Company and the Company knows of no such violation or (ii) any pending or
threatened condemnation proceedings relating to any of their leased properties
and, so far as known to the Company, there are no such pending or threatened
proceedings, in each case, where such violation or proceeding could reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect. The plants, structures, equipment and material tangible properties
owned, operated or leased by the Company are in all material respects well
maintained and are in good operating condition and repair, ordinary wear and
tear excepted.
(o) Validity of Contracts. Except as set forth on Schedule
4(o) hereto, each material contract, agreement or commitment of the Company is
valid and enforceable in accordance with its terms and the Company is not, and
will not be with notice, the lapse of time, or both, in default under any
material provision of any such contract, agreement or commitment. To the
Company's knowledge, any Person which is a party to any such material agreement,
contract or commitment, is not, and will not be with notice, the lapse of time
or both, in default under any provision of any such material contract, agreement
or commitment.
(p) Intellectual Properties. (i) No Person other than the
Company has an ownership interest in, or a right to receive a royalty or similar
payment with respect to, any of the Intellectual Properties or Computer Software
listed on Schedule 4(l)(iii) hereto, except as noted in such Schedule. No
intellectual property or other proprietary rights other than the Intellectual
Properties, the Computer Software and the Licenses are required to enable the
Company to conduct its business as now conducted. The Company has good title to,
or is licensed or otherwise has the rights to use, all of the Intellectual
Properties listed on Schedule 4(l)(iii), free and clear of any Encumbrance or
royalty or other payment requirements of any nature whatsoever, which rights are
freely assignable by the Company to any person without payment, consent of any
person or other restriction except as noted in such Schedule or where any other
such Encumbrance, royalty or payment requirements could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
(ii) The Intellectual Properties are valid and
enforceable, and none of the Intellectual Properties has been canceled or
abandoned or licensed by the Company in such a way as could reasonably be
expected to have a Material Adverse Effect on the validity of such Intellectual
Property or dedicate same to the public. The Company is listed in the records of
the
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<PAGE> 24
appropriate U.S. and foreign governmental agency as the sole and exclusive owner
of record for each registration, grant and application listed in Schedule
4(l)(iii). The Company has received no notice of, and to the Company's
knowledge, the Company is not infringing upon, or otherwise violating, and has
not violated, the intellectual property or other proprietary rights of any third
party. Without limiting the generality of the foregoing, to the Company's
knowledge, no trademark, service mark, trade name or corporate name used by the
Company, including without limitation any such mark or name which includes the
words "Miami Aircraft Support" or "International Enterprises Group" infringes or
dilutes the trademark, service mark, corporate name or trade name of any person.
There exists no event, condition or occurrence which, with the giving of notice
or lapse of time, or both, would constitute a breach or default by the Company
under any agreement granting the Company rights to Intellectual Properties. No
party to any agreement granting the Company rights to Intellectual Properties
has given the Company notice of its intention to cancel, terminate or fail to
renew any such agreement.
(q) Environmental Matters. (i) Except as set forth on Schedule
4(q) hereto, to the Company's knowledge:
(A) the Company and (with respect to the Company) the Company
Personnel are and have been in full compliance with applicable Environmental
Laws; (B) the Company has obtained and is in compliance with all necessary
authorizations that are required under Environmental Law to operate the
facilities, assets and business of the Company; (C) there is not and has not
been any Release or Environmental Condition at, under or in or originating from
any premises or property currently or formerly owned, leased, operated, or used
by the Company; (D) there is not and has not been any Environmental Condition
at, under or in or originating from any other location relating in any way to
the Company (including, without limitation, any location at which any Hazardous
Substances have been generated, treated, stored or disposed by or on behalf of
the Company); (E) the Company is not subject to any indemnity or other agreement
with any person or entity relating to liabilities or obligations (contingent or
otherwise) arising under or related to Environmental Laws; (F) No Environmental
Claims have been asserted against the Company or, to the knowledge of the
Company, any predecessor in interest nor does the Company have knowledge or
notice of any threatened or pending Environmental Claim against the Company or
any predecessor in interest; (G) To the knowledge of the Company, no
Environmental Claims have been asserted against any facilities that may have
received Hazardous Materials generated by the Company or any predecessor in
interest; and (H) The Company has delivered to Buyer true and complete copies of
all environmental reports, studies, investigations or correspondence regarding
any Environmental Conditions at any of the Company's currently or formerly
operated premises or properties which are in possession, care, custody or
control of the Company, Romeo, environmental consultants or its agents.
(ii) "Environmental Condition" means any act, omission,
event, condition or circumstance, including, without limitation, the presence of
any Hazardous Substances, which does or reasonably could (A) require assessment,
investigation, abatement, correction, removal or remediation pursuant to any
Environmental Law, (B) give rise to any obligation or liability of any nature
(whether civil or criminal, arising under a theory of negligence or strict
liability, or otherwise) pursuant to any Environmental Law, (C) create or
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<PAGE> 25
constitute a public or private nuisance or trespass, or (D) constitute a
violation of or non-compliance with any Environmental Law, including, without
limitation, Environmental Laws requiring the acquisition of and compliance with
the terms of Permits issued by any international, national, state, provincial,
regional, federal, municipal or local agency, department, court or other
judicial, administrative, legislative, regulatory, governmental or
quasi-governmental authority ("Governmental Authority").
(iii) "Environmental Law" includes the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
9601 et seq., as amended; the Resource Conservation and Recovery Act ("RCRA"),
42 U.S.C. 6901 et seq., as amended; the Clean Air Act ("CAA"), 42 U.S.C. 7401 et
seq., as amended; the Clean Water Act ("CWA"), 33 U.S.C. 1251 et seq., as
amended; the Occupational Safety and Health Act ("OSHA"), 29 U.S.C. 655 et seq.,
and any international, national, provincial, regional, federal, state, municipal
or local law, regulation, order, judgment, decree, Permit, opinion, common or
decisional law (including, without limitation, principles of negligence and
strict liability), requirement of any Governmental Authority, lessor, or airport
authority, or requirement of any agreement, contract, or undertaking, any of
which regulates, established standards or requirements, or concerns liability
(including, without limitation, by indemnification or contribution) with respect
to the environment, natural resources, safety, or health of humans or other
organisms, including the manufacture, distribution in commerce, and use of
Hazardous Substances.
(iv) "Hazardous Substances" means any (A) element,
compound or chemical that is defined, listed or otherwise classified as a
pollutant, contaminant, hazardous substance, hazardous waste, toxic substance,
oil or petroleum or petroleum-derived substance, medical waste, special waste,
infectious or biohazardous waste or solid waste under Environmental Laws; (B)
petroleum, petroleum-based products; (C) asbestos, PCBs, radioactive material,
ethylene glycol, propylene glycol, or other compound, element, material or
substance in any form whatsoever (including, without limitation, products)
regulated, restricted or addressed by or under any Environmental Law.
(v) "Environmental Claims" refers to any complaint,
summons, citation, notice, directive, order, claim, litigation, investigation,
judicial or administrative proceeding, judgment, letter or other communication
from any governmental agency, department, bureau, office or other authority, or
any third party involving violations of Environmental Laws or Releases of
Hazardous Substances from (i) any assets, properties or businesses of the
Company or any predecessor in interest; (ii) from adjoining properties or
businesses; or (iii) from or onto any facilities which received Hazardous
Substances generated by the Company or any predecessor in interest.
(vi) "Release" means any spilling, leaking, pumping,
emitting, emptying, discharging, injecting, escaping, leaching, migrating,
dumping, or disposing of Hazardous Substances (including the abandonment or
discarding of barrels, containers or other closed receptacles containing
Hazardous Substances) into the environment.
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<PAGE> 26
(r) Insurance. To the Company's knowledge, all policies of
insurance (or renewals thereof) set forth on Schedule 4(l)(v) are valid,
outstanding and in force and effect on the date hereof and all premiums with
respect thereto, covering all periods up to and including the date hereof, have
been paid before past due. Occurrence-based third party liability coverages have
been in effect for five prior years. Such policies are in the amounts shown on
Schedule 4(l)(v), and insure the lease premises, structures and equipment of the
Company against loss, theft and destruction and insure the properties and
business of the Company against such losses and risks as are adequate in
accordance with customary industry practice to protect the properties and
business of the Company. Except as set forth on Schedule 4(l)(v), all pending
and threatened third party liability and workers' compensation claims, to the
Company's knowledge, have been reported to the appropriate insurer. The
insurance policies to which the Company is a party are sufficient for compliance
in all material respects with all requirements of law and of all agreements to
which the Company is a party. The Company's rights and benefits under the
policies will continue in full force and effect with respect to pre-Closing
periods for any claims which are brought post-Closing. Except as disclosed on
Schedule 4(l)(v), no insurance carrier has canceled or limited any insurance
coverage for the Company, or has given any notice or other indication of its
intention to cancel or reduce any such coverage; and to the Company's knowledge
there exists no grounds to cancel or avoid any of such policies or to reduce the
coverage provided thereby. In the past three years, the Company has not been
refused any insurance or indemnity bond coverage with respect to any assets or
operations which it has requested or made any reduction in the scope or amount
of its insurance coverage, nor have such carriers expressed reservations of
rights. To the Company's knowledge, the Company has not received notice from any
insurer or agent of such insurer that substantial capital improvements or other
expenditures will have to be made in order to continue such insurance. No notice
of cancellation or termination of any such insurance policy has been received by
the Company or Romeo. The loss of any property not covered by insurance would
not result, individually or in the aggregate, in a Material Adverse Effect. The
Company has no liability for any workers' compensation matters arising prior to
April 14, 1995.
(s) Labor Matters. Except as disclosed on Schedule 4(l)(vii)
hereto, the Company has no labor contracts, collective bargaining agreements or
employment agreements with any Company Personnel or any representative of any
Company Personnel. Except as set forth on Schedule 4(s)(i) the Company is in
compliance in all material respects with all applicable laws respecting
employment and employment practices, labor, safety and health, terms and
conditions of employment and wages and hours, and is not engaged in any unfair
labor practice; (ii) there is no unfair labor practice complaint against the
Company pending before the National Labor Relations Board or the National
Mediation Board, if applicable, or, to the Company's knowledge, any threatened
charge or complaint against the Company; (iii) there is no labor strike,
representation campaign or work stoppage actually pending or, to the Company's
knowledge, threatened, against or affecting the Company; (iv) no grievance or
arbitration proceeding arising out of or under collective bargaining agreements
is pending and no claim therefor has been asserted against the Company; and (v)
in the past five years the Company has not experienced any work stoppage. The
Company has not experienced within the last 12 months a "plant closing" or "mass
layoff" within the meaning of the Worker Adjustment and Retraining Notification
Act, 29 U.S.C. " 2101 et seq. or comparable state or local law.
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<PAGE> 27
(t) Employment Benefits. (i) Each Employee Plan has at all
times been operated and administered in compliance in all material respects with
its terms, the applicable requirements of ERISA and the Code and all other
applicable laws (including regulations and rulings thereunder) of the United
States or any foreign jurisdiction, including their respective political
subdivisions. Each Employee Plan that is intended to be tax qualified under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service stating that it is so qualified and that any trust
associated with the Plan is tax exempt under Section 501(a) of the Code, and to
the knowledge of the Company, there is no reason why the qualified status of any
such Plan or trust would be denied or revoked, whether retroactively or
prospectively. All amendments to the Employee Plans that were required to be
made through the date hereof and the Closing Date to maintain the continued
qualified status of such Employee Plans under Section 401(a) of the Code have
been or will be made by the Closing Date.
(ii) No actual or, to the Company's knowledge, threatened
disputes, lawsuits, claims (other than routine claims for benefits),
investigations, audits or complaints to, or by, any person or governmental
entity have been filed or are pending with respect to the Employee Plans or the
Company in connection with any Employee Plan or the fiduciaries or
administrators thereof, and to the Company's knowledge, no state of facts or
conditions exist which could be expected to subject the Company or any of its
subsidiaries to any liability (other than routine claims for benefits) under the
terms of the Employee Plan or applicable law which would be expected,
individually or in the aggregate, to have a Material Adverse Effect. With
respect to each Employee Plan there has not occurred, and no person or entity is
contractually bound to enter into, any nonexempt "prohibited transaction" within
the meaning of Section 4975 of the Code or Section 406 of ERISA or other
transaction that would result in any tax or penalty being imposed under Section
4975 of the Code or Section 409 or 502(i) of ERISA on the Company, any of its
subsidiaries or any Person or entity with respect to which the Company or any of
its subsidiaries has an obligation to indemnify.
(iii) Neither the Company nor any other entity (an "ERISA
Affiliate") that is considered one employer with the Company under Section 4001
of ERISA or Section 414 of the Code has at any time maintained or contributed to
or incurred any liability, contingent or otherwise, with respect to any plan
subject to the terms of Title IV of ERISA or Section 412 of the Code.
(iv) Except as set forth in Schedule 4(t)(iv), no Employee
Plan is a multiemployer plan (within the meaning of Section 3(37)(A) of ERISA
and no Employee Plan is a multiple employer plan (as defined in Section 413 of
the Code).
(v) To the extent applicable, all contributions or
payments made or deemed to have been made with respect to each Employee Plan
that is a deferred compensation plan, are presently, and have been during the
years to which they relate, fully deductible pursuant to Section 404 of the
Code. As of the Closing Date, all payments of outstanding contributions, due on
or prior to that date, including minimum contributions, premiums, and funding
obligations imposed by the terms of an Employee Plan or by any law or government
agency shall have been made with respect to each Employee Plan. All
contributions to and payments with
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<PAGE> 28
respect to or under the Employee Plans that are required to be made with respect
to periods ending on or before the Effective Time have been made or accrued
before the Closing Date by the Company in accordance with the appropriate plan
documents, financial statement, actuarial report, collective bargaining
agreements or insurance contracts or arrangements. With respect to each Employee
Plan that is an "employee welfare benefits plan" under Section 3(1) ERISA that
is partially or fully funded through a trust, all tax deductions claimed by the
Company relating to any such trust are allowable, and all tax returns and other
governmental filings required to be filed with respect to any such trust,
whether by the Company or the trust, have been made in a timely manner.
(vi) No Employee Plan providing medical or death benefits
(whether or not insured) with respect to current or former employees of the
Company continues such coverage or provides such benefits beyond their date of
retirement or other termination of service (other than coverage mandated by
section 601 of ERISA, Section 4980B of the Code or any similar federal, state or
local law).
(vii) The execution of, and performance of the
transactions contemplated in this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
plan, policy, arrangement or agreement or any trust or loan that will or may (x)
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any current or former Company
Personnel or (y) terminate or modify or give a third party a right to terminate
or modify the provisions or terms of any Employee Plan. As a direct or indirect
result of the consummation of the transactions contemplated hereby, neither
Buyer nor the Company will be obligated to make a payment to an individual that
would not be deductible as a result of the application of Section 280G of the
Code.
(u) Litigation. Except as disclosed on Schedule 4(u) hereto,
which contains a summary description thereof, there is no (i) claim, litigation,
proceeding, labor dispute (other than routine grievance procedures), arbitral
action or government investigation pending or to the Company's knowledge,
threatened against or relating to (A) the Company or any of its properties, (B)
any Plan, (C) any Company Personnel in reference to actions taken by them in
such capacities or (D) Sellers with respect to the Shares nor (ii) valid basis
to the Company's knowledge for any such claim, litigation, proceeding, dispute,
arbitral action or investigation, which in the case of matters covered by clause
(i) or (ii) if adversely determined could, individually or in the aggregate,
have a Material Adverse Effect. There are no writs, decrees, injunctions or
orders of any court or governmental or regulatory agency, authority or body
outstanding against the Company, any Plan or against Sellers with respect to
Shares.
(v) Compliance with Laws. (i) Except as disclosed on Schedule
4(v) hereto, (i) the Company has complied in all respects with all applicable
statutes, regulations, orders, ordinances and other laws of the United States of
America, all state, local and foreign governments and other governmental bodies
and authorities and agencies of any of the foregoing to which they are subject,
except where non-compliance would not, individually or in the
20
<PAGE> 29
aggregate, have a Material Adverse Effect. The Company has not received any
written or to the Company's knowledge, oral notice to the effect that, or
otherwise been advised that, it is not in compliance with any of such statutes,
regulations and orders, ordinances, other laws or undertakings, and to the
Company's knowledge there is no reason to anticipate that any presently existing
circumstances are likely to result in violations of any such regulations which
could, individually or in the aggregate, have a Material Adverse Effect. Without
limiting the generality of the foregoing, each of the affidavits and statements
set forth on Annex I to Schedule 4(v) is true with respect to the Company. To
the Company's knowledge, there is not presently pending any proceeding, hearing
or investigation with respect to the adoption of amendments or modifications to
existing laws or ordinances, regulations or restrictions which, if adopted,
would have a Material Adverse Effect. The Company has obtained all material
Permits which are required in connection with the operations of its business as
presently conducted. All such Permits are in full force and effect and no
proceedings for the suspension or cancellation of any such Permit is pending or,
to the Company's knowledge, threatened. The foregoing representations and
warranties in this section 4(v), as qualified by Schedule 4(v) hereto, are in
addition to, and not in limitation of, the other representations and warranties
contained elsewhere in this Agreement.
(ii) Neither the Company, nor any Company Personnel, nor
the Sellers has made any payment of funds of the Company prohibited by law, and
no funds of the Company have been set aside to be used for any payment
prohibited by law.
(iii) The Company is in compliance in all material
respects with all applicable Department of Transportation ("DOT") and Federal
Aviation Administration ("FAA") statutes, regulations, and rules, including, but
not limited to: 14 C.F.R. '107 (Airport Security); 14 C.F.R. '121 Appendix I and
J (Drug and Alcohol Testing); and 49 C.F.R. '171 et seq. (Hazardous Materials
Regulations). The Company also is in compliance with any applicable FAA Advisory
Circulars. Except as set forth in Schedule 4(v), the Company has not received
written (nor to the Company's knowledge, oral) notice of any, and to the
Company's knowledge there are no, facts or circumstances that would result in
any investigation, enforcement action, formal complaints or any other legal
action taken by the DOT, FAA, or the Inspector General of the DOT against the
Company or against any air carrier or other entity that the Company is or has
performed ground handling or similar services for.
(w) No Brokers. Neither Sellers nor the Company have entered
into and will not enter into any agreement, arrangement or understanding with
any Person which may result in an obligation of Buyer or the Company to pay any
finder's fee, brokerage commission or similar payment in connection with the
transaction contemplated hereby.
(x) Transactions with Certain Persons. Except as disclosed on
Schedule 4(x) hereto, none of the Sellers or any present or former officer,
directors or employee of the Company or any Family Member or any Affiliate
thereof is presently a party to any transaction with the Company relating to the
business of the Company, including, without limitation, any contract, agreement
or other arrangement (i) providing for the furnishing of services by, (ii)
providing for the rental of real or personal property from, or (iii) otherwise
requiring payments to
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(other than services as officers, directors or employees) any such person or to
any Person in which any such person has a substantial interest as a shareholder,
member, officer, director, trustee or partner. All of the transactions set forth
on Schedule 4(x) hereto have been entered into on an arms-length basis and the
fees and compensation payable by the Company and the other terms with respect
thereto are at or better than prevailing market rates. Except as disclosed on
Schedule 4(x) hereto, no present officer or director of the Company, no
Affiliate thereof and no Seller, have any ownership or stock interest in any
other enterprise, firm, corporation, trust, or any other entity which is engaged
in any line or lines of business which are the same as, or competitive with, the
line or lines of business of the Company.
(y) Assets. The assets of the Company, constitute, and on the
Closing Date will constitute, all of the assets and services that are necessary
to permit the business of the Company to be conducted by Buyer in substantially
the manner as it has heretofore been conducted by the Company and none of the
Sellers or any officer, director or employee of the Company or any Family Member
or any Affiliate thereof or any other Person owns any of such assets.
(z) Books and Records. The books of account and other
financial and corporate records of the Company have been maintained in
accordance with good business and accounting practices. The minute books of the
Company now contain, and on the Closing Date will contain, a true, correct and
complete record of all corporate action taken on or prior to the date hereof, or
hereafter taken on or prior to the Closing Date, at the meetings of shareholders
and directors and committees thereof. The stock certificate books and records of
the Company accurately reflect on the date hereof, and will accurately reflect
on the Closing Date, the ownership of the Shares by the persons and in the
amounts set forth on Annex I. All documentary and stock transfer tax stamps
required in connection with the issuance and transfer of the capital stock of
the Company have been duly affixed for transfer.
(aa) Consequences of Acquisition. Neither any Person who now
has business dealings with the Company nor any management employee of the
Company has notified the Company, and except as may be provided on Schedule
4(aa) hereto, the Company has no reasonable basis to believe that any such
Person would or might cease business dealings or employment with the Company
after the Closing Date.
(bb) Other Property. Except as set forth on Schedule 4(bb)
hereto, the Company has not owned, leased, operated, occupied or used any
premises or real property other than as set forth in Schedule 4(l)(ii).
(cc) Successor-in-Interest. Except as set forth in Schedule
4(cc) hereto, the Company is not the successor-in-interest to any corporation,
partnership, limited liability company, sole proprietorship, person or other
entity pursuant to any international, national, provincial, regional, federal,
state, municipal or local law, regulation, judgment, decree, opinion, common or
decisional law, or agency requirement (including Environmental Law).
(dd) Year 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of the Company's (a)
computer systems and (b) equipment
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containing embedded microchips (including systems and equipment supplied by
others or with which the Company's systems interface) and the testing of such
systems and equipment, as so reprogrammed has been completed. The cost to the
Company of such reprogramming and testing and of the reasonably foreseeable
consequences of the year 2000 to the Company (including without limitation,
reprogramming errors and the failure of others' systems or equipment) will not
have a material adverse effect on the business, condition (financial or other),
assets, properties, operations or prospects of the Company, individually or
taken as a whole. The computer and management information systems of the Company
are and, to the Company's knowledge, with ordinary course upgrading and
maintenance, will continue to be, sufficient to permit the Company to conduct
its business without a material adverse effect.
(ee) Foreign Corrupt Practices Act. Neither the Company nor
any officer, director, employee, consultant or agent thereof acting on their
behalf has made, directly or indirectly, any payment or promise to pay, or gift
or promise to give or authorized such a promise or gift of any money or anything
of value, directly or indirectly, to: (a) any foreign official (as such term is
defined in the Foreign Corrupt Practices Act of 1977, as amended (the "FCPA")),
for the purpose of influencing any official act of decision of such official or
inducing him or her to use his or her influence to affect any act or decision of
a foreign government, or any agency or subdivision thereof; or (b) any foreign
political party or official thereof or candidate for foreign political office
for the purpose of influencing any official act or decision of such party,
official or candidate or inducing such party, official or candidate to use his,
her or its influence to affect any act or decision of a foreign government or
agency or subdivision thereof, in the case of both (a) and (b) above in order to
assist the Company to obtain or retain business for, or direct business to the
Company, and under circumstances which would subject the Company to liability
under the FCPA.
(ff) Disclosure. To the Company's knowledge, no representation
or warranty made by Romeo in this Agreement or as provided herein contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements and information contained herein or therein, in
light of the circumstances under which they are made, not misleading.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Sellers as follows:
(a) Consents, No Conflicts, Etc. Neither the execution and
delivery of this Agreement, the consummation by Buyer of the transactions
contemplated herein nor compliance by Buyer with any of the provisions hereof
will (i) violate or conflict with any provision of the Articles of Incorporation
or By-laws of Buyer, (ii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Buyer or any of its assets or properties, or
(iii) require the consent, approval, permission or other authorization of or by
or filing or qualification with any court, arbitrator or governmental,
administrative, or self-regulatory authority which has not been obtained, other
than the expiration of the waiting period under the HSR Act, if applicable, and
any such actions to be taken by Sellers or the Company.
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(b) Organization and Good Standing. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all the requisite corporate power to carry on its
business as presently conducted.
(c) Authority, Execution and Delivery. All requisite corporate
action has been taken to authorize the execution, delivery and performance by
Buyer of this Agreement and the transactions contemplated herein, and no other
corporate proceedings on the part of Buyer are necessary to authorize the
execution and delivery of this Agreement and the transactions contemplated
herein. This Agreement has been duly executed and delivered by Buyer and
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, except as enforcement hereof or
thereof may be limited by bankruptcy, insolvency, or other similar laws
affecting the enforcement of creditors' rights in general or by general
principles of equity.
(d) No Brokers. Neither Buyer, nor any of its Affiliates, has
entered into any agreement, arrangement or understanding with any Person which
will result in the obligation of the Company (prior to Closing) or Sellers to
pay any finder's fee, brokerage commission or similar payment in connection with
the transactions contemplated hereby.
(e) Financing. Buyer has delivered to the Sellers complete and
correct executed copies of letters with respect to the financing (the "Financing
Letters") of the transactions contemplated hereby. Assuming satisfaction of all
applicable conditions set forth in the Financing Letters and full funding
thereunder, such financing, together with the other funds available to Buyer,
(collectively, the "Financing"), will provide sufficient funds to consummate the
transactions contemplated hereby.
(f) Disclosure. To the knowledge of the Buyer, no
representation or warranty made by the Buyer in this Agreement or as provided
herein contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein, in
light of the circumstances under which they were made, not misleading.
SECTION 6. CERTAIN COVENANTS AND AGREEMENTS.
(a) Conduct of the Company's Business. Sellers will, from the
date hereof up to and including the Closing Date, cause the Company to (i)
conduct business only in the ordinary course; (ii) maintain in full force and
effect the insurance policies set forth on Schedule 4(l)(v) (or policies
providing substantially the same coverage, copies of which will be made
available to Buyer), (iii) take all necessary and prudent action to preserve the
assets and properties, wherever located, which are material to the business of
the Company; (iv) maintain its books and records in accordance with GAAP and in
the manner consistent with past practices and promptly advise Buyer in writing
of any adverse change in the condition (financial or otherwise) of the assets,
liabilities, prospects, earnings or business of the Company; (v) not, without
Buyer's prior written consent, engage in any action which would require
disclosure under Section 4(g) hereto; (vi) not, without Buyer's prior written
consent, make any change in the authorized or outstanding capital stock of the
Company or otherwise change its capitalization; and (vii) use its best efforts
to preserve the business organization of the Company intact, to
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continue its operations at its present levels, to keep available to Buyer the
services of the Company Personnel and to preserve the goodwill of those
suppliers, customers, creditors and others having business relations with the
Company; and refrain from any significant organizational or personnel changes
with respect thereto.
(b) Access to the Company's Business. From the date hereof
until the Closing Date, Romeo shall, and shall cause Company Personnel to,
afford Buyer and its attorneys, consultants, accountants and authorized
representatives (including lenders and equity investors) full access, upon
reasonable notice during normal business hours and at other reasonable times, to
all properties, books, contracts, commitments, records, personnel, lenders and
advisors of the Company in order to permit the Buyer to conduct its due
diligence investigation of the Company. Such investigation shall include, among
other things, the receipt of relevant financial information, the review of any
relevant contractual obligations of the Company, the conducting of discussions
with Company Personnel and customers with the prior consent of Romeo (such
consent not to be unreasonably withheld or delayed) and such other
investigations, valuations or testing (including, but not limited to,
environmental investigations and testing) as may be deemed necessary by Buyer.
The Buyer shall have the right to conduct an environmental site assessment
("ESA") of the Company's operations at its own cost and expense. The ESA may
include ASTM Phase I and Phase II ESAs.
(c) Non-competition. Sellers will not for a period of five (5)
years following the Closing (the "Non-Competition Period"), without the express
written consent of the Company, directly or indirectly, in any geographic area
where the Company conducts business during the Non-Competition Period, (i)
engage or participate in (A) the following businesses: (1) aviation
ground-handling services (including, without limitation, jet bridge, deicing and
ramp services), (2) cargo-handling services, (3) passenger services, (4)
supervision and representation with respect to items (1), (2) and (3), or (4)
warehousing and support business with respect to items (1), (2) and (3), or (B)
any related business activities conducted by the Company at the time of closing
(the "MAS Business"); (ii) lend his name (or any part or variant thereof) to,
any business which is, or as a result of the Sellers' engagement or
participation would become competitive with the MAS Business; (iii) request,
induce, attempt to influence or have any other business contact with any MAS
Business customers or potential customers which have been in contact with the
Company, Buyer or their Affiliates to curtail or cancel any business they may
transact with the Company, Buyer or their Affiliates; (iv) solicit or employ an
officer, director or employee of the Company or Buyer, or any subsidiary thereof
to become an officer, director or employee of Sellers, their respective
Affiliates or anyone else or to terminate his or her employment with the Company
or Buyer, or any subsidiary thereof (provided that if such person's employment
is terminated, without cause (with "cause" being determined in the reasonable
discretion of Buyer), by Buyer, Seller may employ such person in a business
which complies with this non-competition provision); (v) request, induce,
attempt to influence or have any other business contact with any distributor or
supplier of goods or services to the Company, Buyer or their Affiliates to
curtail or cancel any business they may transact with the Company, Buyer or
their Affiliates; (vi) request, induce, attempt to influence or have any other
business contact with any governmental entity or regulatory authority to
terminate, revoke or materially and adversely alter or impair any license,
authority or permit held, owned, used or reserved for
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the Company, Buyer or their Affiliates or (vii) engage in or participate in,
directly or indirectly, any business conducted under any name that shall be the
same as or similar to the name of the Company or Buyer or any trade name used by
it. For purposes of this Section 6, the Sellers shall be deemed to engage or
participate in a business if they, directly or indirectly, engage or invest in,
own, manage, operate, control or participate in the ownership, management,
operation or control of, are employed by, associated or in any manner connected
with, or render services or advice to, any business engaged in the MAS Business;
provided, however, that (A) Romeo and Micale each may continue directly or
through one or more Affiliates, including but not limited to Charter America,
Inc., to engage in the business of leasing or providing aircraft, crew,
associated aircraft maintenance of a mechanical nature and insurance services
under agreements with cargo carriers and other Persons (including those who may
be customers of the Company's MAS Business), all in accordance with Romeo's
current practice (the "Romeo Aircraft Business"))", (B) Romeo and Micale each
may continue directly or through one or more Affiliates, including but not
limited to Custom Air Transport, Inc., to engage in the business of operating an
airline, associated ownership and leasing of aircraft (including business with
persons who may be customers of the Company's MAS Business), and the employment
of staff and crew incidental to all of the foregoing; (C) Romeo may engage in
any activity he is required to perform or resulting from his obligations under
his Consulting Agreement with the Company and (D) the Sellers may invest in the
securities of any enterprise (but without otherwise participating in the
activities of such enterprise) if (x) such securities are listed in any national
or regional securities exchange or have been registered under Section 12(g) of
the Securities Exchange Act of 1934 and (y) the Sellers do not beneficially own
(as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934)
in excess of 5%, in the aggregate, of the outstanding equity of such enterprise.
Where the business engaged in by Romeo pursuant to the preceding proviso
involves contracting with a third party for the provision of services coming
within the scope of the MAS Business, Romeo shall use his best efforts to permit
the Company or its Affiliates to bid on the provisions of such services. Sellers
are entering into the foregoing covenant to assure Buyer of the transfer of the
goodwill of the Company, and in order to induce Buyer to consummate the purchase
contemplated by this Agreement.
The parties agree that $50,000 of the Purchase Price paid to
each of the Sellers shall be deemed paid for this non-competition provision.
(d) Corporate Names. From and after the Closing, Buyer shall
possess, to the exclusion of Sellers, all rights to the names "Miami Aircraft
Support" and "International Enterprises Group" and any variants or derivatives
thereof, and Sellers shall have no rights whatsoever to the use of any such
names or any variant or derivative of any such names in the conduct of any
business.
(e) Nondisclosure. Sellers will not at any time after the date
of this Agreement (other than in the ordinary course of Romeo's employment by
the Company) divulge, furnish to or make accessible to anyone any knowledge or
information with respect to confidential, secret or proprietary processes,
inventions, discoveries, improvements, formulae, plans, material, devices or
ideas or know-how, whether patentable or not, or with respect to any
confidential, secret or proprietary aspects of the business of the Company
(including, without
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limitation, customer lists, supplier lists, pricing arrangements with customers
or suppliers, capital structure or financial information); provided, however,
that nothing herein shall prohibit Sellers from complying with any order or
decree of any court of competent jurisdiction or governmental authority, but
Sellers shall give Buyer timely notice of the receipt of any such order or
decree, and the foregoing provision shall not apply to any information which is
or becomes generally available to the public through no breach of this
Agreement.
(f) Changes in Representations and Warranties. Between the
date of this Agreement and the Closing Date, Sellers shall not, and Sellers
shall not permit the Company to, enter into any transaction, take any action, or
by inaction permit an event to occur, which would result in any of the
representations and warranties of Sellers herein contained not being true and
correct in all material respects at and as of (i) the time immediately following
the occurrence of such transaction or event or (ii) the Closing Date. Sellers
shall promptly give written notice to Buyer upon becoming aware of (x) any fact
which, if known on the date hereof, would have been required to be set forth or
disclosed pursuant to this Agreement, and (y) any impending or threatened breach
in any material respect of any of the representations and warranties contained
in this Agreement and with respect to the latter shall use their best efforts to
remedy same.
(g) Mutual Cooperation. The parties hereto will cooperate with
each other, and will use all reasonable efforts, to cause the fulfillment of the
conditions to the parties' obligation hereunder, and to obtain as promptly as
possible all consents, authorizations, orders or approvals of any third party,
whether private or governmental, required in connection with the transactions
contemplated by this Agreement.
(h) Further Assurances. Romeo will, and will cause the Company
and all Company Personnel to, cooperate fully with Buyer in connection with the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, from and after the Closing Date, from time to time, at Buyer's
request and without further consideration, Romeo will execute and deliver, or
cause to be executed and delivered, such other instruments and take such other
action as Buyer may reasonably request in order to carry out the purposes of
this Agreement.
(i) No Solicitation. Until the earlier of termination of this
Agreement in accordance with the terms hereof and the Closing Date (the
"Nonsolicitation Period"), the Sellers shall, and shall use their reasonable
best efforts to cause their representatives, agents and employees to refrain
from, directly or indirectly, (i) soliciting, discussing or negotiating,
directly or indirectly, with any third party any inquiries, proposals or offers
with respect to the sale of the Company or any portion of its assets or
securities and (ii) disclosing to any third party that the Company is for sale.
If the Sellers or their representatives, agents or employees receive any
unsolicited offer or proposal for any such acquisition, or obtain information
that such an offer or proposal is likely to be made, the Sellers will provide
Buyer with immediate written notice thereof.
(j) Interim Financial Statements. Within thirty (30) days
after the end of each calendar month from April, 1999 but prior to Closing,
Romeo will cause the Company to deliver
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to Buyer unaudited financial statements with respect to the Company for such
calendar month and the corresponding calendar month and year-to-date period of
the preceding fiscal year. All such financial statements shall fairly present
the financial position, results of operations and changes in financial position
of the Company as at the dates or for the periods indicated and in accordance
with GAAP. All unaudited financial statements delivered pursuant to this Section
6(j) shall be prepared on a basis consistent with the Company Financial
Statements.
(k) Certain Intercompany Accounts. Except as otherwise
provided herein, prior to the Closing, Romeo will cause the Company to (a)
cancel without payment all indebtedness and other amounts owed by the Company or
its Affiliates to the Sellers or their Affiliates or Family Members, (b) satisfy
by such cancellation or obtain payment of, all indebtedness and other amounts
owed by the Sellers or their Affiliates or Family Members to the Company or its
Affiliates (whether or not then due); and (c) cancel and discharge of record all
Encumbrances relating to any of the aforesaid indebtedness or amounts.
(l) Consents and Permits. Romeo will cause the Company to use
its best efforts to obtain such consents, leases, Permits and airport authority
or governmental approvals as may be necessary in order for Buyer to acquire and
thereafter to operate the businesses of the Company, including, without
limitation, those listed on Schedule 4(a). In connection with each such
application on the part of the Company, Buyer shall furnish such information and
data as may be necessary or desirable and shall otherwise assist the Company in
any way reasonably requested. Romeo and the Company shall obtain the prior
approval of Buyer, not unreasonably withheld, to any applications, filings or
documents to be filed with or sent to third parties in connection with obtaining
any such consents and permits, provided that approval shall be deemed to have
been given if Buyer has not responded to a request for approval within three
Business Days of receipt of a request therefor. Romeo and the Company shall use
their best efforts to cause unexecuted contracts to be executed.
(m) Interim Operating Reporting. During the period from the
date of this Agreement to the Closing, Romeo shall cause the Company and its
officers to confer on a regular and frequent basis with one or more
representatives of Buyer to report material operational matters and to report
the general status of on-going operations. Romeo shall cause the Company to
notify Buyer in writing of any Material Adverse Effect after the date hereof and
prior to the Closing and shall keep Buyer fully informed of such events.
(n) Antitrust Compliance. The Sellers and Buyer will promptly
file with the Federal Trade Commission and the Department of Justice the
notification and report form required by, and will use its best efforts to
comply with any request for additional information in connection with the HSR
Act. The HSR Act filing fees payable to the Department of Justice shall be paid
by Buyer.
(o) Indebtedness. (i) The Company's indebtedness for borrowed
money, net of cash/savings, which at February 28, 1999 was approximately $4.3
million in principal amount, has been repaid through the date hereof in
accordance with the scheduled amortization thereof as set forth in Schedule
6(o)(i) (the "Scheduled Payments"), and the Company shall continue to
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<PAGE> 37
repay such indebtedness in accordance with such scheduled amortization through
the Closing, without any reduction in the Purchase Price, provided, however, if
the Company has obtained all necessary consents referred to on Schedule 4(a) and
all of the other conditions to Buyer's obligation to close set forth in Section
7 have been satisfied during the period between the date hereof and the
ninetieth day following the date hereof (the "Ninety Day Period"), and such
Closing does not occur until after the Ninety Day Period because of Buyer's
inability to close the transaction, any additional repayment of indebtedness
following the Ninety Day Period in excess of such scheduled amortization shall
result in a dollar-for-dollar increase in the Purchase Price (the "Adjustment
Amount").
(ii) On or prior to the Closing Date, the Sellers shall
have repaid, from the proceeds of sale or other sources not including funds of
the Company or IEG, all indebtedness for borrowed money, including capitalized
leases, of the Company or IEG in full, except for the indebtedness to Mellon
United National Bank, Lyon Credit Corporation, Orix Credit Alliance, Inc.,
Concord Commercial Corporation, Citicorp Dealer Finance and Union Planters Bank,
which shall have been paid down in accordance with the preceding paragraph of
this Section 6, such that the balance of indebtedness for borrowed money,
including capitalized leases, minus cash on hand in the Company's savings
account as of the Closing Date shall not exceed $4.3 million, less the Scheduled
Payments plus the amount of any indebtedness incurred for the capital
expenditures, and up to the amounts, listed on Schedule 6(o)(ii). In the event
that this covenant is not complied with and Buyer elects to proceed with the
Closing, the Purchase Price shall be reduced dollar-for-dollar for any such
excess amount. Such reduction may be effected at the Closing or, if determined
by Buyer subsequent to the Closing pursuant to audit, by claim against the
escrow under the Escrow Agreement or against Anthony Romeo and Sellers pursuant
to the indemnification provisions of this Agreement.
(p) Employment and Non-Competition Agreements. Buyer shall
identify, prior to Closing, employees of the Company from whom the Company
wishes to obtain non-competition, or employment and non-competition, agreements,
and Romeo shall use his best efforts, both prior to and after Closing, to obtain
such agreements from such employees.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER.
The obligation of Buyer to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment, or the
waiver by Buyer, on or prior to the Closing Date, of the following conditions:
(a) Representations and Warranties True at the Closing Date.
The representations and warranties of Sellers contained in this Agreement shall
be deemed to have been made on and as of the Closing Date with the same force
and effect as though made on an as of the Closing Date and shall then be true
and correct in all material respects (except those representations and
warranties that are qualified by materiality or Material Adverse Effect which
shall be true and correct in all respects). Each Seller shall have delivered to
Buyer a certificate with respect to such Seller's representations and
warranties, dated the Closing Date, to such effect.
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(b) Seller's Performance. Each of the obligations of Sellers
and the Company to be performed on or before the Closing Date pursuant to the
terms of this Agreement shall have been duly performed on or prior to the
Closing Date. Each Seller shall have delivered to Buyer a certificate with
respect to such Seller's obligations, dated the Closing Date, to such effect.
(c) Approvals and Consents. (i) All notices to, and consents,
authorizations, approvals, Permits and waivers from, governmental or regulatory
bodies or agencies, whether international, national, provincial, regional,
federal, state, municipal or local, or from third parties required pursuant to
any law, regulation, order, judgment, decree, permit, authorization, license,
opinion, common or decisional law, or agency requirement, leases, mortgages,
contracts or agreements to consummate the transactions contemplated hereby, or
which failure to obtain could have any of the other consequences described in
Section 4(a), including those contained on Schedule 4(a), shall have been made
and obtained.
Notwithstanding the foregoing, in the event that all of
the conditions in this Section 7 are satisfied except for failure to obtain the
Dade County consent to IEG listed as item 5 on Schedule 4(a), the parties shall
proceed to Closing but an additional $250,000 of the Purchase Price shall be
placed in escrow, pursuant to an agreement reasonably acceptable to the parties.
If such consent has not been obtained within six months of Closing, then Buyer
may control the process of seeking such consent for up to an additional eighteen
months, during which period the escrow shall continue. Upon receipt of the
consent, the escrow amount shall be released to Sellers. If such consent has not
been received within two years of Closing, the escrow amount shall be reimbursed
to Buyer and IEG shall be transferred back to Sellers.
(ii) Each of the parties to any contract under which the
purchase of the Shares would constitute or result in a default or acceleration
of obligations, or where the purchase of the Shares would terminate any contract
or constitute a breach of the assignment provisions of such contract, or have
any of the other consequences described in Section 4(a), shall have given such
consent as may be necessary to permit the consummation of the purchase of the
Shares without constituting or resulting (with or without the passage of time)
in a default, acceleration, termination or breach under such contract.
(d) Stock Certificates. On the Closing Date, Sellers shall
have delivered to Buyer a certificate or certificates evidencing the Shares,
free and clear of all Encumbrances of any nature whatsoever, duly endorsed in
blank for transfer or accompanied by stock powers duly executed in blank and
with all requisite documentary or stock transfer tax stamps affixed.
(e) Litigation. As of the Closing Date, there shall not be in
effect any judgment, order, injunction or decree of any court of competent
jurisdiction, the effect of which is to prohibit or restrain the consummation of
the transactions contemplated by this Agreement and no claim, action, suit,
investigation or other proceeding shall be threatened or pending before any
court or administrative agency or by any governmental agency or other person,
challenging or otherwise relating to the transactions provided for herein.
(f) No Change in Law. There shall not have been any action, or
any statute enacted, by the United States, any state or any foreign country
which render the parties unable to
30
<PAGE> 39
consummate the transaction contemplated herein or make the transactions
contemplated herein illegal or prohibit, restrict or substantially delay the
consummation of the transaction contemplated herein.
(g) Opinion of Sellers' Counsel. There shall have been
delivered to Buyer an opinion, dated the Closing Date and addressed to Buyer, of
Roth & Scholl, counsel to Sellers, to the effect set forth in Exhibit I hereto.
(h) Settlement of Certain Accounts. On or before the Closing
Date, all amounts owing by Sellers or any Company Personnel, other than listed
on Schedule 7(h) hereto, or any of their respective Affiliates or Family Members
to the Company shall have been repaid in full, and Sellers shall have delivered
to Buyer reasonably satisfactory evidence with respect thereto.
(i) Consulting Agreements. Each of Romeo and Paula Romeo shall
have executed and delivered to Buyer their respective Consulting Agreements in
substantially the form of Exhibit II hereto.
(j) [Omitted.]
(k) Release; Resignations. Sellers shall have delivered to
Buyer a complete and general release, in form and substance reasonably
satisfactory to Buyer and its counsel, from each of the Sellers, of all claims
against the Company for any matter or thing whenever arising, other than claims
arising under this Agreement, the Exhibits hereto or other documents executed in
connection herewith. At the Closing, Sellers shall deliver to Buyer written
resignations or terminations of all of the directors and officers of the
Company, other than those such directors and officers which Buyer designates in
writing that it desires to retain as employees or consultants. On the Closing
Date, Sellers shall cause a meeting of the Board of Directors of the Company to
be held upon due notice or waiver thereof, at which the resignations of the
respective officers and directors of the Company shall be accepted, effective
upon Closing.
(l) Proceedings and Documents Satisfactory. Buyer shall have
received such certificates, opinions, and other documents as it or its counsel
may reasonably require in order to consummate the transactions contemplated
hereby, all of which shall be in form and substance satisfactory to it and its
counsel. All proceedings in connection with the purchase of the Shares set forth
herein and all certificates and documents delivered to Buyer pursuant to this
Agreement shall be satisfactory in form and substance to Buyer and its counsel
acting reasonably and in good faith.
(m) HSR. Any waiting period under the HSR Act applicable to
the transactions contemplated hereby shall have expired or been terminated.
(n) Nonforeign Persons. Each of Sellers shall have provided
Buyer with a certification of nonforeign status as described under Treasury
Regulations Section 1.1445-2(b)(2).
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<PAGE> 40
(o) Funding. The Financing contemplated by the Financing
Letters shall have been obtained on terms satisfactory to Buyer.
(p) Material Adverse Effect. No Material Adverse Effect shall
have occurred since the date of this Agreement.
(q) Indebtedness. As of the Closing Date, the amount of
indebtedness for borrowed money, including capitalized leases, of the Company
and IEG shall comply with the covenant in Section 6(o).
(r) Net Working Capital. On the Closing Date, the Company's
net working capital, defined as (i) cash in the Company's operating accounts
plus accrued revenues (recognized but unbilled) plus net receivables minus (ii)
accounts payable plus accrued expenses ("Working Capital"), computed in
accordance with GAAP, shall not be less than Four Million Dollars ($4,000,000).
Should this condition not be satisfied, and should Buyer elect to proceed with
Closing, the Purchase Price shall be reduced dollar-for-dollar, for any
shortfall. Such reduction may be effected at the Closing or, if determined by
Buyer subsequent to the Closing pursuant to audit, by claim against the escrow
under the Escrow Agreement or against Anthony Romeo pursuant to the
indemnification provisions of this Agreement. The Sellers shall deliver to Buyer
a statement (the "Closing Statement") setting forth the estimated Working
Capital of the Company at Closing, together with documentation, in reasonable
detail, supporting such calculation.
(s) Corporate Documents. The Sellers shall have delivered to
Buyer (i) copies of the respective Certificates of Incorporation, including all
amendments thereto, of each of the Company and IEG, certified by the Secretary
of State of its jurisdiction of incorporation; (ii) certificates from the
Secretary of State of the respective jurisdictions of incorporation to the
effect that each of the Company and IEG is in good standing in such jurisdiction
and listing all charter documents of the Company and the Subsidiary on file in
such state; and (iii) a certificate from the Secretary of State or other
appropriate official in each state in which the Company or IEG is qualified to
do business to the effect that each of the Company and IEG is in good standing
in such state; in each case, dated as of a date not more than ten days prior to
the Closing Date (provided that if the Closing Date is extended not more than 30
days beyond a scheduled Closing Date as agreed to by the parties, or is extended
beyond 30 days solely by reason of Buyer's failure to be ready to close, such
good standings need not be updated).
(t) Escrow Agreement. The parties shall have entered into the
Escrow Agreement.
SECTION 8. CONDITIONS TO OBLIGATIONS OF SELLERS.
The obligations of Sellers to consummate the transactions
contemplated hereby shall be subject to the fulfillment, or the waiver by
Sellers, on or prior to the Closing Date, of the following conditions:
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<PAGE> 41
(a) Representations and Warranties True at the Closing Date.
The representations and warranties of Buyer contained in this Agreement shall be
deemed to have been made on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date and shall then be true and
correct in all material respects (except those representations and warranties
that are qualified by materiality which shall be true and correct in all
respects). Buyer shall have delivered to Sellers a certificate, dated the
Closing Date, to such effect.
(b) Buyer's Performance. On the Closing Date, Buyer shall pay
to Sellers the Purchase Price in accordance with Section 1(b) of this Agreement.
(c) Litigation. As of the Closing Date, there shall not be in
effect any judgment, order, injunction or decree of any court of competent
jurisdiction, the effect of which is to prohibit or restrain the consummation of
the transactions contemplated by this Agreement, and no claim, action, suit,
investigation or other proceeding shall be threatened or pending before any
court or administrative agency or by any governmental agency or other person,
challenging or otherwise relating to the transactions provided for herein.
(d) No Change in Law. There shall not have been any action, or
any statute enacted, by the United States, any state or any foreign country
which would render the parties unable to consummate the transactions
contemplated herein or make the transactions contemplated herein illegal or
prohibit, restrict or substantially delay the consummation of the transaction
contemplated herein.
(e) HSR. Any waiting period under the HSR Act applicable to
the transactions contemplated hereby shall have expired or been terminated.
(f) Opinion of Buyer's Counsel. There shall have been
delivered to Sellers an opinion, dated the Closing Date and addressed to
Sellers, of Buyer's counsel, Schulte Roth & Zabel, LLP to the effect set forth
in Exhibit IV hereto.
(g) Consulting Agreements. Buyer shall have executed and
delivered to Romeo and Paula Romeo their respective Consulting Agreements in
substantially the form of Exhibit II hereto.
(h) Capital Contribution. Buyer shall have furnished to
Sellers evidence of a capital contribution to the Company of at least $2,000,000
simultaneously with the Closing in excess of the amount necessary to pay the
Purchase Price, which contribution shall be held in an account with a bank and
on terms acceptable to Sellers and Buyer for the sole purpose of distribution
after the Closing Date to the employees (not including Sellers or Paula Romeo)
in the sole and absolute discretion and control of Romeo and Paula Romeo,
provided that no employee shall receive more than $750,000 in the aggregate and
that such amounts shall be paid over at least a two year period with no more
than 50% paid in any year. Neither MAS, Buyer nor their affiliates shall have
any liability or incur any expense in respect of such account or payments.
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<PAGE> 42
SECTION 9. NATURE AND SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION, ETC.
All statements contained in any Schedule, Annex or Exhibit
hereto or in any certificate delivered by or on behalf of the parties pursuant
to this Agreement or in connection with the transactions contemplated hereby
shall be deemed representations and warranties by the parties hereunder.
(a) Survival of Representations, Warranties, Etc. All
representations and warranties of the parties made in this Agreement or as
provided herein shall survive until June 30, 2001 (and thereafter until resolved
if a claim in respect thereof has been made prior to such date), notwithstanding
any investigation at any time made by or on behalf of the other party, provided
that the representations in Section 3 and in Section 4(c) shall survive without
limitation as to time, and the representations of Romeo with respect to tax
matters, environmental matters and employee benefit matters shall survive until
expiration of the statute of limitations applicable to claims with respect to
such matters.
(b) Nature of Seller's Liability. Each Seller shall be liable
to Buyer hereunder in respect of a breach of Section 3 hereof only for breach by
such Seller of his representations or warranties contained therein, and only
Romeo shall be liable to Buyer hereunder in respect of a breach of Section 4
hereof.
(c) Seller's Agreement to Indemnify. Subject at all times to
the limitations on liability set forth below:
(i) Each Seller shall, severally and not jointly, fully
indemnify and hold harmless and satisfy and defend Buyer, its subsidiaries
(including the Company) and all of their Affiliates, officers, directors,
employees, representatives, attorneys, consultants and agents against and in
respect of any and all claims, obligations, liabilities, losses, damages,
deficiencies, penalties, fines, costs or expenses (including, without
limitation, legal, expert and consultant fees and expenses and Taxes)
(collectively "Losses") arising out of or resulting from (A) any
misrepresentation or breach of warranty or representation or the nonfulfillment
of any agreement, covenant or obligation by such Seller made in this Agreement
(including, without limitation, the Schedules, Annexes and Exhibits hereto and
the certificates delivered hereunder) or as provided herein, (B) any and all
Losses arising from any actions, suits, proceedings, claims, demands,
assessments, judgments incidental to the foregoing or the enforcement of such
indemnification, (C) any Losses of the Company of a nature reserved for on the
Balance Sheet in excess of the reserve for such Losses on the Balance Sheet, and
(D) for any excess indebtedness or shortfall in working capital pursuant to
Section 6(o) or 7(r), respectively.
(ii) In addition to the foregoing provisions of Section
9(c)(i) above, without limiting the generality of such foregoing provisions and
without regard to the limitations on liability set forth in Section 9(c)(iv)
below, Romeo agrees to indemnify and hold harmless and satisfy and defend Buyer
and its subsidiaries (including the Company) and all other members, if any, of
any group of which Buyer is a member for tax purposes (any reference to "Buyer"
in this paragraph shall mean Buyer individually or one or more of its Affiliates
as described herein, as
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<PAGE> 43
appropriate) against and in respect of and, on demand, will reimburse Buyer for,
any and all liability whatsoever, and however imposed (including any claim
asserted or deficiency assessed against or collected from or paid by Buyer), in
respect of any Taxes (including any penalties and interest thereon) of the
Company for any and all periods through the period ending on the Closing Date
and the portion ending on and including the Closing Date of any period that
includes but does not end on the Closing Date, in the event the amount thereof
exceeds $200,000 (in which event Romeo's indemnity shall apply only to any
Losses in excess of such amount) (except that such threshold shall not apply to
any knowing or intentional breach of Section 4(h)), less the limitations set
forth in Section 9(c)(iii).
(iii) Seller's liability hereunder shall be limited so
that no Seller shall be obligated to pay any amount for indemnification under
this Agreement (A) for any Losses to the extent covered by and reimbursed by
insurance net of any increases to the rate of such insurance attributable to
such Losses, (B) to the extent of any federal, state and/or local income tax
benefits (at the applicable tax rate) realized by Buyer as a result of such
Losses and (C) in respect of Losses, if any, in an amount in excess of such
Seller's proportionate share of the Purchase Price and, in the case of Romeo,
the amounts paid or payable to him under his Consulting Agreement.
(iv) In addition to the foregoing limitations on liability
set forth in Section 9(c)(iii) above, Romeo's liability hereunder shall be
limited so that Romeo shall not be obligated to pay any amount for
indemnification under Section 9(c)(i) above for misrepresentations or breaches
of his representations or warranties set forth in Section 4 hereof unless and
until any and all of Buyer's Losses under Section 9(c)(i) and Section 9(c)(ii),
in the aggregate, exceed $200,000 (in which case Romeo shall only be liable for
the full amount of such losses in excess of $200,000).
(v) Notwithstanding the foregoing, in the event that the
Buyer indemnified parties incur Losses in excess of $10 million in the aggregate
for matters which constitute a breach of the representation in Section 4(q)
hereof without giving effect to the knowledge qualification therein, and without
regard to whether the Buyer indemnified party is otherwise insured or recovers
insurance for any such Losses, Romeo shall indemnify and hold harmless the Buyer
indemnified parties for such Losses in excess of $10 million, provided that
Romeo's liability under this Section 9(c)(v) shall not exceed $2.5 million.
Romeo may self-insure or purchase insurance for such exposure. The foregoing
indemnity is in addition to Romeo's indemnity provided above for breach of
representations, including the representation in Section 4(q) for matters, set
forth therein if the Company had knowledge thereof.
(d) Buyer's Agreement to Indemnify. Buyer will fully indemnify
and hold harmless Sellers and all of their Affiliates, employees,
representatives, attorneys, consultants and agents against and in respect of any
and all of Sellers' Losses (i) arising out of or resulting from any
misrepresentation or breach of warranty or representation or the nonfulfillment
of any agreement, covenant or obligation by Buyer made in this Agreement
(including, without limitation, the Schedules, Annexes and Exhibits hereto and
the certificates delivered hereunder) or as provided herein and (ii) arising out
of the conduct of the business of the Company from and after the date hereof,
except to the extent any such Loss arises out of or is related to any matter
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<PAGE> 44
for which Buyer is entitled to be indemnified by Sellers hereunder. Buyer's
liability shall be limited so that Buyer shall not be obligated to pay any
amount for indemnification under this Agreement (A) for any Losses to the extent
covered by and reimbursed by insurance net of any increases to the rate of such
insurance attributable to such Losses, (B) to the extent of any federal, state
and/or local income tax benefits realized by Sellers as a result of Losses and
(C) for any misrepresentation or breach of representation or warranty of Buyer
unless and until any and all of Seller's Losses exceed $200,000 in the aggregate
(in which case Buyer shall only be liable for the full amount of such Losses in
excess of $200,000).
(e) Third Party Claims. Promptly after the receipt by any
party hereto of notice of any claim, action, suit or proceeding of any third
party which is subject to indemnification hereunder, such party or parties (the
"Indemnified Party") shall give written notice of such claim (a "Notice of
Claim") to the party obligated to provide indemnification hereunder
(collectively, the "Indemnifying Party"), stating the nature and basis of such
claim and the amount thereof, to the extent known. So long as notice is given
prior to the expiration of the Survival Period, failure of the Indemnified Party
to give such notice promptly shall not relieve the Indemnifying Party from any
liability which it may have on account of this indemnification or otherwise,
except to the extent that the Indemnifying Party is materially prejudiced
thereby (except that the Indemnifying Party shall not be liable for any expenses
incurred during the period in which the Indemnified Party failed to give such
notice). The Indemnifying Party shall be entitled to participate in the defense
or settlement of such matter and the parties agree to cooperate in any such
defense or settlement and to give each other full access to all information
relevant thereto. The Indemnifying Party shall not be obligated to indemnify an
Indemnified Party hereunder for any settlement entered into without the
Indemnifying Party's prior written consent, which consent shall not be
reasonably withheld, conditioned or delayed. If any Notice of Claim relates to a
claim by a person or persons other than the Buyer or an Affiliate of the Buyer,
and the amount of such claim is fully covered by the foregoing indemnity, as
limited herein, the Sellers or any of them which is an Indemnifying Party in
respect of such claim may elect to defend against such claim at its expense, in
lieu of the Buyer assuming such defense; provided, that Buyer shall be entitled
to participate in or monitor such defense at its expense and Sellers will fully
cooperate with Buyer and its counsel with respect thereto. If the Sellers or any
other persons as provided above elect to assume such defense, they shall retain
counsel reasonably satisfactory to the Buyer. The parties shall use commercially
reasonable efforts to minimize Losses from claims by third parties and shall act
in good faith in responding to, defending against, settling or otherwise dealing
with such claims, notwithstanding any dispute as to liability as between the
parties under this Section 9. The parties shall also cooperate in any such
defense, give each other reasonable access to all information relevant thereto
and make employees and other representatives available on a mutually convenient
basis to provide additional information and explanation of any material provided
in connection therewith. If the Loss incurred relates to the failure of the
Buyer or the Company to collect any note or account receivable and if any
Sellers pay in full the unpaid balance thereof to the Buyer or the Company, the
Buyer will cause the Company to assign said note or account without recourse to
the Sellers paying same in full satisfaction of the Sellers' indemnification
obligation as to such uncollected note or account. Any collection procedures by
Sellers will be carried out in a reasonable manner so as not to prejudice the
Company's relationship with the account debtor.
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<PAGE> 45
SECTION 10. TERMINATION AND ABANDONMENT.
(a) Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned (i) by the mutual written consent of
Buyer and Sellers; (ii) by Buyer or by Sellers at any time after 180 days
following the date hereof if for any reason the Closing shall not have occurred
on or prior to such date; provided, however, that the right to terminate under
this Section 10(a)(ii) shall not be available to any party whose failure to
fulfill any obligation under this Agreement shall have been the cause of, or
resulted in, the failure of the Closing to occur on or prior to such date; (iii)
by Buyer if there has been a material misrepresentation or material breach on
the part of the Sellers in the representations, warranties or covenants of
Seller set forth herein, or if there has been any material failure on the part
of a Seller to comply with his obligations hereunder; (iv) by Sellers if there
has been a material misrepresentation or material breach on the part of Buyer in
the representations, warranties or covenants of Buyer set forth herein, or if
there has been any material failure on the part of Buyer to comply with its
obligations hereunder; or (v) by Buyer or Seller if any court of competent
jurisdiction shall have issued an order, decree or ruling or taken any other
action enjoining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decreed, ruling or other action shall have become
final and nonappealable.
(b) Liability Upon Termination. If this Agreement is
terminated and the transactions contemplated by this Agreement are abandoned
pursuant to Section 10(a)(i), (a)(ii) or (a)(v), this Agreement shall become
void and of no further force and effect and no party hereto shall have any
liability or obligation to the other party hereto hereunder, except that the
obligations of the parties pursuant to Sections 6(e), 10 through 14, and 16
through 18 and this Section 10 shall survive any such termination.
(c) Termination by Buyer. In the event that, notwithstanding
Buyer obtaining Financing contemplated by the Financing Letters on terms
substantially the same as those set forth in the Financing Letters, Buyer
terminates this Agreement pursuant to Section 7(p) above, notwithstanding that
all of the other conditions to Buyer's obligation to close in Section 7 have
been satisfied, then Buyer shall reimburse the Company and the Sellers for all
fees and expenses (including, legal, accounting and other professional fees and
expenses) incurred by them in connection with transactions contemplated by this
Agreement in an amount not to exceed $100,000 (less any fees paid by Buyer for
the Hart-Scott-Rodino filing). The foregoing shall be in addition to any other
remedies available to the Sellers.
(d) Termination by Sellers. In the event that the Sellers fail
to consummate the transactions contemplated by the Agreement, notwithstanding
that all of the conditions to the Sellers' obligations to close in Section 8
have been satisfied, or if the closing does not occur by reason of a failure of
the conditions set forth in Section 7(a), (b), (c), (d), (i), (q), (r) or (s),
then Sellers shall reimburse the Buyer for all fees and expenses (including
legal, accounting and other professional fees and expenses) incurred by them in
connection with the transactions contemplated by this Agreement in an amount not
to exceed $100,000. The foregoing shall be in addition to any other remedies
available to the Buyer.
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<PAGE> 46
SECTION 11. PAYMENT OF CERTAIN EXPENSES.
Sellers will pay all federal, state, county and local Taxes
(including, without limitation, any requisite transfer taxes) which may be
payable by reason of the consummation of the purchase and sale of the Shares.
Subject to the foregoing, each party agrees as follows: (i) The Company will be
liable for the reasonable costs and expenses of the Company and the Sellers
incurred in connection with the negotiation, preparation, execution or
performance of this Agreement and the transactions contemplated hereby not to
exceed $100,000 and (ii) Buyer will be liable for its costs and expenses
incurred in connection with the negotiation, preparation, execution or
performance of this Agreement, whether or not such transactions are consummated
(but if such transactions are consummated, the Company may be liable for such
costs and expenses).
Sellers personally (and not the Company) shall reimburse the
Buyer (or its affiliates), or pay, at the Closing, the lesser of $200,000 or
fifty percent (50%) of the premium quoted for the purchase of environmental
insurance providing ten years of coverage and a $10 million liability limitation
for the Company.
SECTION 12. REMEDIES.
Sellers acknowledge that irreparable damage would result if
the provisions of Sections 6(c), (e) or (i) were not complied with in accordance
with their respective specific terms. Accordingly, Sellers agree that Buyer
shall have the right, in addition to any other rights or remedies it may have,
to injunctive relief, without the necessity of posting a bond, in respect of any
failure on the part of Sellers and to comply with provisions of Sections 6(c),
(e) or (i).
SECTION 13. NOTICES, ETC.
All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered in person, or the business day after delivery to an overnight courier
or delivery service, telegraphed, or transmitted by facsimile transmission
(promptly confirmed in writing) or five (5) days after being mailed by certified
or registered mail, postage prepaid:
If to Buyer:
MAS Worldwide Holding Corporation
c/o Castle Harlan, Inc.
150 East 58th Street
New York, New York 10155
Attention: Marcel Fournier
Facsimile: 212-207-8042
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<PAGE> 47
With a required copy to:
Schulte Roth & Zabel, LLP
900 Third Avenue
New York, New York 10022
Attention: Marc Weingarten, Esq.
Facsimile: 212-593-5955
If to Sellers:
Anthony Romeo:
c/o Miami Aircraft Support, Inc.
9100 South Dadeland Boulevard
One Datran Center, Suite 1250
Miami, FL 33156
Facsimile: 305-670-9484
Charles Micale
c/o Micale Management Corporation
P.O. Box 5103
Ft. Lauderdale, FL 33310
Facsimile: 954-781-0357
With a required copy to:
Roth & Scholl
1500 San Remo Avenue
Suite 176
Coral Gables, FL 33146
Attention: Jeffrey Roth, Esq.
Facsimile: 305-662-3816
Any party may, by written notice to the other, change the
address to which notices to such party are to be delivered or mailed.
SECTION 14. ENTIRE AGREEMENT; AMENDMENT.
This Agreement, the other agreements referred to herein and
entered into in connection herewith set forth the entire agreement and
understanding of the parties in respect of the transactions contemplated hereby
and supersede all prior agreements, arrangements and understandings relating to
the subject matter hereof including all such agreements, arrangements and
understandings between the Buyer, the Sellers and the Company. No
representation, promise, inducement or statement of intention has been made by
Sellers or Buyer which is not embodied in this Agreement or the other agreements
referred to herein and entered into in connection herewith, the Schedules,
Annexes or Exhibits hereto, or the written statements,
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<PAGE> 48
certificates or other documents delivered pursuant hereto, and neither Sellers
nor Buyer shall be bound by or liable for any alleged representation, promise,
inducement or statement of intention not so set forth. This Agreement may be
amended or modified only by a written instrument executed by Buyer and Seller or
by their successors and assigns.
SECTION 15. ASSIGNMENT.
This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties, except
that Buyer may assign any or all of its rights, interests, and obligations
hereunder to an Affiliate of Buyer, or a successor to the business of the
Company provided that any such Affiliate or successor agrees in writing to be
bound by all of the terms, conditions and provisions contained herein, or to a
financing source.
SECTION 16. PRESS RELEASES.
Prior to Closing, neither Sellers, on the one hand, nor Buyer,
on the other hand, shall issue any press releases or make any public
announcements of any of the transactions contemplated by this Agreement except
as may be mutually agreed to in writing by both Sellers and Buyer; provided that
after the execution of this Agreement by the parties hereto Buyer may issue any
such press release or make any such public announcement and neither Seller shall
make any such release or announcement, or any disclosure of the terms hereof,
without the prior written consent of the Buyer.
SECTION 17. GENERAL.
This Agreement: (i) shall be construed and enforced in
accordance with the laws of the State of Delaware, without giving effect to the
choice of law principles thereof; (ii) shall inure to the benefit of and be
binding upon the heirs, legal representatives and permitted assigns of Sellers
and the successor and assigns of Buyer, nothing in this Agreement, expressed or
implied, being intended to confer upon any other Person any right or remedies
hereunder, other than a successor of Buyer; and (iii) 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. The Sections and other
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Buyer and
each Seller hereby submit to the personal jurisdiction of the federal and state
courts in the States of Florida and New York and waive any objection as to venue
in the County of Miami-Dade, State of Florida or in New York, New York. Nothing
herein shall preclude Buyer or any Seller from bringing suit or taking other
legal action in any other jurisdiction. Any of the terms or conditions of this
Agreement may be waived at any time and from time to time in writing by the
party entitled to the benefits thereof without affecting any other terms or
conditions of this Agreement.
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SECTION 18. SEVERABILITY.
To the extent that any provision of this Agreement shall be
invalid or unenforceable, it shall be considered deleted herefrom and the
remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect. In furtherance and not in limitation of the
foregoing, if any provision, term, 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, then such provision, term,
covenant or restriction shall be construed to cover only that duration, extent
or activities which may be validly and enforceably covered and the remainder of
the provisions, terms, covenants and restrictions contained herein shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
SECTION 19. JURY TRIAL WAIVER.
As a material inducement to each parties' execution and
consummation of this Agreement, all parties hereto knowingly and intentionally
waive all rights to a trial by jury of any and all disputes, lawsuits, claims or
demands arising from or relating to this Agreement.
SECTION 20. ATTORNEY'S FEES.
In the event of any litigation arising from or relating to
this Agreement, or arising from or relating to the relationship of the parties
created by this Agreement ("Litigation") the prevailing party shall be entitled
to recovery from the losing party all reasonable attorney's fees and court costs
incurred by the prevailing party in such Litigation.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and year first above written.
BUYER:
MAS Worldwide Holding Corporation
By: /s/ Peter A. Pappas
-----------------------------------
Name: Peter A. Pappas
Title: President & CEO
SELLERS:
/s/ Anthony Romeo
----------------------------
Anthony Romeo
/s/ Charles Micale
----------------------------
Charles Micale
<PAGE> 51
ANNEX I
SHARES SOLD AND PURCHASE PRICE ALLOCATION
<TABLE>
<CAPTION>
Name of Seller Number of Shares % Sold Purchase Price
- -------------- --------------------- ------ --------------
Owned To be Sold
------- ----------
<S> <C> <C> <C> <C>
Anthony Romeo 1,000 1,000 100% $30.5 million
Charles Micale 1,000 1,000 100% $30.5 million
</TABLE>
No options, warrants or other securities convertible into, or
rights to purchase common stock are in existence. The 2,000 shares of Common
Stock constitute the entire outstanding shares of the Company.
<PAGE> 1
EXHIBIT 10.3
WFS HOLDINGS, INC.
1999 STOCK OPTION PLAN
1. PURPOSE. There is hereby established the WFS Holdings, Inc.
1999 Stock Option Plan (the "Plan") of WFS Holdings, Inc. (the "Company"). The
Plan is intended to motivate and retain, and to allow for stock ownership by,
certain key employees of or other individuals providing services to the Company,
Worldwide Flight Services, Inc. ("WFS") and/or its Subsidiaries (as defined
below) and to assure, by appropriate means, the maximum efforts and the
continued loyalty to the Company, WFS or its Subsidiaries of such persons. The
Plan permits granting of Incentive Stock Options and Nonqualified Stock Options
(collectively, "Options"), each as hereinafter defined, for the purchase of the
Company's Non-voting Common Stock, par value $.01 per share (the "Non-voting
Common Stock").
2. DEFINITIONS. For the purposes of this Plan:
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean with respect to a Grantee, (i) the
Grantee's willful and continued failure to substantially perform the Grantee's
duties, (ii) repeated acts of insubordination, or willful failure to execute
Company, WFS or Subsidiary plans and/or strategies, (iii) acts of dishonesty
resulting or intending to result in personal gain or enrichment at the expense
of the Company, WFS or a Subsidiary (iv) conviction of, or pleading guilty or no
contest to, a felony, all as determined by the Board in its reasonable judgment;
(v) reasonable evidence presented in writing to the Grantee that the Grantee
engaged in a criminal act involving moral turpitude or willful misconduct or
(vi) conduct not conforming to standards of good citizenship or good moral
character, or which is potentially detrimental to the Company's, WFS's or a
Subsidiary's business, reputation, character or standing, provided that, in the
case of clauses (i) and (ii), the Grantee shall be entitled to written notice
from the Company, WFS or a Subsidiary and twenty (20) days to cure such
deficiency. To the extent that a Grantee is subject to an employment agreement
or a non-competition and confidentiality agreement, breach of such employment
agreement or non-competition and confidentiality agreement shall constitute
Cause under the Plan.
"Change in Control" shall mean an event or series of events in
which (i) any persons who are not Stockholders of the Company as of the
Effective Date shall become the beneficial owners of shares of the Company which
represent fifty and one-tenth of one percent (50.1%) or more of all classes of
stock of the Company, except pursuant to a public offering of securities of the
Company or (ii) there shall occur a sale or other disposition of all or
substantially all of the assets of the Company.
"CHI" shall mean Castle Harlan, Inc. or an affiliate of CHI
and any partner thereof, including related accounts or funds managed by Castle
Harlan, Inc. or an affiliate of Castle Harlan, Inc.
"Closing" shall have the meaning as ascribed to such term in
the stock purchase
<PAGE> 2
agreement by and among MR Services Acquisition Corporation, AMR Services Holding
Corporation and AMR Corporation, dated December 23, 1998.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, or any successor statute thereto.
"Committee" shall mean the Compensation Committee of the
Board.
"Common Stock" shall mean voting common stock, par value $.01
per share, of the Company and Non-voting Common Stock.
"Company" shall mean WFS Holdings, Inc., a Delaware
corporation.
"Determination Date" shall mean the date on which IRR is
calculated for each Plan Year. In the event of a Change in Control, the
"Determination Date" shall mean the date the Change in Control occurs.
"Disability" shall mean a condition as set forth in Section
22(e)(3) of the Code, as determined by the Committee.
"EBITDA" shall mean, for any period, the amount equal to: (a)
the net income (or net loss) of the Company and its subsidiaries during such
period after deduction of all expenses (including bonuses or other incentive
compensation accrued or that will accrue, paid or payable in relation to the
year being considered), taxes and other charges, determined in accordance with
generally accepted accounting principles, less (b) any extraordinary gain, plus
(c) any provision for (or less any benefit from) income or franchise taxes
included in the determination of (a) above; plus (d) depreciation, depletion and
amortization; plus (e) the expenses of the Company and its subsidiaries charged
to income for interest on indebtedness (including the current portion thereof),
determined in accordance with generally accepted accounting principles.
"Effective Date" shall mean such date as provided in Section
18 hereof.
"Eligible Person" shall mean any key employee, consultant,
director and other person of the Company, WFS or any Subsidiary who, by action
of the Committee shall have been elected to participate upon such terms and
conditions as the Committee in its sole discretion may determine from time to
time, shall be eligible to receive Incentive Stock Options and/or Nonqualified
Stock Options.
"Exercise Price" shall mean the price for which an Option
granted under the Plan may be exercised.
"Fair Market Value" shall mean, with respect to Non-voting
Common Stock, the fair market value as determined by the Company in good faith.
"Fully Diluted CHI Ownership" shall mean the percentage of
ownership of CHI after taking into account all Options which become exercisable
in accordance with Section 6(a) regardless of whether Section 6(b) has been
satisfied.
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<PAGE> 3
"Future Equity Value" shall mean the fully diluted equity
value of CHI as of the Determination Date, calculated as follows:
As of a Determination Date which does not coincide
with a Change in Control: ((6 x EBITDA) - debt of the
Company) x Fully Diluted CHI Ownership.
In the event of a Change in Control: the actual fully
diluted equity value to be received by CHI after
taking into account all outstanding Options
exercisable pursuant to Section 6(c).
"Good Reason" shall mean, with respect to an Eligible Person,
(a) a reduction in base salary or any agreed upon benefit provided under any
employment agreement with the Eligible Person without the Eligible Person's
consent; provided, that the Company, WFS or a Subsidiary may at any time or from
time to time amend, modify, suspend or terminate any bonus, incentive
compensation or other benefit plan or program provided to the Eligible Person
for any reason and without the Eligible Person's consent if such modification,
suspension or termination is consistent with similarly situated employees; or
(b) a material adverse change in the Eligible Person's responsibilities,
position, duties, resources, personnel, reporting responsibilities or support
assigned to the Eligible Person without his or her prior consent.
"Grant Date" shall mean the date on which the Incentive Stock
Options or Nonqualified Stock Options are granted by the Committee to an
Eligible Person.
"Granted Options" shall mean the Options granted by the
Committee on the Grant Date.
"Grantee" shall mean any person to whom an Incentive Stock
Option or Nonqualified Stock Option hereunder has been granted.
"Incentive Stock Option" shall mean an option granted pursuant
to the provisions of this Plan which meets the requirements of Section 422 of
the Code.
"Initial Public Offering" shall mean a public offering of any
Shares pursuant to a registration statement filed with, and declared effective
by, the Securities and Exchange Commission, upon the consummation of which the
Shares are listed on a United States securities exchange or included in the
Nasdaq National Market, other than a registration on Form S-4 or S-8 (or their
equivalents).
"IRR" shall mean the compounded internal rate of return
calculated for the period from the Closing to the Determination Date, based on
the Original Equity Value of the Company and the Future Equity Value of the
Company, based on the following equation:
Future Equity Value = (1 + i)n x Original Equity Value
"IRR Target" shall mean an IRR of thirty-five percent (35%).
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<PAGE> 4
"Net Book Value" shall mean, on a fully-diluted basis, total
shareholders equity as set forth in the Company's most recent financial
statements minus the aggregate liquidation preference of all issued and
outstanding preferred shares of the Company divided by the total number of
Common Stock outstanding as of the date of such financial statements provided
that, in no event shall Net Book Value be less than one cent ($.01).
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Nonqualified Stock Option" shall mean any option granted
pursuant to the provisions of this Plan which is not an Incentive Stock Option.
"Non-voting Common Stock" shall mean the non-voting common
stock, par value $.01 per share, of the Company.
"Option" shall mean either an Incentive Stock Option or a
Nonqualified Stock Option.
"Option Agreement" shall mean the written agreement entered
into by the Company and each Eligible Person setting forth the terms and
provisions applicable to the grant of Options under the Plan.
"Original Equity Value" shall mean the amount invested in the
Company by CHI as of the Closing Date.
"Plan" shall mean the WFS Holdings, Inc. 1999 Stock Option
Plan.
"Plan Year" shall mean the fiscal year of the Company.
"Retirement" shall mean retirement as defined in any
applicable retirement plan of the Company, WFS or a Subsidiary.
"Shares" shall mean Common Stock and shares of Series A
preferred stock, par value $.01 per share of the Company.
"10% Stockholder" shall mean an individual who owns more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company.
"Stockholders" shall mean CHI and other shareholders as of the
Closing, any employee stock ownership plan ("ESOP"), holders of Options under
the Plan and their affiliates and permitted transferees.
"Stockholders Agreement" shall mean any stockholders'
agreement of the Company, as may be amended from time to time.
"Subsidiary" shall mean a corporation or other entity 50.1% or
more of the voting power of which may be exercised, directly or indirectly, by
WFS.
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<PAGE> 5
"WFS" shall mean Worldwide Flight Services, Inc. a Delaware
corporation and a wholly-owned subsidiary of the Company.
"Yearly Allocable Options" shall mean one-fifth (1/5) of the
Granted Options.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Committee,
or, in the absence of a Committee, the Board shall act as the Committee. The
Committee shall from time to time at its discretion select persons eligible for
Incentive Stock Options or Nonqualified Stock Options under the Plan, determine
whether any Option shall be an Incentive Stock Option or Nonqualified Stock
Option, determine the number of shares subject to such Option, set the term of
such Options, establish the aggregate number of Options that may be granted to
an Eligible Person on the Grant Date and determine other matters specifically
delegated to it under this Plan. A majority of Committee members is necessary to
form a quorum for the purposes of making decisions hereunder. The affirmative
vote of a majority of Committee members present is the act of the Committee.
(b) The Committee shall have the final authority to
interpret and construe the terms of the Plan and of any Incentive Stock Option
or Nonqualified Stock Option, and any agreements relating thereto. No member of
the Committee shall be liable for any action taken or omitted, interpretation or
construction made in good faith with respect to the Plan, or any Incentive Stock
Option or Nonqualified Stock Option. The Committee may prescribe, amend, and
rescind rules and regulations relating to the Plan and shall make all other
determinations and take such other action as it deems necessary or advisable for
administration of the Plan. All actions taken and interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Company, all Grantees and all other interested persons.
(c) The Board may fill any Committee vacancy and may
remove any member of the Committee at any time with or without cause.
(d) No member of the Committee, nor any person to
whom ministerial duties have been delegated, shall be personally liable for any
action taken or omitted, interpretation or determination made with respect to
the Plan or Options granted hereunder, and each member of the Committee and each
other director to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated shall be fully indemnified and
protected by the Company with respect to any liability he or she may incur with
respect to his or her role on such Committee or regarding the Plan.
4. ELIGIBILITY.
(a) Only an Eligible Person may receive Incentive
Stock Options and/or Nonqualified Stock Options under the Plan; provided,
however, that only those Eligible Persons who are authorized under Section 422
of the Code to receive Incentive Stock Options shall be eligible to receive an
Incentive Stock Option. An Eligible Person holding Incentive Stock Options may
be granted Nonqualified Stock Options and/or additional Incentive Stock Options
and an
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<PAGE> 6
Eligible Person holding Nonqualified Stock Options may be granted Incentive
Stock Options and/or additional Nonqualified Stock Options.
(b) Incentive Stock Options may not be granted to any
Eligible Person who at the time such Incentive Stock Option is a 10%
Stockholder, unless the purchase price of such shares of Non-voting Common Stock
issuable upon exercise is equal to one hundred ten percent (110%) of the Fair
Market Value of such shares on the date such Option is granted, and such Option
is not exercisable after the expiration of five (5) years from the date such
Option is granted.
(c) The granting of Incentive Stock Options or
Nonqualified Stock Options to any Eligible Person shall not (i) impose upon the
Company, WFS or a Subsidiary any obligation to retain the services of that
person, as an employee or otherwise, for any period, (ii) affect any rights the
Company, WFS or a Subsidiary may have with respect to termination of such
person's services to or for the Company, WFS or a Subsidiary, or (iii) confer
upon any such person any rights or privileges, except as specifically provided
for in this Plan.
5. STOCK.
(a) The stock subject to Incentive Stock Options or
Nonqualified Stock Options shall be shares of Non-voting Common Stock. Stock
issued pursuant to the exercise of Options may be authorized but unissued
Non-voting Common Stock or Non-voting Common Stock held in the Company's
treasury. The total number of shares of Non-voting Common Stock with respect to
which Incentive Stock Options and Nonqualified Stock Options may be granted may
equal but shall not exceed in the aggregate one hundred thousand (100,000)
shares. Such number of shares shall be adjusted in accordance with the
provisions of Section 6(j) of the Plan.
(b) For purposes of determining the number of shares
of Non-voting Common Stock remaining available under the Plan, if Incentive
Stock Options or Nonqualified Stock Options expire or are terminated, the
corresponding shares of Non-voting Common Stock may again be subject to either
Incentive Stock Options or Nonqualified Stock Options.
6. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS AND
NONQUALIFIED STOCK OPTIONS. Incentive Stock Options and Nonqualified Stock
Options granted pursuant to the Plan by the Committee shall be evidenced by an
Option Agreement in such form as the Committee shall from time to time
determine. The Committee may grant Options under the Plan to any Eligible
Person, exercisable for such number of shares of Non-voting Common Stock as the
Committee shall designate, subject to the provisions of this Section 6.
(a) Each Plan Year, Yearly Allocable Options shall be
tested in accordance with the following:
(1) If, on the Determination Date, the IRR
Target has been satisfied for the Plan Year, the Yearly Allocable Options shall
become exercisable in accordance with the provisions of Section 6(b).
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<PAGE> 7
(2) If, on the Determination Date, the IRR
for the Plan Year is calculated to be between twenty-five percent (25%) and the
IRR Target, a portion of the Yearly Allocable Options equal to ten percent (10%)
of the Yearly Allocable Options for each one percent (1%) by which the IRR
exceeds twenty-five percent (25%), up to one hundred percent (100%) of the
Yearly Allocable Options shall become exercisable in accordance with the
provisions of Section 6(b).
(3) If, on the Determination Date, IRR for
the Plan Year is calculated to be below twenty-five percent (25%), none of the
Yearly Allocable Options shall become exercisable.
(4) If any portion of the Yearly Allocable
Options are not exercisable pursuant to this Section 6(a) in a Plan Year, then
such portion of Yearly Allocable Options for such Plan Year shall be added to
the number of Yearly Allocable Options that become exercisable pursuant to this
Section 6(a) for the subsequent Plan Year, provided, however, that any Granted
Options that have not become exercisable pursuant to Section 6(a) by the fifth
anniversary of the Grant Date shall be forfeited.
(b) Any Yearly Allocable Options that may become
exercisable pursuant to Section 6(a) shall vest and become exercisable (i) fifty
percent (50%) on the first anniversary of the Determination Date and fifty
percent (50%) on the second anniversary of the Determination Date, provided that
the Grantee remains in the employ of the Company, WFS or a Subsidiary or (ii)
upon a Change in Control pursuant to the provisions of Section 6(c), provided
further that the Committee may, in its sole discretion, accelerate such vesting.
(c) If a Change in Control shall occur prior to the
fifth anniversary of the Grant Date, all Options that have not become
exercisable prior to the date of such Change in Control shall be treated as
follows:
(1) The IRR calculation shall be made upon
the Change in Control and this IRR calculation shall determine, in accordance
with Section 6(a), which portion of the Yearly Allocable Options for the year in
which the Change in Control occurs (the "Year C"), becomes exercisable.
(2) Options which become exercisable
pursuant to Section 6(c)(1) shall be considered exercised and, on the
Determination Date, the IRR shall be calculated again based on the resulting
increased number of shares of Common Stock. Based on this adjusted IRR, the
calculation shall be made again, in accordance with Section 6(a), for the
exercisability of Yearly Allocable Options that would have been exercisable in
the next Plan Year (the "Year C+1"). Such IRR calculation shall determine, in
accordance with Section 6(a), which portion of the Year C+1 Yearly Allocable
Options become exercisable.
(3) Options which become exercisable
pursuant to Section 6(c)(2) shall be considered exercised, and, on the
Determination Date, a new IRR shall be calculated again based on the resulting
increased number of shares of Common Stock. Based on this adjusted IRR, the
calculation shall be made again, in accordance with Section 6(a), for the
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<PAGE> 8
exercisability of Yearly Allocable Options that would have been exercisable in
the next Plan Year (the "Year C+2"). Such IRR calculation shall determine, in
accordance with Section 6(a), which portion of the Year C+2 Yearly Allocable
Options become exercisable.
Such calculations of adjusted IRR shall be
repeated until the Yearly Allocable Options have been tested for each year until
the fifth anniversary of the Grant Date.
(d) Incentive Stock Options and Nonqualified Stock
Options:
(1) Each Incentive Stock Option shall state
the number of shares of Non-voting Common Stock to which it pertains. The
aggregate Fair Market Value (determined at the time the Incentive Stock Option
is granted) of the Non-voting Common Stock with respect to which Incentive Stock
Options first become exercisable during any calendar year under the terms of
this Plan for any Grantee may not exceed one hundred thousand dollars
($100,000). For purposes of this one hundred thousand dollar ($100,000) limit,
the Grantee's Incentive Stock Options under this Plan and all plans maintained
by the Grantee's employer corporation, and its parent and subsidiary
corporations, if any, shall be aggregated.
(2) Each Nonqualified Stock Option shall
state the number of shares of Non-voting Common Stock to which it pertains.
(3) The Company and the Grantee shall
execute an Option Agreement which shall set forth the terms and conditions of
the Option as may be determined by the Committee to be consistent with the Plan,
and which may include such provisions and restrictions that are not inconsistent
with the Plan as the Committee may determine from time to time.
(4) Except to the extent specifically
provided for herein or in an Option Agreement with any Grantee, a Grantee shall
not continue to accrue vested Option rights after his death, permanent
disability, voluntary termination or involuntary termination.
(e) Exercise Price: The Exercise Price shall be the
Fair Market Value of the Non-voting Common Stock of the Company on the Grant
Date; provided, however, an Incentive Stock Option granted to a 10% Stockholder
shall have an Exercise Price that satisfies the requirements of Section 4(b).
(f) Medium and Time of Payment: The Exercise Price
with respect to Options generally shall be payable in United States dollars upon
exercise of the Incentive Stock Option or Nonqualified Stock Option and may be
paid in cash or by certified check, bank draft or money order. The Committee
may, in its discretion, at the request of a Grantee, accept prior acquired
shares of Non-voting Common Stock in partial or full payment of the Exercise
Price. Non-voting Common Stock so accepted shall be valued at its Fair Market
Value on the day prior to the date the Incentive Stock Option or Nonqualified
Stock Option is exercised. The Committee may require as a condition of accepting
prior acquired shares of Non-voting Common Stock as payment of the Exercise
Price that such stock be owned by the Grantee for a specified period of time.
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<PAGE> 9
(g) Term and Exercise of Incentive Stock Options and
Nonqualified Stock Options:
(1) No Option issued under this Plan shall
be exercisable either in whole or in part prior to approval of the Plan by a
majority of the shareholders of the Company and prior to compliance with all
requirements of law governing the issuance of such shares and exercise of
Options.
(2) Each Option Agreement shall specify that
the Option thereunder is granted for a period of ten (10) years, or such shorter
period as the Committee may determine, from the Grant Date and shall provide
that the Option shall expire on such ten (10) anniversary, or shorter period, as
the case may be (unless earlier terminated pursuant to its terms); provided,
however, that no Incentive Stock Option granted to a 10% Stockholder shall be
exercisable after the expiration of five (5) years from the Grant Date.
(3) The Committee shall have the authority
to effect, at any time and from time to time, (i) the cancellation of any or all
outstanding Options and the grant in substitution therefor of new Options
covering the same number of shares of Non-voting Common Stock and having an
Exercise Price which may be the same as the Exercise Price of the canceled
Options or (ii) the amendment of the terms of any and all outstanding Options,
provided that no amendment shall adversely affect the holders of such Options.
(h) Termination of Employment, Death, Disability or
Retirement: All Options that are not exercisable as of the date of a Grantee's
termination of employment for any reason, shall terminate as of such date.
Options that are exercisable as of the date of a Grantee's termination of
employment and Non-voting Common Stock acquired pursuant to exercise of Options
are subject to the following:
(1) In the event a Grantee's employment
shall terminate on account of death, Disability or Retirement, the Grantee (or
his or her personal representative) may exercise all Nonqualified Stock Options
or Incentive Stock Options that are vested and exercisable through the date of
termination. Nonqualified Stock Options must be exercised within the earlier of
(i) one (1) year of the date of such death, Disability or Retirement, or (ii)
the expiration date of the Nonqualified Stock Option. Incentive Stock Options
must be exercised within the earlier of (i) six (6) months of the date of such
death, Disability or Retirement, or (ii) the expiration date of the Incentive
Stock Option. Any portion of such Nonqualified Stock Option or Incentive Stock
Option not exercised within such periods shall be forfeited. The Company shall
have the right, in the Committee's sole discretion, to repurchase all vested and
exercisable Options held by the Grantee on the date of termination, at a price
equal to the difference between (i) the Fair Market Value of the shares of
Non-voting Common Stock pursuant to such Options and (ii) the Exercise Price of
such Options, provided that the Fair Market Value is greater than the Exercise
Price of such vested and exercisable Options at the time of repurchase by the
Company. In the event that the Exercise Price is greater than the Fair Market
Value at the time of a Grantee's termination of employment, such Options shall
terminate as of the date of the Grantee's termination of employment. Further,
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<PAGE> 10
the Company shall have the right, in the Committee's sole discretion, to
repurchase all shares of Non-voting Common Stock acquired upon exercise of an
Option under the Plan at the Fair Market Value of the Non-voting Common Stock.
The Company shall pay for Options or shares of Non-voting Common Stock by
delivery of a check or a wire transfer of funds. All unvested Options at the
time of the Grantee's death, Disability or Retirement shall be forfeited on the
date of the Grantee's termination of employment.
(2) In the event a Grantee's employment
shall terminate on account of discharge not for Cause, any portion of the
Grantee's Option that was vested and exercisable on the date of his or her
termination from employment on account of such discharge shall continue to be
exercisable following such termination of employment for a period of sixty (60)
days after the date of his or her termination of employment (but in no event
after the date of expiration of the Option) and any portion of such Option not
exercised within such sixty (60) day period shall be forfeited. The Company
shall have the right, in the Committee's sole discretion, to repurchase all
vested and exercisable Options held by the Grantee on the date of termination,
at a price equal to the difference between (i) the Fair Market Value of the
shares of Non-voting Common Stock pursuant to such Options and (ii) the Exercise
Price of such Options, provided that the Fair Market Value is greater than the
Exercise Price of such vested and exercisable Options at the time of repurchase
by the Company. In the event that the Exercise Price is greater than the Fair
Market Value at the time of a Grantee's termination of employment, such Options
shall terminate as of the date of the Grantee's termination of employment.
Further, the Company shall have the right, in the Committee's sole discretion,
to repurchase all shares of Non-voting Common Stock acquired upon exercise of an
Option under the Plan at the Fair Market Value of the Non-voting Common Stock.
The Company shall pay for Options or shares of Non-voting Common Stock by
delivery of a check or a wire transfer of funds. All unvested Options at the
time of such discharge not for Cause shall be forfeited on the date of the
Grantee's termination of employment.
(3) If a Grantee's employment shall
terminate on account of resignation from employment, (i) all vested Options to
the extent not exercised within sixty (60) days of the date of such employee's
resignation shall be forfeited on such sixtieth day in the case of resignation
for Good Reason, (ii) all vested Options to the extent not exercised shall
terminate immediately in the case of resignation other than for Good Reason. All
unvested Options at the time of such resignation shall be forfeited on the date
of the Grantee's termination of employment. The Company shall have the right, in
the Committee's sole discretion, to repurchase all vested and exercisable
Options held by the Grantee on the date of termination, at a price equal to the
difference between (A) the Fair Market Value of the shares of Non-voting Common
Stock pursuant to such Options and (B) the Exercise Price of such Options in the
case of resignation for Good Reason, provided that the Fair Market Value is
greater than the Exercise Price of such vested and exercisable Options at the
time of repurchase by the Company. In the event that the Exercise Price is
greater than the Fair Market Value at the time of a Grantee's termination of
employment, such Options shall terminate as of the date of the Grantee's
termination of employment. Further, the Company shall have the right, in the
Committee's sole discretion, to repurchase all shares of Non-voting Common Stock
acquired upon exercise of an Option under the Plan at (i) the Fair Market Value
of the Non-voting Common Stock in the case of resignation for Good Reason and,
(ii) the lower of the Exercise Price and the Fair Market Value of the Non-voting
Common Stock in the case
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of resignation without Good Reason. The Company shall pay for Options or shares
of Non-voting Common Stock by delivery of a check or a wire transfer of funds.
(4) If a Grantee's employment shall
terminate on account of discharge for Cause, no exercise period shall exist and
the Grantee shall forfeit all unexercised Nonqualified Stock Options and/or
Incentive Stock Options (whether or not vested) as of the date of termination.
The Company shall have the right, in the Committee's sole discretion, to
repurchase all shares of Non-voting Common Stock acquired upon exercise of an
Option under the Plan, at the lesser of (i) the Exercise Price paid by the
Grantee to acquire such Non-voting Common Stock or (ii) the Net Book Value of
such shares of Common Stock. The Company shall pay for shares by delivery of a
check or a wire transfer of funds.
(5) In the event the Company repurchases
shares of Non-voting Common Stock, the Company, as purchaser of Non-voting
Common Stock hereunder, will be entitled to receive customary representations
and warranties as to title, no liens, authority and capacity to sell from the
Grantee (or his or her personal representative) regarding such sale and to
require signatures of the Grantee (or his or her personal representative) to be
guaranteed.
(6) To the extent not then exercisable or
exercised in accordance with this Section, the Incentive Stock Options or
Nonqualified Stock Options of a Grantee who resigns or whose employment or other
services to the Company, WFS or a Subsidiary terminates shall terminate on the
date his or her employment or services terminates. Any vested and exercisable
Incentive Stock Option or Nonqualified Stock Option held by a Grantee which is
not timely exercised in accordance with the provisions of this Section 6(h)
shall terminate.
(7) Termination of a person's services, as
an employee or otherwise, shall be considered to occur when such person is no
longer retained to provide services to the Company, WFS or a Subsidiary. Any
Incentive Stock Option or Nonqualified Stock Option exercisable after death may
be exercised by the decedent's personal representative(s).
(i) Drag-Along Right. (1) At any time prior to the
consummation of an Initial Public Offering, if CHI proposes to transfer, in a
single transaction or a series of related transactions (to the same purchaser or
affiliated purchasers), to any person not affiliated with CHI more than 50% of
the Shares owned by CHI in a bona fide transaction to an unaffiliated third
party (regardless of whether such disposition is by means of a sale of such
Shares, a merger of the Company in which such Shares are converted into the
right to receive cash, or a sale of all or substantially all of the assets of
the Company and a subsequent distribution of the proceeds therefrom), CHI shall
be entitled, by delivery of thirty (30) days prior written notice to Eligible
Persons (or their personal representatives), specifying the name and address of
the proposed parties to such transaction and the terms thereof, to require that
each such Eligible Person (or his or her personal representative) sell a number
of (i) shares of Non-voting Common Stock acquired pursuant to the exercise of an
Option under the Plan and (ii) vested and exercisable Options as described below
held by him or her equal to the product of (x) the sum of (a) the outstanding
number of such shares of Non-voting Common Stock plus (b) the number of vested
and exercisable Options owned by such Eligible Person (or his or her personal
representative) as of the last day of such thirty (30) day period, multiplied by
(y) the quotient determined by dividing (a) the outstanding number of such
Shares being transferred by CHI and (b) the outstanding number of such Shares
owned by CHI as of the last day of
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<PAGE> 12
such 30-day period, upon the same terms as CHI, as the case may be, in the
proposed transaction, and such Eligible Person (or his or her personal
representative) shall comply and sell his or her shares of Non-voting Common
Stock, provided that:
In the event that CHI exercises its drag-along right
pursuant to Section 6(i)(1), CHI shall have the right, in its sole discretion,
in cancellation of any vested and exercisable Options held by an Eligible Person
(or his or her personal representative), to require that such Eligible Person
sell such Options, instead of or together with shares of Non-voting Common
Stock, as part of the number of shares of Non-voting Common Stock that would be
required to be sold by an Eligible Person (or his or her personal
representative) in accordance with Section 6(i)(1), for a price equal to (a) the
difference between (i) the fair market value of the cash and other consideration
to be received by an Eligible Person (or his or her personal representative) in
accordance with Section 6(i)(1) and (ii) the Exercise Price of such Options,
provided that the fair market value of the cash and other consideration to be
received by an Eligible Person (or his or her personal representative) in
accordance with Section 6(i)(1) is greater than the Exercise Price at the time
of purchase of such Options by the Company or (b) zero otherwise.
(2) If CHI exercises its drag-along right in
accordance with Section 6(i)(1) in a transaction that also represents a Change
in Control, then subject to 6(c), all unvested Options held by an Eligible
Person (or his or her personal representative) at such time shall terminate.
(3) The closing of any transaction pursuant
to this Section 6(i) shall be held at such time and place as CHI shall
reasonably specify. At such closing, the selling Eligible Persons (or their
personal representatives) shall deliver stock certificates (if such certificates
have been issued pursuant to Section 6(l)) representing the shares of Non-voting
Common Stock to be sold, duly endorsed for transfer and accompanied by all
requisite stock transfer taxes, if any, against payment of the purchase price
therefor, and the shares of Non-voting Common Stock to be transferred shall be
free and clear of any liens, charges, claims or encumbrances (other than
restrictions imposed pursuant to applicable Federal and state securities laws),
and each selling Eligible Person (or his or her personal representative) shall
so represent and warrant. Each selling Eligible Person (or his or her personal
representative) shall further represent and warrant that he or she is the record
and beneficial owner of such shares of Non-voting Common Stock and make such
additional representations and warranties as shall be customary in transactions
of a similar nature.
(j) Recapitalization, Merger, Consolidation and
Similar Transactions:
(1) Subject to any required action by
shareholders, the aggregate number of shares of Non-voting Common Stock on which
Incentive Stock Options or Nonqualified Stock Options may be granted hereunder,
the number of shares thereof covered by each outstanding Incentive Stock Option
and Nonqualified Stock Option, and the Exercise Price of each Incentive Stock
Option and Nonqualified Stock Option shall be adjusted as the Committee shall
determine is
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<PAGE> 13
appropriate in the event of any subdivision or consolidation of shares or the
payment of a stock dividend on the Non-voting Common Stock other than a stock
dividend that is a substitute for a cash dividend, or any other increase in the
number of such shares effected without receipt of consideration by the Company,
or any recapitalization, merger, consolidation, split-up, combination,
surrender, or any similar change affecting the number and kind of shares which
thereafter may be subject to an Option and sold under the Plan and the number
and kind of shares subject to an Option in outstanding Option Agreements and the
Exercise Price per share thereof provided no such adjustment in Exercise Price
may reduce the Exercise Price to an amount per share which is less than the par
value of such share.
(2) Subject to any required action by
shareholders, if the Company shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation in which the Company is the
surviving corporation but the holders of Common Stock receive securities of
another corporation), any Incentive Stock Option or Nonqualified Stock Option
granted hereunder shall pertain to and apply to the securities to which a holder
of the number of shares of Common Stock equal to the number of shares subject to
the Incentive Stock Option or Nonqualified Stock Option would have been
entitled. In the event of the dissolution or liquidation of the Company, a
merger of the Company, a merger or consolidation in which the Company is not the
surviving corporation or a merger or consolidation in which the Company is the
surviving corporation but the holders of Common Stock receive securities of
another corporation, the Committee shall, in its discretion, have the power,
prior to such event, (i) to cancel any or all Incentive Stock Options or
Nonqualified Stock Options which are then exercisable and, in consideration of
such cancellation, pay to each Grantee a cash or other payment with respect to
each share of Non-voting Common Stock as to which an Incentive Stock Option or
Nonqualified Stock Option is then exercisable equal to the difference between
the value per share of the consideration, as determined by the Committee in its
discretion, received by holders of Common Stock as a result of such dissolution,
liquidation, merger or consolidation and the Exercise Price, and to terminate
without consideration or accelerate in all or part the Incentive Stock Options
and Nonqualified Stock Options not then exercisable; or (ii) if the holders of
Common Stock receive property other than cash as a result of such dissolution,
liquidation, merger or consolidation, to provide for the exchange of an
Incentive Stock Option or Nonqualified Stock Option which is then exercisable
for an Incentive Stock Option or Nonqualified Stock Option on some or all of
such property and, incident thereto, make an equitable adjustment, as determined
by the Committee, in the Exercise Price of each affected Incentive Stock Option
or Nonqualified Stock Option, the number of shares or other property subject to
the Incentive Stock Option or Nonqualified Stock Option and, if appropriate,
provide for a cash or other payment to the Grantees in partial consideration for
the exchange for their Incentive Stock Option or Nonqualified Stock Option and
to terminate without consideration or accelerate in all or part of all Incentive
Stock Options or Nonqualified Stock Options not then exercisable. The foregoing
adjustment shall be made by the Committee, whose determination in that respect
shall be final, binding and conclusive. The Committee may make such other
changes it deems appropriate in its sole discretion to comply with applicable
legislative or regulatory requirements.
(3) If changes in capitalization of the
Company other than those referred to above shall occur, the Committee shall make
such adjustments in the number and class
13
<PAGE> 14
of shares for which Incentive Stock Options or Nonqualified Stock Options may
thereafter be granted or in the number and class of shares remaining subject to
Incentive Stock Options or Nonqualified Stock Options then outstanding and in
the Exercise Price as the Committee may consider appropriate to prevent dilution
or enlargement of rights.
(4) Except as provided in this Section 6(j),
the Grantee shall have no rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class, any
dissolution, liquidation, merger, consolidation or change in control or any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class and no adjustment by reason thereof shall be
made with respect to the Exercise Price of or number of shares of Non-voting
Common Stock subject to an Incentive Stock Option or Nonqualified Stock Option.
(k) Surrender of Prior Awards: As a condition to any
grant to an Eligible Person of Options under the Plan, the Committee shall have
the right, at its discretion, to require such Eligible Person to surrender to
the Company for cancellation any or all of the outstanding Options to purchase
shares of Common Stock previously granted to such Eligible Person under the
Plan, any other option plan of the Company, or any plan of any predecessor of
the Company.
(l) Stock Certificates: The Company shall issue a
certificate for shares of Non-voting Common Stock in the name of the Grantee (or
other person exercising the Option in accordance with the applicable provisions
of this Plan) for the shares of Non-voting Common Stock purchased by exercise of
an Option as soon as practicable after due exercise and payment of the aggregate
Exercise Price for such shares. The following legend shall appear on all
certificates for shares of Non-voting Common Stock issued under the Plan upon
the exercise of Options:
THE SHARES OF WFS HOLDINGS, INC. NON-VOTING COMMON
STOCK EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND RESTRICTIONS OF THE WFS HOLDINGS, INC.
1999 STOCK OPTION PLAN. SUCH SHARES MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, ENCUMBERED OR
OTHERWISE ALIENATED OR HYPOTHECATED EXCEPT PURSUANT
TO THE PROVISIONS OF SUCH PLAN AND SUCH AGREEMENTS AS
MAY HAVE BEEN ENTERED INTO PURSUANT THERETO. A COPY
OF SUCH PLAN AND AGREEMENTS ARE AVAILABLE FROM WFS
HOLDINGS, INC. UPON REQUEST. THE SHARES REPRESENTED
BY THIS CERTIFICATE WERE NOT REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
Notwithstanding the foregoing, the
certificates representing shares of Non-voting Common Stock acquired by the
exercise of an Option may bear such other legend as the Company may consider
appropriate.
(m) Non-Uniform Determinations: The Committee's
determinations under the Plan (including, without limitation, determinations of
the persons to receive Options, the form, term, provisions, amount and the
timing of the grant of such Options and the Option
14
<PAGE> 15
Agreements evidencing the same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, Options under
the Plan, whether or not such persons are similarly situated.
(n) Listing, Registration and Compliance with Laws
and Regulations or Other Agreements: The Plan, the grant and exercise of Options
hereunder, and the obligation of the Company to sell and deliver shares under
such Options, shall be subject to all applicable federal and state laws, rules
and regulations and to such approvals by any government or regulatory agency as
may be required. The Company, in its discretion, may postpone the issuance or
delivery of shares upon any exercise of an Option until completion of any stock
exchange listing or any other qualification of such shares under any state or
federal law, rule or regulation as the Company may consider appropriate. Options
shall be subject to the requirement that if at any time the Committee or the
Board, as the case may be, shall determine, in its discretion, that the listing,
registration or qualification of the shares subject to the Options upon any
securities exchange or under any state or federal securities or other law or
regulation, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition to or in connection with the granting of
the Options or the issuance or purchase of shares thereunder, no Options may be
granted or exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee or the Board. The holders of such
Options shall supply the Company with such certificates, representations and
information as the Company shall request and shall otherwise cooperate with the
Company in obtaining such listing, registration, qualification, consent or
approval. In the case of officers and other persons subject to Section 16(b) of
the 1934 Act, the Committee or the Board may at any time impose any limitations
upon the exercise of an Option that, in the Committee's or the Board's
discretion, are necessary or desirable in order to comply with such Section
16(b) and the rules and regulations thereunder. If the Company, as part of an
offering of securities or otherwise, finds it desirable because of federal or
state regulatory requirements to reduce the period during which any Options may
be exercised, the Committee or the Board, may, in its discretion and without the
Grantee's consent, so reduce such period on not less than fifteen (15) days
written notice to the holders thereof.
(o) Nontransferability of Options: Options may not be
transferred or assigned other than by will or the laws of descent and
distribution and, during the lifetime of the Grantee, may be exercised only by
such Grantee (or his legal guardian or legal representative) and no other person
shall acquire any rights therein. In the event of the death of a Grantee,
exercise of Options granted hereunder shall be made only:
(1) by the executor or administrator of the
estate of the deceased Grantee or the person or persons to whom the deceased
Grantee's rights under the Option shall pass by will or the laws of descent and
distribution; and
(2) to the extent that the deceased Grantee
was entitled thereto at the date of his death, unless otherwise provided by the
Committee in such Grantee's Option Agreement.
15
<PAGE> 16
(p) Transfer Restrictions on Non-voting Common Stock.
Prior to the consummation of an Initial Public Offering, shares of Non-voting
Common Stock acquired upon the exercise of any Option granted under the Plan may
not be sold, transferred, assigned, pledged, encumbered or otherwise alienated
or hypothecated except to the Company in accordance with the terms of the Plan
or pursuant to a will or the laws of descent and distribution.
(q) No Rights as a Shareholder: A Grantee or a
transferee of an Incentive Stock Option or Nonqualified Stock Option shall have
no rights as a shareholder with respect to any shares covered by his or her
Option or right until the date as of which stock is issued following exercise of
such Option or right. Except as herein provided, no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or any other distributions for which the record date is prior to the
date as of which such stock is issued. Nothing contained in this Plan relating
to any Option granted hereunder shall create any obligation on the part of the
Company to repurchase any Options granted hereunder, or shares of Non-voting
Common Stock acquired through the exercise of any Option granted hereunder.
(r) Withholding of Taxes: No Incentive Stock Option
or Nonqualified Stock Option may be exercised unless the Grantee has paid or has
made provision satisfactory to the Committee for payment of, federal, state and
local income taxes, or any other taxes (other than stock transfer taxes) which
the Company may be obligated to collect as a result of the issue or transfer of
Non-voting Common Stock upon such exercise of an Incentive Stock Option or
Nonqualified Stock Option satisfied wholly or partly in Non-voting Common Stock.
In its sole discretion, and at the request of a Grantee, the Committee may
permit a Grantee to satisfy the obligation imposed by this Section, in whole or
in part, by instructing the Company to withhold up to that number of shares
otherwise issuable to the Grantee with a Fair Market Value equal to the amount
of tax to be withheld.
(s) Notification of Sales of Non-voting Common Stock:
Any Eligible Person who disposes of shares of Non-voting Common Stock acquired
upon the exercise of an Incentive Stock Option either (i) within two (2) years
from the date of the grant of the Incentive Stock Option under which the
Non-voting Common Stock was acquired or (ii) within one (1) year after the
transfer of such shares of Non-voting Common Stock to the Eligible Person, shall
notify the Company of such disposition and of the amount realized upon such
disposition.
(t) Other Provisions: The Committee may, as a
condition precedent to the exercise of any Incentive Stock Option or
Nonqualified Stock Option require the Grantee of the Incentive Stock Option or
Nonqualified Stock Option (including, in the event of the Grantee's death, his
or her legal representatives, legatees or distributees) to enter into an
agreement or to make such representations as may be required to make lawful the
exercise of the Incentive Stock Option or Nonqualified Stock Option and the
ultimate disposition of the shares acquired by such exercise. The Option
Agreements authorized under the Plan pursuant to which Incentive Stock Options
or Nonqualified Stock Options are granted shall contain such other provisions,
consistent with the Plan, as the Committee shall deem advisable.
16
<PAGE> 17
7. INDEMNIFICATION OF BOARD AND COMMITTEE. The Company shall
indemnify, to the full extent permitted by law, each person made or threatened
to be made a party to any civil or criminal action or proceeding by reason of
the fact that he or she, or his or her testator or intestate, is or was a member
of the Board or the Committee. No member of the Board or the Committee shall be
personally liable by reason of any contract or other instrument executed by such
member or on such member's behalf in such member's capacity as a member of the
Board or the Committee nor for any action, failure to act or mistake of judgment
made in good faith or action or failure to act. The Company shall indemnify and
hold harmless each employee, officer or director of the Company to whom any duty
or power relating to the administration or interpretation of the Plan may be
allocated or delegated, against any cost or expense (including counsel fees) or
liability (including any liability in settlement of a claim with the approval of
the Board) arising out of any act or omission to act in connection with the Plan
unless arising out of such person's own fraud or bad faith.
8. AMENDMENT OF THE PLAN. The Board or the Committee may from
time to time and/or in the event of a Change in Control and with prospective or
retroactive effect, suspend or discontinue the Plan or any portion thereof or
revise or amend it in any respect whatsoever except that, without approval of
the shareholders, no such revision or amendment shall increase the number of
shares subject to the Plan, decrease the price at which Options or rights may be
granted, increase the amount to be received on exercise of a right or Option,
materially increase the benefits accruing to Grantees under the Plan, or
materially modify the requirements as to eligibility for participation in the
Plan; and no such suspension, discontinuance, revision or amendment shall in any
manner affect any Option or right therefore granted without the consent of the
Grantee or the transferee of the Option or right. Any Plan amendment shall be
effected by action of the Committee or of the Board.
9. APPLICATION OF FUNDS. Any cash proceeds received by the
Company from the issuance of Non-voting Common Stock pursuant to the exercise of
Options will be used for general corporate purposes.
10. NO OBLIGATION TO EXERCISE INCENTIVE STOCK OPTION OR
NONQUALIFIED STOCK OPTION. The granting of an Option shall impose no obligation
upon the Grantee to exercise such Option.
11. COMPLIANCE WITH CERTAIN LAWS.
(a) The Company intends that issuances and exercise
of Incentive Stock Options comply with Section 422 of the Code. Should any
provision of the Plan not be necessary to comply so with the requirements of
Section 422 of the Code or should any additional provision be necessary for the
Plan and grants and exercises of Options thereunder to so comply, the Board or
Committee may amend the Plan to add or modify provisions of the Plan
accordingly.
(b) Should any Option or portion thereof designated
or granted by the Committee as an Incentive Stock Option fail to meet the
requirements of Section 422 of the Code, for any reason whatsoever upon the
issuance, exercise, sale of shares received on the exercise or otherwise, then,
in such event, the Grantee shall be deemed for all purposes of this Plan to have
17
<PAGE> 18
been granted a Nonqualified Stock Option covering the same number of shares, at
the same price, with the same duration and exercisable on the same terms as the
Incentive Stock Option or portion thereof which failed to meet the requirements
of Section 422 of the Code.
12. RIGHTS AND PRIVILEGES. The granting of an Option to a
Grantee does not confer upon any such person any rights or privileges except as
specifically provided for in this Plan.
13. INVESTMENT REPRESENTATION. Each Option Agreement may
contain an undertaking that, upon demand by the Committee for such a
representation, the Grantee (or any person acting under Section 6(o)) shall
deliver to the Committee at the time of any exercise of an Option a written
representation that the shares of Non-voting Common Stock to be acquired upon
such exercise are to be acquired for such Grantee's own account and not with a
view to, or for resale in connection with, any distribution. Upon such demand,
delivery of such representation prior to the delivery of any shares issued upon
exercise of an Option shall be a condition precedent to the right of the Grantee
or such other person to purchase any shares.
14. STOCKHOLDERS AGREEMENT. The Company may, in its
discretion, require that an Eligible Person, or his beneficiary or legal
representative, who exercises an Option granted under the Plan become a party to
the provisions of the Stockholders Agreement of the Company prior to the time
that such Eligible Person, beneficiary or legal representative acquires shares
of Non-voting Common Stock of the Company pursuant to the exercise of such
Option under the Plan. If required by the Company, the execution of such
Stockholders Agreement shall be a condition precedent to the right to purchase
any shares of Non-voting Common Stock of the Company.
15. SEVERABILITY. In the event that any provision of the Plan
shall be held illegal or invalid for any reason, such illegality or invalidity
shall not affect the remaining parts of the Plan, and the Plan shall be
construed and enforced as if the illegal or invalid provision had not been
included.
16. GENDER. Whenever used in the Plan, the masculine gender
includes the feminine.
17. GOVERNING LAW. To the extent not preempted by federal law,
the Plan, and all Option Agreements hereunder, shall be construed in accordance
with and governed by the laws of the State of New York applicable to contracts
made and to be performed entirely within the State.
18. EFFECTIVE DATE. The Plan shall become effective as of
July 1, 1999.
18
<PAGE> 1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is effective on
October 1, 1998, and is between Peter A. Pappas ("Executive") and AMR Services
Corporation (the "Company"). For good and valuable consideration, the
sufficiency of which is recognized and acknowledged by Executive and Company,
each of Executive and Company agree to the following:
1. Term/Commitment.
A. This Agreement will begin on October 1, 1998, and will
terminate (unless earlier terminated pursuant to this Agreement) on September
30, 2001. This Agreement may be extended beyond September 30, 2001 by the mutual
agreement of the parties.
B. Upon the terms and subject to the conditions contained in
this Agreement, the Executive agrees to provide full-time services for the
Company as its President and Chief Executive Officer. The Executive agrees to
devote his best efforts to the business of the Company, and to perform his
duties in a diligent trustworthy, and business-like manner. The Company agrees
that during the term of this Agreement Executive's duties will be reasonably
commensurate with those normally associated with his title.
2. Compensation.
During the term of this Agreement:
A. Executive's base salary will be $235,000 per year. This
base salary (with allowances for withholding taxes required to be withheld by
the Company) will be paid to Executive no less frequently than on a monthly
basis. Executive's base salary will be reviewed and considered for adjustment by
the Company at least annually. The Company will not, however, reduce the
Executive's base salary at any time during the term of this Agreement without
the Executive's written consent.
B. Executive will participate in the Company's incentive
compensation plan (or successor plan, each the "Plan"). The relevant terms of
the Plan are set forth in Attachment A. Executive's participation in the Plan
will be on a pro-rata monthly basis and Executive's target award under the Plan
will be a yearly payment equal to 50% of Executive's then current base salary:
provided, that in no event will Executive's payment under the Plan be less than
$50,000 per year. Payment under the Plan will occur as soon as practical
following the end of the applicable Plan's year; provided, that payment will be
made on or before April 1 following the end of the applicable Plan's year. For
the avoidance of doubt, for the 1998 calendar year Executive will receive an
incentive compensation payment as set forth in that letter between Executive and
the Company dated 20 November 1998.
<PAGE> 2
C. Upon the expiration of this Agreement on September 30, 2001
(or such other date mutually agreed by the parties, each the "Expiration Date").
Executive will receive an amount equal to the sum of all payments made pursuant
to Section 2.B (the "Expiration Bonus"). Provided, however, that if during the
term of this Agreement Company sponsors an equity based compensation plan and
offers Executive the opportunity to participate in such plan, on the Expiration
Date the value of Executive's participation (the "Stock Value") will be
determined by an independent compensation consultant of national reputation and
the expenses of such consultant will be paid for by the Company. Should the
Stock Value be equal to or greater than the value of the Expiration Bonus, no
Expiration Bonus will be paid. To the extent the Stock Value is less than the
value of the Expiration Bonus, the Company will make a lump-sum payment to
Executive equal to such differential. Any payment pursuant to this Section 2.C
will be made within 60 days of the Expiration Date.
D. If Executive's employment is terminated by the Company not
for Cause (as defined in Section 3.A) or by Executive for Good Reason (as
defined in Section 3.C) Executive will receive an amount equal to the sum of all
payments made, or to be made, pursuant to Section 2.B (the "Termination Bonus").
The Termination Bonus will be calculated in accordance with Section 3 of this
Agreement.
E. Executive will continue to have the right to use his 1997
BMW 318i for the term of this Agreement. At its option, the Company may
substitute a cash allowance in lieu of a lease, provided such cash allowance is
adequate to make Executive financially indifferent on an after tax basis.
Executive will make all co-payments required to continue the lease for this
automobile.
F. Executive will continue to have the right to use the
membership at the Las Colinas Sports Club for the term of this Agreement for as
long as the Company is owned by AMR Corporation. At such time that the Company
is sold by AMR Corporation, the Company may substitute another membership at the
Las Colinas Sports Club or a cash allowance in lieu of such membership, provided
such cash allowance is adequate to make Executive financially indifferent on an
after tax basis.
G. Executive will be entitled to 20 days of paid vacation
during each full year of this Agreement. Vacation days will be taken at such
times as are consistent with the reasonable business needs of the Company.
H. The Company will reimburse Executive for all reasonable
out-of-pocket expenses incurred by Executive in the course of his duties, in
accordance with Company policies in effect from time to time.
I. Executive will be entitled to participate in the employee
benefit programs generally available to employees of the Company, and to all
normal perquisites provided to senior executives of the Company.
J. For the avoidance of doubt, in the event a Termination
Bonus is paid pursuant to this Agreement then, in no event will an Expiration
Bonus be paid. Likewise, if an
<PAGE> 3
Expiration Bonus is paid pursuant to this Agreement, then, in no event, will a
Termination Bonus be paid.
3. Termination of Employment.
A. If during the term of this Agreement, Executive's
employment is terminated by the Company without Cause, Executive will (i)
receive his base salary, (ii) receive the Termination Bonus contemplated by
Section 2.D and calculated in accordance with Section 3.D and (iii) have use of
the automobile and club membership (or the allowances therefor) contemplated by
Sections 2.E and 2.F as if this Agreement had continued for its full term.
Payments for the amounts set forth in (i) and (ii), of this Section 3.C) A will
be calculated as if Executive had been employed for the full term of this
Agreement and will be made to Executive in a lump sum no later than 60 days
following the termination of his employment. For purposes of this Agreement,
"Cause" means a felony conviction of Executive or the failure of Executive to
contest prosecution for a felony, or Executive's willful misconduct or
dishonesty, any of which is directly and materially harmful to the business or
reputation of the Company or any of its subsidiaries or affiliates.
B. If Executive terminates his employment with the Company
during the term of this Agreement without Good Reason (as defined in Section
3.Q, or if the Company terminates Executive's employment for Cause, then this
Agreement will terminate and the Company's sole obligation will be to pay
Executive his base salary (pro rata as necessary) through the date of
termination of employment.
C. If Executive's employment is terminated by Executive with
Good Reason, during the term of this Agreement, Executive will (i) receive his
base salary, (ii) receive the Termination Bonus contemplated by Section 2.D and
calculated in accordance with Section 3.D, and (iii) have use of the automobile
and club membership (or the allowances therefor) contemplated by Sections 2.E
and 2.F for the remaining term of this Agreement. Payments for the amounts set
forth in (i) and (ii) of this Section 3.C will be calculated as if Executive had
been employed for the full term of this Agreement and will be made to Executive
in a lump sum no later than 60 days following the termination of his employment.
For purposes of this Agreement, "Good Reason" means the occurrence of any of the
following (without Executive's written consent): Executive's
duties/responsibilities changed materially; Executive's primary work place is
moved to a location more than 50 miles from Executive's residence at 5544 Park
Lane, Dallas, TX (such residence, or any future dwelling occupied by Executive
as his primary residence, to be the "Current Residence"); any material, adverse
change is made to Executive's perquisites, including but not limited to, health
and dental care, automobile allowance, club allowance, financial planning advice
allowance; or the Company fails to make any payment due under this Agreement. To
terminate this Agreement for Good Reason, Executive must provide the Company
with 90 days' advance notice of his intention to terminate and must set forth
with particularity the reason(s) for such termination. If the Company remedies
the reason(s) set forth in Executive's notice within such 90 days' period, the
notice of termination will be of no effect.
<PAGE> 4
D. The Termination Bonus contemplated by Section 2.D will be
calculated using the incentive compensation payments actually paid to Executive
and, if incentive compensation payments remain to be paid under this Agreement
the amount of each such incentive compensation payment remaining to be paid will
be equal to Executive's base salary in effect on the date his employment is
terminated.
4. Relocation.
A. If during the term of this Agreement, the Company requires
Executive to perform his duties at a location that is more than 50 miles from
the Current Residence (the "New Location") and Executive agrees to this
relocation, the Company will pay (or reimburse Executive) for all reasonable
moving expenses incurred by him in connection with this relocation. In addition,
the Company will indemnify Executive against any Loss (where "Loss" is defined
as the difference between the actual sales price of the Current Residence and
the higher of (i) his aggregate investment in the Current Residence or (ii) the
fair market value of the Current Residence as determined by a real estate
appraiser designated by the Company and reasonably satisfactory to Executive)
realized on the sale of the Current Residence in connection with the relocation.
Further, Executive's base salary will be increased for the remaining term of
this Agreement if the New Location has a higher cost of living. This increase in
base salary will be proportional to the cost of living differential between the
location of the Current Residence and the New Location, and will be determined
in accordance with an index that indicates the cost of living differential
between various U.S. metropolitan areas. The index will be selected by the
Company and published by the U.S. Department of Labor.
B. If within one year from the date of Executive's relocation
pursuant to Section 4.A his employment with the Company is terminated by (i) the
Company without cause or (ii) Executive with Good Reason (it being understood
that Good Reason for purposes of this Section 4.B excludes relocation as
contemplated by Section 3.C), the Company will, upon Executive's request, pay
(or reimburse Executive) for all reasonable moving expenses incurred by him in
relocating his principal residence to Dallas, TX or another location within the
United States designated by Executive. In addition, the Company will indemnify
Executive against any Loss realized on the sale of the Executive's principal
residence in connection with a relocation as contemplated under this Section
4.B; provided, however, that if Executive wishes to relocate to a location other
than Dallas, TX, Executive will pay any relocation expenses in excess of the
costs that would have been incurred for a relocation to Dallas, TX.
5. Death/Disability.
A. Should Executive die during the term of this Agreement,
this Agreement will terminate and the Company will pay to Executive's devisee,
legatee or other designee (or, if there is no such designee, his estate), a
payment calculated as if Executive's employment had been terminated not for
Cause pursuant to Section 3.A.
B Should Executive become Disabled during the term of this
Agreement, the Company will continue to pay to Executive for the remaining term
of this Agreement all amounts payable under Sections 2.A, 2.B and 2.C and will
continue to allow Executive for such remaining
<PAGE> 5
term the use of the automobile and club as contemplated by Sections 2.E and 2.F.
The Company will maintain in full force and effect for the continued benefit of
Executive, until the end of the term of this Agreement, all employee benefit
plans and programs or arrangements in which Executive was entitled to
participate immediately prior to the date Executive became Disabled. In the
event that the Executive's participation in such plan, program or arrangement is
not feasible, the Company will provide Executive with benefits substantially
similar to those to which he was entitled immediately prior to his becoming
Disabled. Amounts payable under this Section 5.B will be in addition to any
amounts paid under any disability insurance policies that may be maintained in
Executive's favor. For purposes of this Agreement, Disabled means Executive's
qualification for long-term disability benefits under the Company's disability
plan or insurance policy. If no such plan or policy is in existence (or if
Executive does not participate in such plan or policy), Disabled means Executive
is unable to perform his employment duties for a period of four continuous
months (or four months in any six-month period) because of ill health or
physical or mental disability.
6. No Mitigation.
Payments made to Executive under the terms of this Agreement
are acknowledged by the Company to be reasonable, and Executive will not be
required to mitigate the amount of any such payments by seeking other
employment. Further, profits, income, earnings or other benefits paid to
Executive by the Company or a third party, pursuant to arrangements outside this
Agreement, will not create a fight of offset or other reduction in favor of the
Company.
7. Enforcement of Agreement.
If (i) it reasonably appears to Executive that the Company has
failed to comply with any of its obligations under this Agreement, (ii) the
Company or any other person takes or threatens to take any action to declare
this Agreement void or unenforceable, or (iii) the Company or any other person
commences litigation or any other action or proceeding designed to deny, or to
recover from, Executive any or all of the benefits provided or intended to be
provided by this Agreement, the Company authorizes Executive to retain counsel
of Executive's choice, to advise and represent Executive in connection with any
such interpretation, enforcement or defense, including without limitation the
initiation or defense of any litigation or other legal action, whether by or
against the Company. Without regard to whether Executive prevails, in whole or
in part, in connection with any of the foregoing, the Company will pay any and
all reasonable attorneys' and related fees and expenses incurred by Executive in
connection with any of the foregoing.
8. Change in Control.
If a Change of Control occurs with respect to the Company,
Executive's employment with the Company will be deemed to have been terminated
not for Cause. "Change in Control" does not mean any of the transactions
contemplated in the sale of the Company by AMR Corporation. From October 1,
1998, until the sale of the Company by AMR Corporation, "Change in Control" will
have the meaning set forth in the 1998 Long Term Incentive Plan, as amended, of
AMR Corporation.
<PAGE> 6
9. Confidential Information.
Executive agrees that all documents, records, techniques,
business secrets and other information which come into his possession during his
employment with the Company will be deemed to be confidential and proprietary to
the Company and, except for personal documents and records of Executive, will be
returned to the Company upon termination of this Agreement. Executive further
agrees to retain in confidence any confidential information known to him
concerning the Company and its subsidiaries and their respective businesses so
long as such information is not publicly disclosed, except that Executive may
disclose any such information in the normal course of his employment with the
Company or pursuant to any court order or other legal process.
10. Covenant Not to Compete.
If Executive's employment is terminated for Cause or without
Good Reason, Executive agrees to execute a covenant not to compete that is
reasonable as to time and place.
11. Governing Law.
THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF
THIS AGREEMENT WILL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT
REGARD TO CHOICE OF LAW PRINCIPLES.
12. Successors.
The Company will require any successor to all, or
substantially all, of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. This Agreement will inure to the benefit of, and be enforceable
by, Executive's personal, or legal representative executors, administrators,
successors, heirs. distributees, devisees and legatees. If Executive dies while
any amounts are due him under this Agreement. all such amounts will be paid in
accordance with the terms of this Agreement to his devisee, legatee or other
designee or, if there is no such designee, to his estate.
13. Notices.
Any communication under this Agreement, including notices,
consents, requests or approvals, will be in writing and will be deemed to have
been given (i) when hand delivered or dispatched by electronic facsimile
transmission, (ii) five business days after having been mailed by United States
registered or certified mail, return receipt requested, postage prepaid, or
(iii) three business days after having been sent by a nationally recognized
overnight courier service such as FedEx, UPS, or Purolator, addressed to the
Company (to the attention of the Secretary of the Company) at its principal
executive office and to Executive at his principal residence, or to such other
address as any party may have furnished to the other in writing.
<PAGE> 7
14. No Waiver/Entire Agreement.
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is set forth in a
writing signed by Executive and the Company. No waiver by either party of any
breach of, or compliance with, any condition or provision of this Agreement will
be deemed a waiver of similar or dissimilar provisions or conditions. No oral
agreements or representations, express or implied, with respect to the subject
matter of this Agreement have been made which are not set forth expressly in
this Agreement and/or the letter dated 20 November 1998, referenced in the last
sentence of Section 2.B.
15. Severability/Surviving Sections.
A. The invalidity or unenforceability of any provisions of
this Agreement will not affect the validity or enforceability of any other
provision of this Agreement, which will remain in full force and effect.
B. The following Sections of this Agreement will survive its
termination: 2.C, 2.D, 3.A, 3.C, 3.D, 4.A, 5.A, 6, 7, 9, 10, 11, 13, 14 and 15.
16. Assignment.
This Agreement is personal in nature and Executive may not,
without the consent of the Company, assign or transfer this Agreement or any
rights or obligations hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered as of the day and year set forth in the first
paragraph of this Agreement.
AMR Services Corporation
By: /s/ Donald J. Carty,
------------------------
its Chairman
Peter A. Pappas
/s/ Peter A. Pappas,
-----------------------
the Executive
<PAGE> 1
EXHIBIT 10.5
EXECUTIVE EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") dated as of May 30, 1999 between
Worldwide Flight Services, Inc., a Delaware corporation, together with its
subsidiaries (the "Company") and Mark Dunkerley (the "Executive").
WHEREAS, the parties wish to establish the terms of Executive's future
employment with the Company.
Accordingly, the parties agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment by the Company. The Company shall employ the Executive
effective as of July 12, 1999 (the "Effective Date") to render exclusive and
full-time services to the Company. The Executive will serve in the capacity of
Chief Operating Officer and President of the Company and shall serve as a member
of the Board of Directors of the Company. The Executive will perform such duties
as are imposed on the holder of that office by the By-laws of the Company and
such other duties as are customarily performed by one holding such positions in
the same or similar businesses or enterprises as those of the Company. The
Executive will perform such other duties as may be assigned to him from time to
time by the Chief Executive Officer or the Board of Directors of the Company.
The Executive will devote all his full working-time and attention to the
performance of such duties and to the promotion of the business and interests of
the Company. This provision, however, will not prevent the Executive from
investing his funds or assets in any form or manner, or from acting as a member
of the board of directors of any companies, businesses, or charitable
organizations, so long as such actions do not violate the provisions of Section
5.
1.2 Acceptance of Employment by the Executive. The Executive accepts
such employment and shall render the services described above.
2. Duration of Employment.
This Agreement and the employment relationship hereunder will continue
in effect for three (3) years from the Effective Date (the "Term"). At a time at
least nine months prior to the expiration of the Term, the Company and the
Executive shall discuss whether the Agreement should be renewed upon mutual
written agreement. In the event of the Executive's termination of employment
during the Term, the Company's obligation to continue to pay all base salary,
bonus and other benefits then accrued shall terminate except as may be provided
for in Section 4 of this Agreement.
3. Compensation by the Company.
3.1 Base Salary. As compensation for all services rendered pursuant to
this Agreement, the Company will pay to the Executive an annual base salary
("Base Salary") of
<PAGE> 2
Two Hundred Thirty-Five Thousand Dollars ($235,000), subject to the adjustment
by the Board of Directors of the Company, in its sole discretion, and payable in
accordance with the payroll practices of the Company.
3.2. Bonuses. The Executive shall be entitled to receive from the
Company an annual cash bonus up to a maximum amount of 50% of Base Salary, as
adjusted, determined by the Compensation Committee of the Board of Directors of
the Company. For the 1999 fiscal year, any bonus paid to the Executive in 2000
will be prorated based on the Effective Date.
3.3 Signing Bonus. The Company shall pay to the Executive a one-time
bonus of Sixty-Two Thousand Five Hundred Dollars ($62,500) as follows: (i)
Thirty Thousand Dollars ($30,000) on the Effective Date and (ii) Thirty-Two
Thousand Five Hundred Dollars ($32,500) on the three month anniversary of the
Effective Date, with respect to the foregone value of unvested stock options and
stock granted by British Airways.
3.4 Participation in Employee Benefit Plans. The Executive shall be
permitted, during the Term, if and to the extent eligible, to participate in any
group life, hospitalization or disability insurance plan, health program,
pension plan or similar benefit plan of the Company, which may be available to
other executives of the Company generally, on the same terms as such other
executives. Additionally, in lieu of spousal coverage under the Company's health
plans, the Executive shall be entitled to cover Marillia Duffles under the
Company's health plans; provided, however, to the extent that such coverage is
not permitted under the terms of such plans, the Company shall pay to the
Executive an amount equal to the economic equivalent of obtaining such coverage,
provided that the Executive will consult with the Company on the most efficient
way to obtain such coverage.
3.5 Stock Options. The Company shall grant to the Executive stock
options under the CHP III Services Holding Corporation 1999 Stock Option Plan
(the "Stock Option Plan") for the purchase of 10,000 shares of the Company's
non-voting common stock, at an exercise price of $3.25 per share. All terms and
conditions applicable to such stock options shall be governed by the provisions
of the Stock Option Plan and any stock option agreements thereunder.
3.6 Purchase of Stock. The Company shall provide the Executive with the
opportunity to purchase an additional 25,000 shares of the Company's preferred
stock, at the price of $10 per share, and 10,000 shares of voting common stock,
at the price of $3.25 per share, in accordance with the Management Subscription
Agreement and the Management Stock BuyBack Agreement between CHP Services
Holding Corporation and the Executive. The Company and Executive may agree to
have the Company finance, with full recourse, up to fifty percent (50%) of the
purchase price of such preferred and voting common stock.
3.7 Car Allowance. The Executive shall be entitled to a monthly car
allowance equal to $400.
3.8 Vacation. The Executive shall be entitled to twenty (20) days of
paid vacation per year.
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<PAGE> 3
3.9 Expense Reimbursement. During the Term, the Executive shall be
entitled to receive prompt reimbursement of all reasonable out-of-pocket
expenses properly incurred by him in connection with his duties under this
Agreement, including reasonable expenses of entertainment and travel, provided
that such expenses are properly approved, documented and reported in accordance
with the policies and procedures of the Company applicable at the time the
expenses are incurred.
3.10 Location and Commuting Expenses. For a period not to exceed
eighteen (18) months from the Effective Date, the Company shall provide
reimbursement to the Executive for (i) a furnished rental apartment in the
Dallas/Fort Worth, Texas, area at a cost not to exceed Two Thousand Five Hundred
Dollars ($2,500) per month and (ii) travel to and from Miami, Florida to
Dallas/Fort Worth for the Executive or Marillia Duffles at a cost not to exceed
Three Thousand Five Hundred Dollars ($3,500) per month, with the Executive using
his best reasonable efforts to coordinate personal travel with Company business
related travel.
3.11 Relocation Package. The Company shall offer to the Executive a
comprehensive relocation package in the event that the Executive chooses to move
from Miami to the Dallas/Fort Worth area.
4. Termination.
4.1 Termination Upon Death. If the Executive dies during the term
hereof, the Executive's legal representatives shall be entitled to receive the
Executive's Base Salary, as adjusted, and accrued bonus for the period ending on
the last day of the month in which the death of the Executive occurs.
4.2 Termination Upon Disability. If during the Term the Executive meets
the requirements for physical or mental disability under the Company's long-term
disability plan and is eligible to receive benefits thereunder, the Company may
at any time prior to the Executive's recovery but after the last day of the
sixth consecutive month of such disability, by written notice to the Executive,
terminate the Executive's employment hereunder.
Additionally, in such event, the Executive (or his legal
representatives) shall be entitled to receive the Executive's Base Salary, as
adjusted, and accrued bonus for the period ending on the date such termination
occurred. Nothing in this Section 4.2 shall be deemed to in any way affect the
Executive's right to participate in any disability plan maintained by the
Company and for which the Executive is otherwise eligible.
4.3 Termination for Cause. The Executive's employment hereunder may be
terminated by the Company for "Cause" (as herein defined) at any time. "Cause"
shall mean with respect to the Executive, (a) the Executive's willful and
continued failure to substantially perform the Executive's duties, (b) repeated
acts of insubordination, or willful failure to execute Company plans and/or
strategies, (c) acts of dishonesty resulting or intending to result in personal
gain or enrichment at the expense of the Company, (d) conviction of, or pleading
guilty or no contest to, a felony, all as determined by the Board of Directors
of the Company in its reasonable judgment; (e) reasonable evidence presented in
writing to the Executive that the Executive engaged in a criminal act involving
moral turpitude or willful misconduct or (f) conduct not conforming to
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<PAGE> 4
standards of good citizenship or good moral character or which is potentially
detrimental to the Company's business, reputation, character or standing,
provided that, in the case of clauses (a) and (b), the Executive shall be
entitled to written notice from the Company and twenty (20) days to cure such
deficiency. Breach of this Agreement and to the extent that an Executive is
subject to a non-competition and confidentiality agreement, breach of such
non-competition and confidentiality agreement, shall constitute Cause under this
Agreement.
Upon termination for Cause hereunder the Executive shall be entitled to
receive the Executive's Base Salary, as adjusted, through the date of
termination.
4.4 Voluntary Termination by the Executive. The Executive may upon at
least ninety (90) days' prior written notice to the Company terminate employment
hereunder.
(a) Upon a voluntary termination for other than Good Reason, the
Executive shall be entitled to receive the Executive's Base Salary, as adjusted,
through the date of termination.
(b) Upon a voluntary termination for Good Reason (other than the
Executive's election to terminate his employment following a Change in Control
as provided in Section 4.5 hereof), the Executive shall be entitled to receive,
(i) in lieu of salary payments to the Executive for periods subsequent to the
date of such termination, the greater of (1) Base Salary, as adjusted, for
eighteen (18) months or (2) Base Salary, as adjusted, for the remaining duration
of the Term and (ii) for the period applicable under (i)(1) or (2) above after
such voluntary termination for Good Reason, the Company shall arrange to provide
the Executive with life, disability, accident and group health insurance
benefits substantially similar to those which the Executive was receiving
immediately prior to the notice of termination. Benefits otherwise receivable by
the Executive pursuant to this provision (ii) shall be reduced to the extent
comparable benefits are actually received by the Executive during the period
following the Executive's termination, and any such benefits actually received
by the Executive shall be reported to the Company.
The term "Good Reason" shall mean (1) a reduction in Base Salary or
any agreed upon benefit under this Agreement without the Executive's consent;
provided, that the Company may at any time or from time to time amend, modify,
suspend or terminate any bonus, incentive compensation or other benefit plan or
program provided to the Executive for any reason and without the Executive's
consent if such modification, suspension or termination is consistent with
similarly situated employees or (2) a material adverse change in the Executive's
responsibilities, position, duties, resources, personnel, reporting
responsibilities or support assigned to the Executive without his or her prior
consent.
4.5 Voluntary Termination by the Executive upon a Change in Control.
In the event of a Change in Control, the Executive shall have the
right (by written notice to the Company within 10 business days of such Change
in Control) to terminate his employment with the Company upon his election. In
that event, the Executive shall be entitled to (a) an immediate lump sum cash
payment of nine (9) months of his Base Salary, as
4
<PAGE> 5
adjusted and (b) for the period of nine (9) months after such voluntary
termination upon a Change in Control, the Company shall arrange to provide the
Executive with life, disability, accident and group health insurance benefits
substantially similar to those which the Executive was receiving immediately
prior to the notice of termination. Benefits otherwise receivable by the
Executive pursuant to this provision (b) shall be reduced to the extent
comparable benefits are actually received by the Executive during the period
following the Executive's termination, and any such benefits actually received
by the Executive shall be reported to the Company. The term "Change in Control"
shall be as defined in Section 2 of the CHP III Services Holding Corporation
1999 Stock Option Plan.
4.6 Termination by the Company Other Than For Cause.
(a) If, prior to the expiration of this Agreement, the Company
terminates the Executive's employment for any reason other than Cause, in lieu
of salary payments to the Executive for periods subsequent to the date of such
termination, the Company shall pay to the Executive the greater of (i) Base
Salary, as adjusted, for eighteen (18) months or (ii) Base Salary, as adjusted,
for the remaining duration of the Term.
(b) For the period applicable under (a)(i) or (ii) above after any
termination pursuant to this Section 4.6, the Company shall arrange to provide
the Executive with life, disability, accident and group health insurance
benefits substantially similar to those which the Executive was receiving
immediately prior to the notice of termination. Benefits otherwise receivable by
the Executive pursuant to this paragraph (b) shall be reduced to the extent
comparable benefits are actually received by the Executive during the period
following the Executive's termination, and any such benefits actually received
by the Executive shall be reported to the Company.
(c) Nothing contained in this Section 4.6 shall prevent the
Executive from receiving any and all benefits payable under any severance
benefit plan or program maintained by the Company to which the Executive is
entitled.
5. Restrictions and Obligations of the Executive.
5.1 Confidentiality.
(a) The confidential and proprietary information and, in any
material respect, trade secrets of the Company are among its most valuable
assets, including but not limited to, its customer and vendor lists, database,
engineering, computer programs, frameworks, models, its marketing programs, its
sales, financial, marketing, training and technical information, and any other
information, whether communicated orally, electronically, in writing or in other
tangible forms concerning how the Company creates, develops, acquires or
maintains its products and marketing plans, targets its potential customers and
operates its retail and other businesses. The Company invested, and continues to
invest, considerable amounts of time and money in its process, technology,
know-how, obtaining and developing the goodwill of its customers, its other
external relationships, its data systems and data bases, and all the information
described above (hereinafter collectively referred to as "Confidential
Information"), and any misappropriation or unauthorized disclosure of
Confidential Information in any form
5
<PAGE> 6
would irreparably harm the Company. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all Confidential Information relating to
the Company and its business, which shall have been obtained by the Executive
during the Executive's employment by the Company and which shall not be or
become public knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement).The Executive shall take all
reasonable steps to safeguard the Confidential Information and to protect it
against disclosure, misuse, espionage, loss and theft. The Executive understands
and agrees that the Executive shall acquire no rights to any such Confidential
Information.
(b) All files, records, documents, drawings, specifications, data,
computer programs, evaluation mechanisms and analytics and similar items
relating thereto or to the Business ( for the purposes of this Agreement,
"Business" shall be as defined in any non-competition and confidentiality
agreement that may be established between the Executive and the Company and/or
CHP III Services Holding Corporation), as well as all customer lists, specific
customer information, compilations of product research and marketing techniques
of the Company, whether prepared by the Executive or otherwise coming into the
Executive's possession, shall remain the exclusive property of the Company, and
the Executive shall not remove any such items from the premises of the Company,
except in furtherance of the Executive's duties under this Employment Agreement.
(c) It is understood that while employed by the Company the
Executive will promptly disclose to it, and assign to it the Executive's
interest in any invention, improvement or discovery made or conceived by the
Executive, either alone or jointly with others, which arises out of the
Executive's employment. At the Company's request and expense, the Executive will
assist the Company during the period of the Executive's employment by the
Company and thereafter in connection with any controversy or legal proceeding
relating to such invention, improvement or discovery and in obtaining domestic
and foreign patent or other protection covering the same.
(d) As requested by the Company from time to time and upon the
termination of the Executive's employment with the Company for any reason, the
Executive will promptly deliver to the Company all copies and embodiments, in
whatever form, of all Confidential Information in the Executive's possession or
within his control (including, but not limited to, memoranda, records, notes,
plans, photographs, manuals, notebooks, documentation, program listings, flow
charts, magnetic media, disks, diskettes, tapes and all other materials
containing any Confidential Information) irrespective of the location or form of
such material. If requested by the Company, the Executive will provide the
Company with written confirmation that all such materials have been delivered to
the Company as provided herein.
5.2 Non-Solicitation or Hire. During the Term and for a three (3) year
period following the termination of the Executive's employment for any reason,
the Executive shall not, (i) solicit, directly or indirectly, any party who is a
customer of the Company or its subsidiaries, or who was a customer of the
Company or its subsidiaries at any time during the twelve month period
immediately prior to the relevant date, for the purpose of marketing, selling or
providing to any party any services or products offered by or available from the
Company or its subsidiaries and relating to the Business, (provided that if the
Executive intends to solicit any
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<PAGE> 7
such party for any other purpose, it shall notify the Company of such intention)
or (ii) employ or solicit, directly or indirectly, for employment any person who
is an employee of the Company or any of its subsidiaries or who was an employee
of the Company or any of its subsidiaries at any time during the twelve month
period immediately prior to any such solicitation or employment.
5.3 Non-Competition. The Executive shall be bound by the terms of any
non-competition and confidentiality agreement that may be established between
the Executive and the Company and/or CHP III Services Holding Corporation.
5.4 During the Term, the Executive agrees not to engage in any act that
is intended, or may reasonably by expected to harm the reputation, business,
prospects or operations of the Company, its officers, directors, stockholders or
employees. The Company further agrees that it will engage in no act which is
intended, or may reasonably be expected to harm the reputation, business or
prospects of the Executive.
5.5 Property. The Executive acknowledges that all originals and copies
of materials, records and documents generated by him or coming into his
possession during his employment by the Company are the sole property of the
Company ("Company Property"). During the Term, and at all times thereafter, the
Executive shall not remove, or cause to be removed, from the premises of the
Company, copies of any record, file, memorandum, document, computer related
information or equipment, or any other item relating to the business of the
Company, or any affiliate, except in furtherance of his duties under the
Agreement. When the Executive terminates his employment with the Company, or
upon request of the Company at any time, the Executive shall promptly deliver to
the Company all copies of Company Property in his possession or control.
5.6 Work Product. The Executive agrees that all inventions, discoveries,
systems, interfaces, protocols, concepts, formats, creations, developments,
designs, programs, products, processes, investment strategies, materials,
computer programs or software, data bases, improvements, or other properties
related to the business of the Company or any of its affiliates, conceived, made
or developed during the term of his employment with the Company, whether
conceived by the Executive alone or working with others, and whether patentable
or not (the "Work Product"), shall be owned by and belong exclusively to the
Company. The Executive hereby assigns to the Company his entire rights to the
Work Product and agrees to execute any documents and take any action reasonably
requested by the Company to protect the rights of the Company in any Work
Product. The Executive acknowledges that any copyrightable subject matter
created by the Executive within the scope of his employment, whether containing
or involving Confidential Information or not, is deemed a work-made-for-hire
under Chapter 17 of the United States Code, entitled "Copyrights," as amended,
and the Company shall be deemed the sole author and owner thereof for any
purposes whatsoever. In the event of any unauthorized publication of any
Confidential Information, the Company shall automatically own the copyright in
such publication. Further, the Company shall automatically hold all patents
and/or trademarks, if any, with respect to any Work Product.
5.7 Tax Withholding. The Company or other payor is authorized to
withhold, from any benefit provided or payment due hereunder, the amount of
withholding taxes
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due any federal, state or local authority in respect of such benefit or payment
and to take such other action as may be necessary in the opinion of the Board of
Directors of the Company to satisfy all obligations for the payment of such
withholding taxes.
6. Other Provisions.
6.1. Notices. Any notice or other communication required or which may be
given hereunder shall be in writing and shall be delivered personally or sent by
certified mail, postage prepaid, as follows:
(a) If the Company, to:
Worldwide Flight Services, Inc.
4255 Amon Carter Boulevard
MD #4237
Forth Worth, Texas 76155
Attention: Peter Pappas
Telephone: (817) 963-1519
Fax: (817) 963-4847
With a copy to:
CHP III Services Holding Corporation
c/o Castle Harlan Partners III, L.P.
150 E. 58th Street
New York, NY 10155
Attention: Marcel Fournier
Telephone: (212) 644-8600
Fax: (212) 207-8042
And a copy to:
Castle Harlan, Inc.
150 E. 58th Street
New York, NY 10155
Attention: Howard Weiss
Telephone: (212) 644-8600
Fax: (212) 759-0486
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And a copy to:
Schulte Roth & Zabel LLP
900 Third Avenue
New York, NY 10022
Attention: Marc Weingarten, Esq.
Telephone: (212) 756-2000
Fax: (212) 593-5955
(b) If the Executive, to his home address set forth in the records of
the Company.
6.2 Entire Agreement. Except as provided in Sections 3.5, 3.6 and 5.3
hereof, this Agreement contains the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements,
written or oral, with respect thereto.
6.3 Waiver and Amendments. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any right, power or
privilege hereunder, nor any single or partial exercise of any right, power or
privilege hereunder, preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
6.4 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
6.5 Assignability. This Agreement, and the Executive's rights and
obligations hereunder, may not be assigned by the Executive. Subject to the
Executive's rights under Section 4.5, the Company may assign this Agreement and
its rights, together with its obligations, to any other entity which will
substantially carry on the business of the Company.
6.6 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
6.7 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning of terms
contained herein.
6.8 Remedies; Specific Performance. The parties hereto hereby
acknowledge that the provisions of Section 5 are reasonable and necessary for
the protection of the Company. In addition, the Executive further acknowledges
that the Company will be irrevocably damaged if such covenants are not
specifically enforced. Accordingly, the Executive agrees that, in addition to
any other relief to which the Company may be entitled, the Company
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will be entitled to seek and obtain injunctive relief (without the requirement
of any bond) from a court of competent jurisdiction for the purposes of
restraining the Executive from any actual or threatened breach of such
covenants. In addition, without limiting the Company's remedies for any breach
of any restriction on the Executive set forth in Section 5, except as required
by law, the Executive shall not be entitled to any payments set forth in Section
4 hereof if the Executive breaches any of the covenants applicable to the
Executive contained in Section 5, the Executive will immediately return to the
Company any such payments previously received under Sections 4.4, 4.5 and 4.6
upon such a breach, and, in the event of such breach, the Company will have no
obligation to pay any of the amounts that remain payable by the Company under
Section 4.
6.9 Severability. If any term, provision, covenant or restriction of
this Agreement, or any part thereof, is held by a court of competent
jurisdiction of any foreign, federal, state, county or local government or any
other governmental, regulatory or administrative agency or authority to be
invalid, void, unenforceable or against public policy for any reason, 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 or
impaired or invalidated. The Executive acknowledges that the restrictive
covenants contained in Section 5 are a condition of this Agreement and are
reasonable and valid in geographical and temporal scope and in all other
respects.
6.10 Judicial Modification. If any court or arbitrator determines that
any of the covenants in Section 5, or any part of any of them, is invalid or
unenforceable, the remainder of such covenants and parts thereof shall not
thereby be affected and shall be given full effect, without regard to the
invalid portion. If any court or arbitrator determines that any of such
covenants, or any part thereof, is invalid or unenforceable because of the
geographic or temporal scope of such provision, such court or arbitrator shall
reduce such scope to the minimum extent necessary to make such covenants valid
and enforceable.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed this Agreement as of the day and year first above
mentioned.
EXECUTIVE
/s/ Mark Dunkerley
-----------------------------------------
Mark Dunkerley
WORLDWIDE FLIGHT SERVICES, INC.
By: /s/ Peter A. Pappas
-------------------------------------
Name:
Title:
10
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Exhibit 10.6
EXECUTIVE EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") dated as of March 29, 1999
between AMR Services Corporation, a Delaware corporation, together with its
subsidiaries (the "Company") and Scott Letier (the "Executive").
WHEREAS, the parties wish to establish the terms of
Executive's future employment with the Company.
Accordingly, the parties agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment by the Company. The Company shall
employ the Executive effective upon the Closing Date, (the "Effective Date") as
such term is defined in the stock purchase agreement by and among MR Services
Acquisition Corporation ("MR Services"), AMR Services Holding Corporation and
AMR Corporation, dated as of December 23, 1998, for itself and its affiliates,
to render exclusive and full-time services to the Company. The Executive will
serve in the capacity of Chief Financial Officer of the Company. The Executive
will perform such duties as are imposed on the holder of that office by the
By-laws of the Company and such other duties as are customarily performed by one
holding such positions in the same or similar businesses or enterprises as those
of the Company. The Executive will perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Company. The Executive
will devote all his full working-time and attention to the performance of such
duties and to the promotion of the business and interests of the Company. This
provision, however, will not prevent the Executive from investing his funds or
assets in any form or manner, or from acting as a member of the board of
directors of any companies, businesses, or charitable organizations, so long as
such actions do not violate the provisions of Section 5.
1.2 Acceptance of Employment by the Executive. The
Executive accepts such employment and shall render the services described above.
2. Duration of Employment.
This Agreement and the employment relationship
hereunder will continue in effect for three (3) years from the Effective Date.
It may be extended by mutual, written agreement at any time. In the event of the
Executive's termination of employment during the term of this Agreement, the
Company's obligation to continue to pay all base salary, bonus and other
benefits then accrued shall terminate except as may be provided for in Sections
4.1, 4.2, 4.3, 4.4, and 4.5 of this Agreement.
<PAGE> 2
3. Compensation by the Company.
3.1 Base Salary. As compensation for all services
rendered pursuant to this Agreement, the Company will pay to the Executive an
annual base salary ("Base Salary") of one-hundred sixty-five thousand DOLLARS
($165,000), payable in equal semi-monthly installments of $6,875.
3.2. Bonuses. The Executive shall be entitled to
receive from the Company an annual cash bonus in an amount determined by the
Compensation Committee of the Board of Directors of the Company which could
reach 50% percent of Base Salary.
3.3 Participation in Employee Benefit Plans. The
Executive shall be permitted, during the term of this Agreement, if and to the
extent eligible, to participate in any group life, hospitalization or disability
insurance plan, health program, pension plan or similar benefit plan of the
Company, which may be available to other executives of the Company generally, on
the same terms as such other executives. Executive shall be entitled to paid
vacation and all customary holidays each year during the term of this Agreement
in accordance with the Company's policies as the same may be established from
time to time.
3.4 Car Allowance. The Executive shall be entitled to
a monthly car allowance equal to $300.00.
3.5 Expense Reimbursement. During the term of this
Agreement, the Executive shall be entitled to receive prompt reimbursement of
all reasonable out-of-pocket expenses properly incurred by him in connection
with his duties under this Agreement, including reasonable expenses of
entertainment and travel, provided that such expenses are properly approved,
documented and reported in accordance with the policies and procedures of the
Company applicable at the time the expenses are incurred.
4. Termination.
4.1 Termination Upon Death. If the Executive dies
during the term hereof, the Executive's legal representatives shall be entitled
to receive the Executive's Base Salary and accrued bonus for the period ending
on the last day of the month in which the death of the Executive occurs.
4.2 Termination Upon Disability. If during the term
of this Agreement the Executive meets the requirements for physical or mental
disability under the Company's long-term disability plan and is eligible to
receive benefits thereunder, the Company may at any time prior to the
Executive's recovery but after the last day of the sixth consecutive month of
such disability, by written notice to the Executive, terminate the Executive's
employment hereunder.
Additionally, in such event, Executive (or his legal
representatives) shall be entitled to receive the Executive's Base Salary and
accrued bonus for the period
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ending on the date such termination occurred. Nothing in this Section 4.2 shall
be deemed to in any way affect the Executive's right to participate in any
disability plan maintained by the Company and for which the Executive is
otherwise eligible.
4.3 Termination for Cause. The Executive's employment
hereunder may be terminated by the Company for "Cause" (as herein defined) at
any time. "Cause" shall mean with respect to an Executive, (a) the Executive's
willful and continued failure to substantially perform the Executive's duties,
(b) repeated acts of insubordination, or willful failure to execute Company
plans and/or strategies, (c) acts of dishonesty resulting or intending to result
in personal gain or enrichment at the expense of the Company, (d) conviction of,
or pleading guilty or no contest to, a felony, all as determined by the Board of
Directors of the Company in its reasonable judgment; (e) reasonable evidence
presented in writing to the Executive that the Executive engaged in a criminal
act involving moral turpitude or willful misconduct or (f) conduct not
conforming to standards of good citizenship or good moral character, or which is
potentially detrimental to the Company's business, reputation, character or
standing, provided that, in the case of clauses (a) and (b), the Executive shall
be entitled to written notice from the Company and twenty (20) days to cure such
deficiency. Breach of this Agreement and to the extent that an Executive is
subject to a non-competition and confidentiality agreement, breach of such
non-competition and confidentiality agreement, shall constitute Cause under this
Agreement.
Upon termination for Cause hereunder the Executive
shall be entitled to receive the Executive's Base Salary through the date of
termination.
4.4 Voluntary Termination. The Executive may upon at
least sixty (60) days' prior written notice to the Company terminate employment
hereunder. Upon a voluntary termination the Executive shall be entitled to
receive the Executive's Base Salary through the date of termination.
4.5 Termination by the Company Other Than For Cause.
(a) If, prior to the expiration of this
Agreement, the Company terminates the Executive's employment for any reason
other than Cause, in lieu of additional salary payments to the Executive for
periods subsequent to the date of such termination, the Company shall either (i)
pay a lump sum severance payment (together with the payments provided in
paragraph (b) below, to the Executive at the time of termination (the "Lump Sum
Severance Payment")) or (ii) continue to pay the Executive Base Salary for the
remaining term of this Agreement. The Lump Sum Severance Payment shall be an
amount equal to the number of years, including fractional years, remaining until
this Agreement would expire but for such termination multiplied by the
Executive's Base Salary rate as in effect as of the date of termination.
(b) For the length of the period for which
severance benefits are provided after any termination pursuant to this Section
4.5, the Company shall arrange to provide the Executive with life, disability,
accident and group health insurance benefits substantially similar to those
which the Executive was receiving immediately prior
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<PAGE> 4
to the notice of termination. Benefits otherwise receivable by the Executive
pursuant to this paragraph (b) shall be reduced to the extent comparable
benefits are actually received by the Executive during the period following the
Executive's termination, and any such benefits actually received by the
Executive shall be reported to the Company.
(c) Nothing contained in this Section 4.5
shall prevent the Executive from receiving any and all benefits payable under
any severance benefit plan or program maintained by the Company to which the
Executive is entitled.
5. Restrictions and Obligations of the Executive.
5.1 Confidentiality. The confidential and proprietary
information and, in any material respect, trade secrets of the Company are among
its most valuable assets, including but not limited to, its customer and vendor
lists, database, engineering, computer programs, frameworks, models, its
marketing programs, its sales, financial, marketing, training and technical
information, and any other information, whether communicated orally,
electronically, in writing or in other tangible forms concerning how the Company
creates, develops, acquires or maintains its products and marketing plans,
targets its potential customers and operates its retail and other businesses.
The Company invested, and continues to invest, considerable amounts of time and
money in its process, technology, know-how, obtaining and developing the
goodwill of its customers, its other external relationships, its data systems
and data bases, and all the information described above (hereinafter
collectively referred to as "Confidential Information"), and any
misappropriation or unauthorized disclosure of Confidential Information in any
form would irreparably harm the Company. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all Confidential Information relating to
the Company and its business, which shall have been obtained by the Executive
during the Executive's employment by the Company and which shall not be or
become public knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law or
legal process, communicate, divulge or use any such information, knowledge or
data to anyone other than the Company and those designated by it.
5.2 Non-Solicitation or Hire. During the stated term
of this Agreement (as set forth in Section 2) and for a three (3) year period
following the termination of the Executive's employment for any reason, the
Executive shall not, directly or indirectly (i) employ or seek to employ any
person who is at the date of termination, or was at any time within the six (6)
month period preceding the date of termination, an officer, general manager,
station manager or director or equivalent or more senior level employee of the
Company or any of its subsidiaries or otherwise solicit, encourage, cause or
induce any such employee of the Company or any of its subsidiaries to terminate
such employee's employment with the Company or such subsidiary for the
employment of another company (including for this purpose the contracting with
any person who was an
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<PAGE> 5
independent contractor (excluding consultant) of the Company during such period)
or (ii) take any action that would interfere with, disrupt or damage the
relationship of the Company or its subsidiaries with their suppliers, customers,
employees, consultants or any other business relationship without, in any case,
the prior written consent of the Board of Directors of the Company, or engage in
any other action or business that would have a material adverse effect on the
Company.
5.3 Non-Competition. The Executive shall be bound by
the terms of any non-competition and confidentiality agreement that may be
established between the Executive and the Company and/or MR Services.
5.4 The Executive agrees not to engage in any act
that is intended, or may reasonably by expected to harm the reputation,
business, prospects or operations of the Company, its officers, directors,
stockholders or employees. The Company further agrees that it will engage in no
act which is intended, or may reasonably be expected to harm the reputation,
business or prospects of the Executive.
5.5 Property. The Executive acknowledges that all
originals and copies of materials, records and documents generated by him or
coming into his possession during his employment by the Company are the sole
property of the Company ("Company Property"). During the term of this Agreement,
and at all times thereafter, the Executive shall not remove, or cause to be
removed, from the premises of the Company, copies of any record, file,
memorandum, document, computer related information or equipment, or any other
item relating to the business of the Company, or any affiliate, except in
furtherance of his duties under the Agreement. When the Executive terminates his
employment with the Company, or upon request of the Company at any time, the
Executive shall promptly deliver to the Company all copies of Company Property
in his possession or control.
5.6 Work Product. The Executive agrees that all
inventions, discoveries, systems, interfaces, protocols, concepts, formats,
creations, developments, designs, programs, products, processes, investment
strategies, materials, computer programs or software, data bases, improvements,
or other properties related to the business of the Company or any of its
affiliates, conceived, made or developed during the term of his employment with
the Company, whether conceived by the Executive alone or working with others,
and whether patentable or not (the "Work Product"), shall be owned by and belong
exclusively to the Company. The Executive hereby assigns to the Company his
entire rights to the Work Product and agrees to execute any documents and take
any action reasonably requested by the Company to protect the rights of the
Company in any Work Product. The Executive acknowledges that any copyrightable
subject matter created by the Executive within the scope of his employment,
whether containing or involving Confidential Information or not, is deemed a
work-made-for-hire under Chapter 17 of the United States Code, entitled
"Copyrights," as amended, and the Company shall be deemed the sole author and
owner thereof for any purposes whatsoever. In the event of any unauthorized
publication of any Confidential Information, the Company shall
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automatically own the copyright in such publication. Further, the Company shall
automatically hold all patents and/or trademarks, if any, with respect to any
Work Product.
5.7 Tax Withholding. The Company or other payor is
authorized to withhold, from any benefit provided or payment due hereunder, the
amount of withholding taxes due any federal, state or local authority in respect
of such benefit or payment and to take such other action as may be necessary in
the opinion of the Board of Directors of the Company to satisfy all obligations
for the payment of such withholding taxes.
6. Other Provisions.
6.1. Notices. Any notice or other communication
required or which may be given hereunder shall be in writing and shall be
delivered personally, telegraphed, telexed, sent by facsimile transmission or
sent by certified, registered or express mail, postage prepaid, and shall be
deemed given when so delivered personally, telegraphed, telexed, or sent by
facsimile transmission or, if mailed, four (4) days after the date of mailing,
as follows:
(a) If the Company, to:
AMR SERVICES CORPORATION
c/o Castle Harlan, Inc.
150 E. 58th Street
New York, NY 10155
Attention: Marcel Fournier
Telephone: (212) 644-8600
Fax: (212) 207-8042
With a copy to:
Schulte Roth & Zabel LLP
900 Third Avenue
New York, NY 10022
Attention: Marc Weingarten, Esq.
Telephone: (212) 756-2000
Fax: (212) 593-5955
(b) If the Executive, to his home address set forth
in the records of the Company.
6.2 Entire Agreement. This Agreement contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect thereto.
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6.3 Waiver and Amendments. This Agreement may be
amended, modified, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any
right, power or privilege hereunder, nor any single or partial exercise of any
right, power or privilege hereunder, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.
6.4 Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of New York.
6.5 Assignability. This Agreement, and the
Executive's rights and obligations hereunder, may not be assigned by the
Executive. The Company may assign this Agreement and its rights, together with
its obligations, to any other entity which will substantially carry on the
business of the Company.
6.6 Counterparts. This Agreement may be executed in
two (2) or more counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
6.7 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
6.8 Remedies; Specific Performance. The parties
hereto hereby acknowledge that the provisions of Section 5 are reasonable and
necessary for the protection of the Company. In addition, the Executive further
acknowledges that the Company will be irrevocably damaged if such covenants are
not specifically enforced. Accordingly, the Executive agrees that, in addition
to any other relief to which the Company may be entitled, the Company will be
entitled to seek and obtain injunctive relief (without the requirement of any
bond) from a court of competent jurisdiction for the purposes of restraining the
Executive from any actual or threatened breach of such covenants. In addition,
without limiting the Company's remedies for any breach of any restriction on the
Executive set forth in Section 5, except as required by law, the Executive shall
not be entitled to any payments set forth in Section 4 hereof if the Executive
breaches any of the covenants applicable to the Executive contained in Section
5, the Executive will immediately return to the Company any such payments
previously received under Section 4.5 upon such a breach, and, in the event of
such breach, the Company will have no obligation to pay any of the amounts that
remain payable by the Company under Section 4.
6.9 Severability. If any term, provision, covenant or
restriction of this Agreement, or any part thereof, is held by a court of
competent jurisdiction of any foreign, federal, state, county or local
government or any other governmental, regulatory or administrative agency or
authority to be invalid, void, unenforceable or against public
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<PAGE> 8
policy for any reason, 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 or impaired or invalidated. The Executive acknowledges
that the restrictive covenants contained in Section 5 are a condition of this
Agreement and are reasonable and valid in geographical and temporal scope and in
all other respects.
6.10 Judicial Modification. If any court or
arbitrator determines that any of the covenants in Section 5, or any part of any
of them, is invalid or unenforceable, the remainder of such covenants and parts
thereof shall not thereby be affected and shall be given full effect, without
regard to the invalid portion. If any court or arbitrator determines that any of
such covenants, or any part thereof, is invalid or unenforceable because of the
geographic or temporal scope of such provision, such court or arbitrator shall
reduce such scope to the minimum extent necessary to make such covenants valid
and enforceable.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have executed this Agreement as of the day and year first
above mentioned.
EXECUTIVE
/s/ Scott Letier
------------------------------------
SCOTT LETIER
AMR SERVICES CORPORATION
By: /s/ Peter A. Pappas
-------------------------------
Name: Peter A. Pappas
Title:
9
<PAGE> 1
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into effective
as of December 7, 1998 by and between AMR Services Corporation, a Delaware
corporation (the "Company"), and Olivier Bijaoui ("Executive"), having a
mailing address at rue de Monbel, 75017 Paris, France.
R E C I T A L S
The Board of Directors of the Company has determined that it
is in the best interests of the Company to reinforce and encourage the
continued attention and dedication of members of the Company's management,
including the Executive, to their assigned duties without distraction during a
possible sale of the Company. To enhance and induce Executive's uninterrupted
service to the Company, and to provide Executive with specific contractual
assurance of Executive's continued employment with the Company following a sale
of the Company, the Company wishes to provide in this Agreement for the
employment of the Executive upon the terms and conditions hereinafter set
forth.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the Company and the Executive hereby agree
as follows:
1. Employment. Upon the terms and subject to the conditions
contained in this Agreement, the Executive agrees to provide full-time
services for the Company. The Executive agrees to devote his best
efforts to the business of the Company, and to perform his duties in a
diligent, trustworthy, and business-like manner, all for the purpose
of advancing the business of the Company.
2. Duties. Executive's duties, title and reporting
relationship within the Company's management structure shall during
the term of this Agreement be commensurate with Executive's current
duties, title and reporting relationship, as briefly outlined on
Exhibit A attached hereto. Subject to the provisions of Section
10(e)(A), the Executive's duties may, from time to time, be changed or
modified at the discretion of the President of the Company.
3. Employment Term. Subject to the terms and conditions
hereof, the Company agrees to employ the Executive for a term
commencing on the effective date of this Agreement and, subject to
Section 11(k), continuing through the second anniversary of the date
of consummation (the "Closing Date") of any transaction involving the
sale of substantially all of the assets of the Company or a
controlling equity interest in the Company to, or any merger,
consolidation, business combination, or similar transaction
<PAGE> 2
with, a party unaffiliated with AMR Corporation. This Agreement may be
extended beyond the foregoing term by mutual agreement of the parties.
4. Salary and Benefits.
(a) Base Salary. From and after the effective date
of this Agreement, the Company shall continue to pay to Executive his
current annual base salary of FF 926,500 ("Base Salary"), pro rated
for periods of less than 12 months. Executive's Base Salary shall be
paid in accordance with the Company's standard payroll practices.
Effective as of the Closing Date and during the remaining term of this
Agreement, Executive's Base Salary shall be increased to FF 972,825.
After the Closing Date, Executive's Base Salary shall be reviewed and
considered for adjustment by the Company at least annually. The
Company may not, however, reduce the Executive's Base Salary at any
time during the term of this Agreement. As provided in Section 11(i)
below, it is the intent of the parties that this Agreement not amend
or modify any agreement between Executive and SFS pertaining to
Executive's employment with or service to SFS as a salaried employee
or in any other capacity; however, any salary, bonus or other
non-severance-related cash compensation paid to Executive directly by
SFS (in SFS's capacity as principal and not merely as a disbursement
or other agent for the Company) shall be subtracted from and reduce
the compensation payable to Executive by the Company under this
Agreement. The effect of potential severance-related payments to
Executive by SFS are governed by Section 5(d) below.
(b) Annual Bonus Payment. The Company shall pay
Executive an annual bonus during the term of this Agreement. The first
such bonus shall be paid on or before March 15, 2000 (relating to the
year 1999), and on or before the March 15, 2001 (relating to the year
2000). If the Agreement expires in 2001 and is not renewed by mutual
agreement of the parties, a prorated bonus shall be paid to Executive
for any portion of the year 2001 falling within the term of this
Agreement. Such prorated bonus shall be payable within thirty days
following the expiration date of this Agreement. The foregoing annual
bonus shall be an amount equal to 30% of the Executive's Base Salary
for the applicable year (the "Guaranteed Bonus"). In the event the
Company's Board of Directors continues the Company's annual incentive
plan (or adopts a new plan), and the pay out under such plan would be
greater than the Guaranteed Bonus, Executive shall in lieu of the
Guaranteed Bonus be eligible to receive the pay out determined in
accordance with such plan. Executive's Guaranteed Bonus shall be paid
in accordance with the Company's standard payroll practices.
(c) Vacation. The Executive shall be entitled to no
less paid vacation days during each full year of his employment
pursuant to this Agreement than Executive is currently entitled to as
of the date of this Agreement. Vacations shall be taken at such times
as are consistent with the reasonable business needs of the Company.
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(d) Reimbursement of Expenses. The Company shall
reimburse the Executive for all reasonable out-of-pocket expenses
incurred by the Executive in the course of his duties, in accordance
with Company policies in effect from time to time.
(e) Employee Benefits. The Executive shall be
entitled to participate in the employee benefit programs generally
available to employees of the Company, and to all normal perquisites
provided to senior executives of the Company, it being understood and
agreed, however, that (i) the programs and perquisites made available
to Executive during the term of this Agreement shall be commensurate
with those provided to Executive immediately prior to the date of this
Agreement (except for benefits of the type provided under the AMR Long
Term Incentive Plan which may change or be eliminated from and after
the Closing Date), and (ii) unless provided pursuant to a separate
agreement or policy adopted by the Company prior to the Closing Date,
the Company shall not make air travel privileges available to
Executive or other employees of the Company after the Closing Date.
(f) Stay-In-Place Benefits. In addition to any other
amounts due Executive hereunder, the Company shall pay to Executive
certain amounts and make certain other benefits/privileges available
to Executive as outlined in the letter to Executive from the President
of AMR Global Services dated October 9, 1998. The Company's obligation
to pay the foregoing amounts and make the foregoing
benefits/privileges available shall be contingent upon Executive not
(i) voluntarily terminating his employment prior to the Closing Date
(other than for Good Reason); or (ii) being terminated by the Company
for Cause prior to the Closing Date.
(g) Signing Bonus. In addition to any other amounts
due Executive hereunder or provided for in the letter referred to in
Section 4(f), promptly following the Closing Date the Company shall
pay to Executive a bonus equal to eight month's of Executive's Base
Salary, provided that Executive executes and delivers this Agreement
to the Company on or prior to December 7, 1998. Executive's Base
Salary in effect on the date of this Agreement shall be used in
calculating the foregoing bonus amount. The Company's obligation to
pay the foregoing bonus shall be contingent upon Executive not (i)
voluntarily terminating his employment prior to the Closing Date
(other than for Good Reason); or (ii) being terminated by the Company
for Cause prior to the Closing Date.
5. Termination of Employment. The Board of Directors of the
Company may terminate the employment of the Executive at any time as
it deems appropriate. Executive shall likewise be entitled at any time
to terminate his employment with the Company. Upon such termination,
the Company's and Executive's further rights and obligations shall be
determined as set forth in the remaining provisions of this Section 5
and as otherwise provided in this Agreement.
(a) Termination Without Cause; Resignation for Good
Reason. If the Executive's employment is terminated by the
Company without Cause, or the Executive voluntarily
terminates his employment for Good Reason:
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(i) The Company shall continue to pay the
Executive his Base Salary and Guaranteed Bonus as
provided in Sections 4(a) and (b) above until the
end of the term of this Agreement (prorated through
the termination date);
(ii) The Company shall maintain in full
force and effect for the continued benefit of the
Executive, until the end of the term of this
Agreement, all employee benefit plans and programs
or arrangements in which the Executive was entitled
to participate immediately prior to the date of
termination, provided that his continued
participation is possible under the general terms
and provisions of such plans and programs (it being
understood and agreed, however, that unless provided
pursuant to a separate agreement or policy adopted
by the Company prior to the Closing Date, the
Company shall not make air travel privileges
available to Executive or other employees of the
Company after the Closing Date). In the event that
the Executive's participation in any such plan or
program is barred, the Company shall arrange to
provide the Executive with benefits substantially
similar to those which he is entitled to receive
under such plans and programs.
(b) Voluntary Resignation or Termination for Cause.
If the Executive shall voluntarily terminate his employment
other than for Good Reason, or if the Company shall discharge
the Executive for Cause, this Agreement shall terminate
immediately and the Company shall have no further obligation
to make any payment under this Agreement which has not
already become payable, but has not yet been paid; provided,
however, that with respect to any stock options, performance
shares, career equity shares, incentive plans, deferred
compensation arrangements, or other plans or programs in
which the Executive is participating at the time of
termination of his employment, the Executive's rights and
benefits under each such plan shall be determined in
accordance with the terms, conditions, and limitations of the
plan in question.
(c) Mitigation of Amounts Payable Hereunder.
Executive shall not be required to mitigate the amount of any
payment provided for in this Section 5 by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this Section 5 be reduced by any compensation
earned by the Executive as the result of employment by
another employer after the date of termination, or otherwise.
(d) French Severance Payments. The payments provided
for under this Section 5 shall not reduce any severance or
similar termination-related payments which may be paid to
Executive by SFS ("French Severance Payments") should
Executive's employment with SFS be terminated; provided,
however, that to the extent such termination occurs during
the term of this Agreement and the French Severance Payments
exceed the equivalent of
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U.S. $100,000, then any payments provided for under this
Section 5 shall be reduced by such excess amount.
6. Relocation.
(a) If at any time during the term of this Agreement
the Company requires the Executive to Relocate, the Company shall pay
(or reimburse the Executive) for all reasonable moving expenses
incurred by him relating to a change of his principal residence in
connection with such Relocation and to indemnify the Executive against
any loss (defined as the difference between the actual sale price of
such residence and the higher of (i) his aggregate investment in such
residence, or (ii) the fair market value of such residence as
determined by a real estate appraiser designated by the Company and
reasonably satisfactory to Executive) realized on the sale of the
Executive's principal residence in connection with any such change of
residence. In addition, Executive's Base Salary shall be increased for
the remaining term of this Agreement if and to the extent the Company
requires Executive to Relocate to an area with a higher cost of
living. Such increase shall be proportional to the cost of living
differential between the Current Location and the new location, as
determined in accordance with an index selected by the Company that
indicates the cost of living differential between various metropolitan
areas.
(b) If the Company Relocates Executive during the
term of this Agreement, and Executive's employment with the Company is
thereafter terminated prior to the second anniversary of the
Relocation (regardless of whether Executive is at the time of such
termination employed under this Agreement, any extension hereof or as
an at-will employee or otherwise), then the Company shall, upon
Executive's request, pay (or reimburse the Executive) for all
reasonable moving expenses incurred by him in relocating his principal
residence back to Executive's Current Location or other location
within France designated by Executive, and indemnify Executive against
any loss (as defined in Section 6(a) above) realized on the sale of
the Executive's principal residence in connection with any such change
of residence; provided, however, that if Executive wishes to relocate
to a location other than his Current Location, then Executive shall be
responsible for and pay any relocation expenses in excess of the cost
of relocating to his Current Location.
7. Confidential Information. The Executive recognizes and
acknowledges that he will have access to certain information of
members of the Company Group and that such information is confidential
and constitutes valuable, special and unique property of such members
of the Company Group. The Executive shall not at any time, either
during or subsequent to the term of this Agreement, disclose to
others, use, copy or permit to be copied, except in pursuance of his
duties for and on behalf of the Company, its successors, assigns or
nominees, any Confidential Information of any member of the Company
Group (regardless of whether developed by the Executive) without the
prior written consent of the Company. The Executive shall maintain in
confidence any Confidential Information of third parties received as a
result of his employment with the
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<PAGE> 6
Company in accordance with the Company's obligations to such third
parties and the policies established by the Company.
8. Delivery of Documents upon Termination. The Executive
shall deliver to the Company or its designee at the termination of his
employment all correspondence, memoranda, notes, records, drawings,
sketches, plans, customer lists, product compositions, and other
documents and all copies thereof, made, composed or received by the
Executive, solely or jointly with others, that are in the Executive's
possession, custody, or control at termination and that are related in
any manner to the past, present, or anticipated business of any member
of the Company Group. In this regard, the Executive hereby grants and
conveys to the Company all right, title and interest in and to,
including without limitation, the right to possess, print, copy, and
sell or otherwise dispose of, any reports, records, papers, summaries,
photographs, drawings or other documents, and writings, and copies,
abstracts or summaries thereof, that may be prepared by the Executive
or under his direction or that may come into his possession in any way
during the term of his employment with the Company that relate in any
manner to the past, present or anticipated business of any member of
the Company Group.
9. Remedies. The Executive acknowledges that a remedy at law
for any breach or attempted breach of the Executive's obligations
under Sections 7 and 8 may be inadequate, agrees that the Company may
be entitled to specific performance and injunctive and other equitable
remedies in case of any such breach or attempted breach, and further
agrees to waive any requirement for the securing or posting of any
bond in connection with the obtaining of any such injunctive or other
equitable relief.
10. Definitions. For purposes of this Agreement, capitalized
terms shall have the respective meanings set forth below or as
elsewhere provided in this Agreement:
(a) "Cause" means (A) the willful and continued
failure by the Executive to perform his duties with the
Company (other than any such failure resulting from
incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to
the Executive by the Board which specifically identifies the
manner in which the Board believes that he has not
substantially performed his duties and specifying a
reasonable period during which Executive shall be afforded an
opportunity to cure such failure, or (B) the willful engaging
by the Executive in gross misconduct materially and
demonstrably injurious to the Company. 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 him (i) not in good faith and (ii) without
reasonable belief that his action or omission was in the best
interest of the Company.
(b) "Company Group" means the Company, and any
entity that from time to time directly or indirectly
controls, is controlled by, or is under common control with,
the Company, and for purposes of this definition "control"
means the possession, directly or indirectly, of the power to
direct or cause the direction of
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the management and policies of such entity, whether through
the ownership of voting securities, by contract or otherwise.
(c) "Confidential Information" means with respect to
any person means any secret or confidential information or
know-how and shall include, but shall not be limited to, the
plans, customers, costs, prices, uses, and applications of
products and services, results of investigations, studies or
experiments owned or used by such person, and all apparatus,
products, processes, compositions, samples, formulas,
computer programs, computer hardware designs, computer
firmware designs, and servicing, marketing or manufacturing
methods and techniques at any time used, developed,
investigated, made or sold by such person, before or during
the term of this Agreement, that are not readily available to
the public or that are maintained as confidential by such
person.
(d) "Disability" means Executive's qualification for
long-term disability benefits under the Company's disability
plan or insurance policy; or, if no such plan or policy is
then in existence (or if Executive does not participate in
such plan or policy), Executive becoming unable to perform
his or her employment duties for a period of four continuous
months (or four months in any six-month period) because of
ill health or physical or mental disability.
(e) "Good Reason" means:
(A) Without his express written consent,
the assignment to the Executive of any duties not
commensurate with his current duties, title and
reporting relationship, as specified in Exhibit A,
or any removal of the Executive from or any failure
to re-elect the Executive to any of such positions,
except in connection with the termination of his
employment (i) for Cause or as a result of his
death, or (ii) by the Executive other than for Good
Reason;
(B) A reduction by the Company of
Executive's Base Salary (as in effect from time to
time) or Executive's Guaranteed Bonus;
(C) The taking of any action by the Company
which would materially and adversely affect the
Executive's participation in or materially reduce
his benefits under any benefit or compensation plan,
or the failure by the Company to (i) pay any
relocation expense or indemnify Executive against
any relocation loss to the extent provided for in
Section 6 above, or (ii) provide the Executive with
at least that number of paid vacation days to which
he is entitled as set forth in Section 4(c) above
(provided, however, that discontinuance of
Executive's travel privileges after the Closing Date
(without prejudice to any travel commitments made in
any other agreement) shall not give rise to a Good
Reason); or
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<PAGE> 8
(D) Without his express written consent,
requiring Executive to Relocate prior to the first
anniversary of the Closing Date (it being understood
and agreed that requiring Relocation after such
anniversary date shall not constitute a "Good
Reason").
(f) "Relocation" or "Relocate" means a requirement
by the Company that Executive primarily perform his duties at
a location more than 50 miles from the Current Location and
such new location is further from Executive's principal
residence than the Current Location. A Relocation shall be
deemed to occur on the date Executive actually begins to
primarily perform his duties at the new location. "Current
Location" means the location where Executive primarily
performs his duties as of the effective date of this
Agreement.
11. Miscellaneous Provisions.
(a) Successors of the Company. The Company will
require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the
Company, to assume and agree to perform this Agreement.
Except for purposes of the foregoing sentence, as used in
this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid.
(b) Disability. If, during the term of this
Agreement, the Executive incurs a Disability, the Company
shall continue to pay to the Executive all amounts payable
under Sections 4(a) and (b) above during the remaining term
of this Agreement. In addition, the Company shall maintain in
full force and effect for the continued benefit of the
Executive, until the end of the term of this Agreement, all
employee benefit plans and programs or arrangements in which
the Executive was entitled to participate immediately prior
to the date of Disability, provided that his continued
participation is possible under the general terms and
provisions of such plans and programs (it being understood
and agreed, however, that unless provided pursuant to a
separate agreement or policy adopted by the Company prior to
the Closing Date, the Company shall not make air travel
privileges available to Executive or other employees of the
Company after the Closing Date). In the event that the
Executive's participation in any such plan or program is
barred, the Company shall arrange to provide the Executive
with benefits substantially similar to those which he is
entitled to receive under such plans and programs. Amounts
payable under this Section 11(b) shall be in addition to any
amounts paid under any disability insurance policies that may
be maintained in Executive's favor.
(c) Executive's Heirs, etc. The Executive may not
assign his rights or delegate his duties or obligations
hereunder without the written consent of the Company. This
Agreement shall inure to the benefit of and be enforceable by
the
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<PAGE> 9
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any cash
compensation amounts would still be payable to him hereunder
if he had continued to live, all such amounts, unless other
provided herein, shall be paid in accordance with the terms
of this Agreement to his designee or, if there be no such
designee, to his estate.
(d) Notice. For the purposes of this Agreement,
notices and all other communications provide for in the
Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested,
postage prepaid, addressed, in the case of Executive, to his
address set forth on the first page of this Agreement and, in
the case of the Company, to the address of its headquarters
office (provided that all notices to the Company shall be
directed to the attention of the President of the Company
with a copy to the Secretary of the Company), or to such
other address designated in writing in accordance herewith,
except that notices of change of address shall be effective
only upon receipt.
(e) Amendment; Waiver. No provisions of this
Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing
signed by the Executive and such officer as may be
specifically designated by the Board of Directors of the
Company (which shall in any event include the Company's
President). No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which
are not set forth expressly in this Agreement.
(f) Invalid Provisions. Should any portion of this
Agreement be adjudged or held to be invalid, unenforceable or
void, such holding shall not have the effect of invalidating
or voiding the remainder of this Agreement and the parties
hereby agree that the portion so held invalid, unenforceable
or void shall, if possible, be deemed amended or reduced in
scope, or otherwise be stricken from this Agreement to the
extent required for the purposes of validity and enforcement
thereof.
(g) Survival of the Executive's Obligations. The
Executive's obligations under Section 7 and 8 of this
Agreement shall survive regardless of whether the Executive's
employment by the Company is terminated, voluntarily or
involuntarily, by the Company or the Executive, with or
without Cause.
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(h) Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be
an original but all of which together will constitute one and
the same instrument.
(i) Governing Law. This Agreement shall be governed
by and construed under the laws of the State of Texas. This
Agreement shall not be deemed to modify or amend any
agreement between Executive and SFS pertaining to Executive's
employment with or service to SFS as a salaried employee or
in any other capacity.
(j) Captions and Gender. The use of captions and
Section headings herein is for purposes of convenience only
and shall not effect the interpretation or substance of any
provisions contained herein. Similarly, the use of the
masculine gender with respect to pronouns in this Agreement
is for purposes of convenience and includes either sex who
may be a signatory.
(k) Termination of Agreement if No Sale.
Notwithstanding any other provision of this Agreement, if the
Closing Date has not occurred by July 31, 1999, the Company
shall thereafter be entitled to terminate this Agreement at
any time without further obligation or liability.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the date first written above.
AMR SERVICES CORPORATION
By: /s/ Peter Pappas
----------------------------------------
Peter Pappas
President
By: /s/ Olivier Bijaoui
----------------------------------------
Olivier Bijaoui
Exhibit A: Job Description
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EXHIBIT A
SENIOR VICE PRESIDENT - EUROPE AND MIDDLE EAST
As a Senior Vice President - Europe and Middle East,
Executive reports to the President of the Company. The position is responsible
for the financial and operational performance of the Company's European
stations, including, at the present time, Belgium, France, Poland, Spain and
the United Kingdom. Executive directs and coordinates overall activities at his
designated stations in such functional areas as station operations, financial
planning and product marketing. Executive participates in the formulation and
administration of Company policies and long range goals, objectives and
strategy.
<PAGE> 1
EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into effective as of November
13, 1998 by and between AMR Services Corporation, a Delaware corporation (the
"Company"), and John Vittas ("Executive"), having a mailing address at 4000 Fair
Hill Ct., Colleyville, TX 76034.
R E C I T A L S
The Board of Directors of the Company has determined that it is in the best
interests of the Company to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the Executive, to
their assigned duties without distraction during a possible sale of the Company.
To enhance and induce Executive's uninterrupted service to the Company, and to
provide Executive with specific contractual assurance of Executive's continued
employment with the Company following a sale of the Company, the Company wishes
to provide in this Agreement for the employment of the Executive upon the terms
and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and the Executive hereby agree as follows:
1. Employment. Upon the terms and subject to the conditions contained in
this Agreement, the Executive agrees to provide full-time services for the
Company. The Executive agrees to devote his best efforts to the business of the
Company, and to perform his duties in a diligent, trustworthy, and business-like
manner, all for the purpose of advancing the business of the Company.
2. Duties. Executive's duties, title and reporting relationship within the
Company's management structure shall during the term of this Agreement be
commensurate with Executive's current duties, title and reporting relationship,
as briefly outlined on Exhibit A attached hereto. Subject to the provisions of
Section 10(e)(A), the Executive's duties may, from time to time, be changed or
modified at the discretion of the President of the Company.
3. Employment Term. Subject to the terms and conditions hereof, the Company
agrees to employ the Executive for a term commencing on the effective date of
this Agreement and, subject to Section 11(k), continuing through the second
anniversary of the date of consummation (the "Closing Date") of any transaction
involving the sale of substantially all of the assets of the Company or a
controlling equity interest in the Company to, or any merger, consolidation,
business combination, or similar transaction with, a party unaffiliated with AMR
<PAGE> 2
Corporation. This Agreement may be extended beyond the foregoing term by mutual
agreement of the parties.
4. Salary and Benefits.
(a) Base Salary. From and after the effective date of this Agreement, the
Company shall continue to pay to Executive his current annual base salary of
$ , pro rated for periods of less than 12 months, less applicable
withholding and salary deductions, in accordance with the Company's standard
payroll practices. On January 1, 1999 and during the remaining term of this
Agreement, Executive's base salary shall be increased to $ . After the
Closing Date, Executive's base salary shall be reviewed and considered for
adjustment by the Company at least annually. The Company may not, however,
reduce the Executive's base salary at any time during the term of this
Agreement.
(b) Annual Bonus Payment. The Company shall pay Executive an annual bonus
during the term of this Agreement. The first such bonus shall be paid on or
before March 15, 2000 (relating to the year 1999), and on or before the March
15, 2001 (relating to the year 2000). If the Agreement expires in 2001 and is
not renewed by mutual agreement of the parties, a prorated bonus shall be paid
to Executive for any portion of the year 2001 falling within the term of this
Agreement. Such prorated bonus shall be payable within thirty days following the
expiration date of this Agreement. The foregoing annual bonus shall be an amount
equal to 30% of the Executive's base salary for the applicable year (the
"Guaranteed Bonus"). In the event the Company's Board of Directors continues the
Company's annual incentive plan (or adopts a new plan), and the pay out under
such plan would be greater than the Guaranteed Bonus, Executive shall in lieu of
the Guaranteed Bonus be eligible to receive the pay out determined in accordance
with such plan.
(c) Vacation. The Executive shall be entitled to no less than 30 days of
paid vacation during each full year of his employment pursuant to this
Agreement. Vacations shall be taken at such times as are consistent with the
reasonable business needs of the Company.
(d) Reimbursement of Expenses. The Company shall reimburse the Executive
for all reasonable out-of-pocket expenses incurred by the Executive in the
course of his duties, in accordance with Company policies in effect from time to
time.
(e) Employee Benefits. The Executive shall be entitled to participate in
the employee benefit programs generally available to employees of the Company,
and to all normal perquisites provided to senior executives of the Company, it
being understood and agreed, however, that (i) the programs and perquisites made
available to Executive during the term of this Agreement shall be commensurate
with those provided to Executive immediately prior to the date of this Agreement
(except for benefits of the type provided under the AMR Long Term Incentive Plan
which may change or be eliminated from and after the Closing Date), and (ii)
unless provided pursuant to a separate agreement or policy adopted by the
Company prior to the Closing Date, the Company shall not make air travel
privileges available to Executive or other employees of the Company after the
Closing Date.
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(f) Stay-In-Place Benefits. In addition to any other amounts due Executive
hereunder, the Company shall pay to Executive certain amounts and make certain
other benefits/privileges available to Executive as outlined in the letter to
Executive from the President of AMR Global Services dated September 23, 1998.
The Company's obligation to pay the foregoing amounts and make the foregoing
benefits/privileges available shall be contingent upon Executive not (i)
voluntarily terminating his employment prior to the Closing Date (other than for
Good Reason); or (ii) being terminated by the Company for Cause prior to the
Closing Date.
(g) Signing Bonus. In addition to any other amounts due Executive hereunder
or provided for in the letter referred to in Section 4(f), promptly following
the Closing Date the Company shall pay to Executive a bonus equal to two month's
of Executive's base salary, provided that Executive executes and delivers this
Agreement to the Company prior to November 13, 1998. Executive's base salary in
effect immediately prior to the Closing Date shall be used in calculating the
foregoing bonus amount. The Company's obligation to pay the foregoing bonus
shall be contingent upon Executive not (i) voluntarily terminating his
employment prior to the Closing Date (other than for Good Reason); or (ii) being
terminated by the Company for Cause prior to the Closing Date.
5. Termination of Employment. The Board of Directors of the Company may
terminate the employment of the Executive at any time as it deems appropriate.
Executive shall likewise be entitled at any time to terminate his employment
with the Company. Upon such termination, the Company's and Executive's further
rights and obligations shall be determined as set forth in the remaining
provisions of this Section 5 and as otherwise provided in this Agreement.
(a) Termination Without Cause; Resignation for Good Reason. If the
Executive's employment is terminated by the Company without Cause, or the
Executive voluntarily terminates his employment for Good Reason:
(i) The Company shall continue to pay the Executive his base salary and
Guaranteed Bonus as provided in Sections 4(a) and (b) above until the end
of the term of this Agreement (prorated through the termination date);
(ii) The Company shall maintain in full force and effect for the
continued benefit of the Executive, until the end of the term of this
Agreement, all employee benefit plans and programs or arrangements in which
the Executive was entitled to participate immediately prior to the date of
termination, provided that his continued participation is possible under
the general terms and provisions of such plans and programs (it being
understood and agreed, however, that unless provided pursuant to a separate
agreement or policy adopted by the Company prior to the Closing Date, the
Company shall not make air travel privileges available to Executive or
other employees of the Company after the Closing Date). In the event that
the Executive's participation in any such plan or program is barred, the
Company shall arrange to provide the Executive with benefits substantially
similar to those which he is entitled to receive under such plans and
programs.
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(b) Voluntary Resignation or Termination for Cause. If the Executive shall
voluntarily terminate his employment other than for Good Reason, or if the
Company shall discharge the Executive for Cause, this Agreement shall terminate
immediately and the Company shall have no further obligation to make any payment
under this Agreement which has not already become payable, but has not yet been
paid; provided, however, that with respect to any stock options, performance
shares, career equity shares, incentive plans, deferred compensation
arrangements, or other plans or programs in which the Executive is participating
at the time of termination of his employment, the Executive's rights and
benefits under each such plan shall be determined in accordance with the terms,
conditions, and limitations of the plan in question.
(c) Mitigation of Amounts Payable Hereunder. The Executive shall not be
required to mitigate the amount of any payment provided for in this Section 5 by
seeking other employment or otherwise, nor shall the amount of an payment
provided for in this Section 5 be reduced by any compensation earned by the
Executive as the result of employment by another employer after the date of
termination, or otherwise.
6. Relocation.
(a) If at any time during the term of this Agreement the Company requires
the Executive to Relocate, the Company shall pay (or reimburse the Executive)
for all reasonable moving expenses, incurred by him relating to a change of his
principal residence in connection with such Relocation and to indemnify the
Executive against any loss (defined as the difference between the actual sale
price of such residence and the higher of (i) his aggregate investment in such
residence, or (ii) the fair market value of such residence as determined by a
real estate appraiser designated by the Company and reasonably satisfactory to
Executive) realized on the sale of the Executive's principal residence in
connection with any such change of residence. In addition, Executive's base
salary provided for in Section 4(a) shall be increased for the remaining term of
this Agreement if and to the extent the Company requires Executive to Relocate
to an area with a higher cost of living. Such increase shall be proportional to
the cost of living differential between the Current Location and the new
location, as determined in accordance with an index selected by the Company
published by the U.S. Department of Labor that indicates the cost of living
differential between various U.S. metropolitan areas.
(b) If the Company Relocates Executive during the term of this Agreement,
and Executive's employment with the Company is thereafter terminated prior to
the second anniversary of the Relocation (regardless of whether Executive is at
the time of such termination employed under this Agreement, any extension hereof
or as an at-will employee or otherwise), then the Company shall, upon
Executive's request, pay (or reimburse the Executive) for all reasonable moving
expenses incurred by him in relocating his principal residence back to
Executive's Current Location or other location within the United States
designated by Executive, and indemnify Executive against any loss (as defined in
Section 6(a) above) realized on the sale of the Executive's principal residence
in connection with any such change of residence; provided, however, that if
Executive wishes to relocate to a location other than his Current Location, then
Executive shall be responsible for and pay any relocation expenses in excess of
the cost of relocating to his Current Location.
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<PAGE> 5
7. Confidential Information. The Executive recognizes and acknowledges that
he will have access to certain information of members of the Company Group and
that such information is confidential and constitutes valuable, special and
unique property of such members of the Company Group. The Executive shall not at
any time, either during or subsequent to the term of this Agreement, disclose to
others, use, copy or permit to be copied, except in pursuance of his duties for
and on behalf of the Company, it successors, assigns or nominees, any
Confidential Information of any member of the Company Group (regardless of
whether developed by the Executive) without the prior written consent of the
Company. The Executive shall maintain in confidence any Confidential Information
of third parties received as a result of his employment with the Company in
accordance with the Company's obligations to such third parties and the policies
established by the Company.
8. Delivery of Documents upon Termination. The Executive shall deliver to
the Company or its designee at the termination of his employment all
correspondence, memoranda, notes, records, drawings, sketches, plans, customer
lists, product compositions, and other documents and all copies thereof, made,
composed or received by the Executive, solely or jointly with others, that are
in the Executive's possession, custody, or control at termination and that are
related in any manner to the past, present, or anticipated business of any
member of the Company Group. In this regard, the Executive hereby grants and
conveys to the Company all right, title and interest in and to, including
without limitation, the right to possess, print, copy, and sell or otherwise
dispose of, any reports, records, papers, summaries, photographs, drawings or
other documents, and writings, and copies, abstracts or summaries thereof, that
may be prepared by the Executive or under his direction or that may come into
his possession in any way during the term of his employment with the Company
that relate in any manner to the past, present or anticipated business of any
member of the Company Group.
9. Remedies. The Executive acknowledges that a remedy at law for any breach
or attempted breach of the Executive's obligations under Sections 7 and 8 may be
inadequate, agrees that the Company may be entitled to specific performance and
injunctive and other equitable remedies in case of any such breach or attempted
breach, and further agrees to waive any requirement for the securing or posting
of any bond in connection with the obtaining of any such injunctive or other
equitable relief.
10. Definitions. For purposes of this Agreement, capitalized terms shall
have the respective meanings set forth below or as elsewhere provided in this
Agreement:
(a) "Cause" means (A) the willful and continued failure by the Executive to
perform his duties with the Company (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the Board which
specifically identifies the manner in which the Board believes that he has not
substantially performed his duties and specifying a reasonable period during
which Executive shall be afforded an opportunity to cure such failure, or (B)
the willful engaging by the Executive in gross misconduct materially and
demonstrably injurious to the Company. For purposes of this paragraph, no act,
or failure to act, on the Executive's part shall be
-5-
<PAGE> 6
considered "willful" unless done, or omitted to be done, by him (i) not in good
faith and (ii) without reasonable belief that his action or omission was in the
best interest of the Company.
(b) "Company Group" means the Company, and any entity that from time
to time directly or indirectly controls, is controlled by, or is under common
control with, the Company, and for purposes of this definition "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, whether through the
ownership of voting securities, by contract or otherwise.
(c) "Confidential Information" means with respect to any person
means any secret or confidential information or know-how and shall include, but
shall not be limited to, the plans, customers, costs, prices, uses, and
applications of products and services, results of investigations, studies or
experiments owned or used by such person, and all apparatus, products,
processes, compositions, samples, formulas, computer programs, computer hardware
designs, computer firmware designs, and servicing, marketing or manufacturing
methods and techniques at any time used, developed, investigated, made or sold
by such person, before or during the term of this Agreement, that are not
readily available to the public or that are, maintained as confidential by such
person.
(d) "Disability" means Executive's qualification for long-term
disability benefits under the Company's disability plan or insurance policy; or,
if no such plan or policy is then in existence (or if Executive does not
participate in such plan or policy), Executive becoming unable to perform his or
her employment duties for a period of four continuous months (or four months in
any six-month period) because of ill health or physical or mental disability.
(e) "Good Reason" means:
(A) Without his express written consent, the assignment to the
Executive of any duties not commensurate with his current duties, title
and reporting relationship, as specified in Exhibit A, or any removal
of the Executive from or any failure to re-elect the Executive to any
of such positions, except in connection with the termination of his
employment (i) for Cause or as a result of his death, or (ii) by the
Executive other than for Good Reason;
(B) A reduction by the Company of Executive's base salary (as
in effect from time to time) or Executive's Guaranteed Bonus;
(C) The taking of any action by the Company which would
materially and adversely affect the Executive's participation in or
materially reduce his benefits under any benefit or compensation plan,
or the failure by the Company to (i) pay any relocation expense or
indemnify Executive against any relocation loss to the extent provided
for in Section 6 above, or (ii) provide the Executive with at least
that number of paid vacation days to which he is entitled as set forth
in Section 4(c) above (provided, however, that discontinuance of
Executive's travel privileges after the Closing Date (without prejudice
to any travel commitments made in any other agreement) shall not give
rise to a Good Reason); or
-6-
<PAGE> 7
(D) Without his express written consent, requiring Executive
to Relocate prior to the first anniversary of the Closing Date (it
being understood and agreed that requiring Relocation after such
anniversary date shall not constitute a "Good Reason").
(f) "Relocation" or "Relocate" means a requirement by the Company
that Executive primarily perform his duties at a location more than 50 miles
from the Current Location and such new location is further from Executive's
principal residence than the Current Location. A Relocation shall be deemed to
occur on the date Executive actually begins to primarily perform his duties at
the new location. "Current Location" means the location where Executive
primarily performs his duties as of the effective date of this Agreement.
11. Miscellaneous Provisions.
(a) Successors of the Company. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, to assume and agree to perform this Agreement. Except for purposes of
the foregoing sentence, as used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid.
(b) Disability. If, during the term of this Agreement, the Executive
incurs a Disability, the Company shall continue to pay to the Executive all
amounts payable under Sections 4(a) and (b) above during the remaining term of
this Agreement. In addition, the Company shall maintain in full force and effect
for the continued benefit of the Executive, until the end of the term of this
Agreement, all employee benefit plans and programs or arrangements in which the
Executive was entitled to participate immediately prior to the date of
Disability, provided that his continued participation is possible under the
general term and provisions of such plans and programs (it being understood and
agreed, however, that unless provided pursuant to a separate agreement or policy
adopted by the Company prior to the Closing Date, the Company shall not make air
travel privileges available to Executive or other employees of the Company after
the Closing Date). In the event that the Executive's participation in any such
plan or program is barred, the Company shall arrange to provide the Executive
with benefits substantially similar to those which he is entitled to receive
under such plans and programs. Amounts payable under this Section 11(b) shall be
in addition to any amounts paid under any disability insurance policies that may
be maintained in Executives favor.
(c) Executive's Heirs, etc. The Executive may not assign his rights
or delegate his duties or obligations hereunder without the written consent of
the Company. This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any cash compensation amounts would still be payable to him hereunder
if he had continued to live, all such amounts, unless other provided herein,
shall be paid in accordance with the terms of this Agreement to his designee or,
if there be no such designee, to his estate.
-7-
<PAGE> 8
(d) Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed, in the case of Executive, to his address set forth on the first page
of this Agreement and, in the case of the Company, to the address of its
headquarters office (provided that all notices to the Company shall be directed
to the attention of the President of the Company with a copy to the Secretary of
the Company), or to such other address designated in writing in accordance
herewith, except that notices of change of address shall be effective only upon
receipt.
(e) Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer as may be specifically
designated by the Board of Directors of the Company (which shall in any event
include the Company's President). No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
(f) Invalid Provisions. Should any portion of this Agreement be adjudged or
held to be invalid, unenforceable or void, such holding shall not have the
effect of invalidating or voiding the remainder of this Agreement and the
parties hereby agree that the portion so held invalid, unenforceable or void
shall, if possible, be deemed amended or reduced in scope, or otherwise be
stricken from this Agreement to the extent required for the purposes of validity
and enforcement thereof.
(g) Survival of the Executive's Obligations. The Executive's obligations
under Section 7 and 8 of this Agreement shall survive regardless of whether the
Executive's employment by the Company is terminated, voluntarily or
involuntarily, by the Company or the Executive, with or without Cause.
(h) Counterparts. This Agreement may be executed in one or- more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
(i) Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Texas.
(j) Captions and Gender. The use of captions and Section headings herein is
for purposes of convenience only and shall not effect the interpretation or
substance of any provisions contained herein. Similarly, the use of the
masculine gender with respect to pronouns in this Agreement is for purposes of
convenience and includes either sex who may be a signatory.
-8-
<PAGE> 9
(k) Termination of Agreement if No Sale. Notwithstanding any other
provision of this Agreement, if the Closing Date has not occurred by ,
the Company shall thereafter be entitled to terminate this Agreement at any time
without further obligation or liability.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date first written above.
AMR Services Corporation
By: /s/ Peter Pappas
-------------------------------
Peter Pappas
President
/s/ John Vittas
-------------------------------
John Vittas
Exhibit A: Job Description
-9-
<PAGE> 10
EXHIBIT A
Senior Vice President - Marketing and Planning
As Senior Vice President - Marketing and Planning, Executive reports to the
President of the Company. Executive is responsible for sales, marketing and
business development for the Company. Executive participates in formulation and
administration of Company policies and long range goals and objectives.
<PAGE> 1
EXECUTION COPY
================================================================================
EXHIBIT 10.9
CREDIT AGREEMENT
dated as of
August 12, 1999
among
WFS HOLDINGS, INC.,
WORLDWIDE FLIGHT SERVICES, INC.,
as Borrower,
The Lenders Party Hereto,
THE CHASE MANHATTAN BANK,
as Administrative Agent,
and
DLJ CAPITAL FUNDING, INC.,
as Syndication Agent
---------------------------
CHASE SECURITIES INC.,
as Lead Arranger and Book Manager
================================================================================
[CS&M Ref. No. 6700-875]
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I
Definitions
SECTION 1.01. Defined Terms.................................................................. 1
SECTION 1.02. Classification of Loans and Borrowings......................................... 37
SECTION 1.03. Terms Generally................................................................ 37
SECTION 1.04. Accounting Terms; GAAP......................................................... 38
ARTICLE II
The Credits
SECTION 2.01. Commitments.................................................................... 38
SECTION 2.02. Loans and Borrowings........................................................... 39
SECTION 2.03. Requests for Borrowings........................................................ 40
SECTION 2.04. Letters of Credit.............................................................. 41
SECTION 2.05. Funding of Borrowings.......................................................... 47
SECTION 2.06. Interest Elections............................................................. 48
SECTION 2.07. Termination and Reduction of Commitments....................................... 49
SECTION 2.08. Repayment of Loans; Evidence of Debt........................................... 51
SECTION 2.09. Amortization of Term Loans..................................................... 52
SECTION 2.10. Prepayment of Loans............................................................ 53
SECTION 2.11. Fees........................................................................... 56
SECTION 2.12. Interest....................................................................... 57
SECTION 2.13. Alternate Rate of Interest..................................................... 58
SECTION 2.14. Increased Costs................................................................ 59
SECTION 2.15. Break Funding Payments......................................................... 60
SECTION 2.16. Taxes.......................................................................... 61
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.................... 63
SECTION 2.18. Mitigation Obligations; Replacement of Lenders................................. 65
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers........................................................... 66
SECTION 3.02. Authorization; Enforceability.................................................. 67
SECTION 3.03. Governmental Approvals; No Conflicts........................................... 67
SECTION 3.04. Financial Condition; No Material Adverse Change................................ 68
</TABLE>
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2
<TABLE>
<S> <C>
SECTION 3.05. Properties..................................................................... 69
SECTION 3.06. Litigation and Environmental Matters........................................... 69
SECTION 3.07. Compliance with Laws and Agreements............................................ 70
SECTION 3.08. Investment and Holding Company Status.......................................... 70
SECTION 3.09. Taxes.......................................................................... 70
SECTION 3.10. ERISA.......................................................................... 71
SECTION 3.11. Disclosure..................................................................... 71
SECTION 3.12. Subsidiaries................................................................... 72
SECTION 3.13. Insurance...................................................................... 72
SECTION 3.14. Labor Matters.................................................................. 72
SECTION 3.15. Solvency....................................................................... 72
SECTION 3.16. Year 2000...................................................................... 73
SECTION 3.17. Security Documents............................................................. 73
ARTICLE IV
Conditions
SECTION 4.01. Effective Date................................................................. 74
SECTION 4.02. Each Credit Event.............................................................. 78
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other Information..................................... 79
SECTION 5.02. Notices of Material Events..................................................... 82
SECTION 5.03. Information Regarding Collateral............................................... 83
SECTION 5.04. Existence; Conduct of Business................................................. 83
SECTION 5.05. Payment of Obligations......................................................... 83
SECTION 5.06. Maintenance of Properties...................................................... 84
SECTION 5.07. Insurance...................................................................... 84
SECTION 5.08. Casualty and Condemnation...................................................... 84
SECTION 5.09. Books and Records; Inspection and Audit Rights................................. 84
SECTION 5.10. Compliance with Laws........................................................... 85
SECTION 5.11. Use of Proceeds and Letters of Credit.......................................... 85
SECTION 5.12. Additional Subsidiaries........................................................ 86
SECTION 5.13. Further Assurances............................................................. 86
SECTION 5.14. Interest Rate Protection....................................................... 87
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness; Certain Equity Securities........................................ 87
</TABLE>
<PAGE> 4
3
<TABLE>
<S> <C>
SECTION 6.02. Liens.......................................................................... 91
SECTION 6.03. Fundamental Changes............................................................ 92
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions...................... 93
SECTION 6.05. Asset Sales.................................................................... 96
SECTION 6.06. Sale and Leaseback Transactions................................................ 97
SECTION 6.07. Hedging Agreements............................................................. 97
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness.......................... 98
SECTION 6.09. Transactions with Affiliates................................................... 100
SECTION 6.10. Restrictive Agreements......................................................... 100
SECTION 6.11. Amendment of Material Documents................................................ 101
SECTION 6.12. Interest Expense Coverage Ratio................................................ 102
SECTION 6.13. Leverage Ratio................................................................. 103
SECTION 6.14. Senior Leverage Ratio.......................................................... 104
SECTION 6.15. Capital Expenditures........................................................... 104
ARTICLE VII
Events of Default
ARTICLE VIII
The Administrative Agent
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices........................................................................ 110
SECTION 9.02. Waivers; Amendments............................................................ 112
SECTION 9.03. Expenses; Indemnity; Damage Waiver............................................. 114
SECTION 9.04. Successors and Assigns......................................................... 116
SECTION 9.05. Survival....................................................................... 119
SECTION 9.06. Counterparts; Integration; Effectiveness....................................... 120
SECTION 9.07. Severability................................................................... 120
SECTION 9.08. Right of Setoff................................................................ 121
SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS..................... 121
SECTION 9.10. WAIVER OF JURY TRIAL........................................................... 122
SECTION 9.11. Headings....................................................................... 122
SECTION 9.12. Confidentiality................................................................ 122
SECTION 9.13. Interest Rate Limitation....................................................... 123
</TABLE>
<PAGE> 5
CREDIT AGREEMENT dated as of August 12,
1999, among WFS HOLDINGS, INC., WORLDWIDE FLIGHT
SERVICES, INC., the LENDERS party hereto, THE CHASE
MANHATTAN BANK, as Administrative Agent, and DLJ
CAPITAL FUNDING, INC., as Syndication Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Account Debtor" has the meaning assigned to such term in the
Security Agreement.
"Accounts" has the meaning assigned to such term in the
Security Agreement.
"Acquisition" means the purchase of all of the outstanding
shares of capital stock of the Company by MAS Worldwide and the other
transactions contemplated by the Stock Purchase Agreement.
"Adjusted LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its
capacity as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through
<PAGE> 6
2
one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum
equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base
CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due
to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate shall be effective from and including the effective date of such change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"AMR Stock Purchase Agreement" means the Stock Purchase
Agreement dated December 23, 1998, entered into among the Borrower (formerly
known as MR Services Acquisition Corporation), AMR Services Holding Corporation
and AMR Corp.
"Applicable Percentage" means, with respect to any Revolving
Lender, the percentage of the total Revolving Commitments represented by such
Lender's Revolving Commitment. If the Revolving Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"Applicable Rate" means, for any day (a) with respect to any
Term Loan, (i) 2.50% per annum, in the case of an ABR Loan, or (ii) 3.50% per
annum, in the case of a Eurodollar Loan, and (b) with respect to any ABR Loan or
Eurodollar Loan that is a Revolving Loan, the applicable rate per annum set
forth below under the caption "ABR Spread" or "Eurodollar Spread", as the case
may be, based upon the Leverage Ratio as of the end of the Borrower's most
recently completed fiscal quarter, provided that until the delivery to the
Administrative Agent, pursuant to Section 5.01(a) or (b), of the Borrower's
consolidated financial statements for the Borrower's second full fiscal quarter
ending after the Effective Date, the "Applicable Rate" for purposes of clause
(b) above shall be the applicable rate per annum set forth below in Category 1:
<PAGE> 7
3
<TABLE>
<CAPTION>
=================================================================
Leverage Ratio: ABR Spread Eurodollar Spread
--------------- ---------- -----------------
- -----------------------------------------------------------------
<S> <C> <C>
Category 1 2.00% 3.00%
----------
>3.50 to 1.0
- -----------------------------------------------------------------
Category 2 1.75% 2.75%
----------
>2.50 to 1.0 and
<=3.50 to 1.0
- -----------------------------------------------------------------
Category 3 1.50% 2.50%
----------
<=2.50 to 1.0
=================================================================
</TABLE>
For purposes of the foregoing, (a) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of the Borrower's fiscal year
based upon the Borrower's consolidated financial statements delivered pursuant
to Section 5.01(a) or (b) and (b) each change in the Applicable Rate resulting
from a change in the Leverage Ratio shall be effective during the period
commencing on and including the fifth day after the date of delivery to the
Administrative Agent of such consolidated financial statements indicating such
change and ending on the date immediately preceding the effective date of the
next such change, provided that the Leverage Ratio shall be deemed to be in
Category 1 (i) at any time that an Event of Default has occurred and is
continuing or (ii) if the Borrower fails to deliver the consolidated financial
statements required to be delivered by it pursuant to Section 5.01(a) or (b),
during the period from the expiration of the time for delivery thereof until
such consolidated financial statements are delivered.
"Approved Fund" means, with respect to any Lender that is a
fund that invests in bank loans and similar commercial extensions of credit, any
other fund that invests in bank loans and similar commercial extensions of
credit and is managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"Assessment Rate" means, for any day, the annual assessment
rate in effect on such day that is payable by a member of the Bank Insurance
Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States, provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid,
<PAGE> 8
4
then the Assessment Rate shall be such annual rate as shall be reasonably
determined by the Administrative Agent to be representative of the cost of such
insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.
"Base CD Rate" means the sum of (a) the Three-Month Secondary
CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrower" means Worldwide Flight Services, Inc., a Delaware
corporation.
"Borrowing" means Loans of the same Class and Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect.
"Borrowing Base" means, as of any date of determination, an
amount equal to the sum of (a) 85% of the Eligible Domestic Accounts Value, plus
(b) 65% of the Eligible Foreign Accounts Value, plus (c) 50% of the Eligible
Equipment Value; provided that the Borrowing Base shall not include any amount
pursuant to clause (c) above until the Administrative Agent has received and
approved the initial appraisal of the Eligible Equipment. The Borrowing Base
shall be computed as of the end of each fiscal month by the Borrower and a
Borrowing Base Certificate presenting the Borrower's computation of the
Borrowing Base will be delivered to the Administrative Agent promptly, but in no
event later than the 15th day of the following month; provided that the Borrower
may, at its option, deliver a Borrowing Base Certificate at any time (but not
more frequently then once in any week) in order to establish a new Borrowing
Base. The Borrowing Base at any time in effect shall be determined by reference
to the Borrowing Base Certificate most recently delivered hereunder, absent any
error in such Borrowing Base Certificate. The Administrative Agent may, in its
sole discretion, from time to time (a) decrease the advance rates for the
Borrowing Base, (b) establish and revise reserves reducing the amount of the
Eligible Domestic Accounts Value, Eligible Foreign Accounts Value or Eligible
Equipment Value and (c) impose additional
<PAGE> 9
5
eligibility criteria to be applicable to Eligible Accounts Receivable or
Eligible Equipment (any such action referred to in clause (a), (b) or (c), a
"Borrowing Base Adjustment"); provided that (i) Borrowing Base Adjustments shall
be made only in the event that the Administrative Agent determines (whether as a
result of any change in facts or circumstances or based on the completion of the
Administrative Agent's ongoing due diligence review of the Borrowing Base) that
the assets included in the Eligible Accounts Receivable or Eligible Equipment,
or their value, or the security interests therein granted pursuant to the
Security Agreement, are adversely affected by any events, conditions,
contingencies or risks that are not already adequately reflected in the
calculation of the Borrowing Base (including any sale or other distribution of
any assets included in the Eligible Equipment), (ii) each Borrowing Base
Adjustment shall bear a reasonable relationship to the event, condition or
circumstance that is the basis therefor and (iii) each Borrowing Base Adjustment
shall not be effective until the date that is ten Business Days after delivery
of written notice thereof to the Borrower.
"Borrowing Base Certificate" means a certificate in the form
of Exhibit G or any other form approved by the Administrative Agent, together
with all attachments contemplated thereby.
"Borrowing Request" means a request by the Borrower for a
Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed, provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"Capital Expenditures" means, for any period, without
duplication, (a) the additions, maintenance and improvements to property, plant
and equipment and other capital expenditures of the Borrower and its
consolidated Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of the Borrower for such period prepared in accordance
with GAAP and (b) Capital Lease Obligations incurred by the Borrower and its
consolidated Subsidiaries during such period.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under
<PAGE> 10
6
any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person
under GAAP, and the amount of such obligations shall be the capitalized amount
thereof determined in accordance with GAAP.
"Castle Harlan" means Castle Harlan, Inc., a Delaware
corporation.
"Change in Control" means (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person of any Equity
Interest in the Borrower, other than (i) by Holdings and (ii) upon and after the
Transition Date, in accordance with and subject to the limitations set forth in
clause (d) of Section 6.05; (b) prior to an IPO, the failure by the CH Group to
own, directly or indirectly, beneficially and of record, Equity Interests in
Holdings representing more than 50% of each of the aggregate ordinary voting
power and aggregate equity value represented by the issued and outstanding
Equity Interests in Holdings; (c) after an IPO, the failure by the CH Group to
own, directly or indirectly, beneficially and of record, Equity Interests in
Holdings representing at least 30% of each of the aggregate ordinary voting
power and the aggregate equity value represented by the issued and outstanding
Equity Interests in Holdings; (d) after an IPO, the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof),
other than the CH Group, of Equity Interests in Holdings representing more than
the percentage of the aggregate ordinary voting power represented by the issued
and outstanding Equity Interests in Holdings then owned, beneficially and of
record, by the CH Group; (e) occupation of a majority of the seats (other than
vacant seats) on the board of directors of Holdings by Persons who were not (i)
nominated by the board of directors of Holdings, (ii) appointed by directors so
nominated or (iii) recommended by Castle Harlan; (f) the acquisition of direct
or indirect Control of Holdings by any Person or group other than the CH Group
pursuant to any contract or agreement; or (g) the occurrence of a "Change of
Control" (or any analogous event), as defined in the Senior Notes Documents or
Subordinated Debt Documents.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the
<PAGE> 11
7
date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or,
for purposes of Section 2.14(b), by any lending office of such Lender or by such
Lender's or the Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"CH Group" means (a) Castle Harlan, (b) any Affiliate of
Castle Harlan (including CHP III or any other fund or managed account that is an
Affiliate of Castle Harlan, so long as it is such an Affiliate) and (c) any
employees, management or directors of any of the foregoing Persons, and any
trust or individual retirement account for the benefit of any such employee,
management or director, or members of their immediate families, and any other
Person Controlled by any such employee, manager or director.
"CHP III" means Castle Harlan Partners III, L.P., a Delaware
limited partnership.
"Class", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
Revolving Loans or Term Loans and, when used in reference to any Commitment,
refers to whether such Commitment is a Revolving Commitment or Term Commitment.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means any and all "Collateral", as defined in any
applicable Security Document.
"Collateral and Guarantee Requirement" means the requirement
that:
(a) the Administrative Agent shall have received from each
Loan Party either (i) a counterpart of each of the Guarantee Agreement,
the Indemnity, Subrogation and Contribution Agreement, the Pledge
Agreement and the Security Agreement duly executed and delivered on
behalf of such Loan Party (except, with respect to the Security
Agreement, Holdings) or (ii) in the case of any Person that becomes a
Loan Party after the Effective Date, a supplement to each of the
Guarantee Agreement, the Indemnity, Subrogation and Contribution
Agreement, the Pledge Agreement and the Security Agreement, in each
case in the form specified therein, duly executed and delivered on
behalf of such Loan Party;
<PAGE> 12
8
(b) all outstanding Equity Interests of the Borrower and each
Subsidiary owned by or on behalf of any Loan Party shall have been
pledged pursuant to the Pledge Agreement (except that the Loan Parties
shall not be required to pledge more than 65% of the outstanding voting
stock of any Foreign Subsidiary) and the Administrative Agent shall
have received certificates or other instruments representing all such
Equity Interests, together with stock powers or other instruments of
transfer with respect thereto endorsed in blank;
(c) all Indebtedness of Holdings, the Borrower and each
Subsidiary that is owing to any Loan Party shall be evidenced by a
promissory note and shall have been pledged pursuant to the Pledge
Agreement and the Administrative Agent shall have received all such
promissory notes, together with instruments of transfer with respect
thereto endorsed in blank;
(d) all documents and instruments, including Uniform
Commercial Code financing statements, required by law or reasonably
requested by the Administrative Agent to be filed, registered or
recorded to create the Liens intended to be created by the Security
Agreement and the Pledge Agreement and perfect such Liens to the extent
required by, and with the priority required by, the Security Agreement
and the Pledge Agreement, shall have been filed, registered or recorded
or delivered to the Administrative Agent for filing, registration or
recording;
(e) the Administrative Agent shall have received (i)
counterparts of a Mortgage with respect to each Mortgaged Property duly
executed and delivered by the record owner of such Mortgaged Property,
(ii) a policy or policies of title insurance issued by a nationally
recognized title insurance company insuring the Lien of each such
Mortgage as a valid first Lien on the Mortgaged Property described
therein, free of any other Liens except as expressly permitted by
Section 6.02, together with such endorsements, coinsurance and
reinsurance as the Administrative Agent or the Required Lenders may
reasonably request, and (iii) such surveys, abstracts, appraisals,
legal opinions and other documents as the Administrative Agent or the
Required Lenders may reasonably request with respect to any such
Mortgage or Mortgaged Property; and
(f) each Loan Party shall have obtained all consents and
approvals required to be obtained by it in
<PAGE> 13
9
connection with the execution and delivery of all Security Documents to
which it is a party, the performance of its obligations thereunder and
the granting by it of the Liens thereunder.
"Commitment" means a Revolving Commitment or Term Commitment,
or any combination thereof (as the context requires).
"Company" means Miami Aircraft Support, Inc., a Delaware
corporation.
"Consolidated Cash Interest Expense" means, for any period,
the excess of (a) the sum of (i) the interest expense (including commitment
fees, letter of credit fees and imputed interest expense in respect of Capital
Lease Obligations) of the Borrower and the Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, (ii) any interest
accrued during such period in respect of Indebtedness of the Borrower or any
Subsidiary that is required to be capitalized rather than included in
consolidated interest expense for such period in accordance with GAAP, plus
(iii) any cash payments made during such period in respect of obligations
referred to in clause (b)(ii) below that were amortized or accrued in a previous
period, minus (b) the sum of (i) to the extent included in such consolidated
interest expense for such period, non-cash amounts attributable to amortization
of financing costs paid in a previous period, plus (ii) to the extent included
in such consolidated interest expense for such period, non-cash amounts
attributable to amortization of debt discounts or accrued interest payable in
kind for such period.
"Consolidated EBITDA" means, for any period, Consolidated Net
Income for such period plus (a) without duplication and to the extent deducted
in determining such Consolidated Net Income, the sum of (i) consolidated
interest expense for such period, (ii) consolidated income tax expense and other
taxes based on net income for such period, (iii) all amounts attributable to
depreciation and amortization for such period, (iv) management fees paid to
Castle Harlan pursuant to the Management Agreement, as contemplated by clause
(v) of Section 6.08(a), and (v) any extraordinary losses for such period, and
minus (b) without duplication and to the extent included in determining such
Consolidated Net Income, any extraordinary gains for such period, all determined
on a consolidated basis in accordance with GAAP. For purposes of calculating
Consolidated EBITDA for any period (each, a "Reference Period") in connection
with a determination of the Leverage Ratio or the Senior Leverage Ratio for such
period,
<PAGE> 14
10
if during such Reference Period (or, in the case of pro forma calculations,
during the period from the last day of such Reference Period to and including
the date as of which such calculation is made) the Borrower or any Subsidiary
shall have made a Material Disposition or Material Acquisition, Consolidated
EBITDA for such Reference Period shall be calculated after giving pro forma
effect thereto as if such Material Disposition or Material Acquisition occurred
on the first day of such Reference Period (with the Reference Period for the
purposes of pro forma calculations being the most recent period of four
consecutive fiscal quarters for which the relevant financial information is
available); provided that such pro forma calculations shall not give effect to
operating expense reductions and other cost savings, other than as approved by
the Administrative Agent. As used in this definition, "Material Acquisition"
means any Permitted Acquisition or series of related Permitted Acquisitions that
involves consideration (including any noncash consideration) with a fair market
value in excess of $2,500,000; and "Material Disposition" means any disposition
of property or series of related dispositions of property that involves assets
comprising all or substantially all of an operating unit of a business or
constitutes all or substantially all of the Equity Interests of a Subsidiary.
"Consolidated Net Income" means, for any period, the net
income or loss of the Borrower and the Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP (adjusted to reflect any charge,
tax or expense incurred or accrued by Holdings during such period as though such
charge, tax or expense had been incurred by the Borrower, to the extent that the
Borrower has made or would be entitled under the Loan Documents to make any
payment to or for the account of Holdings in respect thereof), provided that
there shall be excluded from such net income or loss (a) the income of any
Person (other than the Borrower or a Subsidiary) in which any other Person
(other than the Borrower or any Subsidiary or any director holding qualifying
shares in compliance with applicable law) owns an Equity Interest, except to the
extent of the amount of dividends or other distributions actually paid to the
Borrower or any of the Subsidiaries by such Person during such period, and (b)
the income or loss of any Person accrued prior to the date on which it becomes a
Subsidiary or is merged into or consolidated with the Borrower or any Subsidiary
or the date on which such Person's assets are acquired by the Borrower or any
Subsidiary.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of
<PAGE> 15
11
the management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise. The terms "Controlling" and "Controlled"
have meanings correlative thereto.
"Default" means any event or condition that constitutes an
Event of Default or that upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.
"Deferred Payment" means the "Deferred Payment Amount"
referred to in Section 2(f)(ii) of the AMR Stock Purchase Agreement.
"Dilution Factors" means, with respect to any period, the
aggregate amount of all deductions, credit memos, returns, adjustments,
allowances, bad debt write-offs and other non-cash credits to Accounts for such
period.
"Dilution Ratio" means, as of any date of determination, the
amount (expressed as a percentage) equal to (a) the aggregate amount of Dilution
Factors for the period of 12 consecutive months most recently ended, divided by
(b) gross sales (excluding intercompany sales) for such period; provided that,
until the Administrative Agent adjusts the Dilution Ratio based upon its
evaluation of the Dilution Factors, the Dilution Ratio shall be 5%.
"Dilution Reserve" means, with respect to any amount of
Eligible Accounts Receivable as of any date of determination, the Dilution Ratio
multiplied by such amount of Eligible Accounts Receivable.
"Disclosed Matters" means the actions, suits and proceedings
and the environmental matters disclosed in Schedule 3.06.
"dollars" or "$" refers to lawful money of the United States
of America.
"Earnout" means, (a) the Deferred Payment and any initially
contingent payment obligation related to a Permitted Acquisition, including
earnout payments, purchase price adjustments, deferred purchase price payments
and bonuses and other forms of compensation to employees or consultants, in each
case so long as such payment obligations are (i) contingent, at the time such
obligation is incurred or entered into, and subject to adjustment based on the
performance of the Person and/or assets so acquired, (ii) not Guaranteed or
subject, at the time such obligation is entered
<PAGE> 16
12
into, to any minimum payment, in whole or in part, by Holdings, the Borrower or
any of their Subsidiaries, (iii) not evidenced by a promissory note or secured
by a Lien on any assets of Holdings, the Borrower or any of the Subsidiaries and
(iv) the Borrower and/or its Subsidiary which is the obligor with respect to
such payment obligation has the right, pursuant to the terms of the document or
instrument evidencing or creating the Earnout, to defer any payment thereon
during the continuance of, or if such payment would cause, a Default hereunder
or (b) the portion of a payment obligation described in clause (a) which has
become fixed and matured.
"Effective Date" means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
9.02).
"Eligible Accounts Receivable" means, as of any date of
determination, all Accounts that satisfy the following criteria as of such date:
(a) all payments on such Account are by the terms of such
Account due not later than 90 days after the date of the original
invoice relating thereto;
(b) such Account has been invoiced (or has been posted on the
internal accounting ledger of the Borrower and the Subsidiaries and
will be invoiced within five days of such posting) and is not, and not
more than 50% of the aggregate amount of Accounts from the same Account
Debtor and any Affiliates thereof are, more than 90 days past the
original invoice date (and, for purposes of determining the aggregate
amount of such Accounts that are more than 90 days past the original
invoice date, any net credit balances owing to the applicable Account
Debtor and its Affiliates in respect of such Accounts shall be
disregarded);
(c) such Account is denominated in dollars;
(d) such Account arose from a completed, outright and lawful
sale of goods or from the completed performance and acceptance of
services rendered by the Borrower or a Subsidiary Loan Party;
(e) such Account is owned solely by the Borrower or a
Subsidiary Loan Party, is subject to a perfected first priority
security interest in favor of the Administrative Agent for the benefit
of the Secured Parties pursuant to the Security Agreement and is not
subject to any other Lien;
<PAGE> 17
13
(f) such Account arose in the ordinary course of business of
the Borrower or a Subsidiary Loan Party and, to the best knowledge of
the Borrower, no event of death, bankruptcy, insolvency or inability to
pay creditors generally of the Account Debtor thereunder has occurred,
and no notice thereof has been received;
(g) with respect to such Account, the Account Debtor (i) is
not Holdings, the Borrower, a Subsidiary or an Affiliate of any
thereof, and (ii) is not the Federal government of the United States of
America (or any agency or instrumentality thereof); provided that up to
$5,000,000 of Accounts that otherwise would be excluded by reason of
clause (ii) above shall not be excluded to the extent that the Borrower
or Subsidiary Loan Party, as applicable, has taken all action necessary
to assign the applicable Accounts to the Administrative Agent in
accordance with the Assignment of Claims Act of 1940, as amended, in a
manner satisfactory to the Administrative Agent;
(h) such Account constitutes an "account" or "chattel paper"
within the meaning of the Uniform Commercial Code of the state in which
the Account is located;
(i) such Account complies in all material respects with the
requirements of all applicable laws and regulations;
(j) with respect to such Account, the Account Debtor has not
been disapproved by the Administrative Agent based upon the
creditworthiness of such Account Debtor;
(k) such Account is in full force and effect and constitutes a
legal, valid and binding obligation of the Account Debtor enforceable
in accordance with its terms;
(l) such Account is not for goods sold or services rendered
under a purchase order or pursuant to an agreement or understanding
(written or oral) indicating that any Person other than the Borrower or
a Subsidiary Loan Party has or has had or is purported to have or have
had an ownership interest in such goods or to have rendered such
services, as subcontractor or otherwise;
(m) the Account Debtor with respect to such Account (i) is not
a creditor of the Borrower or any Subsidiary unless such Account Debtor
has executed a no-offset
<PAGE> 18
14
letter reasonably satisfactory to the Administrative Agent and (ii) has
not asserted that such Account is, and the Borrower is not aware of any
basis upon which such Account could be, subject to any defense, offset,
deduction, credit or dispute (but an Account shall not be excluded
pursuant to this clause (ii) to the extent, if any, of any portion
thereof that is not asserted to be, and the Borrower is not aware of
any basis upon which such portion of such Account could be, so
subject);
(n) such Account is not payable from an office located in
Minnesota or New Jersey unless the Borrower or the applicable
Subsidiary Loan Party (i) has received a certificate of authority to do
business in and is in good standing in such state or (ii) has filed a
notice of business activities report with the appropriate office or
agency of such state for the current year; and
(o) such Account is not subject to any credit for advance
payments or deposits of any Account (but any Account that is so subject
shall be excluded only to the extent of the amount of such advance
payments or deposits).
Notwithstanding the foregoing, all Accounts of any single Account Debtor and its
Affiliates which, in the aggregate, exceed 20% (or, in the case of an Account
Debtor that has long-term debt securities, that are unsecured and are not
subject to any credit support, rated BBB- or better by S&P or Baa3 or better by
Moody's, 30%) of the total amount of all Eligible Accounts Receivable at the
time of any determination, shall be deemed not to be Eligible Accounts
Receivable to the extent of such excess. The percentage limitation set forth in
the preceding sentence must be satisfied when applied to the amount of Eligible
Accounts Receivable after excluding all Accounts required to be excluded by such
percentage limitation.
"Eligible Domestic Accounts Value" means, as of any date of
determination, the excess of (a) the aggregate amount of the Eligible Accounts
Receivable (excluding Foreign Accounts) as of such date, minus (b) the Dilution
Reserve with respect thereto.
"Eligible Equipment" means, as of any date of determination,
all Equipment that satisfies the following criteria as of such date:
(a) such Equipment is owned solely by the Borrower or a
Subsidiary Loan Party, is subject to a perfected
<PAGE> 19
15
first priority security interest in favor of the Administrative Agent
for the benefit of the Secured Parties pursuant to the Security
Agreement and is not subject to any other Lien;
(b) such Equipment is located in the United States of America
and is in the possession of the Borrower or a Subsidiary Loan Party;
(c) such Equipment is in good working order and condition,
ordinary wear and tear excepted; and
(d) such Equipment (i) constitutes "equipment" within the
meaning of the Uniform Commercial Code of the state in which such
Equipment is located, (ii) is not a Fixture (as defined in the Security
Agreement) and (iii) is not an accession to or otherwise a part of any
other asset that does not constitute Eligible Equipment.
"Eligible Equipment Value" means, as of any date of
determination, the gross book value of all Eligible Equipment as of such date
multiplied by the Equipment Valuation Ratio as of such date.
"Eligible Foreign Accounts Value" means, as of any date of
determination, the lesser of (a) the excess of (i) the aggregate amount of the
Eligible Accounts Receivable as of such date that are Foreign Accounts, minus
(ii) the Dilution Reserve with respect thereto, and (b) $10,000,000.
"Environmental Laws" means all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, Release or threatened Release of any
Hazardous Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, administrative oversight costs, fines, penalties or indemnities),
of Holdings, the Borrower or any Subsidiary directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the Release or
threatened Release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual
<PAGE> 20
16
arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.
"Equipment" means the ground equipment of the Borrower and the
Subsidiary Loan Parties used to provide aircraft and airport support services,
excluding office equipment, computer equipment, furniture and leasehold
improvements.
"Equipment Valuation Ratio" means, as of any date of
determination, the amount (expressed as a percentage) equal to (a) the orderly
liquidation value of the Equipment of the Borrower and the Subsidiary Loan
Parties as most recently determined by an appraisal thereof arranged by and
reasonably satisfactory to the Administrative Agent, divided by (b) the gross
book value of the Equipment so appraised.
"Equity Financing" means (a) $35,000,000 in aggregate
principal amount of pay-in-kind debt securities of Holdings that are
subordinated to the Obligations on terms acceptable to the Administrative Agent
and (b) $500,000 of investments in shares of common stock of Holdings that, in
each case, unless the Borrower has issued the Senior Notes on or prior to the
Effective Date, Persons included in the CH Group (in the case of the debt
securities referred to in clause (a)) or members of management of the Borrower
(in the case of the common stock referred to in clause (b)) shall purchase from
Holdings prior to the Acquisition and the gross cash proceeds of which Holdings
shall contribute as common equity to the Borrower.
"Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence
<PAGE> 21
17
with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in
Article VII.
"Excess Availability" means, at any time, the Borrowing Base
then in effect minus the total Revolving Exposures at such time.
"Excess Cash Flow" means, for any fiscal year, the sum
(without duplication) of:
(a) the consolidated net income (or loss) of the Borrower and
its consolidated Subsidiaries for such fiscal year, adjusted to exclude
any gains or losses attributable to Prepayment Events; plus
(b) depreciation, amortization and other non-cash charges or
losses deducted in determining such consolidated net income (or loss)
for such fiscal year; plus
(c) the sum of (i) the amount, if any, by which Net Working
Capital decreased during such fiscal year plus (ii) the net amount, if
any, by which the
<PAGE> 22
18
consolidated deferred revenues of the Borrower and its consolidated
Subsidiaries increased during such fiscal year; minus
(d) the sum of (i) any non-cash gains included in determining
such consolidated net income (or loss) for such fiscal year plus (ii)
the amount, if any, by which Net Working Capital increased during such
fiscal year plus (iii) the net amount, if any, by which the
consolidated deferred revenues of the Borrower and its consolidated
Subsidiaries decreased during such fiscal year; minus
(e) Capital Expenditures for such fiscal year (except (i) to
the extent attributable to the incurrence of Capital Lease Obligations
or otherwise financed by incurring Long-Term Indebtedness or (ii)
Capital Expenditures made pursuant to the first proviso of Section
2.10(c)); minus
(f) the aggregate principal amount of Long-Term Indebtedness
repaid or prepaid by the Borrower and its consolidated Subsidiaries
during such fiscal year, excluding (i) Indebtedness in respect of
Revolving Loans and Letters of Credit, (ii) Term Loans prepaid pursuant
to Section 2.10(a), 2.10(c) or 2.10(d), and (iii) repayments or
prepayments of Long-Term Indebtedness financed by incurring other
Long-Term Indebtedness.
"Excluded Taxes" means, with respect to the Administrative
Agent, any Lender, the Issuing Bank or any other recipient of any payment to be
made by or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized, managed or controlled or in which its principal office is located, or
by any jurisdiction in which such recipient is subject to tax other than as a
result of the transactions contemplated by the Loan Documents or, in the case of
any Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction described in clause (a) above and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 2.18(b)), any withholding tax that (i) is in effect and would
apply to amounts payable to such Foreign Lender at the time such Foreign Lender
becomes a party to this Agreement (or designates a new lending office), except
to the extent that such Foreign Lender (or its assignor, if any) was
<PAGE> 23
19
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to any withholding tax
pursuant to Section 2.16(a), or (ii) is attributable to or would not have been
imposed but for such Foreign Lender's failure to comply with Section 2.16(e).
"Existing Credit Agreement" means the Revolving Credit and
Term Loan Agreement dated as of March 31, 1999, by and among the Borrower (f/k/a
MR Services Acquisition Corporation), Holdings, the banks party thereto and
BankBoston, N.A., as agent.
"Existing Preferred Stock" means the Series A preferred stock
of Holdings, liquidation preference $10 per share.
"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or controller of the Borrower.
"Financing Transactions" means (a) the execution, delivery and
performance by each Loan Party of the Loan Documents to which it is to be a
party, the borrowing of Loans, the use of the proceeds thereof and the issuance
of Letters of Credit hereunder, (b) the execution, delivery and performance by
each Loan Party of the Senior Notes Documents to which it is to be a party, the
issuance of the Senior Notes and the use of the proceeds thereof and (c) the
Equity Financing.
"Foreign Account" means any Account that is not a Domestic
Account. For purposes hereof, an Account is a "Domestic Account" if such Account
is either (a) both (i) owing from an Account Debtor with a principal place of
business in the United States of America and (ii) payable from an office located
in the United States of America or (b) owing
<PAGE> 24
20
from an Account Debtor that, in the reasonable judgment of the Borrower, (i) is
subject to jurisdiction within the United States of America and (ii) has
sufficient (in relation to its obligations) assets located in the United States
of America. For purposes of determining whether an Account Debtor satisfies the
requirement of clause (b)(i) above, the Borrower may presume that such Account
Debtor is subject to jurisdiction in the United States of America if such
Account Debtor conducts business in the United States of America and either owns
or leases real property in the United States of America or has employees in the
United States of America. In the event that the Administrative Agent notifies
the Borrower that it disputes that one or more Accounts meet the criteria set
forth in clause (b) above, the Borrower shall be required to demonstrate, to the
reasonable satisfaction of the Administrative Agent, compliance with such clause
(b)(i) and, in the event that the Borrower fails to so demonstrate such
compliance, the Administrative Agent may, by notice to the Borrower, exclude
such Account as a Domestic Account, and reclassify such Account as a Foreign
Account.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized
under the laws of a jurisdiction other than the United States of America or any
State thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the
United States of America.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee Agreement" means the Guarantee Agreement,
substantially in the form of Exhibit C, among Holdings, the Subsidiary Loan
Parties and the Administrative Agent for the benefit of the Secured Parties.
<PAGE> 25
21
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation, provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes, and all substances or wastes of any nature regulated pursuant to
any Environmental Law.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
"Holdings" means WFS Holdings, Inc., a Delaware corporation.
"Holdings Subordinated Debt" means debt securities of Holdings
(a) that are subordinated to the Obligations on terms reasonably acceptable to
the Administrative Agent, (b) the terms of which do not provide for any
maturity, amortization, sinking fund payment, mandatory redemption, other
required repayment or repurchase of, or cash interest or other similar payment
with respect to, such debt securities, in each case prior to the Term Maturity
Date (or, if the Transition Date has occurred, the Revolving Maturity Date), (c)
that have other terms (including covenants and events of default) reasonably
satisfactory to the Required Lenders and (d) that are issued to Persons included
in the CH Group in
<PAGE> 26
22
connection with a Specified Investment, provided that the Net Proceeds of any
such issuance of such debt securities shall be contributed by Holdings to the
Borrower as common equity substantially contemporaneously with the consummation
of such Specified Investment.
"Holdings Subordinated Debt Documents" means all instruments,
agreements, indentures or other documents evidencing or governing any Holdings
Subordinated Debt or providing for any Guarantee or other right in respect
thereof.
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money or liabilities with respect to
deposits or advances of any kind, (b) all obligations of such Person evidenced
by bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid, (d) all obligations of
such Person under conditional sale or other title retention agreements relating
to property acquired by such Person, (e) all obligations of such Person in
respect of the deferred purchase price of property or services (excluding (i)
current accounts payable and current accrued liabilities, in each case incurred
in the ordinary course of business, and (ii) Earnouts), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such Person in respect of bankers' acceptances. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnity, Subrogation and Contribution Agreement" means the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit D, among the Borrower, the Subsidiary Loan Parties and the
Administrative Agent.
<PAGE> 27
23
"Information Memorandum" means the Confidential Information Memorandum
dated July 1999 relating to the Borrower and the Transactions.
"Interest Election Request" means a request by the Borrower to convert or
continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.06.
"Interest Payment Date" means (a) with respect to any ABR Loan, the last
day of each March, June, September and December and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months' duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months' duration
after the first day of such Interest Period.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect, provided that (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall
be the effective date of the most recent conversion or continuation of such
Borrowing.
"IPO" means an underwritten initial public offering of voting common stock
of Holdings as a direct result of which at least 20% of the aggregate voting
common stock of Holdings is beneficially owned by Persons other than the CH
Group.
"Issuing Bank" means The Chase Manhattan Bank, in its capacity as the
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.04(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank
including, without limitation, Chase Manhattan Bank Delaware, in which case the
term "Issuing Bank"
<PAGE> 28
24
shall include any such Affiliate with respect to Letters of Credit issued by
such Affiliate.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Schedule 2.01 and any other Person
that shall have become a party hereto pursuant to an Assignment and Acceptance,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance.
"Letter of Credit" means any letter of credit issued pursuant to this
Agreement.
"Leverage Ratio" means, on any date, the ratio of (a) Total Indebtedness as
of such date to (b) Consolidated EBITDA for the period of four consecutive
fiscal quarters of the Borrower ended on such date (or, if such date is not the
last day of a fiscal quarter, ended on the last day of the fiscal quarter of the
Borrower most recently ended prior to such date).
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the LIBO Rate with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at
<PAGE> 29
25
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
"Loan Documents" means this Agreement, the Guarantee Agreement, the
Indemnity, Subrogation and Contribution Agreement and the other Security
Documents.
"Loan Parties" means Holdings, the Borrower and the Subsidiary Loan
Parties.
"Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"Long-Term Indebtedness" means any Indebtedness that, in accordance with
GAAP, constitutes (or, when incurred, constituted) a long-term liability.
"Management Agreement" means the Management Agreement dated as of March 31,
1999, by and between Castle Harlan and the Borrower.
"MAS Worldwide" means MAS Worldwide Holding Corporation, a Delaware
corporation.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, assets or condition (financial or otherwise) of Holdings,
the Borrower and the Subsidiaries taken as a whole, (b) the ability of any Loan
Party to perform any of its payment obligations under any Loan Document or to
perform its other material obligations under the Loan Documents or (c) the
remedies available to the Lenders under the Loan Documents.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of Holdings, the Borrower and the Subsidiaries in an
aggregate principal amount exceeding $1,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of
<PAGE> 30
26
the obligations of Holdings, the Borrower or any Subsidiary in respect of any
Hedging Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that Holdings, the Borrower or such
Subsidiary would be required to pay if such Hedging Agreement were terminated
at such time.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means a mortgage, deed of trust, assignment of leases and rents,
leasehold mortgage or other security document granting a Lien on any Mortgaged
Property to secure the Obligations. Each Mortgage shall be reasonably
satisfactory in form and substance to the Administrative Agent.
"Mortgaged Property" means each parcel of real property and improvements
thereto with respect to which a Mortgage is granted pursuant to Section 5.12 or
5.13.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any event (a) the cash proceeds
received in respect of such event, including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty or other insured damage, insurance proceeds, and (iii) in the case of a
condemnation or similar event, condemnation awards and similar payments, net of
(b) the sum of (i) all reasonable fees and out-of-pocket expenses paid by
Holdings, the Borrower and the Subsidiaries to third parties (other than
Affiliates) in connection with such event, (ii) in the case of a sale, transfer
or other disposition of an asset (including pursuant to a sale and leaseback
transaction or a casualty or a condemnation or similar proceeding), the amount
of all payments required to be made by Holdings, the Borrower and the
Subsidiaries as a result of such event to repay Indebtedness (other than Loans)
secured by such asset or otherwise subject to mandatory prepayment as a result
of such event, and (iii) the amount of all taxes paid (or reasonably estimated
to be payable) by Holdings, the Borrower and the Subsidiaries, and the amount of
any reserves established by Holdings, the Borrower and the Subsidiaries to fund
contingent liabilities reasonably estimated to be payable, in each case during
the year that such event occurred or the next two succeeding years and that are
directly attributable to such event (as determined reasonably and in good faith
by a Financial Officer of Holdings or the Borrower).
<PAGE> 31
27
"Net Working Capital" means, at any date, (a) the sum of consolidated
current assets and non-current deferred income tax assets of the Borrower and
its consolidated Subsidiaries as of such date (excluding cash and Permitted
Investments) minus (b) the sum of the consolidated current liabilities and
non-current deferred income tax liabilities of the Borrower and its consolidated
Subsidiaries as of such date (excluding current liabilities in respect of
Indebtedness). Net Working Capital at any date may be a positive or negative
number. Net Working Capital increases when it becomes more positive or less
negative and decreases when it becomes less positive or more negative.
"Non-Consenting Lender" means any Lender that has not approved or consented
to a waiver, amendment or modification pursuant to Section 9.02 hereof which
waiver, amendment or modification is required to be approved or consented to by
all of the Lenders or each of the Lenders affected thereby and shall have been
approved by the Required Lenders.
"Obligations" has the meaning assigned to such term in the Security
Agreement.
"Other Taxes" means any and all current or future recording, stamp,
documentary, excise, transfer, sales, property or similar taxes, charges or
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Perfection Certificate" means a certificate in the form of Annex 1 to the
Security Agreement or any other form approved by the Administrative Agent.
"Permitted Acquisition" means any acquisition (other than the Acquisition)
by the Borrower or any Subsidiary of all or substantially all the assets of, or
at least 80% of the Equity Interests in, a Person or division or line of
business of a Person if, at the time of and immediately after giving effect
thereto, (a) no Default shall have occurred and be continuing, (b) the principal
business of such Person shall be reasonably related, ancillary or complementary,
to a business in which the Borrower and its Subsidiaries were engaged on the
Effective Date, (c) at least 80% of the Equity Interests of each Subsidiary
formed for the purpose of or resulting from
<PAGE> 32
28
such acquisition shall be owned directly or indirectly by the Borrower and all
actions required to be taken with respect to such acquired or newly formed
Subsidiary under Sections 5.12 and 5.13 have been taken, (d) the Borrower and
the Subsidiaries are in compliance, on a pro forma basis after giving effect to
such acquisition (without giving effect to any cost savings, other than as
approved by the Administrative Agent), with the covenants contained in Sections
6.12, 6.13 and 6.14 recomputed as at the last day of the most recently ended
fiscal quarter of the Borrower for which financial statements are available, as
if such acquisition (and any related incurrence or repayment of Indebtedness,
with any new Indebtedness being deemed to be amortized over the applicable
testing period in accordance with its terms, and assuming that any Revolving
Loans borrowed in connection with such acquisition are repaid with excess cash
balances when available) had occurred on the first day of each relevant period
for testing such compliance, (e) unless and until the Transition Date has
occurred, the Senior Leverage Ratio, calculated on a pro forma basis after
giving effect to such acquisition (without giving effect to any cost savings,
other than as approved by the Administrative Agent), shall be less than 3.75 to
1.00, recomputed as at the last day of the most recently ended fiscal quarter
of the Borrower for which financial statements are available, as if such
acquisition (and any related incurrence or repayment of Indebtedness, with any
new Indebtedness being deemed to be amortized over the applicable testing
period in accordance with its terms, and assuming that any Revolving Loans
borrowed in connection with such acquisition are repaid with excess cash
balances when available) had occurred on the first day of each relevant period
for testing such compliance, and (f) the Borrower has delivered to the
Administrative Agent an officers' certificate to the effect set forth in
clauses (a), (b), (c), (d) and (e) above, together with all relevant financial
information for the Person or assets to be acquired and reasonably detailed
calculations demonstrating satisfaction of the requirements set forth in
clauses (d) and (e) above.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes, assessments or other governmental
charges that are not yet due or are being contested in compliance with Section
5.05;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's and
other like Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue by more than
<PAGE> 33
29
30 days or are being contested in compliance with Section 5.05;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance, old age pension
and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts, insurance
contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the ordinary
course of business;
(e) judgment liens in respect of judgments that do not constitute an Event
of Default under clause (k) of Article VII;
(f) easements, zoning restrictions, rights-of-way, restrictions on the use
of real property and defects and irregularities in the title thereto and
similar encumbrances, in each case on real property imposed by law or arising
in the ordinary course of business that do not secure any monetary obligations
and do not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of the Borrower or any
Subsidiary; and
(g) any interest or title of a lessor of property leased to the Borrower or
any of its Subsidiaries, or any encumbrances on any such interest or title of
such lessor, to the extent such lease is permitted hereby;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means (a) securities issued by, or unconditionally
guaranteed or insured by, the United States Government or issued by any agency
thereof and backed by the full faith and credit of the United States, in each
case maturing within one year from the date of acquisition thereof ("Government
Obligations"); (b) marketable direct obligations issued by any state of the
United States of America or any political subdivision thereof maturing within
one year from the date of acquisition thereof and, at the time of acquisition,
having one of the two highest ratings obtainable from either S&P or Moody's; (c)
commercial paper and variable or fixed rate notes maturing no more than six
months from the acquisition thereof and, at the time of acquisition, having a
rating of at least A-1 from S&P or at
<PAGE> 34
30
least P-1 from Moody's; (d) certificates of deposit or banker's acceptances
maturing within one year from the date of acquisition thereof issued by any
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia or any U.S. branch of a foreign bank having
at the date of acquisition thereof combined capital and surplus of not less
than $250,000,000; (e) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (a) above
entered into with any bank meeting the qualifications specified in clause (d)
above; (f) federally tax exempt securities rated "A" or better by S&P or "A2"
or better by Moody's; (g) investments in money market funds with assets of
$100,000,000 or greater which invest substantially all of their assets in
securities of the types described in clauses (a) through (f) above; and (h) in
the case of Foreign Subsidiaries, investments that are substantially equivalent
to the foregoing investments described in clauses (a) through (g) above that
are available in the local currency.
"Permitted Preferred Stock" means any preferred stock issued by Holdings
that is not Disqualified Stock. For purposes of the foregoing "Disqualified
Stock" means any capital stock that by its terms (or by the terms of any
agreement relating thereto or any security into which it is convertible or for
which it is exchangeable or exercisable) or upon the happening of any event (a)
matures or is mandatorily redeemable (whether upon the happening of any
contingency or otherwise), whether pursuant to a sinking fund obligation or
otherwise, prior to the Term Maturity Date (or, if the Transition Date has
occurred, the Revolving Maturity Date), (b) is convertible or exchangeable for
Indebtedness or Disqualified Stock prior to the Term Maturity Date (or, if the
Transition Date has occurred, the Revolving Maturity Date), (c) requires the
payment of dividends prior to the Term Maturity Date (or, if the Transition Date
has occurred, the Revolving Maturity Date) other than dividends payable solely
in additional shares of common stock or Permitted Preferred Stock of Holdings or
(d) is redeemable or subject to required repurchase at the option of the holder
thereof, in whole or in part, whether upon the happening of any contingency or
otherwise, prior to the Term Maturity Date (or, if the Transition Date has
occurred, the Revolving Maturity Date).
"Permitted Subordinated Indebtedness" has the meaning assigned to such term
in clause (viii) of Section 6.01(a).
<PAGE> 35
31
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" means the Pledge Agreement, substantially in the form of
Exhibit E, among the Loan Parties and the Administrative Agent for the benefit
of the Secured Parties.
"Prepayment Event" means:
(a) any sale, transfer or other disposition (including pursuant to a sale
and leaseback transaction) of any property or asset of the Borrower or any
Subsidiary, other than dispositions described in clauses (a), (b), (d) and (e)
of Section 6.05; or
(b) any casualty or other insured damage to, or any taking under power of
eminent domain or by condemnation or similar proceeding of, any property or
asset of the Borrower or any Subsidiary, but only to the extent that the Net
Proceeds therefrom have not been applied, or committed pursuant to an
agreement (including any purchase orders) to be applied, to repair, restore or
replace such property or asset within 180 days after such event; or
(c) the issuance by Holdings, the Borrower or any Subsidiary of any Equity
Interests, or the receipt by Holdings, the Borrower or any Subsidiary of any
capital contribution, other than any such issuance of Equity Interests to, or
receipt of any such capital contribution from, Holdings, the Borrower or a
Subsidiary, other than (i) pursuant to an IPO after the Transition Date, (ii)
stock options, warrants or other rights to acquire stock awarded to employees,
consultants, agents, officers and directors (or any trust or individual
retirement account for the benefit of any such Person) pursuant to incentive
compensation plans or agreements; provided that the Net Proceeds received by
Holdings, the Borrower and its Subsidiaries in connection with all such
options, warrants and rights do not exceed, in the aggregate,
<PAGE> 36
32
$1,000,000, (iii) Specified Equity Investments, (iv) sales or issuances of its
stock, options, warrants, or other rights for the purchase of its Equity
Interests, the Net Proceeds of which in the aggregate do not exceed, for all
such sales and issuances after the Effective Date, $5,000,000, (v) the
issuance of common stock of Holdings pursuant to the exercise of the warrant
issued by Holdings to AMR Corp., (vi) the sale or issuance of stock or other
equity instruments to the Persons and in the amounts set forth on Schedule
1.01(a) hereto and (vii) shares of common stock of the Borrower issued to
Holdings and any Equity Interests of any Subsidiary issued to the Borrower or
to another Subsidiary; or
(d) the incurrence by the Borrower or any Subsidiary of any Indebtedness,
other than Indebtedness permitted by Sections 6.01(a)(i), (iv), (v), (vi),
(vii), (ix), (x), (xi), (xii) and (xiii).
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Register" has the meaning set forth in Section 9.04(c).
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Release" means any release, spill, emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge, dispersal, leaching or migration into the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata) or within any building, structure, facility or fixture.
"Required Lenders" means, at any time, Lenders having Revolving Exposures,
Term Loans and unused Commitments representing in the aggregate more than 50% of
the sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at such time.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any Equity Interests in
Holdings, the Borrower
<PAGE> 37
33
or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any Equity Interests in Holdings, the Borrower or any Subsidiary or any option,
warrant or other right to acquire any such Equity Interests in Holdings, the
Borrower or any Subsidiary.
"Revolving Acquisition Loan" means any Revolving Loan to the extent that
the proceeds are used or are to be used to finance the Acquisition or a
Permitted Acquisition.
"Revolving Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Revolving Maturity Date and
the date of termination of the Revolving Commitments.
"Revolving Commitment" means, with respect to each Lender, the commitment,
if any, of such Lender to make Revolving Loans and to acquire participations in
Letters of Credit hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender's Revolving Exposure hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.07 and (b)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The initial amount of each Lender's Revolving
Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Revolving Commitment, as
applicable. The initial aggregate amount of the Lenders' Revolving Commitments
is $100,000,000.
"Revolving Exposure" means, with respect to any Lender at any time, the sum
of the outstanding principal amount of such Lender's Revolving Loans and its LC
Exposure at such time.
"Revolving Lender" means a Lender with a Revolving Commitment or, if the
Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"Revolving Loan" means a Loan made pursuant to clause (b) of Section 2.01.
"Revolving Maturity Date" means March 31, 2005.
"Revolving Working Capital Loan" means any Revolving Loan that is not a
Revolving Acquisition Loan.
"S&P" means Standard & Poor's Rating Service.
<PAGE> 38
34
"Secured Parties" has the meaning assigned to such term in the Security
Agreement.
"Security Agreement" means the Security Agreement, substantially in the
form of Exhibit F, among the Borrower, the Subsidiary Loan Parties and the
Administrative Agent for the benefit of the Secured Parties.
"Security Documents" means the Security Agreement, the Pledge Agreement,
the Mortgages and each other security agreement or other instrument or document
executed and delivered pursuant to Section 5.12 or 5.13 to secure any of the
Obligations.
"Senior Leverage Ratio" means, on any date, the ratio of (a) Total Senior
Indebtedness as of such date to (b) Consolidated EBITDA for the period of four
consecutive fiscal quarters of the Borrower ended on such date (or, if such date
is not the last day of a fiscal quarter, ended on the last day of the fiscal
quarter of the Borrower most recently ended prior to such date).
"Senior Notes" means the senior notes to be issued by the Borrower in the
aggregate principal amount of not less than $100,000,000 and the Indebtedness
represented thereby.
"Senior Notes Documents" means the indenture under which the Senior Notes
are issued and all other instruments, agreements and other documents evidencing
or governing the Senior Notes or providing for any Guarantee or other right in
respect thereof.
"Specified Investment" means any cash investment in Holdings made in the
form of a common equity investment or the issuance by Holdings of Permitted
Preferred Stock or Holdings Subordinated Debt, in each case to the extent that
the Net Proceeds therefrom are promptly (a) contributed by Holdings to the
Borrower as a common equity investment and (b) applied by the Borrower (directly
or through a Subsidiary) to pay cash consideration for a Permitted Acquisition
or to make an investment in one or more Foreign Subsidiaries or to make an
investment described in clause (o) of Section 6.04, in each case in accordance
with Section 6.04; provided that upon or prior to such investment the Borrower
notifies the Administrative Agent of the amount thereof and the application of
the proceeds therefrom.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate
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35
of the maximum reserve percentages (including any marginal, special, emergency
or supplemental reserves) expressed as a decimal established by the Board to
which the Administrative Agent is subject (a) with respect to the Base CD Rate,
for new negotiable nonpersonal time deposits in dollars of over $100,000 with
maturities approximately equal to three months and (b) with respect to the
Adjusted LIBO Rate, for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D or any comparable regulation. The Statutory
Reserve Rate shall be adjusted automatically on and as of the effective date of
any change in any reserve percentage.
"Stock Purchase Agreement" means the Stock Purchase Agreement dated as of
May 28, 1999, among MAS Worldwide Holding Corporation, Anthony Romeo and Charles
Micale.
"Subordinated Debt Documents" means the indenture under which any Permitted
Subordinated Indebtedness is issued and all other instruments, agreements and
other documents evidencing or governing any Permitted Subordinated Indebtedness
or providing for any Guarantee or other right in respect thereof.
"subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
of which securities or other ownership interests representing more than 50% of
the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held.
"Subsidiary" means any subsidiary of the Borrower. For purposes of the
representations and warranties made herein on the Effective Date and the
conditions specified in Section 4.01, the term "Subsidiary" includes each of the
Company and its subsidiaries.
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36
"Subsidiary Loan Party" means any Subsidiary that is not a Foreign
Subsidiary.
"Syndication Agent" means DLJ Capital Funding, Inc., in its capacity as
syndication agent for the Lenders hereunder.
"Taxes" means any and all current or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"Term Commitment" means, with respect to each Lender, the commitment, if
any, of such Lender to make a Term Loan hereunder on the Effective Date,
expressed as an amount representing the maximum principal amount of the Term
Loan to be made by such Lender hereunder, as such commitment may be (a) reduced
from time to time pursuant to Section 2.07 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
9.04. The initial amount of each Lender's Term Commitment is set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Term Commitment, as applicable. The initial aggregate
amount of the Lenders' Term Commitments is $50,000,000.
"Term Lender" means a Lender with a Term Commitment or an outstanding Term
Loan.
"Term Loan" means a Loan made pursuant to clause (a) of Section 2.01.
"Term Maturity Date" means March 31, 2006.
"Three-Month Secondary CD Rate" means, 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 is not 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 is not 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 is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
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37
"Total Indebtedness" means, as of any date, the sum of (a) the aggregate
principal amount of Indebtedness of the Borrower and the Subsidiaries
outstanding as of such date, in the amount that would be reflected on a balance
sheet prepared as of such date on a consolidated basis in accordance with GAAP,
plus (b) the aggregate principal amount of Indebtedness of the Borrower and the
Subsidiaries outstanding as of such date that is not required to be reflected on
a balance sheet in accordance with GAAP, determined on a consolidated basis.
"Total Senior Indebtedness" means, as of any date, (a) Total Indebtedness
as of such date minus (b) the portion of the Total Indebtedness as of such date
represented by Indebtedness that is subordinated to the Indebtedness created
under the Loan Documents, including any Permitted Subordinated Indebtedness.
"Transactions" means the Acquisition and the Financing Transactions.
"Transition Date" means (a) the Effective Date, if the Senior Notes are
issued on or prior to the Effective Date, or (b) if the Senior Notes are not
issued on or prior to the Effective Date, the date on which the Senior Notes are
issued.
"Type", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving
Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a
"Eurodollar Revolving Loan"). Borrowings also may be classified and referred to
by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar
Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes"
<PAGE> 42
38
and "including" shall be deemed to be followed by the phrase "without
limitation". The word "will" shall be construed to have the same meaning and
effect as the word "shall". Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time, provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees (a) to make a Term Loan to the Borrower on the
Effective Date in a principal amount not exceeding its Term Commitment, provided
that if the Senior Notes are issued on or prior to the Effective Date, no Term
Borrowings shall be permitted, and (b)
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39
to make Revolving Loans to the Borrower from time to time during the Revolving
Availability Period in an aggregate principal amount that (i) will not result in
such Lender's Revolving Exposure exceeding such Lender's Revolving Commitment
and (ii) on and after the Transition Date, will not result in the total
Revolving Exposures exceeding the Borrowing Base then in effect. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Revolving Loans. Amounts repaid in
respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as part of
a Borrowing consisting of Loans of the same Class and Type made by the Lenders
ratably in accordance with their respective Commitments of the applicable Class.
The failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder, provided that the
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender's failure to make Loans as required.
(b) Subject to Section 2.13, each Revolving Borrowing and Term Borrowing
shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith, provided that the Administrative Agent may, in
its discretion, require that all Borrowings made on the Effective Date shall be
ABR Borrowings. Each Lender at its option may make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan, provided that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this
Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $3,000,000. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $500,000 and not less than $1,000,000, provided that
an ABR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Revolving Commitments or that is required to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.04(e). Borrowings of more than one Type and Class may be outstanding at the
same time, provided that there shall not at any time be more than a total of
eight Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or
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40
to elect to convert or continue, any Borrowing if the Interest Period requested
with respect thereto would end after the Revolving Maturity Date or Term
Maturity Date, as applicable.
SECTION 2.03. Requests for Borrowings. To request a Revolving Borrowing or
Term Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
12:00 (noon), New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00
(noon), New York City time, one Business Day before the date of the proposed
Borrowing, provided that any such notice of an ABR Revolving Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.04(e) may be given not later than 11:00 a.m., New York City time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving Borrowing or Term
Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) subject to the proviso to the first sentence of Section 2.02(b),
whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest Period to
be applicable thereto, which shall be a period contemplated by the definition
of the term "Interest Period";
(vi) the location and number of the Borrower's account to which funds are
to be disbursed, which shall comply with the requirements of Section 2.05; and
(vii) in the case of a Revolving Borrowing, whether such Borrowing is
comprised of Revolving Acquisition Loans or Revolving Working Capital Loans or
a combination thereof (in which case the Borrower shall specify the amount of
Revolving Acquisition Loans and the
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41
amount of Revolving Working Capital Loans comprising such Borrowing).
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall
be deemed to have selected an Interest Period of one month's duration. If no
election is made as to whether a Revolving Borrowing is comprised of Revolving
Acquisition Loans or Revolving Working Capital Loans or a combination thereof,
then the requested Borrowing shall be comprised of Revolving Working Capital
Loans. Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
SECTION 2.04. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the Revolving Availability Period and prior to the date that is five
Business Days prior to the Revolving Maturity Date. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
To request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such
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42
Letter of Credit. If requested by the Issuing Bank, the Borrower also shall
submit a letter of credit application on the Issuing Bank's standard form in
connection with any request for a Letter of Credit. A Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension (i) the LC Exposure shall not exceed $5,000,000, (ii) the
total Revolving Exposures shall not exceed the total Revolving Commitments and
(iii) on and after the Transition Date, the total Revolving Exposures shall not
exceed the Borrowing Base then in effect.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Revolving Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby
grants to each Revolving Lender, and each Revolving Lender hereby acquires from
the Issuing Bank, a participation in such Letter of Credit equal to such
Lender's Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Lender acknowledges and agrees that its obligation
to acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the
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43
Borrower shall reimburse such LC Disbursement by paying to the Administrative
Agent an amount equal to such LC Disbursement not later than 1:00 p.m., New York
City time, on the date that such LC Disbursement is made, if the Borrower shall
have received written notice of such LC Disbursement prior to 10:00 a.m., New
York City time, on such date, or, if such notice has not been received by the
Borrower prior to such time on such date, then not later than 1:00 p.m., New
York City time, on (i) the Business Day that the Borrower receives such notice,
if such notice is received prior to 10:00 a.m., New York City time, on the day
of receipt, or (ii) the Business Day immediately following the day that the
Borrower receives such notice, if such notice is not received prior to such time
on the day of receipt, provided that, if such LC Disbursement is not less than
$1,000,000, the Borrower may, subject to the conditions to borrowing set forth
herein, request in accordance with Section 2.03 that such payment be financed
with an ABR Revolving Borrowing in an equivalent amount and, to the extent so
financed, the Borrower's obligation to make such payment shall be discharged and
replaced by the resulting ABR Revolving Borrowing. If the Borrower fails to make
such payment when due, the Administrative Agent shall notify each Revolving
Lender of the applicable LC Disbursement, the payment then due from the Borrower
in respect thereof and such Lender's Applicable Percentage thereof. Promptly
following receipt of such notice, each Revolving Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the
Borrower, in the same manner as provided in Section 2.05 with respect to Loans
made by such Lender (and Section 2.05 shall apply, mutatis mutandis, to the
payment obligations of the Revolving Lenders), and the Administrative Agent
shall promptly pay to the Issuing Bank the amounts so received by it from the
Revolving Lenders. Promptly following receipt by the Administrative Agent of any
payment from the Borrower pursuant to this paragraph, the Administrative Agent
shall distribute such payment to the Issuing Bank or, to the extent that
Revolving Lenders have made payments pursuant to this paragraph to reimburse the
Issuing Bank, then to such Lenders and the Issuing Bank as their interests may
appear. Any payment made by a Revolving Lender pursuant to this paragraph to
reimburse the Issuing Bank for any LC Disbursement (other than the funding of
ABR Revolving Loans as contemplated above) shall not constitute a Loan and shall
not relieve the Borrower of its obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
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with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. None of
the Administrative Agent, the Lenders, the Issuing Bank or any of their Related
Parties shall have any liability or responsibility by reason of or in connection
with the issuance or transfer of any Letter of Credit or any payment or failure
to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the control of the Issuing
Bank, provided that the foregoing shall not be construed to excuse the Issuing
Bank from liability to the Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the Borrower to the extent permitted by applicable law) suffered by the
Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented that appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
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(g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder, provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement,
then, unless the Borrower shall reimburse such LC Disbursement in full on the
date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that the Borrower reimburses such LC Disbursement, at
the rate per annum then applicable to ABR Revolving Loans, provided that, if the
Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph
(e) of this Section, then Section 2.12(c) shall apply. Interest accrued pursuant
to this paragraph shall be for the account of the Issuing Bank, except that
interest accrued on and after the date of payment by any Revolving Lender
pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be
for the account of such Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at
any time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.11(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior
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to such replacement, but shall not be required to issue additional Letters of
Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives written notice from
the Administrative Agent or the Required Lenders (or, if the maturity of the
Loans has been accelerated, Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure) demanding the deposit of cash
collateral pursuant to this paragraph, the Borrower shall deposit in an account
with the Administrative Agent, in the name of the Administrative Agent and for
the benefit of the Lenders, an amount in cash equal to the LC Exposure as of
such date plus any accrued and unpaid interest thereon, provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in clause (h) or (i) of Article VII. The
Borrower also shall deposit cash collateral pursuant to this paragraph as and to
the extent required by Section 2.10(b), and any such cash collateral so
deposited and held by the Administrative Agent hereunder shall constitute part
of the Borrowing Base for purposes of determining compliance with Section
2.10(b). Each such deposit pursuant to this paragraph or Section 2.10(b) shall
be held by the Administrative Agent as collateral for the payment and
performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
Borrower's direction (but only in Permitted Investments, and subject to the
discretion of the Administrative Agent to decline to make investments) and at
the Borrower's risk and expense, such deposits shall not bear interest. Interest
or profits, if any, on such investments shall accumulate in such account. Moneys
in such account shall be applied by the Administrative Agent to reimburse the
Issuing Bank for LC Disbursements for which it has not been reimbursed and, to
the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower for the LC Exposure at such time or,
if the maturity of the Loans has been accelerated (but subject to the consent of
Revolving Lenders with LC Exposure representing greater than 50% of the total LC
Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence and
<PAGE> 51
47
continuance of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within one Business Day after all
Events of Default have been cured or waived. If the Borrower is required to
provide an amount of cash collateral hereunder pursuant to Section 2.10(b), such
amount (to the extent not applied as aforesaid) shall be returned to the
Borrower as and to the extent that, after giving effect to such return, the
Borrower would remain in compliance with Section 2.10(b) and no Event of Default
shall have occurred and be continuing.
SECTION 2.05. Funding of Borrowings. (a) Each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds, to
an account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request,
provided that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.04(e) shall be remitted by the
Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing. If the Borrower pays such amount to the
Administrative Agent, such
<PAGE> 52
48
payment shall not release such Lender from any obligation it may have to the
Borrower hereunder.
SECTION 2.06. Interest Elections. (a) Each Revolving Borrowing and Term
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the Borrower
may elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods
therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such portion
shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall notify
the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing (in
which case the information to be specified pursuant to clauses (iii) and (iv)
below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
<PAGE> 53
49
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Borrower, then, so long as an Event of
Default is continuing (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto. Conversions or continuations of Revolving Borrowings
shall have no effect on the status of the Revolving Loans comprising such
Borrowings as Revolving Acquisition Loans or Revolving Working Capital Loans.
SECTION 2.07. Termination and Reduction of Commitments. (a) Unless
previously terminated, (i) the Term Commitments shall terminate at 5:00 p.m.,
New York City time, on the Effective Date, provided that if the Senior Notes are
issued on or prior to the Effective Date, the Term Commitments shall immediately
terminate at the time of such issuance, and (ii) the Revolving Commitments shall
terminate on the Revolving Maturity Date.
(b) The Borrower may at any time terminate, or from time to time reduce,
the Commitments of any Class, provided that (i) each reduction of the
Commitments of any Class shall be in an amount that is an integral multiple of
$1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not
terminate or reduce the Revolving Commitments if, after giving
<PAGE> 54
50
effect to any concurrent prepayment of the Revolving Loans in accordance with
Section 2.10, the sum of the Revolving Exposures would exceed the total
Revolving Commitments.
(c) If any prepayment of Term Borrowings is or would be required pursuant
to Section 2.10 due to an event described in clause (a) or (b) of the definition
of the term Prepayment Event but cannot be made because there are no Term
Borrowings outstanding, or because the amount of the required prepayment exceeds
the outstanding amount of Term Borrowings, then, on the date that such
prepayment is required, the Revolving Commitments shall be reduced by an
aggregate amount equal to the amount of the required prepayment, or the excess
of such amount over the outstanding amount of Term Borrowings, as the case may
be.
(d) On the Transition Date, the Revolving Commitments shall be reduced to
$75,000,000.
(e) The Revolving Commitments shall be reduced on each date set forth below
in the aggregate amount set forth opposite such date:
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
September 30, 2002 $ 5,000,000
March 31, 2003 $ 5,000,000
September 30, 2003 $ 7,500,000 (or, if the Transition Date has occurred,
$5,000,000)
March 31, 2004 $10,000,000 (or, if the Transition Date has occurred,
$5,000,000)
September 30, 2004 $12,500,000 (or, if the Transition Date has occurred,
$5,000,000)
</TABLE>
(f) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section, or any
required reduction of the Revolving Commitments under paragraph (c) or (d) of
this Section, at least two Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable, provided that a notice
of termination of the Revolving Commitments delivered by the Borrower may state
that such notice is conditioned upon the effectiveness of other
<PAGE> 55
51
credit facilities, in which case such notice may be revoked by the Borrower (by
notice to the Administrative Agent on or prior to the specified effective date)
if such condition is not satisfied. Any termination or reduction of the
Commitments of any Class shall be permanent. Each reduction of the Commitments
of any Class shall be made ratably among the Lenders in accordance with their
respective Commitments of such Class.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay (i) to the Administrative Agent for the account
of each Lender the then unpaid principal amount of each Revolving Loan of such
Lender on the Revolving Maturity Date and (ii) to the Administrative Agent for
the account of each Lender the then unpaid principal amount of each Term Loan of
such Lender as provided in Section 2.09.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof,
the Interest Period applicable thereto and, in the case of Revolving Loans,
whether such Loan is a Revolving Acquisition Loan or a Revolving Working Capital
Loan (ii) the amount of any principal or interest due and payable or to become
due and payable from the Borrower to each Lender hereunder and (iii) the amount
of any sum received by the Administrative Agent hereunder for the account of the
Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b)
or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein, provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it be evidenced
by a promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if
<PAGE> 56
52
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.09. Amortization of Term Loans. (a) Subject to adjustment
pursuant to paragraph (c) of this Section, the Borrower shall repay Term
Borrowings on each date set forth below in the aggregate principal amount set
forth opposite such date:
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
December 31, 1999 $250,000
March 31, 2000 $250,000
June 30, 2000 $250,000
September 30, 2000 $250,000
December 31, 2000 $250,000
March 31, 2001 $250,000
June 30, 2001 $250,000
September 30, 2001 $250,000
December 31, 2001 $250,000
March 31, 2002 $250,000
June 30, 2002 $250,000
September 30, 2002 $250,000
December 31, 2002 $250,000
March 31, 2003 $250,000
June 30, 2003 $250,000
September 30, 2003 $250,000
December 31, 2003 $250,000
March 31, 2004 $250,000
June 30, 2004 $250,000
September 30, 2004 $250,000
December 31, 2004 $2,500,000
March 31, 2005 $2,500,000
June 30, 2005 $2,500,000
September 30, 2005 $2,500,000
December 31, 2005 $5,000,000
March 31, 2006 $30,000,000
</TABLE>
<PAGE> 57
53
(b) To the extent not previously paid, all Term Loans shall be due and
payable on the Term Maturity Date.
(c) Any prepayment of a Term Borrowing shall be applied to reduce all
remaining scheduled repayments of the Term Borrowings to be made pursuant to
this Section ratably. If the initial aggregate amount of the Lenders' Term
Commitments exceeds the aggregate principal amount of Term Loans that are made
on the Effective Date, then the scheduled repayments of Term Borrowings to be
made pursuant to this Section shall be reduced ratably by an aggregate amount
equal to such excess.
(d) Prior to any repayment of any Term Borrowings hereunder, the Borrower
shall select the Borrowing or Borrowings to be repaid and shall notify the
Administrative Agent by telephone (confirmed by telecopy) of such selection not
later than 11:00 a.m., New York City time, three Business Days before the
scheduled date of such repayment. Each repayment of a Borrowing shall be applied
ratably to the Loans included in the repaid Borrowing. Repayments of Term
Borrowings shall be accompanied by accrued interest on the amount repaid.
SECTION 2.10. Prepayment of Loans. (a) The Borrower shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part,
subject to the requirements of this Section.
(b) In the event and on each occasion that the sum of the Revolving
Exposures exceeds the total Revolving Commitments, the Borrower shall prepay
Revolving Borrowings (or, if no such Borrowings are outstanding, deposit cash
collateral in an account with the Administrative Agent pursuant to Section
2.04(j)) in an aggregate amount equal to such excess. On and after the
Transition Date, in the event and on each occasion that the total Revolving
Exposures exceeds the Borrowing Base then in effect, the Borrower shall prepay
Revolving Borrowings (or, if no such Borrowings are outstanding, deposit cash
collateral in an account with the Administrative Agent pursuant to Section
2.04(j)) in an aggregate amount equal to such excess.
(c) In the event and on each occasion that any Net Proceeds are received by
or on behalf of Holdings, the Borrower or any Subsidiary in respect of any
Prepayment Event, the Borrower shall, immediately after such Net Proceeds are
received, prepay Term Borrowings in an aggregate amount equal to such Net
Proceeds (or, in the case of an event described in clause (c) of the definition
of the term Prepayment Event that
<PAGE> 58
54
is an IPO, 50% of such Net Proceeds), provided that, in the case of any event
described in clause (a) of the definition of the term Prepayment Event, if the
Borrower shall deliver to the Administrative Agent a certificate of a Financial
Officer to the effect that the Borrower and the Subsidiaries intend to apply, or
to enter into agreements (including purchase orders) to apply, the Net Proceeds
from such event (or a portion thereof specified in such certificate), within 180
days after receipt of such Net Proceeds, to acquire real property, equipment or
other tangible assets (including intangible assets associated with such tangible
assets) to be used in the business of the Borrower and the Subsidiaries, and
certifying that no Event of Default has occurred and is continuing, then no
prepayment shall be required pursuant to this paragraph in respect of the Net
Proceeds in respect of such event (or the portion of such Net Proceeds specified
in such certificate, if applicable) except to the extent of any such Net
Proceeds therefrom that have not been so applied by the end of such 180-day
period, at which time a prepayment shall be required in an amount equal to such
Net Proceeds that have not been so applied; provided further that the Borrower
shall not be required to prepay Term Borrowings pursuant to this paragraph (c)
in an aggregate principal amount less than $250,000 and, in the event that any
prepayment would be required in an amount less than $250,000, the amount of the
required prepayments shall accumulate until the aggregate principal amount of
prepayments so required and that have not yet been made equals or exceeds
$250,000, at which time prepayment shall be required equal to the sum of all
accumulated amounts. If the Senior Notes are not issued on or prior to the
Effective Date and any prepayment of Term Borrowings is required pursuant to the
first sentence of this paragraph (c) prior to the Transition Date but cannot be
made because there are no Term Borrowings outstanding, or because the amount of
the required prepayment exceeds the outstanding amount of the Term Borrowings,
then, on the date that such prepayment is required, Revolving Borrowings shall
be prepaid in an aggregate amount equal to such required prepayment, or the
excess of such amount over the outstanding amount of Term Borrowings, as the
case may be. If the Senior Notes are not issued on or prior to the Effective
Date, then (i) the Borrower shall prepay all Term Borrowings outstanding on the
Transition Date, (ii) if the Transition Date occurs prior to the nine month
anniversary of the Effective Date, and following the repayment in full of all
outstanding Term Borrowings, the Borrower may (subject to the limitations set
forth in Section 6.08(a)) apply any remaining Net Proceeds from the issuance of
the Senior Notes to make a Restricted Payment in accordance with clause (vi) of
Section 6.08(a), and (iii) to the extent that the amount of Net Proceeds from
the
<PAGE> 59
55
issuance of the Senior Notes exceeds the sum of the amounts applied pursuant to
clauses (i) and (ii) above, such excess Net Proceeds shall be applied to prepay
Revolving Borrowings. Following the Transition Date, if any prepayment of Term
Borrowings would be required pursuant to the first sentence of this paragraph
(c) due to an event described in clause (a), (b) or (d) of the definition of the
term Prepayment Event but cannot be made because there are no Term Borrowings
outstanding, then, on the date that such prepayment would be required, Revolving
Borrowings shall be prepaid in an aggregate amount equal to such required
prepayment.
(d) If the Senior Notes are not issued on or prior to the Effective Date,
then, prior to the Transition Date and following the end of each fiscal year of
the Borrower, commencing with the fiscal year ending December 31, 2000, the
Borrower shall prepay Term Borrowings in an aggregate amount equal to the
excess, if any, of (i) 50% of Excess Cash Flow for such fiscal year minus (ii)
the aggregate principal amount of Term Borrowings prepaid during such fiscal
year pursuant to Section 2.10(a). If the Senior Notes are not issued on or prior
to the Effective Date, then, prior to the Transition Date, if any prepayment of
Term Borrowings is required pursuant to the preceding sentence but cannot be
made because there are no Term Borrowings outstanding, or because the amount of
the required prepayment exceeds the outstanding amount of the Term Borrowings,
then, on the date that such prepayment is required, Revolving Borrowings shall
be prepaid in an aggregate amount equal to such required prepayment, or the
excess of such amount over the outstanding amount of Term Borrowings, as the
case may be. Each prepayment pursuant to this paragraph shall be made within
three Business Days of the date on which financial statements are delivered
pursuant to Section 5.01 with respect to the fiscal year for which Excess Cash
Flow is being calculated (and in any event within 90 days after the end of such
fiscal year).
(e) Prior to any optional or mandatory prepayment of Borrowings hereunder,
the Borrower shall select the Borrowing or Borrowings to be prepaid and shall
specify such selection in the notice of such prepayment pursuant to paragraph
(f) of this Section. In the event of any optional or mandatory prepayment of
Revolving Borrowings made at a time when both Revolving Acquisition Loans and
Revolving Working Capital Loans remain outstanding, the amount of any such
prepayment shall be deemed to have been applied first to prepay Revolving
Acquisition Loans and second, to the extent of any excess, to prepay Revolving
Working Capital Loans.
<PAGE> 60
56
(f) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date, the principal amount of each
Borrowing or portion thereof to be prepaid and, in the case of a mandatory
prepayment, a reasonably detailed calculation of the amount of such prepayment,
provided that, if a notice of optional prepayment of any Loans is given in
connection with a conditional notice of termination of the Revolving Commitments
as contemplated by Section 2.07, then such notice of prepayment may be revoked
if such notice of termination is revoked in accordance with Section 2.07.
Promptly following receipt of any such notice, the Administrative Agent shall
advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02, except as
necessary to apply fully the required amount of a mandatory prepayment. Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.12.
SECTION 2.11. Fees. (a) The Borrower agrees to pay to the Administrative
Agent for the account of each Revolving Lender a commitment fee, which shall
accrue at the rate of 0.50% per annum on the average daily unused amount of the
Revolving Commitment of such Lender during the period from and including the
Effective Date to but excluding the date on which such Commitment terminates.
Accrued commitment fees shall be payable in arrears on the last day of March,
June, September and December of each year and on the date on which the Revolving
Commitments terminate, commencing on the first such date to occur after the date
hereof. All commitment fees shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). For purposes of computing commitment fees, a
Revolving Commitment of a Lender shall be deemed to be used to the extent of the
outstanding Revolving Loans and LC Exposure of such Lender.
(b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
<PAGE> 61
57
Rate as interest on Eurodollar Revolving Loans on the average daily amount of
such Lender's LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender's
Revolving Commitment terminates and the date on which such Lender ceases to have
any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue
at the rate of 0.25% per annum on the average daily amount of the LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date of termination of the Revolving Commitments and the date on
which there ceases to be any LC Exposure, as well as the Issuing Bank's standard
fees with respect to the issuance, amendment, renewal or extension of any Letter
of Credit or processing of drawings thereunder. Participation fees and fronting
fees accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date,
provided that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand. Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within
10 days after demand. All participation fees and fronting fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
SECTION 2.12. Interest. (a) The Loans comprising each ABR Borrowing shall
bear interest at the Alternate Base Rate plus the Applicable Rate.
<PAGE> 62
58
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at
the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus
the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on any
Loan or any fee or other amount payable by the Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Revolving Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments, provided that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment of
an ABR Revolving Loan prior to the end of the Revolving Availability Period),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360
days, except that interest computed by reference to the Alternate Base Rate at
times when the Alternate Base Rate is based on the Prime Rate shall be computed
on the basis of a year of 365 days (or 366 days in a leap year), and in each
case shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The applicable Alternate Base Rate or Adjusted
LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.13. Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for
<PAGE> 63
59
ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans included
in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.14. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected
in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans made
by such Lender or any Letter of Credit or participation therein (other than
any condition relating to Taxes, as to which Section 2.16 shall apply);
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.
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(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has the effect of reducing the rate of return on
such Lender's or the Issuing Bank's capital or on the capital of such Lender's
or the Issuing Bank's holding company, if any, as a consequence of this
Agreement or the Loans made by, or participations in Letters of Credit held by,
such Lender, or the Letters of Credit issued by the Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's or the Issuing Bank's policies and the policies
of such Lender's or the Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the amount
or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. Each Lender or the Issuing Bank, as applicable, shall calculate
any amounts owing to it under this Section in the same manner as it calculates
amounts owing to it from other borrowers in similar circumstances. The Borrower
shall pay such Lender or the Issuing Bank, as the case may be, the amount shown
as due on any such certificate within 10 Business Days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation, provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 180 days prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor, and provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the 180-day period referred to above shall be extended to include the
period of retroactive effect thereof.
SECTION 2.15. Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan
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other than on the last day of an Interest Period applicable thereto (including
as a result of an Event of Default), (b) the conversion of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto, (c) the
failure to borrow, convert, continue or prepay any Eurodollar Loan on the date
specified in any notice delivered pursuant hereto (regardless of whether such
notice may be revoked under Section 2.10(f) and is revoked in accordance
therewith), or (d) the assignment of any Eurodollar Loan other than on the last
day of the Interest Period applicable thereto as a result of a request by the
Borrower pursuant to Section 2.18, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such event
(excluding any loss of margin or anticipated profits). In the case of a
Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest that would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest that would accrue on
such principal amount for such period at the interest rate that such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
Business Days after receipt thereof.
SECTION 2.16. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes, provided that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the
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relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each Lender and
the Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower hereunder or under
any other Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on amounts payable under this Section) and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender or the
Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a
Lender or the Issuing Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Any Foreign Lender that is entitled (or would be so entitled upon
delivery of the documentation described below) to an exemption from or reduction
of withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate, provided that such Foreign Lender
either (i) has received written notice from the Borrower advising it of the
availability of such exemption or reduction and supplying all
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applicable documentation or (ii) is otherwise aware of the availability of such
exemption.
(f) If the Administrative Agent or a Lender determines in good faith, but
in its sole discretion, that it has received a refund in respect of any
Indemnified Taxes or Other Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section 2.16, it shall pay over such refund to the Borrower
(but only to the extent of indemnity payments made, or additional amounts paid,
by the Borrower under this Section 2.16 with respect to the Indemnified Taxes or
Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
the Administrative Agent or such Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); provided, however, that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent or such Lender in the event
the Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. Nothing contained in this Section 2.16(f) shall require
the Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) The Borrower shall make each payment required to be made by it hereunder or
under any other Loan Document (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.14,
2.15 or 2.16, or otherwise) at or prior to the time expressly required hereunder
or under such other Loan Document for such payment (or, if no such time is
expressly required, prior to 1:00 p.m., New York City time), on the date when
due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue, New
York, New York, except payments to be made directly to the Issuing Bank as
expressly provided herein and except that payments pursuant to Sections 2.14,
2.15, 2.16 and 9.03 shall be made directly to the Persons entitled thereto and
payments pursuant to other Loan Documents shall be made to the Persons specified
therein. The Administrative Agent shall distribute any such payments (or
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any payments received by the Administrative Agent in respect of Obligations from
any Guarantor or otherwise) received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
under any Loan Document shall be due on a day that is not a Business Day, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable for
the period of such extension. All payments under each Loan Document shall be
made in dollars.
(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Revolving Loans, Term Loans or participations in LC Disbursements
resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Revolving Loans, Term Loans and participations in LC
Disbursements and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Revolving Loans, Term Loans and
participations in LC Disbursements of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Revolving Loans, Term Loans and participations in LC
Disbursements, provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrower pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in
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LC Disbursements to any assignee or participant, other than to the Borrower or
any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing Bank,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the Issuing Bank, as the
case may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.
(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.04(d) or (e), 2.05(b), 2.17(d) or 9.03(c), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
SECTION 2.18. Mitigation Obligations; Replacement of Lenders. (a) If any
Lender requests compensation under Section 2.14, or if the Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.16, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the reasonable judgment
of such Lender, such designation or
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assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.14 or 2.16, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) If any Lender requests compensation under Section 2.14, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16,
or if any Lender defaults in its obligation to fund Loans hereunder or is a
Non-Consenting Lender, then the Borrower may, at its sole expense and effort,
upon notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 9.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent (and, if a Revolving Commitment is
being assigned, the Issuing Bank), which consent shall not unreasonably be
withheld, (ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.14 or payments required to be made pursuant to
Section 2.16, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.
ARTICLE III
Representations and Warranties
Each of Holdings and the Borrower represents and warrants to the Lenders
that:
SECTION 3.01. Organization; Powers. Each of Holdings, the Borrower and the
Subsidiaries is duly organized,
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validly existing and (except as set forth in Schedule 3.01) in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions to be entered
into by each Loan Party are within such Loan Party's corporate powers and have
been duly authorized by all necessary corporate and, if required, stockholder
action. This Agreement has been duly executed and delivered by each of Holdings
and the Borrower and constitutes, and each other Loan Document to which any Loan
Party is to be a party, when executed and delivered by such Loan Party, will
constitute, a legal, valid and binding obligation of Holdings, the Borrower or
such Loan Party (as the case may be), enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a)
except as set forth in Schedule 3.03, do not require any consent or approval of,
registration or filing with, or any other action by or before, any Governmental
Authority, except such as have been obtained or made and are in full force and
effect and except filings necessary to perfect Liens created under the Loan
Documents, (b) will not violate in any material respect any applicable law or
regulation and will not violate the charter, by-laws or other organizational
documents of Holdings, the Borrower or any of the Subsidiaries or any order of
any Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or other instrument binding upon Holdings, the Borrower
or any of the Subsidiaries or any of their assets, or give rise to a right
thereunder to require any payment to be made by Holdings, the Borrower or any of
the Subsidiaries, except to the extent that such violations, defaults and
payments, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect, and (d) will not result in the creation or
imposition of any Lien on any asset of Holdings, the Borrower or any of the
Subsidiaries, except Liens created under the Loan Documents.
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SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and statements of income, stockholders equity and cash flows (i) as of and for
the fiscal years ended December 31, 1997 and 1998, reported on by Ernst & Young
LLP, independent public accountants, and (ii) as of and for each fiscal quarter
and each portion of the fiscal year ended subsequent to December 31, 1998, and
for each fiscal month preceding the Effective Date since the last fiscal quarter
for which financial statements have been provided, in each case certified by its
chief financial officer. Such financial statements present fairly, in all
material respects, the financial position and results of operations and cash
flows of the Borrower and its consolidated Subsidiaries as of such dates and for
such periods in accordance with GAAP, subject to year-end audit adjustments and
the absence of footnotes in the case of the statements referred to in clause
(ii) above.
(b) The Borrower has heretofore furnished to the Lenders its pro forma
consolidated balance sheet as of June 30, 1999, prepared giving effect to the
Transactions as if the Transactions had occurred on such date. Such pro forma
consolidated balance sheet (i) has been prepared in good faith based on the same
assumptions used to prepare the pro forma financial statements included in the
Information Memorandum (which assumptions are believed by Holdings and the
Borrower to be reasonable), (ii) is based on the best information available to
Holdings and the Borrower after due inquiry, (iii) accurately reflects in all
material respects all adjustments necessary to give effect to the Transactions
and (iv) presents fairly, in all material respects, the pro forma financial
position of the Borrower and its consolidated Subsidiaries as of June 30, 1999,
as if the Transactions had occurred on such date.
(c) The Borrower has heretofore furnished to the Lenders the consolidated
balance sheet and statements of income, stockholders equity and cash flows of
the Company and its subsidiaries (i) as of and for the fiscal years ended
December 31, 1996, 1997 and 1998, reported on by KPMG LLP, independent public
accountants, and (ii) as of and for each fiscal quarter and each portion of the
fiscal year ended subsequent to December 31, 1998, and for each fiscal month
preceding the Effective Date since the last fiscal quarter for which financial
statements have been provided, in each case certified by its chief financial
officer. Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Company and
its consolidated subsidiaries as of such dates
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and for such periods in accordance with GAAP, subject to year-end audit
adjustments and the absence of footnotes in the case of the statements referred
to in clause (ii) above.
(d) Except as disclosed in the financial statements referred to above or
the notes thereto or in the Information Memorandum and except for the Disclosed
Matters, after giving effect to the Transactions, none of Holdings, the Borrower
or the Subsidiaries has, as of the Effective Date, any material contingent
liabilities.
(e) Since March 31, 1999, there has been no material adverse change in the
business, operations, assets, or condition (financial or otherwise) of Holdings,
the Borrower and the Subsidiaries, taken as a whole.
(f) As of the Effective Date, since December 31, 1998, there has been no
material adverse change in the business, operations, assets or condition
(financial or otherwise) of the Company and its subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of Holdings, the Borrower and the
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties), except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Each of Holdings, the Borrower and the Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property necessary to its business, and the use thereof by
Holdings, the Borrower and the Subsidiaries does not infringe upon the rights of
any other Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(c) Schedule 3.05 sets forth the address of each real property that is
owned or leased by the Borrower or any of the Subsidiaries as of the Effective
Date after giving effect to the Transactions.
SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Holdings or the Borrower,
threatened against Holdings, the Borrower or any of the Subsidiaries (i)
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as to which there is a reasonable possibility of an adverse determination and
that, if adversely determined, could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve any of the Loan Documents or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect, none of Holdings, the Borrower or any of
the Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of Holdings, the
Borrower and the Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
SECTION 3.08. Investment and Holding Company Status. None of Holdings, the
Borrower or any of the Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Except as set forth on Schedule 3.09, each of
Holdings, the Borrower and the Subsidiaries has timely filed or caused to be
filed all Tax returns and reports required to have been filed (in each case,
after giving effect to any extensions) and has paid or caused to be paid all
Taxes required to have been paid by it, except (a) any Taxes that are being
contested in good faith by
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appropriate proceedings and for which Holdings, the Borrower or such Subsidiary,
as applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur under applicable law, could reasonably
be expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed by more than $1,000,000 the fair market value of the assets of such Plan,
and the present value of all accumulated benefit obligations of all underfunded
Plans (based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed by more than $1,000,000 the
fair market value of the assets of all such underfunded Plans.
SECTION 3.11. Disclosure. The Borrower has disclosed (including disclosures
contained in the offering memorandum in respect of the Senior Notes, true and
complete copies of which have been delivered to the Lenders) to the Lenders all
agreements, instruments and corporate or other restrictions to which Holdings,
the Borrower or any of the Subsidiaries is subject, and all other matters known
to any of them, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other written information furnished by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document or delivered hereunder or thereunder (as
modified or supplemented by other written information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, taken as a whole, in the light of the circumstances
under which they were made, not misleading in any material respect, provided
that, with respect to projected financial information, Holdings and the Borrower
represent only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time.
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SECTION 3.12. Subsidiaries. Holdings does not have any subsidiaries other
than the Borrower and the Subsidiaries. Schedule 3.12 sets forth the name of,
and the ownership interest of the Borrower in, each Subsidiary and identifies
each Subsidiary that is a Subsidiary Loan Party, in each case as of the
Effective Date.
SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of the Borrower and the Subsidiaries as of
the Effective Date. As of the Effective Date, all premiums required to be paid
in respect of such insurance have been paid. Holdings and the Borrower believe
that the insurance maintained by or on behalf of the Borrower and the
Subsidiaries is adequate.
SECTION 3.14. Labor Matters. As of the Effective Date, there are no
strikes, lockouts or slowdowns against Holdings, the Borrower or any Subsidiary
pending or, to the knowledge of Holdings or the Borrower, threatened. The hours
worked by and payments made to employees of Holdings, the Borrower and the
Subsidiaries have not been in violation in any material respect of the Fair
Labor Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters. All payments due from Holdings, the Borrower or any
Subsidiary, or for which any claim may be made against Holdings, the Borrower or
any Subsidiary, on account of wages and employee health and welfare insurance
and other benefits (in each case, except for de minimus amounts), have been paid
or accrued as a liability on the books of Holdings, the Borrower or such
Subsidiary. The consummation of the Transactions will not give rise to any right
of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which Holdings, the Borrower or any
Subsidiary is bound.
SECTION 3.15. Solvency. Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) each Loan Party will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and
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(d) each Loan Party will not have unreasonably small capital with which to
conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted following the Effective Date.
SECTION 3.16. Year 2000. The Borrower and its Subsidiaries have (a)
reviewed the areas within their businesses and operations which could be
materially adversely affected by failure to become "Year 2000 Compliant" (i.e.,
that computer applications, imbedded microchips and other systems used by the
Borrower or any of its Subsidiaries, or any of their material vendors, will be
able properly to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999), (b)
developed a plan and timetable to become Year 2000 Compliant in a timely manner,
and (c) committed adequate resources to support the Year 2000 plan of the
Borrower and its Subsidiaries. Based upon such review, the Borrower reasonably
believes that the Borrower and its Subsidiaries have become "Year 2000
Compliant" except to the extent that failure to do so will not have a Material
Adverse Effect.
SECTION 3.17. Security Documents. (a) The Pledge Agreement is effective to
create in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when the portion of the
Collateral constituting certificated securities (as defined in the Uniform
Commercial Code) is delivered to the Administrative Agent, the Pledge Agreement
shall constitute a perfected first priority Lien on, and security interest in,
all right, title and interest of the pledgor thereunder in such Collateral.
(b) The Security Agreement is effective to create in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable security interest in the Collateral (as defined in the
Security Agreement) and, when financing statements in appropriate form are filed
in the offices specified on Schedule 6 to the Perfection Certificate, the
Security Agreement shall constitute a perfected Lien on, and security interest
in, all right, title and interest of the grantors thereunder in such Collateral
(to the extent that a Lien or a security interest in such Collateral may be
perfected by filing financing statements pursuant to the Uniform Commercial Code
as in effect in any applicable jurisdiction), in each case prior and superior in
right to any other Person, other than with respect to Liens expressly permitted
by the Security Agreement.
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(c) When the Security Agreement is filed in the United States Patent and
Trademark Office and the United States Copyright Office, the security interest
created thereunder shall constitute a perfected Lien on, and security interest
in, all right, title and interest of the Loan Parties in the Intellectual
Property (as defined in the Security Agreement) to the extent that a security
interest may be perfected by filing, recording or registering a security
agreement, financing statement or analogous document in the United States Patent
and Trademark Office or the United States Copyright Office, as applicable, in
each case prior and superior in right to any other Person, other than with
respect to the rights of Persons pursuant to Liens expressly permitted by the
Security Agreement (it being understood that subsequent recordings in the United
States Patent and Trademark Office and the United States Copyright Office may be
necessary to perfect a lien on registered trademarks, trademark applications and
copyrights acquired by the Loan Parties after the date hereof).
(d) Each Mortgage, if any, is effective under applicable law to create,
subject to the exceptions listed in each title insurance policy covering such
Mortgage, in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable Lien on all of the Loan Parties'
right, title and interest in and to the Mortgaged Property thereunder and the
proceeds thereof, and when such Mortgage is filed in the offices specified on
Schedule 3.18(d), such Mortgage shall constitute a Lien on, and security
interest in, all right, title and interest of the Loan Parties in such Mortgaged
Property and the proceeds thereof.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received from each
party hereto either (i) a counterpart of this Agreement signed on behalf of
such party or (ii) written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed signature page of this
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Agreement) that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
Effective Date) of each of (i) Schulte, Roth & Zabel LLP, counsel for the Loan
Parties, substantially in the form of Exhibit B-1, and (ii) counsel to the Loan
Parties (who shall be reasonably satisfactory to the Administrative Agent) in
the States of Florida and Texas, substantially in the form of Exhibit B-2, and,
in the case of each such opinion required by this paragraph, covering such other
matters relating to the Loan Parties, the Loan Documents or the Transactions as
the Required Lenders shall reasonably request. Each of Holdings and the Borrower
hereby requests such counsel to deliver such opinions.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of each Loan Party,
the authorization of the Transactions and any other legal matters relating to
the Loan Parties, the Loan Documents or the Transactions, all in form and
substance reasonably satisfactory to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other amounts
due and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses (including
fees, charges and disbursements of counsel) required to be reimbursed or paid by
any Loan Party hereunder or under any other Loan Document.
(f) The Collateral and Guarantee Requirement shall have been satisfied and
the Administrative Agent shall have received a completed Perfection Certificate
dated the Effective Date and signed by an executive officer or Financial Officer
of the Borrower, together with all attachments contemplated thereby, including
the results of a search of the Uniform Commercial Code (or equivalent) filings
made with respect to the Loan Parties
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in the jurisdictions contemplated by the Perfection Certificate and copies of
the financing statements (or similar documents) disclosed by such search and
evidence reasonably satisfactory to the Administrative Agent that the Liens
indicated by such financing statements (or similar documents) are permitted by
Section 6.02 or have been released.
(g) The Administrative Agent shall have received evidence that the
insurance required by Section 5.07 and the Security Documents is in effect.
(h) The Lenders shall have received, and shall be satisfied with the
results of, an environmental report prepared by Malcolm Pirnie Inc. with respect
to any Environmental Liabilities that may be attributable to such properties or
operations as have been specified by the Administrative Agent for review.
(i) Either (i) the Borrower shall have received not less than $100,000,000
in Net Proceeds from the issuance of the Senior Notes and, after giving effect
to the Transactions, the Excess Availability as of the Effective Date is not
less than $10,000,000, or (ii) if the Senior Notes are not issued on or prior to
the Effective Date, Holdings shall have received gross cash proceeds of not less
than $35,500,000 from the Equity Financing and shall have contributed all such
cash proceeds to the Borrower as a common equity capital contribution.
(j) All consents and approvals required to be obtained from any
Governmental Authority or other Person in connection with the Acquisition and
the other Transactions (except as set forth on Schedule 3.03) shall have been
obtained, and all applicable waiting periods and appeal periods shall have
expired, in each case without the imposition of any burdensome conditions. The
Acquisition shall have been, or substantially simultaneously with the initial
funding of Loans on the Effective Date shall be, consummated in accordance with
the Stock Purchase Agreement and applicable law, without any amendment to or
waiver of any material terms or conditions of the Stock Purchase Agreement not
approved by the Required Lenders. The Administrative Agent shall have received a
copy of the Stock Purchase Agreement and all certificates, opinions and other
documents delivered thereunder, certified by a Financial Officer as complete and
correct copies thereof.
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(k) The Lenders shall have received (i) audited consolidated balance sheets
and related statements of income, stockholders' equity and cash flows of the
Borrower for the 1997 and 1998 fiscal years and of the Company for the 1996,
1997 and 1998 fiscal years and (ii) unaudited consolidated balance sheets and
related statements of income, stockholders' equity and cash flows of the
Borrower and the Company for (A) each subsequent fiscal quarter ended before the
Effective Date and (B) each fiscal month after the most recent fiscal quarter
for which financial statements were received by the Lenders as described above
and that ended before the Effective Date, which financial statements shall not
be materially inconsistent with the financial statements or forecasts previously
provided to the Lenders.
(l) The Lenders shall have received a pro forma consolidated balance sheet
of the Borrower as of June 30, 1999, reflecting all pro forma adjustments as if
the Transactions had been consummated on such date, and such pro forma
consolidated balance sheet shall be consistent in all material respects with the
forecasts and other information previously provided to the Lenders (it being
understood that the information described above which is contained in the
offering memorandum with respect to the Senior Notes is satisfactory). After
giving effect to the Transactions, neither Holdings, the Borrower nor any of its
Subsidiaries shall have outstanding any shares of preferred stock or any
Indebtedness, other than (i) Indebtedness incurred under the Loan Documents,
(ii) the Senior Notes, (iii) the Existing Preferred Stock and (iv) the
Indebtedness described on Schedule 6.01. The terms and conditions of all
Indebtedness to remain outstanding after the Effective Date (including but not
limited to terms and conditions relating to interest rate, fees, amortization,
maturity, redemption, subordination, covenants, events of default and remedies)
shall be satisfactory in all material respects to the Lenders. The aggregate
amount of fees and expenses (including underwriting discounts and commissions)
payable or otherwise borne by Holdings, the Borrower and its Subsidiaries in
connection with the Transactions (exclusive of any fees and expenses
attributable to the issuance of the Senior Notes) that are paid or accrued on or
prior to the Effective Date shall not exceed $8,500,000.
(m) The Lenders shall have received management's consolidated financial
projections for the Borrower and its Subsidiaries for the period of eight years
following
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the Effective Date (including for each of the four fiscal quarters following the
Effective Date), which projections shall reflect the Transactions and include
the written assumptions upon which such projections are based, and such
projections shall be reasonably satisfactory in all respects to the
Administrative Agent, including with respect to the ability of the Borrower and
its Subsidiaries to achieve such projections and with respect to any cost
savings projected for the Borrower and its Subsidiaries therein.
(n) The Lenders shall be reasonably satisfied in all respects with the tax
position and the contingent tax and other liabilities of, and with any tax
sharing agreements among, Holdings, the Borrower and its Subsidiaries after
giving effect to the Transactions.
(o) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by a Financial Officer of the Borrower, certifying as
to the solvency of the Loan Parties, and such certificate shall be reasonably
satisfactory to the Administrative Agent.
(p) If the Senior Notes are issued on or prior to the Effective Date, the
Administrative Agent shall have received a completed Borrowing Base Certificate
dated the Effective Date and signed by a Financial Officer of the Borrower.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless each
of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at
or prior to 5:00 p.m., New York City time, on September 15, 1999 (and, in the
event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to receipt of the request
therefor in accordance herewith and to the satisfaction of the following
conditions:
(a) The representations and warranties of each Loan Party set forth in the
Loan Documents shall be true and correct on and as of the date of such
Borrowing or the
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date of issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, except for any representation and warranty which is expressly made
as of an earlier date, which representation and warranty shall have been true
and correct as of such earlier date.
(b) At the time of and immediately after giving effect to such Borrowing or
the issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.
(c) In the case of any Revolving Borrowing, at the time of and immediately
after giving effect to such Borrowing, (i) the aggregate principal amount of
Revolving Acquisition Loans outstanding shall not exceed $80,000,000 (or, on
and after the Transition Date, $50,000,000), (ii) the aggregate principal
amount of Revolving Working Capital Loans outstanding shall not exceed
$20,000,000 (or, on and after the Transition Date, $25,000,000) and (iii) if
such Borrowing is being made on or after the Transition Date, the Borrower
shall be in compliance with its obligation to deliver Borrowing Base
Certificates hereunder and the total Revolving Exposures shall not exceed the
Borrowing Base then in effect.
Each Borrowing, each issuance of a Letter of Credit and each amendment, renewal
or extension of a Letter of Credit that increases the stated amount or extends
the expiry date of such Letter of Credit shall be deemed to constitute a
representation and warranty by Holdings and the Borrower on the date thereof as
to the matters specified in paragraphs (a), (b) and (c) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, each of the Borrower and, with respect
to Sections 5.01(a), (b), (g) and (h), 5.02, 5.04, 5.05, 5.09, 5.10 and 5.13,
Holdings covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. Each of Holdings
(but only with respect to the next succeeding clauses (a), (b), (g) and (h)) and
the
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Borrower will furnish to the Administrative Agent and each Lender:
(a) within 90 days (or, in the case of the fiscal year ending December 31,
1999, 105 days) after the end of each fiscal year of Holdings or the Borrower,
respectively, its audited consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for such
year, setting forth in each case (commencing with the fiscal year ending
December 31, 2000) in comparative form the figures for the previous fiscal
year, all reported on by Ernst & Young LLP or other independent public
accountants of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as to
the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal quarters
of each fiscal year of Holdings or the Borrower, respectively, its unaudited
consolidated balance sheet and related statements of operations, stockholders'
equity and cash flows as of the end of and for such fiscal quarter and the
then elapsed portion of the fiscal year, setting forth in each case
(commencing with the fiscal quarter ending March 31, 2000) in comparative form
the figures for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous fiscal year, all certified by
one of its Financial Officers as presenting fairly in all material respects
the financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;
(c) in the case of the Borrower, within 90 days after the end of each
fiscal year of each material Foreign Subsidiary, such Foreign Subsidiary's
audited (or, if audited statements are not available, unaudited) balance sheet
and related statements of operations, stockholders' equity and cash flows as
of the end of and for such year, setting forth in each case (commencing with
the fiscal year ending December 31, 2000) in
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comparative form the figures for the previous fiscal year, (i) reported on, in
the case of audited statements, by independent public accountants of
recognized standing or (ii) certified by, in the case of unaudited financial
statements, one of its Financial Officers, in either case to the effect that
such financial statements present fairly in all material respects the
financial condition and results of operations of such Foreign Subsidiary in
accordance with generally accepted accounting principles in such entity's
jurisdiction of organization.
(d) in the case of the Borrower, concurrently with any delivery of
financial statements under clause (a) or (b) above, a certificate of a
Financial Officer of the Borrower (i) certifying as to whether a Default has
occurred and, if a Default has occurred, specifying the details thereof and
any action taken or proposed to be taken with respect thereto, (ii) setting
forth reasonably detailed calculations demonstrating compliance with Sections
6.12, 6.13 and, prior to the issuance of the Senior Notes, 6.14 and (iii)
stating whether any change in GAAP or in the application thereof has occurred
since the date of the Borrower's audited financial statements referred to in
Section 3.04 and, if any such change has occurred, specifying the effect of
such change on the financial statements accompanying such certificate;
(e) in the case of the Borrower, concurrently with any delivery of
financial statements under clause (a) above, a certificate of the accounting
firm that reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial statements
of any Default (which certificate may be limited to the extent required by
accounting rules or guidelines);
(f) in the case of the Borrower, at least 30 days prior to the commencement
of each fiscal year of the Borrower, a detailed consolidated budget for such
fiscal year (including a projected consolidated balance sheet and related
statements of projected operations and cash flow as of the end of and for such
fiscal year and setting forth the assumptions used for purposes of preparing
such budget) and, promptly when available, any significant revisions of such
budget;
(g) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials (i) filed by
Holdings, the Borrower or any Subsidiary with the
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Securities and Exchange Commission, or any Governmental Authority succeeding
to any or all of the functions of said Commission, or with any national
securities exchange, or (ii) distributed by Holdings to its stockholders
generally, as the case may be;
(h) on the Transition Date, and within 15 days after the end of each month
ending after the Transition Date, a completed Borrowing Base Certificate
calculating and certifying the Borrowing Base as of the last day of such
month, signed on behalf of the Borrower by a Financial Officer and accompanied
by the reports and supporting information contemplated thereby; and
(i) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of
Holdings, the Borrower or any Subsidiary, or compliance with the terms of any
Loan Document, as the Administrative Agent or any Lender may reasonably
request.
SECTION 5.02. Notices of Material Events. Holdings and the Borrower will
furnish to the Administrative Agent and each Lender prompt written notice after
obtaining knowledge of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against Holdings, the Borrower
or any Subsidiary that, if adversely determined, could reasonably be expected
to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result
in liability of Holdings, the Borrower and its Subsidiaries in an aggregate
amount exceeding $1,000,000; and
(d) any other development that results in, or could reasonably be expected
to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
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SECTION 5.03. Information Regarding Collateral. (a) The Borrower will
furnish to the Administrative Agent prompt written notice of any change (i) in
any Loan Party's corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in any Loan Party's identity or corporate structure or (iv) in any Loan
Party's Federal Taxpayer Identification Number. The Borrower agrees not to
effect or permit any change referred to in the preceding sentence unless all
filings have been made under the Uniform Commercial Code or otherwise that are
required in order for the Administrative Agent to continue at all times
following such change to have a valid, legal and perfected security interest in
all the Collateral for the benefit of the Secured Parties. The Borrower also
agrees promptly to notify the Administrative Agent if any material portion of
the Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual financial statements with
respect to the preceding fiscal year pursuant to clause (a) of Section 5.01, the
Borrower shall deliver to the Administrative Agent a certificate of a Financial
Officer and the chief legal officer of the Borrower setting forth the
information required pursuant to Section 2 of the Perfection Certificate or
confirming that there has been no change in such information since the date of
the Perfection Certificate delivered on the Effective Date or the date of the
most recent certificate delivered pursuant to this Section.
SECTION 5.04. Existence; Conduct of Business. Each of Holdings and the
Borrower will, and will cause each of the Subsidiaries to, do or cause to be
done all things reasonably necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names necessary for the
conduct of its business, provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 6.03
or any asset sale permitted by Section 6.05.
SECTION 5.05. Payment of Obligations. Each of Holdings and the Borrower
will, and will cause each of the Subsidiaries to, pay its material Indebtedness
and other obligations, including Tax liabilities, before the same shall
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become delinquent or in default, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (b) Holdings, the
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP, (c) such contest effectively suspends
the enforcement of any Lien securing such obligation and (d) the failure to make
payment pending such contest could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 5.06. Maintenance of Properties. Each of Holdings and the Borrower
will, and will cause each of the Subsidiaries to, keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted.
SECTION 5.07. Insurance. Each of Holdings and the Borrower will, and will
cause each of the Subsidiaries to, maintain, with financially sound and
reputable insurance companies (a) insurance in such amounts (with no greater
risk retention) and against such risks as are customarily maintained by
companies of established repute engaged in the same or similar businesses
operating in the same or similar locations and (b) in the case of the Borrower,
all insurance required to be maintained pursuant to the Security Documents. The
Borrower will furnish to the Lenders, upon request of the Administrative Agent,
information in reasonable detail as to the insurance so maintained.
SECTION 5.08. Casualty and Condemnation. (a) The Borrower (a) will furnish
to the Administrative Agent prompt written notice of any casualty or other
insured damage to any material portion of the Collateral or the commencement of
any action or proceeding for the taking of any material portion of the
Collateral under power of eminent domain or by condemnation or similar
proceeding and (b) will ensure that the Net Proceeds of any such event (whether
in the form of insurance proceeds, condemnation awards or otherwise) are
collected and applied in accordance with the applicable provisions of the
Security Documents.
SECTION 5.09. Books and Records; Inspection and Audit Rights. (a) Each of
Holdings and the Borrower will, and will cause each of the Subsidiaries to, 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
in accordance with GAAP and applicable law. Each of Holdings and the Borrower
will, and will cause each of the Subsidiaries to, permit any representatives
designated by the Administrative Agent or any Lender, upon
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reasonable prior notice and during normal business hours, to visit and inspect
its properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants (other than materials and affairs protected by the attorney-client
privilege and materials which Holdings, the Borrower or any of its Subsidiaries
may not disclose without violation of confidentiality obligations binding upon
it), all at such reasonable times and as often as reasonably requested to the
extent such request does not interfere in any material respect with the business
and operation of the Borrower and its Subsidiaries.
(b) Each of Holdings and the Borrower will, and will cause each of its
Subsidiaries to, permit the Administrative Agent and any representatives
designated by the Administrative Agent (including any consultants, accountants,
lawyers and appraisers retained by the Administrative Agent) to conduct
evaluations and audits of the computation of the Borrowing Base and the assets
included in the Borrowing Base, all at such reasonable times and as often as
reasonably requested; provided that, unless a Default has occurred and is
continuing, such evaluations and audits shall not be conducted on more than two
occasions in any calendar year. In addition, Holdings and the Borrower will, and
will cause each of the Subsidiaries to, permit the Administrative Agent and such
representatives to conduct appraisals of the assets constituting Eligible
Equipment, all at such reasonable times and as often as reasonably requested;
provided that (i) it is understood that such an appraisal will be conducted at
least once during each calendar year, (ii) unless a Default has occurred and is
continuing or a Permitted Acquisition has occurred involving consideration in
excess of $5,000,000, such appraisals shall not be conducted more than once in
any calendar year. The Borrower shall pay the reasonable fees and expenses of
the Administrative Agent and any representatives retained by the Administrative
Agent to conduct any such evaluation, audit or appraisal.
SECTION 5.10. Compliance with Laws. Each of Holdings and the Borrower will,
and will cause each of the Subsidiaries to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.11. Use of Proceeds and Letters of Credit. The proceeds of the
Term Loans and the Equity Financing (or, if the Senior Notes are issued on or
prior to
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the Effective Date, the proceeds of the Senior Notes), together with up to
$46,600,000 of proceeds of Revolving Loans, will be used only for (a) the
payment of amounts payable under the Stock Purchase Agreement as consideration
for the Acquisition, (b) the payment of fees and expenses payable in connection
with the Transactions, (c) the repayment of all amounts outstanding under the
Existing Credit Agreement on the Effective Date and (d) the repayment of all
Indebtedness of the Company outstanding on the Effective Date. Except as
provided in the preceding sentence, the proceeds of the Revolving Loans will be
used only for (i) the payment of cash consideration for Permitted Acquisitions
and fees and expenses associated therewith, in the case of Revolving Acquisition
Loans, and (ii) working capital purposes, in the case of Revolving Working
Capital Loans. No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations T, U and X. Letters of Credit
will be issued only for general corporate purposes.
SECTION 5.12. Additional Subsidiaries. If any additional Subsidiary is
formed or acquired after the Effective Date, the Borrower will, within ten
Business Days after such Subsidiary is formed or acquired, notify the
Administrative Agent thereof and cause the Collateral and Guarantee Requirement
to be satisfied with respect to such Subsidiary (if it is a Subsidiary Loan
Party) and with respect to any Equity Interest in or Indebtedness of such
Subsidiary owned by or on behalf of any Loan Party.
SECTION 5.13. Further Assurances. (a) Each of Holdings and the Borrower
will, and will cause each Subsidiary Loan Party to, execute any and all further
documents, financing statements, agreements and instruments, and take all such
further actions (including the filing and recording of financing statements,
fixture filings, mortgages, deeds of trust and other documents), that may be
required under any applicable law, or which the Administrative Agent or the
Required Lenders may reasonably request, to cause the Collateral and Guarantee
Requirement to be and remain satisfied, all at the expense of the Loan Parties.
Holdings and the Borrower also agree to provide to the Administrative Agent,
from time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens created or
intended to be created by the Security Documents.
(b) If any material assets (including any real property or improvements
thereto or any interest therein) are
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acquired by the Borrower or any Subsidiary Loan Party after the Effective Date
(other than assets constituting Collateral under the Security Agreement or the
Pledge Agreement that become subject to the Lien of the Security Agreement or
the Pledge Agreement upon acquisition thereof), the Borrower will notify the
Administrative Agent thereof, and, if reasonably requested in writing by the
Administrative Agent or the Required Lenders, the Borrower will cause such
assets to be subjected to a Lien securing the Obligations and will take, and
cause the Subsidiary Loan Parties to take, such actions as shall be necessary or
reasonably requested by the Administrative Agent to grant and perfect such
Liens, including actions described in paragraph (a) of this Section, all at the
expense of the Loan Parties; provided that the Borrower and the Subsidiary Loan
Parties shall not be required to grant a Mortgage on real properties and
improvements thereto with an aggregate fair market value less than $1,000,000.
SECTION 5.14. Interest Rate Protection. Within nine months after the
Effective Date, the Borrower will (as necessary) enter into, and thereafter for
a period of not less than three years after the Effective Date will maintain in
effect, one or more interest rate protection agreements on such terms and with
such parties as shall be reasonably satisfactory to the Administrative Agent,
such that the interest cost to the Borrower with respect to at least 50% of the
total Long-Term Indebtedness of the Borrower and the Subsidiaries will be hedged
or capped by such interest rate protection agreements or bear interest at a
fixed rate.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated and all LC Disbursements shall
have been reimbursed, each of the Borrower and, with respect to Sections 6.01(b)
and (c), 6.02(b), 6.03(a) and (c), 6.06, 6.09, 6.10 and 6.11, Holdings covenants
and agrees with the Lenders that:
SECTION 6.01. Indebtedness; Certain Equity Securities. (a) The Borrower
will not, and will not permit any Subsidiary to, create, incur, assume or permit
to exist any Indebtedness, except:
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(i) Indebtedness created under the Loan Documents;
(ii) the Senior Notes; provided, that (A) the terms and conditions of the
Senior Notes and the provisions of the Senior Notes Documents shall be
reasonably satisfactory to the Required Lenders and (B) if the Senior Notes
are not issued on or prior to the Effective Date, the issuance thereof shall
be subject to the condition that, after giving effect to the issuance of the
Senior Notes and application of the proceeds thereof, the Excess Availability
shall not be less than $10,000,000;
(iii) Indebtedness existing on the date hereof and set forth in Schedule
6.01 and extensions, renewals, replacements, refinancings or refundings of any
such Indebtedness that do not increase the outstanding principal amount
thereof or result in an earlier maturity date or decreased weighted average
life thereof;
(iv) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary
to the Borrower or any other Subsidiary, provided that Indebtedness of any
Subsidiary that is not a Loan Party to the Borrower or any Subsidiary Loan
Party shall be subject to Section 6.04;
(v) Guarantees by the Borrower of the Indebtedness of any Subsidiary and by
any Subsidiary of Indebtedness of the Borrower or any other Subsidiary,
provided that Guarantees by the Borrower or any Subsidiary Loan Party of
Indebtedness of any Subsidiary that is not a Loan Party shall be subject to
Section 6.04;
(vi) Indebtedness of the Borrower or any Subsidiary incurred to finance the
acquisition, construction, maintenance or improvement of any fixed or capital
assets, including Capital Lease Obligations and any Indebtedness assumed in
connection with the acquisition of any such assets or secured by a Lien on any
such assets prior to the acquisition thereof, provided that such Indebtedness
is incurred prior to or within 120 days after such acquisition or the
completion of such construction or improvement, and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof or result in an earlier maturity date or decreased
weighted average life thereof, provided further that the
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aggregate principal amount of Indebtedness permitted by this clause (vi),
including Indebtedness referred to in clause (xiv) below incurred to extend,
renew, replace, refinance or refund Indebtedness permitted by this clause,
shall not exceed $10,000,000 at any time outstanding;
(vii) Indebtedness of any Person that becomes a Subsidiary after the date
hereof, provided that (A) such Indebtedness exists at the time such Person
becomes a Subsidiary and is not created in contemplation of or in connection
with such Person becoming a Subsidiary and (B) the aggregate principal amount
of Indebtedness permitted by this clause (vii), including Indebtedness
referred to in clause (xiv) below incurred to extend, renew, replace,
refinance or refund Indebtedness permitted by this clause, shall not exceed
$15,000,000 at any time outstanding;
(viii) unsecured subordinated Indebtedness of the Borrower ("Permitted
Subordinated Indebtedness"), provided that (A) such Permitted Subordinated
Indebtedness shall not have any principal payments due on a date that is
earlier than six months after the Revolving Maturity Date, (B) such Permitted
Subordinated Indebtedness shall have terms (including covenants, events of
default and redemption provisions, but excluding price, maturity, interest
rate and redemption premiums) reasonably satisfactory to the Required Lenders,
(C) such Permitted Subordinated Indebtedness bears interest at a fixed rate,
which rate shall be, in the good faith judgment of the Borrower's board of
directors, consistent with the market at the time of issuance for similar
Indebtedness, (D) the subordination provisions of such Permitted Subordinated
Indebtedness shall be reasonably satisfactory to the Required Lenders, (E) (1)
the Borrower shall be in compliance, on a pro forma basis, with Sections 6.12,
6.13 and 6.14 of this Agreement, which shall be recomputed as of the last day
of the most recently ended fiscal quarter (for which financial information has
been delivered pursuant to Section 5.01 of this Agreement) of the Borrower as
if all such incurrences made or to be made in reliance on this clause (viii)
had occurred on the first day of each relevant period for testing such
compliance and (2) on or prior to the date of each such incurrence, the
Borrower shall deliver a certificate signed by a Financial Officer confirming
compliance with subclause (E)(1), and (F) on the date that such Permitted
Subordinated Indebtedness is
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incurred and immediately after giving effect thereto, no Default shall have
occurred and be continuing;
(ix) obligations on account of non-current accounts payable which the
Borrower or any Subsidiary is contesting in good faith and by appropriate
proceedings diligently conducted and with respect to which adequate reserves
have been established and are being maintained in accordance with GAAP;
(x) fees and any deferred portion thereof owed to Castle Harlan under the
Management Agreement;
(xi) the escrow arrangements as described in Section 7(c) of the Stock
Purchase Agreement;
(xii) Indebtedness of any Foreign Subsidiary incurred to finance working
capital, in an aggregate principal amount at any time outstanding not
exceeding (A) the sum of 75% of the Accounts and 50% of the net book value of
machinery and equipment of the Foreign Subsidiary that is the borrower in
respect of such Indebtedness and (B) $15,000,000 in the aggregate for all
Foreign Subsidiaries;
(xiii) other unsecured Indebtedness of the Borrower and the Subsidiary Loan
Parties in an aggregate principal amount not exceeding $5,000,000 at any time
outstanding; and
(xiv) extensions, renewals, replacements, refinancings and refundings of
any Indebtedness incurred under clause (vi) or (vii) above that do not
increase the outstanding principal amount thereof or result in an earlier
maturity date or decreased weighted average life thereof.
(b) Holdings will not create, incur, assume or permit to exist any
Indebtedness except (i) Indebtedness created under the Loan Documents, (ii)
Indebtedness issued in accordance with the express terms of the definition of
the term "Equity Financing" and only to the extent that the gross cash proceeds
of such issuance are contributed by Holdings to the Borrower as equity and (iii)
Holdings Subordinated Debt issued to Persons included in the CH Group to finance
a Specified Investment to the extent that the Net Proceeds of such issuance are
contributed by Holdings to the Borrower as common equity substantially
contemporaneously with the consummation of such Specified Investment.
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(c) Neither Holdings nor the Borrower will, nor will they permit any
Subsidiary to, issue any preferred stock or other preferred Equity Interests
other than, in the case of Holdings, the Existing Preferred Stock and Permitted
Preferred Stock.
SECTION 6.02. Liens. (a) The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) any Lien on any property or asset of the Borrower or any Subsidiary
existing on the date hereof and set forth in Schedule 6.02, provided that (i)
such Lien shall not apply to any other property or asset of the Borrower or
any Subsidiary and (ii) such Lien shall secure only those obligations that it
secures on the date hereof and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;
(iv) any Lien existing on any property or asset prior to the acquisition
thereof by the Borrower or any Subsidiary or existing on any property or asset
of any Person that becomes a Subsidiary after the date hereof prior to the
time such Person becomes a Subsidiary, provided that (A) such Lien is not
created in contemplation of or in connection with such acquisition or such
Person becoming a Subsidiary, as the case may be, (B) such Lien shall not
apply to any other property or assets of the Borrower or any Subsidiary and
(C) such Lien shall secure only those obligations that it secures on the date
of such acquisition or the date such Person becomes a Subsidiary, as the case
may be and extensions, renewals and replacements thereof that do not increase
the outstanding principal amount thereof;
(v) Liens on fixed or capital assets acquired, constructed or improved by
the Borrower or any Subsidiary, provided that (A) such Liens secure
Indebtedness (including Capital Lease Obligations) permitted by clause (vi) of
Section 6.01(a), (B) such Liens and the Indebtedness secured thereby are
incurred prior to or within 120 days after such acquisition or the
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completion of such construction or improvement, (C) the Indebtedness secured
thereby does not exceed 100% of the cost of acquiring, constructing or
improving such fixed or capital assets and (D) such security interests shall
not apply to any other property or assets of the Borrower or any Subsidiary;
(vi) the escrow arrangements as described in Section 7(c) of the Stock
Purchase Agreement; and
(vii) Liens on assets of Foreign Subsidiaries securing Indebtedness
permitted under clause (xii) of Section 6.01(a).
(b) Holdings will not create, incur, assume or permit to exist any Lien on
any property or asset now owned or hereafter acquired by it, or assign or sell
any income or revenues (including accounts receivable) or rights in respect
thereof, except Liens created under the Pledge Agreement and Permitted
Encumbrances.
SECTION 6.03. Fundamental Changes. (a) Neither Holdings nor the Borrower
will, nor will they permit any Subsidiary to, merge into or consolidate with any
other Person, or permit any other Person to merge into or consolidate with it,
or liquidate or dissolve, except that, if at the time thereof and immediately
after giving effect thereto no Default shall have occurred and be continuing (i)
any Person may merge into the Borrower in a transaction in which the Borrower is
the surviving corporation, (ii) any Person may merge into any Subsidiary in a
transaction in which the surviving entity is a Subsidiary and (if any party to
such merger is a Subsidiary Loan Party) is a Subsidiary Loan Party and (iii) any
Subsidiary (other than a Subsidiary Loan Party) may liquidate or dissolve if the
Borrower determines in good faith that such liquidation or dissolution is in the
best interests of the Borrower and is not materially disadvantageous to the
Lenders, provided that any such merger involving a Person that is not a wholly
owned Subsidiary (other than directors qualifying shares) immediately prior to
such merger shall not be permitted unless also permitted by Sections 6.04 and
6.08.
(b) The Borrower will not, and will not permit any of the Subsidiaries to,
engage to any material extent in any business other than businesses of the type
conducted by the Borrower and the Subsidiaries on the date of execution of this
Agreement and businesses reasonably related, ancillary or complementary thereto.
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(c) Holdings will not engage in any business or activity other than (i) the
ownership of outstanding shares of capital stock of the Borrower and activities
incidental thereto, (ii) the maintenance of its corporate existence and
compliance with applicable law, (iii) accounting, legal, public relations,
investor relations, financial or management activities (including the employment
of agents, accountants, consultants, bankers, advisors or other professionals in
connection with any of the foregoing activities) and (iv) the performance of any
other activity (other than conducting business or operations) customarily
performed by a holding company. Holdings will not own or acquire any assets
(other than shares of capital stock of the Borrower, cash and Permitted
Investments) or incur any liabilities (other than liabilities under the Loan
Documents, liabilities imposed by law, including tax liabilities, liabilities
resulting from any issuance of Holdings Subordinated Debt permitted by Section
6.01(b) and other liabilities incidental to its existence and permitted business
and activities).
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions.
The Borrower will not, and will not permit any of the Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
wholly owned Subsidiary prior to such merger) any Equity Interests in or
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any other investment in, any other Person, or purchase or otherwise acquire (in
one transaction or a series of transactions) any assets of any other Person
constituting a business unit, except:
(a) the Acquisition;
(b) Permitted Investments;
(c) investments existing on the date hereof and set forth on Schedule 6.04;
(d) investments by the Borrower and the Subsidiaries in Equity Interests in
their respective Subsidiaries, provided that (i) any such Equity Interests
held by a Loan Party shall be pledged pursuant to the Pledge Agreement
(subject to the limitations applicable to voting stock of a Foreign Subsidiary
referred to in the definition of the "Collateral and Guarantee Requirement"),
(ii) the aggregate amount of investments by Loan Parties in, and loans and
advances by Loan
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Parties to, and Guarantees by Loan Parties of Indebtedness and other
obligations of, Subsidiaries that are not Loan Parties (excluding all such
investments, loans, advances and Guarantees existing on the Effective Date and
excluding consideration for Permitted Acquisitions) shall not exceed, at any
time outstanding, the sum of $10,000,000 plus the amount of Specified
Investments applied to make investments in Foreign Subsidiaries, and (iii) to
the maximum extent practicable, investments by Loan Parties in Foreign
Subsidiaries shall be made as loans or advances in compliance with clause (e)
below rather than as Equity Investments;
(e) loans or advances made by the Borrower to any Subsidiary and made by
any Subsidiary to the Borrower or any other Subsidiary, provided that (i) any
such loans and advances made by a Loan Party shall be evidenced by a
promissory note pledged pursuant to the Pledge Agreement and (ii) the
aggregate amount of such loans and advances made by Loan Parties to
Subsidiaries that are not Loan Parties shall be subject to the limitation set
forth in clause (d) above;
(f) Guarantees constituting Indebtedness permitted by Section 6.01(a) and
Guarantees by the Borrower or any Subsidiary of obligations (other than
Indebtedness) of any Subsidiary, provided that (i) a Subsidiary shall not
Guarantee the Senior Notes or any Permitted Subordinated Indebtedness unless
(A) such Subsidiary also has Guaranteed the Obligations pursuant to the
Guarantee Agreement, (B) such Guarantee of any Permitted Subordinated
Indebtedness is subordinated to such Guarantee of the Obligations on terms no
less favorable to the Lenders than the subordination provisions of the
Permitted Subordinated Indebtedness and (C) such Guarantee of the Senior Notes
or any Permitted Subordinated Indebtedness provides for the release and
termination thereof, without action by any party, upon any sale or disposition
that results in the applicable Subsidiary ceasing to be a Subsidiary, and (ii)
the aggregate principal amount of Indebtedness and other obligations of
Subsidiaries that are not Loan Parties that is Guaranteed by any Loan Party
shall be subject to the limitation set forth in clause (d) above;
(g) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and
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suppliers, and the satisfaction or enforcement thereof, in each case in the
ordinary course of business;
(h) Permitted Acquisitions; provided that (i) the consideration for each
Permitted Acquisition shall consist solely of cash, Earnouts, shares of common
stock of Holdings (and, to the extent permitted by clause (d) of Section 6.05,
common stock of the Borrower), the assumption of Indebtedness of the acquired
Person or encumbering the acquired assets or a combination thereof, (ii) the
sum of all Indebtedness so assumed or otherwise resulting from Permitted
Acquisitions plus the cash consideration paid in connection with Permitted
Acquisitions shall not exceed (A) for any Permitted Acquisition, the sum of
$50,000,000 plus the amount of any Specified Investment applied to pay such
consideration and (B) for all Permitted Acquisitions involving assets located
outside the United States of America or Equity Interests of entities organized
outside the United States of America, on a cumulative basis during the term of
this Agreement, the sum of $50,000,000 plus the amount of Specified
Investments applied to pay such consideration, and (iii) in the case of any
Permitted Acquisition consummated after the Transition Date, at the time of
such Permitted Acquisition and after giving effect to any Revolving Borrowings
made in connection therewith, the Excess Availability shall not be less than
$10,000,000;
(i) investments consisting of trade and customer accounts receivable for
services rendered in the ordinary course of business and payable in accordance
with customary trade terms, and all letters of credit and other instruments
securing the same;
(j) investments consisting of promissory notes received as proceeds of
asset dispositions permitted by Section 6.05;
(k) investments consisting of loans and advances to employees for moving,
entertainment, travel and other similar expenses and payroll advances, each in
the ordinary course of business, and not to exceed $500,000 in the aggregate
at any time outstanding;
(l) investments constituting Capital Expenditures to the extent permitted
by Section 6.15;
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(m) investments consisting of Hedging Agreements entered into by the
Borrower or any of its Subsidiaries to the extent permitted by Section 6.07
hereof;
(n) investments consisting of acceptance and endorsements of checks or
other negotiable instruments for deposit or collection in the ordinary course
of business; and
(o) investments by the Borrower or any Subsidiary Loan Party in joint
ventures or other Persons that are not Subsidiaries; provided that the
aggregate amount of all such investments shall not exceed the sum of
$5,000,000 plus the amount of Specified Investments applied to make any such
investments.
SECTION 6.05. Asset Sales. The Borrower will not, and will not permit any
of the Subsidiaries to, sell, transfer, lease or otherwise dispose of any asset,
including any Equity Interest owned by it, nor will the Borrower issue or permit
any of the Subsidiaries to issue any additional Equity Interest in the Borrower
or such Subsidiary, except:
(a) sales of inventory, used or surplus equipment and Permitted
Investments, and leases of surplus equipment, in each case in the ordinary
course of business;
(b) sales, transfers and dispositions to the Borrower or a Subsidiary,
provided that any such sales, transfers or dispositions involving a Subsidiary
that is not a Loan Party shall be made in compliance with Section 6.09; and
(c) sales, transfers and other dispositions of assets (other than Equity
Interests in a Subsidiary) that are not permitted by any other clause of this
Section, provided that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of in reliance upon this clause (c) shall
not exceed $1,000,000 during any fiscal year of the Borrower or $5,000,000 in
the aggregate during the term of this Agreement;
(d) after the Transition Date, the issuance by the Borrower of shares of
its common stock as consideration in connection with Permitted Acquisitions;
provided that, after giving effect thereto, Holdings shall continue to own and
control, beneficially and of record, at least 80% of the outstanding shares of
common stock of the Borrower;
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(e) any issuance by the Borrower of shares of its common stock to Holdings
and any issuance by any Subsidiary of Equity Interests to the Borrower or to
any other Subsidiary; provided that any such issuance of Equity Interests in a
Subsidiary Loan Party shall be made to the Borrower or another Subsidiary Loan
Party;
(f) sales contemplated by and permitted under Section 6.06;
(g) leases of assets by the Borrower or any Subsidiary Loan Party to the
Borrower or any Subsidiary Loan Party; provided that any such lease shall be
expressly subject and subordinate to the Liens on such assets granted under
the Security Documents; and
(h) leases of assets by any Foreign Subsidiary to any other Foreign
Subsidiary;
provided that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by clauses (b), (d), (e), (g) and (h) above
and clause (f) above (but only to the extent such clause (f) relates to clauses
(b) and (c) of Section 6.06)) shall be made for fair value and for at least 80%
cash consideration.
SECTION 6.06. Sale and Leaseback Transactions. Neither Holdings nor the
Borrower will, nor will the Borrower permit any of the Subsidiaries to, enter
into any arrangement, directly or indirectly, whereby it shall sell or transfer
any property, real or personal, used or useful in its business, whether now
owned or hereafter acquired, and thereafter rent or lease such property or other
property that it intends to use for the same or a substantially similar purpose
or purposes as the property sold or transferred, except, solely in the case of
the Borrower or any Subsidiary, (a) any such sale of any fixed or capital assets
that is made for cash consideration in an amount not less than the cost of such
fixed or capital asset and is consummated within 90 days after the Borrower or
such Subsidiary acquires or completes the construction of such fixed or capital
asset, (b) any such sale and leaseback transaction between or among any of the
Borrower and the Subsidiary Loan Parties and (c) any such sale and leaseback
transaction between or among Subsidiaries that are not Subsidiary Loan Parties.
SECTION 6.07. Hedging Agreements. The Borrower will not, and will not
permit any of the Subsidiaries to, enter into any Hedging Agreement, other than
(a) Hedging Agreements required by Section 5.14 and (b) Hedging Agreements
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entered into in the ordinary course of business to hedge or mitigate risks to
which the Borrower or any Subsidiary is exposed in the conduct of its business
or the management of its liabilities.
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness. (a)
The Borrower will not, and the Borrower will not permit any Subsidiary to,
declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, or incur any obligation (contingent or otherwise) to do so, except (i)
the Borrower may declare and pay dividends with respect to its capital stock
payable solely in additional shares of its common stock, (ii) Subsidiaries may
make Restricted Payments ratably with respect to their capital stock, (iii) the
Borrower may make Restricted Payments pursuant to and in accordance with stock
option plans or other benefit plans for management or employees of the Borrower
and the Subsidiaries or to Holdings in such amounts and at such times as shall
be necessary to permit Holdings to purchase or otherwise redeem or acquire
capital stock of Holdings issued to management or employees of the Borrower and
the Subsidiaries, provided that the aggregate amount of Restricted Payments made
by the Borrower pursuant to this clause (iii) after the Effective Date shall not
at any time exceed $1,000,000 plus the aggregate amount of Net Proceeds
theretofore received by the Borrower after the Effective Date that are
attributable to the issuance by Holdings of shares of its common stock to
management or employees of the Borrower and the Subsidiaries pursuant to
transactions that do not constitute Prepayment Events, (iv) the Borrower may pay
dividends to Holdings at such times and in such amounts, not exceeding
$1,500,000 during any fiscal year, as shall be necessary to permit Holdings to
pay customary administrative expenses incurred in the ordinary course of
business, (v) the Borrower may make Restricted Payments to Holdings to enable
Holdings to pay, or the Borrower may pay directly to Castle Harlan, management
fees pursuant to the Management Agreement in an aggregate amount not to exceed
(A) $625,000 during the year ending December 31, 1999, (B) $1,250,000 during
each fiscal year of the Borrower ending during the period commencing on January
1, 2000, and ending December 31, 2002, and (C) $2,000,000 during each fiscal
year of the Borrower thereafter and (vi) if the Transition Date occurs after the
Effective Date and prior to the nine month anniversary of the Effective Date and
all outstanding Term Loans have been repaid in full, the Borrower may make
Restricted Payments to Holdings, in an aggregate amount not to exceed the lesser
of (A) the amount of the Equity Financing and (B) the amount of the Net Proceeds
of the issuance of the Senior Notes less the amount of Term Loans outstanding
immediately prior to such
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issuance, to enable Holdings to repay the Equity Financing to CHP III and its
Affiliates; provided, however, that any Restricted Payment otherwise permitted
by this Section 6.08(a) shall not be permitted if at the time thereof and after
giving effect thereto a Default shall have occurred and be continuing.
(b) The Borrower will not, and the Borrower will not permit any Subsidiary
to, make or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash, securities or other property) of or in respect of
principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancelation or termination of any Indebtedness, except:
(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of regularly scheduled interest, principal payments and fees
as and when due in respect of any Indebtedness, other than payments in respect
of any subordinated Indebtedness prohibited by the subordination provisions
thereof;
(iii) refinancings of Indebtedness to the extent permitted by Section 6.01;
(iv) payment of secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such
Indebtedness;
(v) the repayment of all amounts outstanding under the Existing Credit
Agreement and the repayment of all Indebtedness of the Company outstanding on
the Effective Date; and
(vi) after the Transition Date, other repayments of Indebtedness (other
than the Senior Notes and any Permitted Subordinated Indebtedness) if at the
time of any such repayment no Revolving Acquisition Loans are outstanding,
provided that the Borrower and the Subsidiaries may repay Indebtedness (other
than the Senior Notes and any Permitted Subordinated Indebtedness) in
accordance with this clause (vi) in an aggregate principal amount not
exceeding $5,000,000 during the term of this Agreement without regard to the
foregoing
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requirement that Revolving Acquisition Loans not be outstanding.
SECTION 6.09. Transactions with Affiliates. Neither Holdings nor the
Borrower will, nor will they permit any Subsidiary to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) transactions in the ordinary course of business
that do not involve Holdings and are at prices and on terms and conditions not
less favorable to the Borrower or such Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (b) payments to Castle Harlan
and its Affiliates in respect of reasonable professional investment banking fees
and expenses and reasonable finders' fees upon terms no less favorable than
Holdings, the Borrower or any Subsidiary could obtain from a nationally
recognized investment banking firm for a comparable transaction, (c) loans,
advances and other investments made by the Borrower and Subsidiary Loan Parties
in or to Subsidiaries that are not Loan Parties, provided that such loans,
advances and other investments are made in compliance with the other provisions
of this Agreement, (d) transactions between or among the Borrower and the
Subsidiary Loan Parties not involving any other Affiliate, (e) transactions
between or among Subsidiaries that are not Loan Parties not involving any other
Affiliate, (f) Holdings or the Borrower may pay management fees to Castle Harlan
as provided in clause (v) of Section 6.08(a), (g) Holdings may pay dividends to
stockholders of Holdings who are Affiliates of Holdings, (h) any Restricted
Payment permitted by Section 6.08, (i) performance of the agreements identified
in Schedule 6.09 in accordance with their respective terms, (j) the issuance by
Holdings of options, warrants and similar rights in respect of shares of its
capital stock, (k) employment agreements entered into with management of the
Borrower or any Subsidiary on terms and conditions no less favorable to the Loan
Parties than could be obtained with a management employee that is not an
Affiliate and (l) customary tax sharing agreements among the Borrower and the
Subsidiaries.
SECTION 6.10. Restrictive Agreements. Neither Holdings nor the Borrower
will, nor will they permit any Subsidiary to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of Holdings,
the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon
any of its property or assets, or (b) the ability of any Subsidiary to pay
dividends
<PAGE> 105
101
or other distributions with respect to any of its Equity Interests owned by the
Borrower or any other Subsidiary or to make or repay loans or advances to the
Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or
any other Subsidiary, provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by any Loan Document, Senior Notes
Document or Subordinated Debt Document, (ii) the foregoing shall not apply to
restrictions and conditions existing on the date hereof identified on Schedule
6.10 (but shall apply to any extension or renewal of, or any amendment or
modification expanding the scope of, any such restriction or condition), (iii)
the foregoing shall not apply to customary restrictions and conditions contained
in agreements relating to the sale or disposition of a Subsidiary pending such
sale or disposition, provided such restrictions and conditions apply only to the
Subsidiary that is to be sold or disposed of and such sale or disposition is
permitted hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness, (v) clause (a)
of the foregoing shall not apply to customary provisions in leases restricting
the assignment thereof, (vi) clause (a) of the foregoing shall not apply to
restrictions or conditions that permit Liens securing the Obligations, (vii)
clause (b) of the foregoing shall not apply to restrictions or conditions
imposed on any Foreign Subsidiary pursuant to (A) any agreement relating to
Indebtedness of such Foreign Subsidiary permitted by clause (vii) of Section
6.01(a), provided that such restrictions or conditions apply only to the Foreign
Subsidiaries acquired pursuant to the Permitted Acquisition resulting in such
Indebtedness, or (B) any agreement relating to Indebtedness of such Foreign
Subsidiary permitted by clause (xii) of Section 6.01(a), provided that such
restrictions and conditions are limited to financial covenants that, at the time
such agreement is entered into, either (x) are not reasonably anticipated to
prevent such Subsidiary from paying dividends to the extent of its net income or
(y) are not reasonably anticipated to prevent such Subsidiary from making loans
or advances to the Borrower.
SECTION 6.11. Amendment of Material Documents. Neither Holdings nor the
Borrower will, nor will they permit any Subsidiary to, amend, modify or waive
any of its rights under (a) any Senior Notes Document, Subordinated Debt
Document or Holdings Subordinated Debt Document, (b) its certificate of
incorporation, by-laws or other organizational documents, (c) the Management
Agreement or (d) any agreement listed on Schedule 6.09; provided that the
foregoing shall not
<PAGE> 106
102
prohibit amendments, modifications or waivers that, in the aggregate, are not
adverse in any material respect to the interests of the Lenders, as determined
by the Administrative Agent.
SECTION 6.12. Interest Expense Coverage Ratio. (a) Unless and until the
Senior Notes have been issued, the Borrower will not permit the ratio of (i)
Consolidated EBITDA to (ii) Consolidated Cash Interest Expense, in each case for
any period of four consecutive fiscal quarters ending on any date during any
period set forth below, to be less than the ratio set forth below opposite such
period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
September 30, 1999 through
September 29, 2000 2.5 to 1.0
September 30, 2000 through
September 29, 2001 2.75 to 1.0
September 30, 2001 through
September 29, 2002 3.0 to 1.0
September 30, 2002 through
September 29, 2003 3.25 to 1.0
September 30, 2003
and thereafter 3.5 to 1.0
</TABLE>
(b) Following the issuance of the Senior Notes, the Borrower will not
permit the ratio of (i) Consolidated EBITDA to (ii) Consolidated Cash Interest
Expense, in each case for any period of four consecutive fiscal quarters ending
on any date during any period set forth below, to be less than the ratio set
forth below opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
September 30, 1999 through
September 29, 2001 1.5 to 1.0
September 30, 2001 through
September 29, 2002 1.65 to 1.0
September 30, 2002 through
September 29, 2003 1.85 to 1.0
September 30, 2003 through
September 29, 2004 2.0 to 1.0
September 30, 2004 through
September 29, 2005 2.25 to 1.0
September 30, 2005
and thereafter 2.5 to 1.0
</TABLE>
<PAGE> 107
103
(c) For purposes of determining compliance with paragraphs (a) and (b) of
this Section, (i) Consolidated Cash Interest Expense for the period of four
consecutive fiscal quarters ended September 30, 1999, shall be deemed to be
equal to the product of Consolidated Cash Interest Expense for the fiscal
quarter then ended multiplied by four, (ii) Consolidated Cash Interest Expense
for the period of four consecutive fiscal quarters ended December 31, 1999,
shall be deemed to be equal to the product of Consolidated Cash Interest Expense
for the period of two consecutive fiscal quarters then ended multiplied by two
and (iii) Consolidated Cash Interest Expense for the period of four consecutive
fiscal quarters ended March 31, 2000, shall be deemed to be equal to the product
of Consolidated Cash Interest Expense for the period of three consecutive fiscal
quarters then ended multiplied by four-thirds. In addition, for purposes of
determining compliance with paragraphs (a) and (b) of this Section, as well as
for purposes of determining the Leverage Ratio and the Senior Leverage Ratio,
Consolidated EBITDA shall be deemed to be equal to (i) $7,600,000 for the fiscal
quarter ended December 31, 1998, (ii) $6,100,000 for the fiscal quarter ended
March 31, 1999 and (iii) $6,900,000 for the fiscal quarter ended June 30, 1999.
SECTION 6.13. Leverage Ratio. The Borrower will not permit the Leverage
Ratio as of any date during any period set forth below to exceed the ratio set
forth opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
September 30, 1999 through
September 29, 2001 5.25 to 1.0
September 30, 2001 through
September 29, 2002 5.0 to 1.0
September 30, 2002 through
September 29, 2003 4.75 to 1.0
September 30, 2003
and thereafter 4.5 to 1.0
</TABLE>
<PAGE> 108
104
SECTION 6.14. Senior Leverage Ratio. Unless and until the Senior Notes have
been issued, the Borrower will not permit the Senior Leverage Ratio as of any
date during any period set forth below to exceed the ratio set forth below
opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
September 30, 1999 through
September 29, 2000 4.25 to 1.0
September 30, 2000 through
September 29, 2001 4.0 to 1.0
September 30, 2001
and thereafter 3.75 to 1.0
</TABLE>
SECTION 6.15. Capital Expenditures. The Borrower and its Subsidiaries shall
not incur or make Capital Expenditures exceeding in the aggregate (a) $6,500,000
during the period from the Effective Date through December 31, 1999, (b)
$10,000,000 during the fiscal year ending December 31, 2000, (c) $12,500,000
during each of the fiscal years ending December 31, 2001 and December 31, 2002,
and (d) $15,000,000 during any fiscal year ending thereafter; provided that if
during any fiscal year ending on or after December 31, 2000, the amount of
Capital Expenditures made during such fiscal year is less than the amount
permitted under this Section for such fiscal year (disregarding any amount
permitted by reason of this proviso), then the amount of Capital Expenditures
permitted in the next succeeding fiscal year shall be increased by the
unutilized amount.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due
<PAGE> 109
105
and payable, whether at the due date thereof or at a date fixed for prepayment
thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee or
any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or any other Loan Document, when and as
the same shall become due and payable, and such failure shall continue
unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made by or on behalf of
Holdings, the Borrower or any Subsidiary in or in connection with any Loan
Document or any amendment or modification thereof or waiver thereunder, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been incorrect
in any material respect when made or deemed made;
(d) Holdings or the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.04 (with respect to the
existence of Holdings or the Borrower) or 5.11 or in Article VI;
(e) any Loan Party shall fail to observe or perform any covenant, condition
or agreement contained in any Loan Document (other than those specified in
clause (a), (b) or (d) of this Article), and such failure shall continue
unremedied for a period of 30 days after written notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the
request of any Lender);
(f) Holdings, the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable;
(g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with
or without the giving of notice, the lapse of time or both) the holder or
holders of any Material Indebtedness or any trustee or agent on its or their
behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof,
<PAGE> 110
106
prior to its scheduled maturity, provided that this clause (g) shall not apply
to secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of Holdings, the Borrower or any Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Holdings, the Borrower or any Subsidiary
or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
(i) Holdings, the Borrower or any Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or
other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for Holdings, the Borrower or
any Subsidiary or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the foregoing;
(j) Holdings, the Borrower or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate amount
(excluding amounts covered by insurance from financially sound insurance
companies that have acknowledged liability in respect thereof) in excess of
$1,000,000 shall be rendered against Holdings, the Borrower, any Subsidiary or
any combination thereof and the same shall remain undischarged for a period of
45 consecutive days during which execution shall not be
<PAGE> 111
107
effectively stayed, or a judgment creditor shall attach or levy upon any
assets of Holdings, the Borrower or any Subsidiary to enforce any such
judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in liability of Holdings, the Borrower
and the Subsidiaries in an aggregate amount exceeding $1,000,000;
(m) any Lien purported to be created under any Security Document shall
cease to be, or shall be asserted by any Loan Party not to be, a valid and
perfected Lien on any Collateral, with the priority required by the applicable
Security Document, except (i) as a result of the sale or other disposition of
the applicable Collateral in a transaction permitted under the Loan Documents
or (ii) as a result of the Administrative Agent's failure to maintain
possession of any stock certificates, promissory notes or other instruments
delivered to it under the Pledge Agreement; or
(n) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice in writing to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; and in case of any event with respect to the Borrower described in
clause (h) or (i) of this Article, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower.
<PAGE> 112
108
ARTICLE VIII
The Administrative Agent
Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with Holdings, the Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations except
those expressly set forth in the Loan Documents. Without limiting the generality
of the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 9.02), and (c) except as
expressly set forth in the Loan Documents, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to Holdings, the Borrower or any of the Subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent
or any of its Affiliates in any capacity. The Administrative Agent shall not be
liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02) or in the absence of its own gross negligence or wilful misconduct. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by
Holdings, the Borrower or a Lender, and the Administrative Agent shall not be
responsible for or
<PAGE> 113
109
have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered thereunder or in
connection therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any of and all its duties and exercise
its rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of each
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on
<PAGE> 114
110
behalf of the Lenders and the Issuing Bank, appoint a successor Administrative
Agent that shall be a bank with an office in New York, New York, or an Affiliate
of any such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to Holdings:
c/o Castle Harlan, Inc.
150 East 58th Street
New York, New York 10155
Attention: Leonard M. Harlan
Fax: 212-207-8042
Tel: 212-644-8600
<PAGE> 115
111
with a copy to:
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Attention: Marc Weingarten, Esq.
Fax: 212-593-5955
Tel: 212-756-2000
(b) if to the Borrower:
(prior to August 15, 1999)
4255 Amon Carter Boulevard, MD 4237
Fort Worth Texas 76155
Attention: Peter A. Pappas
Fax: 817-963-4847
Tel: 817-963-1519
(on and after August 15, 1999)
1001 West Euless Boulevard
Suite 320
Euless, Texas 76040
Attention: Peter A. Pappas
Fax: (to be provided)
Tel: (to be provided)
with copies to:
Holdings:
c/o Castle Harlan, Inc.
150 East 58th Street
New York, New York 10155
Attention: Leonard M. Harlan
Fax: 212-207-8042
Tel: 212-644-8600
and
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Attention: Marc Weingarten, Esq.
Fax: 212-593-5955
Tel: 212-756-2000
<PAGE> 116
112
(c) if to the Administrative Agent, to The Chase Manhattan Bank, Loan and
Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New York
10081, Attention of Jesus Sang (Telecopy No. (212) 552-5650), with a copy to The
Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017, Attention of
Matthew Massie (Telecopy No. (212) 270-5100);
(d) if to the Issuing Bank, to it at Chase Manhattan Bank Delaware, 1201
Market Street, 8th Floor, Wilmington, Delaware 19801, Attention of Michael
Handago, Letter of Credit Department (Telecopy No. (302)348-3390); and
(e) if to any other Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Bank and the Lenders hereunder and under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of any Loan Document or consent to any departure by
any Loan Party therefrom shall in any event be effective unless the same shall
be permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender or the
Issuing Bank may have had notice or knowledge of such Default at the time.
<PAGE> 117
113
(b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except, in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by
Holdings, the Borrower and the Required Lenders or, in the case of any other
Loan Document, pursuant to an agreement or agreements in writing entered into by
the Administrative Agent and the Loan Party or Loan Parties that are parties
thereto, in each case with the consent of the Required Lenders, provided that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the maturity of any Loan, or the date of any scheduled payment of
the principal amount of any Term Loan under Section 2.09, or the required date
of reimbursement of any LC Disbursement, or any date for the payment of any
interest or fees payable hereunder, or reduce the amount of, waive or excuse any
such scheduled payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby, (iv)
change Section 2.17(b) or (c) in a manner that would alter the pro rata sharing
of payments required thereby, without the written consent of each Lender, (v)
change any of the provisions of this Section or the percentage set forth in the
definition of the term "Required Lenders" or any other provision of any Loan
Document specifying the number or percentage of Lenders (or Lenders of any
Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (or each Lender of such Class, as the case may be), (vi) release
Holdings or any Subsidiary Loan Party from its Guarantee under the Guarantee
Agreement (except as expressly provided in the Guarantee Agreement), or limit
its liability in respect of such Guarantee, without the written consent of each
Lender, (vii) release all or any substantial part of the Collateral from the
Liens of the Security Documents, without the written consent of each Lender,
(viii) change any of the provisions of the definition of "Borrowing Base" (or
any component definition utilized in determining the Borrowing Base) in a manner
that adversely affects the interests of the Revolving Lenders, or amend or waive
compliance with the requirements of Section 2.10(b) or clause (iii) of Section
4.02(c), without the written consent of Revolving Lenders having Revolving
Commitments representing in the aggregate more than 66-2/3% of the total
Revolving Commitments at the time, or (ix) change any provisions of any Loan
Document in a manner that by its terms adversely affects the rights in respect
of payments due
<PAGE> 118
114
to Lenders holding Loans of any Class differently than those holding Loans of
any other Class, without the written consent of Lenders holding a majority in
interest of the outstanding Loans and unused Commitments of each affected Class,
and provided further that (A) no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent or the Issuing Bank
without the prior written consent of the Administrative Agent or the Issuing
Bank, as the case may be, and (B) any waiver, amendment or modification of this
Agreement that by its terms affects the rights or duties under this Agreement of
the Revolving Lenders (but not the Term Lenders), or the Term Lenders (but not
the Revolving Lenders) may be effected by an agreement or agreements in writing
entered into by Holdings, the Borrower and requisite percentage in interest of
the affected Class of Lenders that would be required to consent thereto under
this Section if such Class of Lenders were the only Class of Lenders hereunder
at the time. Notwithstanding the foregoing, any provision of this Agreement may
be amended by an agreement in writing entered into by Holdings, the Borrower,
the Required Lenders and the Administrative Agent (and, if its rights or
obligations are affected thereby, the Issuing Bank) if (i) by the terms of such
agreement the Commitment of each Lender not consenting to the amendment provided
for therein shall terminate upon the effectiveness of such amendment and (ii) at
the time such amendment becomes effective, each Lender not consenting thereto
receives payment in full of the principal of and interest accrued on each Loan
made by it and all other amounts owing to it or accrued for its account under
this Agreement.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses incurred by the Administrative
Agent and its Affiliates and the Syndication Agent and its Affiliates, including
the reasonable fees, charges and disbursements of one counsel and any local or
foreign counsel for the Administrative Agent and the Syndication Agent, in
connection with the syndication of the credit facilities provided for herein and
the preparation of the Loan Documents (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates
and the Syndication Agent and its Affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent and the
Syndication Agent, in connection with the administration of the Loan Documents
or any amendments, modifications or waivers of the provisions thereof (whether
or not the transactions contemplated thereby shall be consummated), (iii) all
reasonable out-of-pocket expenses
<PAGE> 119
115
incurred by the Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and
(iv) all out-of-pocket expenses incurred by the Administrative Agent, the
Syndication Agent, the Issuing Bank or any Lender, including the reasonable
fees, charges and disbursements of any counsel for the Administrative Agent, the
Syndication Agent, the Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with the Loan Documents,
including its rights under this Section, or in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.
(b) The Borrower shall indemnify the Administrative Agent, the Syndication
Agent, the Issuing Bank and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an "Indemnitee") against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses (other than Taxes that are covered by or
excluded from Section 2.16), including the reasonable fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of any Loan Document or any other agreement or instrument
contemplated hereby, the performance by the parties to the Loan Documents of
their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit
or the use of the proceeds therefrom (including any refusal by the Issuing Bank
to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence, Release or
threatened Release of Hazardous Materials on or from any Mortgaged Property or
any other property currently or formerly owned or operated by the Borrower or
any of its Subsidiaries, or any Environmental Liability related in any way to
the Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto, provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
<PAGE> 120
116
negligence or wilful misconduct of such Indemnitee or any Related Parties of
such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required to be
paid by it to the Administrative Agent, the Syndication Agent or the Issuing
Bank under paragraph (a) or (b) of this Section, each Lender severally agrees to
pay to the Administrative Agent, the Syndication Agent or the Issuing Bank, as
the case may be, such Lender's pro rata share (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount, provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent, the Syndication Agent or the
Issuing Bank in its capacity as such. For purposes hereof, a Lender's "pro rata
share" shall be determined based upon its share of the sum of the total
Revolving Exposures, outstanding Term Loans and unused Commitments at the time.
(d) To the extent permitted by applicable law, neither Holdings nor the
Borrower shall assert, and each hereby waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or Letter of Credit or the use
of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby (including any Affiliate of the Issuing Bank that
issues any Letter of Credit) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, the Issuing Bank and
the
<PAGE> 121
117
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitments and the Loans at the time owing to it), provided that (i) except in
the case of an assignment to a Lender or an Affiliate or (in the case of a Term
Lender) an Approved Fund of a Lender, each of the Borrower and the
Administrative Agent (and, in the case of an assignment of all or a portion of a
Revolving Commitment or any Lender's obligations in respect of its LC Exposure,
the Issuing Bank) must give their prior written consent to such assignment
(which consent shall not be unreasonably withheld), (ii) except in the case of
an assignment to a Lender or an Affiliate or (in the case of a Term Lender) an
Approved Fund of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitments or Loans, the amount of the Commitments or Loans
of the assigning Lender subject to each such assignment (determined as of the
date the Assignment and Acceptance with respect to such assignment is delivered
to the Administrative Agent) shall not be less than $5,000,000 unless each of
the Borrower and the Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, except that this
clause (iii) shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender's rights and obligations in
respect of one Class of Commitments or Loans, (iv) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500, and
(v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire, and provided further that
any consent of the Borrower otherwise required under this paragraph shall not be
required if an Event of Default under clause (a), (b), (h) or (i) of Article VII
has occurred and is continuing. Subject to acceptance and recording thereof
pursuant to paragraph (d) of this Section, from and after the effective date
specified in each Assignment and Acceptance the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender's rights and obligations under this
<PAGE> 122
118
Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03). Any assignment
or transfer by a Lender of rights or obligations under this Agreement that does
not comply with this paragraph shall be treated for purposes of this Agreement
as a sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices in The City of New York a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and Holdings, the Borrower, the Administrative
Agent, the Issuing Bank and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower, the Issuing Bank and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, the assignee's completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Acceptance
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph. Notwithstanding anything to the
contrary in any Loan Document, the Borrower shall not be liable for any Other
Taxes, and the applicable Lender and its assignee shall indemnify and hold the
Borrower harmless from any Other Taxes, imposed on or with respect to any
assignment made by any Lender.
(e) Any Lender may, without the consent of the Borrower, the Administrative
Agent or the Issuing Bank, sell participations to one or more banks or other
entities (a "Participant") in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion
<PAGE> 123
119
of its Commitment and the Loans owing to it), provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) Holdings, the Borrower, the Administrative Agent, the
Issuing Bank and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement. Any agreement or instrument pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole right
to enforce the Loan Documents and to approve any amendment, modification or
waiver of any provision of the Loan Documents, provided that such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in the
first proviso to Section 9.02(b) that affects such Participant. Subject to
paragraph (f) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.14 or 2.16 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 2.16 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.16(e) as though it were a
Lender.
(g) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest, provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
<PAGE> 124
120
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the Issuing
Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof that, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
<PAGE> 125
121
SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other obligations at any time owing by such Lender to or for the credit
or the account of the Borrower against any of and all the obligations of the
Borrower now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement and although such obligations may be unmatured. The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Lender may have.
SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(A) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
(b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State court or, to the
extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement or any other Loan
Document shall affect any right that the Administrative Agent, the Issuing Bank
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement or any other Loan Document against Holdings, the Borrower or its
properties in the courts of any jurisdiction.
(c) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to
<PAGE> 126
122
in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01. Nothing in this Agreement or
any other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
Syndication Agent, the Issuing Bank and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions
<PAGE> 127
123
substantially the same as those of this Section, to any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, or to any direct or indirect
contractual counterparties in swap agreements or such contractual
counterparties' professional advisors, (g) with the consent of the Borrower or
(h) to the extent such Information (i) becomes publicly available other than as
a result of a breach of this Section or (ii) becomes available to the
Administrative Agent, the Syndication Agent, the Issuing Bank or any Lender on a
nonconfidential basis from a source other than Holdings or the Borrower. For the
purposes of this Section, the term "Information" means all information received
from Holdings or the Borrower relating to Holdings or the Borrower or its
business (including such information contained in the Information Memorandum),
other than any such information that is available to the Administrative Agent,
the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by
Holdings or the Borrower. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts that are treated as interest on such
Loan under applicable law (collectively, the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") that may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
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124
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
WFS HOLDINGS, INC.,
by
/s/ Marcel Fournier
-------------------------------------
Name: Marcel Fournier
Title: President
WORLDWIDE FLIGHT SERVICES, INC.,
by
/s/ Peter A. Pappas
-------------------------------------
Name: Peter A. Pappas
Title:
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent,
by
/s/ Bruce Borden
-------------------------------------
Name: Bruce Borden
Title: Vice President
DLJ CAPITAL FUNDING, INC.,
individually and as
Syndication Agent,
by
/s/ Richard Beardoin
-------------------------------------
Name: Richard Beardoin
Title: Senior Vice
President
<PAGE> 1
EXHIBIT 10.10
EXECUTION COPY
SECURITY AGREEMENT dated as of August
12, 1999, among WORLDWIDE FLIGHT SERVICES,
INC., a Delaware corporation (the
"Borrower"), each subsidiary of WFS Holdings,
Inc. ("Holdings") listed on Schedule I hereto
(each such subsidiary individually a
"Subsidiary" or a "Guarantor" and,
collectively, the "Subsidiaries" or, with
Holdings, the "Guarantors"; the Subsidiaries
and the Borrower are referred to collectively
herein as the "Grantors") and THE CHASE
MANHATTAN BANK, a New York banking
corporation ("Chase"), as administrative
agent (in such capacity, the "Administrative
Agent") for the Secured Parties (as defined
herein).
Reference is made to (a) the Credit Agreement dated as of August 12, 1999
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, Holdings, the lenders from time to time party
thereto (the "Lenders") and Chase, as administrative agent for the Lenders and
(b) the Guarantee Agreement dated as of August 12, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Guarantee
Agreement"), among the Guarantors and the Administrative Agent.
The Lenders have agreed to make Loans to the Borrower, and the Issuing Bank
has agreed to issue Letters of Credit for the account of the Borrower, pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement. Each of the Guarantors has agreed to guarantee, among other things,
all the obligations of the Borrower under the Credit Agreement. The obligations
of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit
are conditioned upon, among other things, the execution and delivery by the
Grantors of an agreement in the form hereof to secure (a) the due and punctual
payment by the Borrower of (i) the principal of and premium, if any, and
interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including reasonable fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Secured Parties under
the Credit Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Loan Parties under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all obligations
of the Borrower or any other Loan Party, monetary or otherwise, under each
Hedging Agreement entered into with a counterparty that was a Lender (or an
Affiliate of a Lender) at the time such Hedging Agreement was entered into and
(d) the due and punctual payment and performance of all obligations in respect
of overdrafts and related liabilities owed to the Administrative Agent or any of
its Affiliates and arising from treasury, depositary and cash management
services in connection with any
<PAGE> 2
automated clearing house transfers of funds (all the monetary and other
obligations described in the preceding clauses (a) through (d) being
collectively called the "Obligations").
Accordingly, the Grantors and the Administrative Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the context otherwise
requires, all capitalized terms used but not defined herein shall have the
meanings set forth in the Credit Agreement.
SECTION 1.02. Definition of Certain Terms Used Herein. As used herein, the
following terms shall have the following meanings:
"Account Debtor" shall mean any Person who is or who may become obligated
to any Grantor under, with respect to or on account of an Account.
"Accounts" shall mean any and all right, title and interest of any Grantor
to payment for goods and services sold or leased, including any such right
evidenced by chattel paper, whether due or to become due, whether or not it has
been earned by performance, and whether now or hereafter acquired or arising in
the future, including accounts receivable from Affiliates of the Grantors.
"Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.
"Cash Concentration Bank" shall mean a financial institution which shall
have delivered to the Administrative Agent an executed Cash Concentration Letter
Agreement.
"Cash Concentration Letter Agreement" shall mean a Cash Concentration
Letter Agreement substantially in the form of Annex 2 hereto among one or more
Grantors, the Administrative Agent and a Cash Concentration Bank.
"Collateral" shall mean all (a) Accounts Receivable, (b) Documents, (c)
Equipment, (d) General Intangibles, (e) Inventory, (f) cash and cash accounts
(including the Concentration Accounts, the Collection Deposit Accounts and the
Collateral Proceeds Account), (g) Investment Property and (h) Proceeds.
"Collateral Proceeds Account" shall mean the collateral proceeds account
maintained by the Administrative Agent for the benefit of the Secured Parties.
"Collection Deposit Account" shall mean a lockbox account of a Grantor
maintained for the benefit of the Secured Parties with the Administrative Agent
or with a Sub-Agent pursuant to a Lockbox and Depository Agreement.
-2-
<PAGE> 3
"Commodity Account" shall mean an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried out for a Commodity
Customer.
"Commodity Contract" shall mean a commodity futures contract, an option on
a commodity futures contract, a commodity option or any other contract that, in
each case, is (a) traded on or subject to the rules of a board of trade that has
been designated as a contract market for such a contract pursuant to the federal
commodities laws or (b) traded on a foreign commodity board of trade, exchange
or market, and is carried on the books of a Commodity Intermediary for a
Commodity Customer.
"Commodity Customer" shall mean a Person for whom a Commodity Intermediary
carries a Commodity Contract on its books.
"Commodity Intermediary" shall mean (a) a Person who is registered as a
futures commission merchant under the federal commodities laws or (b) a Person
who in the ordinary course of its business provides clearance or settlement
services for a board of trade that has been designated as a contract market
pursuant to federal commodities laws.
"Concentration Account" shall mean a cash concentration account maintained
by a Grantor with a Cash Concentration Bank.
"Copyright License" shall mean any written agreement, now or hereafter in
effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or which such Grantor otherwise has the right to
license, or granting any right to such Grantor under any Copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" shall mean all of the following: (a) all copyright rights in
any work subject to the copyright laws of the United States or any other
country, whether as author, assignee, transferee or otherwise, and (b) all
registrations and applications for registration of any such copyright in the
United States or any other country, including registrations, recordings,
supplemental registrations and pending applications for registration in the
United States Copyright Office, including those listed on Schedule II.
"Credit Agreement" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Documents" shall mean all instruments, files, records, ledger sheets and
documents covering or relating to any of the Collateral.
"Entitlement Holder" shall mean a Person identified in the records of a
Securities Intermediary as the Person having a Security Entitlement against the
Securities Intermediary. If a Person acquires a Security Entitlement by virtue
of Section 8-501(b)(2) or (3) of the Uniform Commercial Code, such Person is the
Entitlement Holder.
"Equipment" shall mean all equipment, furniture and furnishings, and all
tangible personal property similar to any of the foregoing, including tools,
parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by any
Grantor. The term Equipment shall include Fixtures.
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"Financial Asset" shall mean (a) a Security, (b) an obligation of a Person
or a share, participation or other interest in a Person or in property or an
enterprise of a Person, which is, or is of a type, dealt with in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another Person in a Securities Account if the
Securities Intermediary has expressly agreed with the other Person that the
property is to be treated as a Financial Asset under Article 8 of the Uniform
Commercial Code. As the context requires, the term Financial Asset shall mean
either the interest itself or the means by which a Person's claim to it is
evidenced, including a certificated or uncertificated Security, a certificate
representing a Security or a Security Entitlement.
"Fixtures" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.
"General Intangibles" shall mean all choses in action and causes of action
and all other assignable intangible personal property of any Grantor of every
kind and nature (other than Accounts Receivable) now owned or hereafter acquired
by any Grantor, including corporate or other business records, indemnification
claims, contract rights (including rights under leases, whether entered into as
lessor or lessee, Hedging Agreements and other agreements), Intellectual
Property, goodwill, registrations, franchises, tax refund claims and any letter
of credit, guarantee, claim, security interest or other security held by or
granted to any Grantor to secure payment by an Account Debtor of any of the
Accounts Receivable (other than those general intangibles which by their terms
prohibit assignment or a grant of a security interest by such Grantor).
"Intellectual Property" shall mean all intellectual and similar property of
any Grantor of every kind and nature now owned or hereafter acquired by any
Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in connection with, any of the
foregoing.
"Inventory" shall mean all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
any Grantor under contracts of service, or consumed in any Grantor's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing supplies
and spare parts, and all such goods that have been returned to or repossessed by
or on behalf of any Grantor.
"Investment Property" shall mean all Securities (whether certificated or
uncertificated), Security Entitlements, Securities Accounts, Commodity Contracts
and Commodity Accounts of any Grantor, whether now owned or hereafter acquired
by any Grantor.
"License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including those listed on Schedule III (other than those license agreements in
existence on the date hereof or entered into after the date hereof, which by
their terms prohibit assignment or a grant of a security interest by such
Grantor as licensee thereunder); provided, however, that, so long as no Event of
Default has occurred and
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is continuing, Schedule III shall not set forth licenses with respect to
telephone, computer, computer software, HVAC, cleaning, security, maintenance,
laundry or substantially similar systems entered into by any Grantor in the
ordinary course of business.
"Lockbox and Depository Agreement" shall mean a Lockbox and Depository
Agreement substantially in the form of Annex 1 hereto among one or more
Grantors, the Administrative Agent and a Sub-Agent.
"Obligations" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Patent License" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any invention
on which a Patent, now or hereafter owned by any Grantor or which any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third party, is in existence, and all rights of any Grantor under
any such agreement.
"Patents" shall mean all of the following: (a) all letters patent of the
United States or any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or any other
country, including registrations, recordings and pending applications in the
United States Patent and Trademark Office or any similar offices in any other
country, including those listed on Schedule IV, and (b) all reissues,
continuations, divisions, continuations-in-part, renewals or extensions thereof,
and the inventions disclosed or claimed therein, including the right to make,
use and/or sell the inventions disclosed or claimed therein.
"Perfection Certificate" shall mean a certificate substantially in the form
of Annex 3 hereto, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by a Financial Officer and the chief
legal officer of the Borrower.
"Proceeds" shall mean any consideration received from the sale, exchange,
license, lease or other disposition of any asset or property that constitutes
Collateral, any value received as a consequence of the possession of any
Collateral and any payment received from any insurer or other Person or entity
as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property which constitutes
Collateral, and shall include, (a) all cash and negotiable instruments received
by a Sub-Agent, a Cash Concentration Bank or the Administrative Agent pursuant
to Article V, (b) any claim of any Grantor against any third party for (and the
right to sue and recover for and the rights to damages or profits due or accrued
arising out of or in connection with) (i) past, present or future infringement
of any Patent now or hereafter owned by any Grantor, or licensed under a Patent
License, (ii) past, present or future infringement or dilution of any Trademark
now or hereafter owned by any Grantor or licensed under a Trademark License or
injury to the goodwill associated with or symbolized by any Trademark now or
hereafter owned by any Grantor, (iii) past, present or future breach of any
License and (iv) past, present or future infringement of any Copyright now or
hereafter owned by any Grantor or licensed under a Copyright License and (c) any
and all other amounts from time to time paid or payable under or in connection
with any of the Collateral.
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"Secured Parties" shall mean (a) the Lenders, (b) the Issuing Bank, (c) the
Administrative Agent, (d) the Administrative Agent, (e) each counterparty to a
Hedging Agreement entered into with the Borrower or any Loan Party if such
counterparty was a Lender (or an Affiliate of a Lender) at the time the Hedging
Agreement was entered into, (f) the beneficiaries of each indemnification
obligation undertaken by any Grantor under any Loan Document and (g) the
successors and assigns of each of the foregoing.
"Securities" shall mean any obligations of an issuer or any shares,
participations or other interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate representing a security
in bearer or registered form, or the transfer of which may be registered upon
books maintained for that purpose by or on behalf of the issuer, (b) are one of
a class or series or by its terms is divisible into a class or series of shares,
participations, interests or obligations and (c)(i) are, or are of a type, dealt
with or traded on securities exchanges or securities markets or (ii) are a
medium for investment and by their terms expressly provide that they are a
security governed by Article 8 of the Uniform Commercial Code.
"Securities Account" shall mean an account to which a Financial Asset is or
may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.
"Security Entitlements" shall mean the rights and property interests of an
Entitlement Holder with respect to a Financial Asset.
"Security Interest" shall have the meaning assigned to such term in Section
2.01.
"Security Intermediary" shall mean (a) a clearing corporation or (b) a
Person, including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.
"Sub-Agent" shall mean a financial institution which shall have delivered
to the Administrative Agent an executed Lockbox and Depository Agreement.
"Trademark License" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Grantor or which any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any Trademark now or
hereafter owned by any third party, and all rights of any Grantor under any such
agreement.
"Trademarks" shall mean all of the following: (a) all trademarks, service
marks, trade names, corporate names, company names, business names, fictitious
business names, trade styles, trade dress, logos, other source or business
identifiers, designs and general intangibles of like nature, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith, including
registrations and registration applications in the United States Patent and
Trademark Office, any State of the United States or any similar offices in any
other country or any political subdivision thereof, and all extensions or
renewals thereof, including those listed on Schedule V, (b) all goodwill
associated therewith or symbolized thereby and (c) all other assets, rights and
interests that uniquely reflect or embody such goodwill.
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SECTION 1.03. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Administrative Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Administrative
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of such Grantor's right, title and interest
in, to and under the Collateral (the "Security Interest"). Without limiting the
foregoing, the Administrative Agent is hereby authorized to file one or more
financing statements (including fixture filings), continuation statements,
filings with the United States Patent and Trademark Office or United States
Copyright Office (or any successor office or any similar office in any other
country) or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantors, and naming any Grantor or the
Grantors as debtors and the Administrative Agent as secured party.
SECTION 2.02. No Assumption of Liability. The Security Interest is granted
as security only and shall not subject the Administrative Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the Collateral.
ARTICLE III
Representations and Warranties
The Grantors jointly and severally represent and warrant to the
Administrative Agent and the Secured Parties that:
SECTION 3.01. Title and Authority. Each Grantor has good and valid rights
in and title to the Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant to the
Administrative Agent the Security Interest in such Collateral pursuant hereto
and to execute, deliver and perform its obligations in accordance with the terms
of this Agreement, without the consent or approval of any other Person other
than any consent or approval which has been obtained.
SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been delivered to the Administrative Agent for filing in each governmental,
municipal or other office specified in Schedule 6 to the Perfection Certificate,
which are all the filings, recordings and registrations (other than filings
required to be made in the United States Patent and Trademark Office and the
United States Copyright Office in order to perfect the Security Interest in
Collateral consisting of United States Patents, Trademarks and Copyrights)
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that are necessary to publish notice of and protect the validity of and to
establish a legal, valid and perfected security interest in favor of the
Administrative Agent (for the ratable benefit of the Secured Parties) in respect
of all Collateral in which the Security Interest may be perfected by filing,
recording or registration in the United States (or any political subdivision
thereof) and its territories and possessions, and no further or subsequent
filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable law with
respect to the filing of continuation statements.
(b) Each Grantor represents and warrants that fully executed security
agreements in the form hereof and containing a description of all Collateral
consisting of Intellectual Property with respect to United States Patents and
United States registered Trademarks (and Trademarks for which United States
registration applications are pending) and United States registered Copyrights
have been delivered to the Administrative Agent for recording by the United
States Patent and Trademark Office and the United States Copyright Office
pursuant to 35 U.S.C. ss. 261, 15 U.S.C. ss. 1060 or 17 U.S.C. ss. 205 and the
regulations thereunder, as applicable, and otherwise as may be required pursuant
to the laws of any other necessary jurisdiction, to protect the validity of and
to establish a legal, valid and perfected security interest in favor of the
Administrative Agent (for the ratable benefit of the Secured Parties) in respect
of all Collateral consisting of Patents, Trademarks and Copyrights in which a
security interest may be perfected by filing, recording or registration in the
United States (or any political subdivision thereof) and its territories and
possessions, or in any other necessary jurisdiction, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction (other than such actions as
are necessary to perfect the Security Interest with respect to any Collateral
consisting of Patents, Trademarks and Copyrights (or registration or application
for registration thereof) acquired or developed after the date hereof).
SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral (other than, if no filings with respect to Fixtures are made,
Fixtures) in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions and
(c) a security interest that shall be perfected in all Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable. The Security Interest is and shall be
prior to any other Lien on any of the Collateral, other than Permitted
Encumbrances that have priority over the Security Interest by operation of law.
SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement. The Grantor has not filed or
consented to the filing of (a) any financing statement or analogous document
under the Uniform Commercial Code or any other applicable laws covering any
Collateral, (b) any assignment in which any Grantor assigns any Collateral or
any security agreement or similar instrument covering any Collateral with the
United States Patent and Trademark Office or the United States Copyright Office
or (c) any assignment in which any Grantor assigns any Collateral or any
security agreement or similar instrument covering any Collateral with any
foreign governmental, municipal or other office, which financing statement
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or analogous document, assignment, security agreement or similar instrument is
still in effect, except, in each case, for Liens expressly permitted pursuant to
Section 6.02 of the Credit Agreement.
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records; Place of
Business. (a) Each Grantor agrees promptly to notify the Administrative Agent in
writing of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in its identity or corporate structure or (iv) in its Federal Taxpayer
Identification Number. Each Grantor agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made under
the Uniform Commercial Code or otherwise that are required in order for the
Administrative Agent to continue at all times following such change to have a
valid, legal and perfected first priority security interest in all the
Collateral. Each Grantor agrees promptly to notify the Administrative Agent if
any material portion of the Collateral owned or held by such Grantor is damaged
or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral, and, at such time or times as the Administrative
Agent may reasonably request, promptly to prepare and deliver to the
Administrative Agent a duly certified schedule or schedules in form and detail
satisfactory to the Administrative Agent showing the identity, amount and
location of any and all Collateral, provided that so long as no Event of Default
has occurred and is continuing, the Administrative Agent shall be limited to one
such request per fiscal year.
SECTION 4.02. Protection of Security. Each Grantor shall, at its own cost
and expense, take any and all actions necessary to defend title to the
Collateral against all Persons and to defend the Security Interest of the
Administrative Agent in the Collateral and the priority thereof against any Lien
not expressly permitted pursuant to Section 6.02 of the Credit Agreement.
SECTION 4.03. Further Assurances. Each Grantor agrees, at its own expense,
to execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Administrative Agent
may from time to time request to better assure, preserve, protect and perfect
the Security Interest and the rights and remedies created hereby, including the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the filing
of any financing statements (including fixture filings) or other documents in
connection herewith or therewith. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory note
or other instrument, such note or instrument shall be
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immediately pledged and delivered to the Administrative Agent, duly endorsed in
a manner satisfactory to the Administrative Agent.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Administrative Agent, with prompt notice thereof to the Grantors,
to supplement this Agreement by supplementing Schedule II, III, IV or V hereto
or adding additional schedules hereto to specifically identify any asset or item
that may constitute Copyrights, Licenses, Patents or Trademarks; provided,
however, that any Grantor shall have the right, exercisable within 10 days after
it has been notified by the Administrative Agent of the specific identification
of such Collateral, to advise the Administrative Agent in writing of any
inaccuracy of the representations and warranties made by such Grantor hereunder
with respect to such Collateral. Each Grantor agrees that it will use its best
efforts to take such action as shall be necessary in order that all
representations and warranties hereunder shall be true and correct with respect
to such Collateral within 30 days after the date it has been notified by the
Administrative Agent of the specific identification of such Collateral.
SECTION 4.04. Inspection and Verification. The Administrative Agent and
such Persons as the Administrative Agent may reasonably designate shall have the
right, at the Grantors' own cost and expense, to inspect the Collateral, all
records related thereto (and to make extracts and copies from such records) and
the premises upon which any of the Collateral is located, to discuss the
Grantors' affairs with the officers of the Grantors and to verify under
reasonable procedures the validity, amount, quality, quantity, value, condition
and status of, or any other matter relating to, the Collateral, including, in
the case of Accounts or Collateral in the possession of any third person, by
contacting Account Debtors or the third person possessing such Collateral for
the purpose of making such a verification, all in accordance with the terms and
provisions of the Credit Agreement. The Administrative Agent shall have the
absolute right to share any information it gains from such inspection or
verification with any Secured Party.
SECTION 4.05. Taxes; Encumbrances. At its option, the Administrative Agent
may discharge past due taxes, assessments, charges, fees, Liens, security
interests or other encumbrances at any time levied or placed on the Collateral
and not permitted pursuant to Section 6.02 of the Credit Agreement, and may pay
for the maintenance and preservation of the Collateral, in each case to the
extent any Grantor fails to do so as required by the Credit Agreement or this
Agreement, and each Grantor jointly and severally agrees to reimburse the
Administrative Agent on demand for any payment made or any expense incurred by
the Administrative Agent pursuant to the foregoing authorization; provided,
however, that nothing in this Section 4.05 shall be interpreted as excusing any
Grantor from the performance of, or imposing any obligation on the
Administrative Agent or any Secured Party to cure or perform, any covenants or
other promises of any Grantor with respect to taxes, assessments, charges, fees,
Liens, security interests or other encumbrances and maintenance as set forth
herein or in the other Loan Documents.
SECTION 4.06. Assignment of Security Interest. If at any time any Grantor
shall take a security interest in any property of an Account Debtor or any other
Person to secure payment and performance of an Account, such Grantor shall
promptly assign such security interest to the Administrative Agent. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the Account Debtor or other Person granting the security interest.
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SECTION 4.07. Continuing Obligations of the Grantors. Each Grantor shall
remain liable to observe and perform all the conditions and obligations to be
observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and each Grantor jointly and severally agrees to indemnify and hold
harmless the Administrative Agent and the Secured Parties from and against any
and all liability for such performance.
SECTION 4.08. Use and Disposition of Collateral. None of the Grantors shall
make or permit to be made an assignment, pledge or hypothecation of the
Collateral or shall grant any other Lien in respect of the Collateral, except as
expressly permitted by Section 6.02 of the Credit Agreement. None of the
Grantors shall make or permit to be made any transfer of the Collateral and each
Grantor shall remain at all times in possession of the Collateral owned by it,
except that (a) Inventory may be sold in the ordinary course of business and (b)
unless and until the Administrative Agent shall notify the Grantors that an
Event of Default shall have occurred and be continuing and that during the
continuance thereof the Grantors shall not sell, convey, lease, assign, transfer
or otherwise dispose of any Collateral (which notice may be given by telephone
if promptly confirmed in writing), the Grantors may use and dispose of the
Collateral in any lawful manner not inconsistent with the provisions of this
Agreement, the Credit Agreement or any other Loan Document. Without limiting the
generality of the foregoing, each Grantor agrees that it shall not permit any
Inventory to be in the possession or control of any warehouseman, bailee, agent
or processor at any time unless such warehouseman, bailee, agent or processor
shall have been notified of the Security Interest and shall have agreed in
writing to hold the Inventory subject to the Security Interest and the
instructions of the Administrative Agent and to waive and release any Lien held
by it with respect to such Inventory, whether arising by operation of law or
otherwise.
SECTION 4.09. Limitation on Modification of Accounts. None of the Grantors
will, without the Administrative Agent's prior written consent, grant any
extension of the time of payment of any of the Accounts Receivable, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partly, any Person liable for the payment thereof or allow any credit
or discount whatsoever thereon, other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of business
and consistent with its current practices and in accordance with such prudent
and standard practices used in industries that are the same as or similar to
those in which such Grantor is engaged.
SECTION 4.10. Insurance. The Grantors, at their own expense, shall maintain
or cause to be maintained insurance covering physical loss or damage to the
Inventory and Equipment in accordance with Section 5.07 of the Credit Agreement.
The Grantors shall (a) cause all such policies to be endorsed or otherwise
amended to include a "standard" or "New York" lender's loss payable endorsement,
in form and substance reasonably satisfactory to the Administrative Agent, which
endorsement shall provide that, from and after the Effective Date, if the
insurance carrier shall have received written notice from the Administrative
Agent that an Event of Default has occurred and is continuing, the insurance
carrier shall pay all proceeds otherwise payable to any Loan Party under such
policies directly to the Administrative Agent; (b) cause all such policies to
provide that neither the Loan Parties, the Administrative Agent nor any other
party shall be a coinsurer thereunder, and with respect to real property and
equipment, to contain a "Replacement Cost Endorsement", without any deduction
for depreciation, and such other provisions as the Administrative Agent may
reasonably require from time to time to protect their interests; (c) deliver,
when available, original or certified copies of or certificates evidencing all
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such policies to the Administrative Agent; (d) cause each such policy to provide
that it shall not be canceled, modified or not renewed (i) by reason of
nonpayment of premium upon not less than 30 days' prior written notice thereof
by the insurer to the Administrative Agent (giving the Administrative Agent the
right to cure defaults in the payment of premiums) or (ii) for any other reason
upon not less than 30 days' prior written notice thereof by the insurer to the
Administrative Agent (except in the case of war risk and allied perils coverage,
which shall provide the notice generally provided in the marketplace); and (e)
deliver to the Administrative Agent, prior to the cancellation, modification or
nonrenewal of any such policy of insurance, a copy of a renewal or replacement
policy (or other evidence of renewal of a policy previously delivered to the
Administrative Agent) together with evidence reasonably satisfactory to the
Administrative Agent of payment of the required premium therefor. Each Grantor
irrevocably makes, constitutes and appoints the Administrative Agent (and all
officers, employees or agents designated by the Administrative Agent) as such
Grantor's true and lawful agent (and attorney-in-fact) for the purpose, during
the continuance of an Event of Default, of making, settling and adjusting claims
in respect of Collateral under policies of insurance, endorsing the name of such
Grantor on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. In the event that any Grantor at any time or
times shall fail to obtain or maintain any of the policies of insurance required
hereby or to pay any premium in whole or part relating thereto, the
Administrative Agent may, without waiving or releasing any obligation or
liability of the Grantors hereunder or any Event of Default, in its sole
discretion, obtain and maintain such policies of insurance and pay such premium
and take any other actions with respect thereto as the Administrative Agent
deems advisable. All sums disbursed by the Administrative Agent in connection
with this Section 4.10, including reasonable attorneys' fees, court costs,
expenses and other charges relating thereto, shall be payable, upon demand, by
the Grantors to the Administrative Agent and shall be additional Obligations
secured hereby.
SECTION 4.11. Legend. Each Grantor shall legend, in form and manner
satisfactory to the Administrative Agent, its books, records and documents
evidencing or pertaining to its Accounts Receivable with an appropriate
reference in such books, records and documents that such Accounts Receivable
have been assigned to the Administrative Agent for the benefit of the Secured
Parties and that the Administrative Agent has a security interest therein.
SECTION 4.12. Covenants Regarding Patent, Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not, nor will it permit any of
its licensees to, do any act, or omit to do any act, whereby any Patent which is
necessary to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue to mark any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of Federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in violation of any
third party rights.
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(c) Each Grantor (either itself or through licensees) will, for each work
covered by a material Copyright, continue to publish, reproduce, display, adopt
and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.
(d) Each Grantor shall notify the Administrative Agent immediately if it
knows or has reason to know that any Patent, Trademark or Copyright necessary to
the conduct of its business may become abandoned, lost or dedicated to the
public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, United States Copyright Office or
any court or similar office of any country) regarding such Grantor's ownership
of any Patent, Trademark or Copyright, its right to register the same, or to
keep and maintain the same.
(e) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, unless it promptly informs
the Administrative Agent, and, upon request of the Administrative Agent,
executes and delivers any and all agreements, instruments, documents and papers
as the Administrative Agent may request to evidence and perfect the
Administrative Agent's security interest in such Patent, Trademark or Copyright,
and each Grantor hereby appoints the Administrative Agent as its
attorney-in-fact to execute and file such writings for the foregoing purposes,
all acts of such attorney being hereby ratified and confirmed; such power, being
coupled with an interest, is irrevocable.
(f) Each Grantor will take all necessary steps that are consistent with the
practice in any proceeding before the United States Patent and Trademark Office,
United States Copyright Office or any office or agency in any political
subdivision of the United States or in any other country or any political
subdivision thereof, to maintain and pursue each material application relating
to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant
or registration) and to maintain each issued Patent and each registration of the
Trademarks and Copyrights that is necessary to the conduct of any Grantor's
business, including timely filings of applications for renewal, affidavits of
use, affidavits of incontestability and payment of maintenance fees, and, if
consistent with good business judgment, to initiate opposition, interference and
cancelation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that any Collateral
consisting of a Patent, Trademark or Copyright material to the conduct of any
Grantor's business has been or is about to be infringed, misappropriated or
diluted by a third party, such Grantor promptly shall notify the Administrative
Agent and shall, if consistent with good business judgment, promptly sue for
infringement, misappropriation or dilution and to recover any and all damages
for such infringement, misappropriation or dilution, and take such other actions
as are appropriate under the circumstances to protect such Collateral.
(h) Upon and during the continuance of an Event of Default, each Grantor
shall use its commercially reasonable efforts to obtain all requisite consents
or approvals from the licensor of each Copyright License, Patent License or
Trademark License to effect the assignment of all of such Grantor's right, title
and interest thereunder to the Administrative Agent or its designee.
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ARTICLE V
Collections
SECTION 5.01. Cash Management Accounts. (a) Within 30 Business Days after
the Effective Date, the Grantors shall establish and maintain (i) Collection
Deposit Accounts with one or more financial institutions that (A) are reasonably
satisfactory to the Administrative Agent and (B) have entered into a Lockbox and
Depository Agreement and (ii) Concentration Accounts with one or more financial
institutions that (A) are reasonably satisfactory to the Administrative Agent
and (B) have entered into a Collection Deposit Letter Agreement. The Proceeds of
all Accounts Receivable and Inventory shall be deposited into the applicable
Collection Deposit Accounts and forwarded to the applicable Concentration
Account in accordance with the applicable Lockbox and Depository Agreement. Each
Grantor shall use all reasonable efforts to prevent any funds which are not
payments with respect to Accounts Receivable or Inventory from being deposited
into, or otherwise commingled with, the funds held in the Collection Deposit
Accounts.
(b) All Proceeds of Inventory and Accounts Receivable that have been
received by any Sub-Agent on any Business Day will be transferred into the
applicable Concentration Account within one Business Day after such funds become
immediately available to the extent required by the applicable Lockbox and
Depository Agreement. All Proceeds stemming from the sale of a substantial
portion of the Collateral (other than Proceeds of Accounts) that have been
received by a Grantor on any Business Day will be transferred into the
applicable Collection Deposit Account within one Business Day from receipt of
such Proceeds. All Proceeds received on any Business Day by the Administrative
Agent pursuant to Section 5.02 will be transferred into the applicable
Concentration Account on such Business Day.
(c) The Collection Deposit Accounts are, and shall remain, under the sole
dominion and control of the Administrative Agent. Each Grantor acknowledges and
agrees that (i) such Grantor has no right of withdrawal from any Collection
Deposit Account, (ii) the funds on deposit in the Collection Deposit Accounts
and Concentration Accounts shall continue to be collateral security for all the
Obligations and (iii) upon the occurrence and during the continuance of an Event
of Default contained in clause (a) or (b) of Article VII of the Credit Agreement
(a "Payment Default"), at the Administrative Agent's election, the funds on
deposit in the Collection Deposit Accounts and the Concentration Accounts shall
be applied as provided in Section 6.02. So long as no Payment Default has
occurred and is continuing, the Grantors shall have the right, at any time and
from time to time, to withdraw funds from the Concentration Accounts.
(d) Effective upon notice to the Grantors from the Administrative Agent
after the occurrence and during the continuance of a Payment Default (which
notice may be given by telephone if promptly confirmed in writing), each
Concentration Account will, without any further action on the part of any
Grantor, the Administrative Agent or any Cash Concentration Bank, convert into a
closed lockbox account under the exclusive dominion and control of the
Administrative Agent in which funds are held subject to the rights of the
Administrative Agent hereunder. Each Grantor irrevocably authorizes the
Administrative Agent, upon the occurrence and during the continuance of a
Payment Default to notify each Sub-Agent and each Cash Concentration Bank (i) of
the occurrence of a Payment Default and (ii) of the matters referred to in this
paragraph (d). Following the occurrence and during the continuation of a Payment
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Default, the Administrative Agent may instruct each Sub-Agent and each Cash
Concentration Bank to transfer immediately all funds held in each Collection
Deposit Account or Concentration Account, as the case may be, to the Collateral
Proceeds Account.
SECTION 5.02. Collections. (a) Each Grantor agrees (i) to promptly notify
and direct each Account Debtor and every other person obligated to make payments
on Accounts Receivable or in respect of any Inventory to make all such payments
directly to a Collection Deposit Account established in accordance with Section
5.01, (ii) to use all reasonable efforts to cause each Account Debtor and every
other person identified in clause (i) above to make all payments with respect to
Accounts Receivable and Inventory directly to a Collection Deposit Account and
(iii) promptly to deposit all payments received by it on account of Accounts
Receivable and Inventory, whether in the form of cash, checks, notes, drafts,
bills of exchange, money orders or otherwise, in a Collection Deposit Account in
precisely the form in which received (but with any endorsements of such Grantor
necessary for deposit or collection), and until they are so deposited such
payments shall be held in trust by such Grantor for the benefit of the
Administrative Agent.
(b) Without the prior written consent of the Administrative Agent, no
Grantor shall, in a manner adverse to the Lenders, change the general
instructions given to Account Debtors in respect of payment on Accounts to be
deposited in the Collection Deposit Accounts. Each Grantor shall, and the
Administrative Agent hereby authorizes each Grantor to, enforce and collect all
amounts owing on the Inventory and Accounts Receivable, for the benefit and on
behalf of the Administrative Agent and the other Secured Parties; provided,
however, that such privilege may at the option of the Administrative Agent be
terminated upon the occurrence and during the continuance of an Event of
Default.
SECTION 5.03. Power of Attorney. Each Grantor irrevocably makes,
constitutes and appoints the Administrative Agent (and all officers, employees
or agents designated by the Administrative Agent) as such Grantor's true and
lawful agent and attorney-in-fact, and in such capacity the Administrative Agent
shall have the right, with power of substitution for each Grantor and in each
Grantor's name or otherwise, for the use and benefit of the Administrative Agent
and the Secured Parties, upon the occurrence and during the continuance of an
Event of Default (a) to receive, endorse, assign and/or deliver any and all
notes, acceptances, checks, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (b) to demand, collect, receive
payment of, give receipt for and give discharges and releases of all or any of
the Collateral; (c) to sign the name of any Grantor on any invoice or bill of
lading relating to any of the Collateral; (d) to send verifications of Accounts
Receivable to any Account Debtor; (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral; (f) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral; (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Administrative Agent; and (h) to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Administrative Agent were the absolute owner of the
Collateral for all purposes (in each case, in accordance with Section 5.01 and
Section 5.02); provided, however, that nothing herein contained shall be
construed as requiring or obligating the Administrative Agent or any Secured
Party to make any commitment or to make any inquiry as to the nature or
sufficiency of
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any payment received by the Administrative Agent or any Secured Party, or to
present or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby, and no action taken or omitted to be
taken by the Administrative Agent or any Secured Party with respect to the
Collateral or any part thereof shall give rise to any defense, counterclaim or
offset in favor of any Grantor or to any claim or action against the
Administrative Agent or any Secured Party. It is understood and agreed that the
appointment of the Administrative Agent as the agent and attorney-in-fact of the
Grantors for the purposes set forth above is coupled with an interest and is
irrevocable. The provisions of this Section shall in no event relieve any
Grantor of any of its obligations hereunder or under any other Loan Document
with respect to the Collateral or any part thereof or impose any obligation on
the Administrative Agent or any Secured Party to proceed in any particular
manner with respect to the Collateral or any part thereof, or in any way limit
the exercise by the Administrative Agent or any Secured Party of any other or
further right which it may have on the date of this Agreement or hereafter,
whether hereunder, under any other Loan Document, by law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each item of
Collateral to the Administrative Agent on demand, and it is agreed that the
Administrative Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Collateral
consisting of Intellectual Property, on demand, to cause the Security Interest,
by making all necessary filings with any applicable Governmental Authority and
executing any other necessary documentation, to become an assignment, transfer
and conveyance of any of or all such Collateral by the applicable Grantors to
the Administrative Agent, or to license or sublicense, whether general, special
or otherwise, and whether on an exclusive or non-exclusive basis, any such
Collateral throughout the world on such terms and conditions and in such manner
as the Administrative Agent shall determine (other than in violation of any
then-existing licensing arrangements to the extent that waivers cannot be
obtained), and (b) with or without legal process and with or without prior
notice or demand for performance, to take possession of the Collateral and
without liability for trespass to enter any premises where the Collateral may be
located for the purpose of taking possession of or removing the Collateral and,
generally, to exercise any and all rights afforded to a secured party under the
Uniform Commercial Code or other applicable law. Without limiting the generality
of the foregoing, each Grantor agrees that the Administrative Agent shall have
the right, subject to the mandatory requirements of applicable law, to sell or
otherwise dispose of all or any part of the Collateral, at public or private
sale or at any broker's board or on any securities exchange, for cash, upon
credit or for future delivery as the Administrative Agent shall deem
appropriate. The Administrative Agent shall be authorized at any such sale (if
it deems it advisable to do so) to restrict the prospective bidders or
purchasers to Persons who will represent and agree that they are purchasing the
Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such sale the
Administrative Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the property sold absolutely, free from any claim or
right on the part of any Grantor, and each Grantor hereby waives (to the extent
permitted by law) all rights of
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redemption, stay and appraisal which such Grantor now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted.
The Administrative Agent shall give the Grantors 10 Business Days' written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions) of the Administrative Agent's
intention to make any sale of Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Administrative Agent may fix and state in the
notice (if any) of such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Administrative Agent may (in its sole and absolute discretion)
determine. The Administrative Agent shall not be obligated to make any sale of
any Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Administrative
Agent may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at the
time and place to which the same was so adjourned. In case any sale of all or
any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by the Administrative Agent until the sale
price is paid by the purchaser or purchasers thereof, but the Administrative
Agent shall not incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for the Collateral so sold and, in case of any
such failure, such Collateral may be sold again upon like notice. At any public
(or, to the extent permitted by law, private) sale made pursuant to this
Section, any Secured Party may bid for or purchase, free (to the extent
permitted by law) from any right of redemption, stay, valuation or appraisal on
the part of any Grantor (all said rights being also hereby waived and released
to the extent permitted by law), the Collateral or any part thereof offered for
sale and may make payment on account thereof by using any Obligation then due
and payable to such Secured Party from any Grantor as a credit against the
purchase price, and such Secured Party may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to any Grantor therefor. For purposes hereof a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the
Administrative Agent shall be free to carry out such sale pursuant to such
agreement and no Grantor shall be entitled to the return of the Collateral or
any portion thereof subject thereto, notwithstanding the fact that after the
Administrative Agent shall have entered into such an agreement all Events of
Default shall have been remedied and the Obligations paid in full. As an
alternative to exercising the power of sale herein conferred upon it, the
Administrative Agent may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a final judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.
SECTION 6.02. Application of Proceeds. The Administrative Agent shall apply
the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
FIRST, to the payment of all reasonable costs and expenses
incurred by the Administrative Agent or the Administrative Agent (in
its capacity as such
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hereunder or under any other Loan Document) in connection with such
collection or sale or otherwise in connection with this Agreement or
any of the Obligations, including all court costs and the reasonable
fees and expenses of its agents and legal counsel, the repayment of
all advances made by the Administrative Agent hereunder or under any
other Loan Document on behalf of any Grantor and any other costs or
expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the
date of any such distribution); and
THIRD, to the Grantors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Administrative Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Administrative Agent
(including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Administrative Agent or of the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Administrative Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Administrative Agent to exercise rights and remedies
under this Article at such time as the Administrative Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to the
Administrative Agent an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to the Grantors) to use, license or
sub-license any of the Collateral consisting of Intellectual Property now owned
or hereafter acquired by such Grantor, and wherever the same may be located, and
including in such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof. The use of such license
by the Administrative Agent shall be exercised, at the option of the
Administrative Agent, upon the occurrence and during the continuation of an
Event of Default; provided that any license, sub-license or other transaction
entered into by the Administrative Agent in accordance herewith shall be binding
upon the Grantors notwithstanding any subsequent cure of an Event of Default.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and notices
hereunder to any Guarantor shall be given to it at its address or telecopy
number set forth on Schedule I, with a copy to the Borrower.
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SECTION 7.02. Security Interest Absolute. All rights of the Administrative
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Secured Parties and shall survive the making by the Lenders of the Loans and the
issuance of Letters of Credit by the Issuing Bank, and the execution and
delivery to the Lenders of any notes evidencing such Loans, regardless of any
investigation made by the Lenders or on their behalf, and shall continue in full
force and effect until this Agreement shall terminate.
SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall
become effective as to any Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Administrative Agent and a
counterpart hereof shall have been executed on behalf of the Administrative
Agent, and thereafter shall be binding upon such Grantor and the Administrative
Agent and their respective successors and assigns, and shall inure to the
benefit of such Grantor, the Administrative Agent and the other Secured Parties
and their respective successors and assigns, except that no Grantor shall have
the right to assign or transfer its rights or obligations hereunder or any
interest herein or in the Collateral (and any such assignment or transfer shall
be void) except as expressly contemplated by this Agreement or the Credit
Agreement. This Agreement shall be construed as a separate agreement with
respect to each Grantor and may be amended, modified, supplemented, waived or
released with respect to any Grantor without the approval of any other Grantor
and without affecting the obligations of any other Grantor hereunder.
SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or the Administrative Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 7.06. Administrative Agent's Fees and Expenses; Indemnification.
(a) Each Grantor jointly and severally agrees to pay upon demand to the
Administrative Agent the amount of any and all reasonable expenses, including
the reasonable fees, disbursements and other charges of its counsel and of any
experts or agents, which the Administrative Agent may incur in connection with
(i) the administration of this Agreement, (ii) the custody or preservation of,
or the sale of, collection from or other realization upon any of the Collateral,
(iii) the exercise,
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enforcement or protection of any of the rights of the Administrative Agent
hereunder or (iv) the failure of any Grantor to perform or observe any of the
provisions hereof.
(b) Without limitation of its indemnification obligations under the other
Loan Documents, each Grantor jointly and severally agrees to indemnify the
Administrative Agent and the other Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of counsel,
incurred by or asserted against any of them arising out of, in any way connected
with, or as a result of, the execution, delivery or performance of this
Agreement or any claim, litigation, investigation or proceeding relating hereto
or to the Collateral, whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee or any Related Parties of such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Administrative Agent or any Lender. All amounts due under this Section
7.06 shall be payable on written demand therefor.
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Administrative Agent
hereunder and of the Administrative Agent, the Administrative Agent and the
Lenders under the other Loan Documents are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No waiver of any
provisions of this Agreement or any other Loan Document or consent to any
departure by any Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, 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 Grantor in any case shall entitle such
Grantor or any other Grantor to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Administrative Agent and the Grantor or Grantors with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.02 of the Credit Agreement.
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SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.09.
SECTION 7.10. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 7.11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract (subject to Section 7.04), and
shall become effective as provided in Section 7.04. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
SECTION 7.12. Headings. Article and Section headings used herein are for
the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 7.13. Jurisdiction; Consent to Service of Process. (a) Each Grantor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent,
the Administrative Agent or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan Documents against any
Grantor or its properties in the courts of any jurisdiction.
-21-
<PAGE> 22
(b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 7.01. Nothing in this Agreement
will affected the right of any party to this Agreement to serve process in any
other manner permitted by law.
SECTION 7.14. Termination. This Agreement and the Security Interest shall
terminate when all the Obligations have been paid in full and the Lenders have
no further commitment to lend under the Credit Agreement, the LC Exposure has
been reduced to zero and the Issuing Bank has no further obligation to issue
Letters of Credit under the Credit Agreement, at which time the Administrative
Agent shall execute and deliver to the Grantors, at the Grantors' expense, all
Uniform Commercial Code termination statements and similar documents which the
Grantors shall reasonably request to evidence such termination. Any execution
and delivery of termination statements or documents pursuant to this Section
7.14 shall be without recourse to or warranty by the Administrative Agent. A
Grantor shall automatically be released from its obligations hereunder and the
Security Interest in the Collateral of such Grantor shall be automatically
released in the event that such Grantor ceases to be a Subsidiary pursuant to a
transaction permitted under the Loan Documents.
SECTION 7.15. Additional Grantors. Pursuant to Section 5.12 of the Credit
Agreement, each Subsidiary Loan Party that was not in existence or not a
Subsidiary Loan Party on the date of the Credit Agreement is required to enter
into this Agreement as a Grantor upon becoming a Subsidiary Loan Party. Upon
execution and delivery by the Administrative Agent and a Subsidiary of an
instrument in the form of Annex 4 hereto, such Subsidiary shall become a Grantor
hereunder with the same force and effect as if originally named as a Grantor
herein. The execution and delivery of any such instrument shall not require the
consent of any Grantor hereunder. The rights and obligations of each Grantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Grantor as a party to this Agreement.
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<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
WORLDWIDE FLIGHT SERVICES, INC.,
By /s/ Peter A. Pappas
--------------------------------------
Name:
Title:
EACH OF THE OTHER GUARANTORS
LISTED ON SCHEDULE I HERETO,
By /s/ Peter A. Pappas
--------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent,
By /s/ Bruce Borden
--------------------------------------
Name: Bruce Borden
Title: Vice President
-23-
<PAGE> 1
EXHIBIT 10.11
EXECUTION COPY
INDEMNITY, SUBROGATION and CONTRIBUTION
AGREEMENT dated as of August 12, 1999, among
WORLDWIDE FLIGHT SERVICES, INC., a Delaware
corporation (the "Borrower"), each subsidiary
of WFS Holdings, Inc. ("Holdings") listed on
Schedule I hereto (each such subsidiary
individually a "Subsidiary" or a "Guarantor"
and, collectively, the "Subsidiaries" or the
"Guarantors") and THE CHASE MANHATTAN BANK, a
New York banking corporation ("Chase"), as
administrative agent (in such capacity, the
"Administrative Agent") for the Secured
Parties (as defined in the Security
Agreement).
Reference is made to (a) the Credit Agreement dated as of August 12, 1999
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, Holdings, the lenders from time to time party
thereto (the "Lenders") and Chase, as administrative agent for the Lenders, and
(b) the Guarantee Agreement dated as of August 12, 1999, among the Guarantors,
Holdings and the Administrative Agent (the "Guarantee Agreement"). Capitalized
terms used herein and not defined herein shall have the meanings assigned to
such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing Bank
has agreed to issue Letters of Credit for the account of the Borrower, pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement. The Guarantors have guaranteed the Obligations (as defined in the
Guarantee Agreement) pursuant to the Guarantee Agreement; the Guarantors have
granted Liens on and security interests in certain of their assets to secure
such guarantees. The obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit are conditioned on, among other things, the
execution and delivery by the Borrower and the Guarantors of an agreement in the
form hereof.
Accordingly, the Borrower, each Guarantor and the Administrative Agent
agree as follows:
SECTION 1. Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law (but
subject to Section 3), the Borrower agrees that (a) in the event a payment shall
be made by any Guarantor under the Guarantee Agreement, the Borrower shall
indemnify such Guarantor for the full amount of such payment and such Guarantor
shall be subrogated to the rights of the Person to whom such payment shall have
been made to the extent of such payment and (b) in the event any assets of any
Guarantor shall be sold pursuant to any Security Document to satisfy a claim of
any Secured Party, the Borrower shall indemnify such Guarantor in an amount
equal to the greater of the book value or the fair market value of the assets so
sold.
SECTION 2. Contribution and Subrogation. Each Guarantor (a "Contributing
Guarantor") agrees (subject to Section 3) that, in the event a payment shall be
made by any other Guarantor under the Guarantee Agreement or assets of any other
Guarantor shall be sold pursuant to any Security Document to satisfy a claim of
any Secured Party and such other Guarantor (the "Claiming Guarantor") shall not
have been fully indemnified by the Borrower as provided in Section 1, the
Contributing Guarantor shall indemnify the Claiming Guarantor in an amount equal
to the amount of such payment or the greater of the book value or the fair
market value of such assets, as the case may be, in each case multiplied by a
fraction of which the numerator shall be the net worth of the Contributing
Guarantor on the date hereof and the denominator shall be the aggregate net
worth of all the Guarantors on the date hereof (or, in the case of any Guarantor
becoming a party hereto pursuant to Section 12, the date of the Supplement
hereto executed and delivered by such Guarantor). Any Contributing Guarantor
making any payment to a
<PAGE> 2
Claiming Guarantor pursuant to this Section 2 shall be subrogated to the rights
of such Claiming Guarantor under Section 1 to the extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision of this Agreement
to the contrary, all rights of each of the Guarantors under Sections 1 and 2 and
all other rights of each of the Guarantors in respect of indemnity, contribution
or subrogation from any other Loan Party under applicable law or otherwise shall
be fully subordinated to the indefeasible payment in full in cash of all
Obligations which are then due and payable whether at maturity, by acceleration
or otherwise. No failure on the part of the Borrower or any Guarantor to make
the payments required by Sections 1 and 2 (or any other payments required under
applicable law or otherwise) shall in any respect limit the obligations and
liabilities of any Guarantor with respect to its obligations hereunder, and each
Guarantor shall remain liable for the full amount of the obligations of such
Guarantor hereunder.
SECTION 4. Termination. This Agreement shall survive and be in full force
and effect so long as any Obligation is outstanding and has not been
indefeasibly paid in full in cash, and so long as the LC Exposure has not been
reduced to zero, the Issuing Bank is still obligated to issue Letters of Credit
under the Credit Agreement and any of the Commitments under the Credit Agreement
have not been terminated, and shall continue to be effective or be reinstated,
as the case may be, if at any time payment, or any part thereof, of any
Obligation is rescinded or must otherwise be restored by any Secured Party or
any Guarantor upon the bankruptcy or reorganization of the Borrower, any
Guarantor or otherwise.
SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. No Waiver; Amendment. (a) No failure on the part of the
Administrative Agent or any Guarantor to exercise, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy by the
Administrative Agent or any Guarantor preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law. None of the Administrative Agent and the Guarantors shall be deemed to have
waived any rights hereunder unless such waiver shall be in writing and signed by
such parties.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Borrower, the Guarantors and the Administrative Agent, subject to any consent
required in accordance with Section 9.02 of the Credit Agreement.
SECTION 7. Notices. All communications and notices hereunder shall be in
writing and given as provided in the Guarantee Agreement and addressed as
specified therein.
SECTION 8. Binding Agreement; Assignments. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of the parties that are contained in this Agreement
shall bind and inure to the benefit of their respective successors and assigns.
Neither the Borrower nor any Guarantor may assign or transfer any of its rights
or obligations hereunder (and any such attempted assignment or transfer shall be
void) without the consent required in accordance with Section 9.02 of the Credit
Agreement. Notwithstanding the foregoing, at the time any Guarantor is released
from its obligations under the Guarantee Agreement in accordance with such
Guarantee Agreement and the Credit Agreement, such Guarantor will cease to have
any rights or obligations under this Agreement.
SECTION 9. Survival of Agreement; Severability. (a) All covenants and
agreements made by the Borrower and each Guarantor herein and in the
certificates or other instruments prepared or delivered in connection with this
Agreement or the other Loan Documents shall be considered to have been relied
upon by the Administrative Agent, the other Secured Parties and each Guarantor
and shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loans or any
other fee or amount payable under the Credit Agreement or this Agreement or
under any of the other
-2-
<PAGE> 3
Loan Documents is outstanding and unpaid and as long as the Commitments have not
been terminated or the LC Exposure does not equal zero.
(b) In case any one or more of the provisions contained in this Agreement
should be held invalid, illegal or unenforceable in any respect, no party hereto
shall be required to comply with such provision for so long as such provision is
held to be invalid, illegal or unenforceable, but the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 10. Counterparts. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Agreement shall be effective with respect to any Guarantor
when a counterpart bearing the signature of such Guarantor shall have been
delivered to the Administrative Agent. Delivery of an executed signature page to
this Agreement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.
SECTION 11. Rules of Interpretation. The rules of interpretation specified
in Section 1.03 of the Credit Agreement shall be applicable to this Agreement.
SECTION 12. Additional Guarantors. Pursuant to Section 5.12 of the Credit
Agreement, each Subsidiary Loan Party of the Borrower that was not in existence
or not a Subsidiary Loan Party on the date of the Credit Agreement is required
to enter into the Guarantee Agreement as a Guarantor upon becoming a Subsidiary
Loan Party. Upon execution and delivery, after the date hereof, by the
Administrative Agent and such a Subsidiary of an instrument in the form of Annex
1 hereto, such Subsidiary shall become a Guarantor hereunder with the same force
and effect as if originally named as a Guarantor hereunder. The execution and
delivery of any instrument adding an additional Guarantor as a party to this
Agreement shall not require the consent of any Guarantor hereunder.
-3-
<PAGE> 4
The rights and obligations of each Guarantor hereunder shall remain in full
force and effect notwithstanding the addition of any new Guarantor as a party to
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first appearing above.
WORLDWIDE FLIGHT SERVICES, INC.,
By: /s/ Peter A. Pappas
-------------------------------------
Name:
Title:
EACH OF THE OTHER SUBSIDIARIES
LISTED ON SCHEDULE I HERETO, as a
Guarantor,
By: /s/ Peter A. Pappas
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent,
By: /s/ Bruce Borden
-------------------------------------
Name: Bruce Borden
Title: Vice President
-4-
<PAGE> 1
Exhibit 10.12
EXECUTION COPY
GUARANTEE AGREEMENT dated as of August 12,
1999, among WFS HOLDINGS, INC. ("Holdings"), a
Delaware corporation, each subsidiary of Holdings
listed on Schedule I hereto (each such subsidiary
individually, a "Subsidiary" and, collectively, the
"Subsidiaries"; and each such Subsidiary and
Holdings, individually, a "Guarantor" and,
collectively, the "Guarantors") and THE CHASE
MANHATTAN BANK, a New York banking corporation, as
administrative agent (the "Administrative Agent") for
the Secured Parties (as defined in the Security
Agreement).
Reference is made to the Credit Agreement dated as of August 12, 1999
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Worldwide Flight Services, Inc., a Delaware corporation (the
"Borrower"), Holdings, the lenders from time to time party thereto (the
"Lenders") and The Chase Manhattan Bank, as administrative agent for the
Lenders. Capitalized terms used herein and not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Subsidiaries is a direct or indirect subsidiary of
the Borrower and acknowledges that it will derive substantial benefit from the
making of the Loans by the Lenders and the issuance of Letters of Credit by the
Issuing Bank. The obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit are conditioned on, among other things, the
execution and delivery by the Guarantors of a Guarantee Agreement in the form
hereof. As consideration therefor and in order to induce the Lenders to make
Loans and the Issuing Bank to issue Letters of Credit, the Guarantors are
willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally guarantees,
jointly with the other Guarantors and severally, as a primary obligor and not
merely as a surety, (a) the due and punctual payment of (i) the principal of and
premium, if any, and interest (including interest accruing during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding) on the Loans,
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (ii) each payment required to be made by the
Borrower under the Credit Agreement in respect of any Letter of Credit, when and
as due, including payments in respect of reimbursement of disbursements,
interest thereon and obligations to provide cash collateral and (iii) all other
monetary obligations, including reasonable fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Loan Parties to the Secured
Parties under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Loan Parties under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all obligations
of the Borrower or any other Loan Party, monetary or otherwise, under each
Hedging Agreement entered into with a counterparty that was a Lender (or an
Affiliate of a Lender) at the time such Hedging Agreement was entered into and
(d) the due and punctual payment and performance of all obligations in respect
of overdrafts and related liabilities owed to the Administrative Agent or any of
its Affiliates and arising from treasury, depositary and cash management
services in connection with any automated clearing house transfers of funds (all
the monetary and other obligations referred to in the preceding clauses (a)
through (d) being collectively called the "Obligations"). Each Guarantor further
agrees that the Obligations may be extended or renewed, in whole or in part,
without
<PAGE> 2
notice to or further assent from it, and that it will remain bound upon
its guarantee notwithstanding any extension or renewal of any Obligation.
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Guarantor waives presentment to, demand of payment from and
protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. To the fullest
extent permitted by applicable law, the obligations of each Guarantor hereunder
shall not be affected by (a) the failure of the Administrative Agent or any
other Secured Party to assert any claim or demand or to enforce or exercise any
right or remedy against the Borrower or any Guarantor under the provisions of
the Credit Agreement, any other Loan Document or otherwise; (b) any recision,
waiver, amendment or modification of, or any release from any terms or
provisions of this Agreement, any other Loan Document, any Guarantee or any
other agreement, including with respect to any other Guarantor under this
Agreement or (c) the failure to perfect any security interest in, or release of,
any of the security held by or on behalf of the Administrative Agent or any
other Secured Party.
SECTION 3. Security. Each of the Guarantors authorizes the
Administrative Agent and each of the other Secured Parties to (a) take and hold
security for the payment of this Guarantee and the Obligations and exchange,
enforce, waive and release any such security, (b) apply such security and direct
the order or manner of sale thereof as they in their sole discretion may
determine and (c) release or substitute any one or more endorsees, other
guarantors or other obligors.
SECTION 4. Guarantee of Payment. Each Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Administrative Agent
or any other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Administrative Agent or any other Secured Party in favor of the Borrower or
any other Person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations
of each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the payment in full in cash
of the Obligations), including any claim of waiver, release, surrender,
alteration or compromise of any of the Obligations, and shall not be subject to
any defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Guarantor hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Administrative Agent or any other Secured Party
to assert any claim or demand or to enforce any remedy under the Credit
Agreement, any other Loan Document or any other agreement, by any waiver or
modification of any provision of any thereof, by any default, failure or delay,
wilful or otherwise, in the performance of the Obligations, or the failure to
perfect any security interest in, or the release of, any of the security held by
or on behalf of the Administrative Agent or any other Secured Party, or by any
other act or omission that may or might in any manner or to any extent vary the
risk of any Guarantor or that would otherwise operate as a discharge of each
Guarantor as a matter of law or equity (other than the payment in full in cash
of all the Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable law, each of the Guarantors waives any defense based on or arising
out of any defense of the Borrower or the unenforceability of the Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower, other than the final payment in full in cash of the
Obligations. The Administrative Agent and the other Secured Parties may, at
their election, foreclose on any security held by one or more of them by one or
more judicial or nonjudicial sales, accept an assignment of any such security in
lieu of foreclosure, compromise or adjust any part of the Obligations, make any
other accommodation with the Borrower or any other guarantor or exercise any
other right or remedy available to them against the Borrower or any other
guarantor, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Obligations have been fully and
finally paid in cash. Pursuant to applicable law, each of the Guarantors waives
any defense arising out of any such election even though such election operates,
pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Guarantor against
the Borrower or any other Guarantor or guarantor, as the case may be, or any
security.
-2-
<PAGE> 3
SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Administrative Agent
or any other Secured Party has at law or in equity against any Guarantor by
virtue hereof, upon the failure of the Borrower or any other Loan Party to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Administrative
Agent as designated thereby in cash the amount of such unpaid Obligations. Upon
payment by any Guarantor of any sums to the Administrative Agent, all rights of
such Guarantor against the Borrower arising as a result thereof by way of right
of subrogation, contribution, reimbursement, indemnity or otherwise shall in all
respects be subordinate and junior in right of payment to the prior indefeasible
payment in full in cash of all the Obligations. In addition, any indebtedness of
any Loan Party now or hereafter held by any Guarantor is hereby subordinated in
right of payment to the prior payment in full of the Obligations, provided that
so long as no Event of Default exists or is continuing, any Loan Party may repay
indebtedness of such Loan Party held by any other Loan Party without regard to
such subordination. If any amount shall erroneously be paid to any Guarantor on
account of (i) such subrogation, contribution, reimbursement, indemnity or
similar right or (ii) any such indebtedness of any Loan Party, such amount shall
be held in trust for the benefit of the Secured Parties and shall forthwith be
paid to the Administrative Agent to be credited against the payment of the
Obligations, whether matured or unmatured, in accordance with the terms of the
Loan Documents.
SECTION 8. Information. Each of the Guarantors assumes all
responsibility for being and keeping itself informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
such Guarantor assumes and incurs hereunder, and agrees that none of the
Administrative Agent or the other Secured Parties will have any duty to advise
any of the Guarantors of information known to it or any of them regarding such
circumstances or risks.
SECTION 9. Representations and Warranties. Each of the Guarantors
represents and warrants as to itself that all representations and warranties
relating to it contained in the Credit Agreement are true and correct, except
for any representation and warranty that is expressly made as of an earlier
date, which representation and warranty shall have been true and correct as of
such earlier date.
SECTION 10. Termination. The Guarantees made hereunder (a) shall
terminate when all the Obligations have been indefeasibly paid in full and the
Lenders have no further commitment to lend under the Credit Agreement, the LC
Exposure has been reduced to zero and the Issuing Bank has no further obligation
to issue Letters of Credit under the Credit Agreement and (b) shall continue to
be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any Obligation is rescinded or must otherwise be restored
by any Secured Party or any Guarantor upon the bankruptcy or reorganization of
the Borrower, any Guarantor or otherwise.
SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantors that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
as to any Guarantor when a counterpart hereof executed on behalf of such
Guarantor shall have been delivered to the Administrative Agent, and a
counterpart hereof shall have been executed on behalf of the Administrative
Agent, and thereafter shall be binding upon such Guarantor and the
Administrative Agent and their respective successors and assigns, and shall
inure to the benefit of such Guarantor, the Administrative Agent and the other
Secured Parties, and their respective successors and assigns, except that no
Guarantor shall have the right to assign its rights or obligations hereunder or
any interest herein (and any such attempted assignment shall be void). In the
event that a Guarantor ceases to be a Subsidiary pursuant to a transaction
permitted under the Loan Documents, such Guarantor shall be released from its
obligations under this Agreement without further action. This Agreement shall be
construed as a separate agreement with respect to each Guarantor and may be
amended, modified, supplemented, waived or released with respect to any
Guarantor without the approval of any other Guarantor and without affecting the
obligations of any other Guarantor hereunder.
-3-
<PAGE> 4
SECTION 12. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Administrative Agent
hereunder and of the other Secured Parties under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Guarantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on any Guarantor in any case shall entitle such
Guarantor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Guarantors with respect to which such waiver, amendment or modification
relates and the Administrative Agent, subject to any consent required in
accordance with Section 9.02 of the Credit Agreement.
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 14. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to each Guarantor shall be given to it in
care of the Borrower at the address set forth in the Credit Agreement.
SECTION 15. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by the Guarantors herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Administrative Agent and the other Secured Parties
and shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
other fee or amount payable under this Agreement or any other Loan Document is
outstanding and unpaid and as long as the Commitments have not been terminated
or the LC Exposure does not equal zero.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 16. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective as
provided in Section 11. Delivery of an executed signature page to this Agreement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 17. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 18. Jurisdiction; Consent to Service of Process. (a) Each
Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of
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<PAGE> 5
the parties hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Administrative Agent or any other
Secured Party may otherwise have to bring any action or proceeding relating to
this Agreement or the other Loan Documents against any Guarantor or its
properties in the courts of any jurisdiction.
(b) Each Guarantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 14. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 19. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
SECTION 20. Additional Guarantors. Pursuant to Section 5.12 of the
Credit Agreement, each Subsidiary Loan Party of the Borrower that was not in
existence or not a Subsidiary Loan Party on the date of the Credit Agreement is
required to enter into this Agreement as a Guarantor upon becoming a Subsidiary
Loan Party. Upon execution and delivery after the date hereof by the
Administrative Agent and such a Subsidiary of an instrument in the form of Annex
1, such Subsidiary shall become a Guarantor hereunder with the same force and
effect as if originally named as a Guarantor herein effective as of the date as
provided Section 11. The execution and delivery of any instrument adding an
additional Guarantor as a party to this Agreement shall not require the consent
of any other Guarantor hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Guarantor as a party to this Agreement.
SECTION 21. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Secured Party is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other Indebtedness at any time owing by such Secured Party to
or for the credit or the account of any Guarantor against any or all the
obligations of such Guarantor now or hereafter existing under this Agreement and
the other Loan Documents held by such Secured Party, irrespective of whether or
not such Secured Party shall have made any demand under this Agreement or any
other Loan Document and although such obligations may be unmatured. The rights
of each Secured Party under this Section 21 are in
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<PAGE> 6
addition to other rights and remedies (including other rights of setoff) which
such Secured Party may have.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
WFS HOLDINGS, INC.,
By: /s/ Marcel Fournier
---------------------------------
Name: Marcel Fournier
Title: President
EACH OF THE SUBSIDIARIES LISTED ON
SCHEDULE I HERETO,
By: /s/ Peter Pappas
---------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent,
By /s/ Bruce Borden
----------------------------------
Name: Bruce Borden
Title: Vice President
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<PAGE> 1
EXHIBIT 10.13
EXECUTION COPY
PLEDGE AGREEMENT dated as of August
12, 1999, among WORLDWIDE FLIGHT SERVICES,
INC., a Delaware corporation (the
"Borrower"), WFS HOLDINGS, INC., a Delaware
corporation ("Holdings"), each subsidiary of
Holdings listed on Schedule I hereto (each
such subsidiary individually a "Subsidiary
Pledgor" and collectively, the "Subsidiary
Pledgors" or, with Holdings, the
"Guarantors"; the Borrower, Holdings and the
Subsidiary Pledgors are referred to herein
individually as a "Pledgor" and collectively
as the "Pledgors") and THE CHASE MANHATTAN
BANK, a New York banking corporation
("Chase"), as administrative agent (in such
capacity, the "Administrative Agent ") for
the Secured Parties (as defined in the
Security Agreement).
Reference is made to (a) the Credit Agreement dated as of August 12, 1999
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, Holdings, the lenders from time to time party
thereto (the "Lenders") and Chase, as administrative agent for the Lenders, and
(b) the Guarantee Agreement dated as of August 12, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Guarantee Agreement")
among the Guarantors and the Administrative Agent. Capitalized terms used herein
and not defined herein shall have meanings assigned to such terms in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Guarantors have agreed to guarantee, among other things,
all the obligations of the Borrower under the Credit Agreement. The obligations
of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit
are conditioned upon, among other things, the execution and delivery by the
Pledgors of a Pledge Agreement in the form hereof to secure (a) the due and
punctual payment by the Borrower of (i) the principal of and premium, if any,
and interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including reasonable fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Secured Parties under
the Credit Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Loan Parties under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all obligations
of the Borrower or any other Loan Party, monetary or otherwise, under each
Hedging Agreement entered into with a
<PAGE> 2
counterparty that was a Lender (or an Affiliate of a Lender) at the time such
Hedging Agreement was entered into and (d) the due and punctual payment and
performance of all obligations in respect of overdrafts and related liabilities
owed to the Administrative Agent or any of its Affiliates and arising from
treasury, depositary and cash management services in connection with any
automated clearing house transfers of funds (all the monetary and other
obligations referred to in the preceding clauses (a) through (d) being referred
to collectively as the "Obligations").
Accordingly, the Pledgors and the Administrative Agent, on behalf of
itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:
SECTION 1. Pledge. As security for the payment and performance, as the
case may be, in full of the Obligations, each Pledgor hereby transfers, grants,
bargains, sells, conveys, hypothecates, pledges, sets over and delivers unto the
Administrative Agent, its successors and assigns, and hereby grants to the
Administrative Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in all of such Pledgor's right, title and
interest in, to and under (a) the Equity Interests owned by it which are listed
on Schedule II hereto and any Equity Interests obtained in the future by such
Pledgor and the certificates representing all such Equity Interests (the
"Pledged Interests"); provided that the Pledged Interests shall not include more
than 65% of the issued and outstanding common stock of any Foreign Subsidiary;
(b)(i) the debt securities owned by it which are listed opposite the name of
such Pledgor on Schedule II hereto, (ii) any debt securities in the future
issued to such Pledgor (except for debt securities evidencing loans permitted
under clauses (g), (i), (j) or (k) of Section 6.04 of the Credit Agreement in a
principal amount of not more than $25,000 so long as the aggregate principal
amount of all such debt securities does not exceed $100,000 at any time) and
(iii) the promissory notes and any other instruments evidencing such debt
securities (the "Pledged Debt Securities"); (c) all other property that may be
delivered to and held by the Administrative Agent pursuant to the terms hereof;
(d) subject to Section 5, all payments of principal or interest, dividends,
cash, instruments and other property from time to time received, receivable or
otherwise distributed, in respect of, in exchange for or upon the conversion of
the securities referred to in clauses (a) and (b) above; (e) subject to Section
5, all rights and privileges of such Pledgor with respect to the securities and
other property referred to in clauses (a), (b), (c) and (d) above; and (f) all
proceeds of any of the foregoing (the items referred to in clauses (a) through
(f) above being collectively referred to as the "Collateral"). Upon delivery to
the Administrative Agent, (a) any stock certificates, notes or other securities
now or hereafter included in the Collateral (the "Pledged Securities") shall be
accompanied by stock powers duly executed in blank or other instruments of
transfer satisfactory to the Administrative Agent and by such other instruments
and documents as the Administrative Agent may reasonably request and (b) all
other property comprising part of the Collateral shall be accompanied by proper
instruments of assignment duly executed by the applicable Pledgor and such other
instruments or documents as the Administrative Agent may reasonably request.
Each delivery of Pledged Securities shall be accompanied by a schedule
describing the securities theretofore and then being pledged hereunder, which
schedule shall be attached hereto as Schedule II and made a part hereof. Each
schedule so delivered shall supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Administrative Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, forever; subject, however, to the terms,
covenants and conditions hereinafter set forth.
SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees promptly to
deliver or cause to be delivered to the Administrative Agent any and all Pledged
Securities, and any and all certificates or other instruments or documents
representing the Collateral.
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<PAGE> 3
(b) Each Pledgor will cause any Indebtedness for borrowed money owed to
the Pledgor by any Person to be evidenced by a duly executed promissory note
that is pledged and delivered to the Administrative Agent pursuant to the terms
thereof.
SECTION 3. Representations, Warranties and Covenants. Each Pledgor hereby
represents, warrants and covenants, as to itself and the Collateral pledged by
it hereunder, to and with the Administrative Agent that:
(a) the Pledged Interests represent that percentage as set forth on
Schedule II of the issued and outstanding shares of each class of the
Equity Interests of the issuer with respect thereto;
(b) except for the security interest granted hereunder, such Pledgor
(i) is and will at all times continue to be the direct owner, beneficially
and of record, of the Pledged Securities indicated on Schedule II, (ii)
holds the same free and clear of all Liens, (iii) will make no assignment,
pledge, hypothecation or transfer of, or create or permit to exist any
security interest in or other Lien on, the Collateral, other than pursuant
hereto, and (iv) subject to Section 5, will cause any and all Collateral,
whether for value paid by such Pledgor or otherwise, to be forthwith
deposited with the Administrative Agent and pledged or assigned hereunder;
(c) such Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will defend
its title or interest thereto or therein against any and all Liens (other
than the Lien created by this Agreement), however arising, of all Persons
whomsoever;
(d) no consent of any other Person (including stockholders or creditors
of any Pledgor) and no consent or approval of any Governmental Authority
or any securities exchange was or is necessary to the validity of the
pledge effected hereby;
(e) by virtue of the execution and delivery by the Pledgors of this
Agreement, when the Pledged Securities, certificates or other documents
representing or evidencing the Collateral are delivered to the
Administrative Agent in accordance with this Agreement, the Administrative
Agent will have a valid and perfected first lien upon and security
interest in such Pledged Securities as security for the payment and
performance of the Obligations;
(f) the pledge effected hereby is effective to vest in the
Administrative Agent, on behalf of the Secured Parties, the rights of the
Administrative Agent in the Collateral as set forth herein;
(g) all of the Pledged Interests issued by the Borrower or any
Subsidiary Pledgor have been duly authorized and validly issued and are
fully paid and nonassessable;
(h) all information set forth herein relating to the Pledged Interests
is accurate and complete in all material respects as of the date hereof;
and
(i) the pledge of the Pledged Interests pursuant to this Agreement does
not violate Regulation T, U or X of the Federal Reserve Board or any
successor thereto as of the date hereof.
SECTION 4. Registration in Nominee Name; Denominations. Upon the
occurrence and during the continuance of a Default, the Administrative Agent, on
behalf of the Secured Parties, shall have the right (in its sole and absolute
discretion) to hold the Pledged Securities in its own name as pledgee, the name
of its nominee (as pledgee or as sub-agent) or the name of the Pledgors,
endorsed or assigned in blank or in favor of the Administrative Agent. Each
Pledgor will promptly give to the Administrative Agent
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<PAGE> 4
copies of any notices or other communications received by it with respect to
Pledged Securities registered in the name of such Pledgor. The Administrative
Agent shall at all times have the right to exchange the certificates
representing Pledged Securities for certificates of smaller or larger
denominations for any purpose consistent with this Agreement.
SECTION 5. Voting Rights; Dividends and Interest, etc. (a) Unless and
until an Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all voting
and/or other consensual rights and powers inuring to an owner of Pledged
Securities or any part thereof for any purpose consistent with the terms
of this Agreement, the Credit Agreement and the other Loan Documents;
provided, however, that such Pledgor will not be entitled to exercise any
such right if the result thereof could materially and adversely affect the
rights inuring to a holder of the Pledged Securities or the rights and
remedies of any of the Secured Parties under this Agreement or the Credit
Agreement or any other Loan Document or the ability of the Secured Parties
to exercise the same.
(ii) The Administrative Agent shall execute and deliver to each
Pledgor, or cause to be executed and delivered to each Pledgor, all such
proxies, powers of attorney and other instruments as such Pledgor may
reasonably request for the purpose of enabling such Pledgor to exercise
the voting and/or consensual rights and powers it is entitled to exercise
pursuant to subparagraph (i) above and to receive the cash dividends it is
entitled to receive pursuant to subparagraph (iii) below.
(iii) Each Pledgor shall be entitled to receive and retain any and all
cash dividends, interest and principal paid on the Pledged Securities to
the extent and only to the extent that such cash dividends, interest and
principal are permitted by, and otherwise paid in accordance with, the
terms and conditions of the Credit Agreement, the other Loan Documents and
applicable laws. All noncash dividends, interest and principal, and all
dividends, interest and principal paid or payable in cash or otherwise in
connection with a partial or total liquidation or dissolution, return of
capital, capital surplus or paid-in surplus, and all other distributions
(other than distributions referred to in the preceding sentence or
distributions consisting of property that is not Pledged Interests,
Pledged Debt Securities or cash proceeds thereof ) made on or in respect
of the Pledged Securities, whether paid or payable in cash or otherwise,
whether resulting from a subdivision, combination or reclassification of
the outstanding capital stock of the issuer of any Pledged Securities or
received in exchange for Pledged Securities or any part thereof, or in
redemption thereof, or as a result of any merger, consolidation,
acquisition or other exchange of assets to which such issuer may be a
party or otherwise, shall be and become part of the Collateral, and, if
received by any Pledgor, shall not be commingled by such Pledgor with any
of its other funds or property but shall be held separate and apart
therefrom, shall be held in trust for the benefit of the Administrative
Agent and shall be forthwith delivered to the Administrative Agent in the
same form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of Default,
all rights of any Pledgor to dividends, interest or principal that such Pledgor
is authorized to receive pursuant to paragraph (a)(iii) above shall cease, and
all such rights shall thereupon become vested in the Administrative Agent, which
shall have the sole and exclusive right and authority to receive and retain such
dividends, interest or principal. All dividends, interest or principal received
by the Pledgor contrary to the provisions of this Section 5 shall be held in
trust for the benefit of the Administrative Agent, shall be segregated from
other property or funds of such Pledgor and shall be forthwith delivered to the
Administrative Agent upon demand in the same form as so received (with any
necessary endorsement). Any and all money and
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<PAGE> 5
other property paid over to or received by the Administrative Agent pursuant to
the provisions of this paragraph (b) shall be retained by the Administrative
Agent in an account to be established by the Administrative Agent upon receipt
of such money or other property and shall be applied in accordance with the
provisions of Section 7. After all Events of Default have been cured or waived,
the Administrative Agent shall, within one Business Day after all such Events of
Default have been cured or waived, repay to each Pledgor all cash dividends,
interest or principal (with interest, if any), that such Pledgor would otherwise
be permitted to retain pursuant to the terms of paragraph (a)(iii) above and
which remain in such account.
(c) Upon the occurrence and during the continuance of an Event of Default,
all rights of any Pledgor to exercise the voting and consensual rights and
powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section
5, and the obligations of the Administrative Agent under paragraph (a)(ii) of
this Section 5, shall cease, and all such rights shall thereupon become vested
in the Administrative Agent, which shall have the sole and exclusive right and
authority to exercise such voting and consensual rights and powers, provided
that, unless otherwise directed by the Required Lenders, the Administrative
Agent shall have the right from time to time following and during the
continuance of an Event of Default to permit the Pledgors to exercise such
rights. After all Events of Default have been cured or waived, each Pledgor will
have the right to exercise the voting and consensual rights and powers that it
would otherwise be entitled to exercise pursuant to the terms of paragraph
(a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, the Administrative Agent may sell the
Collateral, or any part thereof, at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for future
delivery as the Administrative Agent shall deem appropriate. The Administrative
Agent shall be authorized at any such sale (if it deems it advisable to do so)
to restrict the prospective bidders or purchasers to Persons who will represent
and agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale the Administrative Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of any Pledgor, and, to
the extent permitted by applicable law, the Pledgors hereby waive all rights of
redemption, stay, valuation and appraisal any Pledgor now has or may at any time
in the future have under any rule of law or statute now existing or hereafter
enacted.
The Administrative Agent shall give a Pledgor 10 Business Days' prior
written notice (which each Pledgor agrees is reasonable notice within the
meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions) of the
Administrative Agent's intention to make any sale of such Pledgor's Collateral.
Such notice, in the case of a public sale, shall state the time and place for
such sale and, in the case of a sale at a broker's board or on a securities
exchange, shall state the board or exchange at which such sale is to be made and
the day on which the Collateral, or portion thereof, will first be offered for
sale at such board or exchange. Any such public sale shall be held at such time
or times within ordinary business hours and at such place or places as the
Administrative Agent may fix and state in the notice of such sale. At any such
sale, the Collateral, or portion thereof, to be sold may be sold in one lot as
an entirety or in separate parcels, as the Administrative Agent may (in its sole
and absolute discretion) determine. The Administrative Agent shall not be
obligated to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given. The Administrative Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further
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<PAGE> 6
notice, be made at the time and place to which the same was so adjourned. In
case any sale of all or any part of the Collateral is made on credit or for
future delivery, the Collateral so sold may be retained by the Administrative
Agent until the sale price is paid in full by the purchaser or purchasers
thereof, but the Administrative Agent shall not incur any liability in case any
such purchaser or purchasers shall fail to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may be sold again upon
like notice. At any public (or, to the extent permitted by applicable law,
private) sale made pursuant to this Section 6, any Secured Party may bid for or
purchase, free from any right of redemption, stay or appraisal on the part of
any Pledgor (all said rights being also hereby waived and released), the
Collateral or any part thereof offered for sale and may make payment on account
thereof by using any Obligation then due and payable to it from such Pledgor as
a credit against the purchase price, and it may, upon compliance with the terms
of sale, hold, retain and dispose of such property without further
accountability to such Pledgor therefor. For purposes hereof, (a) a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof, (b) the Administrative Agent shall be free to carry out such
sale pursuant to such agreement and (c) such Pledgor shall not be entitled to
the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Administrative Agent shall have entered
into such an agreement all Events of Default shall have been remedied and the
Obligations paid in full. As an alternative to exercising the power of sale
herein conferred upon it, the Administrative Agent may proceed by a suit or
suits at law or in equity to foreclose upon the Collateral and to sell the
Collateral or any portion thereof pursuant to a final judgment or decree of a
court or courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver. Any sale pursuant to the provisions of this Section 6
shall be deemed to conform to the commercially reasonable standards as provided
in Section 9-504(3) of the Uniform Commercial Code as in effect in the State of
New York or its equivalent in other jurisdictions.
SECTION 7. Application of Proceeds of Sale. The Administrative Agent shall
apply the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
FIRST, to the payment of all reasonable costs and expenses incurred by
the Administrative Agent or the Administrative Agent (in its capacity as
such hereunder or under any other Loan Document) in connection with such
collection or sale or otherwise in connection with this Agreement or any
of the Obligations, including all court costs and the reasonable fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Administrative Agent hereunder or under any other Loan
Document on behalf of any Pledgor and any other costs or expenses incurred
in connection with the exercise of any right or remedy hereunder or under
any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in accordance
with the amounts of the Obligations owed to them on the date of any such
distribution); and
THIRD, to the Pledgors, their successors or assigns, or as a court of
competent jurisdiction may otherwise direct.
The Administrative Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Administrative Agent
(including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the purchase money by the Administrative Agent or of
the officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money
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<PAGE> 7
paid over to the Administrative Agent or such officer or be answerable in any
way for the misapplication thereof.
SECTION 8. Reimbursement of Administrative Agent. (a) Each Pledgor agrees
to pay upon demand to the Administrative Agent the amount of any and all
reasonable expenses, including the reasonable fees, other charges and
disbursements of its counsel and of any experts or agents, that the
Administrative Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Administrative Agent hereunder or (iv)
the failure by such Pledgor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the other
Loan Documents, each Pledgor agrees to indemnify the Administrative Agent and
the Indemnitees (as defined in Section 9.03 of the Credit Agreement) against,
and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees, other
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations thereunder or the consummation of the other
transactions contemplated thereby or (ii) any claim, litigation, investigation
or proceeding relating to any of the foregoing, whether or not any Indemnitee is
a party thereto, provided that such indemnity shall not, as to any Indemnitee,
be available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee or any Related Party of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 8 shall remain operative and in full force and effect regardless
of the termination of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document or any investigation made by or on behalf of the Administrative Agent
or any other Secured Party. All amounts due under this Section 8 shall be
payable on written demand therefor and shall bear interest at the rate specified
in Section 2.12(c) of the Credit Agreement.
SECTION 9. Administrative Agent Appointed Attorney-in-Fact. Each Pledgor
hereby appoints the Administrative Agent the attorney-in-fact of such Pledgor
for the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Administrative Agent may deem
necessary or advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, the Administrative Agent shall have the right, upon the occurrence
and during the continuance of an Event of Default, with full power of
substitution either in the Administrative Agent's name or in the name of such
Pledgor, to ask for, demand, sue for, collect, receive and give acquittance for
any and all moneys due or to become due under and by virtue of any Collateral,
to endorse checks, drafts, orders and other instruments for the payment of money
payable to the Pledgor representing any interest or dividend or other
distribution payable in respect of the Collateral or any part thereof or on
account thereof and to give full discharge for the same, to settle, compromise,
prosecute or defend any action, claim or proceeding with respect thereto, and to
sell, assign, endorse, pledge, transfer and to make any agreement respecting, or
otherwise deal with, the same; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Administrative Agent to make
any commitment or to make any inquiry as to the nature or
-7-
<PAGE> 8
sufficiency of any payment received by the Administrative Agent, or to present
or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Administrative Agent and the other
Secured Parties shall be accountable only for amounts actually received as a
result of the exercise of the powers granted to them herein, and neither they
nor their officers, directors, employees or agents shall be responsible to any
Pledgor for any act or failure to act hereunder, except for their own gross
negligence or wilful misconduct.
SECTION 10. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Administrative Agent
hereunder and of the other Secured Parties under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Agreement or consent to any
departure by any Pledgor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on any Pledgor in any case shall entitle such Pledgor
to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Administrative Agent and the Pledgor or Pledgors with respect to which such
waiver, amendment or modification is to apply, subject to any consent required
in accordance with Section 9.02 of the Credit Agreement.
SECTION 11. Securities Act, etc. In view of the position of the Pledgors
in relation to the Pledged Securities, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such Act and any such similar statute as from time to time in
effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Administrative Agent if the Administrative
Agent were to attempt to dispose of all or any part of the Pledged Securities,
and might also limit the extent to which or the manner in which any subsequent
transferee of any Pledged Securities could dispose of the same. Similarly, there
may be other legal restrictions or limitations affecting the Administrative
Agent in any attempt to dispose of all or part of the Pledged Securities under
applicable Blue Sky or other state securities laws or similar laws analogous in
purpose or effect. Each Pledgor recognizes that in light of such restrictions
and limitations the Administrative Agent may, with respect to any sale of the
Pledged Securities, limit the purchasers to those who will agree, among other
things, to acquire such Pledged Securities for their own account, for
investment, and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges and agrees that in light of such restrictions and
limitations, the Administrative Agent, in its sole and absolute discretion, (a)
may proceed to make such a sale whether or not a registration statement for the
purpose of registering such Pledged Securities or part thereof shall have been
filed under the Federal Securities Laws and (b) may approach and negotiate with
a single potential purchaser to effect such sale. Each Pledgor acknowledges and
agrees that any such sale might result in prices and other terms less favorable
to the seller than if such sale were a public sale without such restrictions. In
the event of any such sale, the Administrative Agent shall incur no
responsibility or liability for selling all or any part of the Pledged
Securities at a price that the Administrative Agent, in its sole discretion, may
in good faith deem commercially reasonable under the circumstances,
notwithstanding the possibility that a substantially
-8-
<PAGE> 9
higher price might have been realized if the sale were deferred until after
registration as aforesaid or if more than a single purchaser were approached.
The provisions of this Section 11 will apply notwithstanding the existence of a
public or private market upon which the quotations or sales prices may exceed
substantially the price at which the Administrative Agent sells.
SECTION 12. Security Interest Absolute. All rights of the Administrative
Agent hereunder, the grant of a security interest in the Collateral and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the foregoing,
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Pledgor in
respect of the Obligations or in respect of this Agreement (other than the
indefeasible payment in full of all the Obligations).
SECTION 13. Termination or Release. (a) This Agreement and the security
interests granted hereby shall terminate when all the Obligations have been paid
in full and the Lenders have no further commitment to lend under the Credit
Agreement, the LC Exposure has been reduced to zero and the Issuing Bank has no
further obligation to issue Letters of Credit under the Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any Collateral that
is permitted under the Credit Agreement to any Person that is not a Pledgor, or,
upon the effectiveness of any written consent to the release of the security
interest granted hereby in any Collateral pursuant to Section 9.02 of the Credit
Agreement, the security interest in such Collateral shall be automatically
released.
(c) In connection with any termination or release pursuant to paragraph
(a) or (b), the Administrative Agent shall execute and deliver to any Pledgor,
at such Pledgor's expense, all documents that such Pledgor shall reasonably
request to evidence such termination or release. Any execution and delivery of
documents pursuant to this Section 13 shall be without recourse to or warranty
by the Administrative Agent.
SECTION 14. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Pledgor shall be given to
it in care of the Borrower at the address set forth in the Credit Agreement.
SECTION 15. Further Assurances. Each Pledgor agrees to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Administrative Agent may at any
time reasonably request in connection with the administration and enforcement of
this Agreement or with respect to the Collateral or any part thereof or in order
better to assure and confirm unto the Administrative Agent its rights and
remedies hereunder.
SECTION 16. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Pledgor that are contained in
this Agreement shall bind and inure to the benefit of its successors and
assigns. This
-9-
<PAGE> 10
Agreement shall become effective as to any Pledgor when a counterpart hereof
executed on behalf of such Pledgor shall have been delivered to the
Administrative Agent and a counterpart hereof shall have been executed on behalf
of the Administrative Agent, and thereafter shall be binding upon such Pledgor
and the Administrative Agent and their respective successors and assigns, and
shall inure to the benefit of such Pledgor, the Administrative Agent and the
other Secured Parties, and their respective successors and assigns, except that
no Pledgor shall have the right to assign its rights hereunder or any interest
herein or in the Collateral (and any such attempted assignment shall be void),
except as expressly contemplated by this Agreement or the other Loan Documents.
In the event that a Pledgor ceases to be a Subsidiary pursuant to a transaction
permitted under the Loan Documents, such Pledgor shall be released from its
obligations under this Agreement without further action. This Agreement shall be
construed as a separate agreement with respect to each Pledgor and may be
amended, modified, supplemented, waived or released with respect to any Pledgor
without the approval of any other Pledgor and without affecting the obligations
of any other Pledgor hereunder.
SECTION 17. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by each Pledgor herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Administrative Agent and the other Secured Parties
and shall survive the making by the Lenders of the Loans and the issuance of
Letters of Credit by the Issuing Bank, regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect as long as any Obligation remains unpaid and as long as the Commitments
have not been terminated or the LC Exposure does not equal zero.
(b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 18. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute a single contract, and shall become effective
as provided in Section 16. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart of this Agreement.
SECTION 20. Rules of Interpretation. The rules of interpretation specified
in Section 1.03 of the Credit Agreement shall be applicable to this Agreement.
Section headings used herein are for convenience of reference only, are not part
of this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting this Agreement.
SECTION 21. Jurisdiction; Consent to Service of Process. (a) Each Pledgor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate
-10-
<PAGE> 11
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement or the other Loan Documents, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that, to the extent permitted by applicable law, all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent
or any other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Pledgor or
its properties in the courts of any jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 14. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 22. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 23. Additional Pledgors. Pursuant to Section 5.12 of the Credit
Agreement, each Subsidiary Loan Party that was not in existence or not a
Subsidiary Loan Party on the date of the Credit Agreement is required to enter
into this Agreement as a Subsidiary Pledgor upon becoming a Subsidiary Loan
Party. Upon execution and delivery by the Administrative Agent and a Subsidiary
of an instrument in the form of Annex 1, such Subsidiary shall become a
Subsidiary Pledgor hereunder with the same force and effect as if originally
named as a Subsidiary Pledgor herein. The execution and delivery of such
instrument shall not require the consent of any Pledgor hereunder. The rights
and obligations of each Pledgor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Pledgor as a party to this
Agreement.
-11-
<PAGE> 12
SECTION 24. Execution of Financing Statements. Pursuant to Section 9-402
of the Uniform Commercial Code as in effect in the State of New York, each
Pledgor authorizes the Administrative Agent to file financing statements with
respect to the Collateral owned by it without the signature of such Pledgor 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.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
WORLDWIDE FLIGHT SERVICES, INC.,
By /s/ Peter A. Pappas
---------------------------------
Name:
Title:
WFS HOLDINGS, INC.,
By /s/ Marcel Fournier
---------------------------------
Name: Marcel Fournier
Title: President
EACH OF THE OTHER SUBSIDIARIES LISTED
ON SCHEDULE I HERETO,
By /s/ Peter A. Pappas
---------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent,
By /s/ Bruce Borden
---------------------------------
Name: Bruce Borden
Title:Vice President
-12-
<PAGE> 1
EXHIBIT 12.1
WORLDWIDE FLIGHT SERVICES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Year Ended December 31, 6 Months 3 Mths 3 Mths
Ended June Ended March Ended June
30, 31, 30,
------------------------------------------- ---------- ----------- ----------
1994 1995 1996 1997 1998 1998 1999 1999
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Earnings (loss) from
continuing operations
before income taxes and
extraordinary loss $ 4,915 $ 5,386 $ 7,450 $ 7,695 $10,794 $ 4,405 $ 1,619 $ 1,126
Add: Total fixed charges (per below) 3,461 4,010 4,550 3,686 4,532 2,161 1,214 2,787
Less: Interest capitalized 0 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- ------- -------
Total earnings $ 8,376 $ 9,396 $12,000 $11,381 $15,326 $ 6,566 $ 2,833 $ 3,913
======= ======= ======= ======= ======= ======= ======= =======
Fixed charges:
Interest $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 1,464
Portion of rental expenses
representative of the
interest factor 3,461 4,010 4,550 3,686 4,532 $ 2,161 1,214 1,231
Amortization of debt expense 0 0 0 0 0 0 0 92
------- ------- ------- ------- ------- ------- ------- -------
Total fixed charges $ 3,461 $ 4,010 $ 4,550 $ 3,686 $ 4,532 $ 2,161 $ 1,214 $ 2,787
======= ======= ======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges 2.4x 2.3x 2.6x 3.1x 3.4x 3.0x 2.3x 1.4x
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 12.2
MIAMI AIRCRAFT SUPPORT, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
6 Months 6 Months
Ended Ended
Year Ended December 31, June 30, June 30,
------------------------------------------------------- -------- --------
1994 1995 1996 1997 1998 1998 1999
Earnings: (In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) from
continuing operations
before income taxes and
extraordinary loss $ 1,565 $ 2,618 $ 2,511 $ 3,001 $ 4,980 $ 1,116 $ 1,886
Add: Total fixed charges (per
below) 1,179 1,778 1,572 2,107 2,442 1,021 1,111
Less: Interest capitalized 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- -------
Total earnings $ 2,744 $ 4,396 $ 4,083 $ 5,108 $ 7,422 $ 2,137 $ 2,997
======= ======= ======= ======= ======= ======= =======
Fixed charges:
Interest $ 361 $ 559 $ 621 $ 516 $ 563 $ 285 $ 260
Portion of rental expenses
representative of the
interest factor 818 1,219 951 1,591 1,879 736 851
Amortization of debt
expense 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- -------
Total fixed charges $ 1,179 $ 1,778 $ 1,572 $ 2,107 $ 2,442 $ 1,021 $ 1,111
======= ======= ======= ======= ======= ======= =======
Ratio of earnings to fixed
charges 2.3x 2.5x 2.6x 2.4x 3.0x 2.1x 2.7x
======= ======= ======= ======= ======= ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 21
<TABLE>
<CAPTION>
Subsidiaries of Worldwide Flight State or Other Jurisdiction of Names under which Subsidiaries do
Services, Inc. Incorporation or Organization Business
- --------------------------------- ----------------------------- ----------------------------------
<S> <C> <C>
Worldwide Flight Finance Company Delaware Worldwide Flight Finance Company
Worldwide Flight Security Service Delaware Worldwide Flight Security Service
Corporation Corporation
Miami International Airport Cargo Florida Miami International Airport Cargo
Facilities & Services, Inc. Facilities & Services, Inc.
International Enterprises Group, Inc. Florida International Enterprises Group, Inc.
Miami Aircraft Support, Inc. Delaware Miami Aircraft Support, Inc.
Aerolink International, Inc. Pennsylvania Aerolink International, Inc.
Aerolink Maintenance, Inc. Pennsylvania Aerolink Maintenance, Inc.
Aerolink Management, Inc. Pennsylvania Aerolink Management, Inc.
Aerolink International, L.P. Pennsylvania Aerolink International, L.P.
Aerolink International Services, Inc. Canada Aerolink International Services, Inc.
Worldwide Flight Services (U.K.) Limited United Kingdom Worldwide Flight Services (U.K.) Limited
Worldwide Flight Services Fueling (Hong Hong Kong Worldwide Flight Services Fueling (Hong
Kong) Limited Kong) Limited
Worldwide Flight Services France France Worldwide Flight Services France
Holding, S.A. Holding, S.A.
Societe de Fret et de Services France Societe de Fret et de Services
SF Maintenance SARL France SF Maintenance SARL
SF Formation SARL France SF Formation SARL
Etudes Realisation et de Services France Etudes Realisation et de Services
Informatiques SARL Informatiques SARL
SFS Servicios Aeroportuarios, S.A. Spain SFS Servicios Aeroportuarios, S.A.
</TABLE>
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
Miami Aircraft Support, Inc.:
We consent to the inclusion of our report dated February 26, 1999, except as to
note 11 which is as of May 28, 1999, relating to the consolidated balance sheets
of Miami Aircraft Support, Inc. as of December 31, 1997 and 1998 and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1998, which report
appears in the registration statement of Worldwide Flight Services, Inc. and to
the reference of our firm under the heading "Experts".
/s/ KPMG LLP
October 1, 1999
<PAGE> 1
EXHIBIT 25
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [ ]
-----------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
-----------------
WORLDWIDE FLIGHT SERVICES, INC.
(Exact name of obligor as specified in its charter)
Delaware 75-1932711
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Table of Co-Registrants
<TABLE>
<S> <S> <C>
Worldwide Flight Finance Company Delaware 75-2533058
Worldwide Flight Security Service Corporation Delaware 75-2276559
Miami International Airport Cargo Florida 59-2550848
Facilities & Services, Inc.
International Enterprises Group, Inc. Florida 65-0117574
Miami Aircraft Support, Inc. Delaware 59-2096579
Aerolink International, Inc. Pennsylvania 25-1559013
Aerolink Maintenance, Inc. Pennsylvania 25-1579442
Aerolink Management, Inc. Pennsylvania 25-1824429
Aerolink International, L.P. Pennsylvania 25-6449621
</TABLE>
1001 West Euless Boulevard
Suite 320
Euless, Texas 76040
(Address of principal executive offices) (Zip code)
-----------------
12-1/4% Series B Senior Notes due 2007
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Superintendent of Banks of 2 Rector Street, New York,
the State of New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with
Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 24th day of September, 1999.
THE BANK OF NEW YORK
By: /s/ MICHELE L. RUSSO
-------------------------------------
Name: MICHELE L. RUSSO
Title: ASSISTANT TREASURER
<PAGE> 4
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1999,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS In Thousands
- ------ ------------
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.........................................$5,597,807
Interest-bearing balances...................................................................4,075,775
Securities:
Held-to-maturity securities...................................................................785,167
Available-for-sale securities...............................................................4,159,891
Federal funds sold and Securities purchased under agreements to resell...........................2,476,963
Loans and lease financing receivables:
Loans and leases, net of unearned income...................................................38,028,772
LESS: Allowance for loan and lease losses....................................................568,617
LESS: Allocated transfer risk reserve.........................................................16,352
Loans and leases, net of unearned income, allowance, and reserve...........................37,443,803
Trading Assets...................................................................................1,563,671
Premises and fixed assets (including capitalized leases)...........................................683,587
Other real estate owned.............................................................................10,995
Investments in unconsolidated subsidiaries and associated companies................................184,661
Customers' liability to this bank on acceptances outstanding.......................................812,015
Intangible assets................................................................................1,135,572
Other assets.................................................................................... 5,607,019
-----------
Total assets...................................................................................$64,536,926
===========
LIABILITIES
- -----------
Deposits:
In domestic offices.......................................................................$26,488,980
Noninterest-bearing........................................................................10,626,811
Interest-bearing...........................................................................15,862,169
In foreign offices, Edge and Agreement subsidiaries, and IBFs..............................20,655,414
Non-interest-bearing..........................................................................156,471
Interest-bearing...........................................................................20,498,943
Federal funds purchased and Securities sold under agreements to repurchase.......................3,729,439
Demand notes issued to the U.S. Treasury...........................................................257,860
Trading liabilities..............................................................................1,987,450
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
Other borrowed money:
With remaining maturity of one year or less...................................................496,235
With remaining maturity of more than one year through three years.................................465
With remaining maturity of more than three years...............................................31,080
Bank's liability on acceptances executed and outstanding...........................................822,455
Subordinated notes and debentures................................................................1,308,000
Other liabilities............................................................................... 2,846,649
Total liabilities...............................................................................58,624,027
EQUITY CAPITAL
- --------------
Common stock.....................................................................................1,135,284
Surplus............................................................................................815,314
Undivided profits and capital reserves...........................................................4,001,767
Net unrealized holding gains (losses) on available-for-sale securities..............................(7,956)
Cumulative foreign currency translation adjustments................................................(31,510)
Total equity capital............................................................................ 5,912,899
Total liabilities and equity capital...........................................................$64,536,926
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Directors:
Thomas A. Reyni
Alan R. Griffith
Gerald L. Hassell
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
WORLDWIDE FLIGHT SERVICES, INC.
OFFER TO EXCHANGE ITS
12 1/4% SENIOR NOTES DUE 2007,
SERIES B (THE "NEW NOTES") FOR ALL OF ITS OUTSTANDING
12 1/4% SENIOR NOTES DUE 2007,
SERIES A (THE "ORIGINAL NOTES")
- -------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON _____,
1999, UNLESS EXTENDED BY THE COMPANY (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- -------------------------------------------------------------------------------
Delivery To: The Bank of New York, Exchange Agent
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Delivery Service:
The Bank of New York The Bank of New York
101 Barclay Street, Floor 7E 101 Barclay Street
New York, New York 10286 Corporate Trust Service Window, Ground Level
Attn: Enrique Lopez, Reorganization Dept. - 7E New York, New York 10286
Attn: Enrique Lopez, Reorganization Dept. - 7E
</TABLE>
By Facsimile Transmission:
(212) 815-4699
(Telephone Confirmation)
(212) 815-2742
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, WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE> 2
The Company reserves the right, at any time or from time to time, to
extend the Exchange Offer at its sole discretion, in which event the term
"Expiration Date" shall mean the latest time and date to which the Exchange
Offer is extended. The Company shall notify the holders of the Original Notes
of any extension by means of a press release or other public announcement prior
to 9:00 A.M., New York City time, on the next business day after the previously
scheduled Expiration Date.
This Letter of Transmittal is to be completed by a holder of Original
Notes either if certificates are to be forwarded herewith or if a tender of
certificates for Original Notes, if available, is to be made by book-entry
transfer to the account maintained by the Exchange Agent at The Depository
Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures
set forth in the Prospectus under the caption "The Exchange Offer-Book-Entry
Transfer." Holders of Original Notes whose certificates are not immediately
available, or who are unable to deliver their certificates or confirmation of
the book-entry tender of their Original Notes into the Exchange Agent's account
at the Book-Entry Transfer Facility (a "Book-Entry Confirmation") and all other
documents required by this Letter to the Exchange Agent on or prior to the
Expiration Date, must tender their Original Notes according to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The Exchange
Offer-Guaranteed Delivery Procedures." See Instruction 1. Delivery of documents
to the Book-Entry Transfer Facility does not constitute delivery to the
Exchange Agent.
List below the Original Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the certificate numbers and
principal amount of Original Notes should be listed on a separate signed
schedule affixed hereto.
<TABLE>
<CAPTION>
- -------------------------------------------------- ------------------------ --------------------- --------------------
DESCRIPTION OF ORIGINAL NOTES 1 2 3
- -------------------------------------------------- ------------------------ --------------------- --------------------
Name (s) and Address (es) of Aggregate Principal Principal
Registered Holder (s) Certificate Amount of Original Amount
(Please fill in, if blank) Number (s)* Note (s) Tendered **
- -------------------------------------------------- ------------------------ --------------------- --------------------
<S> <C> <C> <C>
------------------------ --------------------- --------------------
------------------------ --------------------- --------------------
------------------------ --------------------- --------------------
</TABLE>
- ------------------
* Need not be completed if Original Notes are being tendered by
book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to
have tendered all of the Original Notes represented by the Original
Notes indicated in column 2. See Instruction 2. Original Notes
tendered hereby must be in denominations of principal amount of $1,000
and any integral multiple thereof. See Instruction 1.
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
------------------------ --------------------- --------------------
------------------------ --------------------- --------------------
Total
- -------------------------------------------------- ------------------------ --------------------- --------------------
</TABLE>
START HERE
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE
AGENT WITH THE DEPOSITORY TRUST COMPANY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Account Number: Transaction Code Number:
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE
AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
-------------------------------
Window Ticket Number (if any):
-------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------
Name of Institution which guaranteed delivery:
----------------
If delivered by book-entry transfer, complete the following:
Account Number: Transaction Code Number:
----------- ----------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE COPIES OF
THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO AND
COMPLETE THE FOLLOWING:
Name:
------------------------------------------
Address:
------------------------------------------
<PAGE> 4
Ladies and Gentlemen:
The undersigned hereby tenders to Worldwide Flight Services, Inc. (the
"Company"), the aggregate principal amount of Original Notes indicated in this
Letter of Transmittal, upon the terms and subject to the conditions set forth
in the Company's Prospectus dated _______________, 1999 (the "Prospectus"),
receipt of which is hereby acknowledged, and in this Letter of Transmittal,
which together constitute the Company's offer (the "Exchange Offer") to
exchange $1,000 principal amount of its 12 1/4% Senior Notes Due 2007, Series B
(the "New Notes"), which have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), for each $1,000 principal amount of its
issued and outstanding 12 1/4% Senior Notes Due 2007, Series A, of which
$130,000,000 aggregate principal amount was issued on August 12, 1999 and
outstanding on the date of the Prospectus (the "Original Notes" and, together
with the New Notes, the "Notes"). Capitalized terms which are not defined
herein are used herein as defined in the Prospectus.
Subject to, and effective upon, the acceptance for exchange of the
Original Notes tendered hereby, the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Company all right, title and interest
in and to such Original Notes as are being tendered hereby and hereby
irrevocably constitutes and appoints the Exchange Agent the attorney-in-fact of
the undersigned with respect to such Original Notes, with full power of
substitution (such power of attorney being an irrevocable power coupled with an
interest), to:
(a) deliver such Original Notes in registered certificated form, or
transfer ownership of such Original Notes through book-entry transfer at the
Book-Entry Transfer Facility, to or upon the order of the Company, upon receipt
by the Exchange Agent, as the undersigned's agent, of the same aggregate
principal amount of New Notes; and
(b) receive, for the account of the Company, all benefits and
otherwise exercise, for the account of the Company, all rights of beneficial
ownership of the Original Notes tendered hereby in accordance with the terms of
the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to tender, sell, assign and transfer the Original
Notes tendered hereby and that the Company will acquire good, marketable and
unencumbered title thereto, free and clear of all security interests, liens,
restrictions, charges, encumbrances, conditional sale agreements or other
obligations relating to their sale or transfer, and not subject to any adverse
claim when the same are accepted by the Company.
The Exchange Offer is subject to certain conditions as set forth in
the Prospectus under the caption "Exchange Offer-Conditions." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by the Company) as more particularly set forth in the Prospectus,
the Company may not be required to exchange any of the Original Notes tendered
hereby and, in such event, the Original Notes not exchanged will be returned to
the undersigned.
<PAGE> 5
By tendering, each holder of the Original Notes who wishes to exchange
Original Notes for New Notes in the Exchange Offer represents and acknowledges,
for the holder and for each beneficial owner of such Original Notes, whether or
not the beneficial owner is the holder, that: (i) the New Notes to be acquired
by the holder and each beneficial owner, if any, are being acquired in the
ordinary course of business; (ii) neither the holder nor any beneficial owner
is an affiliate, as defined in Rule 405 of the Securities Act of the Company or
any of the Company's subsidiaries; (iii) any person participating in the
Exchange Offer with the intention or purpose of distributing New Notes received
in exchange for Original Notes, including a broker-dealer that acquired
Original Notes directly from the Company, but not as a result of market-making
activities or other trading activities, will comply with the registration and
prospectus delivery requirements of the Securities Act, in connection with a
secondary resale of the New Notes acquired by such person; (iv) if the holder
is not a broker-dealer, the holder and each beneficial owner, if any, are not
participating, do not intend to participate and have no arrangement or
understanding with any person to participate in any distribution of the New
Notes received in exchange for Original Notes; and (v) if the holder is a
broker-dealer that will receive New Notes for the holder's own account in
exchange for Original Notes, the Original Notes to be so exchanged were
acquired by the holder as a result of market-making or other trading activities
and the holder will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes received in the
Exchange Offer. However, by so representing and acknowledging and by delivering
a prospectus, the holder will not be deemed to admit that it is an underwriter
within the meaning of the Securities Act. The undersigned has read and agrees
to all of the terms of the Exchange Offer.
The Company has agreed that, subject to the provisions of the
Registration Rights Agreement, the Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer
(as defined below) in connection with resales of New Notes received in exchange
for Original Notes, where such Original Notes were acquired by such
Participating Broker-Dealer for its own account as a result of market-making
activities or other trading activities, for a period ending 180 days after the
consummation of the exchange offer or such shorter period as will terminate
when all registrable securities covered by the registration statement have been
sold pursuant thereto (the "Effective Date") (subject to extension under
certain limited circumstances described in the Prospectus). In that regard,
each broker-dealer who acquired Original Notes for its own account as a result
of market-making or other trading activities (a "Participating Broker-Dealer"),
by tendering such Original Notes and executing this Letter of Transmittal or
effecting delivery of an Agent's message in lieu thereof, agrees that, upon
receipt of notice from the Company of the occurrence of any event or the
discovery of any fact which makes any statement contained or incorporated by
reference in the Prospectus untrue in any material respect or which cause the
Prospectus to omit to state a material fact necessary in order to make the
statements contained or incorporated by reference therein, in light of the
circumstances under which they were made, not misleading or of the occurrence
of certain other event specified in the Registration Rights Agreement, such
Participating Broker-Dealer will suspend the sale of New Notes pursuant to the
Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission and has furnished copies of the amended
or supplemented Prospectus to the Participating Broker-Dealer or the Company
has given notice that the sale of the New Notes may be resumed, as the case may
be. If the
<PAGE> 6
Company gives such notice to suspend the sale of the New Notes, it shall extend
the 180-day period referred to above during which Participating Broker-Dealer
are entitled to use the Prospectus in connection with the resale of New Notes
by the number of days during the period from and including the date of the
giving of such notice to and including the date when Participating
Broker-Dealers shall have received copies of the supplemented or amended
Prospectus necessary to permit resales of the New Notes or to and including the
date on which the Company has given notice that the sales of New Notes may be
resumed, as the case may be.
As a result, a Participating Broker-Dealer who intends to use the
Prospectus in connection with resales of New Notes received in exchange for
Original Notes pursuant to the Exchange Offer must notify the Company, or cause
the Company to be notified, on or prior to the Expiration Date, that it is a
Participating Broker-Dealer. Such notice may be given in the space provided
above or may be delivered to the Exchange Agent at the address set forth in the
Prospectus under "The Exchange Offer-Exchange Agent."
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Original Notes tendered hereby. All
authority conferred or agreed to be conferred in this Letter of Transmittal and
every obligation of the undersigned hereunder shall be binding upon the
successors, assigns, heirs, executors, administrators, trustees in bankruptcy
and legal representatives of the undersigned and shall not be affected by, and
shall survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in the Prospectus
under the caption "The Exchange Offer-Withdrawal of Tenders."
Unless otherwise indicated herein in the box entitled "Special
Issuance Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Original Notes for any Original Notes not
exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Original Notes, please credit the account indicated above
maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise
indicated under the box entitled "Special Delivery Instructions" below, please
send the New Notes (and, if applicable, substitute certificates representing
Original Notes for any Original Notes not exchanged) to the undersigned at the
address shown above in the box entitled "Description of Original Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF
ORIGINAL NOTES" ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO
HAVE TENDERED THE ORIGINAL NOTES AS SET FORTH IN SUCH BOX ABOVE.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF (TOGETHER
WITH THE CERTIFICATES FOR ORIGINAL NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL
OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED
BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE.
<PAGE> 7
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE
COMPLETION.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4) (SEE INSTRUCTIONS 3 AND 4)
<S> <C>
To be completed ONLY if certificates for To be completed ONLY if certificates for
Original Notes not exchanged and/or New Original Notes not exchanged and/or New
Notes are to be issued in the name of and Notes are to be sent to someone other than
sent to someone other than the person or the person or persons whose signature(s)
persons whose signature(s) appear(s) below appear(s) below on this Letter of
on this Letter of Transmittal, or if Transmittal or to such person or persons at
Original Notes delivered by book-entry an address other than shown above in the
transfer which are not accepted for box entitled "Description of Original
exchange are to be returned by credit to an Notes" on this Letter of Transmittal.
account maintained at the Book-Entry
Transfer Facility other than the account
indicated above.
Issue: New Notes and/or Original Notes to: Mail: New Notes and/or Original Notes to:
Name(s): Name(s):
----------------------------------- -------------------------------------
(PLEASE TYPE OR PRINT) (PLEASE TYPE OR PRINT)
- -------------------------------------------- ----------------------------------------------
(PLEASE TYPE OR PRINT) (PLEASE TYPE OR PRINT)
Address: Address:
----------------------------------- -------------------------------------
- -------------------------------------------- ----------------------------------------------
(ZIP CODE) (ZIP CODE)
- --------------------------------------------
Taxpayer Identification Number
(Social Security Number or Employer
Identification Number)
[ ] Credit unexchanged Original Notes
delivered by book-entry transfer to the
Book-Entry Transfer Facility account
set forth below:
----------------------------------------
(Book-Entry Transfer Facility
Account Number, if applicable)
</TABLE>
<PAGE> 8
THIS PAGE MUST BE COMPLETED BY ALL TENDERING HOLDERS
(Complete Accompanying Substitute Form W-9 attached at the end of this
Letter of Transmittal)
-----------------------------
PLEASE SIGN HERE
---------------------- ---------------------------
---------------------- ---------------------------
---------------------- ---------------------------
SIGNATURE(S) OF OWNER(S)
___________________, 1999
Date
Area Code and Telephone Number: __________________
If a holder is tendering any Original Notes, this Letter of
Transmittal must be signed by the registered holder(s) as the name(s) appear(s)
on the certificate(s) for the Original Notes or on a securities position
listing or by any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, officer or other person acting in a
fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s):
------------------------------------------------
------------------------------------------------
(Please Type or Print)
Capacity:
--------------------------------------
Address:
--------------------------------------
------------------------------------------------
(Including Zip Code)
<PAGE> 9
SIGNATURE GUARANTEE
(If required by Instruction 3)
Signature(s) Guaranteed by an Eligible Institution:
------------------------------------
(Authorized Signature)
-----------------------------------------------------
(Title)
------------------------------------------------------
(Name and Firm)
Dated:__________________ 1999
<PAGE> 10
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND NOTES; GUARANTEED
DELIVERY PROCEDURES.
This Letter of Transmittal is to be completed by holders of Original
Notes either if certificates are to be forwarded herewith or if tenders are to
be made pursuant to the procedures for delivery by book-entry transfer set
forth in the Prospectus under the caption "The Exchange Offer-Book-Entry
Transfer." Certificates for all physically tendered Original Notes, or
Book-Entry Confirmation, as the case may be, as well as a properly completed
and duly executed Letter of Transmittal (or manually signed facsimile hereof)
and any other documents required by this Letter of Transmittal, must be
received by the Exchange Agent at the address set forth herein on or prior to
the Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Original Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
Holders of Original Notes whose certificates for Original Notes are
not immediately available or who cannot deliver their certificates and all
other required documents to the Exchange Agent on or prior to the Expiration
Date, or who cannot complete the procedure for book-entry transfer on a timely
basis, may tender their Original Notes pursuant to the guaranteed delivery
procedures set forth in the Prospectus under the caption "The Exchange
Offer--Guaranteed Delivery Procedures." Pursuant to such procedures, (i) such
tender must be made through an Eligible Institution (as defined below), (ii) on
or prior to the Expiration Date, the Exchange Agent must receive from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Original Notes, the certificate number or numbers of
such Original Notes and the amount of Original Notes tendered, stating that the
tender is being made thereby and guaranteeing that within three business days
after the Expiration Date the Letter of Transmittal, or facsimile thereof,
together with the certificate(s) representing the Original Notes to be tendered
in proper form for transfer 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 Original Notes, in
proper form for transfer, or Book-Entry Confirmation, as the case may be,
together with a properly completed and duly executed Letter of Transmittal and
all other documents required by this Letter of Transmittal, are received by the
Exchange Agent within three NYSE trading days after the Expiration Date.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE ORIGINAL
NOTES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
TENDERING HOLDERS, BUT THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS
RECOMMENDED THAT HOLDERS
<PAGE> 11
USE AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. DO NOT SEND
THIS LETTER OF TRANSMITTAL OR ANY ORIGINAL NOTES TO THE COMPANY.
See the section entitled "The Exchange Offer" of the Prospectus for
more information.
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS OF ORIGINAL NOTES WHO
TENDER BY BOOK-ENTRY TRANSFER); WITHDRAWAL RIGHTS
Tenders of Original Notes will be accepted only in the principal
amount of $1,000 and integral multiples thereof. If less than all of the
Original Notes evidenced by a submitted certificate are to be tendered, the
tendering holder(s) should fill in the aggregate principal amount of Original
Notes to be tendered in the box above entitled "Description of Original
Notes--Principal Amount Tendered." A reissued certificate representing the
balance of nontendered Original Notes will be sent to such tendering holder,
unless otherwise provided in the appropriate box on this Letter of Transmittal,
promptly after the Expiration Date. ALL OF THE ORIGINAL NOTES DELIVERED TO THE
EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED.
Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written, telegraphic,
telex or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth above on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Original Notes to be withdrawn, the
aggregate principal amount of Original Notes to be withdrawn and (if
certificates for such Original Notes have been tendered) the name of the
registered holder of the Original Notes as set forth on the certificate for the
Original Notes, if different from that of the person who tendered such Original
Notes. If certificates for the Original Notes have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such
certificates for the Original Notes, the tendering holder must submit the
serial numbers shown on the particular certificates for the Original Notes to
be withdrawn and the signature on the notice of withdrawal must be guaranteed
by an Eligible Institution, except in the case of Original Notes tendered for
the account of an Eligible Institution. If Original Notes have been tendered
pursuant to the procedures for book-entry transfer set forth in the Prospectus
under the caption "The Exchange Offer-Book-Entry Transfer," the notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawal of Original Notes, in
which case a notice of withdrawal will be effective if delivered to the
Exchange Agent by written, telegraphic, telex or facsimile transmission.
Withdrawals of tenders of Original Notes may not be rescinded. Original Notes
properly withdrawn will not be deemed to have been validly tendered for
purposes of the Exchange Offer, and no New Notes will be issued with respect
thereto unless the
<PAGE> 12
Original Notes so withdrawn are validly retendered. Properly withdrawn Original
Notes may be retendered at any subsequent time on or prior to the Expiration
Date by following the procedures described in the Prospectus under the caption
"The Exchange Offer-Procedures for Tendering."
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Company, in
its sole discretion, whose determination shall be final and binding on all
parties. Neither the Company, any employees, agents, affiliates or assigns of
the Company, the Exchange Agent nor any other person shall be under any duty to
give any notification of any irregularities in any notice of withdrawal or
incur any liability for failure to give such notification. Any Original Notes
which have been tendered but which are withdrawn will be returned to the holder
thereof without cost to such holder as promptly as practicable after
withdrawal.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES
If this Letter of Transmittal is signed by the registered holder of
the Original Notes tendered hereby, the signature must correspond exactly with
the name as written on the face of the certificates or on a securities position
listing without any change whatsoever.
If any tendered Original Notes are owned of record by two or more
joint owners, all of such owners must sign this Letter of Transmittal.
If any tendered Original Notes are registered in different names on
several certificates or securities positions listings, it will be necessary to
complete, sign and submit as many separate copies of this Letter as there are
different registrations.
When this Letter of Transmittal is signed by the registered holder or
holders of the Original Notes specified herein and tendered hereby, no
endorsements of certificates or separate bond powers are required. If, however,
the New Notes are to be issued, or any untendered Original Notes are to be
reissued, to a person other than the registered holder, then endorsements of
any certificates transmitted hereby or separate bond powers are required.
Signatures on such documents must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder or holders of any certificate(s) specified herein, such
certificate(s) 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(s) on the certificate(s), and the signatures on such
certificate(s) must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted.
<PAGE> 13
ENDORSEMENTS ON CERTIFICATES FOR ORIGINAL NOTES OR SIGNATURES ON BOND
POWERS REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED 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 (EACH AN
"ELIGIBLE INSTITUTION").
SIGNATURES ON THIS LETTER OF TRANSMITTAL NEED NOT BE GUARANTEED BY AN
ELIGIBLE INSTITUTION, PROVIDED THE ORIGINAL NOTES ARE TENDERED: (i) BY A
REGISTERED HOLDER OF ORIGINAL NOTES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE
OFFER, INCLUDES ANY PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM
WHOSE NAME APPEARS ON A SECURITY POSITION LISTING AS THE HOLDERS OF SUCH
ORIGINAL NOTES) WHO HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE
INSTRUCTIONS" OR "SPECIAL DELIVERY INSTRUCTIONS" ON THIS LETTER OR (ii) FOR THE
ACCOUNT OF AN ELIGIBLE INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Original Notes should indicate in the applicable
box the name and address to which New Notes issued pursuant to the Exchange
Offer and/or substitute certificates evidencing Original Notes not exchanged
are to be issued or sent, if different from the name or address of the person
signing this Letter of Transmittal. In the case of issuance in a different
name, the employer identification or social security number of the person named
must also be indicated. A holder of Original Notes tendering Original Notes by
book-entry transfer may request that Original Notes not exchanged be credited
to such account maintained at the Book-Entry Transfer Facility as such holder
may designate hereon. If no such instructions are given, such Original Notes
not exchanged will be returned to the name or address of the person signing
this Letter of Transmittal or credited to the account maintained by such person
at the Book-Entry Transfer Facility, as the case may be.
5. SUBSTITUTE FORM W-9.
The holder tendering Original Notes in exchange for New Notes is
required to provide the Exchange Agent with a correct taxpayer identification
number ("TIN") on Substitute Form W-9, which is provided below. FAILURE TO
PROVIDE THE CORRECT INFORMATION ON THE FORM OR AN ADEQUATE BASIS FOR AN
EXEMPTION MAY SUBJECT THE HOLDER TO A $50 OR $500 PENALTY IMPOSED BY THE
INTERNAL REVENUE SERVICE. WILLFULLY FALSIFYING CERTIFICATIONS OR AFFIRMATIONS
MAY RESULT IN CRIMINAL PENALTIES. IN ADDITION, BACKUP WITHHOLDING AT THE RATE
OF 31% MAY BE IMPOSED UPON ANY PAYMENTS OF PRINCIPAL OF, AND INTEREST ON, AND
THE PROCEEDS OF DISPOSITION OF, A NEW NOTE. IF WITHHOLDING RESULTS IN AN
OVERPAYMENT OF TAXES, A REFUND MAY BE OBTAINED. Write "Applied For" in the
space for the TIN if the holder has
<PAGE> 14
not been issued a TIN and has applied for a number or intends to apply for a
number in the near future. If the Exchange Agent is not provided with a TIN
within 60 days, the Exchange Agent, if appropriate, will withhold 31% of any
payments of principal of and interest on, and the proceeds of disposition of, a
New Note until a TIN is provided to the Exchange Agent.
Exempt holders are not subject to backup withholding. To prevent
possible erroneous backup withholding, an exempt holder should enter its
correct TIN in Part I of the Substitute Form W-9, check Part II of such form,
and sign and date the form. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 (the "W-9 Guidelines")
for additional instructions. In order for a non-resident alien or foreign
entity to qualify as an exempt recipient, such person must submit a completed
Form W-8, Form W-8BEN or other successor form, signed under penalties of
perjury, attesting to the individual's exempt status. Such forms can be
obtained from the Exchange Agent.
The holder is required to give the Exchange Agent the TIN of the
record owner of the Original Notes. If the Original Notes are in more than one
name or are not in the name of the actual owner, consult the W-9 Guidelines for
additional guidance on which TIN to report.
If you do not have a TIN, consult the W-9 Guidelines for instructions
on applying for a TIN, write "Applied for" in the space for the TIN in Part I
of the Substitute Form W-9, and sign and date both signature lines on the form.
If you provide your TIN to the Exchange Agent within 60 days of the date the
Exchange Agent receives such form, amounts withheld during such 60 day period
will be refunded to you by the Exchange Agent. NOTE: WRITING "APPLIED FOR" ON
THE FORM MEANS THAT YOU HAVE ALREADY APPLIED FOR A TIN OR THAT YOU INTEND TO
APPLY FOR ONE IN THE NEAR FUTURE.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the
transfer of Original Notes to it or its order pursuant to the Exchange Offer.
If, however, New Notes and/or substitute Original Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person
other than the registered holder of the Original Notes tendered hereby, or if
tendered Original Notes are registered in the name of any person other than the
person signing this Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the transfer of Original Notes to the Company or its
order pursuant to the Exchange Offer, the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted herewith, the amount of such transfer
taxes will be billed directly to such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE ORIGINAL NOTES SPECIFIED IN THIS
LETTER OF TRANSMITTAL.
<PAGE> 15
7. DETERMINATION OF VALIDITY.
The Company will determine, in its sole discretion, all questions as
to the form of documents, validity, eligibility (including time of receipt) and
acceptance for exchange of any tender of Original Notes, which determination
shall be final and binding on all parties. The Company reserves the absolute
right to reject any and all tenders determined by it not to be in proper form
or the acceptance of which, or exchange for which, may, in the view of counsel
to the Company, be unlawful. The Company also reserves the absolute right,
subject to applicable law, to waive any of the conditions of the Exchange Offer
set forth in the Prospectus under the caption "The Exchange Offer" or any
conditions or irregularity in any tender of Original Notes of any particular
holder whether or not similar conditions or irregularities are waived in the
case of other holders.
The Company's interpretation of the terms and conditions of the
Exchange Offer (including this Letter of Transmittal and the instructions
hereto) will be final and binding. No tender of Original Notes will be deemed
to have been validly made until all irregularities with respect to such tender
have been cured or waived. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Original Notes, neither
the Company, any employees, agents, affiliates or assigns of the Company, the
Exchange Agent, nor any other person shall be under any duty to give
notification of any irregularities in tenders or incur any liability for
failure to give such notification.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Original Notes, by execution of this Letter
of Transmittal, shall waive any right to receive notice of the acceptance of
their Original Notes for exchange.
9. MUTILATED, LOST, STOLEN OR DESTROYED ORIGINAL NOTES.
Any holder whose Original Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests
for additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent, at the address and telephone number indicated
above.
Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9
Name. -- If you are an individual, you must generally enter the name
shown on your social security card. However, if you have changed your last
name, for instance, due to marriage, without informing the Social Security
Administration of the name change, enter your first name, the last name shown
on your social security card, and your new last name.
<PAGE> 16
If the account is in joint names, list first and then circle the name
of the person or entity whose number you enter in Part I of the form.
Sole Proprietor. -- You must enter your individual name as shown on
your social security card. You may enter your business, trade, or "doing
business as" name on the business name line.
Other Entities. -- Enter the business name as shown on required
Federal tax documents. This name should match the name shown on the charter or
other legal document creating the entity. You may enter any business, trade, or
"doing business as" name on the business name line.
Part I -- Taxpayer Identification Number ("TIN")
You must enter your TIN, which is generally a social security number
("SSN") or an employer identification number ("EIN"), in the appropriate box.
If you are a resident alien and you do not have and are not eligible to get an
SSN, your TIN is your IRS individual taxpayer identification number ("ITIN").
Enter it in the social security number box. If you do not have an ITIN, see How
To Get a TIN below.
If you are a sole proprietor and you have an EIN, you may enter either
your SSN or EIN. However, using your EIN may result in unnecessary notice to
the Exchange Agent.
Note: See the chart below for further clarification of name and TIN
combinations.
How To Get a TIN. -- If you do not have a TIN, apply for one
immediately. To apply for an SSN, get Form SS-5 from your local Social Security
Administration office. Get Form W-7 to apply for an ITIN or Form SS-4 to apply
for an EIN. You can get Forms W-7 and SS-4 from the IRS by calling
1-800-TAX-FORM (1-800-829-3676).
If you do not have a TIN, write "Applied For" in the space for the
TIN, sign and date the form, and give it to the Exchange Agent. For interest
and dividend payments, and certain payments made with respect to readily
tradable instruments, you will generally have 60 days to get a TIN and give it
to the Exchange Agent. Other payments are subject to backup withholding.
Note: Writing "Applied For" means that you have already applied for a
TIN or that you intend to apply for one soon.
Part II -- For Payees Exempt From Backup Withholding
Individuals (including sole proprietors) are not exempt from backup
withholding. Corporations are exempt from backup withholding for certain
payments, such as interest and dividends.
<PAGE> 17
If you are exempt from backup withholding, you should still complete
this form to avoid possible erroneous backup withholding. Enter your correct
TIN in Part I, check Part II of this form, and sign and date the form.
If you are a nonresident alien or a foreign entity not subject to
backup withholding, give the Exchange Agent a completed Form W-8, Form W-8BEN
or other successor form.
Part III -- Certification
For a joint account, only the person whose TIN is shown in Part I
should sign. You must sign the certification or backup withholding will apply.
If you are subject to backup withholding and you are merely providing your
correct TIN to the requester, you must cross out item 2 in the certification
before signing the form.
<TABLE>
<CAPTION>
What Name and Number To Give the Exchange Agent
-----------------------------------------------
For this type of account: Give name and SSN of:
------------------------- ---------------------
<S> <C>
1. Individual The individual
2. Two or more individuals The actual owner of the account
(joint account) or, if combined funds, the
first individual on the
account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust (grantor
is also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under state
law
5. Sole proprietorship The owner(3)
For this type of account: Give name and EIN of:
------------------------- ---------------------
6. Sole proprietorship The owner(3)
</TABLE>
- ---------------------
(1) List first and circle the name of the person whose number you furnish.
If only one person on a joint account has an SSN, that person's number
must be furnished.
(2) 2 Circle the minor's name and furnish the minor's SSN.
(3) You must show your individual name, but you may also enter your
business or "doing business as" name. You may use either your SSN or
EIN (if you have one).
<PAGE> 18
<TABLE>
<S> <C>
7. A valid trust, estate, or Legal entity(4)
pension trust
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or
other tax-exempt organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
</TABLE>
- ------------------
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the TIN of the personal representative or
trustee unless the legal entity itself is not designated in the
account title.)
Note: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
<PAGE> 19
SUBSTITUTE FORM W-9
PLEASE COMPLETE THIS FORM AND CERTIFY BY SIGNING AND DATING BELOW.
- ------------------------------------------------------
Name
- ------------------------------------------------------
Address (number, street, suite no.)
- ------------------------------------------------------
City, State and ZIP Code
PART I - TAXPAYER IDENTIFICATION NUMBER ("TIN")
Social Security Number or
Employer Identification Number
- ------------------------------------------------------
(If awaiting TIN write, "Applied For")
PART II -- FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING
Check if applicable:
[ ] Exempt from Backup Withholding
PART III -- CERTIFICATION
Under the penalties of perjury, I certify that:
(1) The number provided on this form is my correct taxpayer identification
number (or I am waiting for a number to be issued to me);
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service ("IRS") that I am subject to
backup withholding as a result of a failure to report all interest or
dividends or the IRS has notified me that I am no longer subject to
backup withholding; and
(3) Any other information provided on this form is true and correct.
You must strike out item (2) above if you have been notified by the
IRS that you are subject to backup withholding because of underreporting
interest or dividends on your tax return and you have not been notified by the
IRS that you are no longer subject to backup withholding.
<PAGE> 20
For instructions regarding completion of Substitute Form W-9, see
Instruction 5 above. The Internal Revenue Service does not require your consent
to any provision of this document other than the certifications required to
avoid backup withholding.
- ------------------------------------------------, 1999
SIGNATURE DATE
AWAITING TAXPAYER IDENTIFICATION NUMBER CERTIFICATE
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) 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 (2)
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 60 days, 31%
of any payments of the principal of and interest on, and the proceeds of
disposition of, the New Notes made to me thereafter will be withheld until I
provide a taxpayer identification number.
- ------------------------------------------------, 1999
SIGNATURE DATE
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY FOR
TENDER OF 12 1/4% SENIOR NOTES
DUE 2007, SERIES A OF WORLDWIDE FLIGHT SERVICES, INC.
This form or one substantially equivalent hereto must be used
to accept the Exchange Offer of Worldwide Flight Services, Inc. (the "Company"),
made pursuant to the Prospectus, dated ______, 1999 (the "Prospectus"), if
certificates for the outstanding 12 1/4% Senior Notes Due 2007, Series A of the
Company (the "Original Notes") are not immediately available or if the procedure
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach The Bank of New York (the "Exchange
Agent") on or prior to 5:00 p.m., New York City time, on the Expiration Date of
the Exchange Offer. This Notice of Guaranteed Delivery may be delivered or
transmitted by telegram, telex, facsimile transmission, mail or hand delivery to
the Exchange Agent as set forth below. See the sections entitled "The Exchange
Offer--Procedures for Tendering" and "The Exchange Offer--Guaranteed Delivery
Procedures" in the Prospectus. Capitalized terms used herein but not defined
herein have the respective meanings given to them in the Prospectus.
Delivery To: The Bank of New York, Exchange Agent
For information by Telephone:
(212) 815-2742
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Delivery Service:
The Bank of New York The Bank of New York
101 Barclay Street, Floor 7E 101 Barclay Street
New York, New York 10286 Corporate Trust Service Window, Ground Level
Attn: Enrique Lopez, Reorganization Dept. - 7E New York, New York 10286
Attn: Enrique Lopez, Reorganization Dept. - 7E
</TABLE>
By Facsimile Transmission:
(212) 815-4699
(Telephone Confirmation)
(212) 815-2742
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS
OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS
<PAGE> 2
NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE OTHER THEN AS SET FORTH ABOVE WILL
NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO
GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO
BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and
the related Letter of Transmittal, the undersigned hereby tenders to the Company
the principal amount of Original Notes set forth below, pursuant to the
guaranteed delivery procedures described in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures."
Aggregate Principal Amount Name(s) of Registered Holder(s):_________________
Principal Amount of Original Notes Tendered:*
Certificate Nos. (if available)
-------------------------------------------------
$
-------------------------------------------------------------------------------
If Original Notes will be delivered by book-entry transfer to
The Depository Trust Company, provide account number. Total Principal Amount
Represented by Original Notes Certificate(s):
$ Account Number
------------------------------------------- ---------------------
* Must be in denominations of principal amount of $1,000 and any integral
multiple thereof ANY AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED
SHALL SURVIVE THE DEATH OR INCAPACITY OF THE UNDERSIGNED, AND EVERY
OBLIGATION OF THE UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS,
PERSONAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED.
PLEASE SIGN HERE
X
----------------------------------------- --------------------------------
X
----------------------------------------- --------------------------------
Signature(s) of Owner(s) or Authorized Date
Signatory
<PAGE> 3
Area Code and Telephone Number:
------------------------------
Must be signed by the holder(s) of Original Notes as their
name(s) appear(s) on certificates for Original Notes or on a security position
listing, or by person(s) authorized to become registered holder(s) by
endorsement of documents transmitted with this Notice of Guaranteed Delivery. If
signature is by trustee, executor, administrator, guardian, attorney-in-fact,
officer or other person acting in a fiduciary or representative capacity, such
person must set forth his or her full title below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
----------------------------------------------
Capacity:
----------------------------------------------
Address(es):
----------------------------------------------
----------------------------------------------
----------------------------------------------
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a member of a registered national securities
exchange, or a member of the National Association of Securities Dealers, Inc.,
or a commercial bank or trust company having an office or correspondent in the
United States, hereby guarantees that the certificates representing the
principal amount of Original Notes tendered hereby in proper form for transfer,
or timely confirmation of the book-entry transfer of such Original Notes into
the Exchange Agent's account at The Depository Trust Company pursuant to the
procedures set forth in the Prospectus under the caption "The Exchange
Offer--Guaranteed Delivery Procedures," together with one or more properly
completed and duly executed Letter(s) of Transmittal (or a manually signed
facsimile thereof) with any required signature guarantee and any other documents
required by the Letter of Transmittal, will be received by the Exchange Agent at
the address set forth above, no later than three business days after the date of
execution hereof.
The undersigned acknowledges that it must deliver the Letter
of Transmittal (and any other required documents) and the Original Notes
tendered hereby to the Exchange Agent within the time set forth above and that
failure to do so could result in financial loss to the undersigned.
- --------------------------------- ----------------------------------
Name of Firm Authorized Signature
- --------------------------------- ----------------------------------
Address Title
- --------------------------------- ----------------------------------
Zip Code (Please Type or Print)
- --------------------------------- ----------------------------------
Area Code and Tel. No. Dated:
NOTE: DO NOT SEND CERTIFICATES FOR ORIGINAL NOTES WITH THIS NOTICE OF GUARANTEED
DELIVERY. ACTUAL SURRENDER OF ORIGINAL NOTES MUST BE MADE PURSUANT TO, AND
BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
