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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 14, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HOLLEY PERFORMANCE PRODUCTS INC.
(Exact Name of Registrant as Specified in Its Charter)
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<S> <C> <C>
DELAWARE 336399 61-1291482
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
</TABLE>
1801 RUSSELLVILLE ROAD
BOWLING GREEN, KENTUCKY 42101
(502) 782-2900
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
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ROBERT L. WINELAND
1801 RUSSELLVILLE ROAD
BOWLING GREEN, KENTUCKY 42101
(502) 782-2900
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
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FOR INFORMATION REGARDING ADDITIONAL REGISTRANTS, SEE "INFORMATION REGARDING
ADDITIONAL REGISTRANTS."
COPIES TO:
DANIEL O. KENNEDY, ESQ.
HUNTON & WILLIAMS
BANK OF AMERICA PLAZA
SUITE 4100
600 PEACHTREE ST., N.E.
ATLANTA, GA 30308-2216
(404) 888-4000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If 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 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 PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER NOTE(1) OFFERING PRICE(1) FEE
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<S> <C> <C> <C> <C>
12 1/4% Senior Notes due 2007, Series
B..................................... $ 150,000,000 96.346% $144,519,000 $40,176.29
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Subsidiary Guarantees of the Additional
Registrants........................... $ 150,000,000 (2) (2) (2)
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(1) Estimated pursuant to Rule 457 solely for the purpose of calculating the
registration fee.
(2) The additional registrants are registering guarantees of the payment
obligations of the primary registrant under the exchange Notes being offered
hereby. Under Rule 457(n), no separate fee is payable with respect to the
guarantees.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNDER SECTION 8 OF THE
SECURITIES ACT OF 1933. 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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INFORMATION REGARDING ADDITIONAL REGISTRANTS
The following additional registrants are wholly owned, direct and indirect
subsidiaries of Holley Performance Products Inc. and guarantors of the Notes and
exchange Notes.
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PRIMARY S.I.C. IRS EMPLOYER
JURISDICTION OF CODE IDENTIFICATION
NAME ORGANIZATION NUMBER NUMBER
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<S> <C> <C> <C>
Holley Performance Systems, Inc....................... Delaware 336399 61-1338014
Lunati Cams, Inc...................................... Tennessee 336399 62-0869631
Weiand Automotive Industries, Inc..................... California 336399 95-2040701
LMT Motor Sports Corporation.......................... Mississippi 336399 62-1716079
Lunati & Taylor Pistons............................... Mississippi 336399 58-2047484
Hooker Industries, Inc................................ California 336399 95-2421847
</TABLE>
The address and telephone number of the principal executive offices and the
agent for service for each of the additional registrants are the same as for
Holley Performance Products Inc., as set forth on the facing page of this
Registration Statement.
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PROSPECTUS
$150,000,000
HOLLEY PERFORMANCE PRODUCTS INC.
Offer to Exchange all Outstanding
$150,000,000 12 1/4% Senior Notes due 2007
for $150,000,000 12 1/4% Senior Exchange Notes due 2007, Series B
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- We are offering to exchange the outstanding Notes described above for an
equal amount of new Notes that are registered under the Securities Act of
1933.
- The exchange offer will expire at 5:00 P.M., New York City time, on
, 1999, unless extended.
- We do not intend to list the exchange Notes on any national securities
exchange or Nasdaq.
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YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE OF THIS
PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER OR INVESTING IN THE
EXCHANGE NOTES ISSUED IN THE EXCHANGE OFFER.
We are not making this exchange offer in any state or jurisdiction where it
is not permitted.
Neither the U.S. Securities and Exchange Commission nor any other federal
or state securities commission has approved or disapproved the Notes to be
distributed in the exchange offer, nor have any of these organizations
determined that this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
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The date of this prospectus is , 1999.
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This Prospectus is confidential. You are authorized to use this Prospectus
solely for the purpose of considering the exchange of the outstanding 12 1/4%
Senior Notes due 2007 (the "Notes") for the 12 1/4% Senior exchange Notes due
2007, Series B described herein. Holley and other sources identified herein have
provided the information contained in this Prospectus. You may not reproduce or
distribute this Prospectus, in whole or in part, and you may not disclose any of
the contents of this Prospectus or use any information herein for any purpose
other than considering the participation in the exchange offer or investing in
the exchange Notes. You agree to the foregoing by accepting delivery of this
Prospectus.
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THE SECURITIES OFFERED HEREBY HAVE NOT BEEN RECOMMENDED BY ANY UNITED
STATES FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements that are subject to a
number of risks and uncertainties, including those described under "Risk
Factors," many of which are beyond our control. Forward-looking statements are
typically identified by words such as "believe," "expect," "anticipate,"
"intend," "estimate" and similar expressions, and include (among others)
statements concerning:
- our strategy;
- our liquidity and capital expenditures;
- our debt levels and ability to obtain financing and service debt;
- competitive pressures and trends in the performance automotive products
industry;
- cyclicality and economic condition of the industries we currently serve;
- acquisitions which have not been consummated and our ability to
successfully integrate acquired companies;
- prevailing levels of interest rates;
- legal proceedings and regulatory matters;
- general economic conditions; and
- costs associated with Year 2000 issues.
Actual results could differ materially from those contemplated by these
forward-looking statements as a result of factors ("cautionary statements") such
as those described in "Risk Factors." In light of these risks and uncertainties,
there can be no assurance that the results and events contemplated by the
forward-looking information contained in this Prospectus will in fact transpire.
You are cautioned not to place undue reliance on these forward-looking
statements. We undertake no obligation to update or revise any forward-looking
statements. All subsequent written or oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the cautionary statements.
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PROSPECTUS SUMMARY
Throughout this Prospectus, the words "Holley," "Company," "we" and "our"
refer to Holley Performance Products Inc. and all of its subsidiaries, unless
the context otherwise requires. The following summary contains basic information
about the Company and this offering. It likely does not contain all the
information that is important to you. For a more complete understanding of this
offering, we encourage you to read this entire document and the documents to
which we have referred you. For purposes of this Prospectus, when we describe
information as being on a "pro forma" basis, unless otherwise indicated, we are
assuming that our acquisitions of Lunati, Weiand, Hooker, FlowTech, NOS and
Earl's (each as defined below, and collectively, the "Acquisitions") and this
offering had been completed on the first day of the period indicated, in the
case of sales or other income statement information, or as of the day indicated,
in the case of assets, liabilities or other balance sheet information. The
acquisitions of Lunati, Weiand, Hooker and FlowTech have been consummated, and
the acquisitions of NOS and Earl's are expected to be consummated in 1999. In
this Prospectus, we rely on and refer to information regarding the
specialty/performance products market and its segments in the United States
provided by Specialty Equipment Market Association ("SEMA") market research
reports and other publicly available sources. Although we believe this
information is reliable, we cannot guarantee the accuracy and completeness of
the information and have not independently verified it.
THE COMPANY
GENERAL
Founded in 1903, Holley is a leading manufacturer and marketer of specialty
products for the performance automotive, marine and powersports (motorcycle,
jet-ski, snowmobile and go-cart) aftermarkets. Our Company designs, manufactures
and markets a diversified line of automotive performance and racing products
that include fuel, air, spark (also known as ignition) and internal engine
management systems. We design our products to enhance vehicle performance
through generating increased horsepower, torque and acceleration. Our products
include both throttle body and multi-port fuel injection systems, performance
and remanufactured carburetors, digital ignition systems, distributors, fuel
pumps, camshafts, crankshafts, intake manifolds, pistons, super chargers,
exhaust systems, headers, mufflers and motorcycle exhaust pipes, cylinder heads,
water pumps and throttle bodies. Upon completion of our acquisitions of NOS and
Earl's, our product offerings will also include nitrous oxide injection systems
and performance plumbing products. In the performance automotive aftermarket, we
have the most widely recognized brand name and believe we have the broadest
distribution network, which includes specialized retailers, performance
wholesale distributors, mail order retailers and original equipment
manufacturers ("OEM's"). We have developed strong relationships with our
customers in each distribution channel, including leading companies such as
Advance Auto Parts, AutoZone, CSK Auto, Keystone, O'Reilly, Summit Racing, Jeg's
mail order, GM Service Parts, Volvo-Penta and Mercury Marine. For the twelve
months ended June 27, 1999, our Company generated pro forma revenue and EBITDA
of $167.8 million and $31.7 million, respectively.
We believe that our focus on the performance sector of the automotive
aftermarket, our dedication to quality and our commitment to the Holley brand
name have positioned our Company as a market leader. We believe we have the
leading market share of at least 60% in performance carburetors and an
approximate 41% market share in performance fuel injection systems.
Additionally, we are a market leader in remanufactured carburetors. The Holley
name is one of the best known automotive brands in the United States. According
to a recent independent marketing survey, the Holley name has 99% brand name
recognition with performance automotive consumers. This very high level of name
recognition has created significant brand equity and has established a strong
platform from which we can leverage our brand and expand our product offerings.
For example, as fuel injection is becoming an increasingly important part of the
performance market, we
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have used our strong brand name to enter this new and growing market segment. In
November 1988, Holley introduced its first performance throttle body fuel
injection system. Since that time, we have expanded our fuel injection business
to include broad coverage for both throttle body and multi-port systems for
four, six and eight cylinder applications, and today we are the market leader in
performance fuel injection systems.
We are committed to providing superior products and services to our
customers and believe that our comprehensive quality control and consumer
support programs position Holley as the industry leader in quality and service.
We are vertically integrated and endeavor to manufacture all critical components
and systems. We perform computer controlled tests on all our products prior to
shipment to ensure maximum reliability and "out of the box race
readiness" -- meaning each product is 100% tested and tuned for maximum
performance and is ready for installation. Additionally, we have a significant
focus on research and development ("R&D") to continually advance our technology
and introduce new products. Our R&D resources include a 14,000 square foot
laboratory staffed by 24 degreed engineers who are supported by highly trained
technicians. In 1998, we introduced 475 new products, leveraging the Holley name
and capitalizing on our superior R&D capability. Our commitment to quality and
reputation for superior performance is widely recognized by performance
enthusiasts and racers at all levels. For example, since 1969, every race-car on
The National Association For Stock Car Auto Racing ("NASCAR") circuit has been
and continues to be equipped with a Holley carburetor. Another testament to our
quality is the many awards that we have won over the years, including National
Hot Rod Association's ("NHRA") 30 year achievement award, five-time
International Hot Rod Association's ("IHRA") Sportsman Sponsor of the Year
award, Ford Q1 award and numerous other industry and racing association awards.
INDUSTRY OVERVIEW
Our Company competes in the automotive specialty/performance products
market, which has been more stable and faster growing than the overall
automotive aftermarket. From 1988 to 1997, the specialty/performance products
market grew at a compound annual growth rate ("CAGR") of 7.8%, while the overall
automotive aftermarket grew by an average of 3.4% during the same period.
Additionally, the specialty/performance products segment has historically been
less cyclical than the total aftermarket, reflecting the favorable demographics
and profile of this segment's customer base. Unlike the overall automotive
aftermarket, the specialty/performance products market is driven by enthusiasts
and therefore is less sensitive to economic factors. The customer base for
specialty/performance products can be divided into three categories: street
(street rods, muscle cars and sport utility vehicles), circle track and drag
racers. The average customer is between 30 and 50 years old with annual income
in excess of $57,000 and purchases approximately $1,200 of performance
automotive parts annually. These customers are passionate about their vehicles
and view enhancing the performance and appearance of their vehicles as more than
a hobby. We believe many of these customers derive their primary source of
income from building, refurbishing (both for personal use and for resale) and
racing their vehicles.
Sales in the specialty/performance products market in the United States
were approximately $6.9 billion in 1997, according to SEMA. Our Company
primarily competes in the performance (or underhood) segment of this market
which had sales of approximately $750 million in 1997. This segment is projected
to be the fastest growing segment of the specialty/performance products market,
with a CAGR of approximately 9.5% from 1997 through 2002. The strong outlook is
due to the increasing popularity of motorsports, the recent change in California
law exempting pre-1974 cars from emissions testing (which may or may not be
implemented by other states) and the growing popularity of the import
performance market.
One of the primary catalysts of growth in the specialty/performance
products market has been the growth in motorsports as a whole. Over the past ten
years, the growth rate of motorsports attendance has substantially outpaced that
of other professional sports. In addition, major motorsports attendance is
expected to increase 5.1% annually from 15.4 million in 1996 to 18.8 million in
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2000. Attendance at NASCAR's major events has grown for 17 consecutive years.
NASCAR's attendance growth from 1990 to 1996 of approximately 66% equals the
attendance growth of the NBA, NHL, NFL and MLB combined. This growth in
motorsports interest is a significant driver of the "do-it-yourself" performance
aftermarket and a key part of our marketing strategy. As evidence of our focus
on these trends, we support 15 race sanctioning bodies and appear at over 125
racing events annually.
We also compete in the remanufactured carburetor market, which provides
replacement parts to older vehicles. While the oldest vehicles in this market
are slowly being retired and this market is in decline, there were still
approximately 51 million carbureted vehicles in operation on the road in 1997.
We have recently introduced a line of remanufactured fuel injectors for this
marketplace and believe that this line will offset over time the decline in
remanufactured carburetor sales. We believe a positive trend in the
remanufactured carburetors market is the outsourcing of corporate fleet
maintenance, a market Holley is currently serving and is well-positioned to take
advantage of as it grows.
BUSINESS STRATEGY
In 1997, our Company recruited a new management team that has successfully
embarked on a strategy to expand our product line and reposition Holley as a
diversified manufacturer and marketer of underhood performance systems, while
continuing to leverage Holley's historical strength in performance and
remanufactured carburetors. As a leading manufacturer of underhood performance
products, Holley is now well positioned to take advantage of the projected
growth in our marketplace. Our growth strategy includes both internal expansion
and acquisitions. The primary components of our business strategy are as
follows:
Leverage the Holley Brand Name Through New Product Introductions. The
Holley name is widely recognized for superior performance. We believe that we
can leverage our strong brand name recognition and our reputation for quality
through new product introductions. In 1998, we introduced 475 part numbers, and
our goal is to introduce 1,000 new part numbers in 1999. Our new product
introductions will focus on the growing late model fuel injected domestic and
import performance markets. We will also continue to introduce new and
innovative products for the growing motorsports marketplace. For example, at the
SEMA trade show in November 1998, we introduced 353 new parts including a high
volume racing fuel pump that was selected the Best New Racing Product for 1999.
At the PRI (Racing) trade show the following month, we introduced an additional
122 new parts. Additionally, we believe we can leverage the Holley name with new
products obtained through acquisitions.
Market Our Products As Systems. We currently offer the most comprehensive
line of fuel, air, spark and internal engine management systems and components
in the industry. To address the growing complexity of modern engines and to
simplify the selling process with the retail consumer, we have begun to market
consumer friendly, fully integrated power systems. These systems are comprised
of integrated Holley products designed to enhance performance for specific
vehicle applications. This systems approach positions Holley to be a category
manager of the performance market at retail and simplifies the consumer's buying
decision process. We currently offer fully integrated power systems and also
sell separately the individual components that make up these systems. This
provides the consumer with maximum financial flexibility to either buy the
system incrementally or to acquire the system all at one time. This strategy
enables us to aggressively introduce complementary products and to increase our
market share in existing and new products.
Continue to Diversify Product and System Offerings. We are committed to
diversifying our product offerings away from our historical focus on carburetors
and associated components. Since 1997, we have targeted our new product and
business development efforts on non-carburetor market segments through
developing comprehensive underhood power packages for late model fuel-injected
vehicles. Overall, this strategy has been successful as our mix of performance
carburetor sales to total net sales has declined from 37.2% in 1997 to a pro
forma 25.6% in 1998,
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while our total dollar sales of performance carburetors have increased by $4.6
million during this same time period.
Improve Manufacturing Efficiency. We are committed to reducing operating
costs and improving manufacturing efficiency. In 1997, we implemented a program
to reduce manufacturing costs by changing our manufacturing operations from a
traditional inventory-intensive batch process to a productive and flexible "pull
through" cellular manufacturing system. In connection with this effort, we
introduced initiatives to consolidate manufacturing and warehousing operations
and reduce inventory levels. Additionally, we implemented a process to design
our new products to maximize manufacturing efficiency. These initiatives,
together with our acquisitions of Lunati and Weiand, have contributed to
increasing EBITDA margins to 14.2% in 1998 and 20.6% in the second quarter of
1999. We are currently a low cost producer in the industry. We believe that
there are still opportunities to reduce costs, particularly in our recently
acquired businesses, and we continually evaluate our operations to improve
manufacturing efficiency.
Leverage Distribution Channels. We have a diverse and broad distribution
network that encompasses retail chains, performance wholesale distributors, mail
order retailers and OEM's. Given our strong relationship with our customers and
the importance of our brands to our key customers, we believe that we are well
positioned to benefit from the consolidation occurring in the distribution
channels. As our customers pursue vendor consolidation and expanded services,
Holley is well positioned to address these needs. While we are a major supplier
of performance products to most major automotive parts distributors in all four
distribution channels, we continually seek to expand our customer base. We have
recently been selected to be the performance induction system category manager
for Advance Auto Parts and have recently started selling our performance
products to CSK Auto and PACCAR. We are also working to expand our distribution
base both internationally and into new markets such as marine and powersports
aftermarkets.
Pursue Strategic Acquisitions. The specialty/performance products market
is highly fragmented, and as a leader in our market, we are well positioned to
make strategic acquisitions. We intend to pursue acquisition opportunities that
expand our manufacturing capabilities, leverage our extensive distribution
network and enhance the Holley family of quality brand names. As part of this
strategy, we have completed four important acquisitions and have two
acquisitions pending. In July 1999, we acquired Hooker Industries, Inc.
("Hooker"), a leading manufacturer of performance exhaust systems, headers,
mufflers and Harley-Davidson(R) exhaust pipes. This acquisition complements
Holley's existing product lines and enhances our position as a leader in the
underhood performance market. In October 1998, we acquired Lunati Cams, Inc. and
its affiliated companies ("Lunati"), which manufacture and distribute internal
engine systems including performance camshafts, crankshafts, pistons, rods and
other automotive products to the racing and street performance market under the
well known "Lunati" brand name. In August 1998, we acquired Weiand Automotive
Industries ("Weiand"), a leading manufacturer of induction systems components
including intake manifolds, super chargers and water pumps. In October 1999, we
acquired Biggs Manufacturing, Inc. (also known as "FlowTech"), a leading
manufacturer of performance exhaust systems, headers, mufflers and exhaust
accessories.
THE ACQUISITIONS
Completed Major Acquisitions
Hooker Industries, Inc. In July 1999, we acquired Hooker, a leading
manufacturer of performance exhaust systems, headers, mufflers and
Harley-Davidson(R) exhaust pipes under the well known brand "Hooker Headers."
The Hooker brand is the leading brand in racing exhaust headers and is the most
widely recognized brand in street performance headers. The addition of the
Hooker business to our other air management products establishes Holley as the
only company to offer a comprehensive and integrated air intake and exhaust
management system. The newly introduced
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Hooker Header systems for the Harley-Davidson(R) motorcycle market represents a
significant growth opportunity.
Lunati Companies. In October 1998, we acquired Lunati, which manufactures
and distributes internal engine systems including performance camshafts, crank
shafts, pistons, rods and other automotive products to the racing market under
the "Lunati" brand name. The Lunati acquisition added a well known name in the
performance aftermarket to the Holley family of brand names while broadening our
internal engine management product lines. The Lunati acquisition also enabled us
to enter the growing performance go-cart market and significantly increases our
exposure to the junior dragster market.
Weiand Automotive Industries. In August 1998, we acquired Weiand, a
leading manufacturer of induction systems components including intake manifolds,
super chargers and water pumps. Historically, Holley purchased and then resold
intake manifolds. The Weiand acquisition expanded our manufacturing capabilities
to include intake manifolds. Weiand is vertically integrated, manufacturing its
own castings at its aluminum foundry, which significantly increases our margins
on this product. Additionally, we consolidated all of Weiand's manufacturing
operations (other than the foundry) into our Bowling Green, Kentucky operation,
which has reduced costs and increased efficiency.
FlowTech. In October 1999, we acquired FlowTech, a leading manufacturer of
performance exhaust systems, headers, mufflers and exhaust accessories. The
addition of the FlowTech business to our Hooker exhaust business and other air
management products further complements and completes our comprehensive air
intake and exhaust management systems. Also, this acquisition provides us with
immediate entry into the performance muffler segment of the underhood
performance market and with increased distribution in the import market.
FlowTech has recently introduced its AIRMASS(TM) exhaust header for the growing
import performance market.
Pending Acquisitions
Nitrous Oxide Systems, Inc. Nitrous Oxide Systems, Inc. ("NOS") is the
leading manufacturer of nitrous oxide injection systems to the performance
aftermarket. Nitrous oxide injection systems significantly increase engine
horsepower by increasing the amount of air/fuel mixture delivered to the
cylinders. NOS has a strong position in the import performance market as well as
in the drag racing market. We have a signed letter of intent with NOS, which
gives us the exclusive right to purchase NOS until October 11, 1999. While we
are currently conducting our financial and legal due diligence and negotiations
with NOS, there can be no assurance that the acquisition will be consummated. If
NOS is acquired, it will complement our ability to offer a range of systems
under the hood which substantially increase horsepower and engine performance.
Earl's Performance Products. Earl's Supply Company, Inc. (also known as
Earl's Performance Products) ("Earl's") is a provider of underhood performance
fittings, brake lines and hoses. The Earl's business, if acquired, would
complete our fuel management systems product offerings and expand our cooling
system business. We have a signed letter of intent with Earl's which gives us
the exclusive right to purchase this company until October 6, 1999, and we are
currently conducting our financial and legal due diligence. Our negotiations are
ongoing, but there can be no assurance that the acquisition will be consummated.
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COMPANY INFORMATION
Holley was founded in 1903 and incorporated in Delaware in October 1995. In
May 1998, affiliates of Kohlberg & Co., L.L.C. ("Kohlberg"), together with
certain members of our management, acquired our Company for $100.0 million. In
connection with the Lunati acquisition, Kohlberg increased its equity investment
to approximately $41.0 million. Kohlberg and its management invested an
additional $5.0 million in connection with the Hooker acquisition, bringing
their total equity investment to approximately $46.0 million, and are committed
to investing an additional $5.0 million in connection with this offering (the
"Additional Equity"). Our principal executive offices are located at 1801
Russellville Road, Bowling Green, Kentucky 42101, and our telephone number is
502-782-2900.
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SUMMARY OF THE EXCHANGE OFFER
The Exchange Offer......... We are offering to exchange $1,000 principal amount
of our 12 1/4% Senior Notes due 2007, Series B,
which have been registered under the Securities
Act, for each $1,000 principal amount of our
outstanding unregistered 12 1/4% Senior Notes due
2007, which were issued by us on September 20, 1999
in a private offering. In order for your
outstanding Notes to be exchanged, you must
properly tender them prior to the expiration of the
exchange offer. All outstanding Notes that are
validly tendered and not validly withdrawn will be
exchanged. We will issue the exchange Notes on or
promptly after the expiration of the exchange
offer. Outstanding Notes may be tendered for
exchange in whole or in part in integral multiples
of $1,000 principal amount.
Registration Rights
Agreement................ We sold the outstanding Notes on September 20, 1999
to the initial purchasers of the outstanding Notes.
Simultaneously with that sale we signed a
registration rights agreement with the initial
purchasers which requires us to conduct this
exchange offer. You have the right pursuant to the
registration rights agreement to exchange your
outstanding Notes for exchange Notes with
substantially identical terms. This exchange offer
is intended to satisfy these rights. After the
exchange offer is complete, you will no longer be
entitled to any exchange or registration rights
with respect to your outstanding Notes. For a
description of the procedures for tendering
outstanding Notes, please refer to "The Exchange
Offer" on page 20.
Consequences of Failure to
Exchange Your Outstanding
Notes.................... If you do not exchange your outstanding Notes for
exchange Notes pursuant to the exchange offer, you
will continue to be subject to the restrictions on
transfer provided in the outstanding Notes and the
indenture. In general, the outstanding Notes may
not be offered or sold unless registered under the
Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the
Securities Act and applicable state securities
laws. We do not currently plan to register the
outstanding Notes under the Securities Act. To the
extent that outstanding Notes are tendered and
accepted in the exchange offer, the trading market
for untendered and tendered but unaccepted
outstanding Notes will be adversely affected.
Expiration Date............ The exchange offer will expire at 5:00 p.m., New
York City time, on , 1999 unless
extended by us, in which case the term "expiration
date" shall mean the latest date and time to which
the exchange offer is extended.
Conditions to the Exchange
Offer.................... The exchange offer is subject to certain conditions
that we may waive at our reasonable discretion. The
exchange offer is not conditioned upon any minimum
principal amount of outstanding Notes being
tendered for exchange. We reserve the right to
terminate the exchange offer if certain specified
conditions have
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not been satisfied and to waive any condition or
otherwise amend the terms of the exchange offer in
any respect.
Procedures for Tendering
Outstanding Notes........ If you wish to tender outstanding Notes for
exchange, you must:
- complete and sign a letter of transmittal in
accordance with the instructions contained in the
letter of transmittal; and
- forward the letter of transmittal by mail,
facsimile transmission or hand delivery, together
with any other required documents, to the
exchange agent, either with the outstanding Notes
to be tendered or in compliance with the
specified procedures for guaranteed delivery of
such outstanding Notes.
Certain brokers, dealers, commercial banks, trust
companies and other nominees may also effect
tenders by book-entry transfer.
Please do not send your letter of transmittal or
certificates representing your outstanding Notes to
us. Those documents should only be sent to the
exchange agent. Questions regarding how to tender
and requests for information should be directed to
the exchange agent.
Special Procedures for
Beneficial Owners........ If your outstanding Notes are registered in the
name of a broker, dealer, commercial bank, trust
company or other nominee, we urge you to contact
such person promptly if you wish to tender your
outstanding Notes pursuant to the exchange offer.
Withdrawal Rights.......... You may withdraw the tender of your outstanding
Notes at any time prior to the expiration date by
delivering a written notice of your withdrawal to
the exchange agent in accordance with the
withdrawal procedures set forth in this prospectus.
Consequences of Not
Complying with Exchange
Offer Procedures......... You are responsible for complying with all exchange
offer procedures. You will only receive exchange
Notes in exchange for your outstanding Notes if,
prior to the expiration date, you:
- deliver to the exchange agent the letter of
transmittal, properly completed and duly
executed, along with any other documents or
signature guarantees required by the letter of
transmittal, as well as certificates for the
outstanding Notes or a book-entry confirmation of
a book-entry transfer of the outstanding Notes
into the exchange agent's account at the
Depository Trust Company (DTC); or
- comply with the guaranteed delivery procedures
set forth in this Prospectus.
Any outstanding Notes you hold and do not tender,
or which you tender but which are not accepted for
exchange, will remain outstanding. You will not
have any appraisal or dissenters' rights in
connection with the exchange offer. You should
allow sufficient time to ensure that the exchange
agent receives all required documents before the
expiration of the exchange offer. Neither we
8
<PAGE> 14
nor the exchange agent has any duty to inform you
of defects or irregularities with respect to the
tender of your outstanding Notes for exchange.
Resales of Exchange Notes We believe that you will be able to resell exchange
Notes issued in the exchange offer without
compliance with the registration and prospectus
delivery provisions of the Securities Act, provided
that:
- you are acquiring the exchange Notes in the
ordinary course of your business;
- you are not participating, and have no
arrangement or understanding with any person to
participate, in the distribution of the exchange
Notes; and
- you are not an insider or a related party of
Holley. Our belief is based on interpretations by
the staff of the SEC, as set forth in no-action
letters issued to third parties unrelated to us.
If our belief is not accurate and you transfer an
exchange note without delivering a prospectus
meeting the requirements of the Securities Act or
without an exemption from such requirements, you
may incur liability under the Securities Act. We
do not and will not assume or indemnify you
against such liability.
Each broker-dealer that receives exchange Notes for
its own account in the exchange offer must
acknowledge that it will deliver a prospectus in
connection with any resale of those exchange Notes.
This prospectus, as it may be amended or
supplemented from time to time, may be used by a
broker-dealer in connection with those resales.
Exchange Agent............. The exchange agent for the exchange offer is State
Street Bank and Trust Company. The address,
telephone number and facsimile number of the
exchange agent are set forth in "The Exchange
Offer -- Exchange Agent" and in the letter of
transmittal.
Use of Proceeds............ We will not receive any cash proceeds from the
issuance of the exchange Notes offered hereby. We
are using the net proceeds from the sale of the
outstanding Notes, together with the Additional
Equity and borrowings under our revolving credit
facility, (i) to repay approximately $115.0 million
of borrowings under our bank credit facility, (ii)
to fund approximately $33.0 million for the
acquisitions of FlowTech, NOS and Earl's described
in this Prospectus and (iii) for general corporate
purposes. See "Use of Proceeds."
Certain Federal Income Tax
Consequences............. Your acceptance of the exchange offer and the
related exchange of your outstanding Notes for
exchange Notes will not be a taxable exchange for
United States federal income tax purposes. You
should not recognize any taxable gain or loss or
any interest income as a result of the exchange.
Please refer to "The Exchange Offer" section of
this Prospectus for more detailed information
concerning the exchange offer. However, because the
Notes were issued with an original issue discount,
there will be certain income tax consequences
associated with the exchange Notes. Please refer to
the "Certain Federal Income Tax Conse-
9
<PAGE> 15
quences" section of this Prospectus for a
description of the income tax consequences
associated with the exchange Notes.
SUMMARY TERMS OF THE EXCHANGE NOTES
The exchange offer relates to the exchange of up to $150 million principal
amount of exchange Notes for an equal principal amount of outstanding Notes. The
form and terms of the exchange Notes are substantially identical to the form and
terms of the outstanding Notes, except the exchange Notes will be registered
under the Securities Act. Therefore, the exchange Notes will not bear legends
restricting their transfer and will not be entitled to registration under the
Securities Act. The exchange Notes will evidence the same debt as the
outstanding Notes, which they replace, and both the outstanding Notes and the
exchange Notes are governed by the same indenture.
Issuer..................... Holley Performance Products Inc.
Notes Offered.............. $150.0 million aggregate principal amount of
12 1/4% Senior Notes due 2007, Series B.
Maturity................... September 15, 2007.
Issue Price................ 96.346%.
Interest................... Annual rate: 12 1/4%.
Payment frequency: every six months on March 15 and
September 15, commencing March 15, 2000.
Guarantors................. All of our existing domestic restricted
subsidiaries will fully and unconditionally
guarantee the Notes on a joint and several basis.
Future wholly owned domestic restricted
subsidiaries will also be required to guarantee the
Notes. Our present and future foreign subsidiaries
and future less than wholly owned domestic
restricted subsidiaries acquired by us will not be
required to guarantee the Notes. If we cannot make
payments on the Notes when they are due, the
guarantors must make them instead.
Sinking Fund............... None.
Ranking and Subsidiary
Guarantees............... The Notes will be senior unsecured obligations of
ours and will effectively rank junior to our
secured obligations to the extent of the value of
the assets securing those debts and to all existing
and future debts and other liabilities of our
foreign subsidiaries and our future less than
wholly owned domestic restricted subsidiaries that
do not guarantee the Notes. They will rank equally
with all of our existing and future unsubordinated,
unsecured debts that do not expressly provide that
they are subordinated to the Notes, and will rank
ahead of all of our future debts that expressly
provide that they are subordinated to the Notes.
See "Description of the Exchange Notes."
All of our existing domestic restricted
subsidiaries and all future wholly owned domestic
restricted subsidiaries will guarantee our
obligation to pay principal, premium, if any, and
interest on the Notes. The subsidiary guarantees
will be senior unsecured obligations of the
guarantors and will effectively rank junior to all
the secured obligations of the guarantors to the
extent of the value of the assets securing those
debts. See "Description of the Ex-
10
<PAGE> 16
change Notes -- Brief Description of the Notes and
the Subsidiary Guarantees."
After giving pro forma effect to this offering, the
Additional Equity and the application of the net
proceeds as intended, as of June 27, 1999, we and
our guarantors would have had approximately $146.9
million of senior indebtedness outstanding
(consisting of the Notes offered hereby and
approximately $2.3 million of secured indebtedness
outstanding under our revolving credit facility).
Optional Redemption........ We may redeem some or all of the Notes at our
option at any time on or after September 15, 2003
at the redemption prices listed in "Description of
the Exchange Notes -- Optional Redemption."
In addition, on or before September 15, 2002, we
may, at our option, use the net cash proceeds from
one or more public equity offerings to redeem up to
35% of the aggregate principal amount of the Notes
originally issued at the price listed in
"Description of the Exchange Notes -- Optional
Redemption."
Mandatory Offer to
Repurchase............... If we experience specific kinds of changes of
control or certain types of asset sales, we must
offer to repurchase the Notes at the prices listed
in "Description of the Exchange Notes -- Repurchase
at the Option of Holders -- Change of Control" and
"-- Asset Sales."
Basic Covenants of the
Indenture................ We will issue the Notes under an indenture with
State Street Bank and Trust Company (the
"Indenture"). The Indenture will limit our ability
and the ability of certain of our subsidiaries to:
- incur more debt;
- pay dividends, redeem stock or make other
distributions;
- issue capital stock;
- make certain investments;
- use assets as security in other transactions;
- enter into transactions with affiliates; and
- merge or consolidate.
These covenants are subject to a number of
important qualifications and limitations. See
"Description of the Exchange Notes -- Certain
Covenants."
RISK FACTORS
You should carefully consider all of the information in this Prospectus. In
particular, you should evaluate the specific risk factors under "Risk Factors"
for a discussion of certain risks involved with an investment in the exchange
Notes or tendering your outstanding Notes for exchange Notes.
11
<PAGE> 17
SUMMARY PRO FORMA AND HISTORICAL FINANCIAL INFORMATION
We have derived the historical financial data included in the following
summary financial data from the Company's audited consolidated financial
statements which are included elsewhere herein and unaudited consolidated
financial statements of the Company and the Predecessor (as defined in the notes
hereto). The selected historical consolidated financial information for the
years ended December 31, 1996 and 1997 and the periods from January 1, 1998 to
May 15, 1998 and from May 16, 1998 to December 31, 1998 are derived from the
Consolidated Financial Statements, which have been audited by Arthur Andersen
LLP, independent public accountants. The selected historical consolidated
financial information for the years ended December 31, 1994 and 1995 and the
period from May 16, 1998 to June 28, 1998 and the six months ended June 27, 1999
are derived from the unaudited consolidated financial statements of the
Predecessor and the Company, which in the opinion of management, reflect all
adjustments necessary for a fair presentation of such data. Results for the six
months ended June 27, 1999 are not necessarily indicative of results to be
expected for the full year.
We have derived the pro forma financial data excluding FlowTech, NOS and
Earl's (the "Pending Acquisitions") and the pro forma financial data including
the Pending Acquisitions from the Company's audited and unaudited Consolidated
Financial Statements, audited financial statements of Lunati for the ten months
ended October 29, 1998, audited financial statements of Hooker for the year
ended June 30, 1999 as well as unaudited financial statements of Lunati, Weiand,
Hooker, FlowTech, NOS and Earl's for the remaining respective periods presented.
The pro forma consolidated financial data including the Pending
Acquisitions are presented as if this offering had been completed, the
Acquisitions had occurred and the Additional Equity had been contributed as of
the beginning of the period presented. The pro forma balance sheet data
including the Pending Acquisitions are presented as if the acquisitions of
Hooker, FlowTech, NOS and Earl's, this offering, the Additional Equity and the
use of proceeds therefrom had occurred on June 27, 1999.
The pro forma consolidated financial data excluding the Pending
Acquisitions are presented as if this offering had been completed, the
acquisitions of Weiand, Lunati and Hooker had occurred and the Additional Equity
had been contributed as of the beginning of the period presented. The pro forma
balance sheet data excluding the Pending Acquisitions are presented as if this
offering had been completed, the acquisition of Hooker had occurred and the
Additional Equity had been contributed on June 27, 1999.
The selected pro forma consolidated financial data are not necessarily
indicative of the results of operations the Company would have obtained had this
offering been completed, the Acquisitions occurred or the Additional Equity been
contributed as of the beginning of the period presented. You should read the
following information in conjunction with the Company's Consolidated Financial
Statements and the Notes thereto, the Combined Financial Statements of Lunati
and the Notes thereto, the Consolidated Financial Statements of Hooker and the
Notes thereto, the information contained in "Unaudited Pro Forma Consolidated
Financial Information," and the information contained in "Management's
Discussion and Analysis of Financial Condition and Results of Operations," all
of which are included elsewhere in this Prospectus.
12
<PAGE> 18
SUMMARY PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
SIX MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 31, JUNE 27, JUNE 27,
1998 1999 1999
------------ ----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF INCOME DATA (INCLUDING PENDING ACQUISITIONS):
Net sales.............................................. $161,490 $ 92,233 $167,802
Cost of sales.......................................... 106,396 57,695 108,228
-------- -------- --------
Gross profit........................................... 55,094 34,538 59,574
Selling, general and administrative expenses(a)........ 30,295 17,293 32,917
Amortization expense................................... 4,512 2,416 4,512
-------- -------- --------
Income from operations................................. 20,287 14,829 22,145
Interest expense(b).................................... 20,529 10,264 20,529
Other income (expense), net............................ (424) 127 --
Provision for income taxes............................. 826 2,323 1,693
-------- -------- --------
Net income (loss)............................ $ (1,492) $ 2,369 $ (77)
======== ======== ========
OTHER FINANCIAL DATA (INCLUDING PENDING ACQUISITIONS):
EBITDA(c).............................................. $ 29,972 $ 19,989 $ 31,691
EBITDA margin(d)....................................... 18.6% 21.7% 18.9%
Cash interest expense.................................. $ 18,591 $ 9,296 $ 18,591
Depreciation and amortization.......................... 9,685 5,160 9,546
Capital expenditures................................... 5,121 1,290 4,140
Ratio of EBITDA to cash interest expense(b)............ 1.6x 2.1x 1.7x
Ratio of net debt to EBITDA(e)......................... 4.9 -- 4.6
Ratio of earnings to fixed charges(f).................. 1.0 1.5x 1.1
FINANCIAL DATA (EXCLUDING PENDING ACQUISITIONS):
Net sales.............................................. $130,224 $ 72,150 $133,544
EBITDA(c).............................................. 22,959 14,867 24,339
EBITDA margin(d)....................................... 17.6% 20.6% 18.2%
Cash interest expense.................................. $ 18,375 $ 9,188 $ 18,375
Depreciation and amortization.......................... 8,788 4,683 8,629
Capital expenditures................................... 4,821 1,140 3,840
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 27, 1999
-----------------------------------------
PRO FORMA
(EXCLUDING PENDING
ACTUAL PRO FORMA ACQUISITIONS)
-------- --------- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................. $ 2,222 $ -- $ 31,353
Total assets.......................................... 183,607 250,003 242,073
Total debt............................................ 96,388 146,856 144,519
Stockholder's equity.................................. 44,587 53,571 53,571
</TABLE>
13
<PAGE> 19
SUMMARY HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
THE PREDECESSOR(G) THE COMPANY(G)
------------------------------------------------------ --------------------------------
MAY 16,
JANUARY 1, 1998 TO MAY 16, SIX MONTHS
YEAR ENDED DECEMBER 31, 1998 TO DECEMBER 1998 TO ENDED
------------------------------------- MAY 15, 31, JUNE 28, JUNE 27,
1994 1995 1996 1997 1998 1998 1998 1999
------- ------- ------- ------- -------------- -------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statements of Income Data:
Net sales.................. $91,535 $96,322 $96,290 $98,803 $36,632 $64,731 $13,435 $64,932
Cost of sales.............. 65,676 66,499 65,368 69,192 25,728 44,269 8,585 42,571
------- ------- ------- ------- ------- ------- ------- -------
Gross profit............... 25,859 29,823 30,922 29,611 10,904 20,462 4,850 22,361
Selling, general and
administrative
expenses(a).............. 15,443 18,558 18,868 22,759 7,616 11,795 2,047 12,258
Non-recurring charge(h).... -- -- -- -- -- 452 -- 424
Amortization expense....... -- -- 113 113 45 1,626 274 1,779
------- ------- ------- ------- ------- ------- ------- -------
Income from operations..... 10,416 11,265 11,941 6,739 3,243 6,589 2,529 7,900
Interest expense(b)........ -- -- -- -- -- 4,705 900 4,341
Other income (expense),
net(i)................... 23 13 (183) 45 (1,395) (231) (6) (7)
------- ------- ------- ------- ------- ------- ------- -------
Income before income
taxes.................... 10,439 11,278 11,758 6,784 1,848 1,653 1,623 3,552
Provision for income
taxes(j)................. -- -- 4,514 2,520 797 1,034 706 2,004
------- ------- ------- ------- ------- ------- ------- -------
Net income................. $10,439 $11,278 $ 7,244 $ 4,264 $ 1,051 $ 619 $ 917 $ 1,548
======= ======= ======= ======= ======= ======= ======= =======
Other Financial Data:
EBITDA(c).................. $11,505 $12,299 $13,091 $ 7,802 $ 3,819 $10,588 $ 3,069 $12,566
EBITDA margin(d)........... 12.6% 12.8% 13.6% 7.9% 10.4% 16.4% 22.8% 19.4%
Depreciation and
amortization............. $ 1,089 $ 1,034 $ 1,150 $ 1,063 $ 576 $ 3,547 $ 540 $ 4,242
Capital expenditures....... 2,414 532 466 942 1,188 2,819 183 1,075
Ratio of earnings to fixed
charges(f)............... 37.9x 63.4x 61.4x 34.8x 26.8x 1.3x 2.8x 1.8x
</TABLE>
- ---------------
(a) Selling, general and administrative expenses include management fees Holley
paid to Coltec Industries Inc. ("Coltec") and KHPP Holdings, Inc.
("Holdings") totaling $2.1 million, $2.2 million, $2.3 million, $2.3
million, $0.8 million, $0.4 million, $0.1 million and $0.4 million for the
fiscal years ended December 31, 1994, 1995, 1996 and 1997 and the periods
from January 1, 1998 to May 15, 1998, from May 16, 1998 to December 31,
1998, and from May 16, 1998 to June 28, 1998 and the six month period ended
June 27, 1999, respectively. For the year ended December 31, 1997, selling,
general and administrative expenses also include a provision for doubtful
accounts of $1.9 million, increased marketing spending of $1.0 million,
additional cash discounts of $0.5 million and additional R&D spending of
$0.5 million. The provision for doubtful accounts resulted from the Super
Shops bankruptcy and the recognition of the uncertain collectability of
certain accounts receivable at December 31, 1997.
(b) Interest expense includes amortization of deferred financing costs. However,
deferred financing costs are excluded from interest expense in calculating
the ratio of EBITDA to cash interest expense.
(c) EBITDA represents income from operations plus depreciation and amortization
expense and non-recurring charges. EBITDA should not be considered as an
alternative measure of net income or cash provided by operating activities
(both as determined in accordance with generally accepted accounting
principles), but is presented to provide additional information related to
the Company's debt service capability. EBITDA should not be considered in
isolation or as a substitute for other measures of financial performance or
liquidity. The primary difference between EBITDA and cash flows provided by
operating activities relates primarily to
14
<PAGE> 20
changes in working capital requirements and payments made for interest and
income taxes. The Company's use of EBITDA may not be comparable to similarly
titled measures due to the use by other companies of different financial
statement components in calculating EBITDA. The definition of EBITDA under
the Indenture could differ from the definition described herein.
(d) EBITDA margin is defined as EBITDA divided by net sales.
(e) Ratio of net debt to EBITDA is defined as pro forma net long-term debt as of
June 27, 1999 divided by pro forma EBITDA for the year ended December 31,
1998 and the twelve months ended June 27, 1999. Pro forma net long-term debt
equals long-term debt less cash and cash equivalents.
(f) For the purpose of determining the ratio of earnings to fixed charges,
"earnings" consist of income before provision for income taxes and fixed
charges. "Fixed charges" consist of interest expense including amortization
of deferred financing costs and one-third of rental expense, representing
that portion of rental expense representative of the interest factor.
(g) Effective May 15, 1998, all outstanding shares of Holley common stock were
purchased by KHPP Acquisition Corporation ("KHPP"), a wholly owned
subsidiary of Holdings, for $100.0 million, in a transaction which was
accounted for as a purchase. At the time of the acquisition of Holley, KHPP
was merged into Holley. Financial information prior to May 16, 1998, is for
Holley when it was a wholly owned subsidiary of Coltec and for periods prior
to January 1, 1996 for Holley when it was a division of Coltec. For periods
in which Holley was either a wholly owned subsidiary or division of Coltec,
Holley is referred to herein as the "Predecessor". For periods in which
Holley is a wholly owned subsidiary of Holdings, Holley is referred to as
the "Company." The acquisition by Holdings and the related application of
purchase accounting resulted in changes to the capital structure of the
Predecessor and the historical basis of various assets and liabilities. The
effect of such changes significantly impairs the comparability of the
financial position and results of operations of the Company and the
Predecessor.
(h) Non-recurring costs include (1) costs incurred in 1998 and 1999 associated
with the movement of inventory and fixed assets to Holley's facility in
Bowling Green, Kentucky from two Weiand facilities which were closed
subsequent to the acquisition and (2) costs incurred in 1999 associated with
the movement of fixed assets from a research and development facility which
was not acquired in the acquisition of Holley.
(i) Other expense for the period from January 1, 1998 to May 15, 1998 includes
$1.0 million in fees paid to Coltec under a licensing agreement. The
agreement was established on December 31, 1997 and expired on May 15, 1998
in connection with the acquisition of Holley.
(j) The Predecessor did not record a tax provision in 1994 and 1995 as it was a
division of Coltec.
15
<PAGE> 21
RISK FACTORS
Before tendering your outstanding Notes for exchange Notes or investing in
the exchange Notes, you should be aware that your investment involves a high
degree of risk. There are a number of factors, including those specified below,
which may adversely affect our ability to make payments on the exchange Notes.
You could therefore lose a substantial portion or all of your investment in the
exchange Notes. Consequently, an investment in the exchange Notes should only be
considered by persons who can assume such risk. The risk factors described below
represent the most significant factors that make this investment speculative,
but are not necessarily exhaustive. You are encouraged to perform your own
investigation with respect to the exchange Notes and our Company.
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION
AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE NOTES
As a result of the offering, we will have incurred a substantial amount of
debt which requires significant interest payments. As of June 27, 1999, on a pro
forma basis, we would have had total consolidated debt of $146.9 million.
Subject to the limits contained in the Indenture and our bank credit facility,
we and our subsidiaries may incur additional indebtedness from time to time to
finance capital expenditures, investments or acquisitions or for other general
corporate purposes.
OUR LEVEL OF INDEBTEDNESS AND THESE SIGNIFICANT DEMANDS ON OUR CASH
RESOURCES COULD HAVE IMPORTANT EFFECTS ON YOUR INVESTMENT. FOR EXAMPLE, THEY
COULD:
- make it more difficult for us to satisfy our obligations with respect to
the Notes and our other indebtedness;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the amount
of our cash flow available for acquisitions, working capital, capital
expenditures and other general corporate purposes;
- limit our flexibility in planning for, or reacting to, changes in our
industry (including the pursuit of our growth strategy);
- place us at a competitive disadvantage compared to our competitors that
have fewer debts and significantly greater operating and financing
flexibility than we do;
- limit, along with the financial and other restrictive covenants
applicable to our indebtedness, among other things, our ability to borrow
additional funds even when necessary to maintain adequate liquidity;
- increase our vulnerability to general adverse economic and industry
conditions; and
- result in an event of default upon a failure to comply with these
covenants which, if not cured or waived, could have a material adverse
effect on our business, financial condition or results of operations.
Our ability to pay principal and interest on the Notes, to repay our
secured indebtedness and to satisfy our other debt obligations will depend upon
our future operating performance and the availability of refinancing
indebtedness, which will be affected by prevailing economic conditions and
financial, business and other factors, certain of which are beyond our control.
If we are unable to service our indebtedness and fund our business, we may
be forced to reduce or delay capital expenditures, seek additional debt
financing or equity capital, restructure or refinance our indebtedness or sell
assets. We cannot assure you that any such strategy could be effected on terms
satisfactory to us or at all.
16
<PAGE> 22
THE INDENTURE AND OUR BANK CREDIT FACILITY CONTAIN RESTRICTIVE COVENANTS
Each of the Indenture and our bank credit facility contains a number of
restrictive covenants. Our ability to meet the maintenance and financial
covenants under the bank credit facility can be affected by events beyond our
control, and, in any event, there can be no assurance that we will meet such
covenants and requirements. Our failure to comply with the obligations in the
Indenture or bank credit facility could result in an event of default under the
Indenture or the bank credit facility that, if not cured or waived, could permit
acceleration of the relevant debt and acceleration of debt under other
instruments.
THE NOTES AND SUBSIDIARY GUARANTEES WILL BE EFFECTIVELY SUBORDINATED TO THE
SECURED INDEBTEDNESS OF HOLLEY AND THE GUARANTORS AND TO ALL LIABILITIES OF
NON-GUARANTOR SUBSIDIARIES
The indebtedness evidenced by the Notes will be a senior unsecured
obligation of Holley, and the indebtedness evidenced by each subsidiary
guarantee will be a senior unsecured obligation of the relevant guarantor. The
payment of principal, premium (if any) and interest on the Notes and any payment
with respect to a subsidiary guarantee will be effectively subordinated in right
of payment to any secured indebtedness of Holley or the relevant guarantor,
including all indebtedness and obligations under Holley's bank credit facility,
to the extent of the assets serving as collateral for the applicable
indebtedness. The bank credit facility will be secured by inventory and accounts
receivable of Holley and its subsidiaries and all of the Capital Stock (as
defined below) of Holley and its subsidiaries. Since Holley conducts
substantially all of its operations through its subsidiaries, the Notes will be
effectively subordinated to the bank credit facility with respect to
substantially all of the assets of Holley and its subsidiaries. Payments on the
Notes will also be effectively subordinated in right of payment to all existing
and future debts and other liabilities, including trade payables, of Holley's
foreign subsidiaries and future less than wholly owned domestic restricted
subsidiaries, none of which will guarantee the Notes. Accordingly, there may be
insufficient assets remaining after payment of prior claims to pay amounts due
on the Notes.
As of June 27, 1999, after giving pro forma effect to the offering, the
Additional Equity and our intended use of such proceeds, Holley would have had
approximately $22.7 million of undrawn revolving loan capacity available under
the bank credit facility. Subject to certain restrictions under the bank credit
facility and the Indenture, Holley may incur additional indebtedness (including
additional secured indebtedness) from time to time. See "Description of Notes."
THE SUBSIDIARY GUARANTEES RAISE FRAUDULENT TRANSFER ISSUES
Under the U.S. bankruptcy law and comparable provisions of state fraudulent
transfer laws, a court could subordinate or void any subsidiary guarantee if it
found that the subsidiary guarantee was incurred with actual intent to hinder,
delay or defraud creditors or the guarantor did not receive fair consideration
or reasonably equivalent value for the subsidiary guarantee and the guarantor
was any of the following:
- insolvent or was rendered insolvent because of the subsidiary guarantee;
- engaged in a business or transaction for which its remaining assets
constituted unreasonably small capital; or
- intended to incur, or believed that it would incur, debts beyond its
ability to pay at maturity.
If a court voided a subsidiary guarantee as a result of fraudulent
conveyance, or held it unenforceable for any other reason, Noteholders would
cease to have a claim against the guarantor and would be solely creditors of the
Company and any other guarantors.
THE ORIGINAL ISSUE DISCOUNT MAY PRESENT UNFAVORABLE TAX AND OTHER LEGAL
CONSEQUENCES TO YOU
The Notes will be deemed to have been issued to you at a discount for
federal income tax purposes. Original issue discount, which is the difference
between the stated redemption price of
17
<PAGE> 23
the Notes at maturity and the issue price of the Notes, will accrue from the
issue date of the Notes and be includable in a holder's gross income as it
accrues. See "Certain Federal Income Tax Considerations."
If a bankruptcy case under the U.S. Bankruptcy Code were commenced by or
against us after the issuance of the Notes, the claim of a holder of Notes could
be limited to exclude the amount of unamortized original issue discount, as of
the relevant date, if the bankruptcy court determined that it was "unmatured
interest."
WE ARE DEPENDENT UPON OUR SUPPLIERS
Our operations are dependent on the supply of metal castings, made
typically of zinc or aluminum, from one significant and several other suppliers.
We obtain substantially all of our supply through purchase orders and do not
typically enter into long-term supply contracts relating to these castings.
Although to date our supply of metal castings has been uninterrupted and we have
been able to obtain these materials in sufficient quantities, supply
interruptions or cost increases, to the extent we are unable to pass these costs
on to our customers, could adversely affect our future results of operations.
OUR BUSINESS IS SUBJECT TO ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATIONS
Our operations and properties are subject to federal, state and local
environmental and occupational health and safety laws and regulations. Such laws
and regulations, among other things, impose limitations on the discharge of
pollutants, establish standards for management and disposal of waste and the
remediation of soil and groundwater contamination. Based upon our experience to
date, we believe that the future cost of compliance with, and potential
liabilities under, existing environmental laws and regulations will not have a
material adverse effect on our business, financial condition or results of
operations. However, future events, such as changes in existing laws and
regulations or their interpretation, or discovery of unknown contamination at
sites now or formerly owned or operated by us, may give rise to additional
compliance costs or liabilities that could have a material adverse effect.
Compliance with more stringent laws or regulations, as well as more vigorous
enforcement policies of regulatory agencies or stricter or different
interpretations of existing laws, may affect the sales volume of certain product
offerings or require additional expenditures that may materially adversely
affect us, our business, financial condition or results of operations.
THERE ARE RISKS ASSOCIATED WITH OUR ACQUISITION STRATEGY
One of our business strategies is to pursue select strategic acquisitions
of other companies that we believe can expand our manufacturing capabilities,
leverage our extensive distribution network and enhance the Holley family of
quality brand names. Any failure by us to acquire companies or integrate
acquired companies without substantial costs, delays or other difficulties could
have a material adverse effect on our business, results of operations or
financial condition. In August 1999, we entered into a definitive purchase
agreement with the owners of FlowTech. We have also entered into letters of
intent with the owners of NOS and Earl's, which allow us to review their
respective business operations and negotiate the terms of a possible purchase
agreement on an exclusive basis for a certain period of time. We cannot assure
you that any potential transaction under a letter of intent will result in the
execution of a definitive purchase agreement or that any transaction
contemplated by a definitive purchase agreement will be consummated.
Additionally, our ability to grow by acquisition is dependent upon, and may be
limited by, the availability of suitable acquisition candidates and capital, and
the restrictions contained in our bank credit facility, the Indenture and any
future financing arrangements.
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THE "YEAR 2000" PROBLEM MAY AFFECT OUR BUSINESS
We have conducted a review of our business systems, including our computer
systems for Year 2000 (or Y2K) compliance, and are querying our customers and
vendors about their progress in identifying and addressing problems that their
computer systems may face. However, we can give no assurance that we will
identify all such Year 2000 problems in our computer systems or those of our
customers and vendors in advance of their occurrence or that we will be able to
successfully remedy any problems that are discovered. Our expenses in
identifying and addressing such problems, or the expenses or liabilities to
which we may become subject as a result of such problems, could have a material
adverse effect on the Company's business, financial condition and results of
operations.
WE MAY NOT HAVE SUFFICIENT FUNDS TO PURCHASE NOTES UPON A CHANGE OF CONTROL
Upon a change of control, we will be required to make an offer to purchase
all outstanding Notes. However, we can not assure you that we will have or will
be able to borrow sufficient funds at the time of any change of control to make
any required repurchases of Notes. Such events constituting a change of control
will also constitute an event of default under the bank credit facility.
MANAGEMENT AND CERTAIN STOCKHOLDERS CAN EXERCISE SIGNIFICANT INFLUENCE OVER
HOLLEY
All of our issued and outstanding capital stock is owned by Holdings.
Approximately 98% of Holding's voting common stock is owned by various members
of management and an affiliate of Kohlberg. Such control enables such
stockholders, through our Company's Board of Directors, to control our affairs,
and to preclude or consummate mergers, acquisitions, changes in our Company's
capital structure, assumptions of control and changes of incumbent management.
CUSTOMER CONCENTRATION
We utilize two principal customers, Jeg's and Summit Racing, for product
distribution through mail order. Approximately 21.0% of 1998 pro forma net sales
came from our mail order business, and we derive substantially all of our mail
order revenue from these two customers. The loss of these two mail order
customers could temporarily but significantly reduce our net sales. However, in
such event, we believe we could replace substantially all of such sales in the
short term.
THERE IS NO ESTABLISHED TRADING MARKET FOR THE NOTES; THE NOTES CONTAIN
RESTRICTIONS ON TRANSFER
There is currently no established trading market for the Notes and we do
not intend to have the Notes listed for trading on any securities exchange or in
any automated dealer quotation system. The Initial Purchasers have advised us
that they presently intend to make a market in the Notes. However, the Initial
Purchasers are not obligated to do so and any such market making may be
discontinued at any time, without notice, at the sole discretion of the Initial
Purchasers. Accordingly, no assurance can be given as to whether an active
trading market will develop or be maintained for the Notes. The Notes have not
been registered under the Securities Act or any state securities laws.
Therefore, absent such registration, the Notes may be offered or sold only in
transactions that are not subject to or are exempt from the registration
requirements of the Securities Act or applicable state securities laws.
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WHERE YOU CAN GET MORE INFORMATION
This Prospectus is part of a registration statement on Form S-4 that we
have filed with the SEC. This Prospectus does not contain all of the information
set forth in the registration statement. For further information about us and
the exchange Notes, you should refer to the registration statement. This
Prospectus summarizes material provisions of contracts and other documents.
Since these summaries may not contain all of the information that you may find
important, you should review the full text of these documents. We have filed
certain of these documents as exhibits to our registration statement.
You should direct any request for information to Robert L. Wineland, our
corporate Secretary, at least 10 business days before you tender your exchange
Notes in the exchange offer. Our mailing address and telephone number are:
Holley Performance Products Inc.
1801 Russellville Road
Bowling Green, Kentucky 42101
(502) 782-2900
As a result of the exchange offer, we will be subject to the periodic
reporting and other informational requirements of the Securities Exchange Act of
1934. In addition, under the indenture governing the outstanding Notes and the
exchange Notes, we have agreed that until we are subject to the reporting and
informational requirements of the Exchange Act and during any other period in
which we are not subject to those requirements, so long as the outstanding Notes
or the exchange Notes remain outstanding, we will distribute to the holders of
the Notes, copies of the financial information that we would have been required
to file with the SEC pursuant to the Exchange Act. This financial information
shall include annual reports containing consolidated financial statements and
Notes thereto, together with an opinion thereon expressed by an independent
public accounting firm, management's discussion and analysis of financial
condition and results of operations, as well as quarterly reports containing
unaudited condensed consolidated financial statements for the first three
quarters of each fiscal year. We have also agreed to furnish to holders of
outstanding Notes and prospective purchasers of the exchange Notes upon their
request, the information required to be delivered pursuant to Rule 144(d)(4)
under the Securities Act during any period in which we are not subject to the
reporting and informational requirements of the Exchange Act.
The registration statement, as well as such reports, exhibits and other
information filed by us with the SEC can be inspected and copied, at prescribed
rates, at the public reference facilities maintained by the Public Reference
Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Regional Offices of the SEC at 7 World Trade
Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Please call the
SEC at 1-800-SEC-0330 for additional information about its public reference
room. Our SEC filings are also available without charge on the SEC's Internet
site at http://www.sec.gov.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the outstanding Notes, we agreed to register
the exchange Notes. The exchange offer is being made to satisfy this contractual
obligation.
By tendering outstanding Notes in exchange for exchange Notes, each Holder
(as defined below) represents to us that:
- any exchange Notes to be received by a Holder are being acquired in the
ordinary course of that Holder's business;
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<PAGE> 26
- it has no arrangement or understanding with any person to participate in
a "distribution" of exchange Notes under the Securities Act;
- it is not an "affiliate" of Holley, as defined in Rule 405 under the
Securities Act, or, if it is an affiliate, that it will comply with the
registration and prospectus delivery requirements of the Securities Act
to the extent applicable;
- it has full power and authority to tender, exchange, sell, assign and
transfer the tendered outstanding Notes;
- Holley will acquire good, marketable and unencumbered title to the
tendered outstanding Notes, free and clear of all liens, restrictions,
charges and encumbrances; and
- the outstanding Notes tendered for exchange are not subject to any
adverse claims or proxies.
Each tendering Holder also will warrant and agree that it will, upon
request, execute and deliver any additional documents that Holley or the
exchange agent deems to be necessary or desirable to complete the exchange,
sale, assignment, and transfer of the outstanding Notes tendered pursuant to the
exchange offer.
Each broker-dealer that receives exchange Notes for its own account in
exchange for outstanding Notes pursuant to the exchange offer, where the
outstanding Notes were acquired by such broker-dealer as a result of
market-making or other trading activities, must acknowledge that it will deliver
a prospectus in connection with any resale of exchange Notes received in this
exchange offer.
The exchange offer is not being made to, nor will Holley accept tenders for
exchange from, holders of outstanding Notes in any jurisdiction in which the
exchange offer or the acceptance of the exchange Notes would be in violation of
the securities or blue sky laws of that jurisdiction.
Unless the context requires otherwise, the term "Holder" with respect to
the exchange offer means any person in whose name the outstanding Notes are
registered on the books of Holley or any other person who has obtained a
properly completed bond power from the registered Holder, or any participant in
DTC whose name appears on a security position listing as a Holder of outstanding
Notes (which, for purposes of the exchange offer, include beneficial interests
in the outstanding Notes held by direct or indirect participants in DTC and
outstanding Notes held in definitive form).
TERMS OF THE EXCHANGE OFFER
Holley hereby offers, upon the terms and subject to the conditions shown in
this Prospectus and in the accompanying letter of transmittal, to exchange
$1,000 principal amount of 12 1/4% Senior Exchange Notes due 2007, Series B, for
each $1,000 principal amount of outstanding 12 1/4% Senior Notes due 2007
properly tendered before the expiration date and not properly withdrawn
according to the procedures described below. Holders may tender their
outstanding Notes in whole or in part in integral multiples of $1,000 principal
amount.
The form and terms of the exchange Notes are the same as the form and terms
of the outstanding Notes except that:
- the exchange Notes have been registered under the Securities Act and
therefore are not subject to the restrictions on transfer applicable to
the outstanding Notes; and
- holders of the exchange Notes will not be entitled to some of the rights
of holders of the outstanding Notes under the registration rights
agreement.
The exchange Notes evidence the same indebtedness as the outstanding Notes
and will be issued pursuant to and entitled to the benefits of the indenture
that governs the outstanding Notes.
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The exchange offer is not conditioned upon any minimum principal amount of
outstanding Notes being tendered for exchange. Holley reserves the right in its
sole discretion to purchase or make offers for any outstanding Notes that remain
outstanding after the expiration date or, as discussed under "-- Conditions to
the Exchange Offer," to terminate the exchange offer and, to the extent
permitted by applicable law, purchase outstanding Notes in the open market, in
privately negotiated transactions or otherwise. The terms of any such purchases
or offers could differ from the terms of the exchange offer. As of the date of
this prospectus, $150 million principal amount of 12 1/4% Senior Notes due 2007
was outstanding.
Holders of outstanding Notes do not have any appraisal or dissenters'
rights in connection with the exchange offer. Outstanding Notes that are not
tendered for, or are tendered but not accepted in connection with, the exchange
offer will remain outstanding. See "Summary of the Exchange
Offer -- Consequences of Not Complying with Exchange Offer Procedures."
If any tendered outstanding Notes are not accepted for exchange because of
an invalid tender, the occurrence of particular other events discussed herein or
otherwise, certificates for any such unaccepted outstanding Notes will be
returned, without expense, to the tendering Holder thereof promptly after the
expiration date.
Holders who tender outstanding Notes in connection with 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 the outstanding Notes in connection with the exchange offer. Holley
will pay all charges and expenses, other than specified applicable taxes. See
"-- Fees and Expenses."
NEITHER HOLLEY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
HOLDERS OF THE OUTSTANDING NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING ALL OR ANY PORTION OF THEIR OUTSTANDING NOTES IN THE EXCHANGE OFFER.
IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS
OF THE OUTSTANDING NOTES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT
TO THE EXCHANGE OFFER, AND, IF SO, THE AGGREGATE AMOUNT OF OUTSTANDING NOTES TO
TENDER AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND
CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR FINANCIAL POSITION AND
REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date for the exchange offer is 5:00 p.m., New York City
time, on , 1999 unless the exchange offer is extended by Holley. If
Holley does extend the exchange offer, the expiration date will be the latest
date and time to which the exchange offer is extended.
Holley expressly reserves the right in its sole and absolute discretion,
subject to applicable law, at any time and from time to time:
- to delay the acceptance of the outstanding Notes for exchange;
- to terminate the exchange offer, whether or not any outstanding Notes
have already been accepted for exchange, if Holley determines, in its
sole and absolute discretion, that any of the events or conditions
referred to under "-- Conditions to the Exchange Offer" has occurred or
exists or has not been satisfied with respect to the exchange offer;
- to extend the expiration date of the exchange offer and retain all
outstanding Notes tendered pursuant to the exchange offer, subject,
however, to the right of holders of outstanding Notes to withdraw their
tendered outstanding Notes as described under "-- Withdrawal Rights;" and
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<PAGE> 28
- to waive any condition or otherwise amend the terms of the exchange offer
in any respect.
If the exchange offer is amended in a manner determined by Holley to
constitute a material change, or if Holley waives a material condition of the
exchange offer, Holley will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders of the
affected outstanding Notes, and Holley will extend the exchange offer to the
extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, termination, extension or amendment will be
followed promptly by oral or written notice thereof to the exchange agent for
the exchange offer (any such oral notice to be promptly confirmed in writing)
and by making a public announcement, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date. Without limiting
the manner in which Holley may choose to make any public announcement, and
subject to applicable laws, Holley shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to an appropriate news agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF EXCHANGE NOTES
Upon the terms and subject to the conditions of the exchange offer,
promptly after the expiration date, Holley will exchange, and will issue to the
exchange agent, exchange Notes for outstanding Notes validly tendered and not
withdrawn pursuant to the withdrawal rights described under "-- Withdrawal
Rights."
In all cases, delivery of exchange Notes in exchange for outstanding Notes
tendered and accepted for exchange pursuant to the exchange offer will be made
only after timely receipt by the exchange agent of:
- outstanding Notes or a book-entry confirmation of a book-entry transfer
of outstanding Notes into the exchange agent's account at DTC;
- the letter of transmittal (or facsimile thereof), properly completed and
duly executed, with any required signature guarantees; and
- any other documents required by the letter of transmittal.
Accordingly, the delivery of exchange Notes might not be made to all
tendering holders at the same time, and will depend upon when outstanding Notes,
book-entry confirmations with respect to outstanding Notes and other required
documents are received by the exchange agent.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of outstanding Notes into the exchange agent's account at
DTC. Subject to the terms and conditions of the exchange offer, Holley will be
deemed to have accepted for exchange, and thereby exchanged, outstanding Notes
validly tendered and not withdrawn as, if and when Holley gives oral or written
notice to the exchange agent (any such oral notice to be promptly confirmed in
writing) of Holley's acceptance of such outstanding Notes for exchange pursuant
to the exchange offer. Holley's acceptance for exchange of outstanding Notes
tendered pursuant to any of the procedures described above will constitute a
binding agreement between the tendering Holder and Holley upon the terms and
subject to the conditions of the exchange offer. The exchange agent will act as
agent for Holley for the purpose of receiving tenders of outstanding Notes,
letters of transmittal and related documents, and as agent for tendering holders
for the purpose of receiving outstanding Notes, letters of transmittal and
related documents and transmitting exchange Notes to holders who validly
tendered outstanding Notes. Such exchange will be made promptly after the
expiration date of the exchange offer. If for any reason the acceptance for
exchange or the exchange of any outstanding Notes tendered pursuant to the
exchange offer is delayed (whether before or after Holley's acceptance for
exchange of outstanding Notes), or Holley extends the exchange offer or is
unable to accept for exchange or exchange outstanding Notes tendered pursuant to
the exchange
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<PAGE> 29
offer, then, without prejudice to Holley's rights set forth herein, the exchange
agent may, nevertheless, on behalf of Holley and subject to Rule 14e-1(c) under
the Exchange Act, retain tendered outstanding Notes and such outstanding Notes
may not be withdrawn except to the extent tendering holders are entitled to
withdrawal rights as described under "-- Withdrawal Rights."
PROCEDURES FOR TENDERING OUTSTANDING NOTES
Valid Tender. Except as set forth below, in order for outstanding Notes to
be validly tendered pursuant to the exchange offer, either:
- a properly completed and duly executed letter of transmittal (or
facsimile thereof), with any required signature guarantees and any other
required documents, must be received by the exchange agent at the address
set forth under "-- Exchange Agent" prior to the expiration date and
tendered outstanding Notes must be received by the exchange agent, or
such outstanding Notes must be tendered pursuant to the procedures for
book-entry transfer set forth below and a book-entry confirmation must be
received by the exchange agent, in each case prior to the expiration
date; or
- the guaranteed delivery procedures described below must be complied with.
If less than all of the outstanding Notes are tendered, a tendering Holder
should fill in the amount of outstanding Notes being tendered in the appropriate
box on the letter of transmittal. The entire amount of outstanding Notes
delivered to the exchange agent will be deemed to have been tendered unless
otherwise indicated.
If any letter of transmittal, endorsement, bond power, power of attorney,
or any other document required by the letter of transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing. Unless waived by Holley, evidence
satisfactory to Holley of such person's authority to so act must also be
submitted.
Any beneficial owner of outstanding Notes that are held by or registered in
the name of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial Holder
wishes to participate in the exchange offer.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER. DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. 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 AND PROPER INSURANCE SHOULD BE OBTAINED. NO
LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO HOLLEY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THESE TRANSACTIONS FOR THEM.
Book-Entry Transfer. The exchange agent will request the establishment of
an account with respect to the outstanding Notes at DTC for purposes of the
exchange offer within two business days after the date of this prospectus. Any
financial institution that is a participant in DTC's book-entry transfer
facility system may make a book-entry delivery of the outstanding Notes by
causing DTC to transfer such outstanding Notes into the exchange agent's account
at DTC in accordance with DTC's procedures for transfers. However, although
delivery of outstanding Notes may be effected through book-entry transfer into
the exchange agent's account at DTC, the letter of transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees and any other required documents, must in any case be delivered to
and received by the exchange agent at its address set forth under "-- Exchange
Agent" prior to the expiration date, or the guaranteed delivery procedure set
forth below must be complied with.
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DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
Signature Guarantees. Certificates for outstanding Notes need not be
endorsed and signature guarantees on a letter of transmittal or a notice of
withdrawal, as the case may be, are unnecessary unless:
- a certificate for outstanding Notes is registered in a name other than
that of the person surrendering the certificate; or
- a registered Holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the letter of
transmittal.
In the case of (a) or (b) above, such certificates for outstanding Notes must be
duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the letter of transmittal or
the notice of withdrawal, as the case may be, guaranteed by a firm or other
entity identified in Rule 17Ad-15 under the Exchange Act as an "eligible
guarantor institution," including (as such terms are defined and each an
"Eligible Institution"):
- a bank;
- a broker, dealer, municipal securities broker or dealer or government
securities broker or dealer;
- a credit union;
- a national securities exchange, registered securities association or
clearing agency; or
- a savings association that is a participant in a Securities Transfer
Association,
unless surrendered on behalf of such Eligible Institution. See Instruction 1 to
the letter of transmittal.
Guaranteed Delivery. If a Holder desires to tender outstanding Notes
pursuant to the exchange offer and the certificates for such outstanding Notes
are not immediately available or time will not permit all required documents to
reach the exchange agent before the expiration date, or the procedures for
book-entry transfer cannot be completed on a timely basis, such outstanding
Notes may nevertheless be tendered, provided that all of the following
guaranteed delivery procedures are complied with:
(1) such tenders are made by or through an Eligible Institution;
(2) prior to the expiration date, the exchange agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form accompanying the letter of
transmittal, setting forth the name and address of the Holder of
outstanding Notes and the amount of outstanding Notes tendered, stating
that the tender is being made thereby and guaranteeing that within three
New York Stock Exchange trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all physically tendered
outstanding Notes, in proper form for transfer, or a book-entry
confirmation, as the case may be, and any other documents required by the
letter of transmittal will be deposited by the Eligible Institution with
the exchange agent. The Notice of Guaranteed Delivery may be delivered by
hand, or transmitted by facsimile or mail to the exchange agent and must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery; and
(3) the certificates (or book-entry confirmation) representing all
tendered outstanding Notes, in proper form for transfer, together with a
properly completed and duly executed letter of transmittal, with any
required signature guarantees and any other documents required by the
Letter of Transmittal, are received by the exchange agent within three New
York Stock Exchange trading days after the date of execution of the Notice
of Guaranteed Delivery.
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Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered outstanding Notes will be determined by Holley, in its sole
discretion, which determination shall be final and binding on all parties.
Holley reserves the absolute right, in its sole and absolute discretion, to
reject any and all tenders it determines not to be in proper form or the
acceptance for exchange of which may, in the view of counsel to Holley, be
unlawful. Holley also reserves the absolute right, subject to applicable law, to
waive any of the conditions of the exchange offer as set forth under
"-- Conditions to the Exchange Offer" or any defect or irregularity in any
tender of outstanding Notes of any particular Holder whether or not similar
defects or irregularities are waived in the case of other holders.
Holley's interpretation of the terms and conditions of the exchange offer
(including the letter of transmittal and the instructions thereto) will be final
and binding on all parties. No tender of outstanding Notes will be deemed to
have been validly made until all defects or irregularities with respect to such
tender have been cured or waived. None of Holley, any affiliates of Holley, the
exchange agent or any other person shall be under any duty to give any
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
RESALES OF EXCHANGE NOTES
Based on interpretations by the staff of the SEC, as set forth in no-action
letters issued to third parties unrelated to Holley, Holley believes that
holders of outstanding Notes who exchange their outstanding Notes for exchange
Notes may offer for resale, resell and otherwise transfer such exchange Notes
without compliance with the registration and prospectus delivery provisions of
the Securities Act. This would not apply, however, to any Holder that is a
broker-dealer that acquired outstanding Notes as a result of market-making
activities or other trading activities or directly from Holley for resale under
an available exemption under the Securities Act. Also, resale would only be
permitted for exchange Notes that are acquired in the ordinary course of a
Holder's business, where such Holder has no arrangement or understanding with
any person to participate in the distribution of such exchange Notes and such
Holder is not an "affiliate" of Holley. The staff of the SEC has not considered
our exchange offer in the context of a no-action letter, and there can be no
assurance that the staff of the SEC would make a similar determination with
respect to our exchange offer. Each broker-dealer that receives exchange Notes
for its own account in exchange for outstanding Notes under the exchange offer,
where such outstanding Notes were acquired by such broker-dealer as a result of
market-making or other trading activities, must acknowledge that it will deliver
a prospectus meeting the requirements of the Securities Act in connection with
any resale of such exchange Notes. See "Plan of Distribution."
WITHDRAWAL RIGHTS
Except as otherwise provided, tenders of outstanding Notes may be withdrawn
at any time prior to the expiration date of the exchange offer. In order for a
withdrawal to be effective, such withdrawal must be in writing and timely
received by the exchange agent at its address set forth under "-- Exchange
Agent" prior to the expiration date. Any such notice of withdrawal must specify
the name of the person who tendered the outstanding Notes to be withdrawn, the
principal amount of outstanding Notes to be withdrawn, and (if certificates for
such outstanding Notes have been tendered) the name of the registered Holder of
the outstanding Notes as set forth on the outstanding Notes, if different from
that of the person who tendered such outstanding Notes. If certificates for
outstanding Notes have been delivered or otherwise identified to the exchange
agent, the notice of withdrawal must specify the serial numbers on the
particular certificates for the outstanding Notes to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of outstanding Notes tendered for the account of
an Eligible Institution. If outstanding Notes have been tendered pursuant to the
procedures for book-entry transfer set forth in "-- Procedures for Tendering
Outstanding Notes," the notice of withdrawal must specify the name and number of
the account at DTC to be credited
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with the withdrawal of outstanding Notes and must otherwise comply with the
procedures of DTC. Withdrawals of tenders of outstanding Notes may not be
rescinded. Outstanding Notes properly withdrawn will not be deemed validly
tendered for purposes of the exchange offer, but may be retendered at any
subsequent time prior to the expiration date of the exchange offer by following
any of the procedures described above under "-- Procedures for Tendering
Outstanding Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by Holley, in its sole
discretion, which determination shall be final and binding on all parties. None
of Holley, any affiliates of Holley, the exchange agent or any other person
shall be under any duty to give any notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any outstanding Notes which have been tendered but
which are withdrawn will be returned to the Holder promptly after withdrawal.
INTEREST ON THE EXCHANGE NOTES
Interest on the exchange Notes will be payable every six months on March 15
and September 15 of each year at a rate of 12 1/4% per annum, commencing March
15, 2000. The exchange Notes will mature on September 15, 2007.
CONDITIONS TO THE EXCHANGE OFFER
If any of the following conditions has occurred or exists or has not been
satisfied prior to the expiration date, Holley will not be required to accept
for exchange any outstanding Notes and will not be required to issue exchange
Notes in exchange for any outstanding Notes. In addition, Holley may, at any
time and from time to time, terminate or amend the exchange offer, whether or
not any outstanding Notes have already been accepted for exchange, or may waive
any conditions to or amend the exchange offer.
- A change in the current interpretation by the staff of the SEC that
permits resales of exchange Notes as described above under "-- Resales of
Exchange Notes;"
- The institution or threat of an action or proceeding in any court or by
or before any governmental agency or body with respect to the exchange
offer that, in Holley's judgment, would reasonably be expected to impair
the ability of Holley to proceed with the exchange offer;
- The adoption or enactment of any law, statute, rule or regulation that,
in Holley's judgment, would reasonably be expected to impair the ability
of Holley to proceed with the exchange offer;
- Any change or development involving a prospective change in the business
or financial affairs of Holley that Holley believes might materially
impair its ability to proceed with the exchange offer.
If Holley determines in its reasonable discretion that any of the foregoing
events or conditions has occurred or exists or has not been satisfied at any
time prior to the expiration date, Holley may, subject to applicable law,
terminate the exchange offer, whether or not any outstanding Notes have already
been accepted for exchange, or may waive any such condition or otherwise amend
the terms of the exchange offer in any respect. If such waiver or amendment
constitutes a material change to the exchange offer, Holley will promptly
disclose such waiver or amendment by means of a prospectus supplement that will
be distributed to the registered holders of the outstanding Notes. In this case,
Holley will extend the exchange offer to the extent required by Rule 14e-1 under
the Exchange Act.
27
<PAGE> 33
TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of outstanding Notes for exchange Notes pursuant to the
exchange offer will not be considered a taxable exchange for U.S. federal income
tax purposes because the exchange Notes will not differ materially in kind or
extent from the outstanding Notes and because the exchange will occur by
operation of the terms of the outstanding Notes. Accordingly, such exchange will
have no U.S. federal income tax consequences to holders of outstanding Notes. A
Holder's adjusted tax basis and holding period in an exchange note will be the
same as such Holder's adjusted tax basis and holding period, respectively, in
the outstanding Notes exchange therefor. However, because the Notes were issued
with an original issue discount, there will be certain income tax consequences
associated with the exchange Notes. Please refer to the "Certain Federal Income
Tax Consequences" section of this Prospectus for a description of the income tax
consequences associated with the exchange Notes. All references to Notes under
the heading "Certain U.S. Federal Income Tax Consequences" in this prospectus
apply equally to exchange Notes as to outstanding Notes.
Holders considering the exchange of outstanding Notes for exchange Notes
should consult their own tax advisors concerning the U.S. federal income tax
consequences in light of their particular situations, as well as any
consequences arising under state, local or foreign income tax or other tax law.
EXCHANGE AGENT
State Street Bank and Trust Company has been appointed as the exchange
agent for the exchange offer. Delivery of the letters of transmittal and any
other required documents, questions, requests for assistance, and requests for
additional copies of this prospectus or of the letter of transmittal should be
directed to the exchange agent as follows:
By Mail
STATE STREET BANK AND TRUST COMPANY
Corporate Trust Department
P.O. Box 778
Boston, MA 02102-0778
Attention: Ralph Jones
OR: By Overnight Delivery or By Hand (9:00 a.m. to 5:00 p.m. local time)
STATE STREET BANK AND TRUST COMPANY
Corporate Trust Department -- 5th Floor
2 Avenue de Lafayette
Boston, MA 02111-1724
Attention: Ralph Jones
By Facsimile (617) 662-1452
Attention: Ralph Jones
Confirm by telephone: (617) 662-1548
DELIVERY TO OTHER THAN THE ABOVE ADDRESSES OR FACSIMILE NUMBER WILL NOT
CONSTITUTE A VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by Holley. The principal
solicitation is being made by mail. Additional solicitation may be made
personally or by telephone or other means by officers, directors or employees of
Holley.
28
<PAGE> 34
Holley has not retained any dealer-manager or similar agent in connection
with the exchange offer and will not make any payments to brokers, dealers or
others soliciting acceptances of the exchange offer. Holley has agreed to pay
the exchange agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.
Holley will also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding
copies of this prospectus and related documents to the beneficial owners of
outstanding Notes, and in handling or tendering for their customers.
Holders who tender their outstanding Notes for exchange will not be
obligated to pay any transfer taxes in connection therewith, except that if
exchange Notes are to be delivered to, or are to be issued in the name of, any
person other than the registered Holder of the outstanding Notes tendered, or if
a transfer tax is imposed for any reason other than the exchange of outstanding
Notes in connection with the exchange offer, then the amount of any such
transfer tax (whether imposed on the registered Holder or any other persons)
will be payable by the tendering Holder. If satisfactory evidence of payment of
such transfer tax or exemption therefrom is not submitted with the letter of
transmittal, the amount of such transfer tax will be billed directly to such
tendering Holder.
USE OF PROCEEDS
We are making the exchange offer to satisfy our obligation under the
registration rights agreement we entered into with the initial purchasers when
we first issued the outstanding Notes. We will not receive any cash proceeds
from the issuance of the exchange Notes. In consideration for issuing the
exchange Notes, we will receive an equal principal amount of outstanding Notes.
The outstanding Notes surrendered in exchange for the exchange Notes will be
retired and canceled. The proceeds from the offering of the outstanding Notes,
together with the Additional Equity and borrowings under our revolving credit
facility are being used, (i) to repay approximately $115.0 million of borrowings
under our bank credit facility, (ii) to fund approximately $33.0 million for the
acquisitions of FlowTech, NOS and Earl's described in this Prospectus and (iii)
for general corporate purposes.
29
<PAGE> 35
CAPITALIZATION
The following table sets forth our unaudited historical capitalization at
June 27, 1999, and our unaudited capitalization at June 27, 1999 as adjusted to
give pro forma effect to the Acquisitions, the issuance of the Notes, the
contribution of the Additional Equity and the application of the net proceeds
therefrom. This table should be read in conjunction with the Consolidated
Financial Statements and the notes thereto and the Unaudited Pro Forma
Consolidated Financial Information and the notes thereto included elsewhere
herein.
<TABLE>
<CAPTION>
JUNE 27, 1999
-----------------------
ACTUAL PRO FORMA(1)
-------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 2,222 $ --
======== ========
Long-term debt, including current portion:
Revolving credit facility(2).............................. $ 8,375 $ 2,337
Term loans................................................ 88,013 --
12 1/4% Senior Notes due 2007(3).......................... -- 144,519
-------- --------
Total long-term debt.............................. 96,388 146,856
Stockholder's equity........................................ 44,587 53,571
-------- --------
Total capitalization.............................. $140,975 $200,427
======== ========
</TABLE>
- ---------------
(1) For an explanation of the pro forma assumptions and adjustments, see
"Unaudited Pro Forma Consolidated Financial Information."
(2) Our bank credit facility consists of a $25.0 million revolving credit
facility which bears a variable rate of interest. Aggregate borrowings under
the revolving credit facility will be limited to the lesser of $25.0 million
or 85% of the eligible accounts receivable and 55% of the eligible inventory
of Holley and its subsidiaries. See "Description of the Credit Facility."
(3) Represents the Notes issued at 96.346% of their face amount.
30
<PAGE> 36
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Set forth below is certain selected unaudited consolidated financial
information showing the pro forma effects of this offering, certain acquisitions
by the Company and the contribution of the Additional Equity. We have derived
the pro forma financial data excluding the Pending Acquisitions and the pro
forma financial data including the Pending Acquisitions from the Company's
audited and unaudited Consolidated Financial Statements, audited financial
statements of Lunati for the ten months ended October 29, 1998, audited
financial statements of Hooker for the year ended June 30, 1999 as well as
unaudited financial statements of Lunati, Weiand, Hooker, FlowTech, NOS and
Earl's for the remaining respective periods presented.
The pro forma consolidated financial data (which includes the Pending
Acquisitions) are presented as if this offering had been completed, the
Acquisitions had occurred and the Additional Equity had been contributed as of
the beginning of the period presented. The pro forma balance sheet data
including the Pending Acquisitions are presented as if the acquisitions of
Hooker, FlowTech, NOS and Earl's, this offering, the Additional Equity and the
use of proceeds therefrom had occurred on June 27, 1999.
The pro forma consolidated financial data excluding the Pending
Acquisitions are presented as if this offering had been completed, the
acquisitions of Weiand, Lunati and Hooker had occurred and the Additional Equity
had been contributed as of the beginning of the period presented. The pro forma
balance sheet data excluding the Pending Acquisitions are presented as if this
offering had been completed, the acquisition of Hooker had occurred and the
Additional Equity had been contributed on June 27, 1999.
The selected pro forma consolidated financial data are not necessarily
indicative of the results of operations the Company would have obtained had this
offering been completed, the Acquisitions occurred or the Additional Equity been
contributed as of the beginning of the period presented. Accordingly, actual
results will differ from the pro forma results, and the differences may be
material. The pro forma consolidated financial data should be read in
conjunction with the consolidated financial statements included elsewhere
herein.
31
<PAGE> 37
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS
OF INCOME AND RELATED DATA
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
HISTORICAL
PERIOD FROM PERIOD FROM PRO FORMA
MAY 16, 1998 TO JANUARY 1, 1998 (EXCLUDING
DECEMBER 31, TO MAY 15, CONSUMMATED PRO FORMA PENDING PENDING
1998 1998(A) ACQUISITIONS(B) ADJUSTMENTS ACQUISITIONS) ACQUISITIONS(C)
--------------- --------------- --------------- ----------- ------------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Statements of Income Data:
Net sales............. $64,731 $36,632 $28,861 $ -- $130,224 $31,126
Cost of sales......... 44,269 25,728 15,762 (191)(d) 87,509 19,688
<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA
----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Statements of Income Data:
Net sales............. $ 140(q) $161,490
Cost of sales......... (426)(d) 106,396
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL
PERIOD FROM PERIOD FROM PRO FORMA
MAY 16, 1998 TO JANUARY 1, 1998 (EXCLUDING
DECEMBER 31, TO MAY 15, CONSUMMATED PRO FORMA PENDING PENDING
1998 1998(A) ACQUISITIONS(B) ADJUSTMENTS ACQUISITIONS) ACQUISITIONS(C)
--------------- --------------- --------------- ----------- ------------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
1,941(e)
------- ------- ------- -------- -------
Gross profit.......... 20,462 10,904 13,099 42,715 11,438
Selling, general and
administrative
expenses............. 11,795 7,616 9,916 (3,991)(f) 24,601 10,144
(447)(g)
(38)(h)
(250)(i)
Non-recurring charge.. 452 -- -- (452)(j) -- --
Amortization
<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA
----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
(375)(r)
--------
Gross profit.......... 55,094
Selling, general and
administrative
expenses............. (3,477)(f) 30,295
(488)(d)
(411)(h)
(74)(r)
Non-recurring charge.. -- --
Amortization
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL
PERIOD FROM PERIOD FROM PRO FORMA
MAY 16, 1998 TO JANUARY 1, 1998 (EXCLUDING
DECEMBER 31, TO MAY 15, CONSUMMATED PRO FORMA PENDING PENDING
1998 1998(A) ACQUISITIONS(B) ADJUSTMENTS ACQUISITIONS) ACQUISITIONS(C)
--------------- --------------- --------------- ----------- ------------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
expense.............. 1,626 45 -- 1,813(k) 3,943 --
459(l)
------- ------- ------- -------- -------
Income from
operations........... 6,589 3,243 3,183 14,171 1,294
Interest and
amortization
of debt expense...... 4,705 -- 167 3,296(m) 20,313 348
<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA
----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
expense.............. 569(k) 4,512
--------
Income from
operations........... 20,287
Interest and
amortization
of debt expense...... (132)(n) 20,529
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL
PERIOD FROM PERIOD FROM PRO FORMA
MAY 16, 1998 TO JANUARY 1, 1998 (EXCLUDING
DECEMBER 31, TO MAY 15, CONSUMMATED PRO FORMA PENDING PENDING
1998 1998(A) ACQUISITIONS(B) ADJUSTMENTS ACQUISITIONS) ACQUISITIONS(C)
--------------- --------------- --------------- ----------- ------------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
(43)(f)
12,188(n)
Other income
(expense), net
(includes interest
income).............. (231) (1,395) 252 (1,054)(o) (320) (104)
------- ------- ------- -------- -------
Income before income
taxes................ 1,653 1,848 3,268 (6,462) 842
Provision for income
taxes................ 1,034 797 561 (3,980)(p) (1,588) 56
------- ------- ------- -------- -------
Net income (loss)..... $ 619 $ 1,051 $ 2,707 $ (4,874) $ 786
======= ======= ======= ======== =======
<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA
----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Other income
(expense), net
(includes interest
income).............. (424)
--------
Income before income
taxes................ (666)
Provision for income
taxes................ 2,358(p) 826
--------
Net income (loss)..... $ (1,492)
========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Financial
Information.
32
<PAGE> 38
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS
OF INCOME AND RELATED DATA
FOR THE SIX MONTHS ENDED JUNE 27, 1999
<TABLE>
<CAPTION>
HISTORICAL
PERIOD FROM PRO FORMA
JANUARY 1, 1999 (EXCLUDING
TO JUNE 27, CONSUMMATED PRO FORMA PENDING PENDING
1999 ACQUISITIONS(B) ADJUSTMENTS ACQUISITIONS) ACQUISITIONS(C)
--------------- --------------- ----------- ------------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Statements of Income Data:
Net sales................. $64,932 $7,218 $ -- $72,150 $20,013
Cost of sales............. 42,571 3,097 -- 45,668 12,427
------- ------ ------- -------
Gross profit............... 22,361 4,121 26,482 7,586
Selling, general and
administrative
expenses.................. 12,258 3,253 (1,370)(f) 14,166 5,310
25 (g)
Non-recurring charge....... 424 -- (424)(j) -- --
Amortization expense....... 1,779 -- 353 (l) 2,132 --
------- ------ ------- -------
Income from operations..... 7,900 868 10,184 2,276
Interest and amortization
of debt expense........... 4,341 24 (24)(f) 10,156 201
5,815 (n)
Other income (expense), net
(includes interest
income)................... (7) 134 127 --
------- ------ ------- -------
Income before income
taxes..................... 3,552 978 155 2,075
Provision for income
taxes..................... 2,004 295 (1,806)(p) 493 --
------- ------ ------- -------
Net income (loss)... $ 1,548 $ 683 $ (338) $ 2,075
======= ====== ======= =======
<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA
----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Statements of Income Data:
Net sales................. $ 70 (q) $92,233
Cost of sales............. (218)(d) 57,695
(182)(r)
-------
Gross profit............... 34,538
Selling, general and
administrative
expenses.................. (1,699)(f) 17,293
(244)(d)
(222)(h)
(18)(r)
Non-recurring charge....... -- --
Amortization expense....... 284 (k) 2,416
-------
Income from operations..... 14,829
Interest and amortization
of debt expense........... (93)(n) 10,264
Other income (expense), net
(includes interest
income)................... 127
-------
Income before income
taxes..................... 4,692
Provision for income
taxes..................... 1,830 (p) 2,323
-------
Net income (loss)... $ 2,369
=======
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Financial
Information.
33
<PAGE> 39
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS
OF INCOME AND RELATED DATA
FOR THE TWELVE MONTHS ENDED JUNE 27, 1999
<TABLE>
<CAPTION>
HISTORICAL
PERIOD FROM PRO FORMA
JULY 1, 1998 (EXCLUDING
TO JUNE 27, CONSUMMATED PRO FORMA PENDING PENDING
1999 ACQUISITIONS(B) ADJUSTMENTS ACQUISITIONS) ACQUISITIONS(C)
------------ --------------- ----------- ------------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Statements of Income
Data:
Net sales............ $116,228 $17,316 $ -- $133,544 $34,118
Cost of sales........ 78,255 8,854 (61)(d) 21,642
310 (e) 87,358
-------- ------- -------- -------
Gross profit.......... 37,973 8,462 46,186 12,476
Selling, general and
administrative
expenses............. 22,006 7,275 (2,754)(f) 26,533 10,817
100 (g)
(9)(h)
(85)(i)
Non-recurring
charge............... 876 -- (876)(j) -- --
Amortization
expense.............. 3,131 -- 228 (k) 3,943 --
584 (l)
-------- ------- -------- -------
Income from
operations........... 11,960 1,187 15,710 1,659
Interest and
amortization of
debt expense......... 8,146 49 (48)(f) 20,313 334
12,166 (n)
Other income
(expense), net
(includes interest
income).............. (232) 233 -- 1 (1)
-------- ------- -------- -------
Income before income
taxes................ 3,582 1,371 (4,602) 1,324
Provision for income
taxes................ 2,328 463 (3,672)(p) (881) 2
-------- ------- -------- -------
Net income
(loss)........ $ 1,254 $ 908 $ (3,721) $ 1,322
======== ======= ======== =======
<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA
----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Statements of Income
Data:
Net sales............ $ 140 (q) $167,802
Cost of sales........ (430)(d) 108,228
(342)(r)
--------
Gross profit.......... 59,574
Selling, general and
administrative
expenses............. (3,488)(f) 32,917
(455)(d)
(419)(h)
(71)(r)
Non-recurring
charge............... --
Amortization
expense.............. 569 (k) 4,512
--------
Income from
operations........... 22,145
Interest and
amortization of
debt expense......... (118)(n) 20,529
Other income
(expense), net
(includes interest
income).............. -- --
--------
Income before income
taxes................ 1,616
Provision for income
taxes................ 2,572 (p) 1,693
--------
Net income
(loss)........ $ (77)
========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Financial
Information.
34
<PAGE> 40
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
AS OF JUNE 27, 1999
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
AS OF (EXCLUDING
JUNE 27, CONSUMMATED PRO FORMA PENDING PENDING PRO FORMA
1999 ACQUISITIONS(B) ADJUSTMENTS ACQUISITIONS) ACQUISITIONS(C) ADJUSTMENTS PRO FORMA
---------- --------------- ----------- ------------- --------------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash................. $ 2,222 $ 4,434 $(4,434)(l) $ 31,353 $ 60 $(31,413)(n) $ --
29,131 (n)
Receivables.......... 20,813 3,168 -- 23,981 6,581 -- 30,562
Inventory............ 18,867 1,874 -- 20,741 7,198 -- 27,939
Deferred income
taxes.............. 4,257 216 -- 4,473 -- -- 4,473
Other current
assets............. 2,345 27 -- 2,372 600 -- 2,972
-------- ------- -------- ------- --------
Total current
assets......... 48,504 9,719 82,920 14,439 65,946
Property, plant and
equipment, net..... 27,546 611 -- 28,157 1,954 -- 30,111
Intangible assets,
net................ 107,557 -- 18,237 (l) 130,656 263 22,533 (l) 153,452
6,500 (n)
(1,638)(s)
Other assets......... -- 340 -- 340 154 494
-------- ------- -------- ------- --------
Total assets..... $183,607 $10,670 $242,073 $16,810 $250,003
======== ======= ======== ======= ========
Accounts payable..... $ 7,451 $ 246 (622)(s) $ 7,075 $ 3,687 -- $ 10,762
Accrued expenses..... 16,014 1,727 -- 17,741 1,654 -- 19,395
Current portion of
long-term debt..... 3,700 -- (3,700)(n) -- 2,504 (2,504)(n) --
-------- ------- -------- ------- --------
Total current
liabilities.... 27,165 1,973 24,816 7,845 30,157
Long-term debt....... 92,688 -- 51,831 (n) 144,519 496 1,841 (n) 146,856
Deferred income
taxes.............. 18,624 -- -- 18,624 -- -- 18,624
Other noncurrent
liabilities........ 543 869 (869)(l) 543 252 -- 795
Stockholder's
equity............. 44,587 7,828 (7,828)(l) 53,571 8,217 (8,217)(l) 53,571
10,000 (n)
(1,016)(s)
-------- ------- -------- ------- --------
Total liabilities
and
stockholder's
equity......... $183,607 $10,670 $242,073 $16,810 $250,003
======== ======= ======== ======= ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Financial
Information.
35
<PAGE> 41
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(a) Adjustment to include the Predecessor historical operating activity for the
period from January 1, 1998 to May 15, 1998.
(b) Adjustment to include the Weiand, Lunati and Hooker historical financial
position and operating activity as of or for the periods prior to their
acquisition in August 1998, October 1998 and July 1999, respectively.
(c) Adjustment to include the FlowTech, NOS and Earl's historical financial
position and operating activity as of or for the periods prior to
acquisition.
(d) Adjustment to eliminate rent, and a portion of utilities and maintenance
expense associated with acquired company facilities which will be closed
subsequent to acquisition and their operations moved into existing
manufacturing facilities.
(e) Adjustment to reflect a full year of depreciation expense for the
adjustments of property, plant and equipment to fair value in the
acquisitions Holley, Weiand and Lunati as if the acquisitions had occurred
on January 1, 1998.
(f) Adjustment to reduce/eliminate salaries and benefits of former shareholders
(including interest expense associated with a deferred compensation plan)
and eliminated personnel of acquired companies net of the salaries of the
incremental personnel that will be required to perform their
responsibilities subsequent to the acquisitions.
(g) Adjustment to management fee to reflect the management fee charged by
Holdings to Holley.
(h) Adjustment to reduce sales commissions paid by acquired companies to the
commission rates paid by Holley.
(i) Adjustment to reduce advertising costs of Weiand and Lunati for costs that
are covered by Holley's marketing programs.
(j) Adjustment to eliminate certain non-recurring costs which include (1) costs
incurred in 1998 and 1999 associated with the movement of inventory and
fixed assets to Holley's facility in Bowling Green, Kentucky from two Weiand
facilities which were closed subsequent to the acquisition and (2) costs
incurred in 1999 associated with the movement of fixed assets from a
research and development facility which was not acquired.
(k) Adjustment to reflect a full year of amortization expense on goodwill and
other identifiable intangibles resulting from the acquisitions as if the
acquisitions had occurred at the beginning of the period presented.
(l) Adjustment to record goodwill and purchase accounting adjustments resulting
from the acquisitions. The purchase accounting adjustments include (1) the
elimination of cash not acquired in the transaction, (2) the elimination of
an accrued liability associated with a deferred compensation plan of Hooker
that was terminated upon acquisition and (3) the elimination of each
acquired company's equity which was accumulated prior to its acquisition.
(m) Adjustment to reflect a full year of interest and finance cost amortization
expense resulting from debt incurred for the acquisitions of Holley, Weiand
and Lunati as if the acquisitions had occurred on January 1, 1998.
(n) Adjustment to record this offering (net of approximately $5.5 million in
original issuance discount on the Notes) and approximately $2.3 million of
borrowings under our revolving credit facility and associated interest
expense as well as the Additional Equity.
(o) Adjustment to eliminate royalty fees paid to Coltec under a licensing
agreement which expired on May 15, 1998.
(p) Adjustment to reflect income tax provision using a tax rate of 38.0%.
36
<PAGE> 42
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION -- (CONTINUED)
(q) Adjustment to reflect incremental sales price gained by eliminating related
party distributor and selling direct to customers.
(r) Adjustment to eliminate rent associated with equipment which has
historically been leased from owners but will be purchased in the
acquisitions.
(s) In the period in which this offering is consummated, the Company will
recognize an extraordinary charge totaling $1.0 million net of income taxes
to write-off finance costs associated with term loans that will be repaid
with a portion of the net proceeds of this offering.
37
<PAGE> 43
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The selected historical consolidated financial information for the years
ended December 31, 1996 and 1997 and the periods from January 1, 1998 to May 15,
1998 and from May 16, 1998 to December 31, 1998 are derived from the
Consolidated Financial Statements, which have been audited by Arthur Andersen
LLP, independent public accountants. The selected historical consolidated
financial information for the years ended December 31, 1994 and 1995 and the
period from May 16, 1998 to June 28, 1998 and the six months ended June 27, 1999
are derived from unaudited consolidated financial statements of the Predecessor
and the Company, which in the opinion of management, reflect all adjustments
necessary for a fair presentation of such data. The results for the six months
ended June 27, 1999 are not necessarily indicative of the results to be expected
for the full year. The selected historical consolidated financial information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements and notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THE PREDECESSOR(A) THE COMPANY(A)
-------------------------------------------------- ----------------------------------------
JANUARY 1, MAY 16, MAY 16, SIX MONTHS
YEAR ENDED DECEMBER 31, 1998 TO 1998 TO 1998 TO ENDED
------------------------------------- MAY 15, DECEMBER 31, JUNE 28, JUNE 27,
1994 1995 1996 1997 1998 1998 1998 1999
------- ------- ------- ------- ---------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statements of Income Data:
Net sales........................ $91,535 $96,322 $96,290 $98,803 $36,632 $64,731 $13,435 $64,932
Cost of sales.................... 65,676 66,499 65,368 69,192 25,728 44,269 8,585 42,571
------- ------- ------- ------- ------- ------- ------- -------
Gross profit..................... 25,859 29,823 30,922 29,611 10,904 20,462 4,850 22,361
Selling, general and
administrative expenses(b)..... 15,443 18,558 18,868 22,759 7,616 11,795 2,047 12,258
Non-recurring charge(c).......... -- -- -- -- -- 452 -- 424
Amortization expense............. -- -- 113 113 45 1,626 274 1,779
------- ------- ------- ------- ------- ------- ------- -------
Income from operations........... 10,416 11,265 11,941 6,739 3,243 6,589 2,529 7,900
Interest and amortization of
deferred financing costs....... -- -- -- -- -- 4,705 900 4,341
Other income (expense), net(d)... 23 13 (183) 45 (1,395) (231) (6) (7)
------- ------- ------- ------- ------- ------- ------- -------
Income before income taxes....... 10,439 11,278 11,758 6,784 1,848 1,653 1,623 3,552
Provision for income taxes(e).... -- -- 4,514 2,520 797 1,034 706 2,004
------- ------- ------- ------- ------- ------- ------- -------
Net income................. $10,439 $11,278 $ 7,244 $ 4,264 $ 1,051 $ 619 $ 917 $ 1,548
======= ======= ======= ======= ======= ======= ======= =======
Other Financial Data:
EBITDA(f)........................ $11,505 $12,299 $13,091 $ 7,802 $ 3,819 $10,588 $ 3,069 $12,566
EBITDA margin(g)................. 12.6% 12.8% 13.6% 7.9% 10.4% 16.4% 22.8% 19.4%
Depreciation and amortization.... $ 1,089 $ 1,034 $ 1,150 $ 1,063 $ 576 $ 3,547 $ 540 $ 4,242
Capital expenditures............. 2,414 532 466 942 1,188 2,819 183 1,075
Ratio of earnings to fixed
charges(h)..................... 37.9x 63.4x 61.4x 34.8x 26.8x 1.3x 2.8x 1.8x
</TABLE>
<TABLE>
<CAPTION>
AS OF
---------------------------------------------------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, MAY 15, DECEMBER 31, JUNE 27,
1994 1995 1996 1997 1998 1998 1999
------------ ------------ ------------ ------------ ------- ------------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents............ $ -- $ -- $ -- $ -- $ -- $ 2,013 $ 2,222
Working capital(i)....... 13,387 13,657 15,166 14,637 12,855 19,562 21,339
Total assets............. 32,407 31,675 36,718 33,884 35,813 178,072 183,607
Total debt(j)............ -- -- 13,428 9,081 5,707 93,088 96,388
Stockholder's
equity(j).............. 19,820 20,179 7,244 11,509 12,559 43,039 44,587
</TABLE>
38
<PAGE> 44
NOTES TO SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(a) Effective May 15, 1998, all outstanding shares of Holley common stock were
purchased by KHPP, a wholly owned subsidiary of Holdings, for $100.0
million, in a transaction which was accounted for as a purchase. At the time
of the acquisition of Holley, KHPP was merged into Holley. Financial
information prior to May 16, 1998, is for Holley when it was a wholly owned
subsidiary of Coltec and for periods prior to January 1, 1996 for Holley
when it was a division of Coltec. For periods in which Holley was either a
wholly owned subsidiary or division of Coltec, Holley is referred to herein
as the "Predecessor". For periods in which Holley is a wholly owned
subsidiary of Holdings, Holley is referred to as the "Company". This
acquisition and the related application of purchase accounting resulted in
changes to the capital structure of the Predecessor and the historical basis
of various assets and liabilities. The effect of such changes significantly
impairs the comparability of the financial position and results of
operations of the Company and the Predecessor.
(b) Selling, general and administrative expenses include management fees Holley
paid to Coltec (as the Predecessor) and Holdings (as the Company) totaling
$2.1 million, $2.2 million, $2.3 million, $2.3 million, $0.8 million, $0.4
million, $0.1 million and $0.4 million for the fiscal years ended December
31, 1994, 1995, 1996 and 1997 and the periods from January 1, 1998 to May
15, 1998 and from May 16, 1998 to December 31, 1998, and the period from May
16, 1998 to June 28, 1998 and the six month period ended June 27, 1999,
respectively. For the year ended December 31, 1997, selling, general and
administrative expenses also include a provision for doubtful accounts of
$1.9 million, increased marketing spending of $1.0 million, additional cash
discounts of $0.5 million and additional R&D spending of $0.5 million. The
provision for doubtful accounts resulted from the Super Shops bankruptcy and
the recognition of the uncertain collectability of certain accounts
receivable at December 31, 1997.
(c) Non-recurring costs include (1) costs incurred in 1998 and 1999 associated
with the movement of inventory and fixed assets to Holley's facility in
Bowling Green, Kentucky from two Weiand facilities which were closed
subsequent to the acquisition and (2) costs incurred in 1999 associated with
the movement of fixed assets from a research and development facility which
was not acquired in the acquisition of Holley.
(d) Other expense for the period from January 1, 1998 to May 15, 1998 includes
$1.0 million in fees paid to Coltec under a licensing agreement. The
agreement was established on December 31, 1997 and expired on May 15, 1998
in connection with the acquisition of Holley.
(e) The Predecessor did not record a tax provision in 1994 and 1995 as it was a
division of Coltec.
(f) EBITDA represents income from operations plus depreciation and amortization
expense and non-recurring charges. EBITDA should not be considered as an
alternative measure of net income or cash provided by operating activities
(both as determined in accordance with generally accepted accounting
principles), but is presented to provide additional information related to
the Company's debt service capability. EBITDA should not be considered in
isolation or as a substitute for other measures of financial performance or
liquidity. The primary difference between EBITDA and cash flows provided by
operating activities relates primarily to changes in working capital
requirements, and payments made for interest and income taxes. The Company's
use of EBITDA may not be comparable to similarly titled measures due to the
use by other companies of different financial statement components in
calculating EBITDA. The definition of EBITDA under the indenture could
differ from the definition described herein.
(g) EBITDA margin is defined as EBITDA divided by net sales.
(h) For the purpose of determining the ratio of earnings to fixed charges,
"earnings" consist of income before provision for income taxes and fixed
charges. "Fixed charges" consist of interest expense including amortization
of deferred financing costs and one-third of rental expense, representing
that portion of rental expense representative of the interest factor.
39
<PAGE> 45
NOTES TO SELECTED HISTORICAL CONSOLIDATED
FINANCIAL INFORMATION -- (CONTINUED)
(i) Working capital is defined as current assets minus current liabilities.
(j) Stockholder's equity includes advances from Coltec at December 31, 1994 and
1995, as Holley operated as a division of Coltec during each of the years
then ended. On January 1, 1996, Holley became a wholly-owned subsidiary of
Coltec, therefore, advances from Coltec are included in long-term debt at
December 31, 1996 and 1997, May 15, 1998.
40
<PAGE> 46
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
our Consolidated Financial Statements and the notes thereto and our Unaudited
Pro Forma Consolidated Financial Information and the notes thereto attached to
this Prospectus.
GENERAL
Holley is a leading manufacturer and marketer of specialty products for the
performance automotive, marine and powersports (motorcycle, jet-ski, snowmobile
and go-cart) aftermarkets. Holley designs, manufactures and markets a
diversified line of automotive performance and racing products that includes
fuel, air, spark and internal engine management systems. We design our products
to enhance vehicle performance through generating increased horsepower, torque
and acceleration. Our products include both throttle body and multi-port fuel
injection systems, performance carburetors, digital ignition systems,
distributors, fuel pumps, camshafts, crankshafts, intake manifolds, pistons,
super chargers, exhaust systems, headers, mufflers and motorcycle exhaust pipes,
cylinder heads, water pumps and throttle bodies. In addition to our performance
automotive products, we manufacture products with applications in performance
marine and industrial engines. We also produce and market remanufactured
carburetors and fuel injectors for the replacement market.
In early 1997, a new management team was recruited by our former parent
Coltec to formulate a new growth strategy and to rationalize the operational
structure of Holley. Since that time, we have significantly reduced our cost
structure, focused on the performance market and introduced many new products.
Historically, the Company focused on the remanufacturing business. In connection
with the management change, the new management team shifted the Company's focus
to the higher margin, faster growing performance market. Some of the steps taken
in 1997 included: (i) consolidation of our warehouse operation into our
production facilities (saving $800,000 annually); (ii) a headcount reduction of
48 administrative personnel (saving approximately $2.3 million annually); (iii)
an approximate 57% reduction in performance product SKUs, thereby streamlining
production, eliminating excess inventory and reducing working capital needs
relating thereto; and (iv) the refurbishment of the factory infrastructure and
the establishment of a cellular manufacturing process, which improved
productivity and work flow. Externally, we revamped our entire marketing
strategy and introduced the concept of "pull" marketing emphasizing the end
consumer and targeting most promotional and advertising programs toward that end
consumer. In the past, Holley had relied on "push" marketing wherein
distributors were enticed to make large purchases through various pricing and
promotional programs. In connection with this change, we eliminated all rebate
and co-op advertising programs that were ineffective, off-market or not
necessary. Our new philosophy stresses premium product quality, name brand
recognition and service and as a result, expects to achieve premium pricing for
our products.
In May 1998, Holley was acquired from Coltec by Holdings, a corporation
owned by senior management and an affiliate of Kohlberg, a merchant banking firm
located in Mt. Kisco, New York. In August 1998, we acquired all of the shares of
Weiand, a manufacturer of automotive induction system components including
intake manifolds, super chargers and water pumps. In October 1998, we acquired
all of the shares of Lunati, which manufactures and distributes internal engine
systems including performance camshafts, crank shafts, pistons, rods and other
automotive products to the racing market under the well known "Lunati" brand
name. The Lunati companies we acquired include Lunati Cams, Inc., Lunati &
Taylor Pistons, Inc. and LMT Motorsports Corporation. In July 1999, we acquired
Hooker, a leading manufacturer of performance exhaust systems, headers, mufflers
and exhaust pipes. Most recently, in October 1999, we acquired FlowTech (a
leading manufacturer of performance exhaust systems, headers, mufflers and
exhaust accessories) and signed letters of intent to acquire NOS (the leading
manufacturer of nitrous oxide injection systems) and Earl's (a manufacturer of
underhood performance fittings, brake lines and hoses).
41
<PAGE> 47
Holley's results of operations for fiscal 1998 (as defined below) and the
six months ended June 28, 1998 have been affected by the acquisition of Holley
by Holdings and the acquisitions of Weiand and Lunati. In addition, fiscal 1998
results include the results of operations from the Weiand and Lunati
acquisitions subsequent to their acquisition dates. Consequentially, comparisons
of 1998 results with earlier years will not be meaningful without a
comprehensive understanding of the information provided under "Results of
Operations." For the purposes hereof, "fiscal 1998" refers to the twelve-month
period ended December 31, 1998 and reflects the sum of Holley's results of
operations for the five months ended May 15, 1998 (before the allocation of
purchase price relating to the acquisition by Holdings) and the results of
operations for the seven months ended December 31, 1998 (after the allocation of
the purchase price). Similarly, results of operations for the six months ended
June 28, 1998 reflect the sum of Holley's results of operations for the five
months ended May 15, 1998 (before the allocation of the purchase price relating
to the acquisition by Holdings) and the results of operations for the period
including May 16, 1998 to June 28, 1998 (after the allocation of the purchase
price). See also "Selected Historical Consolidated Financial Information"
included in this Prospectus.
When Coltec owned Holley, Coltec funded all the company's working capital
requirements and corporate expenses. Also, Coltec withdrew all of the excess
cash from Holley. Thus, Holley did not utilize debt to fund such needs, and
therefore, Holley's financial statements do not reflect any interest expense
during such period.
RESULTS OF OPERATIONS
COMPARISON OF SIX MONTHS ENDED JUNE 27, 1999 AND JUNE 28, 1998
Net Sales. Net sales equals gross revenues less provisions for volume
rebates, co-op advertising allowances and freight-out expenses. Net sales for
the six months ended June 27, 1999 totaled $64.9 million compared to $50.1
million for the same period in 1998, an increase of $14.8 million or 29.5%. The
increase was largely attributable to additional sales from the Weiand and Lunati
acquisitions of $12.6 million and increased sales of $2.2 million in the base
business (the business owned in both periods).
Gross Profits. Gross profits for the six months ended June 27, 1999
totaled $22.4 million or 34.4% of net sales compared to $15.8 million or 31.5%
of net sales for the same period in 1998, an increase of $6.6 million or 41.8%.
The increase was attributable to gross profits contributed by Weiand and Lunati
of $4.4 million and additional gross profit in the base business of $2.2
million. Of the base increase, $0.9 million is attributable to increased volume
and the remaining $1.1 million reflects productivity gains.
Selling, General and Administrative Expenses. Selling, general, and
administrative expenses for the six months ended June 27, 1999 totaled $12.3
million or 19.0% of net sales compared to $9.7 million or 19.4% of net sales for
the same period in 1998. The increase was primarily attributable to increased
marketing spending of $1.3 million, increased payroll costs of $0.6 million, and
increased depreciation of $0.3 million associated with the installation of a new
computer system.
Non-recurring charges. Non-recurring charges for the six months ended June
27, 1999 totaled $0.4 million resulting from one-time expenses incurred in the
integration of the Weiand and Lunati acquisitions and the movement of fixed
assets from a research and development facility which was not acquired.
Amortization expense. Amortization expense for the six months ended June
27, 1999 totaled $1.8 million compared to $0.3 million for the same period in
1998. These expenses reflect the amortization of goodwill, transaction fees, and
other intangible assets associated with the purchase of Holley by Holdings, the
subsequent acquisitions of Weiand and Lunati, and the valuation of intellectual
property owned by the Company.
42
<PAGE> 48
Income from Operations. Income from operations for the six months ended
June 27, 1999 totaled $7.9 million compared to $5.8 million for the same period
in 1998, an increase of $2.1 million or 36.2%. The increase was primarily due to
the factors discussed above.
Interest Expense. Interest expense was $4.3 million for the six months
ended June 27, 1999 compared to $0.9 million for the same period in 1998. The
increased expense resulted from interest on our Company's term loans and
revolving credit facility. This debt was incurred in connection with the
purchase of the Company from Coltec, the subsequent acquisitions of Weiand and
Lunati, and general business and working capital needs.
Other Income. No other income/(expense) was reported for the six months
ended June 27, 1999 compared to $1.4 million in expense for the same period in
1998. The 1998 expense included $1.0 million in fees paid to Coltec under a
licensing agreement.
Provision for Income Taxes. Provision for income taxes for the six months
ended June 27, 1999 was $2.0 million compared to $1.5 million for the same
period in 1998. The effective tax rate was 56.4% for the period.
Net Income. Net income for the six months ended June 27, 1999 was $1.5
million compared to $2.0 million for the same period in 1998, a decrease of $0.5
million. The decrease reflected increased interest expense of $3.4 million and
increased amortization expense of $1.5 million as well as non-recurring expense
items associated with the integration of Weiand and Lunati.
SEVEN MONTHS ENDED DECEMBER 31, 1998
Net Sales. Net sales for the seven months ended December 31, 1998 totaled
$64.7 million.
Gross Profits. Gross profits for the seven months ended December 31, 1998
totaled $20.5 million or 31.7% of net sales.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the seven months ended December 31, 1998 totaled
$11.8 million.
Income from Operations. Income from operations for the seven months ended
December 31, 1998 totaled $6.6 million.
Interest Expense. Interest expense was $4.7 million for the seven months
resulting from interest on our Company's term loans and revolving credit
facility. This debt was incurred in 1998 in connection with the purchase of the
Company from Coltec, the subsequent acquisitions of Weiand and Lunati, and
general business and working capital needs.
Provision for Income Taxes. Provision for income taxes for the seven
months ended December 31, 1998 was $1.0 million. The effective tax rate was
62.6% for the period.
Net Income. Net income for the seven months ended December 31, 1998 was
$0.6 million.
COMPARISON OF YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997
Net Sales. Net sales for fiscal 1998 increased to $101.4 million from
$98.8 million in fiscal 1997, an increase of $2.6 million or 2.6%. The increase
was due primarily to increased performance products sales of $6.6 million
including post-acquisition sales from Weiand and Lunati of $2.9 million, offset
by reduced sales in remanufacturing of $1.8 million, reduced sales from product
lines that were sold of $2.0 million, and reduced OEM & Bulk sales of $0.5
million. The increased performance products sales reflected the successful
introduction of our new line of polished carburetors, increased sales of fuel
pumps, and a fivefold increase in the sales of SysteMax power systems and
components. Remanufacturing sales were down due to general market declines. The
reduced sales due to product lines that were sold reflect the sale of part of
our industrial ignition business which is being de-emphasized as it is not part
of our business strategy or growth plan. We are actively engaged in trying to
sell the remainder of this product line. OEM & Bulk business
43
<PAGE> 49
includes our sales to automotive, marine and industrial OEM's as well as engine
builders and modifiers who are active in the racing markets. The reduced sales
in this segment reflected the final phasing out of component supply to the
former Coltec automotive operations that were acquired by Borg Warner in 1996.
Gross Profits. Gross profits for fiscal 1998 increased to $31.4 million or
31.0% of net sales from $29.6 million or 30.0% of net sales in fiscal 1997, an
increase of $1.8 million. The increase was due to increased sales volume and
manufacturing productivity improvements resulting from our restructuring
initiatives.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for fiscal 1998 decreased $3.4 million to $19.4 million
from $22.8 million for fiscal 1997. For fiscal 1998 and 1997, as a percentage of
net sales, these expenses were 19.1% and 23.0%, respectively. The decrease was
primarily attributable to reduced provision for doubtful accounts of $1.5
million, savings arising from our restructuring initiatives of $1.0 million,
reduced corporate office costs of $1.0 million, reduced customer acquisition
costs of $0.5 million, reduced R&D costs of $0.4 million and other general
expense reductions of $0.2 million, offset by increased marketing expenses of
$1.2 million. The reduced corporate office costs reflected the elimination of
the allocation of corporate office costs charged by Coltec equal to 2.3% of net
sales.
Non-recurring Charge. Non-recurring charges totaling $0.5 million were
booked in fiscal 1998 reflecting relocation costs associated with our internal
restructuring initiatives and the acquisitions of Weiand and Lunati. No such
corresponding expense was incurred in fiscal 1997.
Amortization Expense. Amortization expense increased by $1.6 million to
$1.7 million in fiscal 1998. The increase reflected the amortization of goodwill
and transaction costs associated with the purchase of Holley by Holdings and the
subsequent acquisitions of Weiand and Lunati.
Income from Operations. Income from operations for fiscal 1998 increased
to $9.8 million from $6.7 million in fiscal 1997, an increase of $3.1 million or
46.3%. The increase was due primarily to an increase in sales volume and
manufacturing productivity improvements and administrative cost savings
resulting from our restructuring initiatives.
Interest Expense. Interest expense for fiscal 1998 increased to $4.7
million. We had no interest expense in 1997 because Coltec funded all our
working capital needs. These expenses reflected the interest on our term loans
and revolving credit facility. This debt was incurred in 1998 in connection with
the purchase of Holley from Coltec, the subsequent acquisitions of Weiand and
Lunati and general business and working capital needs.
Provision For Income Taxes. Provision for income taxes for fiscal 1998
decreased to $1.8 million from $2.5 million for fiscal 1997, a decrease of $0.7
million or 28.0%. The effective tax rates were 52.3% and 37.1% for fiscal 1998
and 1997, respectively.
Net Income. As a result of the factors described above, net income for
fiscal 1998 was $1.7 million, a decrease of $2.6 million from fiscal 1997. The
decrease reflected increased interest expense of $4.7 million and increased
amortization expense of $1.6 million, expense items associated with the
acquisitions of Weiand and Lunati.
COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996
Net Sales. Net sales increased $2.5 million or 2.6% from $96.3 million to
$98.8 million. The primary cause of the increase was the transfer to Holley of
the industrial ignition business from another Coltec operating unit. This
business contributed $4.8 million in sales in fiscal 1997. The move of the
business was part of an initiative by Coltec to reduce the number of business
units and associated administrative costs by combining smaller business units
with large ones. Prior management believed there existed some synergy between
this business and Holley's other product lines. However, we are now exiting this
business and sold a portion of the business in 1998. We are now
44
<PAGE> 50
focused on selling the remaining assets related to this business. The additional
sales from the industrial ignition business obscured certain factors affecting
Holley's core business. Approximately $3.2 million in sales were lost as Super
Shops, a large retailer specializing in performance and racing products,
declared bankruptcy in September 1997. In addition, sales were impacted by $2.1
million of increased rebate and co-op advertising costs resulting from programs
instituted by prior management in 1996. These programs were significantly more
generous than those of competitors as they did not require increased sales
levels by the retailers in order to achieve higher discounts and co-op and were
therefore ineffective. As stated above, we discontinued all promotional programs
that were ineffective and changed our marketing mix. Rebates and co-op
advertising allowances are netted against sales on our income statement.
Finally, sales were reduced by $0.5 million due to the cessation of our
automotive air conditioner remanufacturing business. Partially offsetting these
losses were increased sales of remanufactured products of $1.8 million resulting
from the addition of CSK as a customer and $0.7 million of sales of our
Annihilator(TM) ignition system which was introduced in early 1997.
Gross Profits. Our gross profit decreased $1.3 million from $30.9 million
or 32.1% of net sales to $29.6 million or 30.0% of net sales. Gross profit was
hurt by increased rebate and co-op expenses discussed above and the lost sales
to Super Shops. When we took a charge for the former rebate programs, the result
was a decline in sales with no offset to cost of goods sold, further reducing
margins (we account for rebates as a contra-revenue adjustment). Accordingly,
for this reduction in sales, we experienced a dollar for dollar reduction in
gross profit. Additionally, the Annihilator(TM) product line broke even given
the start-up costs with respect to the product launch.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for fiscal 1997 increased $3.9 million to $22.8 million
from $18.9 million for fiscal 1996. For fiscal years 1997 and 1996, as a
percentage of net sales, these expenses were 23.0% and 19.6%, respectively. The
increase was due primarily to provision for doubtful accounts of $1.9 million,
increased marketing spending of $1.1 million, additional cash discounts of $0.5
million and additional R&D spending of $0.5 million. The provision for doubtful
accounts was related to the Super Shops bankruptcy and the recognition of the
uncertain collectability of certain accounts receivable at December 31, 1997.
Income from Operations. Income from operations for fiscal 1997 decreased
to $6.7 million from $11.9 million in fiscal 1996, a decrease of $5.2 million or
43.6%. The decrease was due primarily to those factors discussed above.
Provision For Income Taxes. Provision for income taxes for fiscal 1997
decreased to $2.5 million from $4.5 million for fiscal 1996, a decrease of $2.0
million or 44.4%. The effective tax rates were 37.1% and 38.4% for fiscal 1997
and 1996, respectively.
Net Income. As a result of the factors described above, net income for
fiscal 1997 was $4.3 million, a decrease of $3.0 million from fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities. Net cash provided by operating activities for fiscal
1998, 1997 and 1996 was $4.6 million, $5.7 million and $7.2 million,
respectively. The increase in net income and changes in working capital
requirements contributed primarily to the increase in net cash provided by
operating activities in fiscal 1998. Net cash provided by operating activities
for the six months ended June 27, 1999 equaled $1.4 million. Increased inflows
from net income, depreciation and amortization and changes in deferred taxes of
$5.6 million were offset by increased working capital needs of $4.2 million. The
increased working capital was primarily associated with the Weiand and Lunati
acquisitions.
Investing Activities. Net cash used in investing activities for fiscal
1998, 1997 and 1996 were $133.3 million, $0.6 million and $0.5 million,
respectively. The primary use of cash during fiscal 1998
45
<PAGE> 51
was to fund the acquisitions of Holley, Weiand and Lunati. In addition, we spent
$4.0 million in capital in 1998. The largest capital projects were $2.5 million
for a new ERP software system, $0.6 million for a new R&D facility, and $0.5
million for marketing displays. Net cash used in investing activities for the
six months ended June 27, 1999 totaled $4.5 million. The 1999 activity is
primarily attributable to asset purchases of product lines of $2.3 million.
We anticipate expenditures of $4.6 million for capital improvement projects
in fiscal 1999.
Management anticipates building a new distribution center near Bowling
Green during 1999 under a capital lease arrangement. The new facility will be
leased through the local Economic Development Authority, allowing us to take
advantage of certain state and local tax incentives given for generating new
employment. The cost for constructing the new facility is estimated to be $2.9
million (which will be financed by the Economic Development Authority) with
completion expected by the end of the third quarter of fiscal 1999.
Financing Activities. Net cash provided by/(used in) financing activities
for fiscal 1998, 1997 and 1996 was $130.8 million, $(5.1) million and $(6.8)
million, respectively. Cash provided in 1998 was primarily due to the proceeds
from the issuance of equity of $42.4 million and borrowings under our bank
credit facility of $94.4 million. Such amounts were primarily used to pay for
acquisitions and to fund working capital requirements, as discussed above. Net
cash provided by financing activities for the six months ended June 27, 1999
totaled $3.3 million consisting of borrowings from our bank credit facility of
$4.0 million offset by principal payments of $0.7 million.
The primary sources of liquidity for Holley are funds generated by
operations and borrowings under our bank credit facility.
We historically have expanded our business through the acquisition of other
related and complementary businesses, and we continue to seek and evaluate
acquisition opportunities. We anticipate that our existing capital resources and
cash flow generated from future operations, proceeds from the offering, and
drawings under our bank credit facility will enable us to maintain our planned
operations, capital expenditures and debt service for the foreseeable future. We
also anticipate that implementing our acquisition strategy will require us to
incur additional indebtedness.
ENVIRONMENTAL AND LEGAL MATTERS
In May 1999, Union Pacific Railroad Company ("Union Pacific") initiated
litigation against Weiand and others in federal district court for the Central
District of California alleging that certain soil and groundwater contamination
discovered on the Union Pacific property in Los Angeles migrated from the
adjacent Weiand facility and, therefore, Weiand is responsible for costs related
to investigation and remediation. The complaint seeks costs in the amount of
$4.5 million already incurred and at least an additional $800,000 in future
response costs, as well as an injunction directing Weiand to abate the alleged
contamination. At this time, we are unable to assess the likelihood of an
unfavorable outcome or, in the event of such an outcome, the amount of any
resulting liability. We are investigating the claims of Union Pacific and intend
to defend them vigorously.
YEAR 2000 COMPLIANCE
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of our computer
programs or hardware that have data-sensitive software or embedded chips may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices or engage in similar normal business activities.
This is known generally as the "Y2K problem," and we refer to computers and
computer systems that do not experience these problems generally as "Y2K
compliant" or "Y2K capable."
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We have taken several steps to upgrade our computer systems to be Y2K
compliant, including converting our main computer system to a new ERP package
(BPCS) in May 1998, which was represented by its maker as being Y2K compliant.
This new software has been tested for Y2K problems and has not encountered any
failures. In July 1999, we finished upgrading our PC network LAN to be Y2K
compliant. Our manufacturing processes have been thoroughly tested, and we
believe that they should have no significant Y2K problems. We have also
thoroughly tested our products for Y2K compliance, none of which should be
affected by Y2K problems.
We have contacted our major customers, suppliers and utility providers
regarding their Y2K compliance. Based on the responses we have received to date
from our major customers and suppliers, we believe that most will be Y2K
compliant on or before December 31, 1999. We are currently working with our EDI
customers that link directly to our computer systems to ensure that such
computer links are Y2K capable. Our portion of the computer link is Y2K capable,
but a small portion of such customers do not have a Y2K capable link to our
system. Although we believe these links will be fully Y2K capable by December
31, 1999, it is likely that such links will not be fully Y2K capable until at or
near the end of the year and that a small portion will not be Y2K capable by
such time. Our utility suppliers have assured us that they are fully Y2K
compliant.
In 1998, we spent approximately $2.5 million on our new BPCS computer
systems project and approximately $0.1 million on our LAN and PC upgrades. In
1999, we have budgeted $0.1 million to complete our LAN and PC upgrades and $0.1
million to integrate the Lunati operations into our BPCS system and improve our
EDI systems. These computer system upgrades and enhancements provide both Y2K
compliance as well as other non-Y2K related benefits for our company.
As a result of our computer system upgrades and enhancements, we believe
that our computer systems will be Y2K compliant on or before December 31, 1999.
However, we cannot control the actions or representations of our suppliers and
customers, nor can we anticipate and test every aspect of Y2K compliance
throughout all our systems.
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INDUSTRY OVERVIEW
OVERVIEW
The automotive aftermarket is comprised of three segments: traditional
repair parts (original equipment replacement), service and maintenance, and
specialty/performance products. We compete primarily in the
specialty/performance products segment. The specialty/performance products
segment has enjoyed one of the highest growth rates in the automotive industry,
growing from approximately $3.5 billion in 1988 to approximately $6.9 billion in
1997, a CAGR of 7.8%. During this same timeframe, the overall automotive
aftermarket grew by an average of 3.4% and U.S. gross domestic product ("GDP")
grew by a CAGR of 2.4%. This rapid growth is being driven by many positive
structural characteristics, including the growing enthusiasm for auto racing,
particularly NASCAR style racing, the popularity of light trucks and sports
utility vehicles, which are often accessorized by their owners, and a resurgence
in the popularity of hotrodding and building or restoring street rods and muscle
cars.
The specialty/performance segment of the automotive aftermarket has been
considerably less sensitive to fluctuations in GDP than the total aftermarket or
the OEM vehicle market. This reflects the passion that enthusiasts have for
racing and for their vehicles. The following chart illustrates how the
specialty/performance products segment consistently outperformed the total
aftermarket industry and GDP.
SPECIALTY AUTOMOTIVE PRODUCTS GROWTH COMPARISON
(annual percentage change)
<TABLE>
<CAPTION>
SPECIALITY
AUTOMOTIVE TOTAL
YEAR PRODUCTS AFTERMARKET GDP
- ---- ---------- ----------- ----
<S> <C> <C> <C>
1997........................................................ 8.4% 5.5% 3.7%
1996........................................................ 6.0 4.3 2.8
1995........................................................ 9.0 3.7 2.0
1994........................................................ 6.4 10.2 3.5
1993........................................................ 12.2 6.8 2.2
1992........................................................ 9.3 7.6 2.7
1991........................................................ (3.9) (8.1) (1.0)
1990........................................................ 9.6 5.5 1.3
</TABLE>
- ---------------
Source: Specialty Equipment Market Association -- 1998 Market Study
The specialty/performance automotive market segment is unique in that our
consumers readily identify with and derive significant satisfaction from support
of our industry. These consumers are long time customers, averaging 20 years of
involvement in the industry. The tie to this industry is strong as many
enthusiasts were introduced to the industry by their fathers, and in some cases,
by their grandfathers. The customer base for specialty/performance products can
be divided into three categories: street (street rods, muscle cars and sport
utility vehicles), circle track and drag racers. The average customer is between
30 and 50 years old with annual income in excess of $57,000 and purchases
approximately $1,200 of performance automotive parts annually. These customers
are passionate about their vehicles and view enhancing the performance and
appearance of their vehicles as more than a hobby. We believe that many of these
customers derive their primary source of income from building, refurbishing
(both for personal use and for resale) and racing their vehicles.
The rapid increase in the popularity of car racing, particularly NASCAR,
and the recent addition of NASCAR truck racing have been large factors in the
growth of the specialty/performance products market. Over the past ten years,
the growth rate of motorsports attendance has substantially outpaced that of
other professional sports. Attendance at NASCAR's major events has
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grown for 17 consecutive years. NASCAR's attendance growth from 1990 to 1996 of
approximately 66% equals the attendance growth of the NBA, NHL, NFL and MLB
combined. Raceways are experiencing record attendance with over 15.4 million
fans visiting a track in 1996. Motorsports attendance is expected to increase
5.1% annually from 15.4 million in 1996 to 18.8 million in 2000. Motorsports
television ratings and advertising revenues are at record levels. Motorsports
companies such as Speedway Motorsports, International Speedway and Penske
Motorsports have also built several state-of-the-art superspeedways over the
past 10 years, which have greatly increased the visibility of sponsors and
suppliers to the racing market.
Accordingly, this growth in motorsports interest is a significant driver of
the "do-it-yourself" performance aftermarket and a key part of our marketing
strategy.
PERFORMANCE AUTOMOTIVE PRODUCTS
The performance segment of the specialty/performance products market
consists of products and equipment that are designed to enhance street,
off-road, recreational and competitive vehicle performance through increased
horsepower, torque and acceleration. The performance automotive market (also
known as the "underhood" performance market) is a subsection of the
approximately $6.9 billion specialty/performance products market. The
performance automotive market has grown from approximately $565 million in 1992
to approximately $750 million in 1997, a CAGR of approximately 5.9%, and it is
expected to grow at a CAGR of approximately 9.5% from 1997 through 2002. The
performance automotive market is typically grouped into the following six
categories:
Induction Components. Induction components are products that transfer
gasoline, mix gasoline and air, and route or force the fuel/air mixture gases to
the cylinders. They include carburetors, fuel injection systems, intake
manifolds, forced induction products (super chargers, turbochargers and nitrous
oxide kits) as well as fuel pumps and regulators. Importantly, the induction
segment has grown from approximately $187 million in sales in 1992 to
approximately $247 million in 1997, and is expected to be the fastest growing
segment of the performance automotive market, growing from approximately $247
million in 1997 to an expected $410 million in 2002 (a CAGR of 10.7%).
Ignition Components. Ignition components are designed to ignite the
fuel/air mixture at the optimal moment. They include distributors, ignition
coils, spark plugs and wires, performance computer chips as well as power
modules and ignition control boxes. The ignition component segment has grown
from approximately $101 million in sales in 1990 to approximately $136 million
in 1997.
Internal Engine Components. Internal engine components are hard parts that
make up the engine. They include cylinder heads, camshafts and valvetrain
components, timing sets, pistons, piston rings, engine bearings, oil pumps and
gaskets. The internal engine component segment has grown from approximately $452
million in sales in 1990 to approximately $526 million in 1997.
Performance Chemicals. Performance chemicals are proprietary formulations
of fuel system cleaning and octane boosting chemicals, packaged and distributed.
Performance chemicals are designed to boost performance by cleaning carbon and
varnish deposits and improving fuel economy and acceleration. The performance
chemicals segment has grown from approximately $45 million in sales in 1990 to
approximately $69 million in 1997.
Cooling Systems Products. Cooling system products are designed to cool the
engine block through the circulation of fluid through the block and the transfer
of heat through the radiator. Due to the high rpm and continuous use nature of
racing engines, performance cooling systems are designed to circulate more water
at faster speeds than standard systems. The cooling systems products segment has
grown from approximately $11 million in sales in 1990 to approximately $13
million in 1997.
Exhaust Products. Performance exhaust products are designed to reduce or
eliminate exhaust gas back pressure to improve engine efficiency and power.
Performance muffler systems are
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<PAGE> 55
designed for reduced back pressure and for specific sound tuning. The exhaust
products segment has grown from approximately $81 million in sales in 1990 to
approximately $108 million in 1997.
CARBURETOR/FUEL INJECTION MARKET
Carburetors and fuel injection systems are the principal forms of fuel
management systems in the induction segment. A carburetor is a mechanical
apparatus used to supply internal combustion engines with a precise vaporized
fuel mixture. Fuel injection systems, which electronically monitor and deliver
the fuel-air mixture to engines in the correct ratios, have essentially replaced
carburetors (which are mechanical devices) in the original equipment market. For
the past eight years, all new vehicles have been manufactured with fuel
injection systems. As a result, carburetors are used primarily in the
aftermarket segment of the automotive parts industry, principally in the
performance market and in the original equipment replacement market where
remanufactured products are used for older vehicles.
The performance carburetor market is driven by automotive enthusiasts who
want to enhance the speed and performance of their vehicles. Through proper
mechanical adjustment and matching air and fuel delivery ratios, maximum
horsepower can be achieved. As a result, the racing market and the classic
hot-rod and muscle car market prefer carburetors to fuel injection systems for
speed, tunability and cost reasons. At the highest level of competition, NASCAR
and NHRA Pro Stock drag racing, every vehicle runs a carburetor.
The performance carburetor market grew in terms of both units and revenue
from 1992 through 1997. Units increased from approximately 462,000 to
approximately 524,000 -- a CAGR of approximately 2.6%. Revenues increased from
approximately $61 million to approximately $83 million -- a CAGR of
approximately 6.4%, and these revenues are expected to increase from
approximately $83 million in 1997 to approximately $94 million in 2002. We
believe the potential exists that over the long term the performance carburetor
market will decline given the move from carbureted vehicles to fuel injected
vehicles in certain niche markets. However, we are well positioned to benefit
from the forecasted short term growth of the carburetor market, given our
leading brand name and market share as well as the fact that our carburetors are
the only carburetion systems allowed in NASCAR racing.
An additional factor that may have a positive impact upon growth trends in
the performance carburetor market is new legislation in California (which may or
may not be implemented in other states) which exempts vehicles manufactured
before 1974 from emissions testing. Recently, California amended its emission
laws to exempt owners of vehicles manufactured before 1974 from periodic
emission testing and certification requirements. The laws previously had
exempted only vehicles made before 1968. While this legislation did not change
requirements for approval of aftermarket parts associated with anti-tampering
laws, it is likely to make use of approved after-market parts more attractive by
allowing owners to avoid the inconvenience of emission testing and
certification, a process that can be especially burdensome for users of
aftermarket parts. Since the years 1968 through 1972 were the peak of Detroit
muscle car production, this legislative change is likely to have a positive
impact on our industry by removing a significant disincentive to use aftermarket
parts for those vehicles.
REMANUFACTURED CARBURETOR MARKET
Remanufactured carburetors are repaired and reconditioned
previously-manufactured carburetors that are sold typically at lower prices than
new carburetors. Remanufactured carburetors are not part of the performance
market. Primary purchasers of remanufactured carburetors are consumers driving
older cars. The market for remanufactured carburetors is in decline as older
vehicles are replaced by newer, fuel injected vehicles; however, in 1997, there
were still approximately 51 million carbureted vehicles in operation on the
road. We have also recently introduced a
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line of remanufactured fuel injectors that we believe will gain in popularity as
the fleet of fuel injected vehicles begins to reach maturity.
DISTRIBUTION
In recent years, the automotive aftermarket has undergone a significant
consolidation as distribution of aftermarket parts has shifted from traditional
"mom and pop" and three-step distributors to high-growth, large retailers and
mass merchandisers. This distribution evolution has been brought about primarily
by a substantial increase in consumers installing their own accessories and the
rise of large, efficient "category killer" retailers. Traditional distributors
relied primarily on dealer installers to reach the primary customer base for its
high-turn products. These repair outlets utilized local "jobber" stores to order
parts which were in turn supplied by regional warehouse distributors that
carried large supplies of parts, generally over 100,000 part numbers or SKUs.
The decline of service stations as primary repair outlets combined with the rise
of "do-it-yourselfers" have left the traditional multi-tiered distribution
network vulnerable to more efficient, lower-cost distributors and retailers who
purchase directly from manufacturers and sell directly to professional
installers or consumers. As a result, jobber stores have experienced a
significant consolidation and have had to make a transition from being
wholesale/mini-warehouse outlets to full-service auto parts stores. This has
forced the traditional market into direct competition with highly sophisticated
retailers, some of whom also offer installation such as Pep Boys. We are well
positioned to capitalize on this consolidation as we believe we offer the
broadest product coverage and the ability to customize marketing and
distribution programs for our large retail customers.
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BUSINESS
GENERAL
Founded in 1903, Holley is a leading manufacturer and marketer of specialty
products for the performance automotive, marine and powersports (motorcycle,
jet-ski, snowmobile and go-cart) aftermarkets. Our Company designs, manufactures
and markets a diversified line of automotive performance and racing products
that include fuel, air, spark (also known as ignition) and internal engine
management systems. We design our products to enhance vehicle performance
through generating increased horsepower, torque and acceleration. Our products
include both throttle body and multi-port fuel injection systems, performance
and remanufactured carburetors, digital ignition systems, distributors, fuel
pumps, camshafts, crankshafts, intake manifolds, pistons, super chargers,
exhaust systems, headers, mufflers and motorcycle exhaust pipes, cylinder heads,
water pumps and throttle bodies. Upon completion of our acquisitions of NOS and
Earl's, our product offerings will also include nitrous oxide injection systems
and performance plumbing products. In the performance automotive aftermarket, we
have the most widely recognized brand name and believe we have the broadest
distribution network, which includes specialized retailers, performance
wholesale distributors, mail order retailers and OEM's. We have developed strong
relationships with our customers in each distribution channel, including leading
companies such as Advance Auto Parts, AutoZone, CSK Auto, Keystone, O'Reilly,
Summit Racing, Jeg's mail order, GM Service Parts, Volvo-Penta and Mercury
Marine. For the twelve months ended June 27, 1999, our Company generated pro
forma revenue and EBITDA of $167.8 million and $31.7 million, respectively.
We believe that our focus on the performance sector of the automotive
aftermarket, our dedication to quality and our commitment to the Holley brand
name have positioned our Company as a market leader. We believe we have the
leading market share of at least 60% in performance carburetors and an
approximate 41% market share in performance fuel injection systems.
Additionally, we are a market leader in remanufactured carburetors. The Holley
name is one of the best known automotive brands in the United States. According
to a recent independent marketing survey, the Holley name has 99% brand name
recognition with performance automotive consumers. This very high level of name
recognition has created significant brand equity and has established a strong
platform from which we can leverage our brand and expand our product offerings.
For example, as fuel injection is becoming an increasingly important part of the
performance market, we have used our strong brand name to enter this new and
growing market segment. In November 1988, Holley introduced its first
performance throttle body fuel injection system. Since that time, we have
expanded our fuel injection business to include broad coverage for both throttle
body and multi-port systems for four, six and eight cylinder applications, and
today we are the market leader in performance fuel injection systems.
We are committed to providing superior products and services to our
customers and believe that our comprehensive quality control and consumer
support programs position Holley as the industry leader in quality and service.
We are vertically integrated and endeavor to manufacture all critical components
and systems. We perform computer controlled tests on all our products prior to
shipment to ensure maximum reliability and "out of the box race
readiness"-- meaning each product is 100% tested and tuned for maximum
performance and is ready for installation. Additionally, we have a significant
focus on R&D to continually advance our technology and introduce new products.
Our R&D resources include a 14,000 square foot laboratory staffed by 24 degreed
engineers who are supported by highly trained technicians. In 1998, we
introduced 475 new products, leveraging the Holley name and capitalizing on our
superior R&D capability. Our commitment to quality and reputation for superior
performance is widely recognized by performance enthusiasts and racers at all
levels. For example, since 1969, every race-car on the NASCAR circuit has been
and continues to be equipped with a Holley carburetor. Another testament to our
quality is the many awards that we have won over the years, including NHRA 30
year achievement award,
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five-time IHRA Sportsman Sponsor of the Year award, Ford Q1 award and numerous
other industry and racing association awards.
BUSINESS STRATEGY
In 1997, our Company recruited a new management team that has successfully
embarked on a strategy to expand our product line and reposition Holley as a
diversified manufacturer and marketer of underhood performance systems, while
continuing to leverage Holley's historical strength in performance and
remanufactured carburetors. As a leading manufacturer of underhood performance
products, Holley is now well positioned to take advantage of the projected
growth in our marketplace. Our growth strategy includes both internal expansion
and acquisitions. The primary components of our business strategy are as
follows:
Leverage the Holley Brand Name Through New Product Introductions. The
Holley name is widely recognized for superior performance. We believe that we
can leverage our strong brand name recognition and our reputation for quality
through new product introductions. In 1998, we introduced 475 part numbers, and
our goal is to introduce 1,000 new part numbers in 1999. Our new product
introductions will focus on the growing late model fuel injected domestic and
import performance markets. We will also continue to introduce new and
innovative products for the growing motorsports marketplace. For example, at the
SEMA trade show in November 1998 we introduced 353 new parts including a high
volume racing fuel pump that was selected the Best New Racing Product for 1999.
At the PRI (Racing) trade show the following month, we introduced an additional
122 new parts. Additionally, we believe we can leverage the Holley name with new
products we obtained through acquisitions.
Market Our Products As Systems. We currently offer the most comprehensive
line of fuel, air, spark and internal engine management systems and components
in the industry. To address the growing complexity of modern engines and to
simplify the selling process with the retail consumer, we have begun to market
consumer friendly, fully integrated power systems. These systems are comprised
of integrated Holley products designed to enhance performance for specific
vehicle applications. This systems approach positions Holley to be a category
manager of the performance market at retail and simplifies the consumer's buying
decision process. We currently offer fully integrated power systems and also
sell separately the individual components that make up these systems. This
provides the consumer with maximum financial flexibility to either buy the
system incrementally or to acquire the system all at one time. This strategy
enables us to aggressively introduce complementary products and to increase our
market share in existing and new products.
Continue to Diversify Product and System Offerings. We are committed to
diversifying our product offerings away from our historical focus on carburetors
and associated components. Since 1997, we have targeted our new product and
business development efforts on non-carburetor market segments through
developing comprehensive underhood power packages for late model fuel-injected
vehicles. Overall, this strategy has been successful as our mix of performance
carburetor sales to total net sales has declined from 37.2% in 1997 to a pro
forma 25.6% in 1998, while our total dollar sales of performance carburetors
have increased by $5.0 million during this same time period.
Improve Manufacturing Efficiency. We are committed to reducing operating
costs and improving manufacturing efficiency. In 1997, we implemented a program
to reduce manufacturing costs by changing our manufacturing operations from a
traditional inventory-intensive batch process to a productive and flexible "pull
through" cellular manufacturing system. In connection with this effort, we
introduced initiatives to consolidate manufacturing and warehousing operations
and reduce inventory levels. Additionally, we implemented a process to design
our new products to maximize manufacturing efficiency. These initiatives,
together with our acquisitions of Lunati and Weiand, have contributed to
increasing EBITDA margins to 14.2% in 1998 and 20.6% in the second quarter of
1999. We are currently a low cost producer in the industry. We believe that
there are still
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opportunities to reduce costs, particularly in our recently acquired businesses,
and we will continually evaluate our operations to improve manufacturing
efficiency.
Leverage Distribution Channels. We have a diverse and broad distribution
network that encompasses retail chains, performance wholesale distributors, mail
order retailers and OEM's. Given our strong relationship with our customers and
the importance of our brands to our key customers, we believe that we are well
positioned to benefit from the consolidation occurring in the distribution
channels. As our customers pursue vendor consolidation and expanded services,
Holley is well positioned to address these needs. While we are a major supplier
of performance products to most major automotive parts distributors in all four
distribution channels, we continually seek to expand our customer base. We have
recently been selected to be the performance induction system category manager
for Advance Auto Parts and have recently started selling our performance
products to CSK Auto and PACCAR. We are also working to expand our distribution
base both internationally and into new markets such as marine and powersports
aftermarkets.
Pursue Strategic Acquisitions. The specialty/performance products market
is highly fragmented, and as a leader in our market, we are well positioned to
make strategic acquisitions. We intend to pursue acquisition opportunities that
expand our manufacturing capabilities, leverage our extensive distribution
network and enhance the Holley family of quality brand names. As part of this
strategy, we have completed three important acquisitions and have three
acquisitions pending. In July 1999, we acquired Hooker, a leading manufacturer
of performance exhaust systems, headers, mufflers and Harley-Davidson(R) exhaust
pipes. This acquisition complements Holley's existing product lines and enhances
our position as a leader in the underhood performance market. In October 1998,
we acquired Lunati, which manufactures and distributes internal engine systems
including performance camshafts, crankshafts, pistons, rods, and other
automotive products to the racing and street performance market under the well
known Lunati brand name. In August 1998, we acquired Weiand, a leading
manufacturer of induction systems components including intake manifolds, super
chargers and water pumps.
ACQUISITIONS
Completed Major Acquisitions
Hooker Industries, Inc. In July 1999, we acquired Hooker, a leading
manufacturer of performance exhaust systems, headers, mufflers and
Harley-Davidson(R) exhaust pipes under the well known brand "Hooker Headers."
The Hooker brand is the leading brand in racing exhaust headers and is the most
widely recognized brand in street performance headers. The addition of the
Hooker business to our other air management products establishes Holley as the
only company to offer a comprehensive and integrated air intake and exhaust
management system. The newly introduced Hooker Header systems for the
Harley-Davidson(R) motorcycle market represents a significant growth
opportunity.
Lunati Companies. In October 1998, we acquired Lunati, which manufactures
and distributes internal engine systems including performance camshafts, crank
shafts, pistons, rods and other automotive products to the racing market under
the Lunati brand name. The Lunati acquisition added a well known name in the
performance aftermarket to the Holley family of brand names while broadening our
internal engine management product lines. The Lunati acquisition also enabled us
to enter the growing performance go-cart market and significantly increases our
exposure to the junior dragster market.
Weiand Automotive Industries. In August 1998, we acquired Weiand, a
leading manufacturer of induction systems components including intake manifolds,
super chargers and water pumps. Historically, Holley purchased and then resold
intake manifolds. The Weiand acquisition expanded our manufacturing capabilities
to include intake manifolds. Weiand is vertically integrated, manufacturing its
own castings at its aluminum foundry, which significantly increases our margins
on this product. Additionally, we consolidated all of Weiand's manufacturing
operations (other than the
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foundry) into our Bowling Green, Kentucky operation, which has reduced costs and
increased efficiency.
FlowTech. In October 1999, we acquired Biggs Manufacturing, Inc. (also
known as FlowTech), a leading manufacturer of performance exhaust systems,
headers, mufflers and exhaust accessories. The addition of the FlowTech business
to our Hooker exhaust and other air management products further complements and
completes our comprehensive air intake and exhaust management system offerings.
Also, this acquisition also provides us with immediate entry into the
performance muffler segment of the underhood performance market. FlowTech has
recently introduced its AIRMASS(TM) exhaust header for the growing import
performance market.
Pending Acquisitions
Nitrous Oxide Systems, Inc. NOS is the leading manufacturer of nitrous
oxide injection systems to the performance aftermarket. Nitrous oxide injection
systems significantly increase engine horsepower by increasing the amount of
air/fuel mixture delivered to the cylinders. NOS has a strong position in the
import performance market as well as in the drag racing market. We have a signed
letter of intent with NOS, which gives us the exclusive right to purchase NOS
until October 11, 1999. While we are currently conducting our financial and
legal due diligence and negotiations with NOS, there can be no assurance that
the acquisition will be consummated. If NOS is acquired, it will complement our
ability to offer a range of systems under the hood which substantially increase
horsepower and engine performance.
Earl's Performance Products. Earl's is a provider of underhood performance
fittings, brake lines and hoses. The Earl's business, if acquired, would
complete our fuel management systems product offerings and expand our cooling
system business. We have a signed letter of intent with Earl's which gives us
the exclusive right to purchase this company until October 6, 1999, and we are
conducting our financial and legal due diligence. Our negotiations are ongoing,
but there can be no assurance that the acquisition will be consummated.
PRODUCTS
Our product line is broadly divided into two segments: (i) a full line of
performance products including induction components, internal engine components
and ignition components; and (ii) remanufactured products.
Performance Products
We are a leading manufacturer of a diversified line of performance
automotive products that are designed to enhance street, off-road, recreational
and competitive vehicle performance through increased horsepower, torque and
acceleration. We hold a strong position in the performance segment due to our
brand preferences among car enthusiasts and racers. Our performance product
line, accounting for 83.0% of net sales for the twelve months ended June 27,
1999, is made up predominately of induction, internal engine and ignition
components.
Induction Components. Induction components are products that transfer
gasoline, mix gasoline and oxygen and route or force the mixed gases to the
cylinders. Induction components represent 52.8% of net sales for the twelve
months ended June 27, 1999. The induction components that we manufacture are as
follows:
<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- ------- -----------
<S> <C>
Carburetors............................ Mechanical apparatus used to supply internal
combustion engines with a precise vaporized fuel
mixture and currently our largest single product
offering. We manufacture a broad range of
performance, remanufactured and specialty
carburetors.
</TABLE>
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<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- ------- -----------
<S> <C>
Fuel Injection Systems................. Electronic apparatus which provides the engine with a
precise vaporized fuel mixture. We manufacture a
line of throttle body and multi-port fuel
injection systems for popular automotive and
marine applications.
Fuel Pumps............................. Transfer fuel from the fuel tank to the engine. We
manufacture, market and distribute a full line of
in-tank, external, mechanical and electronic fuel
pumps.
Intake Manifolds....................... Collect and direct air to the engine and are
designed to provide greater engine performance
through increasing torque and horsepower by better
directing the fuel-air mixture to the cylinders.
We manufacture a full line of aluminum performance
intake manifolds for both the automotive and
marine markets.
Cylinder Heads......................... Mounted on top of the engine, they house the
valves that control the fuel/air mixture flowing
in and the exhaust flowing out of the engine.
Performance cylinder heads can increase engine
performance through increased throttle response,
torque and acceleration.
</TABLE>
Exhaust Systems. Exhaust systems convey exhaust gases from the engine and
reduce the level of environmental pollutants. Hooker and FlowTech are leading
manufacturers of exhaust systems components, which represent 14.2% of net sales
for the twelve months ended June 27, 1999. The exhaust system components that we
manufacture as a result of acquiring Hooker and FlowTech are as follows:
<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- ------- -----------
<S> <C>
Headers................................ Highly tuned exhaust manifolds which collect
exhaust gases from each cylinder and route the gas
to a central collection point. Headers are
designed to decrease back pressure and thus
enhance engine performance.
Mufflers............................... Sound deadening devices that use mechanical
dampers to suppress engine exhaust sound.
Performance mufflers are designed to either
enhance performance by reducing exhaust gas back
pressure or to produce particular sound patterns.
Exhaust Fittings....................... Cosmetic and performance tips that are either
welded or mechanically attached to the muffler or
exhaust pipe to improve vehicle cosmetics.
</TABLE>
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Internal Engine Components. Internal engine components are the mechanical
parts within an engine that transfer power generated from internal combustion to
the vehicle's transmission. With the acquisition of Lunati, we successfully
entered the internal engine components segment of the market with a line of
performance camshafts, crankshafts, pistons and rods that are sold under the
well known "Lunati" brand name. Internal engine components represented 8.2% of
net sales for the twelve months ended June 27, 1999.
<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- ------- -----------
<S> <C>
Camshafts.............................. Operate the engine valves and can improve vehicle
performance by optimizing vehicle torque for both
street and competition use.
Crankshafts............................ Connected to the piston rods, they transmit power
to the vehicle's transmission.
Pistons................................ Moving in the cylinders, they capture the energy
of the internal combustion and transmit it to the
piston rods and crankshaft.
Rods................................... Transmit power from the pistons to the crankshaft.
</TABLE>
Ignition Components. Ignition components ignite and cause combustion of
the fuel/air mixture in the cylinders at the optimal moment. In 1997, we
successfully entered the ignition components segment of the market with our
digitally controlled, capacitive discharge Annihilator(TM) ignition system. The
Annihilator(TM) system is a complete digital ignition system that includes
billet distributors, Lazershot 50(TM) wire sets, performance coils, digital
capacitive discharge control systems (including the only individual cylinder
timing system commercially available) and a full eight sensor data acquisition
system. Even though ignition systems accounted for less than 0.3% of 1998 pro
forma net sales, we believe that this segment provides an attractive growth
opportunity and should increase as a percentage of our net sales in the future.
<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- ------- -----------
<S> <C>
Digital Control Module................. Microprocessor controlled, fully programmable
(engine rpm based) ignition control system that
enables the user to specify engine timing
parameters. These parameters can include spark
timing, spark retard, establishing engine rpm
maximum ("rev limits") and other signals.
Coils.................................. Electrical charge collection and relay device
designed to amplify the electrical impulse being
sent to each spark plug to deliver a higher
current signal/spark.
Wire Sets.............................. Engine specific and universal fit wire bundles
designed to relay the spark signal from the
distributor to the spark plug with a minimum loss
in energy.
Billet Distributors.................... Precision machined electromechanical device that
controls the distribution of ignition spark signal
to each of the engines spark plugs.
</TABLE>
Performance Chemicals and Cooling Systems. We recently introduced a line
of specialty chemicals which are effective in the internal cleansing of an
engine's fuel system. This line is being manufactured and distributed by a
private label chemical manufacturer but sold under the Holley brand name. As a
result of the Weiand acquisition, we entered the cooling systems segment of the
performance market with Weiand's performance water pumps. We view performance
chemicals and cooling systems as areas of growth and we have seen demand for
Weiand water pumps increase fivefold since acquiring Weiand.
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<PAGE> 63
Remanufactured Carburetors/Fuel Injectors
We manufacture and market a line of remanufactured carburetors and fuel
injection components. Remanufacturing is the process of repairing,
reconditioning, recalibrating and cleaning used products. Our remanufactured
product line accounted for 16.0% of net sales for the twelve months ended June
27, 1999. We are a leader in the remanufactured carburetors segment of the
automotive aftermarket, and we believe there is opportunity for growth from the
outsourcing of corporate fleet maintenance by companies with large fleets of
carbureted trucks. We recently introduced a line of remanufactured fuel
injectors for this marketplace and believe that this line will offset, over
time, the decline in remanufactured carburetor sales.
RESEARCH AND DEVELOPMENT
We constantly develop new products to respond to consumer demand, to
increase the performance characteristics of existing product lines and to expand
into new product lines. Over the course of our history, we have expanded our
business operations by developing and adapting product lines in response to
changing engine technology, such as our development of the Annihilator(TM)
ignition system and our performance throttle body and multi-port fuel injection
systems. The success of our R&D effort is evident from our introduction of over
475 new part numbers in 1998 (including 353 new part numbers at the SEMA trade
show in November 1998) and our winning the 1999 SEMA Best New Racing Product
Award for our 500 gallon per hour electric fuel pump. Focusing primarily on fuel
injected vehicles, it is our goal to introduce 1,000 new part numbers in 1999.
We recently completed the construction and installation of a 14,000 square
foot R&D laboratory at our Bowling Green facility. Operated by 24 degreed
engineers who are supported by highly trained technicians, this R&D facility has
a full complement of engineering and testing equipment including five state of
the art dynamometers used for full scale engine analysis, 12 computer modeling
stations and a full range of environmental testing capabilities. We believe that
this facility is unmatched in the performance automotive market. In 1998, we
spent approximately $2.3 million on R&D, and we plan on spending approximately
$2.4 million on R&D in 1999.
DISTRIBUTION
We believe we have the broadest distribution network in the industry and
sell through retail, wholesale, mail order and OEM segments. Our products are
sold in all 50 states and Canada and to a lesser degree to other export markets.
Although we believe we have the broadest distribution in the industry, we are
continually trying to expand our customer base. Our largest and fastest growing
distribution channel is mail order which includes our two largest customers,
Summit Racing and Jeg's. The retail channel includes mass merchandisers and auto
parts retailers with the majority of our retail sales through auto parts
retailers which include Advance Auto Parts, AutoZone, CSK Auto and Pep Boys. We
have recently been selected to be the performance induction system category
manager for Advance Auto Parts and have recently started selling our performance
products to CSK Auto and PACCAR. Wholesale distribution is the industry's
traditional channel and a major outlet for our performance products. Significant
customers include Keystone, O'Reilly and The 3-Star, AAM and USP buying groups.
We manufacture products for and sell directly to OEM's including the "Big
Three" automakers as well as manufacturers of marine applications, material
handling and stationary power equipment. Approximately 9.2% of our 1998 pro
forma net sales came from direct product sales to OEM's, and our largest OEM
accounts are with the marine inboard engine manufacturers (Volvo/Penta, Mercury
Marine and others). We see an opportunity to expand our high margin OEM business
through applications such as personal watercraft, go-carts, snowmobiles and
motorcycles.
While not a specific distribution channel, we export products to several
U.S.-based suppliers that have worldwide distribution capabilities. Export
products are used for American-made automo-
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<PAGE> 64
biles throughout Europe, Australia, Asia, South America and Central America and
represented approximately 4.5% of our 1998 pro forma net sales. We believe that
the export market represents a significant growth opportunity for us to leverage
Holley's racing brand awareness and capitalize on the current trend of
increasing interest in the performance market overseas.
MARKETING
We have an experienced sales force of 18 outside and 15 in-house
salespersons, and we support our sales efforts with extensive advertising and
promotional programs. We focus our advertising and promotional efforts on NASCAR
because of its importance in the motorsports industry and influence on the
performance aftermarket. In addition, we sponsor many of the nation's other
leading racing sanctioning bodies, including the IHRA and the NHRA, as well as
key motor sports associations including the National Street Rod Association, the
World Karting Association and the National Muscle Car Association. We also
sponsor different national events including the Holley Spring Nationals drag
racing event, Hot Rod Magazine East and West Coast Power Tours, the Rod and
Custom Americruise and the Hot Rod Magazines' Power Club.
To ensure that we understand and appreciate the needs of our customers, we
operate three touring display trailers carrying our products and catalogs and
personnel. These trailers, one of which is a 64 foot -- 18 wheel trailer and two
of which are 35 foot -- 5th wheel trailers, travel to approximately 125 events
nationally including automotive racing events, specialty automotive shows,
retail store openings and distributor open houses. This visible presence at
these events enables us to elicit customer comments regarding their preferences
and suggestions for new or modified products. We also maintain a technical
hotline, e-mail address and web page to assist consumers with installation and
application questions. A total of 22 qualified technicians handle approximately
53,000 inquiries per year.
FACILITIES
We have eight manufacturing facilities located in Bowling Green, Kentucky,
Springfield, Tennessee, Los Angeles and Ontario, California, Memphis, Tennessee,
Phoenix, Arizona and Ciudad Industrial and Sonoita, Sonora, Mexico and we
believe that each is well maintained and suitable for its purpose. As part of
our business strategy, we endeavor to manufacture in our facilities all critical
components and systems. However, to complete certain products, we outsource
certain processes to third parties. Our approximately 220,000 square foot
manufacturing and distribution facility in Bowling Green, Kentucky sits on 15.4
acres and also is our headquarters. At this location, we manufacture, package
and distribute carburetors, intake manifolds, electric fuel pumps and fuel
injection systems. In connection with the management change in 1997, we focused
on reducing costs and increasing our manufacturing efficiency. As part of this
program, we transformed the manufacturing process at our Bowling Green facility
from an inventory intensive batch process to a pull-through cellular
manufacturing operation with 45 manufacturing cells managed by employee
self-directed teams. The implementation of the cellularized operation resulted
in a productivity increase of 17.3% (as measured by net sales per employee), and
our management believes that there are still opportunities for productivity
improvements within the system. We are currently in the process of constructing
a new approximately 110,000 square foot distribution facility in Bowling Green,
Kentucky which will be completed in the third quarter of 1999. We will move all
of our performance products distribution functions to this facility, allowing us
to expand our manufacturing operations at our current facilities.
Our remanufactured carburetor operation is located in Springfield,
Tennessee. This approximately 95,000 square foot facility is also completely
cellularized with seven manufacturing cells that are managed by employee
self-directed teams. We lease the Springfield facility on a year to year basis
from the local industrial authority (pursuant to an industrial revenue bond) at
a rate of one hundred dollars ($100) per year.
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<PAGE> 65
In connection with the Weiand acquisition, we acquired a leasehold interest
in an approximately 30,000 square foot aluminum foundry located in Los Angeles,
California. The other manufacturing operations of Weiand were moved to our
Bowling Green facility. The foundry ensures a reliable supply of quality
castings on a cost-effective basis. We employ over forty employees at the
foundry which operates four pouring stations and four mold machines to produce
components used in the manufacture of manifolds and other performance parts. In
connection with the Lunati acquisition, we acquired a leasehold interest in an
approximately 30,000 square foot manufacturing facility located in Memphis,
Tennessee. This location manufactures, packages and distributes camshafts,
crankshafts, pistons and rods. The Memphis facility is currently implementing
the transition of its manufacturing operations from a traditional batch and
queue manufacturing operation to a cellularized system. This transition is
expected to be completed in the third quarter of 1999.
Hooker has a manufacturing facility in Ciudad Industrial, Mexico and an
administrative office in Ontario, California. Hooker leases the land and
buildings in Ontario, California from H & S Properties, Inc. pursuant to various
lease agreements, which expire August 31, 2003. The lease agreements do not
provide for any renewal options upon completion of the current lease term. The
monthly rent payments are subject to adjustment based upon the consumer price
index. Hooker leases the land and buildings in Ciudad Industrial, Mexico from a
third-party. The lease was recently renewed for a term ending July 31, 2004. The
lease does not provide for rent escalations during this period.
SEASONALITY
Our operations experience slight seasonal trends which generally affect the
overall automotive aftermarket industry. Historically, our revenues are highest
in the spring (our second fiscal quarter), which marks the beginning of the
racing season and when the weather is better suited for outdoor automotive
repair activity. Seasonality has a more prevalent effect on our remanufacturing
facility in Springfield, and accordingly, we occasionally hire temporary
employees to respond to peak demand.
COMPETITION
There is significant competition in the performance automotive products
segment, and we compete with many other companies and individuals in the
manufacture and sale of performance automotive parts. We compete primarily on
the basis of product performance, brand name, quality, service and price. Some
of our competitors are substantially larger and have greater financial resources
than we do. Within our performance products line, we primarily compete with
Edelbrock Corporation, a public company, though we also compete against smaller,
specialized producers of performance automotive products. Holley and Edelbrock
are the only two companies that currently provide products for nearly all
product segments of the performance market. We view this situation as a
significant opportunity for our Company, and accordingly, we seek to capitalize
on this opportunity by making strategic acquisitions in this fragmented
industry.
EMPLOYEES
As of June 30, 1999, we had approximately 938 employees, approximately 29
of whom are part-time, 707 are hourly and 202 are full-time/salaried. None of
our employees are represented by labor unions, and we provide a comprehensive
benefits program to all full-time employees. Our commitment to our employees has
led to high levels of employee loyalty, low turnover and a positive working
relationship between management and the employees. In Bowling Green our
employees average 57 years of age and 32 years of service with our Company,
while our employees in Springfield average 38 years of age and seven years of
service. Hooker has approximately 359 employees, including approximately 306 in
Mexico and 53 in California.
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<PAGE> 66
LEGAL PROCEEDINGS
In May 1999, Union Pacific Railroad Company initiated litigation against
Weiand and others in federal district court for the Central District of
California alleging that certain soil and groundwater contamination discovered
on the Union Pacific property in Los Angeles migrated from the adjacent Weiand
facility and, therefore, Weiand is responsible for costs related to
investigation and remediation. The complaint seeks costs in the amount of $4.5
million already incurred and at least an additional $800,000 in future response
costs, as well as an injunction directing Weiand to abate the alleged
contamination. At this time, we are unable to assess the likelihood of an
unfavorable outcome or, in the event of such an outcome, the amount of any
resulting liability. We are investigating the claims of Union Pacific and intend
to defend them vigorously.
We have been named as defendants in a number of legal actions arising from
normal business activities. Although the amount of any ultimate liability with
respect to such matters cannot be precisely determined, we do not expect any
such liability to have a material adverse effect on our overall operations.
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<PAGE> 67
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age and position of each person
who is an executive officer or a member of the Board of Directors (a "Director")
of our Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- ------------------------------------------
<S> <C> <C>
Jeffrey G. King........................... 37 Chief Executive Officer, President and
Director
James R. Vance............................ 39 Executive Vice President and Chief
Operating Officer
Robert L. Wineland........................ 44 Vice President, Chief Financial Officer
and Secretary
John H. Nickoloff......................... 47 Vice President and General Manager --
Remanufacturing Business
William H. Bass........................... 50 Vice President -- Marketing and Sales
Christopher Lacovara...................... 34 Vice President, Treasurer, Assistant
Secretary and Director
Evan D. Wildstein......................... 28 Assistant Secretary and Director
James A. Kohlberg......................... 41 Director
Marion H. Antonini........................ 68 Director
William F. Andrews........................ 67 Director
James D. Wiggins.......................... 51 Director
Samuel P. Frieder......................... 34 Director
</TABLE>
Jeffrey G. King. Chief Executive Officer, President and Director. Mr. King
joined our Company as Chief Executive Officer in 1997. Prior to joining our
Company, Mr. King was Executive Vice President and Chief Operating Officer of
Lincoln Brass Works, where he began in 1994 as Vice President of Sales and
Marketing. From 1984 to 1994, he held positions with increasing responsibility
at Arvin Industries, an automotive systems and components company, ultimately
becoming the manager of new business development for its electronics unit,
director of sales and marketing and business unit manager for Arvin's Gabriel
Ride Control Products.
James R. Vance. Executive Vice President and Chief Operating Officer. Mr.
Vance joined our Company as Chief Operating Officer in 1997. Prior to joining
our Company, Mr. Vance served as Vice President of Operations at U.S.
Industries, Inc., a lighting manufacturer, from 1994 to 1997, where he had total
operational responsibility for four manufacturing facilities with total annual
revenues exceeding $70 million. Prior to 1994, Mr. Vance worked at Cooper
Industries, Inc. from 1989 to 1994, where he served as a plant manager in a 350
person florescent lighting products facility.
Robert L. Wineland. Vice President, Chief Financial Officer and Secretary.
Mr. Wineland joined our Company as Chief Financial Officer in 1997. From 1993 to
1997, Mr. Wineland served as Vice President of Finance at the France Compressor
Products division of Coltec, a multiplant, international manufacturer of sealing
components and valves for industrial compressors.
John H. Nickoloff. Vice President and General Manager -- Remanufacturing
Business. Mr. Nickoloff joined our Company as Vice President in 1994. Prior to
joining our Company, Mr. Nickoloff served as a Plant Manager for Frigidaire
(White Consolidated Industries) from 1975 to 1994, and was a manager of JIT
manufacturing systems in other Frigidaire plants.
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<PAGE> 68
William H. Bass. Vice President Marketing and Sales. Mr. Bass joined our
Company in February 1999. From 1988 to January 1999, Mr. Bass was employed with
Petersen Publishing Company (publisher of Hot Rod, Motor Trend and Car Craft and
50 other magazines and publications) in various positions, including Southern
Regional Advertising Sales Manager. Mr. Bass has been involved in advertising
and marketing in the specialty automotive aftermarket industry for over 30
years.
Christopher Lacovara. Vice President, Treasurer, Assistant Secretary and
Director. Since 1995, Mr. Lacovara has been a Principal of Kohlberg & Company.
Prior to that, he was an associate at Kohlberg & Company, which he joined in
1988. Mr. Lacovara is also a director of Northwestern Steel and Wire Company.
Evan D. Wildstein. Assistant Secretary and Director. Mr. Wildstein is an
associate with Kohlberg & Company, which he joined in 1994. Mr. Wildstein is
also a director of Magnavision Corp.
James A. Kohlberg. Director. Mr. Kohlberg is the Managing Principal of
Kohlberg & Company, which he co-founded in 1987. Mr. Kohlberg is also a director
of Northwestern Steel and Wire Company.
Marion H. Antonini. Director. Mr. Antonini joined Kohlberg & Company as a
Principal in 1998. Prior to joining the firm, Mr. Antonini was Chairman,
President and Chief Executive Officer of Welbilt Corporation. Mr. Antonini is
also a director of Vulcan Materials Company, Engelhard Corporation and
Scientific-Atlanta.
William F. Andrews. Director. Mr. Andrews has been Chairman of Scovill
Fasteners, Inc. since 1995. From 1993 to 1995, Mr. Andrews was Chairman and
Chief Executive Officer of Amdura Corporation, a manufacturer of hardware and
industrial equipment. Mr. Andrews is also a director of Black Box Corporation,
Corrections Corporation of America, Johnson Controls, Inc., Katy Industries,
Navistar International Corp., Northwestern Steel and Wire Co., Dayton Superior
Corp. and Southern New England Telephone Company.
James D. Wiggins. Director. Currently, Mr. Wiggins is Group President of
the Stant/Schrader Group of The Gates Rubber Co., and was President and Chief
Executive Officer of Bridge Products, Inc. from 1987 through its acquisition by
Schrader, Inc. in 1996.
Samuel P. Frieder. Director. Mr. Frieder has been a Principal of Kohlberg
& Company since 1995. Prior to that, he was an associate at Kohlberg & Company,
which he joined in 1989.
EXECUTIVE COMPENSATION
Compensation of Directors. Directors who are officers or employees of our
Company receive no additional compensation for serving on the Board of
Directors. Our non-employee members of the Board of Directors receive
reimbursement for expenses incurred in attending meetings.
Compensation of Executive Officers. The following table shows, for the
fiscal year ended on December 31, 1998, the compensation paid to or earned by
our Chief Executive Officer and four other most highly compensated executive
officers who were serving at the end of fiscal 1998 (the "Named Executive
Officers").
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<PAGE> 69
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(2)
- --------------------------- ---- -------- -------- ----------
<S> <C> <C> <C> <C>
Jeffrey G. King(1)................................... 1998 $112,241 $250,000 1,467,304
Chief Executive Officer
James R. Vance(1).................................... 1998 68,571 103,500 1,024,216
Chief Operating Officer
Robert L. Wineland(1)................................ 1998 59,249 75,000 733,725
Chief Financial Officer
John H. Nickoloff(1)................................. 1998 64,316 74,025 440,235
Vice President -- Remanufacturing
</TABLE>
- ---------------
(1) Each of the executives participates in Holley's 401(k) plan. Under the plan,
Holley matches contributions 100% up to a maximum of 6% of the participant's
total salary and bonus for that year. In 1998, Holley paid the following
amounts in 401(k) matches: James R. Vance -- $4,025; Robert L.
Wineland -- $3,500; John H. Nickoloff -- $3,603. Each of the executives also
participates in Holley's group health and dental insurance plan.
(2) Options to buy stock of Holdings, the direct parent of Holley, granted in
1998.
<TABLE>
<CAPTION>
POTENTIAL
OPTION GRANTS IN LAST FISCAL YEAR REALIZABLE VALUE AT
----------------------------------------- ASSUMED ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OF FOR OPTION TERM
OPTIONS EMPLOYEES BASE PRICE EXPIRATION -----------------------
NAME GRANTED IN FISCAL YEAR ($/SH) DATE 5% 10%
- ---- ---------- -------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey G. King -- C.E.O.............. 1,467,304 40.03% $1.50 05/15/2008 $1,384,169 $3,507,757
James R. Vance -- C.O.O............... 1,024,216 27.94 1.50 05/15/2008 966,186 2,448,505
Robert L. Wineland -- C.F.O........... 733,725 20.02 1.50 05/15/2008 692,154 1,754,053
John H. Nickoloff -- V.P. (Reman)..... 440,235 12.01 1.50 05/15/2008 415,292 1,052,432
--------- ------ ---------- ----------
Total......................... 3,665,480 100.00% $3,457,801 $8,762,747
========= ====== ========== ==========
</TABLE>
RETIREMENT AND SEVERANCE PLANS
401(k) Plans. The Company maintains two 401(k) savings plans (the "401(k)
plans"), one of which is for salaried employees and one of which is for hourly
employees. Under the 401(k) plans, participating employees can make pre-tax
deferrals. The 401(k) plans have a matching feature pursuant to which the
Company may make a discretionary contribution from its own funds to match some
or all of a participating employee's pre-tax contributions. The 401(k) plans do
not permit participating employees to make after-tax contributions. Both of the
401(k) plans are designed to be qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code") and exempt from tax under Code
Section 501(a).
Pension Plans. The Company also maintains a qualified defined benefit
pension plan (the "Pension Plan"). The Company provides benefits to
participating employees based on the employment status of each participant as an
hourly or salaried employee. The Company makes all contributions to fund the
benefits that the Pension Plan provides. The Pension Plan is designed to be
qualified under Code Section 401(a) and exempt from tax under Code Section
501(a). Under the Pension Plan, normal retirement age is 65, though participants
may retire as early as age 55 with ten years of credited service and receive a
reduced benefit. The estimated annual benefits payable upon retirement at normal
retirement age for each of the Named Executive Officers is as follows: Mr. King
$65,000; Mr. Vance $61,000; Mr. Nickoloff $51,000; and Mr. Wineland $76,000.
Severance Plan. Mr. King, Mr. Vance, Mr. Wineland and Mr. Nickoloff each
are covered by the Company's 1998 Severance Policy. The policy provides for a
severance payment equal to the greater of six months of such persons' annual
salary or one month's salary for every year of employment in the event his
employment is involuntarily terminated.
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<PAGE> 70
CERTAIN TRANSACTIONS
RELATIONSHIP WITH KOHLBERG
Pursuant to a fee arrangement, Holley pays Kohlberg an annual management
fee (plus expenses) of $850,000 for certain management and advisory services,
which is subject to increase if Kohlberg invests additional capital in Holley.
The management fee agreement terminates on the earlier of Kohlberg terminating
the agreement by written notice to Holley, April 1, 2009 or the end of the
fiscal year in which Kohlberg (through KHPP) beneficially owns less than 25% of
Holley's outstanding common stock. In 1998, we paid Kohlberg an aggregate of
$405,000 under this management fee agreement.
SECURITY OWNERSHIP
The following table sets forth the ownership of our Company's common stock
as of December 31, 1998 by our directors, executive officers, persons known by
us to own more than 5.0% of our common stock and all our directors and executive
officers as a group.
<TABLE>
<CAPTION>
AGGREGATE
NUMBERS OF SHARES PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OWNED
- ------------------------------------ ------------------ ----------
<S> <C> <C>
KHPP Holdings, Inc.(1)...................................... 1,000 100%
Directors and executive officers as a group (12
persons)(2)............................................... -- --
</TABLE>
- ---------------
(1) KHPP's business address is: c/o Kohlberg & Co., LLC, 111 Radio Circle, Mt.
Kisco, New York, 10549. The voting common stock of KHPP Holdings, Inc. is
owned beneficially and of record as follows: KHPP Acquisition Co.,
L.P. -- 97.1%; Jeffrey G. King -- 0.4%; Robert L. Wineland -- 0.2%; James R.
Vance -- 0.3%; John Nickoloff -- 0.1%; and other unaffiliated investors --
1.9%. James A. Kohlberg indirectly owns 100% of KHPP Acquisition Co., L.P.
Mr. King, Mr. Wineland, Mr. Vance and Mr. Nickoloff also hold the same
officer positions with KHPP as they hold with Holley. The business address
of each such persons is: c/o Holley Performance Products Inc., 1801
Russellville Rd., Bowling Green, Kentucky 42101.
(2) The directors and officers of Holley do not own (beneficially or of record)
common stock of Holley, but own common stock of KHPP, which owns all of the
common stock of Holley. See footnote (1) above.
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<PAGE> 71
DESCRIPTION OF THE CREDIT FACILITY
In May 1998, we established a senior secured credit facility with a group
of banks led by Credit Agricole Indosuez, which after certain amendments
consists of a $25.0 million revolving credit facility and term loans totaling
$115.0 million which were utilized in part to acquire Weiand, Lunati and Hooker.
Concurrent with the closing of the initial Notes offering, we applied a
portion of the offering proceeds to permanently repay all of our indebtedness
under the term loans and temporarily repay all amounts outstanding under the
revolving credit facility. Therefore, our bank credit facility consists of only
the revolving credit facility thereunder.
We may borrow from time to time under the revolving credit facility for
working capital purposes, and all outstanding borrowings thereunder must be
repaid in full by June 2003. Loans under our bank credit facility bear interest,
at our option, at one of two floating rates (which can be changed at our option
from time to time): either Base Rate (based on Credit Agricole Indosuez'
announced "prime rate" or 1/2% per annum in excess of the Federal Funds Rate),
plus an additional 1.0% per annum, or the reserve adjusted London Interbank
Offered Rate ("LIBOR") plus an additional 2.5%. The bank credit facility
contains various covenants made by Holley, including covenants prohibiting or
limiting our ability to: (i) incur additional debt, (ii) grant liens or (iii)
sell our assets, together with financial covenants and information reporting
requirements we must meet.
During the term of the bank credit facility, Holley (on a consolidated
basis) will be required to maintain a minimum EBITDA level as well as certain
financial ratios, including: (1) a ratio of debt to EBITDA (net income before
provision for interest, tax, depreciation or amortization expense) and (2) a
ratio of EBITDA to interest expense, in each case, on a trailing four-quarter
basis. Any borrowings under the revolving credit facility will be limited to the
lesser of $25.0 million or 85% of the eligible accounts receivable and 55% of
the eligible inventory of Holley and its subsidiaries.
Our bank credit facility is guaranteed by all of Holley's subsidiaries, and
is secured by a first priority security interest in favor of the bank lenders in
the capital stock of Holley and its subsidiaries and in each of their accounts
receivable and inventory.
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DESCRIPTION OF THE EXCHANGE NOTES
You can find the definitions of certain terms used in this description
under the subheading "-- Certain Definitions." In this description, the word
"Company" refers only to Holley Performance Products Inc. and not to any of its
subsidiaries. When we refer to "Notes" in this section, we mean the exchange
Notes and also the outstanding Notes.
The Company issued the Notes and will issue the exchange Notes under an
Indenture (the "Indenture") among itself, the Guarantors and State Street Bank
and Trust Company, as trustee (the "Trustee"). The terms of the exchange Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
The 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 of these Notes. You can obtain a copy of the Indenture from the Trustee.
BRIEF DESCRIPTION OF THE NOTES AND THE SUBSIDIARY GUARANTEES
The Notes
These Notes:
- are general unsecured obligations of the Company;
- are equal in right of payment to all existing and future senior
Indebtedness of the Company;
- are senior in right of payment to all future subordinated Indebtedness of
the Company; and
- are unconditionally guaranteed by the Guarantors.
The Subsidiary Guarantees
These Notes are guaranteed by all of the Company's existing Domestic
Restricted Subsidiaries.
The Subsidiary Guarantees:
- are general unsecured obligations of each Guarantor;
- are equal in right of payment to all existing and future senior
Indebtedness of each Guarantor; and
- are senior in right of payment to all future subordinated Indebtedness of
each Guarantor.
The exchange Notes will be issued solely in exchange for an equal principal
amount of outstanding Notes pursuant to the exchange offer. The form and terms
of the exchange Notes will be identical in all material respects to the form and
terms of the outstanding Notes except that (i) the exchange Notes will have been
registered under the Securities Act and (ii) the registration rights and
contingent liquidated damages provisions applicable to the outstanding Notes are
not applicable to the exchange Notes.
The Notes and each Subsidiary Guarantee will be effectively subordinated in
right of payment to all existing and future secured Indebtedness of the Company
and the applicable Guarantor, respectively, with respect to the assets securing
such Indebtedness. Assuming we had completed the offering of these Notes and
applied the net proceeds as intended and that the Additional Equity had been
contributed, as of June 27, 1999, the Company and the Guarantors would have had
total senior Indebtedness of approximately $146.9 million (consisting of the
Notes offered hereby and approximately $2.3 million of secured Indebtedness
outstanding under our revolving credit facility). The Indenture will permit us
and the Guarantors to incur additional secured Indebtedness.
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As of the date of the Indenture, all of our subsidiaries will be
"Restricted Subsidiaries." However, under the circumstances described below
under the subheading "Certain Covenants -- Designation of Restricted and
Unrestricted Subsidiaries," we will be permitted to designate certain of our
subsidiaries as "Unrestricted Subsidiaries." Unrestricted Subsidiaries will not
be subject to many of the restrictive covenants in the Indenture. Unrestricted
Subsidiaries will not guarantee these Notes.
Our Foreign Restricted Subsidiaries and our future Domestic Restricted
Subsidiaries that are not Wholly Owned Restricted Subsidiaries will not be
required to guarantee these Notes. In the event of a bankruptcy, liquidation or
reorganization of a non-guarantor subsidiary, the non-guarantor subsidiary will
pay the holders of its debt and its trade creditors before it will be able to
distribute any of its assets to us.
PRINCIPAL, MATURITY AND INTEREST
The Indenture will permit the Company to issue Notes with a maximum
aggregate principal amount of $250.0 million, of which $150.0 million will be
issued in this exchange offer. The Company will issue Notes in denominations of
$1,000 and integral multiples of $1,000. The Notes will mature on September 15,
2007.
Interest on these Notes will accrue at the rate of 12 1/4% per annum and
will be payable semi-annually in arrears on March 15 and September 15,
commencing on March 15, 2000. The Company will make each interest payment to the
Holders of record of these Notes on the immediately preceding March 1 and
September 1.
Interest on these Notes will accrue from the date of original issuance 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 NOTES
If a Holder has given wire transfer instructions to the Company, the
Company will make all principal, premium and interest payments on those Notes in
accordance with those instructions. All other payments on these 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 address set forth in the register of
Holders.
PAYING AGENT AND REGISTRAR FOR THE 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 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 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 Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed. The
registered Holder of a Note will be treated as the owner of it for all purposes.
BOOK-ENTRY; DELIVERY AND FORM
The exchange notes will be issued in the form of a global note (the "Global
Note"). The Global Note will be deposited with, or on behalf of, DTC and
registered in the name of DTC or its nominee.
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Except as set forth below, the Global Note may be transferred in whole or in
part, only to DTC or another nominee of DTC. Investors may hold their beneficial
interests in the Global Note directly through DTC if they have an account with
DTC or indirectly through organizations which have accounts with DTC.
Exchange Notes that are issued as described below under "-- Certificated
Exchange Notes" will be issued in definitive form. Upon the transfer of an
exchange Note in definitive form, such exchange Note will, unless the Global
Note has previously been exchanged for exchange Notes in definitive form, be
exchanged for an interest in the Global Note representing the principal amount
of exchange Notes being transferred.
Certain Book-Entry Procedures for the Global Note
The descriptions of the operations and procedures of DTC, Euroclear and
Cedel Bank set forth below 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 change by them from time to time. We take
no responsibility for these operations or procedures, and investors are urged to
contact the relevant system or its participants directly to discuss these
matters.
DTC has advised us that it is:
- a limited purpose trust company organized under the laws of the State of
New York;
- a "banking organization" within the meaning of the New York Banking Law;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the Uniform Commercial
Code, as amended; and
- a "clearing agency" registered pursuant to Section 17A of the Exchange
Act.
DTC was created to hold securities for its participants (collectively, the
"Participants") and facilitates the clearance and settlement of securities
transactions between Participants through electronic book-entry changes to the
accounts of its Participants, thereby eliminating the need for physical transfer
and delivery of certificates. DTC's Participants include securities brokers and
dealers (including the initial purchasers of the outstanding notes), banks and
trust companies, clearing corporations and certain other organizations. Indirect
access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies (collectively, the "Indirect
Participants"), that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Investors who are not Participants
may beneficially own securities held by or on behalf of DTC only through
Participants or Indirect Participants.
We expect that pursuant to procedures established by DTC:
- upon deposit of the Global Note, DTC will credit the accounts of
Participants with an interest in the Global Note; and
- ownership of the exchange Notes will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by
DTC (with respect to the interests of Participants) and the records of
Participants and the Indirect Participants (with respect to the interests
of persons other than Participants).
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Accordingly, the ability to transfer interests in the Notes represented by a
Global Note to such persons may be limited. In addition, because DTC can act
only on behalf of its Participants, who in turn act on behalf of persons who
hold interests through Participants, the ability of a person having an interest
in exchange Notes represented by a Global Note to pledge or transfer such
interest to persons or entities that do not participate in DTC's
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system, or to otherwise take actions in respect of such interest, may be
affected by the lack of a physical definitive security in respect of such
interest.
So long as DTC or its nominee is the registered owner of the Global Note,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the exchange Notes represented by the Global Note for all purposes
under the Indenture. Except as provided below, owners of beneficial interests in
the Global Note will not be entitled to have exchange Notes represented by such
Global Note registered in their names, will not receive or be entitled to
receive physical delivery of certificated Notes, and will not be considered the
owners or holders thereof under the Indenture for any purpose, including with
respect to the giving of any direction, instruction or approval to the Trustee
thereunder. Accordingly, each holder owning a beneficial interest in the Global
Note must rely on the procedures of DTC and, if such holder is not a Participant
or an Indirect Participant, on the procedures of the Participant through which
such holder owns its interest, to exercise any rights of a holder of exchange
Notes under the Indenture or such Global Note. We understand that under existing
industry practice, in the event that we request any action of holders of
exchange Notes, or a holder that is an owner of a beneficial interest in the
Global Note desires to take any action that DTC, as the holder of such Global
Note, is entitled to take, DTC would authorize the Participants to take such
action and the Participants would authorize holders owning through such
Participants to take such action or would otherwise act upon the instruction of
such holders. Neither we nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of exchange Notes by DTC, or for maintaining, supervising or reviewing any
records of DTC relating to such exchange Notes.
We expect that DTC or its nominee, upon receipt of any payment of principal
of or interest on the Global Note, will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of the Global Note as shown on the records of DTC or its
nominee. We also expect that payments by participants to owners of beneficial
interests in the Global Note held through such participants will be governed by
standing instructions and customary practices and will be the responsibility of
such participants. We will not have any responsibility or liability for any
aspect of the records relating to, or payments made on account of, beneficial
ownership interests in the Global Note for any Note or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests or for any other aspect of the relationship between such participants
and the owners of beneficial interests in the Global Note owning through such
participants.
Transfers between the Participants in DTC will be effected in accordance
with DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Cedel Bank will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Cross-market transfers between the Participants in DTC, on the one hand,
and Euroclear or Cedel Bank participants, on the hand, will be effected through
DTC in accordance with DTC's rules on behalf of Euroclear or Cedel Bank, as the
case may be, by its respective depositary; however, such cross-market
transactions will require delivery of instructions to Euroclear or Cedel Bank,
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 Bank, 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 Notes in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Euroclear participants and Cedel Bank
participants may not deliver instructions directly to the depositaries for
Euroclear or Cedel Bank.
Because of time zone differences, the securities account of a Euroclear or
Cedel Bank participant purchasing an interest in a Global Note from a
Participant in DTC will be credited, and
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any such crediting will be reported to the relevant Euroclear or Cedel Bank
participant, during the securities settlement processing day (which must be a
business day for Euroclear and Cedel Bank) immediately following the settlement
date of DTC. Cash received in Euroclear or Cedel Bank as a result of sales of
interest in a Global Security by or through a Euroclear or Cedel Bank
participant to a Participant in DTC will be received with value on the
settlement date of DTC but will be available in the relevant Euroclear or Cedel
Bank cash account only as of the business day for Euroclear or Cedel Bank
following DTC's settlement date.
DTC, Euroclear and Cedel Bank are under no obligation to perform or to
continue to perform the foregoing procedures to facilitate transfers of
interests in the Global Note among participants in DTC, Euroclear and Cedel, and
such procedures may be discontinued at any time. Neither we nor the Trustee will
have any responsibility for the performance by DTC, Euroclear or Cedel Bank or
their respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
The information in this Prospectus concerning DTC, Euroclear and Cedel and
their book-entry systems has been obtained from sources that we believe to be
reliable, but we have not independently verified this information.
Certified Exchange Notes
If
- we notify the Trustee in writing that DTC is no longer willing or able to
act as a depositary or DTC ceases to be registered as a clearing agency
under the Exchange Act and a successor depositary is not appointed within
90 days of such notice or cessation;
- we, at our option, notify the Trustee in writing that we elect to cause
the issuance of exchange Notes in definitive form under the Indenture; or
- upon the occurrence of certain other events as provided in the Indenture,
then, upon surrender by DTC of the Global Note, certificated exchange notes in
definitive form in denominations of U.S. $1,000 and integral multiples thereof
will be issued to each person that DTC identifies as the beneficial owner of the
Notes represented by the Global Note. Upon any such issuance, the Trustee is
required to register such certificated exchange Notes in the name of such person
or persons (or the nominee of any thereof) and cause the same to be delivered
thereto.
Subject to the foregoing, the Global Note is not exchangeable, except for a
Global Note of the same aggregate denomination to be registered in the name of
DTC or its nominee.
Neither we nor the Trustee shall be liable for any delay by DTC or any
Participant or Indirect Participant in identifying the beneficial owners of the
related exchange Notes and we and the Trustee may conclusively rely on, and
shall be protected in relying on, instructions from DTC for all purposes,
including with respect to the registration and delivery, and the respective
principal amounts, of the exchange Notes to be issued.
DTC management is aware that some computer applications, systems and
similar functions for processing data ("Systems") that are dependent upon
calendar dates, including dates before, on, and after January 1, 2000, may
encounter "Year 2000 problems." DTC has informed its participants and other
members of the financial community (the "Industry") that it has developed and is
implementing a program so that its Systems, as the same relate to the timely
payment of distributions (including principal and income payments) to
securityholders, book-entry deliveries and settlement of trades within DTC ("DTC
Services"), continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
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However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third-party vendors from whom DTC licenses software and hardware, and
third-party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed the Industry that it is contacting (and will
continue to contact) third-party vendors from whom DTC acquires services to: (i)
impress upon them the importance of such services being Year 2000 compliant and
(ii) determine the extent of their efforts for Year 2000 remediation (and, as
appropriate, testing) of their services. In addition, DTC is in the process of
developing such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.
SUBSIDIARY GUARANTEES
The Guarantors will jointly and severally guarantee the Company's
obligations under these exchange Notes. 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 -- The Subsidiary Guarantees Raise Fraudulent Transfer Issues".
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), another Person unless:
(1) immediately after giving effect to that transaction, no Default or
Event of Default exists;
(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 pursuant to a
supplemental indenture 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; and
(3) If the Guarantor is merging or consolidating with or transferring
its assets to a Person other than the Company and/or other Guarantors, the
Company 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 below under the caption "Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock".
The Subsidiary Guarantee of a Guarantor will be released:
(1) 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 the applicable provisions of
the Indenture;
(2) in connection with any sale of all of the Capital Stock of a
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 any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary in accordance with the Indenture.
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See "-- Repurchase at the Option of Holders -- Asset Sales" below.
OPTIONAL REDEMPTION
During the first 36 months after the Issue Date, the Company may on any one
or more occasions redeem up to 35% of the aggregate principal amount of Notes
issued under the Indenture at a redemption price of 112.25% 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 principal amount of Notes issued remains
outstanding immediately after the occurrence of such redemption (excluding
Notes held by the Company and its Subsidiaries); and
(2) the redemption occurs within 180 days of the date of the closing
of such Public Equity Offering.
Except pursuant to the preceding paragraph, the Notes will not be
redeemable at the Company's option prior to September 15, 2003.
After September 15, 2003, the Company may redeem all or a part of these
Notes 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, but not including the
applicable redemption date, if redeemed during the twelve-month period beginning
on September 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003........................................................ 106.125%
2004........................................................ 104.083%
2005........................................................ 102.042%
2006 and thereafter......................................... 100.000%
</TABLE>
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
If a Change of Control occurs, each Holder of 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 Notes pursuant to the Change of
Control Offer. In the Change of Control Offer, the Company will offer a Change
of Control Payment in cash equal to 101% of the aggregate principal amount of
Notes repurchased plus accrued and unpaid interest thereon, if any, to the date
of purchase. Within thirty 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 Notes on the
Change of Control Payment Date specified in such notice, 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 thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept for payment all 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 Notes or portions thereof so tendered;
and
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(3) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the aggregate
principal amount of Notes or portions thereof being purchased by the
Company.
The Paying Agent will promptly mail to each Holder of Notes so tendered the
Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such 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 regardless of
whether or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
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 Notes validly tendered and not withdrawn under such Change of
Control Offer.
Notwithstanding the foregoing, the Company shall not be required to make a
Change of Control Offer, as provided above, if, in connection with or in
contemplation of any Change of Control, it has made an offer to purchase (an
"Alternate Offer") any and all Notes validly tendered at a cash price equal to
or higher than the Change of Control Payment and has purchased all Notes
properly tendered in accordance with the terms of such Alternate 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. Although
there is a limited body of case law interpreting the phrase "substantially all,"
there is no precise established definition of the phrase under applicable law.
Accordingly, the ability of a Holder of Notes to require the Company to
repurchase such 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. In
addition, there can be no assurance that the Company will have available funds
sufficient to permit it to fund a Change of Control Offer. See "Risk
Factors -- We May Not Have Sufficient Funds to Purchase Notes Upon a Change of
Control".
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 the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value of the assets or Equity Interests issued or sold or
otherwise disposed of;
(2) 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 Officers' Certificate delivered to the Trustee; and
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(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 liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet) of the Company or any Restricted
Subsidiary (other than contingent liabilities and 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 a
customary novation agreement that releases the Company or such
Restricted Subsidiary from further liability; and
(b) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that are
contemporaneously (subject to ordinary settlement periods) converted by
the Company or such Restricted Subsidiary into cash (to the extent of
the cash received in that conversion).
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or the applicable Restricted Subsidiary may apply such Net Proceeds
at its option:
(1) to permanently repay Indebtedness secured by assets or Equity
Interests owned by the Company or any Restricted Subsidiary;
(2) to acquire Replacement Assets; or
(3) to the extent the Net Proceeds are derived from assets or Equity
Interests sold by a Foreign Restricted Subsidiary, to repay Indebtedness of
such Foreign Restricted Subsidiary.
Pending the final application of any such Net Proceeds, the Company or the
applicable Restricted Subsidiary may temporarily reduce revolving credit
borrowings 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 $5.0 million, the Company will make
an Asset Sale Offer to all Holders of Notes to purchase the maximum principal
amount of Notes 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
Notes tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds,
the Trustee shall select the Notes to be purchased on a pro rata basis to the
extent practicable. Upon completion of each Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, the Trustee
will select Notes for redemption as follows:
(1) if the Notes are listed, in compliance with the requirements of
the principal national securities exchange on which the Notes are listed;
or
(2) if the Notes are not so listed, on a pro rata basis, by lot or by
such method as the Trustee shall deem fair and appropriate.
No 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 Notes to be redeemed at its
registered address. Notices of redemption may not be conditional.
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If any Note is to be redeemed in part only, the notice of redemption that
relates to that Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion of
the original Note will be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on 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 (including, without limitation, any payment
in connection with any merger or consolidation involving the Company or any
of its Restricted Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable solely in
Equity Interests (other than Disqualified Stock) of the Company or
dividends or distributions payable to the Company or a Restricted
Subsidiary of the Company);
(2) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or
consolidation involving the Company) 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);
(3) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated to the Notes or the Subsidiary Guarantees, except a payment of
interest or principal at the Stated Maturity thereof; 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"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; 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 date of the Indenture (excluding Restricted Payments
permitted by clauses (2) and (3) of the 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 date of the Indenture 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
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(b) 100% of the aggregate net cash proceeds received by the Company
since the date of the Indenture as a contribution to its common equity
capital or from the issue or sale of Equity Interests of the Company
(other than Disqualified Stock) or from the issue 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),
excluding, in each case, net cash proceeds from a Public Equity Offering
to the extent used to redeem Notes, plus
(c) an amount equal to the lesser of (A) the sum of the fair market
value of the Equity Interests of an Unrestricted Subsidiary owned by the
Company and/or the Restricted Subsidiaries and aggregate amount of all
Indebtedness of such Unrestricted Subsidiary owed to the Company and
each Restricted Subsidiary on the date of redesignation of such
Unrestricted Subsidiary as a Restricted Subsidiary in accordance with
the covenant described under "-- Designation of Restricted and
Unrestricted Subsidiaries" or (B) the Designation Amount with respect to
such Unrestricted Subsidiary on the date of the designation of such
Subsidiary as an Unrestricted Subsidiary in accordance with the covenant
described under "-- Designation of Restricted and Unrestricted
Subsidiaries"; plus
(d) to the extent that any Restricted Investment that was made
after the date of the Indenture is sold for cash or otherwise liquidated
or repaid for cash, the lesser of (i) the cash return of capital with
respect to such Restricted Investment (less the cost of disposition, if
any) and (ii) the initial amount of such Restricted Investment, in each
case, to the extent Consolidated Net Income is not already increased
thereby.
So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the Indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of the Company or any
Guarantor or of any Equity Interests of the Company or 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) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company or any Guarantor with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of the
Company to the holders of its common Equity Interests on a pro rata basis;
(5) repurchases of Equity Interests of the Company or Holdings from
officers, directors, employees or consultants of the Company or any of its
Restricted Subsidiaries or of Holdings pursuant to equity ownership or
compensation plans or stockholders agreements not to exceed $1.0 million in
the aggregate;
(6) the payment of management fees to Kohlberg in aggregate amount not
to exceed for any calendar year the sum of (a) $850,000 plus (b) 2.0% of
the aggregate net cash proceeds in excess of $5.0 million received by the
Company from Kohlberg and/or its controlled Affiliates from (I) the
issuance to Kohlberg and/or such controlled Affiliates of Equity Interests
of the
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Company (other than Disqualified Stock) after the Issue Date and (II)
without duplication of any amounts included in the immediately preceding
clause (I), any contribution to the common equity capital of the Company;
or
(7) the payment of dividends and distributions to Holdings to (a) fund
payments for taxes attributable to the business and operations of the
Company and its Subsidiaries and (b) other expenses of Holdings not to
exceed $250,000 in any calendar year.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
covenant shall be determined by the Board of Directors whose resolution with
respect thereto shall be delivered to the Trustee.
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 that the Company and any Guarantor may incur Indebtedness (including
Acquired Debt), and the Company may issue Disqualified 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 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 the additional Indebtedness had been incurred, or the
Disqualified Stock had 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 be
caused thereby, the first paragraph of this covenant will not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(1) the incurrence by the Company and the Guarantors of Indebtedness
represented by the Notes, and the Subsidiary Guarantees thereof, not to
exceed $150.0 million at any one time outstanding;
(2) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness incurred pursuant to a revolving credit
facility under the Credit Facility in an aggregate principal amount at any
time outstanding not to exceed the greater of:
(a) $25.0 million (reduced by any required permanent repayments or
prepayments with the proceeds of Asset Sales actually made (which are
accompanied by a corresponding permanent commitment reduction)
thereunder); or
(b) the sum of (I) 85% of the net book value of the accounts
receivable of the Company and the Restricted Subsidiaries and (II) 55%
of the net book value of the inventory of the Company and the Restricted
Subsidiaries, less the amount of Indebtedness outstanding pursuant to
clause (14) below;
(3) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness incurred pursuant to an Acquisition Facility
under the Credit Facility in an aggregate principal amount not to exceed
$30.0 million (reduced by any permanent repayments or prepayments with the
proceeds of Asset Sales actually made thereunder);
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(4) other Indebtedness of the Company and the Restricted Subsidiaries
outstanding on the Issue Date reduced by the amount of any scheduled
amortization payments or mandatory prepayments when actually paid or
permanent reductions thereon;
(5) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations
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 or
Purchase Money Indebtedness, in an aggregate principal amount not to exceed
$5.0 million at any time outstanding;
(6) 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 (1) (without limitation as to principal amount outstanding), (4) or
(5) of this paragraph;
(7) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Wholly Owned Restricted Subsidiaries; provided that:
(a) if the Company or any Guarantor is the obligor on such
Indebtedness, such Indebtedness must be unsecured and expressly
subordinated to the prior payment in full in cash 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 Wholly Owned Restricted Subsidiary thereof and (ii) any
sale or other transfer of any such Indebtedness to a Person that is not
either the Company or a Wholly Owned Restricted Subsidiary thereof;
shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Restricted Subsidiary, as the case
may be, that was not permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations;
(9) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Restricted Subsidiary of the Company that
was permitted to be incurred by another provision of this covenant;
(10) the incurrence by the Company or any of the Guarantors of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (10), not to exceed $10.0
million at any one time outstanding;
(11) 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 in the form of additional shares of the same class of
Disqualified Stock; provided, in each such case, that the amount thereof is
included in Fixed Charges of the Company as accrued;
(12) the incurrence by the Company of Indebtedness arising from the
honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of
business; provided that such Indebtedness is extinguished within five
business days of incurrence;
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(13) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by letters of credit for the
account of the Company or such Restricted Subsidiary, as the case may be,
in order to provide security for workers' compensation claims, payment
obligations in connection with self-insurance or similar requirements in
the ordinary course of business; and
(14) the incurrence by Foreign Restricted Subsidiaries of Indebtedness
in an aggregate principal amount at any one time outstanding not to exceed
the greater of $5.0 million or the sum of (a) 85% of the net book value of
accounts receivable of the Foreign Restricted Subsidiaries and (b) 55% of
the net book value of the inventory of the Foreign Restricted Subsidiaries.
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 (14) above, or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company will be permitted to classify such item of Indebtedness on the date of
its incurrence in any manner that complies with this covenant.
The Company will not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any other Indebtedness of the Company unless such Indebtedness is
equally subordinate or junior in right of payment to the Notes. No Guarantor
will incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is subordinate or junior in right of payment to any other
Indebtedness of such Guarantor unless such Indebtedness is equally subordinate
or junior in right of payment to such Guarantor's Subsidiary Guarantee.
Limitation on Liens
The Company will not, and will not permit any Guarantor to, incur or suffer
to exist any Lien on or with respect to any property or assets now owned or
hereafter acquired by the Company or any Guarantor to secure any Indebtedness
without making, or causing such Guarantor to make, effective provision for
securing the Notes or such Guarantor's Subsidiary Guarantee, as the case may be,
(x) equally and ratably with (or prior to) such Indebtedness as to such property
for so long as such Indebtedness will be so secured or (y) in the event such
Indebtedness is subordinate in right of payment to the Notes or such Guarantor's
Subsidiary Guarantee, as the case may be, prior to such Indebtedness as to such
property for so long as such Indebtedness will be so secured.
The foregoing restrictions on the Company and the Guarantors shall not
apply to:
(1) Liens existing on the Issue Date and securing Indebtedness
outstanding on the Issue Date or Liens securing the Notes or the Subsidiary
Guarantees;
(2) Liens securing Indebtedness incurred pursuant to the Credit
Facility in an aggregate principal amount not to exceed amounts permitted
to be incurred pursuant to clauses (2) and (3) under the second paragraph
of the covenant described under "-- Incurrence of Indebtedness and Issuance
of Preferred Stock" above;
(3) Liens in favor of the Company or any Guarantor that is a Wholly
Owned Restricted Subsidiary of the Company;
(4) Liens on real or personal property of the Company or a Restricted
Subsidiary of the Company acquired, constructed or constituting
improvements made after the Issue Date to secure Capital Lease Obligations
or Purchase Money Indebtedness, provided, however, that: (a) the Incurrence
of such Indebtedness was permitted under the covenant described under
"-- Incurrence of Indebtedness and Issuance of Preferred Stock" above; (b)
the principal amount of any Indebtedness secured by such a Lien does not
exceed 100% of such purchase
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price or cost of construction or improvement of the property subject to
such Lien; (c) such Lien attaches to such property prior to, at the time of
or within 180 days after the acquisition, completion of construction or
commencement of operation of such property; and (d) such Lien does not
extend to or cover any property other than the property (or identifiable
portions thereof) acquired, constructed or constituting improvements made
with the proceeds of such Purchase Money Indebtedness;
(5) Liens to secure Acquired Debt; provided, however, that (a) such
Lien attaches to the acquired asset prior to the time of the acquisition of
such asset and (b) such Lien does not extend to or cover any other asset;
(6) Liens to secure Indebtedness incurred to extend, renew, refinance
or refund (or successive extensions, renewals, refinancings or refundings),
in whole or in part, Indebtedness secured by any Lien referred to in the
foregoing clauses (1), (2), (4) and (5) so long as such Lien does not
extend to any other property and the principal amount of Indebtedness so
secured is not increased except as otherwise permitted under clause (6) of
the second paragraph of the covenant described under "-- Incurrence of
Indebtedness and Issuance of Preferred Stock";
(7) Liens on Equity Interests issued by a Restricted Subsidiary that
is not a Guarantor securing Indebtedness of such Restricted Subsidiary;
provided however, that the Liens may not extend to any other property owned
by the Company or any Guarantor;
(8) Lien securing Hedging Obligations; and
(9) Permitted Liens.
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 encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock
to the Company or any of the Company's Restricted Subsidiaries, or with
respect to any other interest or participation in, or measured by, its
profits, 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.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) the Credit Facility and Existing Indebtedness, in each case, as in
effect on the date of the Indenture 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, taken as a whole, with respect to
such dividend and other payment restrictions than those contained in the
Credit Facility or such Existing Indebtedness, as the case may be, as in
effect on the date of the Indenture, provided, further, however that
restrictions under the Credit Facility may provide for more restrictive
limitations on the ability of the Company to make Investments in Restricted
Subsidiaries or on the ability of Guarantors to make Investments in
non-Guarantor Restricted Subsidiaries;
(2) the Indenture and the Notes;
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(3) applicable law;
(4) any instrument governing Indebtedness of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of
such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance
or restriction is not applicable to any Person, or the properties or assets
of any Person, other than the Person, or the property or assets of the
Person, so acquired, provided that such Indebtedness was permitted by the
terms of the Indenture to be incurred;
(5) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(6) Purchase Money Indebtedness that imposes restrictions on the
property so acquired of the nature described in clause (3) of the preceding
paragraph;
(7) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions 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, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced;
(9) Liens securing Indebtedness otherwise permitted to be incurred
pursuant to the provisions of the covenant described above under the
caption "-- Limitations on Liens" that limit the right of the Company or
any Guarantor to dispose of the assets subject to such Lien;
(10) any instrument governing Indebtedness of a Foreign Restricted
Subsidiary;
(11) 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; and
(12) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
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
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of (or
cause or permit any of its Restricted Subsidiaries to sell, assign, transfer,
convey or otherwise dispose of) all or substantially all of the Company's
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 corporation; 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 Notes, the Indenture and the
Exchange and Registration Rights Agreement pursuant to agreements
reasonably satisfactory to the Trustee;
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(3) immediately after such transaction no Default or Event of Default
exists (including, without limitation, after giving effect to any Liens
incurred, assumed or granted in connection with or in respect of such
transaction); and
(4) the Company or the Person formed by or surviving any such
consolidation or merger (if other than the Company) 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."
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 "Merger, Consolidation or Sale of
Assets" covenant will not apply to a sale, assignment, transfer, conveyance or
other disposition of assets between or among the Company and any Guarantors
which are Wholly Owned Restricted Subsidiaries.
Transactions with Affiliates
The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable
to the Company or the relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person; and
(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
$1.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate Transaction 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 Holders of such
Affiliate Transaction 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 agreement entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business and consistent
with the past practice of the Company or such Restricted Subsidiary or are
approved by a majority of the disinterested directors of the Company;
(2) transactions between or among the Company and/or its Restricted
Subsidiaries;
(3) payment of reasonable directors fees to Persons who are not
otherwise Affiliates of the Company; and
(4) Restricted Payments and Permitted Investments that are permitted
by the provisions of the Indenture described above under the caption
"-- Restricted Payments."
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Additional Subsidiary Guarantees
If the Company or any of its Restricted Subsidiaries creates another
Domestic Restricted Subsidiary after the date of the Indenture or acquires
another Domestic Restricted Subsidiary that is a Wholly Owned Restricted
Subsidiary after the date of the Indenture, then that newly acquired or created
Domestic Restricted Subsidiary must become a Guarantor and shall (i) execute and
deliver to the Trustee a supplemental indenture in form reasonably satisfactory
to the Trustee pursuant to which such Domestic Restricted Subsidiary shall
unconditionally guarantee all of the Company's obligations under the Notes and
the Indenture on the terms set forth in the Indenture and (ii) deliver to the
Trustee an Opinion of Counsel that such supplemental indenture has been duly
authorized, executed and delivered by such Restricted Subsidiary and constitutes
a legal, valid, binding and enforceable obligation of such Restricted
Subsidiary, subject to normal exceptions. Thereafter, such Domestic Restricted
Subsidiary shall be a Guarantor for all purposes of the Indenture.
In addition, if the Company or any of its Restricted Subsidiaries acquires
a Domestic Restricted Subsidiary that is not a Wholly Owned Restricted
Subsidiary at the time of acquisition, but shall thereafter become a Wholly
Owned Restricted Subsidiary, such Domestic Restricted Subsidiary shall comply
with the provisions of clauses (i) and (ii) of the immediately preceding
paragraph, and shall thereafter be a Guarantor for all purposes of the
Indenture. The Company, at its option, may cause a Domestic Restricted
Subsidiary that is not a Wholly Owned Restricted Subsidiary to become a
Guarantor in accordance with the provisions of clauses (i) and (ii) of the
immediately preceding paragraph.
Designation of Restricted and Unrestricted Subsidiaries
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if:
(1) that designation would not cause a Default;
(2) the Company will, on the date of such designation after giving pro
forma effect thereto 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 under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock";
(3) such Subsidiary has no Indebtedness other than Non-Recourse Debt;
(4) such Subsidiary 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;
(5) such Subsidiary is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation to subscribe for additional Equity Interests or to maintain or
preserve such Person's financial condition or to cause such Person to
achieve any specified levels of operating results; and
(6) such Subsidiary 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
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by the covenant described above under the
caption "-- Restricted Payments."
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If a Restricted 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 a Restricted Investment made
as of the time of such designation and will reduce the amount available for
Restricted Payments under the first paragraph of the covenant described above
under the caption "-- Restricted Payments" or Permitted Investments, as
applicable. All such outstanding Investments will be valued at their fair market
value at the time of such designation (the amount of such Investments, the
"Designation Amount"). That designation will only be permitted if such
Restricted Payment would be permitted at that time.
If, at any time, any Unrestricted Subsidiary would fail to meet any of the
requirements set forth in clause (3) through (6) of the first paragraph of this
covenant, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Indenture and any Indebtedness and Liens of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Company as of
such date and, if any such Indebtedness or Lien is not permitted to be incurred
as of such date under the Indenture, the Company shall be in default of the
applicable covenant(s). 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 and
Liens by a Restricted Subsidiary of the Company of any outstanding Indebtedness
and Liens of such Unrestricted Subsidiary and such designation shall only be
permitted if:
(1) such Indebtedness is permitted under the covenant described under
the caption "-- 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;
(2) such Liens are permitted under the covenant described under the
caption "-- Limitation on Liens"; and
(3) no Default or Event of Default would be in existence following
such designation.
Limitation on Issuances and Sales of Equity Interests in Restricted
Subsidiaries
The Company will not, and will not permit any of its Restricted
Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests in any Restricted Subsidiary of the Company to any Person
(other than the Company or a Restricted Subsidiary of the Company), unless:
(1) such transfer, conveyance, sale, lease or other disposition is of
all the Equity Interests in such Restricted Subsidiary; and
(2) the cash Net Proceeds from such transfer, conveyance, sale, lease
or other disposition are applied in accordance with the covenant described
above under the caption "-- Repurchase at the Option of Holders -- Asset
Sales."
In addition, the Company will not permit any Restricted Subsidiary of the
Company to issue any of its Equity Interests (other than, if necessary, shares
of its Capital Stock constituting directors' qualifying shares) to any Person
other than to the Company or a Restricted Subsidiary of the Company.
Limitations on Issuances of Guarantees of Indebtedness
The Company will not permit any of its Restricted Subsidiaries that are not
Guarantors to, directly or indirectly, Guarantee or pledge any assets to secure
the payment of any other Indebtedness of the Company or any Guarantor unless
such Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture providing for the Guarantee of the payment of the Notes by such
Restricted Subsidiary, which Guarantee shall be senior to or pari passu with
such Restricted Subsidiary's Guarantee of or pledge to secure such other
Indebtedness.
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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 Notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the Indenture or the Notes unless
such consideration is offered to be paid and is paid to all Holders of the 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 Commission, so long as any Notes are
outstanding, the Company will furnish to the Holders of Notes, within the time
periods specified in the Commission's rules and regulations:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission 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
Commission on Form 8-K if the Company were required to file such reports.
In addition, whether or not required by the Commission, the Company will
file a copy of all of the information and reports referred to in clauses (1) and
(2) above with the Commission for public availability within the time periods
specified in the Commission's rules and regulations (unless the Commission will
not accept such a filing) and make such information available to securities
analysts and prospective investors upon request.
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 on the Notes;
(2) default in payment when due of the principal of or premium, if any, on
the Notes;
(3) failure by the Company or any of its Subsidiaries to comply with the
provisions described under the captions "-- Repurchase at the Option of
Holders -- Change of Control," "-- Repurchase at the Option of
Holders -- Asset Sales," "-- Certain Covenants -- Restricted Payments"
or "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock";
(4) failure by the Company or any of its Restricted Subsidiaries for 30
days after notice to comply with any of the other agreements in the
Indenture;
(5) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced 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 date of the Indenture, if
that default:
(a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness 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 Stated
Maturity,
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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 $10.0 million or more;
(6) failure by the Company or any of its Restricted Subsidiaries to pay
final judgments aggregating in excess of $10.0 million, which judgments
are not paid, discharged or stayed for a period of 60 days;
(7) except as permitted by the Indenture, any Guarantor's Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable
or invalid or shall cease for any reason to be in full force and effect
or any Guarantor, or any Person acting on behalf of any Guarantor,
shall deny or disaffirm in writing its obligations under its Subsidiary
Guarantee; and
(8) certain events of bankruptcy or insolvency with respect to the Company
or any of its Restricted Subsidiaries.
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 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 Notes may declare all
the Notes to be due and payable immediately.
At any time after a declaration of acceleration with respect to the Notes
as described in the preceding paragraph, the Holders of a majority in principal
amount of the then outstanding Notes may rescind and cancel such declaration and
its consequences:
(1) if the rescission would not conflict with any judgment or decree;
(2) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
the acceleration;
(3) to the extent the payment of such interest is lawful, if interest
on overdue installments of interest and overdue principal, which has become
due otherwise than by such declaration of acceleration, has been paid;
(4) if the Company has paid the Trustee its reasonable compensation
and reimbursed the Trustee for its expenses, disbursements and advances;
and
(5) in the event of the cure or waiver of an Event of Default
regarding certain events of bankruptcy or insolvency, the Trustee shall
have received an Officers' Certificate and an Opinion of Counsel that such
Event of Default has been cured or waived.
No such rescission shall affect any subsequent Default or impair any right
consequent thereto.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of the Company with the
intention of avoiding payment of the premium that the Company would have had to
pay if the Company then had elected to redeem the Notes pursuant
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to the optional redemption provisions of the Indenture, an equivalent premium
shall also become and be immediately due and payable to the extent permitted by
law upon the acceleration of the Notes. If an Event of Default occurs prior to
September 15, 2003, by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to September 15, 2003, then the
premium specified in the Indenture shall also become immediately due and payable
to the extent permitted by law upon the acceleration of the Notes.
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 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 Notes, the Indenture, the Guarantors'
Subsidiary Guarantees or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder of Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws.
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 Notes and all obligations
of the Guarantors discharged with respect to their Guarantees ("Legal
Defeasance") except for:
(1) the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, premium, if any, and interest on such Notes
when such payments are due from the trust referred to below;
(2) the Company's obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost
or stolen Notes and the maintenance of an office or agency for 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 Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium,
if any, and interest on the outstanding Notes on the Stated Maturity or on
the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
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(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 date
of the Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Holders of the outstanding Notes will
not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(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 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 on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit);
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the Indenture) 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 Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders of 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 Officers' 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.
AMENDMENT, SUPPLEMENT AND WAIVER
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder):
(1) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(2) reduce the principal of or change or have the effect of changing
the Stated Maturity of any Note or alter the provisions with respect to the
redemption of the 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 Note;
(4) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least
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a majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration);
(5) make any Note payable in currency other than that stated in the
Notes;
(6) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or premium, if any, or interest on the Notes;
(7) waive a redemption payment with respect to any Note (other than a
payment required by one of the covenants described above under the caption
"-- Repurchase at the Option of Holders");
(8) amend, change or modify in any material respect the obligation of
the Company to make and consummate a Change of Control Offer in the event
that a Change of Control has already occurred or make and consummate an
Asset Sale Offer with respect to any Asset Sale that has been consummated
or modify any of the provisions or definitions with respect thereto;
(9) release any Guarantor from any of its obligations under its
Subsidiary Guarantee or the Indenture otherwise than in accordance with the
terms of the Indenture;
(10) adversely affect the ranking of the Notes or any Subsidiary
Guarantee; or
(11) make any change in the preceding amendment and waiver provisions.
Without the consent of any Holder of Notes, the Company and the Trustee may
amend or supplement the Indenture or the Notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(3) to provide for the assumption of the Company's obligations to
Holders of Notes in the case of a merger or consolidation or sale of all or
substantially all of the Company's assets;
(4) to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder; or
(5) to comply with requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the Trust Indenture
Act.
Any other amendment or waiver may be effected with the consent of a
majority in aggregate principal amount of the outstanding Notes.
GOVERNING LAW
The Indenture, the Notes and the Guarantors' Subsidiary Guarantees will be
governed by the laws of the State of New York.
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 Commission for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding 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
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shall occur and be continuing, the Trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. 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 Notes, unless such Holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
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, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Restricted Subsidiary of such
specified Person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other Person merging with or
into, or becoming a Restricted Subsidiary of, such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset existing at
the time acquired by such specified Person.
"Acquisition Facility" means one or more credit facilities or
subfacilities, the proceeds from which are used to make Asset Acquisitions,
acquire Replacement Assets, repay Acquired Debt, and/or pay related fees and
expenses or other reasonably related uses.
"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.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary, or shall be merged with or into the Company or
any Restricted Subsidiary, or (b) the acquisition by the Company or any
Restricted Subsidiary of the assets of any Person (other than a Restricted
Subsidiary) which constitute all or substantially all of the assets of such
Person or comprises any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any property,
assets or rights, other than sales of inventory in the ordinary course of
business consistent with past practices; 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 of Equity Interests by any of the Company's
Restricted Subsidiaries or the sale of Equity Interests in any of its
Subsidiaries.
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Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) any single transaction or series of related transactions that: (a)
involves assets having a fair market value of less than $1.0 million; or
(b) results in net proceeds to the Company and its Restricted Subsidiaries
of less than $1.0 million;
(2) a transfer of assets between or among the Company and its
Restricted Subsidiaries;
(3) an issuance of Equity Interests by a Restricted Subsidiary to the
Company or to another Restricted Subsidiary;
(4) disposals or replacements of obsolete equipment in the ordinary
course of business; and
(5) a Restricted Payment or a Permitted Investment that is permitted
by the covenant described above under the caption "-- Restricted Payments."
"Attributable Value" means, as to any particular lease under which any
Person is at the time liable other than a Capital Lease Obligation, and at any
date as of which the amount thereof is to be determined, the total net amount of
rent required to be paid by such Person under such lease during the initial term
thereof as determined in accordance with generally accepted accounting
principles, discounted from the last date of such initial term to the date of
determination at a rate per annum equal to the discount rate which would be
applicable to a Capital Lease Obligation with like term in accordance with
generally accepted accounting principles. The net amount of rent required to be
paid under any such lease for any such period shall be the aggregate amount of
rent payable by the lessee with respect to such period after excluding amounts
required to be paid on account of insurance, taxes, assessments, utility
operating and labor costs and similar charges. In the case of any lease which is
terminable by the lessee upon the payment of a penalty, such net amount shall
also include the lesser of the amount of such penalty (in which case no rent
shall be considered as required to be paid under such lease subsequent to the
first date upon which it may be so terminated) or the rent which would otherwise
be required to be paid if such lease is not so terminated.
"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.
"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, all corporate stock (however
designated);
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(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.
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"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is pledged in
support thereof) having maturities of not more than twelve months from the
date of acquisition;
(3) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any domestic commercial bank having capital
and surplus in excess of $500 million and a Thompson Bank Watch Rating of
"B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Corporation and in each case
maturing within twelve months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1) through (5) of this
definition.
"Change of Control" means the occurrence of any of the following:
(1) the sale, transfer, conveyance or other disposition (other than 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" or "group" (as such terms
are used in Section 13(d)(3) of the Exchange Act);
(2) the adoption of a plan relating to the liquidation or dissolution
of the Company;
(3) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" or "group" (as defined above), other than one or more Permitted
Holders, becomes the Beneficial Owner, directly or indirectly, of more than
50% of the Voting Stock of the Company, measured by voting power rather
than number of shares;
(4) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors; or
(5) the Company consolidates with, or merges with or into, any Person,
or any Person consolidates with, or merges with or into, the Company, in
any such event pursuant to a transaction in which any of the outstanding
Voting Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where the
Voting Stock of the Company outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person constituting a
majority of the outstanding shares of such Voting Stock of such surviving
or transferee Person immediately after giving effect to such issuance.
"Commission" means the Securities and Exchange Commission.
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"Consolidated EBITDA" 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; 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, the provision for taxes based on the income or
profits of, and the depreciation and amortization and other non-cash charges of,
a Restricted Subsidiary of the Company shall be added to Consolidated Net Income
to compute Consolidated EBITDA of the Company only to the extent that a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Restricted Subsidiary without prior approval
(that has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Interest Expense" of any Person for any period means the
aggregate interest expense of such Person and its Restricted Subsidiaries
(whether paid or accrued and whether or not capitalized) determined on a
consolidated basis in accordance with GAAP, including, without limitation or
duplication, 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 expense with respect to Attributable Value
in Sale and Leaseback Transactions, interest on Indebtedness Guaranteed by (or
secured by a Lien on any assets of) such Person or any of its Restricted
Subsidiaries, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
pursuant to Hedging Obligations.
"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 or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends
or distributions received in cash by the specified Person or a Restricted
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 that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of
the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders;
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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;
(4) the Net Income (but not loss) of any Unrestricted Subsidiary shall
be excluded, whether or not distributed to the specified Person or one of
its Subsidiaries;
(5) the cumulative effect of a change in accounting principles shall
be excluded;
(6) any restoration to income of any contingency reserve of an
extraordinary, non-recurring or unusual nature shall be excluded, except to
the extent that provision for such reserve was made out of Consolidated Net
Income accrued at any time following the Issue Date;
(7) 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 shall be excluded;
(8) any extraordinary gain or loss, together with any related
provision for taxes on such extraordinary gain or loss shall be excluded;
(9) any income or loss attributable to discontinued operations shall
be excluded; and
(10) in the case of a successor to the specified Person by
consolidation or merger or as a transferee of the specified Person's
assets, any earnings of the successor corporation prior to such
consolidation, merger or transfer of assets shall be excluded.
"Continuing Director" 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 date of the
Indenture; 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 Facility" means the amended and restated Credit Agreement dated as
of September 20, 1999, among the Company, the Guarantors, the lenders party
thereto in their capacities as lenders thereunder and Credit Agricole Indosuez,
as agent, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including (a) adding an Acquisition Facility, (b) increasing the
amount of available borrowings thereunder (provided that such increase in
borrowings is permitted by the covenant described under "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock" as
evidenced by an Officers' Certificate delivered to the Trustee, which shall be
conclusive) or (c) adding Subsidiaries as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreements and whether by the same or any other agent,
lender or group of lenders.
"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.
"Designation Amount" has the meaning ascribed to that term under
"-- Certain Covenants -- Designation of Restricted and Unrestricted
Subsidiaries."
"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, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
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sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date 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 unless such repurchase or
redemption complies with the covenant described above under the caption
"-- Certain Covenants -- Restricted Payments."
"Domestic Restricted Subsidiary" means a Restricted Subsidiary incorporated
or otherwise 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 the Obligations of the Company and its
Restricted Subsidiaries in existence on the date of the Indenture, until such
amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of:
(1) the Consolidated Interest Expense of such Person; plus
(2) the product of (a) all dividend payments, whether or not in cash,
on any series of Disqualified Stock of such Person and on any series of
preferred stock of any of its Restricted Subsidiaries, other than dividend
payments on Equity Interests payable solely in Equity Interests of the
Company (other than Disqualified Stock) or payable 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 EBITDA 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, Guarantees, redeems or repays any Indebtedness
(other than borrowings under working capital facilities in the ordinary course
of business) or issues or redeems preferred stock subsequent to the commencement
of the period for which the Fixed Charge Coverage Ratio is being calculated but
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee, redemption or repayment of Indebtedness, or such issuance
or redemption of preferred stock, as if the same had occurred at the beginning
of the applicable four-quarter reference period.
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 EBITDA 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 EBITDA attributable to operations or businesses
disposed of prior to the Calculation Date shall be excluded; and
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(3) the Fixed Charges attributable to 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.
"Foreign Restricted Subsidiary" means any Restricted Subsidiary that is
organized and existing under the laws of a jurisdiction other than the United
States, any State thereof or the District of Columbia.
"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, 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.
"Guarantors" means each of:
(1) Holley Performance Systems, Inc., Weiand Automotive Industries,
Inc., Lunati Cams, Inc., Lunati & Taylor Pistons, Inc., LTM Motor Sports
Corporation and Hooker Industries, Inc.; and
(2) any other Subsidiary that executes a Subsidiary Guarantee in
accordance with the provisions of the Indenture;
and their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements entered into in the ordinary course of
business relating to Indebtedness permitted to be incurred under the
Indenture; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates or foreign currency exchange rates
entered into in the ordinary course of business.
"Holder" means the registered holder of a Note.
"Holdings" means KHPP Holdings, Inc., a Delaware corporation.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:
(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 balance deferred and unpaid of the purchase price
of any property, except any such balance that constitutes an accrued
expense or trade payable;
(6) representing any Hedging Obligations; or
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(7) representing any Disqualified Stock of such Person and any
preferred stock issued by a Restricted Subsidiary of such Person,
if and to the extent any of the preceding items (other than letters of credit,
Hedging Obligations, Disqualified Stock and preferred stock of a Restricted
Subsidiary) would appear as a liability upon a balance sheet of the specified
Person prepared in accordance with GAAP. In addition, the term "Indebtedness"
includes (a) all Indebtedness of others secured by a Lien on any asset of the
specified Person (whether or not such Indebtedness is assumed by the specified
Person), (b) any sale of receivables of such Person, other than in connection
with a disposition of the business operations of such Person relating thereto or
a disposition of defaulted receivables for purpose of collection and not as a
financing arrangement, and (c) to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount;
(2) the amount of the unrecovered capital or principal investment of
the purchaser (other than the Company or a Restricted Subsidiary of the
Company) excluding amounts representative of yield or interest earned on
such investment, in the case of any sale of receivables;
(3) the maximum fixed redemption or repurchase price, in the case of
Disqualified Stock of such Person;
(4) the maximum voluntary or involuntary liquidation preferences plus
accrued and unpaid dividends, in the case of preferred stock of a
Restricted Subsidiary of such Person; and
(5) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness.
"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, purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP.
"Issue Date" means the date of original issuance of Notes.
"Kohlberg" means Kohlberg & Co., L.L.C., a Delaware limited liability
company, and its affiliates.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Net 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 and
Disqualified Stock dividends.
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale, including, without limitation, legal, accounting
and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof, in each
case after taking into account any
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available tax credits or deductions and any tax sharing arrangements and net of
appropriate amounts to be provided by the Company or any Restricted Subsidiary,
as the case may be, as a reserve, in accordance with GAAP, against any
liabilities associated with such Asset Sale and retained by the Company or any
Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale.
"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;
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of
any other Indebtedness (other than the Notes) of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its Stated
Maturity; and
(3) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of the Company or any of
its Restricted Subsidiaries.
"Notes" means the Company's 12 1/4% Senior Notes due 2007 issued pursuant
to the Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Chief Financial
Officer, the Controller or the Secretary of such Person.
"Officers' Certificate" means a certificate signed by two Officers of the
Company.
"Opinion of Counsel" means a written opinion from legal counsel who are
reasonably acceptable to the Trustee.
"Permitted Holders" means KHPP Holdings, Inc., a Delaware corporation and
Kohlberg, a Delaware limited liability company (and any of their controlled
Affiliates), Jeffrey G. King, Robert L. Wineland, James R. Vance and John H.
Nickoloff.
"Permitted Investments" means:
(1) any Investment in the Company or in a Restricted Subsidiary of the
Company;
(2) any Investment in 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 Restricted Subsidiary of the Company; or
(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 Restricted Subsidiary of the
Company;
(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";
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(5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company;
(6) loans and advances to employees and officers of the Company and its
Restricted Subsidiaries in the ordinary course of business for bona
fide business purposes not in excess of $1.0 million at any one time
outstanding;
(7) Investments in securities of trade creditors or customers received
pursuant to any plan of reorganization or similar arrangement upon
the bankruptcy or insolvency of such trade creditors or customers;
(8) other Investments in any Person 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 (8)
since the date of the Indenture, not to exceed $1.0 million at any
one time outstanding;
(9) Investments in Hedging Obligations; and
(10) Investments in the Notes.
"Permitted Liens" means:
(1) Liens for taxes, assessments, governmental charges or claims which
are not yet delinquent or which are being contested in good faith by
appropriate proceedings, if a reserve or other appropriate provision, if
any, as shall be required in conformity with generally accepted accounting
principles shall have been made therefor;
(2) pledges and deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of statutory obligations (including to secure government contracts);
(3) deposits made to secure the performance of tenders, bids, leases,
and other obligations of like nature incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money);
(4) zoning restrictions, servitudes, easements, rights-of-way,
restrictions and other similar charges or encumbrances incurred in the
ordinary course of business which, in the aggregate, do not materially
detract from the value of the property subject thereto or interfere with
the ordinary conduct of the business of the Company or the Guarantors;
(5) Liens arising out of judgments or awards against the Company or
any Guarantor with respect to which the Company or such Guarantor is
prosecuting an appeal or proceeding for review and the Company or such
Guarantor is maintaining adequate reserves in accordance with generally
accepted accounting principles;
(6) any interest or title of a lessor in the property subject to any
lease other than a Capital Lease Obligation; and
(7) any statutory warehousemen's, materialmen's or other similar Liens
for sums not then due and payable (or which, if due and payable, are being
contested in good faith and with respect to which adequate reserves are
being maintained to the extent required by generally accepted accounting
principles).
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"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus accrued interest on, and any
reasonable prepayment premium with respect to, the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the
amount of reasonable expenses incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, or has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes or a
Subsidiary Guarantee, such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and is subordinated in
right of payment to, the Notes or such Subsidiary Guarantee, as the case
may be, on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by the Company or by the
Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof.
"Public Equity Offering" means any underwritten public offering of common
stock of the Company or of Holdings pursuant to a registration statement filed
with the Commission in accordance with the Securities Act; provided that in the
event of a Public Equity Offering by Holdings, Holdings contributes to the
common equity capital of the Company (other than Disqualified Stock of the
Company) the portion of the net cash proceeds of such Public Equity Offering
necessary to pay the aggregate redemption price (plus accrued and unpaid
interest and Additional Interest, if any, thereon to the redemption date) of the
Notes to be so redeemed.
"Purchase Money Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary incurred for the purpose of financing all or any part of
the purchase price or the cost of an Asset Acquisition or construction or
improvement of any property; provided that the aggregate principal amount of
such Indebtedness does not exceed such purchase price or cost.
"Replacement Assets" means assets and property that will be used in the
business of the Company and/or its Restricted Subsidiaries as existing on the
Issue Date or in a business the same, similar or reasonably related thereto
(including Equity Interests of a Person which becomes a Restricted Subsidiary).
"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.
"Sale and Leaseback Transaction" of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person more than 365 days after the
later of the acquisition thereof or the completion of construction or
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commencement of operation thereof to such lender or investor or to any Person to
whom funds have been or are to be advanced by such lender or investor on the
security of such property or asset. The Stated Maturity of such arrangement
shall be the date of the last payment of rent or any other amount due under such
arrangement prior to the first date on which such arrangement may be terminated
by the lessee without payment of a penalty.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"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 partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or
(b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means a Guarantee of the Notes issued by a Guarantor
pursuant to the Indenture.
"Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary in accordance
with the covenant described under the caption "-- Certain
Covenants -- Designation of Restricted and Unrestricted Subsidiaries."
"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.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following discussion is a summary of certain United States federal
income tax considerations relevant to the purchase, ownership and disposition of
the Notes by persons acquiring Notes on original issuance for cash at the
initial issue price and does not purport to be a complete analysis of all of the
potential tax considerations relating thereto. This summary is based on the
Internal Revenue Code of 1986, as amended, Treasury regulations, court
decisions, published positions of the Internal Revenue Service and other
applicable authorities, all as in effect on the date of this Prospectus and all
of which are subject to change or differing interpretation, possibly on a
retroactive basis. This summary is limited to persons who will hold the Notes as
capital assets (generally, assets held for investment). This summary does not
address all of the tax consequences that may be relevant to investors that may
be subject to special tax treatment (such as financial institutions, tax-exempt
organizations, real estate investment companies, regulated investment companies,
insurance companies, dealers in securities or currencies, non-United States
persons or expatriates). Accordingly, each prospective purchaser of Notes should
consult its tax advisor with respect to the particular federal income tax
consequences of purchasing, owning and disposing of Notes, including the
application and effect of any state, local and foreign tax laws.
TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of outstanding Notes for exchange Notes pursuant to the
exchange offer will not be considered a taxable exchange for U.S. federal income
tax purposes because the exchange Notes will not differ materially in kind or
extent from the outstanding Notes and because the exchange will occur by
operation of the terms of the outstanding Notes. Accordingly, such exchange will
have no U.S. federal income tax consequences to holders of outstanding Notes. A
Holder's adjusted tax basis and holding period in an exchange note will be the
same as such Holder's adjusted tax basis and holding period, respectively, in
the outstanding Notes exchange therefor. However, because the Notes were issued
with an original issue discount, there will be certain income tax consequences
associated with the exchange Notes. Please refer to the "Certain Federal Income
Tax Consequences" section of this Prospectus for a description of the income tax
consequences associated with the exchange Notes. All references to Notes under
the heading "Certain U.S. Federal Income Tax Consequences" in this prospectus
apply equally to exchange Notes as to outstanding Notes.
Holders considering the exchange of outstanding Notes for exchange Notes
should consult their own tax advisors concerning the U.S. federal income tax
consequences in light of their particular situations, as well as any
consequences arising under state, local or foreign income tax or other tax law.
UNITED STATES HOLDERS
As used herein, the term "United States Holder" means the beneficial owner
of a Note that for United States federal income tax purposes is:
- a citizen or resident of the United States,
- a corporation created or organized in or under the laws of the United
States or any state thereof,
- a partnership or other business entity created or organized in or under
the laws of the United States or any state thereof and that, is properly
treated as a United States person for tax purposes,
- an estate the income of which is includable in gross income for United
States federal income tax purposes regardless of its source, or
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- a trust the administration of which is subject to the primary supervision
of a United States court and with respect to which one or more United
States persons have the authority to control all substantial decisions.
An individual may, subject to certain exceptions, be deemed to be a United
States resident (as opposed to a non-resident alien) by virtue of being present
in the United States on at least 31 days in the calendar year and for an
aggregate of at least 183 days during a three-year period ending in the current
calendar year (counting for such purposes all of the days present in the current
year, one-third of the days present in the immediately preceding year, and
one-sixth of the days present in the second preceding year). Resident aliens are
subject to United States federal income tax as if they were United States
citizens.
Payment of Interest and Original Issue Discount
Interest on a Note generally will be includable in the income of a United
States Holder as ordinary income at the time such interest is received or
accrued, in accordance with such Holder's method of accounting for United States
federal income tax purposes.
The Notes will be issued with original issue discount (the "original issue
discount") from their stated principal amount. The amount of the original issue
discount will be equal to the excess of the stated redemption price at maturity
of the Notes (i.e., the principal amount) over their issue price. A Holder must
include the original issue discount in gross income as ordinary interest income
as it accrues on a constant yield method, without regard to the Holder's regular
method of accounting. The original issue discount must, therefore, be included
in income in advance of the receipt of the cash representing that income.
Sale, Exchange or Redemption of Notes
Upon the sale, exchange or redemption of a Note, a United States Holder
generally will recognize capital gain or loss equal to the difference between
(i) the amount of cash proceeds and the fair market value of any property
received on the sale, exchange or redemption (except to the extent such amount
is attributable to accrued interest income, which is taxable as ordinary income)
and (ii) such Holder's adjusted tax basis in the Note. A United States Holder's
adjusted tax basis in a Note generally will equal the cost of the Note to such
Holder increased by the original issue discount previously included in income
and decreased by any principal payments received by such Holder. Such capital
gain or loss will be long-term if the United States Holder's holding period is
more than 12 months and will be short-term if the holding period is equal to or
less than 12 months. Long-term capital gains recognized by individuals are
generally taxed at a maximum federal tax rate of 20.0%, and short-term capital
gains are generally taxed at a maximum federal tax rate of 39.6%.
Information Reporting and Backup Withholding
In general, information reporting requirements will apply to certain
noncorporate United States Holders with respect to payments of principal and
interest on a Note, and to payments of the proceeds of the sale of a Note. The
receipt of such payments may be subject, under certain circumstances, to "backup
withholding" at a 31.0% rate. Backup withholding generally applies only if the
Holder (i) fails to furnish his or her Social Security or other taxpayer
identification number ("TIN") within a reasonable time after the request
therefor, (ii) furnishes an incorrect TIN, (iii) is notified by the IRS that he
or she has failed to report properly interest, dividends or original issue
discount, or (iv) fails, under certain circumstances, to provide a certified
statement, signed under penalties of perjury, that the TIN provided is the
correct number and that he or she is not subject to backup withholding. Any
amounts withheld under the backup withholding rules from a payment to a United
States Holder will be allowed as a credit against such Holder's United States
federal income tax and may entitle the Holder to a refund, provided that the
required information is furnished to the Internal Revenue Service.
104
<PAGE> 110
NON-U.S. HOLDERS
The following discussion is a summary of certain United States federal
income tax consequences to a Non-U.S. Holder that holds a Note. A "Non-U.S.
Holder" is a holder that is not a U.S. Holder.
A Non-U.S. Holder generally will not be subject to United States tax on
interest on a Note, provided that such interest is not effectively connected
with a U.S. trade or business of the holder and that
- such Non-U.S. Holder does not actually or constructively own 10% or more
of the total combined voting power of all classes of stock of the issuer
entitled to vote;
- such Non-U.S. Holder is not a controlled foreign corporation with respect
to which the issuer is a "related person" for United States federal
income tax purposes; and
- such Non-U.S. Holder certifies, under penalty of perjury, that it is a
Non-U.S. Holder and provides its name and address.
A Non-U.S. Holder that does not qualify for the exception from tax
described above would generally be subject to United States withholding tax at a
flat rate of 30% (or a lower applicable treaty rate) on payments of interest,
unless the Non-U.S. Holder's income from the Notes is effectively connected with
a U.S. trade or business of the holder and the holder timely furnishes two duly
executed copies of IRS Form 4224 (or any successor form) to the withholding
agent, in which case such income would be taxed on a net basis as though the
holder were a United States person.
In addition, gain recognized by a Non-U.S. Holder upon the sale, exchange
or redemption of a Note will not be subject to United States federal income tax
unless
- the gain is effectively connected with the conduct of a trade or business
within the United States by the Non-U.S. Holder; or
- the Non-U.S. Holder is an individual present in the United States for 183
days or more during the taxable year in which the Note is sold, exchanged
or redeemed, and certain other requirements are met.
A Note held by an individual who at the time of his or her death is not a
citizen or resident of the United States will not be includable in such
individual's gross estate subject to United States federal estate tax as a
result of such individual's death, provided that
- the individual did not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the issuer
entitled to vote; and
- the interest on the Note would not have been United States trade or
business income if it had been received by such individual at the time of
his or her death.
BACKUP WITHHOLDING
A holder of a Note may be subject to backup withholding at a 31% rate with
respect to interest and gross proceeds received with respect to the Note. Backup
withholding will not apply, however, to a holder who furnishes a correct
taxpayer identification number or certificate of foreign status and makes any
other required certification, or who is otherwise exempt from backup
withholding. Generally, a holder of a Note that is a United States person will
provide such certification on IRS Form W-9 (Request for Taxpayer Identification
Number and Certification) and a Non-U.S. Holder will provide such certification
on IRS Form W-8 (Certificate of Foreign Status).
Backup withholding is not an additional tax. Amounts withheld under the
backup withholding rules may be credited against a holder's tax liability, and a
holder may obtain a refund of any excess amounts withheld under the backup
withholding rules by filing the appropriate claim for refund with the IRS
(generally, a United States federal income tax return).
105
<PAGE> 111
The IRS has issued Treasury regulations, generally effective for payments
made after December 31, 2000, concerning the withholding of tax and reporting
for certain amounts paid to non-resident individuals and foreign corporations.
Among other things, these Treasury regulations may require Non-U.S. Holders to
furnish new certification of their foreign status. Prospective purchasers of
Notes should consult their tax advisors concerning the applicability and effect
of these Treasury regulations on an investment in Notes.
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange Notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange Notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of exchange Notes received in
exchange for outstanding Notes where such outstanding Notes were acquired as a
result of market-making activities or other trading activities. Holley has
agreed that, starting on the expiration date and ending on the close of business
one year after the expiration date, it will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until , 1999, all dealers effecting
transactions in the exchange Notes may be required to deliver a prospectus.
Holley will not receive any proceeds from the issuance of the exchange
Notes offered hereby or any sale of exchange Notes by broker-dealers. Exchange
Notes received by broker-dealers for their own account pursuant to the exchange
offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the exchange Notes or a combination of such methods of resale, at
market prices prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such exchange Notes. Any
broker-dealer that resells exchange 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 exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit from any
such resale of exchange Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The letter of transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of one year after the expiration date, Holley will promptly
send additional copies of this prospectus and any amendment or supplement to
this prospectus to any broker-dealer that requests such documents in the letter
of transmittal. Holley has agreed to pay all expenses incident to the exchange
offer (including the expenses of one counsel for the holders of the outstanding
Notes) other than dealers' and brokers' discounts, commissions and counsel fees
and will indemnify the holders of the outstanding Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
106
<PAGE> 112
LEGAL MATTERS
The validity of the exchange Notes offered hereby will be passed upon for
our Company by Hunton & Williams, Atlanta, Georgia.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited consolidated financial statements of Holley Performance
Products Inc. and Subsidiaries for the years ended December 31, 1996 and 1997
and the periods from January 1, 1998 to May 15, 1998 and May 16, 1998 to
December 31, 1998; the combined financial statements of Lunati & Taylor Pistons,
Inc., Lunati Cams, Inc. and LMT Motor Sports Corporation for the year ended
December 31, 1997 and the period from January 1, 1998 to October 29, 1998; and
the consolidated financial statements of Hooker Industries, Inc. for the years
ended June 30, 1999 and 1998, all included in this Prospectus, have been audited
by Arthur Andersen LLP, independent public accountants, as stated in their
reports appearing herein.
107
<PAGE> 113
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
HOLLEY PERFORMANCE PRODUCTS, INC.
Report of Independent Public Accountants.................. F-2
Consolidated Balance Sheets as of December 31, 1997 and
1998................................................... F-3
Consolidated Statements of Income for each of the years
ended December 31, 1996 and 1997, the period from
January 1, 1998 to May 15, 1998 and the period from
Inception, May 16, 1998, to December 31, 1998.......... F-4
Consolidated Statements of Stockholder's Equity for each of
the years ended December 31, 1996 and 1997, the period
from January 1, 1998 to May 15, 1998 and the period from
Inception, May 16, 1998, to December 31, 1998............. F-5
Consolidated Statements of Cash Flows for each of the years
ended December 31, 1996 and 1997, the period from January
1, 1998 to May 15, 1998 and the period from Inception, May
16, 1998, to December 31, 1998............................ F-6
Notes to Consolidated Financial Statements................ F-7
THE LUNATI GROUP
Report of Independent Public Accountants.................. F-21
Combined Balance Sheets as of December 31, 1997 and
October 29, 1998....................................... F-22
Combined Statements of Income for the year ended December
31, 1997 and the period from January 1, 1998 to October
29, 1998............................................... F-23
Combined Statements of Stockholders' Equity for the year
ended December 31, 1997 and the period from January 1,
1998 to October 29, 1998............................... F-24
Combined Statements of Cash Flows for the year ended
December 31, 1997 and the period from January 1, 1998
to October 29, 1998.................................... F-25
Notes to Combined Financial Statements.................... F-26
HOOKER INDUSTRIES, INC.
Report of Independent Public Accountants.................. F-30
Consolidated Balance Sheets as of June 30, 1999 and
1998................................................... F-31
Consolidated Statements of Income for the years ended June
30, 1999 and 1998...................................... F-32
Consolidated Statements of Stockholders' Equity for the
years ended June 30, 1999 and 1998..................... F-33
Consolidated Statements of Cash Flows for the years ended
June 30, 1999 and 1998................................. F-34
Notes to Consolidated Financial Statements................ F-35
HOLLEY PERFORMANCE PRODUCTS INC.
Consolidated Balance Sheets as of December 31, 1998 and
June 27, 1999.......................................... F-42
Consolidated Income Statements for the periods from
January 1, 1998 to May 15, 1998 and May 16, 1998 to
June 28, 1998 and the six months ended June 27, 1999... F-43
Consolidated Statements of Stockholder's Equity for the
six months ended June 27, 1999......................... F-44
Consolidated Statements of Cash Flows for the periods from
January 1, 1998 to May 15, 1998 and May 16, 1998 to
June 28, 1998 and the six months ended June 27, 1999... F-45
Notes to Consolidated Financial Statements................ F-46
</TABLE>
F-1
<PAGE> 114
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Holley Performance Products, Inc.:
We have audited the accompanying consolidated balance sheet of HOLLEY
PERFORMANCE PRODUCTS, INC. (a Delaware corporation) AND SUBSIDIARIES (the
"Company") as of December 31, 1998 and the related consolidated statements of
income, stockholder's equity and cash flows for the period from inception, May
16, 1998, to December 31, 1998. We have also audited the accompanying balance
sheet of the Predecessor (businesses identified in Note 1) as of December 31,
1997, and the related statements of income, stockholder's equity and cash flows
for the years ended December 31, 1996 and 1997 and the period from January 1,
1998 to May 15, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Holley Performance Products,
Inc. and subsidiaries as of December 31, 1998 and the results of their
operations and cash flows for the period from inception, May 16, 1998, to
December 31, 1998 and the financial position of the Predecessor as of December
31, 1997 and its results of operations and cash flows for the years ended
December 31, 1996 and 1997 and the period from January 1, 1998 to May 15, 1998
in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Nashville, Tennessee
February 23, 1999
F-2
<PAGE> 115
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND THE
PREDECESSOR ARE NOT COMPARABLE IN CERTAIN RESPECTS.
<TABLE>
<CAPTION>
THE PREDECESSOR THE COMPANY
DECEMBER 31, DECEMBER 31,
1997 1998
--------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ -- $ 2,013
Accounts receivable, net of reserves for doubtful accounts
of $1,118 and $1,686, respectively..................... 10,529 15,174
Inventories............................................... 11,216 22,673
Deferred income taxes..................................... 2,791 4,151
Other current assets...................................... 2,540 845
------- --------
Total current assets.............................. 27,076 44,856
PROPERTY, PLANT AND EQUIPMENT, net.......................... 6,511 26,771
INTANGIBLE ASSETS, net...................................... 297 106,445
------- --------
Total assets...................................... $33,884 $178,072
======= ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Bank overdraft............................................ $ 172 $ --
Current portion of long-term debt......................... -- 3,200
Accounts payable.......................................... 3,305 6,923
Accrued liabilities....................................... 8,962 15,171
------- --------
Total current liabilities......................... 12,439 25,294
------- --------
PAYABLE TO PARENT........................................... 9,081 --
------- --------
LONG-TERM DEBT, net of current portion...................... -- 89,888
------- --------
DEFERRED INCOME TAXES....................................... 41 19,099
------- --------
OTHER....................................................... 814 752
------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock, $1.00 and $0.01 par value; authorized 1,000
and 50,000,000; issued and outstanding 1,000 and
24,966,667, respectively............................... 1 250
Paid-in capital........................................... -- 42,170
Retained earnings......................................... 11,508 619
------- --------
Total stockholder's equity........................ 11,509 43,039
------- --------
Total liabilities and stockholder's equity........ $33,884 $178,072
======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE> 116
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND THE
PREDECESSOR ARE NOT COMPARABLE IN CERTAIN RESPECTS.
<TABLE>
<CAPTION>
THE PREDECESSOR THE COMPANY
------------------------------ ------------
YEAR ENDED JANUARY 1, MAY 16, 1998
DECEMBER 31, 1998 TO TO
----------------- MAY 15, DECEMBER 31,
1996 1997 1998 1998
------- ------- ---------- ------------
<S> <C> <C> <C> <C>
NET SALES.......................................... $96,290 $98,803 $36,632 $64,731
COST OF SALES...................................... 65,368 69,192 25,728 44,269
------- ------- ------- -------
Gross profit............................. 30,922 29,611 10,904 20,462
------- ------- ------- -------
SELLING EXPENSES................................... 8,538 9,654 4,018 6,895
GENERAL AND ADMINISTRATIVE EXPENSES................ 10,330 13,105 3,598 4,900
NON-RECURRING CHARGE............................... -- -- -- 452
AMORTIZATION EXPENSE............................... 113 113 45 1,626
------- ------- ------- -------
Operating income......................... 11,941 6,739 3,243 6,589
------- ------- ------- -------
INTEREST EXPENSE................................... -- -- -- 4,705
OTHER INCOME (EXPENSE)............................. (183) 45 (1,395) (231)
------- ------- ------- -------
INCOME BEFORE TAXES................................ 11,758 6,784 1,848 1,653
PROVISION FOR INCOME TAXES......................... 4,514 2,520 797 1,034
------- ------- ------- -------
NET INCOME......................................... $ 7,244 $ 4,264 $ 1,051 $ 619
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 117
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS)
THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND THE
PREDECESSOR ARE NOT COMPARABLE IN CERTAIN RESPECTS.
<TABLE>
<CAPTION>
COMMON PAID-IN DIVISIONAL RETAINED
STOCK CAPITAL EQUITY EARNINGS TOTAL
------- ------- ---------- -------- --------
THE PREDECESSOR
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995................ $ -- $ -- $ 20,185 $ -- $ 20,185
Elimination of divisional equity........ -- -- (20,185) -- (20,185)
Issuance of common stock................ 1 -- -- -- 1
Net income.............................. -- -- -- 7,244 7,244
------- ------- -------- -------- --------
BALANCE, December 31, 1996................ 1 -- -- 7,244 7,245
Net income.............................. -- -- -- 4,264 4,264
------- ------- -------- -------- --------
BALANCE, December 31, 1997................ 1 -- -- 11,508 11,509
Net income.............................. -- -- -- 1,051 1,051
------- ------- -------- -------- --------
BALANCE, May 15, 1998..................... $ 1 $ -- $ -- $ 12,559 $ 12,560
======= ======= ======== ======== ========
THE COMPANY
----------------------------------------------------
Acquisition -- elimination of Predecessor
equity (see Note 1)..................... $ (1) $ -- $ -- $(12,559) $(12,560)
Issuance of common stock................ 250 42,170 -- -- 42,420
Net income.............................. -- -- -- 619 619
------- ------- -------- -------- --------
BALANCE, December 31, 1998................ $ 250 $42,170 $ -- $ 619 $ 43,039
======= ======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 118
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND THE
PREDECESSOR ARE NOT COMPARABLE IN CERTAIN RESPECTS.
<TABLE>
<CAPTION>
THE PREDECESSOR THE COMPANY
-------------------------------- ------------
YEAR ENDED JANUARY 1, MAY 16, 1998
DECEMBER 31, 1998 TO TO
------------------- MAY 15, DECEMBER 31,
1996 1997 1998 1998
--------- ------- ---------- ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................. $ 7,244 $ 4,264 $ 1,051 $ 619
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............ 1,150 1,063 576 3,547
(Gain) loss on disposal of fixed
assets................................. 188 (85) -- --
Deferred income taxes.................... (2,292) (458) (919) (959)
Changes in assets and liabilities, net of
assets purchased:
Accounts receivable.................... (4,279) 4,094 (3,686) 1,401
Inventories............................ 491 1,439 1,198 (3,464)
Other current assets................... 166 (1,870) 501 (770)
Bank overdraft......................... -- (853) (131) --
Accounts payable....................... 314 623 2,719 265
Accrued liabilities.................... 4,236 (2,562) 1,704 936
--------- ------- --------- --------
Net cash provided by operating
activities........................ 7,218 5,655 3,013 1,575
--------- ------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures........................ (466) (942) (1,188) (2,819)
Proceeds on disposal of fixed assets........ -- 347 -- 1,053
Cash paid for acquisitions.................. -- -- -- (130,380)
--------- ------- --------- --------
Net cash used in investing
activities........................ (466) (595) (1,188) (132,146)
--------- ------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term
obligations.............................. -- -- -- 94,376
Principal payments on long-term
obligations.............................. -- -- -- (2,362)
Elimination of divisional equity............ (20,185) -- -- --
Changes in payable to parent................ 13,433 (5,060) (1,825) --
Financing costs............................. -- -- -- (1,850)
Proceeds from issuance of equity............ -- -- -- 42,420
--------- ------- --------- --------
Net cash provided by (used in)
financing activities.............. (6,752) (5,060) (1,825) 132,584
--------- ------- --------- --------
NET CHANGE IN CASH............................ -- -- -- 2,013
BALANCE AT BEGINNING OF PERIOD................ -- -- -- --
========= ======= ========= ========
BALANCE AT END OF PERIOD...................... $ -- $ -- $ -- $ 2,013
========= ======= ========= ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest...................... $ -- $ -- $ -- $ 3,818
========= ======= ========= ========
Cash paid for income taxes.................. $ -- $ -- $ -- $ 2,350
========= ======= ========= ========
Transfer of assets from (to) Parent......... $ -- $ 704 $ (1,594) $ --
========= ======= ========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 119
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. ORGANIZATION AND BASIS OF PRESENTATION
Holley Performance Products Inc. (a Delaware corporation and "Holley"),
based in Bowling Green, Kentucky, is a leading manufacturer of a diversified
line of performance automotive products, including carburetors, fuel pumps, fuel
injection systems, ignition systems and remanufactured carburetors. The products
are designed to enhance street, off-road, recreational and competitive vehicle
performance through increased horsepower, torque and driveability. In addition
to its automotive performance line, Holley manufactures performance marine,
mobile and stationary industrial engine components and markets a new line of
performance in-tank fuel pumps as well as a recently introduced specialty
chemical line.
Effective May 15, 1998, all outstanding shares of Holley common stock were
purchased by KHPP Acquisition Corporation ("KHPP"), a wholly-owned subsidiary of
KHPP Holdings Corporation ("Holdings"), for $100,000 (the "Acquisition"). At the
time of the Acquisition, KHPP was merged into Holley. The consolidated balance
sheet as of December 31, 1998 and the consolidated statements of income,
stockholder's equity and cash flows for the period from May 16 to December 31,
1998 reflect the accounts of Holley subsequent to the change in ownership which
resulted from the Acquisition. The Acquisition was accounted for using the
purchase method of accounting. The allocation of purchase price has been
tentatively allocated based upon preliminary estimates of the fair value of the
net assets acquired (Note 3).
Prior to January 1, 1996, Holley was a division of Coltec Industries, Inc.
("Coltec"). Effective January 1, 1996, Holley was incorporated, and from January
1, 1996 to May 15, 1998, Holley was a wholly-owned subsidiary of Coltec. The
balance sheet as of December 31, 1997 and the statements of income,
stockholder's equity and cash flows for the years ended December 31, 1996 and
1997 and the period from January 1, 1998 through May 15, 1998, are the financial
statements of Holley when it was a wholly-owned subsidiary of Coltec (referred
to herein as the "Predecessor"). The Acquisition and the related application of
purchase accounting (Note 3) resulted in changes to the capital structure of the
Predecessor and the historical basis of various assets and liabilities. The
effect of such changes significantly impairs the comparability of the financial
position and results of operations of Holley and the Predecessor.
In August and October of 1998, respectively, Holley purchased the
outstanding common stock of Weiand Automotive Industries, Inc. ("Weiand") and a
group of companies under common ownership, Lunati Cams, Inc., Lunati & Taylor
Pistons, Inc., and LMT Motor Sports Corporation (referred to collectively as
"Lunati"). Weiand is a manufacturer and distributor of induction systems, and
Lunati is a manufacturer of camshafts, crankshafts, pistons and automotive
specialty parts. Both Weiand and Lunati sell their products to automotive parts
retailers throughout the United States.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Holley and
its wholly-owned subsidiaries -- Weiand and Lunati (collectively referred to as
the "Company"). All significant intercompany transactions and balances between
Holley and its subsidiaries have been eliminated in consolidation.
F-7
<PAGE> 120
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of highly liquid investments, purchased
with an original maturity of three months or less.
REVENUES AND ACCOUNTS RECEIVABLE
The Company's customers operate primarily in the automotive parts and
specialty automotive equipment parts industries. The Company generally grants
credit to customers on an unsecured basis. Revenues from sales are recognized at
the time products are shipped. Sales returns and allowances are recorded as a
charge against revenue in the period in which the related sales are recognized.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined
using the last-in, first-out (LIFO) method for 100% and 75% of inventory,
respectively, as of December 31, 1997 and 1998. Cost for the remaining inventory
as of December 31, 1998, is determined using the first-in, first-out (FIFO)
method. The percentage decrease in inventory accounted for by the LIFO method as
of December 31, 1998, resulted from the Weiand and Lunati acquisitions. Cost
elements included in inventory are material, labor and factory overhead.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment purchased in the Acquisition, as well as the
acquisitions of Weiand and Lunati, are stated at estimated fair market value as
prescribed by the purchase method of accounting. Subsequent purchases of
property, plant and equipment are stated at cost, net of accumulated
depreciation. Depreciation is computed using the straight-line method over the
estimated useful lives of the assets, which are as follows (in years):
<TABLE>
<CAPTION>
THE PREDECESSOR THE COMPANY
--------------- -----------
<S> <C> <C>
Buildings and improvements.............................. 10-45 10-45
Machinery and equipment................................. 3-20 3-10
Furniture and fixtures.................................. 3-20 3
Computer equipment...................................... 3 3
</TABLE>
Expenditures for maintenance and repairs are generally charged to expense
as incurred, whereas expenditures for improvements and replacements are
capitalized.
The cost and accumulated depreciation of assets sold or otherwise disposed
of are removed from the accounts and the resulting gain or loss is reflected in
the consolidated statements of income.
INTANGIBLE ASSETS
Financing costs are amortized over the term of the related outstanding debt
using the effective interest method. The excess of the aggregate purchase price
over the fair value of assets of businesses acquired (goodwill) is being
amortized on a straight-line basis over a period of 40 years. Trade names are
being amortized on a straight-line basis over their estimated useful lives of 40
years. In connection with acquisitions, the Company has entered into various
noncompete agreements with certain individuals. The estimated values allocated
to such agreements are amortized on a straight-line basis over the terms of the
respective agreements.
F-8
<PAGE> 121
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
Subsequent to an acquisition, the Company continually evaluates whether
events and circumstances have occurred that indicate the remaining estimated
useful life of its intangible assets may warrant revision or that the remaining
balance of such assets may not be recoverable. When factors indicate that such
assets should be evaluated for possible impairment, the Company uses an estimate
of the acquired operation's undiscounted cash flows over the remaining life of
the asset in measuring whether the asset is recoverable.
INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", ("SFAS 109"). Under
the asset and liability method of SFAS 109, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the
fiscal years in which those temporary differences are expected to be recovered
or settled. Under SFAS 109, the effect on the deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
Prior to the Acquisition, the Predecessor was included in the consolidated
Federal income tax return of Coltec. For financial reporting purposes, the
Predecessor provided income taxes as if it filed separately from Coltec while it
was a subsidiary of Coltec. Subsequent to the Acquisition, the Company will be
included in the consolidated Federal income tax return of Holdings.
ACCRUED CLAIMS AND LITIGATION
The Company is partially self-insured for claims arising from employee
health benefits and, prior to May 16, 1998, was partially self-insured for
claims arising from workers' compensation. Excess insurance coverage is
maintained for per-incident and cumulative liability losses for these risks in
amounts management considers adequate. Amounts are currently accrued for the
estimated cost of claims incurred, including related expenses. Management
considers the accrued liabilities for unsettled claims to be adequate; however,
there is no assurance that the amounts accrued will not vary from the ultimate
amounts incurred upon final disposition of all outstanding claims. As a result,
periodic adjustments to the reserves will be made as events occur which indicate
that changes are necessary.
STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation", ("SFAS 123"), encourages, but does not require,
companies to record compensation cost for stock-based employee compensation
plans at fair value. The Company has chosen to continue to account for employee
stock-based compensation using the intrinsic value method as prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees", ("APB Opinion No. 25"), and related Interpretations. As of December
31, 1998, no options to purchase common stock of the Company have been granted.
NON-RECURRING CHARGE
The non-recurring charge includes expenses related to the closure of a
manufacturing facility and the related movement of inventory and fixed assets to
the Company's manufacturing facility in Bowling Green, Kentucky.
F-9
<PAGE> 122
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
RESEARCH AND DEVELOPMENT COSTS
Research, development, pre-production and start-up costs related to both
present and future products are expensed as incurred. Such costs amounted to
$2,133, $2,688, $884 and $1,387 for the years ended December 31, 1996 and 1997,
and the periods from January 1, 1998 to May 15, 1998, and from May 16, 1998 to
December 31, 1998, respectively, and are classified as a component of general
and administrative expenses in the accompanying consolidated statements of
income.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
LONG-LIVED ASSETS
When factors are present which indicate the cost of assets may not be
recovered, the Company evaluates the realizability of its long-lived assets
based upon the anticipated future undiscounted cash flows generated by the
asset.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company estimates the fair value of financial instruments using quoted
or estimated market prices based upon the current interest rate environment and
the remaining term to maturity. At December 31, 1998, there were no material
differences between the book values of the Company's financial instruments and
their related fair values.
RECENT ACCOUNTING PRONOUNCEMENTS
Effective May 16, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" ("SFAS 131"). SFAS 131 establishes standards for the way
that public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. SFAS 131 also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. The Company operates in one industry
segment, and accordingly, the adoption of SFAS 131 had no significant effect on
the Company.
Effective May 16, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"),
which establishes standards for reporting and displaying comprehensive income
and its components in a full set of general purpose financial statements.
Comprehensive income encompasses all changes in stockholder's equity (except
those arising from transactions with owners) and includes net income, net
unrealized capital gains or losses on available for sale securities and foreign
currency translation adjustments. Adoption of this pronouncement has not had a
material impact on the Company's results of operations, as comprehensive income
for 1998 was the same as net income for the Company.
F-10
<PAGE> 123
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
3. ACQUISITIONS
HOLLEY
The Acquisition was accounted for as a purchase. Accordingly, the
consolidated financial statements of the Company include the results of
operations of Holley subsequent to May 15, 1998. The purchase price was
$100,000, excluding certain costs related to financing and consummating the
Acquisition. The purchase price was funded from the sale of common stock and the
proceeds from three term notes and a revolving line of credit.
The allocation of the purchase price to the underlying net assets acquired
was based on estimates of the fair value of the net assets as follows:
<TABLE>
<S> <C>
Purchase price.............................................. $100,000
Financing and other transaction costs....................... 5,511
--------
Total purchase price.............................. 105,511
--------
Less: value assigned to assets and liabilities:
Current assets............................................ 26,266
Property, plant and equipment............................. 17,686
Financing costs........................................... 1,700
Trade name................................................ 23,180
Deferred tax liability, net............................... (10,179)
Current liabilities....................................... (16,867)
Non-current liabilities................................... (814)
--------
40,972
--------
Goodwill.......................................... $ 64,539
========
</TABLE>
F-11
<PAGE> 124
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
WEIAND
Effective August 21, 1998, Holley acquired 100% of the outstanding stock of
Weiand for cash of $5,607 excluding certain costs related to consummating the
transaction. The transaction has been accounted for as a purchase. The principal
stockholders of Weiand also entered into agreements not to compete with the
Company. The consolidated financial statements include the results of operations
of Weiand subsequent to August 21, 1998. The purchase price has been tentatively
allocated to the assets acquired and liabilities assumed based on their
estimated fair values as follows:
<TABLE>
<S> <C>
Purchase price.............................................. $5,607
Financing and other transaction costs....................... 115
------
Total purchase price.............................. 5,722
------
Less: value assigned to assets and liabilities:
Current assets............................................ 1,958
Property, plant and equipment............................. 3,957
Covenants not to compete.................................. 500
Deferred tax liability, net............................... (1,078)
Long-term debt............................................ (1,074)
Current liabilities....................................... (873)
------
3,390
------
Goodwill.......................................... $2,332
======
</TABLE>
F-12
<PAGE> 125
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
LUNATI
Effective October 29, 1998, Holley acquired 100% of the outstanding stock
of Lunati. The transaction has been accounted for as a purchase. The
consolidated financial statements include the results of operations of Lunati
subsequent to October 29, 1998. The purchase price was $20,000, excluding
certain costs related to financing and consummating the transaction. The
principal stockholders of Lunati also entered agreements not to compete with the
Company. The purchase price has been tentatively allocated to the assets
acquired and liabilities assumed based on their estimated fair values as
follows:
<TABLE>
<S> <C>
Purchase price.............................................. $20,000
Financing and other transaction costs....................... 997
-------
Total purchase price.............................. 20,997
-------
Less: value assigned to assets and liabilities:
Current assets............................................ 5,683
Property, plant and equipment............................. 5,076
Financing costs........................................... 150
Other assets.............................................. 65
Trade name................................................ 5,290
Covenants not to compete.................................. 4,000
Deferred tax liabilities, net............................. (4,650)
Current liabilities....................................... (386)
Non-current liabilities................................... (441)
-------
14,787
-------
Goodwill.......................................... $ 6,210
=======
</TABLE>
The purchase prices of Holley, Weiand and Lunati have been allocated to the
assets acquired and liabilities assumed based on information currently available
as to estimated fair values. An evaluation of the acquired assets and
liabilities assumed is in progress. Upon completion of the evaluation, net
additions or reductions in the fair values currently assigned will be credited
to or charged against amounts allocated to goodwill.
The following unaudited pro forma information combines the consolidated
results of the Company as if the acquisitions of Holley, Weiand and Lunati had
occurred on January 1, 1997. While the Company believes it will realize certain
long-term synergies through the integration of certain operating functions,
there can be no assurances that such synergies can be realized.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1998
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net sales.................................................. $117,323 $118,702
======== ========
Net income (loss).......................................... $ (1,725) $ 1,273
======== ========
</TABLE>
F-13
<PAGE> 126
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
4. INVENTORIES
Inventories as of December 31, 1997 and 1998 consisted of the following:
<TABLE>
<CAPTION>
THE THE
PREDECESSOR COMPANY
1997 1998
----------- -------
<S> <C> <C>
Raw materials............................................... $ 6,954 $14,032
Work-in-progress............................................ 1,309 3,877
Finished goods.............................................. 2,953 4,092
Other....................................................... -- 672
------- -------
$11,216 $22,673
======= =======
</TABLE>
If the FIFO method had been used to value all inventories, inventories
would have been $4,131 higher as of December 31, 1997. As a result of the
Acquisition, inventories were revalued to fair value at May 16, 1998, which
approximates the FIFO method of determining inventory value as of December 31,
1998.
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of December 31, 1997 and 1998 consisted of
the following:
<TABLE>
<CAPTION>
THE THE
PREDECESSOR COMPANY
1997 1998
----------- -------
<S> <C> <C>
Buildings and improvements.................................. $11,112 $ 3,882
Machinery and equipment..................................... 17,969 19,560
Computer equipment.......................................... 742 3,106
Furniture and fixtures...................................... 114 874
Construction in process..................................... 1,135 906
------- -------
31,072 28,328
Less: accumulated depreciation.............................. (24,561) (1,557)
------- -------
$ 6,511 $26,771
======= =======
</TABLE>
Depreciation expense was $1,037, $950, $531 and $1,921 for the years ended
December 31, 1996 and 1997 and the periods from January 1, 1998 to May 15, 1998
and from May 16, 1998 to December 31, 1998, respectively.
F-14
<PAGE> 127
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
6. INTANGIBLE ASSETS
Intangible and other assets as of December 31, 1997 and 1998 consisted of
the following:
<TABLE>
<CAPTION>
THE THE
PREDECESSOR COMPANY
1997 1998
----------- --------
<S> <C> <C>
Costs in excess of net assets acquired...................... $ 450 $ 73,081
Trade names................................................. -- 28,470
Covenants not to compete.................................... -- 4,500
Financing costs............................................. -- 1,704
Other....................................................... 5 316
----- --------
455 108,071
Less: accumulated amortization.............................. (158) (1,626)
----- --------
$ 297 $106,445
===== ========
</TABLE>
Amortization expense was $113, $113, $45 and $1,626 for the years ended
December 31, 1996 and 1997 and the periods from January 1, 1998 to May 15, 1998
and from May 16, 1998 to December 31, 1998, respectively.
7. ACCRUED LIABILITIES
Accrued liabilities as of December 31, 1997 and 1998 consisted of the
following:
<TABLE>
<CAPTION>
THE THE
PREDECESSOR COMPANY
1997 1998
----------- -------
<S> <C> <C>
Wages and benefits.......................................... $2,379 $ 4,620
Reserve for product returns................................. 3,706 3,894
Allowance for outstanding rebate programs................... 467 1,434
Other....................................................... 2,410 5,223
------ -------
$8,962 $15,171
====== =======
</TABLE>
8. LONG-TERM DEBT
Long-term debt as of December 31, 1997 and 1998 consisted of the following:
<TABLE>
<CAPTION>
THE THE
PREDECESSOR COMPANY
1997 1998
----------- -------
<S> <C> <C>
Revolving line of credit, maturing June 30, 2003............ $ -- $ 4,375
Term note "A," maturing June 30, 2003....................... -- 19,000
Term note "B," maturing June 30, 2005....................... -- 29,850
Term note "C," maturing June 30, 2006....................... -- 14,925
Term note "D," maturing December 31, 2006................... -- 24,938
Payable to parent........................................... 9,081 --
------ -------
9,081 93,088
Less current portion........................................ -- (3,200)
------ -------
$9,081 $89,888
====== =======
</TABLE>
To finance the Acquisition, the Company entered into a credit agreement
(the "Credit Agreement") with a group of lenders on May 16, 1998. The Credit
Agreement provides for term notes of
F-15
<PAGE> 128
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
$20,000, $30,000 and $15,000, as well as a revolving line of credit of up to
$15,000. In connection with the acquisition of Lunati in October 1998, the
Company entered into an amendment to the Credit Agreement (the "Amendment"). The
Amendment provides for an additional term loan of $25,000 and increases the
maximum borrowings available under the revolving line of credit to $20,000.
Borrowing availability under the revolving line of credit is subject to
limitations based on eligible accounts receivable and inventory as defined in
the Credit Agreement. As of December 31, 1998, the Company had borrowings of
$93,088 outstanding under the Credit Agreement including $4,375 of borrowings
under the revolving line of credit and $15,092 of unused credit availability.
Both the Credit Agreement and the Amendment allow the Company to choose
among interest rate options as follows:
<TABLE>
<CAPTION>
INTEREST RATE AT
PRIME OPTION LIBOR OPTION DECEMBER 31, 1998
------------ ------------ -----------------
<S> <C> <C> <C>
Revolving line of credit.............. Prime + 1.0% LIBOR + 2.5% 8.75%
Term note "A"......................... N/A LIBOR + 2.5% 7.53%
Term note "B"......................... N/A LIBOR + 3.0% 8.03%
Term note "C"......................... N/A LIBOR + 3.5% 8.53%
Term note "D"......................... N/A LIBOR + 3.5% 8.78%
</TABLE>
Interest rates for the term notes and the revolving line of credit ranged
from 8.75% to 9.5% during the period from Inception through December 31, 1998.
The weighted average interest rate was 8.13% during the period from Inception
through December 31, 1998. Both the Credit Agreement and the Amendment require
an annual commitment fee of 0.5% of the total commitment, less letters of credit
and amounts borrowed, and require the Company to make quarterly payments of
accrued interest outstanding on the term notes and the revolving line of credit.
Both the term notes and the revolving line of credit are secured by
substantially all assets of the Company.
Both the Credit Agreement and the Amendment require the Company to meet
certain covenants which, among other things, require the maintenance of ratios
related to leverage and cash flow, and limit the level of capital expenditures
and payments of dividends. The Credit Agreement and Amendment also require
mandatory principal prepayments from any proceeds of sales of the Company's
assets or common stock as well as 75% of excess cash flow, as defined. At
December 31, 1998, the Company was in compliance with these covenants.
Future maturities of long-term debt for the years following December 31,
1998 are as follows:
<TABLE>
<S> <C>
1999........................................................ $ 3,200
2000........................................................ 4,200
2001........................................................ 5,200
2002........................................................ 6,200
2003........................................................ 15,050
Thereafter................................................ 59,238
-------
$93,088
=======
</TABLE>
The payable to parent was used to transfer cash between the Predecessor and
Coltec. There was no formal credit arrangement in place, and no interest was
charged.
F-16
<PAGE> 129
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
9. INCOME TAXES
The provision for income tax expense consisted of the following:
<TABLE>
<CAPTION>
THE PREDECESSOR THE COMPANY
------------------------------ ------------
YEAR ENDED MAY 16, 1998
DECEMBER 31, JANUARY 1, TO
--------------- 1998 TO DECEMBER 31,
1996 1997 MAY 15, 1998 1998
------ ------ ------------ ------------
<S> <C> <C> <C> <C>
Current tax expense........................ $4,054 $2,978 $1,716 $1,993
Deferred tax expense (benefit)............. 460 (458) (919) (959)
------ ------ ------ ------
Income tax expense............... $4,514 $2,520 $ 797 $1,034
====== ====== ====== ======
</TABLE>
A reconciliation of the U.S. Federal statutory rate to the effective rate
is as follows:
<TABLE>
<CAPTION>
THE PREDECESSOR THE COMPANY
--------------------------- ------------
YEAR ENDED MAY 16, 1998
DECEMBER 31, JANUARY 1, TO
------------ 1998 TO DECEMBER 31,
1996 1997 MAY 15, 1998 1998
---- ---- ------------ ------------
<S> <C> <C> <C> <C>
U.S. Federal statutory rate................ 34.0% 34.0% 34.0% 34.0%
State taxes on income, net of Federal
benefit.................................. 4.0 4.0 4.0 4.0
Expenses not deductible.................... 0.4 0.4 3.1 3.4
Other...................................... -- (1.3) 2.0 --
Non-deductible amortization................ -- -- -- 21.2
---- ---- ---- ----
Income tax expense............... 38.4% 37.1% 43.1% 62.6%
==== ==== ==== ====
</TABLE>
Significant components of deferred tax liabilities and assets are as
follows:
<TABLE>
<CAPTION>
THE THE
PREDECESSOR COMPANY
1997 1998
----------- -----------
<S> <C> <C>
Reserve on assets.......................................... $ 597 $ 410
Liabilities not yet deductible............................. 2,194 3,741
------ --------
Total current assets............................. 2,791 4,151
------ --------
Other...................................................... 456 283
Trade name................................................. -- (10,681)
Covenants not to compete................................... -- (1,654)
Fixed assets............................................... (497) (7,047)
------ --------
Total noncurrent liabilities, net................ (41) (19,099)
------ --------
Total deferred tax asset (liability)............. $2,750 $(14,948)
====== ========
</TABLE>
As of December 31, 1998, the Company had no net operating loss
carryforwards for income tax purposes.
10. BENEFIT PLANS
HOLLEY 401(K) PLAN
Effective May 16, 1998, Holley established 401(k) savings plans for
salaried and non-salaried employees. Participation in the plans is optional.
Employer contributions to the plans are discretion-
F-17
<PAGE> 130
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
ary. During the period from May 16, 1998 to December 31, 1998, the Company
contributed $375 to these plans.
LUNATI 401(K) PLAN
Lunati maintains a profit sharing and a 401(k) savings plan for its
employees. Employer contributions to the plan are discretionary. During the
period from May 16, 1998 to December 31, 1998, the Company did not make
contributions to this plan.
DEFINED BENEFIT PENSION PLAN
Effective May 16, 1998, the Company established a defined benefit pension
plan for its employees. The Projected Unit Credit Actuarial Cost Method is used
to determine the normal cost of the pension plan and estimate pension benefit
obligations.
<TABLE>
<S> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at May 16, 1998.......................... $ --
Service cost................................................ 560
Interest cost............................................... 75
Actuarial loss.............................................. 835
Acquisition................................................. 1,650
-------
Benefit obligation at December 31, 1998........... $ 3,120
=======
FAIR VALUE OF PLAN ASSETS
Fair value of plan assets at May 16,1998.................... $ --
Employer contributions...................................... --
-------
Fair value of plan assets at December 31, 1998.............. $ --
=======
FUNDED STATUS
Funded status at December 31, 1998.......................... $(3,120)
Unrecognized actuarial loss................................. 835
-------
Net accrued benefit liability recognized.................... $(2,285)
=======
COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost................................................ $ 560
Interest cost............................................... 75
-------
Net periodic benefit cost......................... $ 635
=======
</TABLE>
The actuarial assumptions include a discount rate of 6.5% and an annual
rate of compensation increase of 4% for 1998.
Prior to May 16, 1998, the Predecessor participated in the defined benefit
pension plan of Coltec. Under this plan, eligible retired employees were
provided certain health care and life insurance benefits, with some of those
retirees paying a portion of the related costs. The Company's liability under
this plan was not separately calculated; therefore, expense is reflected based
on cash funding requirements. Company contributions to the plan totaled $532,
$496 and $0 for the years ended December 31, 1996 and 1997 and the period from
January 1, 1998 to May 15, 1998, respectively.
F-18
<PAGE> 131
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
11. LEASE COMMITMENTS
The aggregate future minimum fixed lease obligations under operating leases
for the Company as of December 31, 1998, are as follows:
<TABLE>
<CAPTION>
OPERATING LEASES
----------------
<S> <C>
1999........................................................ $ 716
2000........................................................ 300
2001........................................................ 211
2002........................................................ 87
2003........................................................ 18
Thereafter.................................................. 4
------
Total minimum lease payments...................... $1,336
======
</TABLE>
Total rent expense for the Company's operating leases was approximately
$584, $603, $215 and $444 for the years ended December 31, 1996 and 1997 and the
periods from January 1, 1998 to May 15, 1998 and from May 16, 1998 to December
31, 1998, respectively.
12. MAJOR CUSTOMERS
The Company's customers include many large and well-known automotive parts
retailers and distributors. One customer, Auto Sales, Inc., represented 13.8% of
total sales from May 16, 1998 to December 31, 1998. Approximately 1% of the
Company's accounts receivable at December 31, 1997 and 1998 were from this
customer. Management believes the credit risk associated with this customer is
minimal.
13. COMMITMENTS AND CONTINGENCIES
The Company is a party to various lawsuits and claims in the normal course
of business. While the outcome of the lawsuits and claims against the Company
cannot be predicted with certainty, management believes that the ultimate
resolution of the matters will not have a material effect on the financial
position or results of operations of the Company.
The Company, like others in similar businesses, is subject to extensive
federal, state and local environmental laws and regulations. Although Company
environmental policies and practices are designed to ensure compliance with
these laws and regulations, future developments and increasingly stringent
regulation could require the Company to make unforeseen environmental
expenditures.
The Company has established a severance plan for certain members of
management. Under the terms of the severance plan, the participants are entitled
to certain severance benefits which include salary continuation in the event the
participant is terminated by the Company without cause.
14. RELATED-PARTY TRANSACTIONS
The Company paid a fee of $2,000 to Kohlberg & Co., L.L.C. (the majority
shareholder of Holdings and "Kohlberg") in conjunction with the Acquisition. In
August and October of 1998, the Company paid fees totaling $750 to Kohlberg in
conjunction with the acquisitions of Weiand and Lunati (Note 3). These fees have
been capitalized along with other acquisition costs incurred in the
transactions.
F-19
<PAGE> 132
HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
Pursuant to a management agreement, Kohlberg provides the Company with
general corporate administrative services. Kohlberg receives a management fee to
recover its operating expenses based upon an allocation of time devoted to the
Company. Fees paid by the Company to Kohlberg are included in general and
administrative expenses in the accompanying consolidated statements of income
and total $405 for the period from May 16, 1998 to December 31, 1998.
Prior to May 15, 1998, Coltec's staff and management provided certain
operating, corporate and management services to the Predecessor. Fees paid by
the Predecessor to Coltec for these services are included in general and
administrative expenses in the accompanying statements of income and total
$2,285, $2,269 and $842 for the years ended December 31, 1996 and 1997 and the
period from January 1, 1998 to May 15, 1998, respectively. Management believes
the fees were fair based on the services provided.
Subsequent to the Acquisition, Holdings issued 3,668,481 stock options to
buy common stock of Holdings to certain members of management of the Company.
The options are exercisable at $1.50 per share, which represented estimated fair
value at the date of grant, and vest at the end of nine years or at an
accelerated rate if certain performance measurements are met. As of December 31,
1998, all options remained unvested.
15. ROYALTY AGREEMENT
Effective December 31, 1997, the Predecessor entered into a License
Agreement (the "Agreement") with Coltec. Under the terms of the Agreement,
Coltec granted the Predecessor the use of certain intellectual property,
including but not limited to copyrights, patents, and trademarks, in exchange
for a fee. Fees paid to Coltec under this Agreement from January 1, 1998 to May
15, 1998 totaled $1,054 and are included in other expense in the accompanying
statements of income. The agreement terminated on May 15, 1998 in connection
with the Acquisition.
F-20
<PAGE> 133
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Holley Performance Products, Inc.:
We have audited the accompanying combined balance sheets of Lunati & Taylor
Pistons, Incorporated, Lunati Cams, Incorporated and LMT Motor Sports
Corporation (all Tennessee corporations and referred to collectively as the
"Company") as of December 31, 1997 and October 29, 1998, and the related
combined statements of income, stockholders' equity and cash flows for the year
ended December 31, 1997 and the period from January 1, 1998 to October 29, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Lunati & Taylor
Pistons, Incorporated, Lunati Cams, Incorporated and LMT Motor Sports
Corporation as of December 31, 1997 and October 29, 1998, and the results of
their combined operations and cash flows for the year ended December 31, 1997
and the period from January 1, 1998 to October 29, 1998 in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Nashville, Tennessee
February 23, 1999
F-21
<PAGE> 134
LUNATI CAMS, INCORPORATED
LUNATI & TAYLOR PISTONS, INCORPORATED
LMT MOTOR SPORTS CORPORATION
COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 29,
1997 1998
------------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 391 $ --
Accounts receivable, net of reserve for doubtful accounts
of $60 and $60, respectively........................... 938 597
Inventories............................................... 3,625 5,031
Deferred income taxes..................................... 33 72
Other current assets...................................... 39 2
------ ------
Total current assets.............................. 5,026 5,702
PROPERTY, PLANT AND EQUIPMENT, net.......................... 965 1,082
INTANGIBLE AND OTHER ASSETS, net............................ 89 64
------ ------
Total assets...................................... $6,080 $6,848
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable -- bank...................................... $1,216 $ --
Note payable -- stockholders.............................. 1,020 1,000
Accounts payable.......................................... 271 392
Accrued liabilities....................................... 75 281
------ ------
Total current liabilities......................... 2,582 1,673
------ ------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock.............................................. 227 600
Capital in excess of par value............................ 1,573 1,573
Retained earnings......................................... 1,698 3,002
------ ------
Total stockholders' equity........................ 3,498 5,175
------ ------
Total liabilities and stockholders' equity........ $6,080 $6,848
====== ======
</TABLE>
The accompanying notes are an integral part of these combined balance sheets.
F-22
<PAGE> 135
LUNATI CAMS, INCORPORATED
LUNATI & TAYLOR PISTONS, INCORPORATED
LMT MOTOR SPORTS CORPORATION
COMBINED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 1, 1998 TO
DECEMBER 31, 1997 OCTOBER 29, 1998
----------------- ------------------
<S> <C> <C>
NET SALES................................................. $12,649 $12,931
COST OF SALES............................................. 7,035 7,554
------- -------
Gross profit............................................ 5,614 5,377
------- -------
SELLING GENERAL AND ADMINISTRATIVE EXPENSES............... 5,258 3,681
------- -------
Operating income........................................ 356 1,696
------- -------
INTEREST EXPENSE.......................................... 7 74
OTHER INCOME.............................................. 45 29
------- -------
INCOME BEFORE TAXES....................................... 394 1,651
PROVISION FOR EXCISE TAXES................................ 14 58
------- -------
NET INCOME................................................ $ 380 $ 1,593
======= =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-23
<PAGE> 136
LUNATI CAMS, INCORPORATED
LUNATI & TAYLOR PISTONS, INCORPORATED
LMT MOTOR SPORTS CORPORATION
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CAPITAL IN
COMMON EXCESS OF PAR RETAINED
STOCK VALUE EARNINGS TOTAL
------ ------------- -------- ------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1996........................... $227 $ 365 $1,318 $1,910
Capital contribution............................... -- 1,208 -- 1,208
Net income......................................... -- -- 380 380
---- ------ ------ ------
BALANCE, December 31, 1997........................... 227 1,573 1,698 3,498
Sale of common stock............................... 373 -- -- 373
Dividends.......................................... -- -- (289) (289)
Net income......................................... -- -- 1,593 1,593
---- ------ ------ ------
BALANCE, October 29, 1998............................ $600 $1,573 $3,002 $5,175
==== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-24
<PAGE> 137
LUNATI CAMS, INCORPORATED
LUNATI & TAYLOR PISTONS, INCORPORATED
LMT MOTOR SPORTS CORPORATION
COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, JANUARY 1, TO
1997 OCTOBER 29, 1998
------------ ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 380 $ 1,593
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization.......................... 117 146
Deferred income taxes.................................. -- (39)
Changes in assets and liabilities:
Accounts receivable.................................. (317) 341
Inventories.......................................... (1,841) (1,406)
Other current assets................................. 24 37
Accounts payable..................................... 46 101
Accrued liabilities.................................. (51) 206
Other assets......................................... (56) 25
------- -------
Total adjustments................................. (2,078) (589)
------- -------
Net cash provided by (used in) operating
activities...................................... (1,698) 1,004
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (157) (614)
Proceeds on disposal of fixed assets...................... -- 120
------- -------
Net cash used in investing activities............. (157) (494)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from short-term obligations.................. 1,008 --
Principal payments on short-term obligations.............. -- (1,216)
Dividends paid............................................ -- (58)
Proceeds from issuance of equity.......................... 1,208 373
------- -------
Net cash provided by (used in) financing
activities...................................... 2,216 (901)
------- -------
NET CHANGE IN CASH.......................................... 361 (391)
BALANCE AT BEGINNING OF PERIOD.............................. 30 391
------- -------
BALANCE AT END OF PERIOD.................................... $ 391 $ --
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest.................................... $ -- $ 81
======= =======
Cash paid for income taxes................................ $ 66 $ 14
======= =======
Property dividend......................................... $ -- $ 231
======= =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-25
<PAGE> 138
LUNATI CAMS, INCORPORATED
LUNATI & TAYLOR PISTONS, INCORPORATED
LMT MOTOR SPORTS CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. ORGANIZATION AND BASIS OF PRESENTATION
Lunati Cams, Incorporated ("Cams") was incorporated under the laws of
Tennessee in April, 1972 and is a manufacturer of automotive crankshafts and
camshafts from its manufacturing facility located in Tennessee. Lunati & Taylor
Pistons, Incorporated ("Pistons") was incorporated under the laws of Tennessee
in April, 1993 and is a manufacturer of automotive pistons, rings and related
parts from its manufacturing facility located in Mississippi. LMT Motor Sports
Corporation ("LMT") was incorporated under the laws of Tennessee in October,
1997 and is a manufacturer of automotive connecting rods from its manufacturing
facility located in Mississippi. Cams, Pistons and LMT are owned by a common
group of stockholders. References to the "Company" in these notes to combined
financial statements refer collectively to Cams, Pistons, and LMT.
The Company sells its products to automotive parts retailers throughout the
United States.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
All significant intercompany transactions and balances have been eliminated
in combination.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of highly liquid investments, purchased
with an original maturity of three months or less.
REVENUES AND ACCOUNTS RECEIVABLE
The Company's customers operate primarily in the automotive parts and
specialty automotive equipment parts industries. The majority of the Company's
sales are on a cash basis, however, the Company generally grants credit to a
limited number of customers on an unsecured basis. Revenues from sales are
recognized at the time products are shipped.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is valued at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets,
which are as follows:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and building improvements......................... 10-40
Machinery and equipment..................................... 5-10
Office equipment............................................ 5-10
Automobiles................................................. 3-5
</TABLE>
Expenditures for maintenance and repairs are generally charged to expense
as incurred, whereas expenditures for improvements and replacements are
capitalized.
F-26
<PAGE> 139
LUNATI CAMS, INCORPORATED
LUNATI & TAYLOR PISTONS, INCORPORATED
LMT MOTOR SPORTS CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The cost and accumulated depreciation of assets sold or otherwise disposed
of are removed from the accounts and the resulting gain or loss is reflected in
the combined statements of income.
INCOME TAXES
For federal income tax purposes, the Company is organized as an "S"
corporation. As a result, the liability for federal income taxes passes through
to the stockholders, and no provision for these income taxes is recorded by the
Company. Bonuses are paid to the stockholders for their federal income tax
liabilities arising from corporate income. These bonuses totaled $3,010 and
$1,568 for 1997 and 1998, respectively, and are included in selling, general and
administrative expenses in the accompanying statements of income. The Company
expenses these bonuses as compensation expense in the period in which the
stockholder tax liability was generated. The State of Tennessee does not
recognize "S" corporation tax status; therefore, a provision for Tennessee
excise taxes is recorded on the operating results of Cams.
Deferred tax liabilities and assets are recognized using the Tennessee
state corporate income tax rate for the tax effects of differences between the
financial statement and tax bases of assets and liabilities. A valuation
allowance is established to reduce deferred tax assets if it is more likely than
not that a deferred tax asset will not be realized.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
LONG-LIVED ASSETS
When factors are present which indicate the cost of assets may not be
recovered, the Company evaluates the realizability of its long-lived assets
based upon the anticipated future undiscounted cash flows generated by the
asset.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company estimates the fair value of financial instruments using quoted
or estimated market prices based upon the current interest rate environment and
the remaining term to maturity. At December 31, 1998, there were no material
differences in the book values of the Company's financial instruments and their
related fair values.
F-27
<PAGE> 140
LUNATI CAMS, INCORPORATED
LUNATI & TAYLOR PISTONS, INCORPORATED
LMT MOTOR SPORTS CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
3. INVENTORIES
Inventories of the Company as of December 31, 1997 and October 29, 1998
consisted of the following:
<TABLE>
<CAPTION>
1997 1998
------ ------
<S> <C> <C>
Raw materials............................................... $1,031 $1,558
Work-in-progress............................................ 656 934
Finished goods.............................................. 1,938 2,539
------ ------
$3,625 $5,031
====== ======
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of December 31, 1997 and October 29, 1998
consisted of the following:
<TABLE>
<CAPTION>
1997 1998
------ ------
<S> <C> <C>
Leasehold improvements...................................... $ 289 $ 64
Machinery and equipment..................................... 1,768 2,158
Office equipment............................................ 159 162
------ ------
2,216 2,384
Less: accumulated depreciation.............................. (1,251) (1,302)
------ ------
$ 965 $1,082
====== ======
</TABLE>
Depreciation expense for the year ended December 31, 1997 and the period
ended October 29, 1998 was $116 and $146, respectively.
5. INCOME TAXES
The tax effects of temporary differences related to deferred taxes shown on
the balance sheets are as follows:
<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
Current deferred tax assets:
Asset reserves and liabilities not yet deductible for tax
purposes............................................... $33 $72
--- ---
$33 $72
--- ---
</TABLE>
6. NOTES PAYABLE -- BANK
At December 31, 1997, the Company had a note payable to a bank bearing
interest at 6.9% and secured by personal investments of the stockholder. The
note was repaid in 1998.
7. BENEFIT PLANS
LUNATI 401(K) PLAN
The Company maintains a profit sharing and 401(k) savings plan for its
employees. Employer contributions to the plan are discretionary. During the
period from January 1, 1998 to October 29, 1998, the Company contributed $63 to
these plans.
F-28
<PAGE> 141
LUNATI CAMS, INCORPORATED
LUNATI & TAYLOR PISTONS, INCORPORATED
LMT MOTOR SPORTS CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
8. LEASE COMMITMENTS
The Company leases certain of its facilities under month to month operating
leases and has no future minimum fixed lease obligations as of October 29, 1998.
Total rent expense for the Company's operating leases was approximately $120 and
$118 for the years ended December 31, 1997 and from January 1, 1998 to October
29, 1998, respectively.
9. CONTINGENCIES
The Company is a party to various lawsuits and claims in the normal course
of business. While the outcome of the litigation and claims against the Company
cannot be predicted with certainty, management believes that the ultimate
resolution of the matters will not have a material effect on the financial
position or results of operations of the Company.
The Company, like others in similar businesses, is subject to extensive
federal, state and local environmental laws and regulations. Although Company
environmental policies and practices are designed to ensure compliance with
these laws and regulations, future developments and increasingly stringent
regulation could require the Company to make unforeseen environmental
expenditures.
10. RELATED-PARTY TRANSACTIONS
The Company leases certain equipment as well as the land and building on
which the Lunati & Taylor Pistons, Inc. and the Lunati Cams, Inc. facilities are
located from its stockholders under month to month operating leases. Rent
expense of $120 and $118 for the years ended December 31, 1997 and from January
1, 1998 to October 29, 1998, respectively, was paid to related parties.
The Company has notes payable to certain of its stockholders which bear
interest at 6%. The notes payable are due on demand and are unsecured.
11. SUBSEQUENT EVENT
Effective October 29, 1998, the outstanding stock of the Company was
purchased by Holley Performance Products, Inc. for $20 million.
F-29
<PAGE> 142
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Holley Performance Products, Inc.:
We have audited the accompanying consolidated balance sheets of Hooker
Industries, Inc. and subsidiary as of June 30, 1999 and 1998, and the related
consolidated statements of income, stockholders' 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 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 Hooker
Industries, Inc. and subsidiary as of June 30, 1999 and 1998, and the results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Nashville, Tennessee
August 5, 1999
F-30
<PAGE> 143
HOOKER INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 4,434,203 $3,893,159
Accounts receivable, net of allowance for doubtful
accounts of $58,000.................................... 3,168,225 2,735,114
Inventories............................................... 1,873,987 1,454,345
Prepaid expenses.......................................... 25,875 14,354
Deferred tax benefit...................................... 217,355 111,638
----------- ----------
Total current assets.............................. 9,719,645 8,208,610
PROPERTY AND EQUIPMENT, net of accumulated depreciation..... 611,465 662,115
NONCURRENT ASSETS:
Deposits.................................................. 24,496 23,038
Cash surrender value of life insurance.................... -- 9,332
Other assets.............................................. -- 565
Deferred tax benefit...................................... 315,032 249,761
----------- ----------
Total noncurrent assets........................... 339,528 282,696
----------- ----------
Total assets...................................... $10,670,638 $9,153,421
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 246,721 $ 292,745
Accrued expenses.......................................... 1,726,827 1,270,315
----------- ----------
Total current liabilities......................... 1,973,548 1,563,060
DEFERRED COMPENSATION....................................... 869,349 648,161
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $0.10 par value per share, 2,000,000 shares
authorized; 330,354 and 330,454 shares issued and
outstanding, respectively.............................. 33,035 33,045
Retained earnings......................................... 7,794,706 6,909,155
----------- ----------
Total stockholders' equity........................ 7,827,741 6,942,200
----------- ----------
Total liabilities and stockholders' equity........ $10,670,638 $9,153,421
=========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these balance sheets.
F-31
<PAGE> 144
HOOKER INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
NET SALES................................................... $12,107,745 $10,513,114
COST OF GOODS SOLD.......................................... 5,533,668 4,992,227
----------- -----------
Gross profit.............................................. 6,574,077 5,520,887
OPERATING EXPENSES:
Selling expenses.......................................... 412,034 369,479
Administrative expenses................................... 3,259,745 2,826,479
Shipping expenses......................................... 812,440 679,169
Marketing expenses........................................ 959,311 955,859
----------- -----------
Total operating expenses.......................... 5,443,530 4,830,986
----------- -----------
INCOME FROM OPERATIONS...................................... 1,130,547 689,901
OTHER INCOME (EXPENSE):
Interest expense.......................................... (48,645) (53,023)
Interest income........................................... 204,345 166,548
Other income, net......................................... 43,591 21,329
Gain on sale of assets.................................... 16,887 10,426
----------- -----------
Total other income................................ 216,178 145,280
INCOME BEFORE PROVISION FOR INCOME TAXES.................... 1,346,725 835,181
PROVISION FOR INCOME TAXES.................................. 462,576 302,552
----------- -----------
NET INCOME.................................................. $ 884,149 $ 532,629
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
F-32
<PAGE> 145
HOOKER INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
COMMON COMMON RETAINED
SHARES STOCK EARNINGS TOTAL
------- ------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE, June 30, 1997........................... 330,454 $33,045 $6,404,655 $6,437,700
Foreign currency loss.......................... -- -- (28,129) (28,129)
Net income..................................... -- -- 532,629 532,629
------- ------- ---------- ----------
Total comprehensive income............. -- -- 504,500 504,500
------- ------- ---------- ----------
BALANCE, June 30, 1998........................... 330,454 33,045 6,909,155 6,942,200
Foreign currency gain.......................... -- -- 3,621 3,621
Net income..................................... -- -- 884,149 884,149
------- ------- ---------- ----------
Total comprehensive income............. -- -- 887,770 887,770
------- ------- ---------- ----------
Repurchase of common stock..................... (100) (10) (2,219) (2,229)
------- ------- ---------- ----------
BALANCE, June 30, 1999........................... 330,354 $33,035 $7,794,706 $7,827,741
======= ======= ========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
F-33
<PAGE> 146
HOOKER INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 884,149 $ 532,629
Depreciation.............................................. 179,549 171,058
Deferred income taxes..................................... (170,988) (38,031)
Deferred compensation..................................... 221,188 194,556
Decrease in cash surrender value-life insurance in lieu of
premium payments....................................... 2,982 --
Gain on sale of fixed assets.............................. (16,887) (10,426)
Adjustments to reconcile net income to net cash provided
by operating activities:
Accounts receivable.................................... (433,111) 253,936
Inventories............................................ (419,642) (106,387)
Prepaid expenses....................................... (11,521) 23,843
Deposits............................................... (1,458) 14,787
Other assets........................................... 565 19,627
Accounts payable....................................... (46,024) 16,210
Accrued expenses....................................... 456,512 (222,694)
---------- ----------
Net cash provided by operating activities......... 645,314 849,108
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets.................................. (130,612) (206,896)
Proceeds from sale of fixed assets........................ 18,600 12,700
Proceeds from redemption of life insurance (cash surrender
value)................................................. 6,350 (2,337)
---------- ----------
Net cash used by investing activities............. (105,662) (196,533)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments to repurchase and retire common stock............ (2,229) --
Payments on notes payable to related parties.............. -- (198,000)
---------- ----------
Net cash used by financing activities............. (2,229) (198,000)
---------- ----------
EFFECT OF TRANSLATION RATE CHANGES.......................... 3,621 (28,129)
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 541,044 426,446
CASH AND CASH EQUIVALENTS, beginning of year................ 3,893,159 3,466,713
---------- ----------
CASH AND CASH EQUIVALENTS, end of year...................... $4,434,203 $3,893,159
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
F-34
<PAGE> 147
HOOKER INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
1. GENERAL
Hooker Industries, Inc. (the "Company") develops, manufactures and
wholesales after market motor vehicle accessories and related products. The
Company operates manufacturing facilities and administrative offices in Ontario,
California and Ciudad Industrial, Mexico.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and Casler de Mexico, S.A. de C. V. ("Casler"), a wholly owned subsidiary. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
REVENUE RECOGNITION
The Company recognizes revenue upon shipment of the product to the
customer.
CASH AND CASH EQUIVALENTS
The Company considers all short-term investments with an original maturity
date of six months or less to be cash equivalents.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The allowance for doubtful accounts represents an estimate by the Company's
management of specific accounts deemed uncollectable. The estimated allowance
considers prior bad debt experience and customer receivables outstanding beyond
established credit terms.
INVENTORIES
Inventories are stated at the lower of cost or market, determined by the
first-in, first-out basis.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost, less accumulated depreciation.
Depreciation expense is computed under the straight-line method over the
estimated useful lives of the assets.
The following estimated useful lives are used by the Company:
<TABLE>
<CAPTION>
TYPE OF ASSET ESTIMATED USEFUL LIFE
- ------------- ---------------------
<S> <C>
Machinery and equipment..................................... 5 years
Vehicles.................................................... 3 years
Office equipment............................................ 5 years
Leasehold improvements...................................... 5-20 years
</TABLE>
When assets are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain or
loss is reflected in income for the period. The cost of maintenance and repairs
is charged against income as incurred, whereas significant renewals or
betterments are capitalized. Included in the accompanying statements of income
are provisions for depreciation and amortization in the amount of $179,547 and
$171,058 in 1999 and 1998, respectively.
F-35
<PAGE> 148
HOOKER INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOREIGN CURRENCY TRANSLATION
Assets and liabilities accounted for in foreign currencies are translated
into dollars at the rates prevailing at the balance sheet date. Expenses are
translated at average monthly rates throughout the year. No revenues are
accounted for in foreign currencies. The realized exchange differences resulting
from these translations are included as components of comprehensive income in
the accompanying consolidated statements of stockholders' equity. The foreign
currency translation gain (loss) amounted to $3,621 in 1999 and $(28,129) in
1998, respectively.
PRODUCT DEVELOPMENT COSTS
Research and development costs are charged to operations when incurred and
are included in operating expenses. The Company incurred $227,428 and $236,837
in product development costs in fiscal 1999 and 1998, respectively.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". This
standard requires, among other things, recognition of future tax benefits,
measured by enacted tax rates, attributable to deductible temporary differences
between financial statement and income tax bases of assets and liabilities and
to net operating loss carryforwards, to the extent that realization of such
benefits is more likely than not.
ENVIRONMENTAL MATTERS
Environmental expenditures are expensed or capitalized as appropriate,
depending on their future economic benefit. Environmental accruals are
established for sites where it is probable that a loss has been incurred and the
amount of the loss can be reasonably estimated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
LONG-LIVED ASSETS
When factors are present which indicate the carrying value of assets may
not be recovered, the Company evaluates the realizability of its long-lived
assets based upon the anticipated future undiscounted cash flows generated by
the asset.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company estimates the fair value of financial instruments using quoted
or estimated market prices based upon current interest rates and the remaining
term to maturity. At June 30, 1999, there were no material differences in the
book values of the Company's financial instruments and their related fair
values.
F-36
<PAGE> 149
HOOKER INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130")
and Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities," ("SFAS No. 133").
SFAS No. 130 established standards for reporting and display of
comprehensive income and its components. Comprehensive income encompasses all
changes in stockholders' equity, except those arising from transaction with
owners, including foreign currency translation adjustments. The Company opted
for early adoption of the provisions of this pronouncement. The Company has
elected to disclose comprehensive income, which includes net income and foreign
currency translation gains (losses), in the consolidated statements of
stockholders' equity.
SFAS No. 133 establishes standards for the way companies account for and
report information about derivative instruments and hedging activities in annual
financial statements. The statement was originally effective for financial
statement periods beginning after June 15, 1999, but was later amended to be
effective for financial statement periods beginning after June 15, 2000. The
Company will adopt the provisions of this statement in association with its
consolidated financial statements issued for the required period. The Company
does not expect the adoption of this standard to have a material effect on the
Company's consolidated financial statements.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1998 consolidated financial
statements in order to conform with the 1999 presentation.
3. INVENTORIES
Inventories at June 30, 1999 and 1998 consisted of:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Raw materials............................................... $ 374,985 $ 449,500
Work in process............................................. 514,578 242,316
Finished goods.............................................. 984,424 762,529
---------- ----------
$1,873,987 $1,454,345
========== ==========
</TABLE>
4. PROPERTY AND EQUIPMENT
Property and equipment at June 30, 1999 and 1998 consisted of:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Land..................................................... $ 20,113 $ 20,113
Machinery and equipment.................................. 2,596,444 2,571,591
Vehicles................................................. 270,851 250,958
Office equipment......................................... 158,361 150,032
Leasehold improvements................................... 402,078 416,420
Property and equipment at Casler......................... 312,257 295,298
----------- -----------
3,760,104 3,704,412
Accumulated depreciation................................. (3,148,639) (3,042,297)
----------- -----------
Net book value........................................... $ 611,465 $ 662,115
=========== ===========
</TABLE>
F-37
<PAGE> 150
HOOKER INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. ACCRUED EXPENSES
Accrued expenses as of June 30, 1999 and 1998 consisted of:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Allowance for outstanding rebate program.................... $ 515,721 $ 471,844
Wages and benefits.......................................... 929,308 567,925
Other....................................................... 281,798 230,546
---------- ----------
$1,726,827 $1,270,315
========== ==========
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
LEASE OF FACILITIES
The Company leases the land and buildings in Ontario, California from H & S
Properties, Inc., a related party, pursuant to various operating lease
agreements, which expire August 31, 2004. The lease agreements do not provide
for any renewal options upon completion of the current lease term. The monthly
rent payments are subject to an annual adjustment based upon the consumer price
index.
The Company leases the land and buildings in Ciudad Industrial, Tijuana,
Mexico from a third-party. The lease term is from August 1, 1994 through July
31, 1999. A renewal option is available covering the succeeding five year period
ending July 31, 2004. The lease does not provide for rent escalations during the
initial lease term or renewal period.
Rental expense for the years ended June 30, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Related party rental expense................................ $261,401 $249,292
Third party rental expense.................................. 87,253 85,316
-------- --------
$348,654 $334,608
======== ========
</TABLE>
Minimum future lease payments under the above operating leases are as
follows:
<TABLE>
<CAPTION>
YEARS ENDING JUNE 30,
- ---------------------
<S> <C>
2000...................................................... $ 344,801
2001...................................................... 344,801
2002...................................................... 344,801
2003...................................................... 344,801
2004...................................................... 344,801
Thereafter.................................................. 28,733
----------
Total minimum future lease payments............... $1,752,738
==========
</TABLE>
CONSULTING AGREEMENT
The Company has entered into a consulting agreement with Primos Computer
Services, S.A. ("Primos") dated July 27, 1993, with an effective date of August
1, 1994. Pursuant to the terms of the agreement, Primos has been contracted to
assist in connection with the development and operation of commercial business
ventures within Mexico. Primos fulfills its commitment by providing advice and
consultation to the Company on international trade, identification, evaluation,
and negotiation of suitable business opportunities, importation and exportation
matters, personnel recruitment and training, material supply sources and
purchases, sales, and similar activities in
F-38
<PAGE> 151
HOOKER INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Mexico agreed upon between the parties. The agreement originally provided for
monthly compensation in the amount of $8,564 and was amended on March 3, 1999 to
provide monthly compensation of $9,356 effective August 1, 1999. The agreement
remains in effect until terminated by the Company.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with its president and
chairman of the board of directors dated September 6, 1994, with an effective
date of July 1, 1994 and continuing through June 30, 2004 or upon death of the
employee named in the agreement, whichever comes first. Subject to provisions
regarding termination, the agreements provide for automatic extensions on a
daily basis, commencing July 1, 2001, so that a remaining term of at least three
years exists at all times. The agreements provide for minimum base salaries,
incentive bonuses and other fringe benefits. The minimum base salaries are
subject to adjustment annually on July 1. The adjusted minimum salary, which is
based upon the consumer price index, may in no instance decrease. In the event
employment is terminated by the Company for reasons other than disability, or by
the employee for reasons as defined in the agreement, the agreement shall
terminate requiring payment to the employee within 30 days of termination a lump
sum including, but not limited to, an amount equal to the total remaining salary
that would have been paid to the employee over the term of the agreement.
Terminations occurring as a result of death or disability require continued
payment of salaries for a period of 12 months following the date of death or
disability.
Notwithstanding any other benefits described in the agreement, the
president may become entitled to a post-employment benefit at a rate of 20
percent applied to a comparison of the market value (as defined in the
agreement) of the Company on June 30, 1994 with that of the June 30th following
his termination subject to proration and income aggregation guidelines as set
forth in the agreement. In the event employment is terminated by the Company, or
by the employee for reasons as defined in the agreement, the post-employment
benefit is payable within 30 days after publication of the Company's financial
statements following termination. Termination for other reasons permit the
Company to pay post-employment benefits in equal quarterly payments with 10
percent compounded interest for a period of five years. The liability under this
agreement is being accrued over the officer's remaining period of employment so
that, on the date of his retirement, the present value of the estimated payment
will be accrued.
CONTINGENCIES
The Company is subject to various legal proceedings and claims that arise
in the ordinary course of business. In the opinion of management, the amount of
any ultimate liability with respect to these actions will not materially affect
the Company's financial statements.
The Internal Revenue Service ("IRS") is in the process of examining the
Company's federal income tax return for the 1998 fiscal year. At this time it is
too early to determine the amount of adjustments, if any, which may be proposed.
7. STOCK PURCHASE AGREEMENT
In accordance with a corporate stock redemption and cross purchase
agreement adopted September 6, 1994, the Company is obligated, upon the death of
the chairman of the board or the president, to purchase not less than one
hundred (100%) percent of the decedent's shares of the Company's capital stock.
F-39
<PAGE> 152
HOOKER INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company, at the request of the decedent's personal representative may,
through Board of Directors' resolution and unanimous vote of the remaining
shareholders party to this agreement, waive its obligation to purchase said
shares and allow the decedent's spouse or heir to retain decedent's stock
interest in the Company.
In addition, the agreement provides that, upon termination of employment of
the minority stockholder, the Company is obligated to purchase one hundred
(100%) percent of the terminated shareholder's shares of the Company's capital
stock.
At June 30, 1999, these shareholders owned 327,170 shares of the common
stock outstanding.
8. INCOME TAXES
Income tax expense consisted of the following:
<TABLE>
<CAPTION>
1999 1998
--------- --------
<S> <C> <C>
CURRENT PROVISION:
Federal................................................... $ 499,379 $264,562
State..................................................... 134,185 76,021
--------- --------
633,564 340,583
DEFERRED PROVISION (BENEFIT)................................ (170,988) (38,031)
--------- --------
$ 462,576 $302,552
========= ========
</TABLE>
The provision for income taxes differs from that computed at the Federal
statutory corporate tax rate. A reconciliation of income tax computed at the
U.S. Federal statutory rate to the Company's effective tax rate is as follows at
June 30:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
U.S. Federal statutory tax provision........................ $457,887 $274,397
State income taxes, net of Federal taxes.................... 80,803 50,174
Other....................................................... (76,114) (22,019)
-------- --------
$462,576 $302,552
======== ========
</TABLE>
The components of the deferred tax asset are as follows as of June 30:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Depreciation................................................ $ 25,846 $ 25,276
Accounts receivable reserve................................. 23,177 23,177
Inventories................................................. 19,826 27,174
Accrued expenses............................................ 159,266 58,916
Deferred compensation....................................... 304,272 226,856
--------- ---------
Total deferred tax assets......................... 532,387 361,399
Less current portion.............................. (217,355) (111,638)
--------- ---------
$ 315,032 $ 249,761
========= =========
</TABLE>
F-40
<PAGE> 153
HOOKER INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. CASH FLOW INFORMATION
Cash paid for interest and income taxes was as follows as of June 30:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Interest.................................................... $ 33 $ 20,653
Income taxes................................................ 670,181 367,270
</TABLE>
10. ECONOMIC DEPENDENCY
A material part of the Company's business is dependent upon three
customers, the loss of whom would have an adverse effect on the Company. During
the years ended June 30, 1999 and 1998, these three customers accounted for
approximately 57 percent of revenues in each year. Although there are no
executed continuing contracts with these customers, the Company feels that any
reduction in sales to any one customer would result in corresponding increases
in sales to the other customers.
11. CONCENTRATION OF CREDIT RISK FOR CASH HELD AT BANKS
The Company maintains cash balances at several banks. Accounts at each
institution are insured by the Federal Deposit Insurance Corporation up to
$100,000.
12. SUBSEQUENT EVENT
In July 1999, the outstanding stock of the Company was acquired by Holley
Performance Products, Inc. ("Holley").
F-41
<PAGE> 154
HOLLEY PERFORMANCE PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 27,
1998 1999
------------ --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 2,013 $ 2,222
Accounts receivable, net of reserves for doubtful accounts
of $1,686 and $1,753, respectively..................... 15,174 20,813
Inventories............................................... 22,673 18,867
Deferred income taxes..................................... 4,151 4,257
Other current assets...................................... 845 2,345
-------- --------
Total current assets.............................. 44,856 48,504
PROPERTY, PLANT AND EQUIPMENT, net.......................... 26,771 27,546
INTANGIBLE ASSETS, net...................................... 106,445 107,557
-------- --------
Total assets...................................... $178,072 $183,607
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt......................... $ 3,200 $ 3,700
Accounts payable.......................................... 6,923 7,451
Accrued liabilities....................................... 15,171 16,014
-------- --------
Total current liabilities......................... 25,294 27,165
-------- --------
LONG-TERM DEBT, net of current portion...................... 89,888 92,688
-------- --------
DEFERRED INCOME TAXES....................................... 19,099 18,624
-------- --------
OTHER....................................................... 752 543
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock, $0.01 par value; 1,000 authorized, issued
and outstanding........................................ 250 250
Paid-in capital........................................... 42,170 42,170
Retained earnings......................................... 619 2,167
-------- --------
Total stockholder's equity........................ 43,039 44,587
-------- --------
Total liabilities and stockholder's equity........ $178,072 $183,607
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-42
<PAGE> 155
HOLLEY PERFORMANCE PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND THE PREDECESSOR ARE NOT
COMPARABLE IN CERTAIN RESPECTS.
<TABLE>
<CAPTION>
THE
PREDECESSOR THE COMPANY
--------------- ------------------------------
JANUARY 1, 1998 MAY 16, 1998 JANUARY 1, 1999
TO MAY 15, TO JUNE 28, TO JUNE 27,
1998 1998 1999
--------------- ------------ ---------------
<S> <C> <C> <C>
NET SALES........................................ $36,632 $13,435 $64,932
COST OF SALES.................................... 25,728 8,585 42,571
------- ------- -------
Gross profit................................... 10,904 4,850 22,361
------- ------- -------
SELLING EXPENSES................................. 4,018 1,032 7,169
GENERAL AND ADMINISTRATIVE EXPENSES.............. 3,598 1,015 5,089
NONRECURRING CHARGE.............................. -- -- 424
AMORTIZATION EXPENSE............................. 45 274 1,779
------- ------- -------
Operating income............................... 3,243 2,529 7,900
INTEREST EXPENSE................................. -- 900 4,341
OTHER INCOME (EXPENSE)........................... (1,395) (6) (7)
------- ------- -------
INCOME BEFORE TAXES.............................. 1,848 1,623 3,552
PROVISION FOR INCOME TAXES....................... 797 706 2,004
------- ------- -------
NET INCOME....................................... $ 1,051 $ 917 $ 1,548
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-43
<PAGE> 156
HOLLEY PERFORMANCE PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ------- -------- -------
THE COMPANY
-------------------------------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1998.............................. $250 $42,170 $ 619 $43,039
Net income............................................ -- -- 1,548 1,548
---- ------- ------ -------
BALANCE, June 27, 1999.................................. $250 $42,170 $2,167 $44,587
==== ======= ====== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-44
<PAGE> 157
HOLLEY PERFORMANCE PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND THE PREDECESSOR ARE NOT
COMPARABLE IN CERTAIN RESPECTS.
<TABLE>
<CAPTION>
THE
PREDECESSOR THE COMPANY
---------------- -----------------------------------
JANUARY 1, 1998 MAY 16, 1998 JANUARY 1, 1999
TO MAY 15, 1998 TO JUNE 28, 1998 TO JUNE 27, 1999
---------------- ---------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................. $ 1,051 $ 917 $ 1,548
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization........... 576 540 4,242
Deferred income taxes................... (919) 185 (185)
Changes in assets and liabilities, net
of assets purchased:
Accounts receivable................... (3,686) (1,133) (5,829)
Inventories........................... 1,198 1,294 1,922
Other current assets.................. 501 (38) (1,478)
Bank overdraft........................ (131) -- --
Accounts payable...................... 2,719 (2,386) 528
Accrued liabilities................... 1,704 2,691 628
------- --------- -------
Net cash provided by operating
activities....................... 3,013 2,070 1,376
------- --------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisitions.................. -- (105,509) (2,326)
Other noncurrent assets.................... -- (775) (1,066)
Capital expenditures....................... (1,188) (183) (1,075)
Proceeds on the disposal of fixed assets... -- 1,080 --
------- --------- -------
Net cash used in investing
activities....................... (1,188) (105,387) (4,467)
------- --------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term
obligations............................. -- 69,000 4,000
Principal payments on long-term
obligations............................. -- -- (700)
Changes in payable to parent............... (1,825) -- --
Proceeds from the issuance of equity....... -- 37,420 --
------- --------- -------
Net cash provided by (used in)
financing activities............. (1,825) 106,420 3,300
------- --------- -------
NET CHANGE IN CASH........................... $ -- $ 3,103 $ 209
------- --------- -------
BALANCE AT BEGINNING OF PERIOD............... -- -- 2,013
======= ========= =======
BALANCE AT END OF PERIOD..................... $ -- $ 3,103 $ 2,222
======= ========= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest..................... $ -- $ -- $ 3,321
======= ========= =======
Cash paid for income taxes................. $ -- $ -- $ 1,379
======= ========= =======
Transfer of assets from (to) Parent........ $(1,594) $ -- $ --
======= ========= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-45
<PAGE> 158
HOLLEY PERFORMANCE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
The consolidated balance sheet as of June 27, 1999 and the consolidated
statements of income and cash flows for the periods from January 1, 1998 to May
15, 1998, May 16, 1998 to June 28, 1998 and the six months ended June 27, 1999
have been prepared by the Company in accordance with the accounting policies
described in its annual financial statements and should be read in conjunction
with the notes thereto.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and changes in cash flows at May 15, 1998, June 28, 1998
and June 27, 1999 and for all periods presented have been made. The results of
operations for the six months ended June 27, 1999 are not necessarily indicative
of the operating results to be expected for the full year.
Holley Performance Products, Inc. (a Delaware corporation and "Holley"),
based in Bowling Green, Kentucky, is a leading manufacturer of a diversified
line of performance automotive products, including carburetors, fuel pumps, fuel
injection systems, ignition systems and remanufactured carburetors. The products
are designed to enhance street, off-road, recreational and competitive vehicle
performance through increased horsepower, torque and driveability. In addition
to its automotive performance line, Holley manufactures performance marine,
mobile and stationary industrial engine components and markets a new line of
performance in-tank fuel pumps as well as a recently introduced specialty
chemical line.
Effective May 15, 1998, all outstanding shares of Holley common stock were
purchased by KHPP Acquisition Corporation ("KHPP"), a wholly-owned subsidiary of
KHPP Holdings Corporation ("Holdings"), for $100,000 (the "Acquisition"). At the
time of the Acquisition, KHPP was merged into Holley. The consolidated balance
sheets as of December 31, 1998 and June 27, 1999 and the consolidated statements
of income, stockholder's equity and cash flows for the period from May 16, 1998
to June 28, 1998 and the six months ended June 27, 1999 reflect the accounts of
Holley subsequent to the change in ownership which resulted from the
Acquisition. The Acquisition was accounted for using the purchase method of
accounting.
Prior to January 1, 1996, Holley was a division of Coltec Industries, Inc.
("Coltec"). On January 1, 1996, Holley was incorporated, and from January 1,
1996 to May 15, 1998, Holley was a wholly-owned subsidiary of Coltec. The
consolidated statements of income and cash flows for the period from January 1,
1998 to May 15, 1998 are the financial statements of Holley when it was a
wholly-owned subsidiary of Coltec (referred to herein as the "Predecessor"). The
Acquisition and the related application of purchase accounting resulted in
changes to the capital structure of the Predecessor and the historical basis of
various assets and liabilities. The effect of such changes significantly impairs
the comparability of the financial position and results of operations of Holley
and the Predecessor.
In August and October of 1998, respectively, Holley purchased the
outstanding common stock of Weiand Automotive Industries, Inc. ("Weiand") and a
group of companies under common ownership, Lunati Cams, Inc., Lunati & Taylor
Pistons, Inc., and LMT Motor Sports Corporation (referred to collectively as
"Lunati"). Weiand is a manufacturer and distributor of induction systems, and
Lunati is a manufacturer of camshafts, crankshafts, pistons and automotive
specialty parts. Both Weiand and Lunati sell their products to automotive parts
retailers throughout the United States.
F-46
<PAGE> 159
HOLLEY PERFORMANCE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The consolidated financial statements include the accounts of Holley and
its wholly-owned subsidiaries -- Weiand and Lunati (collectively referred to as
the "Company"). All significant intercompany transactions and balances between
Holley and its subsidiaries have been eliminated in consolidation.
2. INVENTORIES
Inventories of the Company consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 27,
1998 1999
------------ --------
<S> <C> <C>
Raw materials............................................... $14,032 $10,644
Work-in-progress............................................ 3,877 2,801
Finished goods.............................................. 4,092 4,952
Other....................................................... 672 470
------- -------
$22,673 $18,867
======= =======
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment of the Company consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 27,
1998 1999
------------ --------
<S> <C> <C>
Land........................................................ $ -- $ 360
Buildings and improvements.................................. 3,882 8,470
Machinery and equipment..................................... 19,560 16,524
Computer equipment.......................................... 3,106 3,023
Furniture and fixtures...................................... 874 877
Construction in process..................................... 906 1,934
------- -------
28,328 31,188
Less: accumulated depreciation.............................. (1,557) (3,642)
------- -------
$26,771 $27,546
======= =======
</TABLE>
Depreciation expense was $259, $225 and $2,354 for the periods from January
1, 1998 to May 15, 1998, May 16, 1998 to June 28, 1998 and the six months ended
June 27, 1999, respectively.
4. ACCRUED LIABILITIES
Accrued liabilities of the Company consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 27,
1998 1999
------------ --------
<S> <C> <C>
Wages and benefits.......................................... $ 4,620 $ 4,959
Reserve for product returns................................. 3,894 3,894
Allowance for outstanding rebate programs................... 1,434 1,025
Other....................................................... 5,223 6,136
------- -------
$15,171 $16,014
======= =======
</TABLE>
F-47
<PAGE> 160
HOLLEY PERFORMANCE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. LONG-TERM DEBT
Long-term debt of the Company consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 27,
1998 1999
------------ --------
<S> <C> <C>
Revolving line of credit, maturing June 27, 2003............ $ 4,375 $ 8,375
Term note "A", maturing June 27, 2003....................... 19,000 18,500
Term note "B", maturing June 27, 2005....................... 29,850 29,775
Term note "C", maturing June 27, 2006....................... 14,925 14,888
Term note "D", maturing December 31, 2006................... 24,938 24,850
------- -------
93,088 96,388
Less current portion........................................ (3,200) (3,700)
------- -------
$89,888 $92,688
======= =======
</TABLE>
To finance the Acquisition, the Company entered into a credit agreement
(the "Credit Agreement") with a group of lenders on May 16, 1998. The Credit
Agreement provides for term notes of $20,000, $30,000 and $15,000, as well as a
revolving line of credit of up to $15,000. In connection with the acquisition of
Lunati in October 1998, the Company entered into an amendment to the Credit
Agreement (the "Amendment"). The Amendment provides for an additional term loan
of $25,000 and increases the maximum borrowings available under the revolving
line of credit to $20,000. Borrowing availability under the revolving line of
credit is subject to limitations based on eligible accounts receivable and
inventory as defined in the Credit Agreement.
6. NON-RECURRING CHARGE
The non-recurring charge includes expenses related to the closure of a
manufacturing facility and the related movement of inventory and fixed assets to
the Company's manufacturing facility in Bowling Green, Kentucky.
7. LITIGATION
In May 1999, the Union Pacific Railroad Company ("Union Pacific") initiated
litigation against the Company alleging that certain soil and groundwater
contamination found on Union Pacific's property had migrated from an adjacent
facility owned by Weiand. The complaint seeks costs totaling in excess of $5
million. At this time the Company is unable to access the likelihood of an
unfavorable outcome or, in the event of such an outcome, the amount of any
resulting liability. The Company is investigating the claims and intends to
defend them vigorously.
8. ACQUISITIONS
In May 1999, the Company acquired a super charger product line from
Automoco Corporation for a total purchase price of approximately $2.3 million in
a transaction which was accounted for as a purchase.
In July 1999, the Company completed an acquisition of Hooker Industries,
Inc., ("Hooker") for a net purchase price of approximately $22.0 million. Hooker
is a manufacturer of performance exhaust systems, headers, mufflers and
Harley-Davidson exhaust pipes.
F-48
<PAGE> 161
- ------------------------------------------------------
- ------------------------------------------------------
No dealer, salesperson or other person is authorized to give any information or
to represent anything not contained in this Prospectus. You must not rely on any
unauthorized information or representations. This Prospectus is an offer to sell
only the Notes offered hereby, but only under circumstances and in jurisdictions
where it is lawful to do so. The information contained in this Prospectus is
current only as of its date.
------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Forward-Looking Statements............ iii
Prospectus Summary.................... 1
Risk Factors.......................... 16
Where You Can Get More Information.... 20
The Exchange Offer.................... 20
Use of Proceeds....................... 29
Capitalization........................ 30
Unaudited Pro Forma Consolidated
Financial Information............... 31
Selected Historical Consolidated
Financial Information............... 38
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 41
Industry Overview..................... 48
Business.............................. 52
Management............................ 62
Certain Transactions.................. 65
Security Ownership.................... 65
Description of the Credit Facility.... 66
Description of the Exchange Notes..... 67
Certain Federal Income Tax
Consequences........................ 103
Plan of Distribution.................. 106
Legal Matters......................... 107
Independent Public Accountants........ 107
Index to Financial Statements......... F-1
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
$150,000,000
HOLLEY PERFORMANCE
PRODUCTS INC.
Offer to Exchange its 12 1/4%
Senior Notes due 2007,
Series B, for any and all
outstanding 12 1/4%
Senior Notes due 2007
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 162
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Holley Performance Products Inc.
The By-laws of Holley Performance Products Inc. ("Holley") provide for the
indemnification of Holley's directors and officers. Insofar as indemnification
for liabilities under the Securities Act may be permitted to directors, officers
or controlling persons of Holley pursuant to Holley's by-laws and the Delaware
General Corporation Law ("DGCL"), Holley is aware that it is the opinion of the
SEC that such indemnification is against public policy as expressed in such Act
and is therefore unenforceable.
Holley's by-laws provide for indemnification of the Company's directors and
officers against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by them in
connection with any action, suit or proceeding if they acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful;
except that, in the case of an action, suit or proceeding by or in the right of
the Company, there shall be no indemnification in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of such person's duties unless, and
then only to the extent that, a court of proper jurisdiction shall determine
that despite such adjudication such person is fairly and reasonably entitled to
indemnification.
The Directors and officers of Holley may also be indemnified against
liability incurred in their capacity as officers and/or directors pursuant to
Section 145 of the DGCL.
Holley maintains insurance covering expenditures that may be incurred in
connection with the lawful indemnification of the Company's directors and
officers for their liabilities and expenses.
Biggs Manufacturing, Inc. (also known as FlowTech)
The Articles of Incorporation provide that no director of Biggs
Manufacturing, Inc. ("Biggs") shall be personally liable for money damages in
any action brought by or in the right of Biggs for breach of the Directors'
duties to Biggs and its Shareholders, except for any liability of the Director
for actual omissions that involve intentional misconduct or a knowing or
culpable violation of any corporate law, for acts or omissions that a Director
believes to be contrary to the best interest of the Corporation or its
Shareholders or involve the absence of good faith on the part of the Director,
for any transaction from which a Director derived an improper personal benefit,
for acts or omissions that show a reckless disregard for the Director's duty to
Biggs or its Shareholders in circumstances in which the Director was aware, or
should have been aware, in the ordinary course in performing the Director's
duties, of a risk of serious injury to Biggs or its Shareholders, or for acts or
omissions that constitute an unexcused pattern or an inattention that amounts to
an abdication of the Director's duty to the Corporation or its Shareholders.
The Directors and officers of Biggs may also be indemnified against
liability incurred in their capacity as officers and/or directors pursuant to
Article 5 of the Arizona Business Corporation Act.
LMT Motor Sports, Inc.
The By-Laws of LMT Motor Sports, Inc. ("LMT") provide that any person made
a party to any action by reason of the fact that he, his testator, or intestate
representative, is or was a Director, Officer or employee of LMT, or of any
corporation in which he served as such at the request of LMT, shall be
indemnified by LMT against the reasonable expenses, including attorney's fees,
actually
II-1
<PAGE> 163
and necessarily incurred by him in connection with the defense of such action,
suit or proceedings, or in connection with any appeal therein, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding, or in connection with any appeal therein that such Officer, Director
or employee is liable for negligence or misconduct in the performance of his
duties. The foregoing rights of indemnification are not deemed exclusive of any
rights which any Officer, Director or employee may be entitled. The amount of
indemnification to which any Officer or any Director may be entitled shall be
fixed by the Board of Directors, except that in any case where there is no
disinterested majority of the Board available, the amount shall be fixed by
arbitration pursuant to the then existing rules of the American Arbitration
Association.
The Directors and officers of LMT may also be indemnified against liability
incurred in their capacity as officers and/or directors pursuant to Article 8,
Subarticle E of the Mississippi Business Corporation Act.
Lunati & Taylor Pistons Inc.
The By-laws of Lunati & Taylor Pistons, Inc. ("LTP") provide that LTP shall
indemnify its directors and officers to the full extent of the Mississippi
Business Corporation Act ("MBCA") and consistent with the provisions of the
MBCA. Article 8, Subarticle E of the MBCA sets forth the provisions in
connection with the indemnification of officers and directors.
Lunati Cams, Inc.
The By-laws of Lunati Cams, Inc. ("Lunati") provides that any person made a
party to any action by reason of the fact that he is or was a director or
officer of Lunati, shall be indemnified by Lunati against the reasonable
expenses, including attorney's fees, actually and necessarily incurred by him in
connection with the defense of such action, suit or proceedings, or in
connection with any appeal therein, except in relation to matters as to which it
shall be adjudges in such action, suit or proceeding, or in connection with any
appeal therein that such officer or director is liable for negligence or
misconduct in the performance of his duties. The By-laws provide that the
foregoing rights of indemnification are not deemed to be exclusive. The By-laws
provide that the amount of indemnity to which any officer or any director may be
entitled shall be fixed by the Board of Directors, except that in the case where
there is no disinterested majority of the Board available, the amount shall be
fixed by arbitration pursuant to the then existing rules of the American
Arbitration Association.
The Directors and officers of Lunati may also be indemnified against
liability incurred in their capacity as officers and/or directors pursuant to
Chapter 18, Part 5 of the Tennessee Business Corporation Act.
Holley Performance Systems, Inc.
The Certificate of Incorporation ("Charter") and the By-laws of Holley
Performance Systems, Inc. ("HPS") provide for the indemnification of HPS's
directors and officers to the fullest extent permitted under the Delaware
General Corporation Law ("DGCL"). As permitted by the DGCL, the Charter provides
that directors of HPS shall not be personally liable to HPS or its shareholders
for monetary damages for breach of fiduciary duty as a director, except for
those specific breaches and acts or omissions with respect to which the DGCL
expressly provides shall not eliminate or limit such personal liability. The
By-laws of HPS may require HPS, among other things, to reimburse or advance
expenses to a director or officer entitled to indemnification as a result of any
threatened claims or proceedings brought against them as to which they could be
indemnified.
II-2
<PAGE> 164
Hooker Industries, Inc.
The Directors and officers of Hooker Industries, Inc. may be indemnified
against liability incurred in their capacity as officers and/or directors
pursuant to Section 317 of the California General Corporation Law.
Weiand Automotive Industries, Inc.
The Directors and officers of Weiand Automotive Industries, Inc. may be
indemnified against liability incurred in their capacity as officers and/or
directors pursuant to Section 317 of the California General Corporation Law.
II-3
<PAGE> 165
ITEM 21. EXHIBITS AND FINANCIAL SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
3.1a* -- Certificate of Incorporation of Holley Performance Products
Inc., as amended
3.1b* -- Bylaws of Holley Performance Products Inc.
3.2a* -- Certificate of Incorporation of Holley Performance Systems,
Inc.
3.2b* -- Bylaws of Holley Performance Systems, Inc.
3.3a* -- Articles of Incorporation of Weiand Automotive Industries,
Inc., as amended
3.3b* -- Bylaws of Weiand Automotive Industries, Inc.
3.4a* -- Articles of Incorporation of Lunati Cams, Inc., as amended
3.4b* -- Bylaws of Lunati Cams, Inc.
3.5a* -- Articles of Incorporation of LMT Motor Sports Corporation
3.5b* -- Bylaws of LMT Motor Sports Corporation
3.6a* -- Articles of Incorporation of Lunati & Taylor Pistons
3.6b* -- Bylaws of Lunati & Taylor Pistons
3.7a* -- Articles of Incorporation of Hooker Industries, Inc.
3.7b* -- Bylaws of Hooker Industries, Inc., as amended
3.8a* -- Articles of Incorporation of Biggs Manufacturing, Inc.
3.8b* -- Bylaws of Biggs Manufacturing, Inc.
4.1* -- Indenture for the 12 1/4% Senior Notes due 2007, dated as of
September 20, 1999, between Holley Performance Products
Inc., the Guarantors and State Street Bank and Trust
Company, as Trustee
4.2* -- Form of Exchange Global Note for 12 1/4% Senior Note due
2007
4.3* -- Form of Exchange Global Note for 12 1/4% Senior Note due
2007, Series B
5* -- Legal Opinion of Hunton & Williams
10* -- Amended and Restated Credit Agreement dated as of September
20, 1999, by and among KHPP Holdings, Inc., Holley, Credit
Agricole Indosuez as Administrative Agent and Comerica Bank
as Co-Agent
12* -- Computation of ratios of earnings to fixed charges
21* -- Subsidiaries
23.1* -- Consent of Arthur Andersen LLP
23.2* -- Consent of Hunton & Williams (included in Exhibit 5)
24* -- Power of attorney is contained in the signature page of this
Registration Statement
25* -- Statement of the eligibility and qualification on Form T-1
of State Street Bank and Trust Company, as Trustee under the
Indenture
27.1* -- Financial Data Schedule for the period ended December 31, 1998
(for SEC use only)
27.2* -- Financial Data Schedule for the period ended June 27, 1999
(for SEC use only)
99.1* -- Form of Letter of Transmittal
99.2* -- Form Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.3* -- Form of Notice of Guaranteed Delivery
</TABLE>
- ---------------
* Filed herewith.
II-4
<PAGE> 166
ITEM 22. UNDERTAKINGS.
A. The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of the securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
C. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of 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 this Registration Statement through
the date of responding to the request.
D. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
II-5
<PAGE> 167
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Bowling Green, State of
Kentucky, on this 14th day of October, 1999.
HOLLEY PERFORMANCE PRODUCTS INC.
By: /s/ ROBERT L. WINELAND
------------------------------------
Robert L. Wineland
Chief Financial Officer
Each person whose individual signature appears below hereby authorizes and
appoints Robert L. Wineland with full power of substitution and resubstitution
and full power to act as his true and lawful attorney-in-fact and agent to act
in his name, place and stead and to execute in the name and on behalf of each
person, individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments and any registration statement relating to the same offering as this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agents full power and authority to do and perform each and every act and thing,
ratifying and confirming all that said attorney-in-fact and agent or any of them
or their substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ JEFFREY G. KING Chief Executive Officer, President and
- ----------------------------------------------------- Director (principal executive officer)
Jeffrey G. King
/s/ ROBERT L. WINELAND Vice President, Chief Financial Officer and
- ----------------------------------------------------- Secretary (principal financial and
Robert L. Wineland accounting officer)
/s/ CHRISTOPHER LACOVARA Vice President, Treasurer, Assistant Secretary
- ----------------------------------------------------- and Director
Christopher Lacovara
/s/ EVAN D. WILDSTEIN Assistant Secretary and Director
- -----------------------------------------------------
Evan D. Wildstein
/s/ JAMES A. KOHLBERG Director
- -----------------------------------------------------
James A. Kohlberg
/s/ MARION H. ANTONINI Director
- -----------------------------------------------------
Marion H. Antonini
/s/ WILLIAM F. ANDREWS Director
- -----------------------------------------------------
William F. Andrews
</TABLE>
II-6
<PAGE> 168
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
- -----------------------------------------------------
James D. Wiggins
/s/ SAMUEL P. FRIEDER Director
- -----------------------------------------------------
Samuel P. Frieder
</TABLE>
II-7
<PAGE> 169
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Bowling Green, State of
Kentucky, on this 14th day of October, 1999.
HOLLEY PERFORMANCE SYSTEMS, INC.
By: /s/ ROBERT L. WINELAND
-----------------------------------
Robert L. Wineland,
Chief Financial Officer
Each person whose individual signature appears below hereby authorizes and
appoints Robert L. Wineland with full power of substitution and resubstitution
and full power to act as his true and lawful attorney-in-fact and agent to act
in his name, place and stead and to execute in the name and on behalf of each
person, individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments and any registration statement relating to the same offering as this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agents full power and authority to do and perform each and every act and thing,
ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Jeffrey G. King Chief Executive Officer, President and
- --------------------------------- Director (principal executive officer)
Jeffrey G. King
/s/ Robert L. Wineland Vice President, Chief Financial Officer and
- --------------------------------- Secretary (principal financial and accounting
Robert L. Wineland officer)
/s/ Christopher Lacovara Vice President, Treasurer, Assistant
- --------------------------------- Secretary and Director
Christopher Lacovara
</TABLE>
II-8
<PAGE> 170
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Bowling Green, State of
Kentucky, on this 14th day of October, 1999.
WEIAND AUTOMOTIVE INDUSTRIES, INC.
By: /s/ ROBERT L. WINELAND
-----------------------------------
Robert L. Wineland,
Chief Financial Officer
Each person whose individual signature appears below hereby authorizes and
appoints Robert L. Wineland with full power of substitution and resubstitution
and full power to act as his true and lawful attorney-in-fact and agent to act
in his name, place and stead and to execute in the name and on behalf of each
person, individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments and any registration statement relating to the same offering as this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agents full power and authority to do and perform each and every act and thing,
ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Jeffrey G. King Chief Executive Officer, President and
- --------------------------------- Director (principal executive officer)
Jeffrey G. King
/s/ Robert L. Wineland Vice President, Chief Financial Officer and
- --------------------------------- Secretary (principal financial and accounting
Robert L. Wineland officer)
/s/ Christopher Lacovara Vice President, Treasurer, Assistant
- --------------------------------- Secretary and Director
Christopher Lacovara
</TABLE>
II-9
<PAGE> 171
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Bowling Green, State of
Kentucky, on this 14th day of October, 1999.
LUNATI CAMS, INC.
By: /s/ ROBERT L. WINELAND
-----------------------------------
Robert L. Wineland,
Chief Financial Officer
Each person whose individual signature appears below hereby authorizes and
appoints Robert L. Wineland with full power of substitution and resubstitution
and full power to act as his true and lawful attorney-in-fact and agent to act
in his name, place and stead and to execute in the name and on behalf of each
person, individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments and any registration statement relating to the same offering as this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agents full power and authority to do and perform each and every act and thing,
ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Jeffrey G. King Chief Executive Officer, President and
- --------------------------------- Director (principal executive officer)
Jeffrey G. King
/s/ Robert L. Wineland Vice President, Chief Financial Officer and
- --------------------------------- Secretary (principal financial and accounting
Robert L. Wineland officer)
/s/ Christopher Lacovara Vice President, Treasurer, Assistant
- --------------------------------- Secretary and Director
Christopher Lacovara
</TABLE>
II-10
<PAGE> 172
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Bowling Green, State of
Kentucky, on this 14th day of October, 1999.
LMT MOTOR SPORTS CORPORATION
By: /s/ Robert L. Wineland
----------------------------------
Robert L. Wineland,
Chief Financial Officer
Each person whose individual signature appears below hereby authorizes and
appoints Robert L. Wineland with full power of substitution and resubstitution
and full power to act as his true and lawful attorney-in-fact and agent to act
in his name, place and stead and to execute in the name and on behalf of each
person, individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments and any registration statement relating to the same offering as this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agents full power and authority to do and perform each and every act and thing,
ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Jeffrey G. King Chief Executive Officer, President and
- --------------------------------- Director (principal executive officer)
Jeffrey G. King
/s/ Robert L. Wineland Vice President, Chief Financial Officer and
- --------------------------------- Secretary (principal financial and accounting
Robert L. Wineland officer)
Christopher Lacovara Vice President, Treasurer, Assistant
- --------------------------------- Secretary and Director
Christopher Lacovara
</TABLE>
II-11
<PAGE> 173
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Bowling Green, State of
Kentucky, on this 14th day of October, 1999.
LUNATI & TAYLOR PISTONS
By: /s/ Robert L. Wineland
----------------------------------
Robert L. Wineland,
Chief Financial Officer
Each person whose individual signature appears below hereby authorizes and
appoints Robert L. Wineland with full power of substitution and resubstitution
and full power to act as his true and lawful attorney-in-fact and agent to act
in his name, place and stead and to execute in the name and on behalf of each
person, individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments and any registration statement relating to the same offering as this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agents full power and authority to do and perform each and every act and thing,
ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Jeffrey G. King Chief Executive Officer, President and
- --------------------------------- Director (principal executive officer)
Jeffrey G. King
/s/ Robert L. Wineland Vice President, Chief Financial Officer and
- --------------------------------- Secretary (principal financial and accounting
Robert L. Wineland officer)
Christopher Lacovara Vice President, Treasurer, Assistant
- --------------------------------- Secretary and Director
Christopher Lacovara
</TABLE>
II-12
<PAGE> 174
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Bowling Green, State of
Kentucky, on this 14th day of October, 1999.
HOOKER INDUSTRIES, INC.
By: /s/ ROBERT L. WINELAND
-----------------------------------
Robert L. Wineland,
Chief Financial Officer
Each person whose individual signature appears below hereby authorizes and
appoints Robert L. Wineland with full power of substitution and resubstitution
and full power to act as his true and lawful attorney-in-fact and agent to act
in his name, place and stead and to execute in the name and on behalf of each
person, individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments and any registration statement relating to the same offering as this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agents full power and authority to do and perform each and every act and thing,
ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Jeffrey G. King Chief Executive Officer, President and
- --------------------------------- Director (principal executive officer)
Jeffrey G. King
/s/ Robert L. Wineland Vice President, Chief Financial Officer and
- --------------------------------- Secretary (principal financial and accounting
Robert L. Wineland officer)
/s/ Christopher Lacovara Vice President, Treasurer, Assistant
- --------------------------------- Secretary and Director
Christopher Lacovara
/s/ Evan D. Wildstein Vice President, Assistant Secretary and
- --------------------------------- Director
Evan D. Wildstein
</TABLE>
II-13
<PAGE> 175
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Bowling Green, State of
Kentucky, on this 14th day of October, 1999.
BIGGS MANUFACTURING, INC.
By:
Robert L. Wineland,
Chief Financial Officer
Each person whose individual signature appears below hereby authorizes and
appoints Robert L. Wineland with full power of substitution and resubstitution
and full power to act as his true and lawful attorney-in-fact and agent to act
in his name, place and stead and to execute in the name and on behalf of each
person, individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments and any registration statement relating to the same offering as this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agents full power and authority to do and perform each and every act and thing,
ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- ---------------------------------------------
<S> <C>
Jeffrey G. King.............................. Chief Executive Officer, President and
Director (principal executive officer)
Robert L. Wineland........................... Vice President, Chief Financial Officer and
Secretary (principal financial and accounting
officer)
Christopher Lacovara......................... Vice President, Treasurer, Assistant
Secretary and Director
</TABLE>
II-14
<PAGE> 176
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Holley Performance Products Inc.:
We have audited the accompanying consolidated balance sheet of HOLLEY
PERFORMANCE PRODUCTS INC. (a Delaware corporation) AND SUBSIDIARIES as of
December 31, 1998 and the related consolidated statements of income,
stockholder's equity and cash flows for the period from inception, May 16, 1998,
to December 31, 1998. We have also audited the accompanying balance sheet of the
Predecessor (businesses identified in Note 1) as of December 31, 1997, and the
related statements of income, stockholder's equity and cash flows for the years
ended December 31, 1996 and 1997 and the period from January 1, 1998 to May 15,
1998 included in this registration statement and have issued our report thereon
dated February 23, 1999.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying schedule of valuation
and qualifying accounts is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. The information presented in this schedule as of and for
the periods ended December 31, 1996, December 31, 1997, May 15, 1998 and
December 31, 1998 has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, fairly states in
all material respects, the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Nashville, Tennessee
February 23, 1999
S-1
<PAGE> 177
FINANCIAL STATEMENT SCHEDULE
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING OF COSTS AND DEDUCTIONS END OF
CLASSIFICATION PERIOD EXPENSES FROM RESERVES PERIOD
-------------- ------------ ---------- ------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
VALUATION AND QUALIFYING ACCOUNTS DEDUCTED
FROM THE ASSETS TO WHICH THEY APPLY:
Allowance for doubtful accounts:
For the period from May 16, 1998 to
December 31, 1998...................... $1,575 $ 397 $(286) $1,686
For the period from January 1, 1998 to
May 15, 1998........................... 1,118 457 -- 1,575
For the year ended December 31, 1997..... 14 1,104 -- 1,118
For the year ended December 31, 1996..... 12 54 (52) 14
</TABLE>
S-2
<PAGE> 178
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------
<C> <C> <S>
3.1a* -- Certificate of Incorporation of Holley Performance Products
Inc., as amended
3.1b* -- Bylaws of Holley Performance Products Inc.
3.2a* -- Certificate of Incorporation of Holley Performance Systems,
Inc.
3.2b* -- Bylaws of Holley Performance Systems, Inc.
3.3a* -- Articles of Incorporation of Weiand Automotive Industries,
Inc., as amended
3.3b* -- Bylaws of Weiand Automotive Industries, Inc.
3.4a* -- Articles of Incorporation of Lunati Cams, Inc., as amended
3.4b* -- Bylaws of Lunati Cams, Inc.
3.5a* -- Articles of Incorporation of LMT Motor Sports Corporation
3.5b* -- Bylaws of LMT Motor Sports Corporation
3.6a* -- Articles of Incorporation of Lunati & Taylor Pistons
3.6b* -- Bylaws of Lunati & Taylor Pistons
3.7a* -- Articles of Incorporation of Hooker Industries, Inc.
3.7b* -- Bylaws of Hooker Industries, Inc., as amended
3.8a* -- Articles of Incorporation of Biggs Manufacturing, Inc.
3.8b* -- Bylaws of Biggs Manufacturing, Inc.
4.1* -- Indenture for the 12 1/4% Senior Notes due 2007, dated as of
September 20, 1999, between Holley Performance Products
Inc., the Guarantors and State Street Bank and Trust
Company, as Trustee
4.2* -- Form of Exchange Global Note for 12 1/4% Senior Note due
2007
4.3* -- Form of Exchange Global Note for 12 1/4% Senior Note due
2007, Series B
5* -- Legal Opinion of Hunton & Williams
10* -- Amended and Restated Credit Agreement as of September 20,
1999, by and among KHPP Holdings, Inc., Holley Credit
Agricole Indosuez as Administrative Agent and Comerica Bank
as Co-Agent
12* -- Computation of ratios of earnings to fixed charges
21* -- Subsidiaries
23.1* -- Consent of Arthur Andersen LLP
23.2* -- Consent of Hunton & Williams (included in Exhibit 5)
24* -- Power of attorney is contained in the signature page of this
Registration Statement
25* -- Statement of the eligibility and qualification on Form T-1
of State Street Bank and Trust Company, as Trustee under the
Indenture
27* -- Financial Data Schedule (for SEC use only)
99.1* -- Form of Letter of Transmittal
99.2* -- Form Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.3* -- Form of Notice of Guaranteed Delivery
</TABLE>
- ---------------
* Filed herewith.
<PAGE> 1
EXHIBIT 3.1(a)
CERTIFICATE OF INCORPORATION
OF
HOLLEY PERFORMANCE PRODUCTS INC.
ARTICLE FIRST
The name of the corporation (hereinafter called the "Corporation") is
Holley Performance Products Inc.
ARTICLE SECOND
The address of the registered office of the Corporation in the State
of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle.
The name of the registered agent of the Corporation at such address is The
Corporation Trust Company.
ARTICLE 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 the State of Delaware.
ARTICLE FOURTH
The total number of shares of stock which the Corporation shall have
authority to issue is 1,000 shares of the par value of $1.00 per share. All
such shares shall be one class and shall be designated "Common Stock".
ARTICLE FIFTH
The name and mailing address of the incorporator is as follows:
<PAGE> 2
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Donald E. O'Keefe c/o Coltec Industries Inc.
430 Park Avenue
New York, NY 10022
</TABLE>
ARTICLE SIXTH
The Corporation is to have perpetual existence.
ARTICLE SEVENTH
For the management of the business and for the conduct of the affairs
of the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation and of its directors and stockholders, it is further
provided that:
(a) the number of directors of the Corporation shall be
fixed by, or in the manner provided in, the By-laws of the
Corporation;
(b) 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 to make, alter, amend or repeal
the By-laws in any manner not inconsistent with the laws of the State
of Delaware or this Certificate of Incorporation, subject to the power
of the stockholders of the Corporation having voting power to alter,
amend or repeal the By-laws made by the Board of Directors;
(c) in addition to the powers and authorities herein or
by statute expressly conferred upon it, the Board of Directors may
exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the laws of the State of Delaware, of this Certificate
of Incorporation and of the Bylaws of the Corporation;
2
<PAGE> 3
(d) any director or any officer elected or appointed by
the stockholders or by the Board of Directors, or any Committee
thereof, may be removed at any time by a unanimous consent of the
stockholders or in any such other manner as shall be provided in the
By-laws of the Corporation; and
(e) unless and except to the extent that the By-laws of
the Corporation shall so require, the election of directors of the
Corporation need not be by written ballot.
IN WITNESS WHEREOF, I, Donald E. O'Keefe, the sole
incorporator of Holley Performance Products Inc., have executed this
Certificate of Incorporation this 30th day of October, 1995, and DO
HEREBY CERTIFY under the penalties of perjury that the facts stated in
this Certificate of Incorporation are true.
/s/ Donald E. O'Keefe
---------------------------
Donald E. O'Keefe
3
<PAGE> 4
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING KHPP ACQUISITION CORPORATION
WITH AND INTO
HOLLEY PERFORMANCE PRODUCTS INC.
Pursuant to Section 253 of the General Corporation Law of the State of
Delaware (the "Code"), the undersigned, KHPP Acquisition Corporation, a
Delaware corporation (the "Company"), does hereby certify:
FIRST: That the Company was incorporated on the 16th day of April,
1998, pursuant to the Code.
SECOND: That the Company owns all of the issued and outstanding
shares of capital stock of Holley Performance Products Inc., a corporation
incorporated on the 30th day of October, 1995, pursuant to the Code
("Subsidiary").
THIRD: That the Company, by resolutions duly adopted by its sole
director by written consent on the 12th day of May, 1998, determined to merge
itself into Subsidiary and did adopt the following resolutions:
WHEREAS, the Company owns all of the issued and outstanding
shares of common stock of Holley;
WHEREAS, the Company desires to merge itself into Holley
pursuant to the provisions of Section 253 of the Delaware General
Corporation Law;
RESOLVED, that effective upon the filing of an appropriate
Certificate of Ownership and Merger embodying these resolutions with
the Secretary of State of Delaware (but subject to the approval of the
sole stockholder of the Company), the Company shall merge, and it
hereby does merge itself into Holley, which will assume all of the
obligations of the Company;
RESOLVED, that the terms and conditions of the merger are as
follows:
Upon the proposed merger becoming effective, each outstanding
share of common stock owned of record by the Company shall cease to be
outstanding, without any payment being made in respect thereof; and
each share of common stock of the Company shall be converted into one
thousand (1,000) shares of common stock, $1.00 par value, of Holley,
certificates for which shall be issued to the sole stockholder of the
Company upon surrender to Holley of such stockholder's certificates
formerly representing such shares of common stock of the Company;
<PAGE> 5
RESOLVED, that the proposed merger be submitted to the sole
stockholder of the Company and that upon receiving the unanimous
written consent of such stockholder, the proposed merger shall be
approved;
RESOLVED, that the proper officers of the Company be and they
hereby are directed to make and execute a Certificate of Ownership and
Merger setting forth a copy of the resolutions to merge itself into
said Holley, and the date of adoption thereof, and to cause the same
to be filed with the Secretary of State of Delaware and to do all acts
and things whatsoever, whether within or without the State of
Delaware, which may be in anywise necessary or proper to effect said
merger.
FOURTH: That the Company shall merge with and into Subsidiary,
whereupon the Company shall cease to exist and Subsidiary shall be the
surviving entity of such merger, and Subsidiary shall assume all of the
obligations of the Company.
FIFTH: That the merger has been approved by the sole stockholder of
the Company, by written consent, in accordance with the provisions of the Code.
SIXTH: That this Certificate of Ownership and Merger shall be
effective as of the date of filing of this Certificate of Ownership and Merger
with the Secretary of State of Delaware.
IN WITNESS WHEREOF, the undersigned authorized officer of KHPP
Acquisition Corporation has executed this Certificate of Ownership and Merger,
this 15th day of May, 1998.
KHPP ACQUISITION CORPORATION
By: /s/ Christopher Lacovara
----------------------------
Christopher Lacovara
President
2
<PAGE> 1
EXHIBIT 3.1(b)
BY-LAWS
OF
HOLLEY PERFORMANCE PRODUCTS, INC.
(a Delaware corporation)
ARTICLE I
Offices
SECTION 1. Registered Office. The registered office of the Corporation
in the State of Delaware shall be at 1209 Orange Street, City of Wilmington,
County of New Castle. The name of the registered agent in charge thereof is The
Corporation Trust Company.
SECTION 2. Other Offices. The Corporation may also have offices at
other places, either within or without the State of Delaware, as the Board of
Directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE II
Meetings of Stockholders
SECTION 1. Annual Meetings. The annual meeting of the stockholders for
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held at such place (within or without
the State of Delaware), date and hour as shall be designated in the notice
thereof.
SECTION 2. Special Meetings. Special meetings of the stockholders for
any purpose or purposes may be called by the Board, the Executive Committee,
the President or by a stockholder or stockholders holding of record at least
25% of all shares of the Corporation entitled to vote thereat to be held at
such place (within or without the State of Delaware), date and hour as shall be
designated in the notice thereof.
<PAGE> 2
SECTION 3. Notice of Meetings. Except as otherwise expressly required
by law, notice of each meeting of the stockholders shall be given not less than
10 nor more than 60 days before the date of the meeting to each stockholder
entitled to vote at such meeting by mailing such notice, postage prepaid,
directed to each stockholder at the address thereof as it appears on the
records of the Corporation. Every such notice 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. Except as provided in the immediately
succeeding sentence or as otherwise expressly required by law, notice of any
adjourned meeting of the stockholders need not be given if the time and place
thereof are announced at the meeting at which the adjournment is taken. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, notice of the adjourned meeting shall
be given to each stockholder entitled to vote at such adjourned meeting.
A written waiver of notice, signed by a stockholder entitled thereto,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a stockholder in person or by proxy at a stockholders'
meeting shall constitute a waiver of notice to such stockholder of such
meeting, except when such stockholder 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. List of Stockholders. It shall be the duty of the Secretary
or other officer of the Corporation who shall have charge of its stock ledger
to prepare and make, at least 10 days before every meeting of the 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
2
<PAGE> 3
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days prior to the
meeting either at a place specified in the notice of the meeting within the
city where the meeting is to be held, or, if not so specified, at the place
where the meeting is to be held. Such 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 5. Quorum. At each meeting of the stockholders, except as
otherwise expressly required by law, stockholders holding a majority of the
shares of stock of the Corporation issued and outstanding and entitled to be
voted at the meeting, shall be present in person or by proxy to constitute a
quorum for the transaction of business. In the absence of a quorum at any such
meeting or any adjournment or adjournments thereof, a majority in voting
interest of those present in person or by proxy and entitled to vote thereat,
or, in the absence therefrom of all the stockholders, any officer entitled to
preside at, or to act as secretary of such meeting may adjourn such meeting
from time to time until stockholders holding the amount of stock requisite for
a quorum shall be present in person or by proxy. At any such adjourned meeting
at which a quorum may be present, any business may be transacted that might
have been transacted at the meeting as originally called.
SECTION 6. Organization. At each meeting of the stockholders, one of
the following shall act as chairman of the meeting and preside thereat, in the
following order of precedence:
(a) the Chairman of the Board;
(b) the President;
3
<PAGE> 4
(c) any other officer of the Corporation designated by the Board
or the Executive Committee to act as chairman of such meeting and to
preside thereat if the Chairman of the Board and the President shall be
absent from such meeting; or
(d) a stockholder of record of the Corporation who shall be
chosen chairman of such meeting by a majority in voting interest of the
stockholders present in person or by proxy and entitled to vote thereat.
The Secretary or, if he shall be presiding over the meeting in accordance with
the provisions of this Section or if he shall be absent from such meeting, the
person (who shall be an Assistant Secretary, if an Assistant Secretary shall be
present thereat) whom the chairman of such meeting shall appoint, shall act as
secretary of such meeting and keep the minutes thereof.
SECTION 7. Order of Business The order of business at each meeting of
the stockholders shall be determined by the chairman of such meeting, but such
order of business may be changed by a majority in voting interest of those
present in person or by proxy at such meeting and entitled to vote thereat.
SECTION 8. Voting. Each holder of voting stock of the Corporation
shall, at each meeting of the stockholders, be entitled to one vote in person
or by proxy for each share of stock of the Corporation held by him and
registered in his name on the books of the Corporation
(a) on the date fixed pursuant to the provisions of Section 4 of
Article VIII of these By-laws as the record date for the determination of
stockholders who shall be entitled to receive notice of and to vote at
such meeting, or
(b) if no record date shall have been so fixed, then at the close
of business on the day next preceding the day on which notice of the
meeting shall be given or, if notice
4
<PAGE> 5
shall be waived, at the close of business on the day next preceding
the day on which the meeting shall be held.
Shares of its own stock belonging 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 by the Corporation, shall neither be entitled to
vote nor be counted for quorum purposes. Any vote of stock of the Corporation
may be given at any meeting of the stockholders by the stockholders entitled
thereto in person or by proxy appointed by an instrument in writing delivered
to the Secretary or an Assistant Secretary of the Corporation or the secretary
of the meeting. The attendance at any meeting of a stockholder who may
theretofore have given a proxy shall not have the effect of revoking the same
unless he shall in writing so notify the secretary of the meeting prior to the
voting of the proxy. At all meetings of the stockholders, all matters, except
as otherwise provided by law or in these By-laws, shall be decided by the vote
of a majority of the votes cast by stockholders present in person or by proxy
and entitled to vote thereat, a quorum being present. Except as otherwise
expressly required by law, the vote at any meeting of the stockholders on any
question need not be by ballot, unless so directed by the chairman of the
meeting. On a vote by ballot, each ballot shall be signed by the stockholder
voting, or by his proxy, if there be such proxy, and shall state the number of
shares voted.
SECTION 9. Action by Written Consent. Any action required or permitted
to be taken at any annual or special meeting of the stockholders may be taken
without a meeting, without prior notice and without a vote if a consent in
writing, setting forth the action so taken shall be signed by the holders of
outstanding stock of the Corporation 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. The Secretary
or an Assistant
5
<PAGE> 6
Secretary shall file such consent or consents with the minutes of stockholders'
meetings and shall give prompt notice (in the manner provided in Section 3 of
this Article II) of the taking of any action without a meeting by less than
unanimous written consent to those stockholders who have not consented in
writing. If no record date for determining the shareholders entitled to express
consent to corporate action without a meeting is fixed by the Board, the record
date therefor shall be the day on which the first written consent is received.
ARTICLE III
Board of Directors
SECTION 1. General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors.
SECTION 2. Number and Term of Office. The Board of Directors shall
consist of three members, but the number of members constituting the Board of
Directors may be increased or decreased from time to time by resolution adopted
by a majority of the whole Board. Directors need not be stockholders or
citizens or residents of the United States of America. Each of the directors of
the Corporation shall hold office until the annual meeting of the stockholders
held next after his election at which his term expires and until his successor
is elected and qualified or until his earlier death or until his earlier
resignation or removal in the manner hereinafter provided.
SECTION 3. Election. At each meeting of the stockholders for the
election of directors at which a quorum is present, the persons receiving the
greatest number of votes, up to the number of directors to be elected, shall be
the directors.
SECTION 4. Resignation, Removal and Vacancies. Any director may resign
at any time by giving written notice of his resignation to the Chairman of the
Board, the President
6
<PAGE> 7
or the Secretary of the Corporation. Any such resignation shall take effect at
the time specified therein, or, if the time when it shall become effective
shall not be specified therein, then it shall take effect when accepted by
action of the Board. Except as aforesaid, the acceptance of such resignation
shall not be necessary to make it effective.
A director may be removed, either with or without cause, at any time
by a vote of a majority in voting interest of the stockholders.
Any vacancy occurring on the Board for any reason may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director. The director elected to fill such vacancy shall hold
office for the unexpired term in respect of which such vacancy occurred.
SECTION 5. Meetings.
(A) Annual Meetings. As soon as practicable after each annual election
of directors, the Board shall meet for the purpose of organization and
the transaction of other business.
(B) Regular Meetings. Regular meetings of the shall be held at such
times and places as the Board from time to time determine.
(C) Special Meetings. Special meetings of the Board shall be held
whenever called by the Chairman of the Board or the President or a majority of
the directors at the time in office. Any and all business may be transacted at
a special meeting that may be transacted at a regular meeting of the Board.
(D) Place of Meeting. The Board may hold its meetings at such place or
places within or without the State of Delaware as the Board may from time to
time by resolution determine or as shall be designated in the respective
notices or waivers of notice thereof.
7
<PAGE> 8
(E) Notice of Meetings Notices of regular meetings of the Board or of
any adjourned meeting need not be given.
Notices of special meetings of the Board, or of any meeting of any
committee of the Board that has not been fixed in advance as to time and place
by such committee, shall be mailed by the Secretary or an Assistant Secretary
to each director or member of such committee, addressed to him at his residence
or usual place of business, at least two days before the day on which such
meeting is to be held, or shall be sent to him by telegraph, cable or other
form of recorded communication or be delivered personally or by telephone not
later than the day before the day on which such meeting is to be held. Such
notice shall include the time and place of such meeting. Notice of any such
meeting need not be given to any director or member of any committee, however,
if waived by him in writing or by telegraph, cable or other form of recorded
communication, whether before or after such meeting shall be held, or if he
shall be present at such meeting.
(F) Quorum and Manner of Acting. Except as otherwise provided by law,
the Certificate of Incorporation or these By-laws, one-half of the total number
of directors shall be present in person at any meeting of the Board in order to
constitute a quorum for the transaction of business at such meeting. In each
case the vote of a majority of those directors present at any such meeting at
which a quorum is present shall be necessary for the passage of any resolution
or any act of the Board, except as otherwise expressly required by law or these
By-laws. In the absence of a quorum for any such meeting, a majority of the
directors present thereat may adjourn such meeting from time to time until a
quorum shall be present thereat.
(G) Action by Communication Equipment. The directors, or the members
of any committee of the Board, may participate in a meeting of the Board, or of
such committee, by
8
<PAGE> 9
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
(H) Action by Consent Any action required or permitted to be taken at
any meeting of the Board, or of any committee thereof, may be taken without a
meeting if all members of the Board or committee, as the case may be, consent
thereto in writing and such writing is filed with the minutes of the
proceedings of the Board or such committee.
(I) Organization. At each meeting of the Board, one of the following
shall act as chairman of the meeting and preside thereat, in the following
order of precedence: (a) the Chairman of the Board; (b) the President; (c) any
director chosen by a majority of the directors present thereat. The Secretary
or, in case of his absence, any person (who shall be an Assistant secretary, if
an Assistant Secretary shall be present thereat) whom the chairman shall
appoint, shall act as secretary of such meeting and keep the minutes thereof.
SECTION 6. Compensation. Directors, as such, shall not receive any
stated salary for their services, but by resolution of the Board may receive a
fixed sum and expenses incurred in performing the functions of director and
member of any committee of the Board. Nothing herein contained shall be
construed so as to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
SECTION 7. Indemnification of Directors and Officers. The Corporation
shall indemnify any person made, or 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, his
testator or his intestate is or was a director, officer or employee of the
Corporation, any corporation that may be absorbed in a consolidation or merger
with the
9
<PAGE> 10
Corporation and that, if its separate existence had continued, would have had
the power and authority to indemnify such person (a "Predecessor") or any
corporation, partnership, joint venture, trust or other enterprise that he
served as a director, officer or employee at the request of the Corporation or
a Predecessor (an "Affiliate") against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if such
person acted in good faith and in a manner that he reasonably believed to be
in, or not opposed to, the best interests of the Corporation, Predecessor or
Affiliate, as the case may be, and, with respect to any criminal action or
proceeding if he had no reasonable cause to believe that his conduct was
unlawful; except that, in the case of an action, suit or proceeding by or in
the right of the Corporation, there shall be no indemnification in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable for negligence or misconduct in the performance of his duties unless,
and then only to the extent that, a court of proper jurisdiction shall
determine that despite such adjudication such person is fairly and reasonably
entitled to indemnification.
The indemnification provided for above shall not be deemed exclusive
of any other rights to which any officer, director or employee may be entitled
or of any power of the Corporation apart from the provisions of this Section 7.
ARTICLE IV
Committees
SECTION 1. Executive Committee.
(A) Designation and Membership The Board may, by resolution passed by
a majority of the whole Board, designate an Executive Committee consisting of
the President and such number of other directors, not less than two, as the
Board shall appoint. Vacancies
10
<PAGE> 11
occurring on the Executive Committee for any reason may be filled by the Board
at any time. Any member of the Executive Committee shall be subject to removal,
with or without cause, at any time by the Board or by a majority in voting
interest of the stockholders.
(B) Functions and Powers. The Executive Committee, subject to any
limitations prescribed by the Board, shall possess and may exercise, during the
intervals between meetings of the Board, all the powers and authority of the
Board 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 that may
require it; provided, however, that the Executive Committee shall not have such
power or authority in reference to amending the Certificate of Incorporation of
the Corporation (except that the Executive Committee may, to the extent
authorized in resolutions providing for the issuance of shares of stock adopted
by the Board of Directors, fix 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), adopting an agreement of
merger or consolidation under Section 251 or 252 of the General Corporation Law
of the State of Delaware, 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, filling vacancies on the Board, changing the
membership or filling vacancies on the Executive Committee or amending these
By-laws. The Executive Committee shall not have the power and authority to
declare dividends, to authorize the issuance of stock of the Corporation or to
adopt a certificate of ownership and merger pursuant to Section 253 of the
General Corporation Law of the State of Delaware unless such power and
authority shall be expressly
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delegated to it by a resolution passed by a majority of the whole Board. At
each meeting of the Board, the Executive Committee shall make a report of all
action taken by it since its last report to the Board.
(C) Meetings, Quorum and Manner of Acting The Executive Committee
shall meet annually immediately after the annual meeting of the Board if
necessary to elect officers not elected by the Board and shall meet at such
other times and as often as may be deemed necessary and expedient and at such
places as shall be determined by the Executive Committee. A majority of the
Executive Committee shall constitute a quorum, and the vote of a majority of
those members of the Executive Committee present at any meeting thereof at
which a quorum is present shall be necessary for the passage of any resolution
or act of the Executive Committee. The Board may designate a chairman for the
Executive Committee, who shall preside at meetings thereof, and a vice
chairman, who shall preside at such meetings in the absence of the chairman.
SECTION 2. Audit Committee.
(A) Designation and Membership. The Board may, by resolution passed by
a majority of the whole Board, designate an Audit Committee consisting of two
or more directors as the Board shall appoint. Vacancies occurring on the Audit
Committee for any reason may be filled by the Board at any time. Any member of
the Audit Committee shall be subject to removal, with or without cause, at any
time by the Board or by a majority in voting interest of the stockholders.
(B) Functions and Powers The Audit Committee, subject to any
limitations prescribed by the Board, shall recommend to the Board a firm of
independent public accountants, review with such accountants the scope of their
examination, receive reports of such accountants, meet with representatives of
such accountants for the purpose of reviewing and considering
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questions relating to their examination and such reports, review (either
directly or through such accountants) the internal accounting and auditing
procedures of the Corporation, report the results of the foregoing to the Board
and act upon such additional matters as may be referred to it by the Board. At
each meeting of the Board, the Audit Committee shall make a report of all
action taken by it since its last report to the Board.
(C) Meetings, Quorum and Manner of Acting. The Audit Committee shall
meet as often as may be deemed necessary and expedient at such times and places
as shall be determined by the Audit Committee. A majority of the Audit
Committee shall constitute a quorum, and the vote of a majority of those
members of the Audit Committee present at any meeting thereof at which a quorum
is present shall be necessary for the passage of any resolution or act of the
Audit Committee. The Board may designate a chairman for the Audit Committee,
who shall preside at meetings thereof, and a vice chairman, who shall preside
at such meetings in the absence of the chairman.
SECTION 3. Other Committees The Board may, by resolution passed by a
majority of the whole Board, designate other committees of the Board, each such
committee to consist of two or more directors and to have such duties and
functions as shall be provided in such resolution. The Board shall have the
power to change the members of any such committee at any time, to fill
vacancies and to discharge any such committee, either with or without cause, at
any time.
ARTICLE V
Officers
SECTION 1. Election, Appointment and Term of Office. The officers of
the Corporation shall be a Chairman of the Board, a President, who shall also
be the Chief Executive
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Officer, such number of Vice Chairmen of the Board and Vice Presidents
(including any Executive, Senior and/or First Vice Presidents) as the Board may
determine from time to time, a Treasurer and a Secretary. Any two or more
offices may be held by the same person. Officers need not be stockholders of
the Corporation or citizens or residents of the United States of America. The
Chairman of the Board, any Vice Chairman of the Board and the President shall
be elected by the Board from among its members at its annual meeting, and all
other officers may be elected by the Board or Executive Committee, and each
such officer shall hold office until the next annual meeting of the Board or
the Executive Committee, as the case may be, and until his successor is elected
or until his earlier death or until his earlier resignation or removal in the
manner hereinafter provided.
The Board or the Executive Committee may elect or appoint such other
officers as it deems necessary, including a Comptroller, a Corporate General
Counsel and one or more Assistant Comptrollers, Associate or Assistant
Corporate General Counsels, Assistant Vice Presidents, Assistant Treasurers and
Assistant Secretaries. Each such officer shall have such authority and shall
perform such duties as may be provided herein or as the Board or Executive
Committee may prescribe.
If, additional officers are elected or appointed during the year, each
of them shall hold office until the next annual meeting of the Board or
Executive Committee at which officers are regularly elected or appointed and
until his successor is elected or appointed or until his earlier death or until
his earlier resignation or removal in the manner hereinafter provided.
SECTION 2. Resignation. Removal and Vacancies Any officer may resign
at any time by giving written notice to the President or the Secretary of the
Corporation, and such resignation shall take effect at the time specified
therein or, if the time when it shall become
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effective shall not be specified therein, then it shall take effect when
accepted by action of the Board or Executive Committee. Except as aforesaid,
the acceptance of such resignation shall not be necessary to make it effective.
All officers and agents elected or appointed by the Board or Executive
Committee shall be subject to removal at any time by the Board or the Executive
Committee, as the case may be, with or without cause.
A vacancy in any office may be filled for the unexpired portion of the
term in the same manner as provided for election or appointment to such office.
SECTION 3. Duties and Functions
(A) Chairman of the Board The Chairman of the Board, who shall be a
member thereof, shall preside at all meetings of the Board and of the
stockholders at which he shall be present and shall perform such other duties
and exercise such powers as may from time to time be prescribed by the Board of
Directors or the Executive Committee.
(B) Vice Chairmen of the Board. Each Vice Chairman of the Board shall
be a member thereof and shall have such powers and duties as may from time to
time be prescribed by the Board or the Executive Committee.
(C) President. The President shall be a member of the Board, shall be
the Chief Executive Officer of the Corporation and shall perform such duties
and exercise such powers as are incident to the office of chief executive, and
shall perform such other duties and exercise such other powers as may from time
to time be prescribed by the Board or the Executive Committee.
(D) Vice Presidents. Each Vice President shall have such powers and
duties as shall be prescribed by the Board or the Executive Committee.
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(E) Treasurer. The Treasurer shall have charge and custody of, and be
responsible for, all funds and securities of the Corporation and shall deposit
all such funds to the credit of the Corporation in such banks, trust companies
or other depositaries as shall be selected in accordance with the provisions of
these By-laws; he shall disburse the funds of the Corporation as may be ordered
by the Board or the Executive Committee, making proper vouchers for such
disbursements, and shall render to the President, the Board or the Executive
Committee, whenever the President, the Board or the Executive Committee may
require, and shall present at all annual meetings of the stockholders, a
statement of all his transactions as Treasurer; and, in general, he shall
perform all the duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the Board, the Executive
Committee or the President. To such extent as the Board or Executive Committee
shall deem proper, the duties of the Treasurer may be performed by one or more
assistants, to be appointed by the Board or Executive Committee.
(F) Secretary. The Secretary shall keep the records of all meetings of
the stockholders and of the Board and committees of the Board. He shall affix
the seal of the Corporation to all instruments requiring the corporate seal
when the same shall have been signed on behalf of the Corporation by a duly
authorized officer. The Secretary shall be the custodian of all contracts,
deeds, documents and all other indicia of title to properties owned by the
Corporation and of its other corporate records (except accounting records) and
in general shall perform all duties and have all powers incident to the office
of Secretary. To such extent as the Board or Executive Committee shall deem
proper, the duties of Secretary may be performed by one or more assistants, to
be appointed by the Board or Executive Committee.
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(G) Comptroller. The Comptroller, if any, shall have charge of the
accounts of the Corporation and shall perform such duties as from time to time
may be assigned to him by the Board, the Executive Committee by the President.
He shall be sworn to the faithful discharge of his duties.
(H) Corporate General Counsel. The Corporate General Counsel, if any,
shall have supervision of such legal matters concerning the Corporation as may
be designated by the Board and shall perform such duties as from time to time
may be assigned to him by the Board, the Executive Committee or the President.
ARTICLE VI
Contracts, Checks, Drafts, Bank Accounts, Proxies, Etc.
SECTION 1. Execution of Documents. The President or any other officer,
employee or agent of the Corporation designated by the Board, or designated in
accordance with corporate policy as approved by the Board, shall have power to
execute and deliver deeds, leases, contracts, mortgages, bonds, debentures,
checks, drafts and other orders for the payment of money and other documents
for and in the name of the Corporation, and such power may be delegated
(including power to redelegate) by written instrument to other officers,
employees or agents of the Corporation.
SECTION 2. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
or otherwise in accordance with corporate policy as approved by the Board.
SECTION 3. Proxies in Respect of Stock or Other Securities of Other
Corporations The President or any other officer of the Corporation designated
by the Board shall have the authority (a) to appoint from time to time an agent
or agents of the Corporation to
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exercise in the name and on behalf of the Corporation the powers and rights
which the Corporation may have as the holder of stock or other securities in
any other corporation, (b) to vote or consent in respect of such stock or
securities and (c) to execute or cause to be executed in the name and on behalf
of the Corporation and under its corporate seal, or otherwise, such written
proxies, powers of attorney or other instruments as he may deem necessary or
proper in order that the Corporation may exercise such powers and rights. The
President or any such designated officer may instruct any person or persons
appointed as aforesaid as to the manner of exercising such powers and rights.
ARTICLE VII
Books and Records
The books and records of the Corporation may be kept at such places
within or without the State of Delaware as the Board may from time to time
determine.
ARTICLE VIII
Shares and Their Transfer; Fixing Record Date
SECTION 1. Certificate for Stock Every owner of stock of the
Corporation shall be entitled to have a certificate certifying the number of
shares owned by him in the Corporation and designating the class of stock to
which such shares belong, which shall otherwise be in such form as the Board
shall prescribe. Each such certificate shall be signed by, or in the name of
the Corporation by, the Chairman of the Board 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. In case any officer who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer before such certificate is issued, it may
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<PAGE> 19
nevertheless be issued by the Corporation with the same effect as if he were
such officer at the date of issue.
SECTION 2. Record. A record shall be kept of the name of the person,
firm or corporation owning the stock represented by each certificate for stock
of the Corporation issued, the number of shares represented by each such
certificate and the date thereof, and, in the case of cancellation, the date of
cancellation. Except as otherwise expressly required by law, the person in
whose name shares of stock stand on the books of the Corporation shall be
deemed the owner thereof for all purposes as regards the Corporation.
SECTION 3. Lost Stolen, Destroyed or Mutilated Certificates. The
holder of any stock of the Corporation shall immediately notify the Corporation
of any loss, theft, destruction or mutilation of the certificate therefor. The
Corporation may issue a new certificate for stock in the place of any
certificate theretofore issued by it and alleged to have been lost, stolen,
destroyed or mutilated, and the Board or the President or the Secretary may, in
its or his discretion, require the owner of the lost, stolen, mutilated or
destroyed certificate or his legal representatives to give the Corporation a
bond in such sum, limited or unlimited, in such form and with such surety or
sureties as the Board shall in its discretion determine, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss, theft, mutilation or destruction of any such certificate or the
issuance of any such new certificate.
SECTION 4. 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, 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
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exchange of stock or for the purpose of any other lawful action, the Board may
fix, in advance, a record date, which shall not be more than 60 nor less than
10 days before the date of such meeting, nor more than 60 days prior to any
other action.
ARTICLE IX
Seal
The Board shall provide a corporate seal, which shall be in the form
of a circle and shall bear the full name of the Corporation, the words
"Corporate Seal Delaware" and in figures the year of its incorporation.
ARTICLE X
Fiscal Year
The fiscal year of the Corporation shall be the calendar year.
ARTICLE XI
Amendments
These By-laws may be amended or repealed by the Board at any regular
or special meeting thereof, subject to the power of the holders of a majority
of the outstanding stock of the Corporation entitled to vote in respect
thereof, by their vote given at an annual meeting or at any special meeting, to
amend or repeal any By-law.
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EXHIBIT 3.2(a)
CERTIFICATE OF INCORPORATION
OF
HOLLEY PERFORMANCE SYSTEMS, INC.
ARTICLE I
The name of the corporation is: Holley Performance Systems, Inc.
ARTICLE II
The registered office of the corporation in Delaware will be located at
Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware, and the name of the registered agent will be "The Corporation Trust
Company".
ARTICLE III
The corporation shall be permitted to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
The Corporation shall have the authority to issue One Thousand (1,000)
shares of Common Stock, $.01 par value per share. The holders of the shares of
stock shall have one vote per share.
ARTICLE V
The name and address of the sole incorporated is:
Joseph B. Alexander
Hunton & Williams
600 Peachtree Street, NE, Suite 4100
Atlanta, Georgia 30308
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the board of directors of the corporation is expressly authorized to adopt,
amend or repeal the bylaws of the corporation. Election of directors need not be
by written ballot unless the bylaws of the corporation shall so provide.
<PAGE> 2
ARTICLE VII
The directors of the corporation shall be protected from personal
liability, through indemnification or otherwise, to the fullest extent permitted
under the General Corporation Law of Delaware as from time to time in effect.
A director of the corporation shall under no circumstances have any
personal liability to the corporation or its shareholders for monetary damages
for breach of fiduciary duty as a director, except for those specific breaches
and acts or omissions with respect to which the General Corporation Law of
Delaware expressly provides that this provision shall not eliminate or limit
such personal liability of directors. The modification or repeal of this
paragraph of ARTICLE VII shall not adversely affect the restriction hereunder of
a director's personal liability for any act or omission occurring prior to such
modification or repeal.
The corporation shall indemnify each director and officer of the
corporation to the fullest extent permitted by applicable law, except as may be
otherwise provided in the corporation's bylaws. The modification or repeal of
this paragraph of ARTICLE VII shall not adversely affect the right of
indemnification of any director or officer hereunder with respect to any act or
omission occurring prior to such modification or repeal.
ARTICLE VIII
The corporation reserves the right to alter, amend or repeal any
provision contained in this Certificate of Incorporation in the manner now or
hereafter prescribed by the laws of the State of Delaware. All rights herein
conferred are granted subject to the foregoing reservation.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
Delaware, do make, file and record this Certificate of Incorporation, hereby
declaring and certifying that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hand this 29th day of
December, 1998.
/s/ Joseph B. Alexander
----------------------------------------
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EXHIBIT 3.2(b)
BYLAWS
of
HOLLEY PERFORMANCE SYSTEMS, INC.
(A Delaware Corporation)
ARTICLE 1
DEFINITIONS
As used in these Bylaws, unless the context otherwise requires, the
term:
1.1 "Assistant Secretary" means an Assistant Secretary of the
Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the
Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "Bylaws" means the initial Bylaws of the corporation, as
amended from time to time.
1.5 "Certificate of Incorporation" means the initial certificate
of incorporation of the Corporation, as amended, supplemented or restated from
time to time.
1.6 "Chairman" means the Chairman of the Board of Directors of
the Corporation.
1.7 "Corporation" means Holley Performance Systems, Inc.
1.8 "Directors" means directors of the Corporation.
1.9 "Entire Board" means all directors of the Corporation in
office, whether or not present at a meeting of the Board, but disregarding
vacancies.
1.10 "General Corporation Law" means the General Corporation Law
of the State of Delaware, as amended from time to time.
<PAGE> 2
1.11 "Office of the Corporation" means the executive office of the
Corporation, anything in Section 131 of the General Corporation Law to the
contrary notwithstanding.
1.12 "President" means the President of the Corporation.
1.13 "Secretary" means the Secretary of the Corporation.
1.14 "Stockholders" means stockholders of the Corporation.
1.15 "Treasurer" means the Treasurer of the Corporation.
1.16 "Vice President" means a Vice President of the Corporation.
ARTICLE 2
STOCKHOLDERS
2.1 Place of Meetings. Every meeting of stockholders shall be
held at the office of the Corporation or at such other place within or without
the State of Delaware as shall be specified or fixed in the notice of such
meeting or in the waiver of notice thereof.
2.2 Annual Meeting. A meeting of stockholders shall be held
annually for the election of Directors and the transaction of other business at
such hour and on such business day in May or as may be determined by the Board
and designated in the notice of meeting.
2.3 Deferred Meeting for Election of Directors, Etc. If the
annual meeting of stockholders for the election of Directors and the
transaction of other business is not held within the months specified in
Section 2.2 hereof, the Board shall call a meeting of stockholders for the
election of Directors and the transaction of other business as soon thereafter
as convenient.
2.4 Other Special Meetings. A special meeting of stockholders
(other than a special meeting for the election of Directors), unless otherwise
prescribed by statute, may be called at any time by the Board or by the
President or by the Secretary. At any special meeting of stockholders only such
business may be transacted as is related to the purpose or purposes of
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such meeting set forth in the notice thereof given pursuant to Section 2.6
hereof or in any waiver of notice thereof given pursuant to Section 2.7 hereof.
2.5 Fixing Record Date. For the purpose of (a) determining the
stockholders entitled (i) to notice of or to vote at any meeting of
stockholders or any adjournment thereof, (ii) to express consent to corporate
action in writing without a meeting or (iii) 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 (b) any
other lawful action, the Board may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date was
adopted by the Board and which record date shall not be (x) in the case of
clause (a)(i) above, more than 60 nor less than 10 days before the date of such
meeting, (y) in the case of clause (a)(ii) above, more than 10 days after the
date upon which the resolution fixing the record date was adopted by the Board
and (z) in the case of clause (a)(iii) or (b) above, more than 60 days prior to
such action. If no such record date is fixed:
2.5.1 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;
2.5.2 the record date for determining stockholders
entitled to express consent to corporate action in writing without a
meeting, when no prior action by the Board is required under the
General Corporation Law, shall be the first day 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
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proceedings of meetings of stockholders are recorded; and when prior
action by the Board is required under the General Corporation 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 date on which the Board adopts the resolution taking
such prior action; and
2.5.3 the record date for determining stockholders for any
purpose other than those specified in Sections 2.5.1 and 2.5.2 shall
be at the close of business on the day on which the Board adopts the
resolution relating thereto.
When a determination of stockholders entitled to notice of or to vote at any
meeting of stockholders has been made as provided in this Section 2.5, such
determination shall apply to any adjournment thereof unless the Board fixes a
new record date for the adjourned meeting. Delivery made to the Corporation's
registered office in accordance with Section 2.5.2 shall be by hand or by
certified or registered mall, return receipt requested.
2.6 Notice of Meetings of Stockholders. Except as otherwise
provided in Sections 2.5 and 2.7 hereof, whenever under the provisions of any
statute, the Certificate of Incorporation or these Bylaws, stockholders are
required or permitted to take any action at a meeting, written notice shall be
given stating the place, date and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called.
Unless otherwise provided by any statute, the Certificate of Incorporation or
these Bylaws, a copy of the notice of any meeting shall be given, personally or
by mail, not less than ten nor more than sixty days before the date of the
meeting, to each stockholder entitled to notice of or to vote at such meeting.
If mailed, such notice shall be deemed to be given when deposited in the United
States mail, with postage prepaid, directed to the stockholder at his or her
address as it appears on the records of the
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Corporation. An affidavit of the Secretary or an Assistant Secretary or of the
transfer agent of the Corporation that the notice required by this Section 2.6
has been given shall, in the absence of fraud, be prima facie evidence of the
facts stated therein. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken, and at the
adjourned meeting any business may be transacted that might have been
transacted at the meeting as originally called. If, however, 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.
2.7 Waivers of Notice. Whenever the giving of any notice is
required by statute, the Certificate of Incorporation or these Bylaws, a waiver
thereof, in writing, signed by the stockholder or stockholders entitled to said
notice, whether before or after the event as to which such notice is required,
shall be deemed equivalent to notice. Attendance by a stockholder at a meeting
shall constitute a waiver of notice of such meeting except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the ground that the meeting has
not been lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice unless so required by statute, the
Certificate of Incorporation or these Bylaws.
2.8 List of Stockholders. The Secretary shall prepare and make,
or cause to be prepared and made, 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.
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Such list shall be open to the examination of any stockholder, the
stockholder's agent, or attorney, at the stockholder's expense, 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. The Corporation shall maintain the stockholder list in written form or
in another form capable of conversion into written form within a reasonable
time. Upon the willful neglect or refusal of the Directors to produce such a
list at any meeting for the election of Directors, they shall be ineligible for
election to any office at such meeting. The stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the stock ledger,
the list of stockholders or the books of the Corporation, or to vote in person
or by proxy at any meeting of stockholders.
2.9 Quorum of Stockholders; Adjournment. Except as otherwise
provided by any statute, the Certificate of Incorporation or these Bylaws, the
holders-of one-third of all outstanding shares of stock entitled to vote at any
meeting of stockholders, present in person or represented by proxy, shall
constitute a quorum for the transaction of any business at such meeting. When a
quorum is once present to organize a meeting of stockholders, it is not broken
by the subsequent withdrawal of any stockholders. The holders of a majority of
the shares of stock present in person or represented by proxy at any meeting of
stockholders, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. Shares of its own
stock belonging 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
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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.
2.10 Voting; Proxies. Unless otherwise provided in the Certificate
of Incorporation, every stockholder of record shall be entitled at every
meeting of stockholders to one vote for each share of capital stock standing in
his or her name on the record of stockholders determined in accordance with
Section 2.5 hereof. If the Certificate of Incorporation provides for more or
less than one vote for any share on any matter, each reference in the Bylaws or
the General Corporation Law to a majority or other proportion of stock shall
refer to such majority or other proportion of the votes of such stock. The
provisions of Sections 212 and 217 of the General Corporation Law shall apply
in determining whether any shares of capital stock may be voted and the
persons, if any, entitled to vote such shares; but the Corporation shall be
protected in assuming that the persons in whose names shares of capital stock
stand on the stock ledger of the Corporation are entitled to vote such shares.
Holders of redeemable shares of stock are not entitled to vote after the notice
of redemption is mailed to such holders and a sum sufficient to redeem the
stocks has been deposited with a bank, trust company, or other financial
institution under an irrevocable obligation to pay the holders the redemption
price on surrender of the shares of stock. At any meeting of stockholders (at
which a quorum was present to organize the meeting), all matters, except as
otherwise provided by statute or by the Certificate of Incorporation or by
these Bylaws, shall be decided by a majority of the votes cast at such meeting
by the holders of shares present in person or represented by proxy and entitled
to vote thereon, whether or not a quorum is present when the vote is taken. All
elections of Directors shall be by
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written ballot unless otherwise provided in the Certificate of Incorporation.
In voting on any other question on which a vote by ballot is required by law or
is demanded by any stockholder entitled to vote, the voting shall be by ballot.
Each ballot shall be signed by the stockholder voting or the stockholder's
proxy and shall state the number of shares voted. on all other questions, the
voting may be viva voce. 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. The validity and enforceability of any proxy shall be
determined in accordance with Section 212 of the General Corporation Law. A
stockholder may revoke any proxy that is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or by delivering a proxy in accordance with applicable law bearing a
later date to the Secretary.
2.11 Voting Procedures and Inspectors of Election at Meetings of
Stockholders. The Board, in advance of any meeting of stockholders, may appoint
one or more inspectors to act at the meeting and make a written report thereof.
The Board may designate one or more persons as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is able to act at
a meeting, the person presiding at the meeting may appoint, and on the request
of any stockholder entitled to vote thereat shall appoint, one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability. The inspectors shall (a) ascertain the number of
shares outstanding and the voting power of each, (b) determine the shares
represented at the meeting and the validity of proxies and ballots, (c) count
all votes and ballots, (d) determine and retain for a reasonable period a
record of the disposition of any challenges made to any determination by the
inspectors,
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and (e) certify their determination of the number of shares represented at the
meeting and their count of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
their duties. Unless otherwise provided by the Board, the date and time of the
opening and the closing of the polls for each matter upon which the
stockholders will vote at a meeting shall be determined by the person presiding
at the meeting and shall be announced at the meeting. No ballot, proxies or
votes, or any revocation thereof or change thereto, shall be accepted by the
inspectors after the closing of the polls unless the Court of Chancery of the
State of Delaware upon application by a stockholder shall determine otherwise.
2.12 Organization. At each meeting of stockholders, the Chairman,
or in the absence of the chairman the President, or in the absence of the
President a Vice President, and in case more than one Vice President shall be
present, that Vice President designated by the Board (or in the absence of any
such designation, the most senior Vice President, based on age, present), shall
act as chairman of the meeting. The Secretary, or in his or her absence one of
the Assistant Secretaries, shall act as secretary of the meeting. In case none
of the officers above designated to act as chairman or secretary of the
meeting, respectively, shall be present, a chairman or a secretary of the
meeting, as the case may be, shall be chosen by a majority of the votes cast at
such meeting by the holders of shares of capital stock present in person or
represented by proxy and entitled to vote at the meeting.
2.13 Order of Business. The order of business at all meetings of
stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present
may be changed by a majority of the votes cast at such
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meeting by the holders of shares of capital stock present in person or
represented by proxy and entitled to vote at the meeting.
2.14 Written Consent of Stockholders Without a Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required by
the General Corporation Law to be taken at any annual or special meeting of
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 (by hand or by certified or registered mail,
return receipt requested) to the Corporation by delivery to its registered
office in the State of Delaware, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Every written consent 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 60 days of the earliest dated consent delivered in the manner
required by this Section 2.14, written consents signed by a sufficient number
of holders to take action are delivered to the Corporation as aforesaid. Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
ARTICLE 3
DIRECTORS
3.1 General Powers. Except as otherwise provided in the
Certificate of Incorporation, the business and affairs of the Corporation shall
be managed by or under the direction of the
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Board. The Board may adopt such rules and regulations, not inconsistent with
the Certificate of Incorporation or these Bylaws or applicable laws, as it may
deem proper for the conduct of its meetings and the management of the
Corporation. In addition to the powers expressly conferred by these Bylaws, the
Board may exercise all powers and perform all acts that are not required, by
these Bylaws or the Certificate of Incorporation or by statute, to be exercised
and performed by the stockholders.
3.2 Number; Qualification; Term of Office. The Board shall
consist of one or more members. The number of Directors shall be fixed
initially by the incorporator and may thereafter be changed from time to time
by action of the stockholders or by action of the Board. Directors need not be
stockholders. Each Director shall hold office until a successor is elected and
qualified or until the Director's death, resignation or removal.
3.3 Election. Directors shall, except as otherwise required by
statute or by the Certificate of Incorporation, be elected by a plurality of
the votes cast at a meeting of stockholders by the holders of shares entitled
to vote in the election.
3.4 Newly Created Directorships and Vacancies. Unless otherwise
provided in the Certificate of Incorporation, newly created Directorships
resulting from an increase in the number of Directors and vacancies occurring
in the Board for any other reason, including the removal of Directors without
cause, may be filled by the affirmative votes of a majority of the entire
Board, although less than a quorum, or by a sole remaining Director, or may be
elected by a plurality of the votes cast by the holders of shares of capital
stock entitled to vote in the election at a special meeting of stockholders
called for that purpose. A Director elected to fill a vacancy shall be elected
to hold office until a successor is elected and qualified, or until the
Director's earlier death, resignation or removal.
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3.5 Resignation. Any Director may resign at any time by written
notice to the Corporation. Such resignation shall take effect at the time
therein specified, and, unless otherwise specified in such resignation, the
acceptance of such resignation shall not be necessary to make it effective.
3.6 Removal. Any or all of the Directors may be removed with or
without cause by vote of the holders of a majority of the shares then entitled
to vote at an election of Directors.
3.7 Compensation. Each Director, in consideration of his or her
service as such, shall be entitled to receive from the Corporation such amount
per annum or such fees for attendance at Directors' meetings, or both, as the
Board may from time to time determine, together with reimbursement for the
reasonable out-of-pocket expenses, if any, incurred by such Director in
connection with the performance of his or her duties. Each Director who shall
serve as a member of any committee of Directors in consideration of serving as
such shall be entitled to such additional amount per annum or such fees for
attendance at committee meetings, or both, as the Board may from time to time
determine, together with reimbursement for the reasonable out-of-pocket
expenses, if any, incurred by such Director in the performance of his or her
duties. Nothing contained in this Section 3.7 shall preclude any Director from
serving the Corporation or its subsidiaries in any other capacity and receiving
proper compensation therefor.
3.8 Times and Places of Meetings. The Board may hold meetings,
both regular and special, either within or without the State of Delaware. The
times and places for holding meetings of the Board may be fixed from time to
time by resolution of the Board or (unless contrary to a resolution of the
Board) in the notice of the meeting.
3.9 Annual Meetings. On the day when and at the place where the
annual meeting of stockholders for the election of Directors is held, and as
soon as practicable thereafter, the Board
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may hold its annual meeting, without notice of such meeting, for the purposes
of organization, the election of officers and the transaction of other
business. The annual meeting of the Board may be held at any other time and
place specified in a notice given as provided in Section 3.11 hereof for
special meetings of the Board or in a waiver of notice thereof.
3.10 Regular Meetings. Regular meetings of the Board may be held
without notice at such times and at such places as shall from time to time be
determined by the Board.
3.11 Special Meetings. Special meetings of the Board may be called
by the Chairman, the President or the Secretary or by any two or more Directors
then serving on at least one day's notice to each Director given by one of the
means specified in Section 3.14 hereof other than by mail, or on at least three
days' notice if given by mail. Special meetings shall be called by the
Chairman, President or Secretary in like manner and on like notice on the
written request of any two or more of the Directors then serving.
3.12 Telephone Meetings. Directors or members of any committee
designated by the Board may participate in a meeting of the Board or of such
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 3.12 shall constitute
presence in person at such meeting.
3.13 Adjourned Meetings. A majority of the Directors present at
any meeting of the Board, including an adjourned meeting, whether or not a
quorum is present, may adjourn such meeting to another time and place. At least
one day's notice of any adjourned meeting of the Board shall be given to each
Director whether or not present at the time of the adjournment, if such notice
shall be given by one of the means specified in Section 3.14 hereof other than
by
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mail, or at least three days' notice if by mail. Any business may be transacted
at an adjourned meeting that might have been transacted at the meeting as
originally called.
3.14 Notice Procedure. Subject to Sections 3.11 and 3.17 hereof,
whenever, under the provisions of any statute, the Certificate of Incorporation
or these Bylaws, notice is required to be given to any Director, such notice
shall be deemed given effectively if given in person or by telephone, by mail
addressed to such Director at such Director's address as it appears on the
records of the corporation, with postage thereon prepaid, or by telegram,
telex, telecopy or similar means addressed as aforesaid.
3.15 Waiver of Notice. Whenever the giving of any notice is
required by statute, the Certificate of Incorporation or these Bylaws, a waiver
thereof, in writing, signed by the person or persons entitled to said notice,
whether before or after the event as to which such notice is required, shall be
deemed equivalent to notice. Attendance by 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 on the ground that the meeting has not been
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Directors or a committee of
Directors need be specified in any written waiver of notice unless so required
by statute, the Certificate of Incorporation or these Bylaws.
3.16 Organization. At each meeting of the Board, the Chairman, or
in the absence of the Chairman the President, or in the absence of the
President a chairman chosen by a majority of the Directors present, shall
preside. The Secretary shall act as secretary at each meeting of the Board. In
case the Secretary shall be absent from any meeting of the Board, an Assistant
Secretary shall perform the duties of secretary at such meeting; and in the
absence from any such
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meeting of the Secretary and all Assistant Secretaries, the person presiding at
the meeting may appoint any person to act as secretary of the meeting.
3.17 Quorum of Directors. The presence in person of a majority of
the entire Board shall be necessary and sufficient to constitute a quorum for
the transaction of business at any meeting of the Board, but a majority of a
smaller number may adjourn any such meeting to a later date.
3.18 Action by Majority Vote. Except as otherwise expressly
required by statute, the Certificate of Incorporation or these Bylaws, the act
of a majority of the Directors present at a meeting at which a quorum is
present shall be the act of the Board.
3.19 Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be
taken without a meeting if all Directors or members 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.
ARTICLE 4
COMMITTEES OF THE BOARD
The Board may, by resolution passed by a vote of the entire 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 to replace absent or disqualified members
at any meeting of such committee. If a member of a committee shall be absent
from any meeting, or disqualified from voting thereat, the remaining member or
members present and not disqualified from voting, whether or not such member or
members constitute a quorum, may, by a unanimous vote, appoint another member of
the Board to act at
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the meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in a resolution of the Board passed as
aforesaid, shall have and may exercise all the powers and authority of the
Board in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be impressed on all papers that may
require it, but no such committee shall have the power or authority of the
Board in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation under Section 251 or 252 of the General
Corporation Law, selling, leasing or exchanging all or substantially all of the
Corporation's property and assets, dissolving or revoking the dissolution of
the Corporation or amending the Bylaws of the Corporation; and, unless the
resolution designating it expressly so provides, no such committee shall have
the power and authority to declare a dividend, to authorize the issuance of
stock or to adopt a certificate of ownership and merger pursuant to Section 253
of the General Corporation Law. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board. Unless otherwise specified in the resolution of the Board
designating a committee, at all meetings of such committee a majority of the
total number of members of the committee shall constitute a quorum for the
transaction of business, and the vote of a majority of the members of the
committee present at any meeting at which there is a quorum shall be the act of
the committee. Each committee shall keep regular minutes of its meetings.
Unless the Board otherwise provides, each committee designated by the Board may
make, alter and repeal rules for the conduct of its business. In the absence of
such rules each committee shall conduct its business in the same manner as the
Board conducts its business pursuant to Article 3 of these Bylaws.
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ARTICLE 5
OFFICERS
5.1 Positions. The officers of the Corporation shall be a
Chairman of the Board, a President, a Secretary, a Treasurer and such other
officers as the Board may appoint, including one or more Vice Presidents and
one or more Assistant Secretaries and Assistant Treasurers, who shall exercise
such powers and perform such duties as shall be determined from time to time by
the Board. The Board may designate one or more vice Presidents as Executive
Vice Presidents and may use descriptive words or phrases to designate the
standing, seniority or areas of special competence of the Vice Presidents
elected or appointed by it. Any number of offices may be held by the same
person unless the Certificate of Incorporation or these Bylaws otherwise
provide.
5.2 Appointment. The officers of the Corporation shall be chosen
by the Board annually or at such other time or times as the Board shall
determine.
5.3 Compensation. The compensation of all officers of the
Corporation shall be fixed by the Board. No officer shall be prevented from
receiving a salary or other compensation by reason of the fact that the officer
is also a Director.
5.4 Term of Office. Each officer of the Corporation shall hold
office until such officer's successor is chosen and qualifies or until such
officer's earlier death, resignation or removal. Any officer may resign at any
time upon written notice to the Corporation. Such resignation shall take effect
at the date of receipt of such notice or at such later time as is therein
specified, and, unless otherwise specified, the acceptance of such resignation
shall not be necessary to make it effective. The resignation of an officer
shall be without prejudice to the contract rights of the Corporation, if any.
Any officer elected or appointed by the Board may be removed at any time, with
or without cause, by vote of a majority of the entire Board. Any
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vacancy occurring in any office of the Corporation shall be filled by the
Board. The removal of an officer without cause shall be without prejudice to
the officer's contract rights, if any. The election or appointment of an
officer shall not of itself create contract rights.
5.5 Fidelity Bonds. The Corporation may secure the fidelity of
any or all of its officers or agents by bond or otherwise.
5.6 Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the Board and shall exercise such powers and perform
such other duties as shall be determined from time to time by the Board. 5.7
President. The President shall have general supervision over the business of
the Corporation, subject, however, to the control of the Board, the Chairman of
the Board and of any duly authorized committee of Directors. The President
shall preside at all meetings of the stockholders and at all meetings of the
Board at which the Chairman is not present. The President may sign and execute
in the name of the Corporation deeds, mortgages, bonds, contracts and other
instruments except in cases in which the signing and execution thereof shall be
expressly delegated by the Board or by these Bylaws to some other officer or
agent of the Corporation or shall be required by statute otherwise to be signed
or executed and, in general, the President 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 the President by the Board.
5.7 President. The President shall have general supervision over
the business of the Corporation, subject, however, to the control of the Board,
the Chairman of the Board and of any duly authorized committee of Directors.
The President shall preside at all meetings of the stockholders and at all
meetings of the Board at which the Chairman is not present. The President may
sign and execute in the name of the Corporation deeds, mortgages, bonds,
contracts and other instruments except in cases in which the signing and
execution thereof shall be expressly delegated by the Board or by these Bylaws
to some other officer or agent of the Corporation or shall be required by
statute otherwise to be signed or executed and, in general, the President 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 the President by
the Board.
5.8 Vice Presidents. At the request of the President, or, in the
President's absence, at the request of the Board, the Vice Presidents shall (in
such order as may be designated by the Board or, in the absence of any such
designation, in order of seniority based on age) perform all of the duties of
the President and, in so performing, shall have all the powers of, and be
subject to all restrictions upon, the President. Any Vice President may sign
and execute in the name of the
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Corporation deeds, mortgages, bonds, contracts or other instruments, except in
cases in which the signing and execution thereof shall be expressly delegated
by the Board or by these Bylaws to some other officer or agent of the
Corporation, or shall be required by statute otherwise to be signed or
executed, and each Vice President shall perform such other duties as from time
to time may be assigned to such Vice President by the Board or by the
President.
5.9 Secretary. The Secretary shall attend all meetings of the
Board and of the stockholders and shall record all the proceedings of the
meetings of the Board and of the Stockholders in a book to be kept for that
purpose, and shall perform like duties for committees of the Board, when
required. The Secretary shall give, or cause to be given, notice of all special
meetings of the Board and of the stockholders and shall perform such other
duties as may be prescribed by the Board or by the President, under whose
supervision the Secretary shall be. The Secretary shall have custody of the
corporate seal of the Corporation, and the Secretary, or an Assistant
Secretary, shall have authority to impress the same on any instrument requiring
it, and when so impressed the seal may be attested by the signature of the
Secretary or by the signature of such Assistant Secretary. The Board may give
general authority to any other officer to impress the seal of the Corporation
and to attest the same by such officer's signature. The Secretary or an
Assistant Secretary may also attest all instruments signed by the President or
any Vice President. The Secretary shall have charge of all the books, records
and papers of the Corporation relating to its organization and management,
shall see that the reports, statements and other documents required by statute
are properly kept and filed 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 the Secretary by the Board or by the President.
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5.10 Treasurer. The Treasurer shall have charge and custody of,
and be responsible for, all funds, securities and notes of the Corporation;
receive and give receipts for moneys due and payable to the Corporation from
any sources whatsoever; deposit all such moneys and valuable effects in the
name and to the credit of the Corporation in such depositories as may be
designated by the Board; against proper vouchers, cause such funds to be
disbursed by checks or drafts on the authorized depositories of the Corporation
signed in such manner as shall be determined by the Board and be responsible
for the accuracy of the amounts of all moneys so disbursed; regularly enter or
cause to be entered in books or other records maintained for the purpose full
and adequate account of all moneys received or paid for the account of the
Corporation; have the right to require from time to time reports or statements
giving such information as the Treasurer may desire with respect to any and all
financial transactions of the Corporation from the officers or agents
transacting the same; render to the President or the Board, whenever the
President or the Board shall require the Treasurer so to do, an account of the
financial condition of the Corporation and of all financial transactions of the
Corporation; exhibit at all reasonable times the records and books of account
to any of the Directors upon application at the office of the Corporation where
such records and books are kept; disburse the funds of the Corporation as
ordered by the Board; and, in general, perform all duties incident to the
office of Treasurer of a corporation and such other duties as may from time to
time be assigned to the Treasurer by the Board or the President.
5.11 Assistant Secretaries and Assistant Treasurers. Assistant
Secretaries and Assistant Treasurers shall perform such duties as shall be
assigned to them by the Secretary or by the Treasurer, respectively, or by the
Board or by the President.
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ARTICLE 6
CONTRACTS. CHECKS. DRAFTS, BANK ACCOUNTS. ETC.
6.1 Execution of Contracts. The Board, except as otherwise
provided in these Bylaws, may prospectively or retroactively authorize any
officer or officers, employee or employees or agent or agents, in the name and
on behalf of the Corporation, to enter into any contract or execute and deliver
any instrument, and any such authority may be general or confined to specific
instances, or otherwise limited.
6.2 Loans. The Board may prospectively or retroactively authorize
the President or any other officer, employee or agent of the Corporation to
effect loans and advances at any time for the Corporation from any bank, trust
company or other institution, or from any firm, corporation or individual, and
for such loans and advances the person so authorized may make, execute and
deliver promissory notes, bonds or other certificates or evidences of
indebtedness of the Corporation, and, when authorized by the Board so to do,
may pledge and hypothecate or transfer any securities or other property of the
Corporation as security for any such loans or advances. Such authority
conferred by the Board may be general or confined to specific instances, or
otherwise limited.
6.3 Checks, Drafts, Etc. All checks, drafts and other orders for
the payment of money out of the funds of the Corporation and all evidences of
indebtedness of the Corporation shall be signed on behalf of the Corporation in
such manner as shall from time to time be determined by resolution of the
Board.
6.4 Deposits. The funds of the Corporation not otherwise employed
shall be deposited from time to time to the order of the Corporation with such
banks, trust companies, investment banking firms, financial institutions or
other depositories as the Board may select or
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as may be selected by an officer, employee or agent of the Corporation to whom
such power to select may from time to time be delegated by the Board.
ARTICLE 7
STOCK AND DIVIDENDS
7.1 Certificates Representing Shares. The shares of capital stock
of the Corporation shall be represented by certificates in such form
(consistent with the provisions of Section 158 of the General Corporation Law)
as shall be approved by the Board. Such certificates shall be signed by the
Chairman, the President or a Vice President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer, and may be
impressed with the seal of the Corporation or a facsimile thereof. The
signatures of the officers upon a certificate may be facsimiles, if the
certificate is countersigned by a transfer agent or registrar other than the
Corporation itself or its employee. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon any
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, such certificate may, unless otherwise
ordered by the Board, 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.
7.2 Transfer of Shares. Transfers of shares of capital stock of
the Corporation shall be made only on the books of the Corporation by the
holder thereof or by the holder's duly authorized attorney appointed by a power
of attorney duly executed and filed with the Secretary or a transfer agent of
the Corporation, and on surrender of the certificate or certificates
representing such shares of capital stock properly endorsed for transfer and
upon payment of all necessary transfer taxes. Every certificate exchanged,
returned or surrendered to the Corporation shall be marked "Cancelled," with
the date of cancellation, by the Secretary or an Assistant
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Secretary or the transfer agent of the Corporation. A person in whose name
shares of capital stock shall stand on the books of the Corporation shall be
deemed the owner thereof to receive dividends, to vote as such owner and for
all other purposes as respects the Corporation. No transfer of shares of
capital stock shall be valid as against the Corporation, its stockholders and
creditors for any purpose, except to render the transferee liable for the debts
of the Corporation to the extent provided by law, until such transfer shall
have been entered on the books of the Corporation by an entry showing from and
to whom transferred.
7.3 Transfer and Registry Agents. The Corporation may from time
to time maintain one or more transfer offices or agents and registry offices or
agents at such place or places as may be determined from time to time by the
Board.
7.4 Lost, Destroyed, Stolen and Mutilated Certificates. The
holder of any shares of capital stock of the Corporation shall immediately
notify the Corporation of any loss, destruction, theft or mutilation of the
certificate representing such shares, and the Corporation may issue a new
certificate to replace the certificate alleged to have been lost, destroyed,
stolen or mutilated. The Board may, in its discretion, as a condition to the
issue of any such new certificate, require the owner of the lost, destroyed,
stolen or mutilated certificate, or his or her legal representatives, to make
proof satisfactory to the Board of such loss, destruction, theft or mutilation
and to advertise such fact in such manner as the Board may require, and to give
the Corporation and its transfer agents and registrars, or such of them as the
Board may require, a bond in such form, in such sums and with such surety or
sureties as the Board may direct, to indemnify the Corporation and its transfer
agents and registrars against any claim that may be made against any of them on
account of the continued existence of any such certificate so alleged to have
been lost, destroyed, stolen or mutilated and against any expense in connection
with such claim.
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7.5 Rules and Regulations. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with these Bylaws or
with the Certificate of Incorporation, concerning the issue, transfer and
registration of certificates representing shares of its capital stock.
7.6 Restriction on Transfer of Stock. A written restriction on
the transfer or registration of transfer of capital stock of the Corporation,
if permitted by Section 202 of the General Corporation Law and noted
conspicuously on the certificate representing such capital stock, may be
enforced against the holder of the restricted capital stock or any successor or
transferee of the holder, including an executor, administrator, trustee,
guardian or other fiduciary entrusted with like responsibility for the person
or estate of the holder. Unless noted conspicuously on the certificate
representing such capital stock, a restriction, even though permitted by
Section 202 of the General Corporation Law, shall be ineffective except against
a person with actual knowledge of the restriction. A restriction on the
transfer or registration of transfer of capital stock of the Corporation may be
imposed either by the Certificate of Incorporation or by an agreement among any
number of stockholders or among such stockholders and the Corporation. No
restriction so imposed shall be binding with respect to capital stock issued
prior to the adoption of the restriction unless the holders of such capital
stock are parties to an agreement or voted in favor of the restriction.
7.7 Dividends, Surplus, Etc. Subject to the provisions of the
Certificate of Incorporation and of law, the Board:
7.7.1 may declare and pay dividends or make other
distributions on the outstanding shares of capital stock in such
amounts and at such time or times as it, in its
24
<PAGE> 25
discretion, shall deem advisable giving due consideration to the
condition of the affairs of the Corporation;
7.7.2 may use and apply, in its discretion, any of the
surplus of the Corporation in purchasing or acquiring any shares of
capital stock of the Corporation, or purchase warrants therefor, in
accordance with law, or any of its bonds, debentures, notes, scrip or
other securities or evidences of indebtedness; and
7.7.3 may set aside from time to time out of such surplus
or net profits such sum or sums as, in its discretion, it may think
proper, as a reserve fund to meet contingencies, or for equalizing
dividends or for the purpose of maintaining or increasing the property
or business of the Corporation, or for any purpose it may think
conducive to the best interests of the Corporation.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnity Undertaking. To the extent not prohibited by law,
the Corporation shall indemnify any person who is or was made, or threatened to
be made, a party to any threatened, pending or completed action, suit or
proceeding (a "Proceeding"), whether civil, criminal, administrative or
investigative, including, without limitation, an action by or in the right of
the Corporation to procure a judgment in its favor, by reason of the fact that
such person, or a person of whom such person is the legal representative, is or
was a Director or officer of the Corporation, or is or was serving in any
capacity at the request of the Corporation for any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
(an "Other Entity"), against judgments, fines, penalties, excise taxes, amounts
paid in settlement and costs, charges and expenses (including attorneys' fees
and disbursements). Persons who are not
25
<PAGE> 26
Directors or officers of the Corporation may be similarly indemnified in
respect of service to the Corporation or to an Other Entity at the request of
the Corporation to the extent the Board at any time specifies that such persons
are entitled to the benefits of this Section 8.
8.2 Advancement of Expenses. The Corporation shall, from time to
time, reimburse or advance to any Director or officer or other person entitled
to indemnification hereunder the funds necessary for payment of expenses,
including attorneys' fees and disbursements, incurred in connection with any
Proceeding, in advance of the final disposition of such Proceeding; provided,
however, that, if required by the General Corporation Law, such expenses
incurred by or on behalf of any Director or officer or other person may be paid
in advance of the final disposition of a Proceeding only upon receipt by the
Corporation of an undertaking, by or on behalf of such Director or officer (or
other person indemnified hereunder), to repay any such amount so advanced if it
shall ultimately be determined by final judicial decision from which there is
no further right of appeal that such Director, officer or other person is not
entitled to be indemnified for such expenses.
8.3 Rights Not Exclusive. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Section 8 shall not be deemed exclusive of any other rights to which a
person seeking indemnification or reimbursement or advancement of expenses may
have or hereafter be entitled under any statute, the Certificate of
Incorporation, these Bylaws, any agreement, any 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.
8.4 Continuation of Benefits. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Section 8 shall continue as to
26
<PAGE> 27
a person who has ceased to be a Director or officer (or other person
indemnified hereunder) and shall inure to the benefit of the executors,
administrators, legatees and distributees of such person.
8.5 Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of an Other Entity,
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether
or not the Corporation would have the power to indemnify such person against
such liability under the provisions of this Section 8, the Certificate of
Incorporation or under Section 145 of the General Corporation Law or any other
provision of law.
8.6 Binding Effect. The provisions of this Section 8 shall be a
contract between the Corporation, on the one hand, and each Director and
officer who serves in such capacity at any time while this Section 8 is in
effect and any other person indemnified hereunder, on the other hand, pursuant
to which the Corporation and each such Director, officer or other person intend
to be legally bound. No repeal or modification of this Section 8 shall affect
any rights or obligations with respect to any state of facts then or
theretofore existing or thereafter arising or any proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such state
of facts.
8.7 Procedural Rights. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Section 8 shall be enforceable by any person entitled to such
indemnification or reimbursement or advancement of expenses in any court of
competent jurisdiction. The burden of proving that such indemnification or
27
<PAGE> 28
reimbursement or advancement of expenses is not appropriate 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 such
indemnification or reimbursement or advancement of expenses is proper in the
circumstances nor an actual determination by the Corporation (including its
Board of Directors, its independent legal counsel and its stockholders) that
such person is not entitled to such indemnification or reimbursement or
advancement of expenses shall constitute a defense to the action or create a
presumption that such person is not so entitled. Such a person shall also be
indemnified for any expenses incurred in connection with successfully
establishing his or her right to such indemnification or reimbursement or
advancement of expenses, in whole or in part, in any such proceeding.
8.8 Service Deemed at Corporation's Request. Any Director or
officer of the Corporation serving in any capacity (a) another corporation of
which a majority of the shares entitled to vote in the election of its
directors is held, directly or indirectly, by the Corporation or (b) any
employee benefit plan of the Corporation or any corporation referred to in
clause (a) shall be deemed to be doing so at the request of the Corporation.
8.9 Election of Applicable Law. Any person entitled to be
indemnified or to reimbursement or advancement of expenses as a matter of right
pursuant to this Section 8 may elect to have the right to indemnification or
reimbursement or advancement of expenses interpreted on the basis of the
applicable law in effect at the time of the occurrence of the event or events
giving rise to the applicable Proceeding, to the extent permitted by law, or on
the basis of the applicable law in effect at the time such indemnification or
reimbursement or advancement of expenses is sought. Such election shall be made,
by a notice in writing to the Corporation, at
28
<PAGE> 29
the time indemnification or reimbursement or advancement of expenses is sought;
provided, however, that if no such notice is given, the right to
indemnification or reimbursement or advancement of expenses shall be determined
by the law in effect at the time indemnification or reimbursement or
advancement of expenses is sought.
ARTICLE 9
BOOKS AND RECORDS
9.1 Books and Records. There shall be kept at the principal
office of the Corporation correct and complete records and books of account
recording the financial transactions of the Corporation and minutes of the
proceedings of the stockholders, the Board and any committee of the Board. The
Corporation shall keep at its principal office, or at the office of the
transfer agent or registrar of the Corporation, a record containing the names
and addresses of all stockholders, the number and class of shares held by each
and the dates when they respectively became the owners of record thereof.
9.2 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
written 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.
9.3 Inspection of Books and Records. Except as otherwise provided
by law, the Board shall determine from time to time whether, and, if allowed,
when and under what conditions and regulations, the accounts, books, minutes
and other records of the Corporation, or any of them, shall be open to the
stockholders for inspection.
29
<PAGE> 30
ARTICLE 10
SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
ARTICLE 11
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and may be changed,
by resolution of the Board.
ARTICLE 12
PROXIES AND CONSENTS
Unless otherwise directed by the Board, the Chairman, the President,
any Vice President, the Secretary or the Treasurer, or any one of them, may
execute and deliver on behalf of the Corporation proxies respecting any and all
shares or other ownership interests of any Other Entity owned by the
Corporation appointing such person or persons as the officer executing the same
shall deem proper to represent and vote the shares or other ownership interests
so owned at any and all meetings of holders of shares or other ownership
interests, whether general or special, and/or to execute and deliver consents
respecting such shares or other ownership interests; or any of the aforesaid
officers may attend any meeting of the holders of shares or other ownership
interests of such Other Entity and thereat vote or exercise any or all other
powers of the Corporation as the holder of such shares or other ownership
interests.
30
<PAGE> 31
ARTICLE 13
EMERGENCY BYLAWS
Unless the Certificate of Incorporation provides otherwise, the
following provisions of this Article 13 shall be effective during an emergency,
which is defined as when a quorum of the Corporation's Directors cannot be
readily assembled because of some catastrophic event. During such emergency:
13.1 Notice to Board Members. Any one member of the Board or any
one of the following officers: Chairman, President, any Vice President,
Secretary, or Treasurer, may call a meeting of the Board. Notice of such
meeting need be given only to those Directors whom it is practicable to reach,
and may be given in any practical manner, including by publication and radio.
Such notice shall be given at least six hours prior to commencement of the
meeting.
13.2 Temporary Directors and Quorum. One or more officers of the
Corporation present at the emergency Board meeting, as is necessary to achieve
a quorum, shall be considered to be Directors for the meeting, and shall so
serve in order of rank, and within the same rank, in order of seniority. In the
event that less than a quorum of the Directors are present (including any
officers who are to serve as Directors for the meeting), those Directors
present (including the officers serving as Directors) shall constitute a
quorum.
13.3 Actions Permitted To Be Taken. The Board as constituted in
Section 13.2, and after notice as set forth in Section 13.1 may:
13.3.1 prescribe emergency powers to any officer of the
Corporation;
13.3.2 delegate to any officer or Director, any of the
powers of the Board;
13.3.3 designate lines of succession of officers and
agents, in the event that any of them are unable to discharge their
duties;
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<PAGE> 32
13.3.4 relocate the principal place of business, or
designate successive or simultaneous principal places of business; and
13.3.5 take any other convenient, helpful or necessary
action to carry on the business of the corporation.
ARTICLE 14
AMENDMENTS
These Bylaws may be altered, amended, or repealed and new Bylaws may
be adopted by a vote of the holders of shares entitled to vote in the election
of Directors or by a vote of two-thirds of the entire Board. Notwithstanding
the preceding sentence, none of the. provisions of this Article 14 shall be
altered, amended or repealed by the Board. Any Bylaws adopted, altered or
amended by the Board may be altered, amended or repealed by the stockholders
entitled to vote thereon only to the extent and in the manner provided in the
Certificate of Incorporation and these Bylaws.
32
<PAGE> 1
EXHIBIT 3.3(a)
ARTICLES OF INCORPORATION
OF
ALL ALUMINUM FOUNDRY, INC.
One: The name of this corporation is:
ALL ALUMINUM FOUNDRY, INC.
Two: The purpose for which this corporation is formed are:
(a) The principal purpose of this corporation shall be
the manufacture and fabrication of metal parts by the process of
casting, such parts per customer instruction using, in some instances,
patterns furnished by the customers from which the required molds are
made.
(b) To purchase, acquire, own, hold, use, lease (either
as lessor or lessee), grant, sell, exchange, subdivide, mortgage,
convey in trust, manage, improve, construct, operate, and generally
deal in any and all real estate, improved or unimproved, stores,
office buildings, dwelling houses, apartment houses, hotels,
manufacturing plants and other buildings, and any and all other
property of every kind or description, real, personal and mixed, and
wheresoever situated, either in California, other states of the United
States, the District of Columbia, territories and colonies of the
United States, or foreign countries.
(c) To acquire, by purchase or otherwise, the good will,
business, property rights, franchises and assets of every kind, with
or without undertaking either wholly or in part, the liabilities of
any person, firm, association or corporation; and to acquire any
property or business as a going concern or otherwise (i) by purchase
of the assets therefore wholly or in part, (ii) by acquisition of the
shares or any part thereof or, (iii) in any other manner, and to pay
for the same in cash or in shares or bonds or other evidences of
indebtedness of this corporation, or otherwise; to hold, maintain and
operate, or in any manner dispose of, the whole or any part of the
good will, business rights and property so acquired, end to conduct in
any lawful manner the whole or any part of any business so acquired;
and to exercise all the powers necessary or convenient in and about
the management of such business.
(d) To take, purchase, and otherwise acquire, own, hold,
use, sell assign, transfer, exchange, lease, mortgage, convey in
trust, pledge, hypothecate, grant licenses in respect of and otherwise
dispose of letters patent of the United States or any foreign country,
patent rights, governmental, state, territorial, county and municipal
grants and concessions of every character which this corporation may
deem advantageous in the
<PAGE> 2
prosecution of its business or in the maintenance, operation,
development or extension of its properties.
(e) To enter into, make, perform and carryout contracts
of every kind for any lawful purpose without limit as to amount, with
any person, firm association or corporation, municipality, county,
parish, state, territory government or other municipal or governmental
subdivision.
(f) To become a partner (either general or limited or
both) and to enter into agreements of partnership with one or more
other persons or corporations, for the purpose of carrying on any
business whatsoever which this corporation may deem proper or
convenient in connection with any of the purposes herein set forth or
otherwise, or which may be calculated directly or indirectly, to
promote the interests of this corporation or to enhance the value of
its property or business.
(g) From time to time to apply for, purchase, acquire by
assignment, transfer or otherwise exercise, carry out and enjoy any
benefit, right, privilege, prerogative or power conferred by, acquired
under or granted by any statute, ordinance, order, license, power,
authority, franchise, commission, right or privilege, which any
government or authority or governmental agency or corporation or other
public body may be empowered to enact, make or grant; to pay for, aid
in, and contribute toward carrying the same into effect and to
appropriate any of this corporation's shares, bonds and/or assets to
defray the costs, charges and expenses thereof.
(h) To subscribe or cause to be subscribed for and to
take, purchase and otherwise acquire, own, hold, use, sell, assign,
transfer, exchange, distribute and otherwise dispose of, the whole or
any part of the shares of the capital stock, bonds, coupons,
mortgages, deeds of trust, debentures, securities, obligations
evidences of indebtedness, notes, good will, rights, assets and
property of any and every kind, or any part thereof, of any other
corporation or corporations, association or associations, firm or
firms or person or persons, together with shares, rights, units or
interest in or in respect of, any trust estate, now or hereafter
existing, and whether created by the laws of the State of California
or of, any other state, territory or country; and to operate, manage
and control such properties, or any of them, either in the name of
this corporation or corporations, or in the name of this corporation,
and while the owners of any of said shares of capital stock, to
exercise all of the rights, powers and privileges of ownership of
every kind and description, including the right to vote thereon, with
power to designate some person or persons for that purpose from time
to time, and to the same extent as natural persons might or could do.
(i) To promote or to aid in any manner, financially or
otherwise, any person, firm, corporation or association of which any
shares of stock, bonds, notes, debentures or other securities or
evidences of indebtedness are held directly or indirectly by this
corporation; and for this purpose, to guarantee the contracts,
dividends, shares, bonds, debentures, notes and other obligations of
such other persons, firms, corporations or associations; and to do any
other acts or things designed to protect, preserve, improve or
-2-
<PAGE> 3
enhance value of such shares, bonds, notes, debentures or other
securities or evidences of indebtedness.
(o) To borrow and lend money, but nothing herein
contained shall be construed as authorizing the business of banking,
or as including the business purposes of a commercial bank, savings
bank or trust company.
(k) To issue bonds, notes, debentures or other
obligations of this corporation from time to time for any of the
objects or purposes of this corporation, and to secure the same by
mortgage, deed of trust, pledge or otherwise, or to issue the same
unsecured; to purchase or otherwise acquire its own bonds, debentures
or other evidences of its indebtedness or obligations; to purchase,
hold, sell and transfer the shares of its own capital stock to the
extent and in the manner provided by the laws of the State of
California as the same are new in force or may be hereafter amended.
(1) To purchase, acquire, take, hold, own, use and enjoy,
and to sell, lease, transfer, pledge, mortgage, convey, grant, assign
or otherwise dispose of, and generally to invest, trade, deal in and
with oil royalties, mineral rights of all kinds, mineral bearing lands
and hydrocarbon products of all kinds, oil, gas and mineral leases,
and all rights and interests therein, and in general products of the
earth and deposits, both subsoil and surface, of every nature and
description.
(m) To carry on any business whatsoever, either as
principal or as agent or both, or as a partnership, which this
corporation may deem proper or convenient in connection with any of
the foregoing purposes or otherwise, or which may be calculated
directly or indirectly to promote the interests of this corporation or
to enhance the value of its property or business; to conduct its
business in this state, in other states; in the District of Columbia,
in the territories and colonies of the United States, and in foreign
countries.
(n) To have and to exercise all the powers conferred by
the laws of California upon corporations formed by the laws of
California upon corporations formed under the laws pursuant to and
under which this corporation is formed, as such laws are now in effect
or may at any time hereafter be amended.
The foregoing statement of purposes shall be construed as a statement
of both purposes and powers, and the purposes and powers stated in each clause
shall, except where otherwise expressed, he in no wise limited or restricted by
reference to or inference from the terms or provisions of any other clause, but
shall be regarded as independent purposes and powers.
Three: The county in the State of California where the principal
office for the transaction of business of this corporation is to be located is
Los Angeles County.
-3-
<PAGE> 4
Four: This corporation is authorized to issue only one (1) class of
shares of stock; the total number of said shares shall be 2,500; the aggregate
par value of all said shares shall be Twenty Five Thousand Dollars ($25,000.00)
- ------ ; and the par value of each of said shares shall be Ten Dollars ($10.00).
Five: (a) The number of directors of this corporation shall be
three (3).
(b) The names and addresses of the persons who are
appointed to act as the first directors of this corporation are:
<TABLE>
<CAPTION>
NAME ADDRESS
---- -------
<S> <C>
PHILIP WEIAND, JR. 2733 San Fernando Road
Los Angeles 65, California
ANNA C. WEIAND 2733 San Fernando Road
Los Angeles 65, California
LUCILE MATKIN 2121 Commonwealth Avenue
Los Angeles 27, California
</TABLE>
IN WITNESS WHEREOF, for the purpose of forming this corporation under
the laws of the State of California, the undersigned, constituting the
incorporators of this corporation, including the persons named hereinabove, as
the first directors of this corporation, have executed these Articles of
Incorporation, this 26th day of March, 1959.
/s/ Philip Weiand, Jr.
-----------------------------------
Philip Weiand, Jr.
/s/ Anna C. Weiand
-----------------------------------
Anna C. Weiand
/s/ Lucile Matkin
-----------------------------------
Lucile Matkin
-4-
<PAGE> 5
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On this 26th day of March , 1959, before me, the undersigned a
Notary Public in and for said County and State, residing therein, duly
commissioned and sworn, personally appeared PHILIP WEIAND, JR., ANNA C. WEIAND
and LUCILE MATKIN, known to me to be the persons whose names are subscribed to
the foregoing Articles of Incorporation, and acknowledged to me that they
executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal, the day and year in this certificate first above written.
/s/ Charlotte Fairchild
-------------------------------------------
Notary Public in and for said
County and State
My Commission Expires March 18,1960
-5-
<PAGE> 6
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
ALL ALUMINUM FOUNDRY, INC.
PHILIP WEIAND, JR. and JOAN WEIAND certify:
1. That they are the President and Secretary, respectively, of
ALL ALUMINUM FOUNDRY, INC., a California corporation.
2. That at a meeting of the Board of Directors of said
corporation, duly held at Los Angeles, California, on January 3, 1972, the
following resolution was adopted:
RESOLVED, that Article ONE of the Articles of Incorporation of this
corporation be amended to read as follows:
ONE: The name of this corporation is: WEIAND AUTOMOTIVE
INDUSTRIES, INC.
3. That the shareholder has adopted said amendment by written
consent; that the wording of the amended article, as set forth in the
shareholder's written consent, is the same as that set forth in the directors'
resolution in paragraph 2 above.
4. That the number of shares represented by written consent is
350; that the total number of shares entitled to vote on or consent to the
amendment is 350.
/s/ Philip Weiand, Jr.
-----------------------------------
Philip Weiand, Jr.
/s/ Joan Weiand
-----------------------------------
Joan Weiand
<PAGE> 7
Each of the undersigned declares under penalty of perjury that the
matters set forth in the foregoing certificates are true and correct. Executed
at Los Angeles, California, on the 3rd day of January, 1972.
/s/ Philip Weiand, Jr.
-----------------------------------
Philip Weiand, Jr.
/s/ Joan Weiand
-----------------------------------
Joan Weiand
-2-
<PAGE> 8
CERTIFICATE OF OWNERSHIP
MERGING
WEIAND POWER & RACING EQUIPMENT
INTO
WEIAND AUTOMOTIVE INDUSTRIES, INC.
WEIAND AUTOMOTIVE INDUSTRIES, INC., a California corporation, certifies
that:
1. It owns all the outstanding stock of WEIAND POWER & RACING
EQUIPMENT, a corporation duly incorporated on July 31, 1962, under the laws of
the State of California.
2. The following resolutions were adopted by a majority of its
Board of Directors:
WHEREAS, this corporation owns all the outstanding stock of
WEIAND POWER & RACING EQUIPMENT into itself and assume all of its obligations;
WHEREAS, it is deemed in the best interests of this
corporation and its shareholders that this corporation merge WEIAND POWER &
RACING EQUIPMENT into itself and assume all of its obligations;
NOW THEREFORE, BE IT RESOLVED that this corporation merge
WEIAND POWER & RACING EQUIPMENT into itself and assume all obligations of the
merged corporation; and
BE IT FURTHER RESOLVED, that the President and Secretary are
directed to execute and file a Certificate of Ownership pursuant to Section 4124
of the California
<PAGE> 9
Corporations Code and to take such further actions as may be necessary or
proper to accomplish such merger.
3. Said resolutions were adopted at a special meeting of the
Board of Directors of this corporation held at 3:00 P.M. on April 6, 1972, at
Los Angeles, California. This corporation has three (3) Directors, all of whom
were present at such meeting, and said resolutions were adopted by unanimous
vote of the Directors.
WEIAND AUTOMOTIVE INDUSTRIES, INC.,
a California Corporation
By /s/ Philip C. Weiand
-----------------------------------------
Philip C. Weiand, President
By /s/ Joan Weiand
-----------------------------------------
Joan Weiand, Secretary
PHILIP C. WEIAND and JOAN WEIAND say:
They are the President and Secretary respectively of WEIAND AUTOMOTIVE
INDUSTRIES, INC., a California Corporation.
They have read the foregoing Certificate of Ownership and know the
contents thereof.
The same is true of their own knowledge.
Executed on - April 7, 1972, at Los Angeles, California.
-2-
<PAGE> 10
We declare under penalty of perjury that the foregoing is true and
correct.
/s/ Philip C. Weiand
-----------------------------------------
Philip C. Weiand, President
/s/ Joan Weiand
-----------------------------------------
Joan Weiand, Secretary
-3-
<PAGE> 11
CERTIFICATE OF OWNERSHIP
MERGING
WEIAND MFG. CO.
INTO
WEIAND AUTOMOTIVE INDUSTRIES, INC.
WEIAND AUTOMOTIVE INDUSTRIES, INC., a California corporation, certifies
that:
1. It owns all the outstanding stock of WEIAND MFG. CO., a
corporation duly incorporated on July 31, 1962, under the laws of the State of
California.
2. The following resolutions were adopted by a majority of its
Board of Directors:
WHEREAS, this corporation owns all the outstanding stock of WEIAND
MFG. CO.; and
WHEREAS, it is deemed in the best interests of this corporation and
its shareholders that this corporation merge WEIAND MFG. CO. into itself and
assume all of its obligations;
NOW THEREFORE, BE IT RESOLVED that this corporation merge WEIAND MFG.
CO. into itself and assume all obligations of the merged corporation; and
BE IT FURTHER RESOLVED, that the President and Secretary are directed
to execute and file a Certificate of Ownership pursuant to Section 4124 of the
California Corporations Code and to take such further actions as may be
necessary or proper to accomplish such merger.
<PAGE> 12
3. Said resolutions were adopted at a special meeting of the
Board of Directors of this corporation held at 3:00 P.M. on April 6, 1972, at
Los Angeles, California. This corporation has three (3) Directors, all of whom
were present at such meeting; and said resolutions were adopted by the unanimous
vote of the Directors.
WEIAND AUTOMOTIVE INDUSTRIES, INC.,
a California Corporation
By /s/ Philip C. Weiand
-----------------------------------------
Philip C. Weiand, President
By /s/ Joan Weiand
-----------------------------------------
Joan Weiand, Secretary
PHILIP C. WEIAND and JOAN WEIAND say:
They are the President and Secretary respectively of WEIAND AUTOMOTIVE
INDUSTRIES, INC., a California Corporation.
They have read the foregoing Certificate of Ownership and know the
contents thereof.
The same is true of their own knowledge.
Executed on April 7, 1972, at Los Angeles, California.
We declare under penalty of perjury that the foregoing is true and
correct.
/s/ Philip C. Weiand
-----------------------------------------
Philip C. Weiand, President
/s/ Joan Weiand
-----------------------------------------
Joan Weiand, Secretary
-2-
<PAGE> 13
CERTIFICATE OF AMENDMENT
OF ARTICLES OF INCORPORATION
OF
WEIAND AUTOMOTIVE INDUSTRIES, INC.
Joan F. Weiand and Fredrick W. Wade hereby certify that:
1. They are the President and the Assistant Secretary,
respectively, of Weiand Automotive Industries, Inc., a California corporation.
2. Article Two of the Articles of Incorporation of this
corporation is amended to read in its entirety as follows:
"The purpose of this corporation is to engage in any lawful
act or activity for which a corporation may be organized
under the General Corporation Law of California other than
the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the
California Corporations Code."
3. Article Six is hereby added to the Articles of Incorporation
of this corporation, and said Article Six shall read in its entirety as
follows:
"This corporation elects to be governed by all of the
provisions of the General Corporation Law of 1977 not
otherwise applicable to it under Chapter 23 thereof."
4. The foregoing amendments of Articles of Incorporation have
been duly approved by the board of directors.
5. The foregoing amendments of Articles of Incorporation has been
duly approved by the required vote of shareholders in accordance with Section
902 of the Corporations Code. The total number of outstanding shares of the
corporation is 650. The number of shares voting in favor of the amendment
equaled or exceeded the vote required. The percentage vote required was more
than 50%.
<PAGE> 14
We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this certificate are true and
correct of our own knowledge.
Date: August 5, 1998
/s/ Joan F. Weiand
-----------------------------------------
Joan F. Weiand, President
/s/ Fredrick W. Wade
-----------------------------------------
Fredrick W. Wade, Assistant Secretary
-2-
<PAGE> 1
EXHIBIT 3.3(b)
AMENDED AND RESTATED
BYLAWS
OF WEIAND AUTOMOTIVE INDUSTRIES, INC.
Effective March 30, 1979
<PAGE> 2
AMENDED AND RESTATED BYLAWS
OF WEIAND AUTOMOTIVE INDUSTRIES, INC.,
a California corporation
--------------------------------------------------------------
INDEX
-----
<TABLE>
<CAPTION>
Article No. Heading Page
- ----------- ------- ----
<S> <C> <C> <C>
I DIRECTORS 5
Section 1. Number 5
Section 2. Qualifying shares not required 5
Section 3. Quorum 5
Section 4. Election 5
Section 5. Vacancies 5
Section 6. Place of meeting and meeting by telephone 5
Section 7. Organization meeting 6
Section 8. Special meetings 6
Section 9. Adjourned meetings 6
Section 10. Waiver of notice 7
Section 11. Action without meeting 7
Section 12. Powers and duties 7
(a) Management of corporate affairs 7
(b) Selection and removal of officers,
agents and employees 7
(c) Issuance of shares 7
(d) Incurring of indebtedness 8
(e) Authorization of signatures 8
(f) Fixing principal office 8
(g) Committees 8
(h) General powers 8
Section 13. Directors to serve without salary 8
II OFFICERS 9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
Section 1. Enumeration 9
Section 2. Powers and duties of the chairman of the board 9
Section 3. Powers and duties of the president 9
Section 4. Powers and duties of the vice-president 9
Section 5. Duties of the secretary 10
(a) Minutes 10
(b) Corporate seal 10
(c) Books and other records 10
(d) Share register 10
(e) Receipt, deposit, and disbursement of funds 10
(f) General duties 10
Section 6. Duties of the treasurer 10
III SHAREHOLDERS 11
Section 1. Quorum 11
Section 2. Place of meeting 11
Section 3. Annual meeting 11
Section 4. Special meetings 12
Section 5. Adjourned meetings 12
Section 6. Notice of regular or special meetings 12
Section 7. Notice of adjourned meetings 13
Section 8. Proxies 13
Section 9. Consent of absentees 13
Section 10. Action without meeting 14
Section 11. Voting rights 14
IV MISCELLANEOUS 15
Section 1. Record dates and closing of transfer books 15
Section 2. Inspection of corporate records 15
Section 3. Inspection of Bylaws 16
Section 4. Annual report to shareholders 16
Section 5. Representation of shares of other corporations 16
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
V SEAL 16
VI AMENDMENTS 17
Section 1. By shareholders 17
Section 2. By the directors 17
CERTIFICATE AS TO ADOPTION OF BYLAWS 18
</TABLE>
<PAGE> 5
AMENDED AND RESTATED BYLAWS
OF WEIAND AUTOMOTIVE INDUSTRIES, INC.,
a California corporation
ARTICLE I
DIRECTORS
Section 1. Number. Until changed by amendment of the Articles
of Incorporation or by a Bylaw duly adopted by the shareholders amending this
section, the authorized number of directors of this corporation shall be three.
Section 2. Qualifying shares not required. Directors need not
be shareholders of the corporation.
Section 3. Quorum. A majority of the number of directors
shall constitute a quorum.
Section 4. Election. Directors shall be elected at each
annual meeting of shareholders and shall continue in office until the election
of their successors. If directors are not elected at an annual meeting or if
such meeting is not held, directors may be elected at a special meeting of
shareholders.
Section 5. Vacancies. Vacancies occurring in the office of
director (except in case of the removal of one or more directors and the
election of a new director or directors under the provisions of Section 303 of
the California Corporations Code) shall be filled by a majority of the
remaining directors, though less than a quorum, or authorized by a sole
remaining director, or by the shareholders and the person so elected shall hold
office until his successor is elected.
Section 6. Place of meeting and meeting by telephone.
Meetings of the board of directors shall be held at the principal office of the
corporation or at such other place within or
<PAGE> 6
without the State of California as may be fixed from time to time by resolution
of the board or by written consent of all members of the board. Whenever a
place other than the principal office is fixed by resolution as the place at
which any future meeting shall be held, written notice thereof shall be sent no
later than the following business day to all directors who were absent from the
meeting at which the resolution was adopted. Any meeting may be held by
conference telephone or similar communications equipment, so long as all
directors participating in the meeting can hear one another.
Section 7. Organization meeting. Immediately following each
annual meeting of shareholders, the board of directors shall hold a regular
meeting for the purpose of organizing, electing officers, and transacting other
business. Notice of such meeting need not be given.
Section 8. Special meetings. Special meetings of the board of
directors may be called at any time by the president or by any two directors.
Special meetings shall be held upon four days written notice addressed to each
director at the address appearing on the books of the corporation or
theretofore given by him to the corporation for the purposes of notice, or upon
48 hours notice given personally or by telephone, telegraph, telex or other
similar means.
Section 9. Adjourned meetings. A majority of the directors
present at a meeting, whether or not constituting a quorum, may adjourn from
time to time to meet again at a stated day and hour prior to the time fixed for
the next regular meeting of the board. Notice of the time and place of an
adjourned meeting need not be given to any director if the time and place is
fixed at the time of adjournment, unless the meeting is adjourned for more than
24 hours, in which case notice of such adjourned meeting shall be given prior
to the time thereof to any director not present at the time of adjournment.
<PAGE> 7
Section 10. Waiver of notice. The transactions of any meeting
of the board of directors, however called and noticed or wherever held, shall
be as valid as though had at a meeting duly held after regular call and notice
if a quorum is present and if, either before or after the meeting, each of the
directors not present signs a written waiver of notice or a consent to the
holding of such meeting or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or
made a part of the minutes of the meeting.
Section 11. Action without meeting. Any action required or
permitted to be taken by the board of directors may be taken without a meeting,
if all members of the board shall individually or collectively consent in
writing to such action. Such written consent or consents shall be filed with
the minutes of the proceedings of the board. Such action by written consent
shall have the same force and effect as a unanimous vote of such directors.
Section 12. Powers and duties. The powers and duties of the
board of directors are:
(a) Management of corporate affairs. To conduct, manage and
control the business and affairs of the corporation and to make rules and
regulations therefor consistent with the Articles of Incorporation and the
Bylaws.
(b) Selection and removal of officers, agents and employees.
To select all the other officers, agents and employees of the corporation, to
remove them at pleasure, either with or without cause, to prescribe for them
duties consistent with the Articles of Incorporation and the Bylaws, and to fix
their compensation.
(c) Issuance of shares. From time to time to cause shares to
be issued, to fix the consideration therefor, and to prescribe the form of
share certificates.
<PAGE> 8
(d) Incurring of indebtedness. To borrow money and to incur
indebtedness for the purposes of the corporation and to cause promissory notes,
bonds, debentures and other evidences of indebtedness, and mortgages, deeds of
trust, pledge agreements or other instruments of hypothecation to be executed
as security therefor in the corporate name.
(e) Authorization of signatures. From time to time to
designate the person or persons authorized to sign or endorse checks, drafts or
other orders for the payment of money issued in the name of or payable to the
corporation.
(f) Fixing principal office. To fix and from time to time to
change the location of the principal office of the corporation.
(g) Committees. To appoint an executive committee and other
committees, and to delegate to the executive committee any of the powers and
authority of the board in the management of the business and affairs of the
corporation, except as set forth in Section 311 of the California Corporations
Code or as otherwise limited by law or by the Articles of Incorporation or
these Bylaws. The board of directors shall have the power to prescribe the
manner in which proceedings of the executive committee and other committees
shall be conducted. The executive committee shall be composed of two or more
directors.
(h) General powers. Generally to exercise such powers and
duties as are usually vested in corporate directors or authorized by the
California Corporations Code.
Section 13. Directors to serve without salary. No director
shall receive any salary or other compensation or reimbursement of expenses for
acting as a director unless such salary, compensation or reimbursement is
authorized by the affirmative vote of a majority of the authorized number of
members of the board.
<PAGE> 9
ARTICLE II
OFFICERS
Section 1. Enumeration. The officers of the corporation shall
be a president, one or more vice-presidents, a secretary, a treasurer and such
other officers as are elected by the board of directors, including in its
discretion a chairman of the board. Officers shall be elected by and shall hold
office at the pleasure of the board of directors. When the duties do not
conflict, any two or more offices may be held by the same person.
Section 2. Powers and duties of the chairman of the board.
The chairman of the board, if there shall be such an officer, shall, if
present, preside at all meetings of the board of directors and exercise and
perform such other powers and duties as may be from time to time assigned to
him by the board of directors.
Section 3. Powers and duties of the president. Subject to
such supervisory powers, if any, as may be given by the board of directors to
the chairman of the board, if there be such an officer, the president shall be
the chief executive officer of the corporation and, subject to the control of
the board of directors, shall have general supervision, direction and control
of the business of the corporation and its employees and shall exercise such
general powers and duties of management as are usually vested in the office of
president of a corporation. He shall preside at all meetings of the
shareholders and, in the absence of the chairman of the board or if there be
none, at all meetings of the board of directors. He shall be an ex officio
member of all standing committees.
Section 4. Powers and duties of the vice-president. In the
absence or disability of the president, the vice-presidents in order of their
rank as fixed by the board of directors or, if not
<PAGE> 10
ranked, the vice-president designated by the board of directors shall perform
all of the duties of the president and, when so acting, shall have all the
powers of and be subject to all of the restrictions upon the president. The
vice-presidents shall have such other powers and perform such other duties as
are prescribed for them from time to time by the board of directors.
Section 5. Duties of the secretary. The secretary shall:
(a) Minutes. Keep full and complete minutes of the meetings
of the board of directors and of the meetings of the shareholders and give
notice, as required, of all such meetings;
(b) Corporate seal. Keep the seal of the corporation and
affix the same to all instruments executed by the corporation which require it;
(c) Books and other records. Maintain custody of and keep the
books of account and other records of the corporation, except such as are in
the custody of the treasurer;
(d) Share register. Keep at the principal office of the
corporation a share register, or a duplicate share register if a transfer agent
is employed to keep the original share register, showing the ownership and
transfers of ownership of all shares;
(e) Receipt, deposit, and disbursement of funds. Receive,
deposit and disburse funds belonging to the corporation; and
(f) General duties. Generally, perform all duties which
pertain to his office and which are required by the board of directors.
Section 6. Duties of the treasurer. The treasurer shall be
the chief financial officer of the corporation. The treasurer shall keep and
maintain, or cause to be kept and maintained, adequate and correct books and
records of accounts of the properties and business transactions of the
corporation, and shall send or cause to be sent to the shareholders such
<PAGE> 11
financial statements as are required by law or by the Articles of Incorporation
or these Bylaws. The treasurer shall deposit all monies and other valuables in
the name and to the credit of the corporation with such depositories as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board, shall render to the president and
directors upon request an account of all transactions as treasurer and of the
financial condition of the corporation, and shall have other powers and perform
such other duties as may be prescribed by the board of directors.
ARTICLE III
SHAREHOLDERS
Section 1. Quorum. The presence in person or by proxy of the
persons entitled to vote a majority of the voting shares at any meeting of
shareholders shall constitute a quorum. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, provided that any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 2. Place of meeting. Meetings of the shareholders
shall be held at the principal office of the corporation or at such place
within or without the State of California as is designated by the board of
directors or by the written consent of all shareholders entitled to vote
thereat, given either before or after the meeting and filed with the secretary
of the corporation.
Section 3. Annual meeting. The annual meeting of shareholders
shall be held each year on a date and at a time designated by the board of
directors. The date so designated shall be within five months following the
close of the fiscal year of the corporation and within
<PAGE> 12
fifteen months following the last annual meeting. At each annual meeting,
directors shall be elected and any other proper business may be transacted.
Section 4. Special meetings. Special meetings of the
shareholders may be held at any time for any purpose or purposes. Such special
meetings may be called at any time by the president or by a majority of the
board or by any one or more shareholders holding not less than 10% of the
voting power of the corporation.
Section 5. Adjourned meetings. Any meeting of shareholders,
whether or not a quorum is present, may be adjourned from day to day or from
time to time by the vote of a majority of the shares the holders of which are
either present at the meeting or represented by proxy.
Section 6. Notice of regular or special meetings. All notices
of annual or special meetings of shareholders shall be given not less than ten
nor more than sixty days before the date of the meeting. The notice shall
specify the place, date and hour of the meeting and (i) in the case of a
special meeting, the general nature of the business to be transacted, or (ii)
in the case of an annual meeting, those matters which the board of directors
intends, at the time of giving the notice, to present for action by the
shareholders, and (iii) in the case of a meeting at which directors are to be
elected, the names of nominees who management intends, at the time of the
notice, to present for election. The notice shall also contain all other
matters required to be included by the California Corporations Code. Notice
shall be given either personally or by first class mail or telegraphic or other
written communication, charges prepaid, addressed to the shareholder at his
address appearing on the books of the corporation or theretofore given by him
to the corporation for the purpose of notice or, if no address appears or has
been given, to the corporation's principal executive office. Notice of a
special meeting called by any person or
<PAGE> 13
persons other than the board of directors shall be given not less than
thirty-five nor more than sixty days after the receipt by the chairman of the
board, the president, any vice-president or the secretary of the corporation of
a written request there-for, specifying the time of such meeting and the
general nature of the business proposed to be transacted. If the notice is not
given within twenty days after receipt of the request, the person or persons
requesting the meeting may give such notice.
Section 7. Notice of adjourned meetings. It shall not be
necessary to give any notice of the time and place of any adjourned meeting or
of the business to be transacted thereat other than by announcement at the
meeting at which such adjournment is taken, except that when a meeting is
adjourned for forty-five days or more notice of the adjourned meeting shall be
given as in the case of an original meeting.
Section 8. Proxies. The appointment of a proxy or proxies
shall be made by an instrument in writing executed by the shareholder or his
duly authorized agent and filed with the secretary of the corporation. No proxy
shall be valid after the expiration of eleven months from the date of its
execution, unless the shareholder executing it specifies therein the length of
time for which it is to continue in force. At a meeting of shareholders all
questions concerning the qualification of voters, the validity of proxies and
the acceptance or rejection of votes shall be decided by the secretary of the
meeting unless inspectors of election are appointed pursuant to Section 707 of
the California Corporations Code, in which event such inspectors shall pass
upon all questions and shall have all other duties specified in said section.
Section 9. Consent of absentees. The transactions of any
meeting of shareholders, either annual, special or adjourned, however called
and noticed, shall be as valid as though had at a meeting duly held after
regular call and notice if a quorum is present and if,
<PAGE> 14
either before or after the meeting, each shareholder entitled to vote, not
present in person or by proxy, signs a written waiver of notice or a consent to
the holding of such meeting or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or
made a part of the minutes of the meeting.
Section 10. Action without meeting. Any action which may be
taken at a meeting of the shareholders may be taken without a meeting or prior
notice if authorized by a writing signed by the holders of outstanding shares
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all voting shares were
present and voted, except that a written consent to the election of directors,
other than the election of directors to fill a vacancy not created by removal,
shall be effective only if signed by the holders of all outstanding shares
entitled to vote upon the election of directors. All such consents shall be
filed with the secretary of the corporation and shall be maintained in the
corporate records. If the consents of all shareholders entitled to vote have
not been solicited in writing and if the unanimous written consent of all such
shareholders have not been received, the secretary shall give prompt notice of
any corporate action approved by the shareholders without a meeting as required
in Section 603 of the California Corporations Code, and the consummation of any
such action shall be subject to such Section.
Section 11. Voting rights. If no future date is fixed by the
board of directors for the determination of the shareholders entitled to notice
of or to vote at any shareholders meeting, the record date for determining
shareholders entitled to such notice or to vote thereat shall be at the close
of business on the business day next preceding the day on which notice is given
or, if notice is waived, at the close of business on the business day next
preceding the day on which the
<PAGE> 15
meeting is held, and the record date for determining shareholders entitled to
give written consent to corporate action without a meeting shall be the day on
which the first written consent is given.
ARTICLE IV
MISCELLANEOUS
Section 1. Record dates and closing of transfer books. From
time to time the board of directors may fix a future date, not more than sixty
nor less than ten days preceding the date of any meeting of shareholders and
not more than sixty days preceding the date fixed for the payment of any
dividend or distribution or for the allotment of rights or the date on which
the shareholders become entitled to exercise any rights in respect of any other
lawful action, as the record date for the determination of the shareholders
entitled to notice of and to vote at any such meeting or to receive any such
dividend or distribution or any allotment of rights or to exercise any such
rights. If a time is so fixed, only shareholders of record on the date so fixed
shall be entitled to notice of and to vote at such meeting or to receive such
dividend or distribution or allotment of rights or to exercise such rights, as
the case may be, notwithstanding any transfer of shares on the books of the
corporation after the record date so fixed. The board of directors may close
the books of the corporation against transfers of shares during the whole or
any part of the period between the record date and the date so fixed for the
meeting, payment, distribution, allotment or exercise of rights.
Section 2. Inspection of corporate records. The share
register or duplicate share register, the books of account, and the minutes of
the proceedings of the shareholders and directors shall be open to inspection
upon the written demand of any shareholder at any reasonable time for a purpose
reasonably related to his interests as a shareholder and shall be
<PAGE> 16
exhibited at any time when required by the demand of 10% or more of the shares
represented at any shareholders' meeting. Such inspection may be made in person
or by an agent or attorney and shall include the right to make extracts. Demand
of inspection other than at a shareholders' meeting shall be made in writing
upon the president, secretary or assistant secretary of the corporation.
Section 3. Inspection of Bylaws. The corporation shall keep
in its principal office for the transaction of business the original or a copy
of the Bylaws as amended or otherwise altered to date, certified by the
secretary, which shall be open to inspection by the shareholders at all
reasonable times during office hours.
Section 4. Annual report to shareholders. The corporation
shall send to its shareholders an annual report as required by Section 1501 of
the California Corporations Code not later than 120 days after the close of
each of its accounting years.
Section 5. Representation of shares of other corporations.
The president or any vice-president and the secretary or assistant secretary of
the corporation, acting either in person or by a proxy or proxies designated in
a written instrument duly executed by said officers, are authorized to vote,
represent and exercise on behalf of this corporation all rights incident to any
shares of any other corporation standing in the name of this corporation.
ARTICLE V
SEAL
The corporation shall have a seal, being the same as that
imprinted on the margin hereof.
<PAGE> 17
ARTICLE VI
AMENDMENTS
Section 1. By shareholders. Except for any change for which a
larger number is required by law, these Bylaws may be amended or repealed or
new or additional Bylaws may be adopted by the vote or written consent of
shareholders entitled to exercise a majority of the voting power of the
corporation.
Section 2. By the directors. These Bylaws may be amended or
repealed and new or additional Bylaws may be adopted by the vote or written
assent of the board of directors, but the right of the directors to change the
authorized number of directors shall be subject to all of the provisions of
Section 212 of the California Corporations Code. The power hereby delegated may
be revoked by the vote or written consent of shareholders entitled to exercise
a majority of the voting power of the corporation.
<PAGE> 18
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting secretary of WEIAND
AUTOMOTIVE INDUSTRIES, INC., a California corporation; and
2. That the foregoing Amended and Restated Bylaws, comprising
18 pages, constitute the Bylaws of said corporation as duly adopted by action
of the Board of Directors of the Corporation duly taken on March 30, 1979.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed the seal of said corporation this 17th day of February, 1981.
/s/ Marge Baird
-------------------------------
Secretary
<PAGE> 1
EXHIBIT 3.4(a)
April 20, 1972
CHARTER
of
CHROME CRANKSHAFT, INC.
The undersigned natural person or persons, having capacity to contract
and acting as the incorporator or incorporators of a corporation under the
Tennessee General Corporation Act, adopt the following charter for such
corporation:
(1) The name of the corporation is Chrome Crankshaft, Inc.
(2) The duration of the corporation is perpetual.
(3) The address of the principal office of the corporation in the
State of Tennessee shall be 1074 East Brooks Road, Memphis, Tennessee, County
of Shelby.
(4) The corporation is for profit.
(5) The purpose or purposes for which the corporation is organized
are:
(a) To build, reconstruct, repair, renovate, sell high
performance automobile crankshafts, and all related parts thereto including
selling crankshaft kits and assemblies used in racing or other types of cars
and all related parts thereto.
(6) The maximum number of shares which the corporation shall have
the authority to issue in One Hundred (100) shares, with no par value.
(7) The corporation will not commence business until consideration
of One Thousand Dollars ($1,000.00) has been received for the issuance of
shares (not less than $1,000.00).
Dated: April 19,1972
/s/ June Harris
-----------------------------------
Incorporator
<PAGE> 2
I, JOE C. CARR, Secretary of State, do certify that this Charter, with
certificate attached, the foregoing of which is a true copy, was this day
registered and certified to by me.
This the 20th day of April, 1972.
JOE C. CARR,
SECRETARY OF STATE
FEE: $20.00
<PAGE> 3
ARTICLES OF AMENDMENT TO THE CHARTER
OF
CHROME CRANKSHAFT, INC.
Pursuant to the provisions of Section 48-303 of the Tennessee General
Corporation Act, the undersigned corporation adopts the following article of
amendment to its charter:
1. The name of the corporation is Chrome Crankshaft, Inc.
2. The amendment adopted is:
The name of the corporation is changed from Chrome
Crankshaft, Inc. to Lunati Cams, Inc.
The address of the principal office of the corporation shall
be 3871 Watman, Memphis, Shelby County, Tennessee
3. The amendment was duly adopted at a meeting of the
shareholders on July 31, 1974.
4. If the amendment is not to be effective when these articles
are filed by the Secretary of State, the date it will be
effective is July 31, 1974.
Dated July 31, 1974 .
---------------------
CHROME CRANKSHAFT, INC.
-----------------------------------------
(Name of Corporation)
By /s/ Joe Lunati
---------------------------------------
(Title)
<PAGE> 4
I, JOE C. CARR, Secretary of State, do hereby certify that this
amendment to charter, with certificate attached, the foregoing of which is a
true copy, was this day registered and certified to by me.
This the 21st day of October, 1974.
JOE C. CARR,
SECRETARY OF STATE
FEE: $10.00
<PAGE> 5
ARTICLES OF AMENDMENT TO THE CHARTER
OF
CHROME CRANKSHAFT, INC.
------------------------------------------
Pursuant to the provisions of Section 48-1-303 of the Tennessee
General Corporation Act, the undersigned corporation adopts the following
articles of amendment to its charter:
1. The name of the corporation is:
Lunati Cams, Inc.
2. The corporation hereby changes its address to:
P.O. Box 18021
Memphis, TN 38181-0021
3. The amendment was duly adopted at a meeting of the
shareholders on November 28, 1986.
Dated: July 13, 1987
----------------
Lunati Cams, Inc.
------------------------------------------
Name of Corporation
By: /s/ Peggy M. Lunati
---------------------------------------
Signature
<PAGE> 1
EXHIBIT 3.4(b)
BY LAWS
OF
LUNATI CAMS, INC.
ARTICLE I: OFFICES
The principal office of the corporation in the state of Tennessee
shall be located in the City of Memphis. The Corporation may have such other
offices, either within or without the State of Tennessee, as the Board of
Directors may designate or as the business of the corporation may require from
time to time.
ARTICLE II: SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders
shall be held on the 20th day of March in each year beginning with year 1986,
at the hours of 10:00 a .m CST, for the purpose of electing directors and for
the transaction of such other business as may come before the meeting. If the
day fixed for the annual meeting shall be a legal holiday in the State of
Tennessee, such meeting shall be held on the next succeeding business day. If
the election of directors shall not be held on the day designated herein for an
annual meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as conveniently may be held.
SECTION 2. SPECIAL MEETINGS. Special meeting of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the president or by the Board of Directors, and shall be called by the
president at the request of the holders of not less than 1/10th of all the
outstanding shares of the corporation entitled to vote at the meeting.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate any
place, either within or without the State of Tennessee, unless otherwise
prescribed by statute, as
<PAGE> 2
the place of meeting for any annual meeting or for any special meeting called
by the Board of Directors. A waiver of notice signed by all shareholders
entitled to vote at a meeting may designate any place, either within or without
the State of Tennessee, unless otherwise prescribed by statute, and the place
for the holding of such meeting. If no designation is made or if a special
meeting be otherwise called, the place of meeting shall be the principal office
of the corporation in the State of Tennessee.
SECTION 4. NOTICE OF MEETING. Written notice setting the place, day
and hour of the meeting, and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall, unless otherwise prescribed by
statute, be delivered not less than ten (10) nor more than sixty (60) days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the persons calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the shareholder at his address as it appears
on the stock transfer books of the corporation, with postage thereon prepaid.
No notice of an adjourned meeting shall be required.
SECTION 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining shareholders entitled to notice of, or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, forty (40) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of, or to vote at a meeting of shareholders, such books
shall be closed for at least ten (10) days, immediately
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preceding such meeting. In lieu of closing the stock transfer books, the Board
of Directors may fix in advance, a date as the record date for any such
determination of shareholders, such date in any case to be not more than forty
(40) days, and in case of a meeting of shareholders, not less than ten (10)
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice of, or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record
date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of the shareholders has been made
as provided in this section, such determination shall apply to any adjournment
thereof.
SECTION 6. VOTING LISTS. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make a complete list
of the shareholders entitled to vote at each meeting of shareholders or any
adjournment thereof, arranged in alphabetical order, with the address of, and
the number of shares held by each, which list, for a period of not less than
ten (10) days prior to the meeting, shall be kept on file at the registered
office of the corporation and such list shall be produced and kept open at the
time and place of the meeting and shall be subject to the inspection of any
shareholders during the whole time of the meeting for the purposes thereof.
SECTION 7. QUORUM. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders, but in no event shall a
quorum consist of less than ONE-THIRD (1/3rd of the votes
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entitled to vote at the meeting). If less than a majority of the shares are
represented, then those represented may adjourn the meeting from time to time
without further notice. At such adjourned meeting when a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The shareholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
SECTION 8. PROXIES. At all meetings of the shareholders, a shareholder
may vote in person or by proxy, executed in writing by shareholder or by his
duly authorized attorney-in-fact. Such proxy shall be filed with the secretary
of the corporation before or at the time of the meeting. No proxy shall be
valid after eleven (11) months from the date of its execution, unless otherwise
provided in the proxy.
SECTION 9. VOTING OF SHARES. Subject to the provisions of Section
Twelve (12) of this Article II, each outstanding share entitled to vote shall
be entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders.
SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in
the name of another corporation may be voted by such officer, agent or proxy as
the By-Laws of such corporation may prescribe, or, in the absence of such
provision, as the Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without a transfer of such shares into his name.
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Shares standing in the name of a receiver may be voted by such
receiver and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name, if authority to do so
be contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee and
thereafter, the pledgee shall be entitled to vote the shares s6 transferred.
Shares of its own stock belonging to the corporation shall not be
voted, directly or indirectly, at any meeting, and shall not be counted in
determining the total number of outstanding shares at any given time.
SECTION 11. INFORMAL ACTION BY SHAREHOLDERS. Unless otherwise provided
by law, any action required to be taken at a meeting of the shareholders, or
any other action which may be taken at a meeting of the shareholders, may be
taken without a meeting if a consent, in writing, setting forth the action so
taken, shall be signed by all of the shareholders entitled to vote with respect
to the subject matter thereof.
SECTION 12. CUMULATIVE VOTING. Unless otherwise provided by law, at
each election for directors, every shareholder entitled to vote at such
election shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected
and whose election he has a right to vote, or to cumulate his votes by giving
one candidate as many votes as the number of such directors multiplied by the
number of his shares shall equal, or by distributing such votes on the same
principle among any number of candidates.
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SECTION 13. RESTRICTION ON TRANSFER AND SALE. The directors of the
corporation are authorized, upon resolution of the shareholders, to cause a
restriction on transfer and sale of shares to be typed on each certificate of
stock issued by the corporation, and said restriction is to be in the following
wording:
"RESTRICTION ON TRANSFER AND SALE: The shares of
stock represented by this certificate may not be sold,
transferred, or assigned except as provided in the
corporation's certificate of incorporation, it's by-laws, or
agreement among shareholders and any amendments thereto."
ARTICLE III: BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by its Board of Directors.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors
of the corporation shall be four, (4).**/*** Each director shall hold office
until the next annual meeting of shareholders or until his successor shall have
been elected and qualified.
SECTION 3. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without other notice in accordance with this By-Law
immediately after, and at the same place as the annual meeting of shareholders.
The Board of Directors may provide, by resolution, the time and place for the
holding of additional regular meetings without other notice than such
resolution. Joint meetings of stockholders and Board of Directors may be held.
** Amended on 10/29/98 to reflect one director (See Attached).
*** Amended on 8/30/99 to reflect variable number of directors (See
Attached).
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SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by, or at the request of the president or any director.
Such special meetings of the Board shall not be held outside of the State of
Tennessee.
SECTION 1. NOTICE. Notice of any special meeting shall be given at
least five (5) days previously thereto by written notice delivered personally,
or mailed to each director at his business address, or by telegram. If mailed,
such notice shall be deemed to be delivered when deposited in the United States
mail so addressed, with postage thereon prepaid. If notice is given by
telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Any director at a meeting shall constitute
a waiver of notice of such meeting, except where a director attends a meeting
for the express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened.
SECTION 2. QUORUM. A majority of the number of directors fixed by
Section two (2) of this Article III, shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but if less
than such majority is present at a meeting, a majority of the directors present
may adjourn the meeting from time to time without further notice.
SECTION 3. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 4. ACTION WITHOUT A MEETING. Any action that may be taken by
the Board of Directors at a formal meeting may be taken without a meeting if a
consent in writing, setting forth the action so to be taken, shall be signed
before such action by all of the directors.
SECTION 5. VACANCIES. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum
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of the Board of Directors, unless otherwise provided by law. A director elected
to fill a vacancy shall be elected for the unexpired term of his predecessor in
office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by election by the Board of Directors for a term of
office continuing only until the next election of directors by the
shareholders.
SECTION 6. COMPENSATION. By resolution of the Board of Directors, each
director may be paid his expenses, if any, of attendance at each meeting of the
Board of Directors, and may be paid a stated salary as director or a fixed sum
for attendance at each meeting of the Board of Directors or both. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation.
SECTION 7. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action unless his
dissent shall be entered in 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 therefore, or shall forward such dissent by
registered mail to the secretary of the corporation immediately after
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
SECTION 8. REMOVAL OF DIRECTORS. Any and all of the directors may be
removed without cause by vote of the shareholders.
ARTICLE IV: OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be a chief
executive officer (CEO) who is also chairman of the board of directors, a
president, a secretary and a treasurer, and such other officers and assistant
officers as may be deemed necessary and elected
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or appointed by the Board of Directors. The Board of Directors shall determine
whether any two offices shall be held by the same person.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the
corporation to be elected by the Board of Directors shall be elected annually
by the Board of Directors at the first meeting of the Board of Directors held
after each annual meeting of the shareholders. Each officer shall hold office
until his successor shall have been duly elected and shall have qualified or
until his death or until he shall resign or shall have been removed in the
manner hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent may be removed by the Board
of Directors whenever in its judgment, the best interest of the corporation
will be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of
an officer or agent shall not of itself create contract rights.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. CHAIRMAN OF BOARD AND CHIEF EXECUTIVE OFFICER (CEO). The
chairman of the Board of Directors shall be the chief executive officer (CEO)
of the corporation. The CEO has the responsibility to assign to the president
his duties and responsibilities. He shall preside at all Stockholders and Board
of Directors' meetings.
SECTION 6. PRESIDENT. The president of the corporation shall be the
general manager of the corporation. His duties and responsibilities shall be
assigned by the CEO. He shall carry out the policy formulated by the Board of
Directors and as supervised by the CEO. The president of the corporation shall
assign the duties and responsibilities of all other officers of
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the corporation. He may sign, with the secretary or any other proper officer of
the corporation thereunto authorized by the Board of Directors, certificates
for shares of the corporation, any deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors has authorized to be executed, except
in cases where the signing and execution thereof shall be expressly delegated
by the Board of Directors or by these By-Laws to some officer or agent of the
corporation, and shall perform all duties incident to the office of president
and such other duties as may be prescribed by the CEO and the Board of
Directors from time to time.
SECTION 7. VICE-PRESIDENT. The duly elected vice-presidents of the
corporation shall perform such duties and responsibilities as may be assigned
to them by the president. The executive vice-president of the corporation, if
one is elected, shall be charged with the duties and responsibilities of the
president when the president is outside the State of Tennessee or
incapacitated.
SECTION 8. SECRETARY. The secretary shall:
(a) keep the minutes of the proceedings of the shareholders and of the
Board of Directors in one or more books provided for that purpose;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws or as required bylaw;
(c) be custodian of the corporate records;
(d) keep a register of the post office address of each shareholder
which shall be furnished to the secretary by such shareholder;
(e) sign with the president, certificates for shares of the
corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors;
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(f) have general charge of the stock transfer books of the
corporation; and
(g) in general, perform all duties incident to the office of secretary
and such other duties as from time to time may be assigned to him by the
president or the Board of Directors.
SECTION 9. TREASURER. The treasurer shall:
(a) have charge and custody of and be responsible for all funds and
securities of the corporation;
(b) receive and give receipts for moneys due and payable to the
corporation from any source whatsoever, and deposit all such moneys in the name
of the corporation in such banks, trust companies or other depositories as
shall be selected in accordance with the provisions of Article V of these
By-Laws; and
(c) in general, perform all of the duties incident to the office of
treasurer and such other duties as from time to time may be assigned to him by
the president or by the Board of Directors. If required by the Board of
Directors, the treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety for sureties as the Board of Directors
shall determine.
SECTION 10. SALES. The salaries of the officers shall be fixed from
time by the Board of Directors and no officer shall be prevented from receiving
such salary by reason of the fact he is also a director of the corporation.
ARTICLE V: CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
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SECTION 2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION 1. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 2. DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited form time to time to the credit of the corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
SECTION 3. SEAL. The corporation may have a seal if and should the
Board of Directors so determine. Should the Board of Directors determine that
the corporation shall have a seal, on the seal shall be the corporation's name,
the State of Tennessee, and the year of incorporation. Such seal shall be used
on all official papers and instruments executed by and on behalf of the
corporation.
ARTICLE VI: CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 4. CERTIFICATES FOR SHARES. Certificates representing shares
of the corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the president and by the
secretary, or by such other officers authorized by law and by the Board of
Directors. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the
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corporation for transfer shall be canceled and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered and canceled, except that in the case of a lost, destroyed or
mutilated certificate, a new one may be issued upon such terms and indemnity to
the corporation as the Board of Directors may prescribe.
SECTION 5. TRANSFER OF SHARES. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
"power-of-attorney" duly executed and filed with the secretary of the
corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
The Board of Directors, with ratification by the stockholders, may place a
restriction on the sale and disposition of stock, but not inconsistent with
Article II, Section 13, of these By-Laws.
ARTICLE VII: AUTHORITY TO BORROW
The Board of Directors of the corporation shall have such authority
and may exercise such from time to time to borrow monies and/or funds binding
the corporation. The directors shall have the authority to authorize the
president to borrow money and/or funds, when needed by the corporation, from
banks and/or individuals; to mortgage and/or pledge and/or place liens on
corporate property to secure such loans. The directors shall be empowered to
issue such indentures and/or bonds, in accordance with law secured by
corporation property and assets. The president of the corporation is authorized
to execute such instruments in order to carry out resolutions, relative to
borrowing, as the Board of Directors may authorize.
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ARTICLE VIII: FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be
subject to change, by the Board of Directors.
ARTICLE IX: DIVIDENDS
The Board of Directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law or its Article of Incorporation.
ARTICLE X: WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to
be given to any shareholder or director to the corporation under the provisions
of these By-Laws, or under the provisions of the Articles of Incorporation, or
under the provisions of Tennessee Code Annotated Sections 48-17-106 and
48-18-204, a waiver thereof in writing signed by the person or persons entitled
to such notice, whether before or after the time stated therein shall be deemed
equivalent to the giving of such notice.
ARTICLE XI: OPTION STOCK, BONUS AND EMPLOYMENT CONTRACTS
The Board of Directors may, from time to time, authorize option stock
to officers and directors of the corporation at a price set by the Board of
Directors either as a bonus or for cash or as an incentive to executives of the
corporation. In addition, the Board of Directors may enter into employment
contracts with officers of the corporation and offer employment contracts to
applicants for employment as executives of the corporation.
The authority of the Board of Directors to create and authorize the
issuance of right or options entitling designated persons to purchase from the
corporation, any shares of its capital stock of any class or classes shall be
evidenced by such instruments as the Board of Directors
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shall approve. The terms upon which such rights or options may be issued and
any such shares may be fixed by the Board of Directors. In the absence of
actual fraud in the transaction, the judgment of the directors as to the
consideration for the issue of such rights or options shall be conclusive.
Nothing herein shall restrict and/or abridge the rights of the
shareholders of the corporation to create option stock for issues to
shareholders of record nor for the shareholders to declare option stock for
officers of the corporation.
The stockholders, at any regular and/or special meeting, may establish
preemptive rights for stockholders.
ARTICLE XII: PROFIT-SHARING PLAN
The Board of Directors, at its first meeting, or any annual or special
meeting thereafter, may adopt a profit sharing plan for officers and employees
of the corporation, and the Board of Directors of the corporation will have
full authority to administer the plan which may be discontinued at any time by
the Board of Directors.
ARTICLE XIII: BONUS
The Board of Directors may at the end of each fiscal year, authorize
payments of a bonus to officers and employees who are employed by the
corporation on the last day of the fiscal year. Such bonus, if authorized,
shall be based on performance and that person's contributions to the profits of
the corporation. No officer or employee shall be entitled to receive a bonus by
virtue of length of service only. Sales personnel may receive a bonus, if
authorized.
ARTICLE XIV: INDEMNITY
(a) Any person made a party to any action by reason of the fact
that he, his testator or intestate representative, is or was a director,
officer, or employee of the corporation, or of any
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corporation in which he served as such at the request of the corporation, shall
be indemnified by the corporation against the reasonable expenses, including
attorney' 5 fees, actually and necessarily incurred by him in connection with
the defense of such action, suit or proceedings, or in connection with any
appeal therein, except in relation to matters as to which it shall be adjudged
in such action, suit or proceeding, or in connection with any appeal therein
that such officer, director or employee is liable for negligence or misconduct
in the performance of his duties.
(b) The foregoing rights of indemnification shall not be deemed
exclusive of any other rights to which any officer or director or employee may
be entitled, apart from the provisions of this section.
(c) The amount of indemnity to which any officer or any director
may be entitled shall be fixed by the Board of Directors, except that in any
case where there is no disinterested majority of the Board available, the
amount shall be fixed by arbitration pursuant to the then existing rules of the
American Arbitration Association.
ARTICLE XV: AMENDMENTS
These By-Laws may be altered, amended or repealed and new By-Laws may
be adopted by the stockholders at any regular or special meeting.
CERTIFICATE
I, Peggy Lunati, Secretary of Lunati Cams, Inc., certify that the
foregoing By-Laws are the true and correct By-Laws of the corporation, adopted
and approved by a resolution of the stockholders at a meeting held on the 15th
day of July, 1986.
/s/ Peggy Lunati
-----------------------------------
Peggy Lunati, Secretary
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Annex A
RESOLUTIONS OF THE SOLE SHAREHOLDER
OF LUNATI CAMS, INC. (the "Company")
RESOLVED, that as authorized pursuant to the Bylaws of the
Corporation, Article III, Section 2 of the Bylaws of the Corporation is hereby
amended to reflect that the number of Directors of the Company be, and hereby
is, one.
RESOLVED, that Robert Wineland be, and hereby is, elected as the sole
director of the Company, to serve in such capacity until his successor is
elected and has qualified or until his earlier resignation or removal.
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Annex A
RESOLUTIONS OF THE SOLE SHAREHOLDER
OF LUNATI CAMS, INC. (the "Company")
RESOLVED, that as authorized pursuant to the Bylaws of the
Corporation, Article III, Section 2 of the Bylaws of the Corporation is hereby
amended in its entirety so that, as amended, Article III, Section 2 of the
Bylaws shall read as follows:
"SECTION 2. NUMBER, TENURE AND QUALIFICATION. The Board of
Directors shall consist of one or more members. The number of
Directors shall be fixed, and may be changed from time to
time, by action of the shareholders or by action of the
Board. Directors need not be shareholders. Each Director
shall hold office until the next annual meeting of
shareholders or until a successor is elected and has
qualified or until the Director's death, resignation or
removal."
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EXHIBIT 3.5(a)
ARTICLES OF INCORPORATION
OF
LMT MOTOR SPORTS CORPORATION
1. The corporation is a Profit corporation.
2. The Name of the Corporation is LMT Motor Sports Corporation
3. The number (and classes) if any of shares the corporation is
authorized to issue is (are) as follows:
Classes - Capital common
Number - 50,000
4. Name and Street Address of the Registered Agent and Registered
Office is as follows:
Barry Ticer
8785 Old Craft Road
Olive Branch, WS 38654-1165
5. The name and complete address of each incorporator are as follows:
Ed N. Murley, Attorney
44 North Second Street, Suite 505,
Memphis, TN 38183
6. The other provisions are:
(a) The Stockholders of the Corporation will not delegate authority to
adopt and amend the By-Laws of the Corporation.
(b) Terms of directors and officers of the Corporation shall be
established by the By-Laws.
(c) The number of directors and officers of the Corporation shall be
determined by the Stockholders and such will be included and
authorized in the By-Laws of the Corporation.
Filed: 10/27/97
/s/ Ed M. Hurley
------------------------------
<PAGE> 1
EXHIBIT 3.5(b)
BY-LAWS
OF
LMT MOTOR SPORTS CORPORATION
ARTICLE I: OFFICERS
The principal office of the Corporation in the state of Mississippi
shall be located in the city of Ashland. The corporate office shall be in the
state of Tennessee located in the city of Memphis. The Corporation may have
such other offices, either within or without the states of Tennessee and
Mississippi, as the Board of Directors may designate or as the business of the
Corporation may require from time to time.
ARTICLE II: SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The Annual Meeting of the Shareholders
shall be held on the first Saturday in the month of January in each year
beginning with the year 1999, at the hours of 10:00 a.m., CST, in the corporate
offices situated at 4770 Lamar Avenue, Memphis, Tennessee 38118, for the
purpose of electing directors and for the transaction of such other business as
may come before the meeting. If the day fixed for the Annual Meeting shall be a
legal holiday in the state of Tennessee, such meeting shall be held on the next
succeeding business day. If the election of directors shall not be held on the
day designated herein for an Annual Meeting of the Shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a Special Meeting of the Shareholders as soon thereafter as conveniently may
be held.
<PAGE> 2
SECTION 2. SPECIAL MEETINGS. Special Meetings of the Shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the President or by the Board of Directors, and shall be called by the
President at the request of the Shareholders of not less than 1/10th of all the
outstanding shares of the Corporation entitled to vote at the Meetings.
SECTION 3. PLACE OF MEETINGS. The Board of Directors may designate any
place, either within or without the state of Mississippi or the state of
Tennessee unless otherwise prescribed by statute, as the place of meeting for
any Annual Meeting or for any Special Meeting called by the Board of Directors.
A Waiver of Notice signed by all Shareholders entitled to vote at a meeting may
designate any place, either within or without the state of Mississippi or the
state of Tennessee, unless otherwise prescribed by statute, and the place for
holding of such meeting. If no designation is made or if a Special Meeting be
otherwise called, the place of meeting shall be the corporate office of the
Corporation situated in Memphis, Tennessee.
SECTION 4. NOTICE OF MEETINGS. Written Notice setting the place, day
and hour of the Meeting, and, in case of a Special Meeting, the purpose or
purposes for which the Meeting is called, shall, unless otherwise prescribed by
statute, be delivered not less than ten (10) nor more than sixty (60) days
before the date of the Meeting, either personally or by mail, by or at the
direction of the President, or the Secretary, or the person calling the
Meeting, to each Shareholder of record entitled to vote at such Meeting. If
mailed, such Notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the Shareholder at his address as it appears
on the Stock Transfer Books of the Corporation, with postage thereon paid. No
Notice of an adjourned Meeting shall be required.
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SECTION 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining Shareholders entitled to Notice of, or to vote at any
Meeting of Shareholders or any adjournment thereof, or Shareholders entitled to
receive payment of any dividend, or in order to make a determination of
Shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the Stock Transfer Book shall be closed for a
stated period not to exceed, in any case, forty (40) days. If the Stock
Transfer Book shall be closed for the purpose of determining Shareholders
entitled to Notice of, or to a vote at a Meeting of Shareholders, such Books
shall be closed for at least ten (10) days, immediately preceding such Meeting.
In lieu of closing the Stock Transfer Books, the Board of Directors may fix in
advance, a date as the record date for any such determination of Shareholders,
such date in any case to be not more than forty (40) days, and in case of a
Meeting of Shareholders, not less than ten (10) days prior to the date on which
the particular action, requiring such determination of Shareholders, is to be
taken. If the Stock Transfer Books are not closed and no record date is fixed
for the determination of Shareholders entitled to Notice of, or to vote at a
Meeting of Shareholders, or Shareholders entitled to receive payment of a
dividend, the date on which Notice of the Meeting is mailed or the date on
which the Resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination of
Shareholders. When a determination of Shareholders entitled to vote at any
Meeting of the Shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof.
SECTION 6. VOTING LISTS. The officer or agent having charge of the
Stock Transfer Books for shares of the Corporation shall make a complete list
of the Shareholders entitled to vote at each Meeting of Shareholders or any
adjournment thereof arranged in alphabetical order,
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with the address of and the number of shares held by each, which list, for a
period of not less than ten (10) days prior to the Meeting, shall be kept on
file at the Registered Office of the Corporation and such list shall be
produced and kept open at the time and place of the Meeting and shall be
subject to the inspection of the Shareholders during the whole time of the
Meeting for any purposes thereof.
SECTION 7. QUORUM. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person by proxy, shall constitute
a quorum at a Meeting of Shareholders, but in no event shall a quorum consist
of less than one-third (1/3) of the votes entitled to vote at the Meeting. If
less than a majority of the shares are represented, then those represented may
adjourn the Meeting from time to time without further notice. At such adjourned
Meeting when a quorum shall be present or represented, any business may be
transacted which might have been transacted at the Meeting as originally
noticed. The Shareholders present at a duly organized Meeting may constitute to
transact business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum.
SECTION 8. PROXIES. At all Meetings of the Shareholders, a Shareholder
may vote in person or by Proxy, executed in writing by Shareholder or by his
duly authorized attorney-in-fact. Such Proxy shall be filed with the Secretary
of the Corporation before or at the time of the Meeting. No Proxy shall be
valid after eleven (11) months from the date of its execution, unless otherwise
provided in the Proxy.
SECTION 9. VOTING OF SHARES. Subject to the provisions of Section 12
of this Article II, each outstanding share entitled to vote shall be entitled
to one vote on each matter submitted to a vote at a Meeting of Shareholders.
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SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares outstanding in
the name of another Corporation may be voted by such officer, agent or proxy as
the By-Laws of such Corporation may prescribe, or, in the absence of such
provision, as the Board of Directors of such Corporation may determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name, if authority to do so
be contained in an appropriate order of the court by which such receiver was
appointed.
A Shareholder whose shares are pledged shall be entitled to a vote
such shares until the shares have been transferred into the name of the pledgee
and thereafter, the pledgee shall be entitled to vote the shares so
transferred.
Shares of its own Stock belonging to the Corporation shall not be
voted, directly or indirectly, at any Meeting, and shall be counted in
determining the total number of outstanding shares at any given time.
SECTION 11. INFORMAL ACTION BY SHAREHOLDERS. Unless otherwise provided
by law, any action required to be taken at a Meeting of the Shareholders, or
any other action which may be taken at a Meeting of the Shareholders, may be
taken without a Meeting if a consent, in writing, setting forth the action so
taken, shall be signed by all of the Shareholders entitled to vote with respect
to the subject matter thereof.
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SECTION 12. CUMULATIVE VOTE. Unless otherwise provided by law, at each
election for directors, every Shareholder entitled to vote at such election
shall have the right to vote, in person or by proxy, the number of shares owned
by him for as many persons as there are directors to be elected and whose
election he has a right to vote, or to cumulate his votes by giving one
candidate as many votes as the number of such directors multiplied by the
number of his shares shall equal, or by distributing such votes on the same
principal among any number of candidates.
SECTION 13. RESTRICTION ON TRANSFER AND SALE. The Directors of the
Corporation are authorized, upon Resolution of the Shareholders, to cause a
Restriction on transfer and sale of shares to be typed on each Certificate of
Stock issued by the Corporation, and said Restriction is to be in the following
wording:
"RESTRICTION ON TRANSFER AND SALE: The shares of stock
represented by this Certificate may not be sold, transferred,
or assigned except as provided in the Corporation's
Certificate of Incorporation, its By-Laws, or Agreement among
Shareholders and any Amendments thereto and is subject to
Restrictions adopted by the Shareholders of the Corporation
at a meeting on November 7, 1997.
ARTICLE III: BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed by its Board of Directors.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS.(1) The number of
Directors of the Corporation shall be not less than two (2) nor more than five
(5). Each Director
- --------
(1) Article III, Section 2 amended on 10/29/98 to provide for one or more
directors (See Attached).
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<PAGE> 7
shall hold office until the next Annual Meeting of Shareholders or until his
successor shall have been elected and qualified.
SECTION 3. REGULAR MEETINGS. A Regular Meeting of the Board of
Directors shall be held without other Notice in accordance with this By-Law
immediately after, and at the same place as the Annual Meeting of Shareholders.
The Board of Directors may provide, by Resolution, the time and place for the
holding of additional Regular Meetings without other Notice than such
Resolution. Joint-Meetings of Shareholders and Board of Directors may be held.
SECTION 4. SPECIAL MEETINGS. Special Meetings of the Board of
Directors may be called by, or at the request of the President or any Director.
Such Special Meetings of the Board shall not be held outside of the State of
Tennessee.
SECTION 5. NOTICE. Notice of any Special Meeting shall be given at
least five (5) days previously thereto by written Notice delivered personally,
or mailed to each Director at his business address, or by telegram. If mailed,
such Notice shall be deemed and delivered when deposited in the United States
mail so addressed, with postage thereon prepaid. If Notice is given by telegram
is delivered to the telegraph company any Director at a Meeting shall
constitute a Waiver of Notice of such Meeting, except where a Director attends
a Meeting for the express purpose of objecting to the transaction of any
business because the Meeting is not lawfully called or conveyed.
SECTION 6. QUORUM. A majority of the number of Directors fixed by
Section 2 of this Article III, shall constitute a quorum for the transaction of
business at any Meeting of the Board of Directors, but if less than such
majority is present at a Meeting, a majority of the Directors present may
adjourn the Meeting from time to time without further Notice.
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SECTION 7. MANNER OF ACTING. The act of the majority of the Directors
present at a Meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 8. ACTION WITHOUT A MEETING. Any action that may be taken by
the Board of Directors at a formal meeting may be taken without a Meeting if a
consent in writing, setting forth the action to be taken, shall be signed
before such action by all of the Board of Directors.
SECTION 9. VACANCIES. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining Directors
though less than a quorum of the Board of Directors, unless otherwise provided
by law. A Director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number
of Directors may be filled by election by the Board of Directors for a term of
office continuing only until the next election of Directors by the
Shareholders.
SECTION 10. COMPENSATION. By Resolution of the Board of Directors,
each Director may be paid his expenses, if any, of attendance at each Meeting
of the Board of Directors, and may be paid a stated salary as Director or a
fixed sum for attendance at each Meeting of the Board of Directors or both. No
such payment shall preclude any Director from serving the Corporation in any
other capacity and receiving compensation.
SECTION 11. PRESUMPTION OF ASSENT. A Director of the Corporation who is
present at a Meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action unless his
dissent shall be entered in 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 therefore, or shall forward such dissent by
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registered mail to the Secretary of the Corporation immediately after
adjournment of the Meeting. Such right to dissent shall not apply to a Director
who voted in favor of such action.
SECTION 12. REMOVAL OF DIRECTORS. Any and all of the Directors may be
removed without cause by vote of the Shareholders.
ARTICLE IV: OFFICERS
SECTION 1. NUMBER. The Officers of the Corporation shall be a
President, Secretary, Treasurer and Vice-Presidents, if so determined by the
Board of Directors, and such other officers and assistant officers, as may be
deemed necessary, and elected or appointed by the Board of Directors. The Board
of Directors shall determine whether any two (2) offices shall be held by the
same person.
SECTION 2. ELECTION AND TERM OF THE OFFICE. The Officers of the
Corporation to elected by the Board of Directors shall be elected annually by
the Board of Directors at the First Meeting of the Board of Directors held
after each Annual Meeting of the Shareholders. Each Officer shall hold office
until his successor shall have been duly elected and shall have qualified or
until his death or until he shall resign or shall have been removed in the
manner hereinafter provided.
SECTION 3. REMOVAL. Any Officer or agent may be removed by the Board
of Directors whenever in its judgment, the best interest of the Corporation
will be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of
an Officer or agent shall not of itself create contract rights.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal or disqualification or otherwise, may be filled by the
Board of Directors for the unexpired portion of the term.
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SECTION 5. CHAIRMAN OF THE BOARD OF DIRECTORS AND PRESIDENT. The
President of the Corporation shall be Chairman of the Board of Directors. He
shall preside at all Meetings of the Shareholders and Board of Directors.
SECTION 6. PRESIDENT. The President of the Corporation shall be the
General Manager of the Corporation. He shall carry out the policy formulated by
the Board of Directors. The President of the Corporation shall assign the
duties and responsibilities of all other Officers of the Corporation. He may
sign, with the Secretary or any other proper Officer of the Corporation
thereunto authorized by the Board of Directors, Certificates for shares of
Corporation, any deeds, mortgages, bonds, contracts or instruments which the
Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these By-Laws to some officer or agent of the Corporation, and
shall perform all duties intent to the Office of the President and such other
duties as may be prescribed by the Board of Directors from time to time.
SECTION 7. VICE-PRESIDENTS. The duly elected Vice-Presidents of the
Corporation shall perform such duties and responsibilities as may be assigned
to them by the President. The Executive Vice-President of the Corporation, if
one is elected, shall be charged with the duties and responsibilities of the
President when the President is outside the states of Tennessee and Mississippi
or is incapacitated.
SECTION 8. SECRETARY. The Secretary shall:
(a) Keep the Minutes of the proceedings of the Shareholders and of the
Board of Directors in one or more books provided for that purpose;
(b) See that all Notices are duly given in accordance with the
provisions of these By-Laws or as required by law;
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(c) Be custodian of the Corporate Records;
(d) Keep a Register of the post office address of each Shareholder
which shall be furnished to the Secretary by such Shareholder;
(e) Sign with the President, Certificates for Shares of the
Corporation, the issuance of which shall have been authorized by Resolution of
the Board of Directors;
(f) Have general charge of the Stock Transfer Books of the
Corporation; and
(g) In general, perform all duties incident to the Office of Secretary
and such other duties as from time to time may be assigned to him by the
President or the Board of Directors.
SECTION 9. TREASURER. The Treasurer shall:
(a) Have charge and custody of and be responsible for all funds and
securities of the Corporation;
(b) Receive and give receipts for money due and payable to the
Corporation from any source whatsoever, and deposit all such monies in the name
of the Corporation in such banks, trust companies or other depositories as
shall be selected in accordance with the provisions of Article V of these
By-Laws; and
(c) In general, perform all of the duties incident to the Office of
Treasurer and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with surety for sureties as the Board of Directors shall
determine.
SECTION 10. SALARIES. The salaries of the Officers shall be fixed from
time to time by the Board of Directors and no Officer shall be prevented from
receiving such salary by reason of the fact he is also a Director of the
Corporation.
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ARTICLE V: CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The Board of Directors may authorize any Officer
or Officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name or on behalf of the Corporation, and such authority
may be general or confined to specific instances.
SECTION 2. LOANS: No loan shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a Resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such Officer or Officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by Resolution of the Board of Directors.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other deposits as the Board of Directors may
select.
SECTION 5. SEAL. The Corporation may have a seal if and should the
Board of Directors so determine. Should the Board of Directors determine that
the Corporation shall have a Seal, on the Seal shall be the Corporation's name,
the State of Mississippi and the year of incorporation. Such Seal shall be used
on all official papers and instruments executed by and on behalf of the
corporation.
ARTICLE VI: CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares
of the Corporation shall be in such form as shall be determined by the Board of
Directors. Such
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Certificates shall be signed by the President and by the Secretary, or by such
other Officers authorized by law and by the Board of Directors. All
Certificates for Shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the Stock Transfer Books of the Corporation. All Certificates
surrendered to the Corporation for transfer shall be canceled and no new
Certificate shall be issued until the former Certificate for a like number of
shares have been surrendered and cancelled, except that in the case of a lost,
destroyed or mutilated Certificate, a new one may be issued upon such terms and
indemnity to the Corporation as the Board of Directors may prescribe.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of the Corporation
shall be made only on the Stock Transfer Books of the Corporation by the holder
of record thereof or by his legal representative who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
"power-of-attorney" duly executed and filed with the Secretary of the
Corporation, and on surrender for cancellation of the Certificate for such
shares. The person in whose name shares stand on the Books of the Corporation
shall be deemed by the Corporation to be the owner thereof for all purposes.
The Board of Directors, with ratification by the Shareholders, may place a
Restriction on the Sale and disposition of stock, but not inconsistent with
Article II, Section 13, of these By-Laws.
ARTICLE VII: AUTHORITY TO BORROW
The Board of Directors of the Corporation shall have such authority
and may exercise such from time to time borrow monies and/or funds binding the
Corporation. The Directors shall have the authority to authorize the President
to borrow money and/or funds, when needed by the Corporation, from banks and/or
individuals; to mortgage and/or pledge and/or place liens on
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<PAGE> 14
corporate property to secure such loans. The Directors shall be empowered to
issue such indentures and/or bonds, in accordance with the law secured by the
Corporation's property and assets. The President of the Corporation is
authorized to execute such instruments in order to carry out Resolutions,
relative to borrowing, as the Board of Directors may authorize.
ARTICLE VIII: FISCAL YEAR
The Fiscal Year of the Corporation shall be fixed, and shall be
subject to change, by the Board of Directors.
ARTICLE IX: DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law or its Article of Incorporation.
ARTICLE X: WAIVER OF NOTICE
Unless otherwise provided by law, whenever any Notice is required to
be given to any Shareholder or Director to the Corporation under the provisions
of these By-Laws, or under the provisions of the Article of Incorporation, or
under the provisions of the State of Mississippi applicable Code Sections, a
Waiver thereof in writing signed by the person or persons entitled to such
Notice, whether before or after the time stated therein shall be deemed
equivalent to the giving of such Notice.
ARTICLE XI: OPTION STOCK, BONUS AND EMPLOYMENT CONTRACTS
The Board of Directors may, from time to time, authorize option stock
to Officers and Directors of the Corporation at a price set by the Board of
Directors either as a bonus or for cash or an incentive to executives of the
Corporation. In addition, the Board of Directors may enter into employment
contracts to applicants for employment as executives of the Corporation.
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The authority of the Board of Directors to create and authorize the
issuance of right or options entitling designated persons to purchase from the
Corporation, any shares of its capital stock of any class or classes shall be
evidenced by such instruments as the Board of Directors shall approve. The
terms upon which such rights or options may be issued and any such shares may
be fixed by the Board of Directors. In the absence of actual fraud in the
transaction, the judgment of the Directors as to the consideration for the
issue of such rights or options shall be conclusive.
Nothing herein shall restrict and/or abridge the rights of the
Shareholders of the Corporation to create option stock for issues to the
Shareholders of record nor for the Shareholders to declare option stock for
Officers of the Corporation.
The Shareholders, at any Regular and/or Special Meeting, may establish
preemptive rights for Shareholders.
ARTICLE XII: PROFIT-SHARING PLAN
The Board of Directors, at its First Meeting, or any Annual or Special
Meeting thereafter, may adopt a Profit Sharing Plan for Officers and employees
of the Corporation, and the Board of Directors of the Corporation will have
full authority to administer the Plan which may be discontinued at any time by
the Board of Directors.
ARTICLE XIII: BONUS
The Board of Directors may at the end of each Fiscal Year, authorize
payments of a bonus to Officers and employees, who are employed by the
Corporation on the last day of the Fiscal Year. Such bonus, if authorized,
shall be based on performance and that person's contribution to the profits of
the Corporation. No Officer or employee shall be entitled to receive a bonus by
virtue of length of service only. Sales personnel may receive a bonus, if
authorized.
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ARTICLE XIV: INDEMNITY
(a) Any person made a party to any action by reason of the fact that
he, his testator, or intestate representative, is or was a Director, Officer or
employee of the Corporation, or of any corporation in which he served as such
at the request of the Corporation, shall be indemnified by the Corporation
against the reasonable expenses, including attorney's fees, actually and
necessarily incurred by him in connection with the defense of such action, suit
or proceedings, or in connection with any appeal therein, except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding, or
in connection with any appeal therein that such Officer, Director or employee
is liable for negligence or misconduct in the performance of his duties;
(b) The foregoing rights of indemnification shall not be deemed
exclusive of any rights to which any Officer or Director or employee may be
entitled, apart from the provisions of this Section; and
(c) The amount of indemnity to which any Officer or any Director may
be entitled shall be fixed by the Board of Directors, except that in any case
where there is no disinterested majority of the Board of Directors available,
the amount shall be fixed by arbitration pursuant to the then existing rules of
the American Arbitration Association.
ARTICLE XV: SUBCHAPTER "S"
The Shareholders of the Corporation may elect for the Corporation to
be taxed as a Subchapter "S" Corporation.
ARTICLE XVI: AMENDMENTS
These By-Laws may be altered, amended or repealed and new By-Laws may
be adopted by the Shareholders at any Regular or Special Meeting.
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CERTIFICATE
I, Peggy Lunati, Secretary of LMT Motor Sports Corporation, certify
that the foregoing By-Laws are the true and correct By-Laws of the Corporation,
adopted and approved by a Resolution of the Shareholders at a Meeting held on
the 7th day of November, 1997.
/s/ Peggy Lunati
------------------------------------
PEGGY LUNATI, Secretary
(SEAL)
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Annex A
RESOLUTIONS OF THE SOLE SHAREHOLDER
OF LMT MOTOR SPORTS CORPORATION (THE "COMPANY")
RESOLVED, that Article III, Section 2 of the Bylaws of the Company is
hereby amended in its entirety such that, as amended, Article III, Section 2 of
the Bylaws shall read as follows:
"The Board of Directors shall consist of one or more members. The
number of Directors shall be fixed, and may be changed, from time to time by
action of the Shareholders or by action of the Board. Directors need not be
Shareholders. Each Director shall hold office until a successor is elected and
qualified or until such Director's death, resignation or removal."
RESOLVED, that pursuant to the Bylaws of the Company, the number of
directors of the Company is hereby set at one;
RESOLVED, that Robert Wineland be, and hereby is, elected as the sole
director of the Company, to serve in such capacity until his successor is
elected and has qualified or until his earlier resignation or removal.
<PAGE> 1
EXHIBIT 3.6(a)
ARTICLES OF INCORPORATION
FOR
LUNATI & TAYLOR PISTONS, INCORPORATED
FOR PROFIT
TO THE SECRETARY OF STATE OF THE STATE OF MISSISSIPPI:
The undersigned person pursuant to Section 79-4-2.02 of the
Mississippi Code of 1972, hereby executes the following document and sets forth
the "Articles of Incorporation" for a profit corporation:
1. The name of the corporation is:
Lunati & Taylor Pistons, Incorporated
2. Domiciled address is:
8785 Old Craft Road
Olive Branch, Mississippi 38654
3. (a) The number of shares the corporation is authorized
to issue is as follows:
Class Number of Shares Authorized
-------------------- ---------------------------
Capital Common Stock 50,000
-------------------- --------------------------
3. (b) If more than one (1) class is of shares is
authorized, the preferences, limitations, and relative rights of each class are
as follows:
Only Capital Common Stock is authorized.
----------------------------------------
3. (c) The mailing address of the corporation is:
4770 Lamar Avenue
Memphis, Tennessee 38118
4. The street address of its initial registered office is:
8785 Old Craft Road
Olive Branch, Mississippi 38654
<PAGE> 2
and the name of its registered agent at such address is:
Bill C. Taylor
5. The name and complete address of each incorporator is as
follows:
Ed M. Hurley, Attorney
44 North Second Street
Suite 505
Memphis, Tennessee 38103
6. Other provisions:
(a) The stockholders of the corporation will not
delegate authority to adopt and amend the by-laws of the corporation.
(b) Terms of directors and officers of the corporation
shall be established by the by-laws.
(c) The number of directors and officers of the
corporation shall be determined by the stockholders and such will be included
and authorized in the by-laws of the corporation.
Date: April 8, 1993
- ---------------------
LUNATI & TAYLOR PISTONS, INCORPORATED
BY: /s/ Ed M. Hurley
--------------------------------------
ED M. HURLEY, ATTORNEY
-2-
<PAGE> 1
EXHIBIT 3.6(b)
BYLAWS
OF
LUNATI & TAYLOR PISTONS INCORPORATED
I.
SHAREHOLDERS' MEETINGS
1. ANNUAL MEETING. The annual meeting of the shareholders shall be
held at such time and place, either within or without this state, as may be
designated from time to time by the directors, said meeting shall be held on
the 31st day of December of each year, or as close thereto as practicable,
unless another date is designated by the directors.
2. SPECIAL MEETINGS. Special meetings of the shareholders may be
called by the president, a majority of the board of directors, or by the
holders of not less than one-tenth (1/10th) of all the shares entitled to vote
at such meeting. The place of said meetings shall be designated by the
directors.
3. NOTICE OF SHAREHOLDER MEETINGS. Written or printed notice stating
the place, day and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called and the person or
persons calling the meeting, shall be delivered either personally or by mail by
or at the direction of the president, secretary, officer or person calling the
meeting to each shareholder entitled to vote at the meeting. If mailed, such
notice shall be delivered not less than ten (10) nor more than sixty (60) days
before the date of the meeting, and shall be deemed to be delivered when
deposited in the United States mail addressed to the shareholders at his
address as it appears on the stock transfer books of the corporation, with
postage thereon prepaid. If delivered personally, such notice shall be
delivered not less than five (5) nor more than sixty (60) days before the date
of the meeting, and shall be deemed delivered when actually received by the
shareholder. The person giving such notice shall certify that the notice
required by this paragraph has been given.
4. RECORD DATE. For the purpose of determining the shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, the directors may fix, in advance, a date as the record
date for such determination of shareholders. Such rate shall not be less than
ten (10) nor more than sixty (60) days before the date of such meeting.
5. QUORUM REQUIREMENTS. A majority of the shares entitled to vote
shall constitute a quorum for the transaction of business. A meeting may be
adjourned despite the absence of quorum, and notice of an adjourned meeting
need not be given if the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken. When a quorum is
present at any meeting, a majority in interest of the stock there represented
shall decide any question brought before such meeting, unless the question is
one upon which, by express provision of this Corporation's Charter, these
Bylaws, or the laws of the State of Mississippi, a
<PAGE> 2
a larger or different vote is required, in which case, such express provision
shall govern the decision of such question.
6. VOTING AND PROXIES. Every shareholder entitled to vote at a meeting
may do so either in person or by written proxy, which proxy shall be filed with
the secretary of the meeting before being voted. Such proxy shall entitle the
holders thereof to vote at any adjournment of such meeting, but shall not be
valid after the expiration of eleven (11) months from the date of its execution
unless otherwise provided in the proxy.
II.
BOARD OF DIRECTORS
1. QUALIFICATION AND ELECTION. Directors need not be shareholders or
residents of this State, but must be of legal age. They shall be elected by a
plurality of the votes cast at the annual meetings of the shareholders. Each
director shall hold office until the expiration of the term for which he is
elected, and thereafter, until his successor has been elected and qualified.
2. NUMBER. The number of the directors shall be one (1), or such other
number as may from time to time be fixed by the shareholders, but shall never
be less than the number required by law.
3. MEETINGS. The annual meeting of the Board of Directors shall be
held immediately after the adjournment of the annual meeting of the
shareholders, at which time the officers shall be elected. The board may also
designate more frequent intervals for regular meetings. Special meetings may be
called at any time by the chairman of the board, president, or the director.
3. NOTICE OF DIRECTORS' MEETINGS. The annual and all regular board
meetings may be held without notice. Special meetings shall be held upon notice
sent by any usual means of communication not less than three (3) days before
the meeting.
4. QUORUM AND VOTE. The presence of a majority of the directors shall
constitute a quorum for the transaction of business. A meeting may be adjourned
despite the absence of a quorum, and notice of an adjourned meeting need not be
given if the time and place to which the meeting is adjourned are fixed at the
meeting at which the adjournment is taken, and, if the period of adjournment
does not exceed thirty (30) days in any one adjournment. 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 vote of a greater number is required by the
charter, these Bylaws or by the laws of Mississippi.
5. EXECUTIVE AND OTHER COMMITTEES. The Board of Directors, by a
resolution adopted by a majority of its members, may designate an executive
committee, consisting of one (1) or more directors, and other committees
consisting of two (2) or more persons, who may or may not be directors, and may
delegate to such committee or committees any and all such authority as it deems
desirable, including the right to delegate to an executive committee the
2
<PAGE> 3
power to exercise all the authority of the Board of Directors in the management
of the affairs and property of the corporation.
III.
OFFICERS
1. NUMBER. The corporation shall have a president and a secretary, and
such other officers as the Board of Directors shall from time to time deem
necessary. Any two or more offices may be held by the same person, except the
offices of president and secretary.
2. ELECTION AND TERM. The officers shall be elected by the board at
its annual meeting. Each officer shall serve until the expiration of the term
for which he is elected, and thereafter, until his successor has been elected
and qualified.
3. DUTIES. All officers shall have such authority and perform such
duties in the management of the corporation as are normally incident to their
offices as the Board of Directors may from time to time provide.
IV.
RESIGNATIONS, REMOVALS AND VACANCIES
1. RESIGNATIONS. Any officer or director may resign at any time by
giving written notice to 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 is specified, then upon its acceptance by the Board of
Directors.
2. REMOVAL OF OFFICERS. Any officer or agent may be removed by the
board whenever in its judgment the best interests of the corporation will be
served thereby.
3. REMOVAL OF DIRECTORS. Any or all of the directors may be removed,
either with or without cause, by a proper vote of the shareholders, and may be
removed with cause by a majority vote of the entire board.
4. DUTIES. All officers shall have such authority and perform such
duties in the management of the corporation as are normally incident to their
offices as the Board of Directors may from time to time provide.
5. VACANCIES--OFFICERS. Vacancies occurring in an office for any
reason, including removal of an officer or director, may be filled by the vote
of a majority of the directors then in office, even if less than a quorum
exists.
6. VACANCIES--DIRECTORS. Newly created directorships resulting from an
increase in the number of directors, and vacancies occurring in any office or
directorship for any reason, including removal of an officer or director, may
be filled by the vote of a majority of the directors then in office, even if
less than a quorum exists.
3
<PAGE> 4
V.
CAPITAL STOCK
1. STOCK CERTIFICATES. Every shareholder shall be entitled to a
certificate or certificates of capital stock of the corporation in such form as
may be prescribed by the Board of Directors. Unless otherwise decided by the
Board, such certificates shall be signed by the president and the secretary of
the corporation.
2. TRANSFER OF SHARES. Shares of stock may be transferred on the books
of the corporation by delivery and surrender of the properly assigned
certificate, but subject to any restrictions on transfer imposed by either the
applicable securities law or any shareholder agreement. However, in the event
this corporation has made an election to the Internal Revenue Service to be
treated as a small business (S corporation), then shares of stock may not be
transferred on the books of the corporation without the consent of the counsel
for the corporation stating that such transfer will not cause a termination of
the Subchapter S status of the corporation. Any transfer, including those by
operation of law, inter vivos or testamentary, without the above consent shall
be considered by the corporation to be an invalid transfer and shall not be
recognized by the corporation and therefore shall be considered an invalid
transfer. Transfer of stock by consent of the corporation's counsel shall be
made by delivery and surrender of the properly assigned certificate to the
office of the corporation, but subject to any restrictions on transfer imposed
by either the applicable securities law or any shareholder agreement.
3. LOSS OF CERTIFICATES. In the case of the loss, mutilation, or
destruction of a certificate of stock, a duplicate certificate may be issued
upon such terms as the Board of Directors shall prescribe.
4. DIVIDENDS. The corporation shall have a dividend paying policy that
will assure the shareholders of receiving at least annually minimum dividends
in an amount sufficient to pay their individual federal and state taxes on the
corporate income, if any, said dividend being based on the maximum individual
federal tax bracket.
VI.
ACTION BY CONSENT
When the shareholders or directors are required or permitted to take
any action by vote, such action may be taken without a meeting on written
consent, setting forth the action to be taken, signed by all the persons or
entities entitled to vote thereon.
VII.
INDEMNIFICATION
The corporation shall indemnify its directors and officers, and every
other person whom the corporation may indemnify under the indemnification
provisions of the business corporation act of the corporation's state of
incorporation, as now in effect of hereafter amended, to the full extent
permissible under and consistent with such provisions. The right of
indemnification provided in this section shall not
4
<PAGE> 5
be deemed exclusive of any other right to which said directors, officers, or
other persons may be entitled apart from this section.
VIII.
FISCAL YEAR
The fiscal year of the corporation shall begin on January 1, and end
on December 31 of each year, unless otherwise provided by the directors.
IX.
SEAL
This corporation shall have a seal.
X.
AMENDMENT OF BYLAWS
These Bylaws may be amended, added to, or repealed either by: (1) a
majority vote of the shares represented at any duly constituted shareholders'
meeting, or (2) a majority vote of the entire Board of Directors. Any change in
the Bylaws made by the Board of Directors, however, may be amended or repealed
by the shareholders.
CERTIFICATE
I certify that these Bylaws were adopted at the organizational meeting
of the corporation held on April 8, 1993.
/s/
-----------------------------------
5
<PAGE> 1
EXHIBIT 3.7(a)
RESTATED ARTICLES OF INCORPORATION
OF
HOOKER INDUSTRIES, INC.
I.
The name of this corporation is Hooker Industries, Inc.
II.
The purposes for which this corporation is formed, the specific
business in which the corporation is primarily to engage being set forth in
Paragraph (1) below, are:
(1) The specific business in which the corporation is
primarily to engage is to design, develop, manufacture and market
exhaust systems and other accessories for automobiles and other motor
driven vehicles and to design, develop, manufacture and market
recreational water craft.
(2) To design, develop, manufacture, buy, sell, assemble,
distribute, and to otherwise acquire, or to own, hold, use, sell,
assign, transfer, exchange, lease, license or otherwise dispose of,
and to invest, trade, deal in and with goods, wares, merchandise,
building materials, supplies and all other property of every class and
description.
(3) To purchase, acquire, own, hold, use, lease, either as
lessor or lessee, rent, sublet, grant, sell, exchange, subdivide,
mortgage, deed in trust, manage, improve, cultivate, develop,
maintain, construct, operate, and generally deal in, any and all real
estate, improved or unimproved, stores, office buildings, dwelling
houses, boarding houses, apartment houses, hotels, business blocks,
garages, warehouses, manufacturing plants, and other buildings of any
kind or description, and any and all other property of every kind or
description, real, personal and mixed, and any interest or right
therein, including water and water rights, wheresoever situated, in
California, other states of the United States, the District of
Columbia, territories of the United States and foreign countries.
(4) To purchase, acquire, take, hold, own, use and enjoy,
and to sell, lease, transfer, pledge, mortgage, convey, grant, assign
or otherwise dispose of, and generally to invest, trade, deal in and
with oil royalties, mineral rights of all kinds, mineral bearing lands
and hydrocarbon products of all kinds, oil, gas and mineral leases,
and all rights and interests therein, and in general products of the
earth and deposits, both subsoil and surface, of every nature and
description.
<PAGE> 2
(5) To enter into, make, perform, and carry out contracts
of every kind for any lawful purpose without limit as to amount, with
any person, firm, association or corporation, municipality, county,
parish, state, territory, government (foreign or domestic) or other
municipal or governmental subdivision..
(6) To become a partner (either general or limited or
both) and to enter into agreements of partnership with one or more
other persons or corporations, for the purpose of carrying on any
business whatsoever which this corporation may deem proper or
convenient in connection with any of the purposes herein set forth or
otherwise, or which may be calculated, directly or indirectly, to
promote the interest of this corporation or to enhance the value of
its property or business.
(7) To acquire, by purchase or otherwise, the good will,
business, property rights, franchises and assets of every kind, with
or without undertaking, either wholly or in part, the liabilities of
any person, firm, association or corporation; and to acquire any
property or business as a going concern or otherwise, (a) by purchase
of the assets thereof wholly or in part, (b) by acquisition of the
shares or any part thereof, or (c) in any other manner; and to pay for
the same in cash or in the shares or bonds or other evidences of
indebtedness of this corporation, or otherwise; to hold, maintain and
operate, or in any manner dispose of the whole or any part of the good
will, business, rights and property so acquired, and to conduct, in
any lawful manner, the whole or any part of any business so acquired;
and to exercise all the powers necessary or convenient in and about
the management of such business.
(8) To take, purchase and otherwise acquire, own, hold,
use, sell, assign, transfer, exchange, lease, mortgage, convey in
trust, pledge, hypothecate, grant licenses in respect of any 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, and government,
state, territorial, county and municipal grants and concessions of
every character which this corporation may deem advantageous in the
prosecution of its business or in the maintenance, operation,
development or extension of its properties.
(9) From time to time to apply for, purchase, acquire by
assignment, transfer or otherwise, exercise, carry out and enjoy any
benefit, right, privilege, prerogative or power conferred by, acquired
under or granted by any statute, ordinance, order, license, power,
authority, franchise, commission, right or privilege which any
government or authority or governmental agency or corporation or other
public body may be empowered to enact, make or grant; to pay for, aid
in, and contribute toward carrying the same into effect; and to
appropriate any of this corporation's shares, bonds and/or assets to
defray the costs, charges and expenses thereof.
(10) To subscribe or cause to be subscribed for, and to
take, purchase and otherwise acquire, own, hold, use, sell, assign,
transfer, exchange, distribute and otherwise dispose of, the whole or
any part of the shares of the capital stock, bonds, coupons,
mortgages, deeds of trust, debentures, securities, obligations,
evidences of
<PAGE> 3
indebtedness, notes, good will, rights, assets and property of any and
every kind, or any part thereof, of any other corporation or
corporations, associations or associations, firm or firms, or person
or persons, together with the shares, rights, units or interests in or
in respect of any trust estate, now or hereafter existing, and whether
created by the laws of the State of California or of any other state,
territory or country; and to operate, manage and control such
properties, or any of them, either in the name of such other
corporation or corporations or in the name of this corporation, and,
while the owner of any of said shares of capital stock, to exercise
all of the rights, powers and privileges of ownership of every kind
and description, including the right to vote thereon, with power to
designate some person or persons for that purpose from time to time,
and to the same extent as natural persons might or could do.
(11) To promote or to aid in any manner, financially or
otherwise, any person, firm, corporation or association of which any
shares of stock, bonds, notes, debentures or other securities or
evidences of indebtedness are held directly or indirectly by this
corporation; and for this purpose to guarantee the contracts,
dividends, shares, bonds, debentures, notes and other obligations of
such other persons, firms, corporations or associations; and to do any
other acts or things designed to protect, preserve, improve or enhance
the value of such shares, bonds, notices, debentures or other
securities or evidences of indebtedness.
(12) To borrow and lend money, but nothing herein contained
shall be construed as authorizing the business of banking, or as
including the business purposes of a commercial bank, savings bank or
trust company.
(13) To issue bonds, notes, debentures or other obligations
of this corporation from time to time for any of the objects or
purposes of this corporation, and to secure the same by mortgage, deed
of trust, pledge or otherwise, or to issue the same unsecured; to
purchase or otherwise acquire its own bonds, debentures or other
evidences of its indebtedness or obligations; to purchase, hold, sell,
and transfer the shares of its own capital stock to the extent and in
the manner provided by the laws of the State of California as the same
are now in force or may be hereafter amended.
(14) To conduct and carry on, directly or indirectly,
research, development and promotional or experimental activities, and
to promote or aid financially or otherwise, any person, firm or
corporation engaged in such activities, or any of them.
(15) To carry on any business whatsoever, either as
principal, agent or partner, which this corporation may deem proper or
convenient in connection with any of the foregoing purposes or
otherwise, or which may be calculated directly or indirectly to
promote the interests of this corporation or to enhance the value of
its property or business; and to conduct its business in this state,
in other states, in the District of Columbia, in the territories of
the United States, and in foreign countries.
<PAGE> 4
(16) To have and to exercise all the powers conferred by
the laws of California upon corporations formed under the laws
pursuant to and under which this corporation is formed, as such laws
are now in effect or may at any time hereafter be amended.
The foregoing statement of purposes shall be construed as a statement
of both purposes and powers, and the purposes and powers stated in each clause
shall, except where otherwise expressed, be in nowise limited or restricted by
any reference to or inference from the terms or provisions of any other clause,
but shall be regarded as independent purposes and powers.
III.
The county in the State of California where the principal office for
the transaction of business is located is the County of San Bernardino.
IV.
The authorized number of directors shall be not less than eight (8)
nor more than eleven (11) until changed by amendment of the Articles of
Incorporation or by a By-Law duly adopted by the shareholders. The exact number
of directors shall be specified by a by-law or amendment thereof duly adopted
by the shareholders or by the Board of Directors.
The names and addresses of the persons who were appointed to act as
the first directors of this corporation were stated in this original Articles
of Incorporation of this corporation as follows:
<TABLE>
<S> <C>
William H. Casler 839 West Berkeley Court
Ontario, California
Gary Hooker 846 West Berkeley Court
Ontario, California
Newell H. Casler 3530 Beechwood
Lynwood, California
</TABLE>
V.
This corporation is authorized to issue two classes of shares of stock
to be designated, respectively, "Common Stock" and "Preferred Stock"; the total
number of such shares shall be two million five hundred thousand (2,500,000);
the total number of shares of Common Stock shall be two million (2,000,000) and
the par value of each share shall be ten cents ($.10); and the total number of
shares of Preferred Stock shall be five hundred thousand (500,000) and the par
value of each share shall be one dollar ($1). The aggregate par value of all
shares is $700,000.
Upon the filing in the Office of the Secretary of State of California
of the Certification of Amendment of the Articles of Incorporation of this
corporation whereby this Article V is
<PAGE> 5
amended to read as herein set forth, the 198,990 shares of Common Stock, no par
value, of this corporation, being all of the shares of stock of this
corporation then outstanding, shall be thereupon split up, subdivided and
changed on a pro rata basis into 596,970 shares of Common Stock of the par
value of $.10 per share and each person then holding of record issued and
outstanding shares of Common Stock, no par value, of this corporation shall be
entitled to and shall receive a stock certificate or certificates to evidence
and represent the number of additional shares of Common Stock of the par value
of $.10 per share to which he becomes entitled by reason of such stock split,
subdivision and change on the basis of two (2) additional shares for each such
share so held of record.
VI.
Shares of Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is hereby authorized to fix or alter the
dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), redemption price or
prices, and liquidation preferences of any wholly unissued series of shares of
Preferred Stock, and the number of shares constituting any such series and the
designation thereof, or all or any of them; and to increase or decrease the
number of shares constituting any series subsequent to the issue of shares of
that series, but not below the number of shares of such series.
IN WITNESS WHEREOF, the undersigned, GARY R. HOOKER and WILLIAM H.
CASLER, the duly elected and acting President and Secretary, respectively, of
Hooker Industries, inc., a California corporation, have executed this
certificate entitled "RESTATED ARTICLES OF INCORPORATION OF HOOKER INDUSTRIES,
INC." the 30th day of March, 1973.
/S/ Gary R. Hooker
--------------------------------------------
GARY R. HOOKER
President
Hooker Industries, Inc.
/S/ William H. Casler
--------------------------------------------
WILLIAM H. CASLER
Secretary
Hooker Industries, Inc.
<PAGE> 6
SECRETARY OF CALIFORNIA )
) ss.:
COUNTY OF SAN BERNARDINO )
GARY R. HOOKER and WILLIAM H. CASLER being by me duly sworn, depose
and say: That they are the President and Secretary, respectively, of Hooker
Industries, Inc., a California corporation, and that they have read the
foregoing certificate entitled "RESTATED ARTICLES OF INCORPORATION OF HOOKER
INDUSTRIES, INC."; that they have been authorized to execute the certificate by
resolution of the Board of Directors of the corporation adopted on the 5th day
of February, 1973, at Ontario, California; and, that the certificate correctly
sets forth the text of the Articles of Incorporation as amended to the date of
the certificate.
/S/ Gary R. Hooker
--------------------------------------------
GARY R. HOOKER
/S/ William H. Casler
--------------------------------------------
WILLIAM H. CASLER
Subscribed and sworn to before
me this ____ day of March, 1973
/S/
- -----------------------------------
Notary Public in and for the
State of California
<PAGE> 7
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
HOOKER INDUSTRIES, INC.
Gary R. Hooker and David v. Spangler certify that:
1. They are the Chairman and President and Secretary,
respectively, of Hooker Industries, Inc., a California corporation (the
"Corporation").
2. Article IV of the Articles of Incorporation of the
Corporation is amended (the "Amendment") to read in its entirety as follows:
"IV.
The authorized number of directors shall be three
until changed by amendment of the Articles of Incorporation
or by a By-Law duly adopted by the shareholders.
The names and addresses of the persons who were
appointed to act as the first directors of this corporation
were stated in the original Articles of Incorporation of this
corporation as follows:
<TABLE>
<S> <C>
William H. Casler 839 West Berkeley Court
Ontario, California
Gary Hooker 846 West Berkeley Court
Ontario, California
Newell H. Casler 3530 Beechwood
Lynwood, California
</TABLE>
3. The foregoing Amendment of the Articles of Incorporation has
been duly approved by the Board of Directors of the Corporation.
4. The Corporation has only Common Stock outstanding. The
Amendment was approved by the required vote of the shareholders pursuant to
Section 902 of the California General Corporation Law.
5. The Corporation has 330,354 shares of Common Stock issued
and outstanding.
6. The number of shares voting in favor of the amendment equaled
or exceeded the vote required. The percentage vote required was more than 50%.
<PAGE> 8
We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this certificate are true and
correct of our own knowledge.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment on July 21, 199.
/S/ Gary R. Hooker
--------------------------------------------
Gary R. Hooker
Chairman
/S/ David V. Spangler
--------------------------------------------
David V. Spangler
President and Secretary
<PAGE> 9
CERTIFICATE OF OWNERSHIP
OF
HOLLEY ACQUISITION CORP.
Jeffrey G. King and Robert L. Wineland do hereby certify that:
1. They are the President and Secretary of Holley Acquisition
Corp., a California corporation.
2. This corporation owns at least 90 percent of the outstanding
shares of each class of stock of Hooker Industries, Inc., a
corporation organized under the laws of the State of
California ("Subsidiary").
3. The Board of Directors of this corporation has approved the
Plan of Merger, attached hereto as Exhibit A (the "Plan of
Merger").
4. The Board of Directors of Subsidiary has approved the Plan of
Merger, including the consideration to be received by each
share of Subsidiary not owned by this corporation.
5. The principal terms of the Plan of Merger were approved by
the required majority vote of the outstanding shares of this
corporation.
We declare under penalty of perjury under the laws of the State of
California, that the foregoing is true and correct of our own knowledge.
Dated: August 20, 1999
/S/ Jeffrey G. King
--------------------------------------------
Jeffrey G. King, President
/S/ Robert L. Wineland
--------------------------------------------
Robert L. Wineland, Secretary
<PAGE> 10
EXHIBIT A
TO
CERTIFICATE OF OWNERSHIP
PLAN OF MERGER
The following corporations are parties to this Plan of
Merger: Holley Acquisition Corp., a California corporation ("HAC"), and Hooker
Industries, Inc., a California corporation ("Hooker").
1. HAC has acquired and now owns 90% or more of the
outstanding shares of capital stock of Hooker.
2. HAC shall be merged into Hooker.
3. Each outstanding share of Hooker not owned by HAC
immediately prior to the merger shall be converted into cash in the amount of
$64.07. Each outstanding share of Hooker owned by HAC immediately prior to the
merger shall be canceled.
4. Upon the merger, each outstanding common share of HAC
shall be converted into one common share of Hooker.
5. Each holder of shares of Hooker shall thereupon
surrender the share certificate of certificates to Hooker and shall be entitled
to receive in exchange therefor cash into which the shares theretofore
represented by the certificate or certificates so surrendered shall have been
converted in accordance with paragraph 3.
6. Each holder of shares of HAC shall thereupon surrender
the share certificate or certificates to Hooker and shall be entitled to
receive a share certificate into which the shares theretofore represented by
the certificate or certificates so surrendered shall have been converted in
accordance with paragraph 4.
7. Hooker shall assume any and all liabilities of HAC.
<PAGE> 1
EXHIBIT 3.7(b)
BY-LAWS
OF
HOOKER INDUSTRIES, INC.
(AMENDED THROUGH APRIL 14, 1973)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I. Offices................................................................................................1
PRINCIPAL OFFICE.........................................................................................1
OTHER OFFICES............................................................................................1
ARTICLE II. Meetings of Shareholders..............................................................................1
PLACE OF MEETINGS........................................................................................1
ANNUAL MEETINGS..........................................................................................1
SPECIAL MEETINGS.........................................................................................2
QUORUM...................................................................................................2
ADJOURNED MEETING AND NOTICE THEREOF.....................................................................2
VOTING...................................................................................................2
CONSENT OF ABSENTEES.....................................................................................3
ACTION WITHOUT MEETING...................................................................................3
PROXIES..................................................................................................3
INSPECTORS OF ELECTION...................................................................................3
ARTICLE III. Directors............................................................................................4
POWERS...................................................................................................4
NUMBER AND QUALIFICATION OF DIRECTORS....................................................................5
ELECTION AND TERM OF OFFICE..............................................................................5
VACANCIES................................................................................................5
PLACE OF MEETING.........................................................................................6
ORGANIZATION MEETING.....................................................................................6
OTHER REGULAR MEETINGS...................................................................................6
SPECIAL MEETINGS.........................................................................................6
QUORUM...................................................................................................7
WAIVER OF NOTICE.........................................................................................7
ADJOURNMENT..............................................................................................7
NOTICE OF ADJOURNMENT....................................................................................7
FEES AND COMPENSATION....................................................................................7
ACTION WITHOUT MEETING...................................................................................7
ARTICLE IV. Officers..............................................................................................7
OFFICERS.................................................................................................7
ELECTION.................................................................................................8
SUBORDINATE OFFICERS, ETC................................................................................8
REMOVAL AND RESIGNATION..................................................................................8
VACANCIES................................................................................................8
CHAIRMAN OF THE BOARD....................................................................................8
PRESIDENT................................................................................................8
VICE PRESIDENT...........................................................................................9
SECRETARY................................................................................................9
TREASURER................................................................................................9
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V. Miscellaneous.........................................................................................10
RECORD DATE AND CLOSING STOCK BOOKS.....................................................................10
INSPECTION OF CORPORATE RECORDS.........................................................................10
CHECKS, DRAFTS, ETC.....................................................................................10
CONTRACTS, ETC., HOW EXECUTED...........................................................................10
CERTIFICATES OF STOCK...................................................................................10
LOST CERTIFICATES.......................................................................................11
REPRESENTATION OF SHARES OF OTHER CORPORATIONS..........................................................11
INSPECTION OF BY-LAWS...................................................................................11
EMPLOYEE STOCK PURCHASE PLANS...........................................................................11
ANNUAL REPORT TO SHAREHOLDERS...........................................................................12
FILING STATEMENT OF CORPORATE OFFICERS..................................................................12
CONSTRUCTION AND DEFINITIONS............................................................................13
ARTICLE VI. Amendments...........................................................................................13
POWER OF SHAREHOLDERS...................................................................................13
POWER OF DIRECTORS......................................................................................13
</TABLE>
ii
<PAGE> 4
ARTICLE I.
Offices.
Section 1. PRINCIPAL OFFICE. The principal office for the
transaction of the business of the corporation in California is hereby fixed
and located at:
1009 West Brooks Street
City of Ontario
County of San Bernardino
State of California
The board of directors is hereby granted full power and authority to change
said principal office from one location to another in said county. Any such
change shall be noted on the by-laws by the secretary, opposite this section,
or this section may be amended to state the new location.
Section 2. OTHER OFFICES. Branch or subordinated offices may at
any time be established by the board of directors at any place or places where
the corporation is qualified to do business.
ARTICLE II.
Meetings of Shareholders.
Section 1. PLACE OF MEETINGS. Meetings of shareholders shall be
held at any place within or without the State of California designated either
by the board of directors pursuant to authority hereinafter granted to said
board, or by the written consent of all persons entitled to vote thereat, given
before or after the meeting and filed with the secretary of the corporation. In
the absence of any such designation, shareholders' meetings shall be held at
the principal office of the corporation.
Section 2. ANNUAL MEETINGS. The annual meetings of shareholders
shall be held on:
the first day of November in each year at the hour of 10 a.m.;
provided, however, that should said day fall upon a legal holiday, then any
such annual meeting of shareholders shall be held at the same time and place on
the next day thereafter ensuing which is a full business day. At such meeting
directors shall be elected, reports of the affairs of the corporation shall be
considered, and any other business may be transacted which is within the power
of the shareholder.
Written notice of each annual meeting shall be given to each
shareholder entitled to vote, either personally or by mail or other means of
written communication, charges prepaid, addressed to such shareholder at his
address appearing on the books of the corporation or given by him to
<PAGE> 5
the corporation for the purpose of notice. If a shareholder gives no address
notice shall be deemed to have been given him if sent by mail or other means of
written communication addressed to the place where the principal office of the
corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which said office is located. All such
notices shall be sent to each shareholder entitled thereto not loess than seven
days before each annual meeting. Such notices shall specify the place, the day
and the hour of such meeting and shall state such other matters, if any, as may
be expressly required by statute.
Section 3. SPECIAL MEETINGS. Special meetings of the
shareholders, for any purpose or purposes whatsoever, may be called at any time
by the president, or by any vice-president, or by the board of directors, or by
one or more shareholders holding not less than one-fifth of the voting power of
the corporation. Except in special cases where other express provision is made
by statute, notice of such special meetings shall be given in the same manner
as for annual meetings of shareholders. Notices of any special meeting shall
specify, in addition to the place, day and hour of such meeting, the general
nature of the business to be transacted.
Section 4. QUORUM. The presence in person or by proxy of the
persons entitled to vote a majority of the voting shares at any meeting shall
constitute a quorum for the transaction of business. The shareholders present
at a duly called or held meeting at which a quorum is present may continue to
do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Section 5. ADJOURNED MEETING AND NOTICE THEREOF. Any
shareholders' meeting, annual or special, whether or not a quorum is present,
may be adjourned from time to time by the vote of a majority of the shares, the
holders of which are either present in person or represented by proxy thereat,
but in the absence of a quorum no other business may be transacted at such
meeting.
When any shareholders' meeting, either annual or special, is adjourned
for 30 days or more, notice of the adjourned meeting shall be given as in the
case of an original meeting. Save as aforesaid, it shall not be necessary to
give any notice of the time and place of the adjourned meeting or of the
business to be transacted thereat, other than by announcement at the meeting at
which such adjournment is taken.
Section 6. VOTING. Unless a record date for voting purposes be
fixed as provided in Section 1 of Article V of these by-laws then, subject to
the provisions of Sections 2218 to 2223, inclusive, of the Corporations Code of
California, only persons in whose names shares entitled to vote stand on the
stock records of the corporation on the day three days prior to any meeting of
shareholders shall be entitled to vote at such meeting. Such vote may be viva
voce or by ballot; provided, however, that all elections for directors must be
by ballot upon demand made by a shareholder at any election and before the
voting begins. Every shareholder entitled to vote at an election for directors
shall have the right to cumulate his votes and give one candidate a number of
votes equal to the number of directors to be elected multiplied by the number
of votes to which his shares are entitled, or to distribute his votes on the
same principle among as many
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candidates as he shall think fit. The candidates receiving the highest number
of votes up to the number of directors to be elected shall be elected.
Section 7. CONSENT OF ABSENTEES. The transactions of any
meeting of shareholders, either annual or special, however called and noticed,
shall be as valid as though had at a meeting duly held after regular call and
notice, if a quorum be present either in person or by proxy, and if, either
before or after the meeting, each of the persons entitled to vote, not present
in person or by proxy, signs a written waiver of notice, or a consent to the
holding of such meeting, or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or
made a part of the minutes of the meeting.
Section 8. ACTION WITHOUT MEETING. Any action which, under any
provision of the California General Corporation Law, may be taken at a meeting
of the shareholders, may be taken without a meeting if authorized by a writing
signed by all of the persons who would be entitled to vote upon such action at
a meeting, and filed with the secretary of the corporation.
Section 9. PROXIES. Every person entitled to vote or execute
consents shall have the right to do so either in person or by one or more
agents authorized by a written proxy executed by such person or his duly
authorized agent and filed with the secretary of the corporation. Any proxy
duly executed is not revoked and continues in full force and effect until an
instrument revoking it or a duly executed proxy bearing a later date is filed
with the secretary of the corporation; provided that no such proxy shall be
valid after the expiration of eleven months from the date of its execution,
unless the person executing it specifies therein the length of time for which
such proxy is to continue in force, which in no case shall exceed seven years
from the date of its execution.
Section 10. INSPECTORS OF ELECTION. In advance of any meeting of
shareholders, the board of directors may appoint any persons other than
nominees for office inspectors of election to act at such meeting or any
adjournment thereof. If inspectors of election be not so appointed, the
chairman of any such meeting may, and on the request of any shareholder or his
proxy shall, make such appointment at the meeting. The number of inspectors
shall be either one or three. If appointed at a meeting on the request of one
or more shareholders or proxies, the majority of shares present shall determine
whether one or three inspectors are to be appointed. In case any person
appointed as inspector fails to appear or fails or refuses to act, the vacancy
may be filled by appointment by the board of directors in advance of the
meeting, or at the meeting by the chairman.
The duties of such inspectors shall be as prescribed by Section 2233
of the Corporations Code of California and shall include: determining the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies; receiving votes, ballots or consents; hearing
and determining all challenges and questions in any way arising in connection
with the right to vote; counting and tabulating all votes or consents;
determining the result; and such acts as may be proper to conduct the election
or vote with fairness to all shareholders.
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ARTICLE III.
Directors.
Section 1. POWERS. Subject to limitations of the articles of
incorporation, of the by-laws, and of the California General Corporation Law as
to action to be authorized or approved by the shareholders, and subject to the
duties of directors as prescribed by the by-laws, all corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by, the board of directors. Without prejudice
to such general powers, but subject to the same limitations, it is hereby
expressly declared that the directors shall have the following powers, to wit:
First: To select and remove all the other offices, agents and
employees of the corporation, prescribe such powers and duties for them as may
not be inconsistent with law, with the articles of incorporation or the
by-laws, fix their compensation and require from them security for faithful
service.
Second: To conduct, manage and control the affairs and business of
the corporation, and to make such rules and regulations therefor not
inconsistent with law, as they may deem best.
Third: To change the principal office for the transaction of the
business of the corporation from one location to another within the same county
as provided in Article I, Section 1, hereof; to fix and locate from time to
time one or more subsidiary offices of the corporation within or without the
State of California, as provided in Article I, Section 2, hereof; to designate
any place within or without the State of California for the holding of any
shareholders' meeting or meetings; and to adopt, make and use a corporate seal,
and to prescribe the forms of certificates of stock, and to alter the form of
such seal and of such certificates from time to time, as in their judgment they
may deem best, provided such seal and such certificates shall at all times
comply with the provisions of law.
Fourth: To authorize the issue of shares of stock of the corporation
from time to time, upon such terms as may be lawful, in consideration of money
paid, labor done or services actually rendered, debts or securities cancelled,
or tangible or intangible property actually received, or in the case of shares
issued as a dividend against amounts transferred from surplus to stated
capital.
Fifth: To borrow money and incur indebtedness for the purposes of
the corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and securities therefor.
Sixth: To appoint an executive committee and other committees, and
to delegate to the executive committee any of the powers and authority of the
board in the management of the business and affairs of the corporation, except
the power to declare dividends and to adopt,
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amend or repeal by-laws. The board of directors shall have the power to
prescribe the manner in which proceedings of the executive committee and other
committees shall be conducted. The executive committee shall be composed of two
or more directors. Unless the board of directors shall otherwise provide:
regular meetings of the executive committee, notice of which is hereby
dispensed with, shall be held at such times as are determined by the board of
directors, or by such committee if appointed; special meetings of the executive
committee shall be held at the principal office of the corporation, or at any
place which has been designated from time to time by resolution of the
executive committee or by written consent of all members thereof, and may be
called by the president, any vice-president who is a member of the executive
committee, or any two members thereof, upon written notice to the members of
the executive committee of the time and place of such special meeting given in
the manner provided for the giving of written notice to members of the board of
directors of the time and place of special meetings of the board of directors;
minutes shall be kept of each meeting of the executive committee; vacancies in
the membership of the executive committee may be filled by the board of
directors; a majority of the authorized number of members of the executive
committee shall constitute a quorum for the transaction of business; and
transactions of any meeting of the executive committee, however called and
noticed or wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum be present and if, either
before or after the meeting, each of the members not present signs a written
waiver of notice or a consent to holding such meeting or an approval of the
minutes thereof. All such waivers, consents or approvals shall be filed with
the corporate records or made a party of the minutes of the meeting.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The
authorized number of directors shall be not less than eight nor more than
eleven until changed by amendment of the articles of incorporation or by a
by-law duly adopted by the shareholders. The exact number of directors shall be
fixed, within the limits specified in the articles of incorporation or in the
by-laws, by a by-law or amendment thereof duly adopted by the shareholders or
by the board of directors.
The exact number of directors shall be nine until changed as provided
in the foregoing paragraph of this Section 2.
Section 3. ELECTION AND TERM OF OFFICE. The directors shall be
elected at each annual meeting of shareholders but, if any such annual meeting
is not held or the directors are not elected thereat, the directors may be
elected at any special meeting of shareholders held for that purpose. All
directors shall hold office until their respective successors are elected.
Section 4. VACANCIES. Vacancies in the board of directors may
be filled by a majority of the remaining directors, though less than a quorum,
or by a sole remaining director, and each director so elected shall hold office
until his successor is elected at an annual or a special meeting of the
shareholders.
A vacancy or vacancies in the board of directors shall be deemed to
exist in case of the death, resignation or removal of any director, or if the
authorized number of directors be
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increased, or if the shareholders fail, at any annual or special meeting of
shareholders at which any director or directors are elected, to elect the full
authorized number of directors to be voted for at that meeting.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors. If the board of directors
accept the resignation of a director rendered to take effect at a future time,
the board or the shareholders shall have power to elect a successor to take
office when the resignation is to become effective.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.
Section 5. PLACE OF MEETING. Regular meetings of the board of
directors shall be held at any place within or without the state which has been
designated from time to time by resolution of the board or by written consent
of all members of the board. In the absence of such designation regular
meetings shall be held at the principal office of the corporation. Special
meetings of the board may be held either at a place so designated or at the
principal office.
Section 6. ORGANIZATION MEETING. Immediately following each
annual meeting of shareholders the board of directors shall hold a regular
meeting for the purpose of organization, election of officers, and the
transaction of other business. Call and notice of such meetings are hereby
dispenses with.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of
the board of directors shall be hale without call on those dates and items
which may be specified by duly adopted amendments of this Section 7; provided,
however, should any of those said dates fall upon a legal holiday, then said
meeting shall be held at the same time on the next day thereafter ensuing which
is a full business day. Notice of all such regular meetings of the board of
directors is hereby dispensed with.
Section 8. SPECIAL MEETINGS. Special meetings of the board of
directors for any purpose or purposes shall be called at any time by the
president or, if he is absent or unable or refuses to act, by any
vice-president or by any two directors.
Written notice of the time and place of special meetings shall be
delivered personally to each director or sent to each director by mail or by
other form of written communication, charges prepaid, addressed to him at his
address as it is shown upon the records of the corporation or, if it is not so
shown on such records or is not readily ascertainable, at the place in which
the meeting of the directors are regularly held. In case such notice is mailed
or telegraphed, it shall be deposited in the United States mail or delivered to
the telegraph company in the place in which the principal office of the
corporation is located at least 48 hours prior to the time of the holding of
the meeting. In case such notice is delivered as above provided, it shall be so
delivered at least 24 hours prior to the time of the holding of the meeting.
Such mailing, telegraphing or delivery as above provided shall be due, legal
and personal notice to such director.
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Section 9. QUORUM. A majority of the number of directors then
fixed as the exact number of directors authorized shall be necessary to
constitute a quorum for the transaction of business, except to adjourn as
hereinafter provided. Every act or decision done or made by a majority of the
directors present at a meeting duly held at which a quorum is present shall be
regarded as the act of the board of directors, unless a greater number be
required by law or by the articles of incorporation.
Section 10. WAIVER OF NOTICE. The transactions of any meeting of
the board of directors, however called and noticed or wherever held, shall be
as valid as though had at a meeting duly held after regular call and notice, if
a quorum be present and if, either before or after the meeting, each of the
directors not present signs a written waiver of notice or a consent to holding
such meeting or an approval of the minutes thereof. All such waivers, consents
or approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 11. ADJOURNMENT. A quorum of the directors may adjourn
any directors' meeting to meet again at a stated day and hour; provided,
however, that in the absence of a quorum a majority of the directors present at
any directors' meeting, either regular or special, may adjourn from time to
time until the time fixed for the next regular meeting of the board.
Section 12. NOTICE OF ADJOURNMENT. Notice of the time and place
of holding an adjourned meeting need not be given to absent directors if the
time and place be fixed at the meeting adjourned.
Section 13. FEES AND COMPENSATION. Directors and members of
committees may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by resolution of the
board.
Section 14. ACTION WITHOUT MEETING. Any action required or
permitted to be taken by the board of directors under the General Corporation
Law of the State of California may be taken without a meeting if all members of
the board shall individually or collectively consent in writing to such action.
Such consent shall have the same effect as an unanimous vote of the board of
directors and shall be filed with the minutes of the proceedings of the board.
Any certificate or other document filed under any provision of the General
Corporation Law of the State of California which relates to actions so taken
shall state that the action was taken by unanimous written consent of the board
without a meeting and that these by-laws authorize the directors to so act.
ARTICLE IV.
Officers.
Section 1. OFFICERS. The officers of the corporation shall be a
president, a vice-president, a secretary and a treasurer. The corporation may
also have, at the discretion of the board of directors, a chairman of the
board, one or more additional vice-presidents, one or more
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assistant secretaries, one or more assistant treasurers, and such other
officers as may be appointed in accordance with the provisions of Section 3 of
this Article. One person may hold two or more offices, except that the offices
of president and secretary shall not be held by the same person.
Section 2. ELECTION. The officers of the corporation, except
such officers as may be appointed in accordance with the provisions of Section
3 or Section 5 of this Article, shall be chosen annually by the board of
directors, and each shall hold his office until he shall resign or shall be
removed or otherwise disqualified to serve, or his successor shall be elected
and qualified.
Section 3. SUBORDINATE OFFICERS, ETC. The board of directors
may appoint, and may empower the president to appoint, such other officers as
the business of the corporation may require, each of whom shall hold office for
such period, have such authority and perform such duties as are provided in the
by-laws or as the board of directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed,
either with or without cause, by the board of directors, at any regular or
special meeting thereof, or, except in case of an officer chosen by the board
of directors, by any officer upon whom such power of removal may be conferred
by the board of directors.
Any officer may resign at any time by giving written notice to the
board of directors or to the president, or to the secretary of the corporation.
Any such resignation shall take effect at the date of the receipt of such
notice or at any later time specified therein; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in
the manner prescribed in the by-laws for regular appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board, if
there shall be such an officer, shall, if present, preside at all meetings of
the board of directors and exercise and perform such other powers and duties as
may be from time to time assigned to him by the board of directors or
prescribed by the by-laws.
Section 7. PRESIDENT. Subject to such supervisory powers, if
any, as may be given by the board of directors to the chairman of the board, if
there be such an officer, the president shall be the chief executive officer of
the corporation and shall, subject to the control of the board of directors,
have general supervision, direction and control of the business and officers of
the corporation. He shall preside at all meetings of the shareholders and, in
the absence of the chairman of the board, or if there by none, at all meetings
of the board of directors. He shall be ex-officio a member of all the standing
committees, including the executive committee, if any, and shall have the
general powers and duties of management usually vested in the office of
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president of a corporation, and shall have such other powers and duties as may
be prescribed by the board of directors or the by-laws.
Section 8. VICE PRESIDENT. In the absence or disability of the
president, the vice-president in order of their rank as fixed by the board of
directors or, if not ranked, the vice-president designated by the board of
directors, shall perform all the duties of the president, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice-presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by
the board of directors or the by-laws.
Section 9. SECRETARY. The secretary shall keep or cause to be
kept, at the principal office or such other place as the board of directors may
order, a book of minutes of all meetings of directors and shareholders, with
the time and place of holding, whether regular or special, and, if special, how
authorized, the notice thereof given, the names of those present at directors'
meetings, the number of shares present or represented at shareholders'
meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal office
or at the office of the corporation's transfer agent, a share register, or a
duplicate share register, showing the names of the shareholders and their
addresses, the number and classes of shares held by each, the number and date
of certificates issued for the same, and the number and date of cancellation of
every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all the
meetings of the shareholders and of the board of directors required by the
by-laws or by law to be given, and he shall keep the seal of the corporation in
safe custody, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or by the by-laws.
Section 10. TREASURER. The treasurer shall keep and maintain, or
cause to be kept and maintained, adequate and correct accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
surplus and shares. Any surplus, including earned surplus, paid-in surplus and
surplus arising from a reduction of stated capital, shall be classified
according to source and shown in a separate account. The books of account shall
at all reasonable times be open to inspection by any director.
The treasurer shall deposit all moneys and other valuables in the name
and to the credit of the corporation with such depositories as may be
designated by the board of directors. He shall disburse the funds of the board
of directors. He shall disburse the funds of the corporation as may be ordered
by the board of directors, shall render to the president and directors,
whenever they request it, an account of all of his transactions as treasurer
and of the financial condition of the corporation, and shall have such other
powers and perform such other duties as may be prescribed by the board of
directors or the by-laws.
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ARTICLE V.
Miscellaneous.
Section 1. RECORD DATE AND CLOSING STOCK BOOKS. The board of
directors may fix a time in the future as a record date for the determination
of the shareholders entitled to notice of and to vote at any meeting of
shareholders or entitled to receive any dividend or distribution, or any
allotment of rights, or to exercise rights in respect to any change,
conversion, or exchange of shares. The record date so fixed shall be not more
than 50 days prior to the date of the meeting or event for the purposes of
which it is fixed. When a record date is so fixed, only shareholders of record
on that date are entitled to notice of and to vote at the meeting or to receive
a dividend, distribution, or allotment of rights, or to exercise the rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date.
Section 2. INSPECTION OF CORPORATE RECORDS. The share register
or duplicate share register, the books of account, and minutes of proceedings
of the shareholders and directors and of the executive and other committees of
the directors and of the executive and other committees of the directors shall
be open to inspection upon the written demand of any shareholder or holder of a
voting trust certificate, at any reasonable time, and for a purpose reasonably
related to his interests as a shareholder or as the holder of a voting trust
certificate and shall be exhibited at any time when required by the demand of
10% of the shares represented at any shareholders' meeting. Such inspection may
be made in person or by an agent or attorney, and shall include the right to
make extracts. Demand of inspection other than at a shareholders' meeting shall
be made in writing upon the president, secretary, assistant secretary or
general manager of the corporation.
Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other
orders for payment of money, notes or other evidences of indebtedness, issued
in the name of or payable to the corporation, shall be signed or endorsed by
such person or persons and in such manner as, from time to time, shall be
determined by resolution of the board of directors.
Section 4. CONTRACTS, ETC., HOW EXECUTED. The board of
directors, except as in the by-laws otherwise provided, may authorize any
officer or officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances; and, unless so authorized by
the board of directors, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or to any amount.
Section 5. CERTIFICATES OF STOCK. A certificate or certificates
for shares of the capital stock of the corporation shall be issued to each
shareholder when any such shares are fully paid up. All such certificates shall
be signed by the president or a vice-president and the secretary or an
assistant secretary, or be authenticated by facsimiles of the signatures of the
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president and the secretary or by a facsimile of the signature of the president
and the written signature of the secretary or an assistant secretary. Every
certificate authenticated by a facsimile of a signature must be countersigned
by a transfer agent or transfer clerk, or by the facsimile signature of a
transfer agent or transfer clerk, and be registered by an incorporated bank or
trust company, either domestic or foreign, as registrar of transfers, before
issuance. Even though an officer of the corporation or of a transfer agent, or
a transfer clerk, who signed, or whose facsimile signature has been written,
printed or stamped on, a certificate for shares shall cease by death,
resignation, or otherwise to be such before such certificate is delivered by
the corporation, such certificate shall be as valid as though delivered prior
to the death, resignation or other termination of the capacity of such person.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the board of directors or the by-laws may
provide; provided, however, that any such certificate so issued prior to full
payment shall state the amount remaining unpaid and the terms of payment
thereof.
Section 6. LOST CERTIFICATES. Except as hereinafter in this
section provided, no new certificate for shares shall be issued in lieu of an
old one unless the latter is surrendered and cancelled at the same time. The
board of directors may, however, in case any certificate for shares is lost,
stolen, mutilated or destroyed, authorize the issuance of a new certificate in
lieu thereof, upon such terms and conditions, including reasonable
indemnification of the corporation, as the board shall determine.
Section 7. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The
president or any vice-president and the secretary or assistant secretary of
this corporation are authorized to vote, represent and exercise on behalf of
this corporation all rights incident to any and all shares of any other
corporation or corporations standing in the name of this corporation. The
authority herein granted to said officers to vote or represent on behalf of
this corporation any and all shares held by this corporation in any other
corporation or corporations may be exercised either by such officers in person
or by any other person authorized so to do by proxy or power of attorney duly
executed by said officers.
Section 8. INSPECTION OF BY-LAWS. The corporation shall keep in
its principal office for the transaction of business the original or a copy of
the by-laws as amended or otherwise altered to date, certified by the
secretary, which shall be open to inspection by the shareholders at all
reasonable times during office hours.
Section 9. EMPLOYEE STOCK PURCHASE PLANS. The corporation may,
upon terms and conditions herein authorized, provide and carry out an employee
stock purchase plan or plans providing for the issue and sale, or for the
granting of options for the purchase, of its unissued shares, or of issued
shares purchased or to be purchased or acquired, to employees of the
corporation or of any subsidiary or to a trustee on their behalf. Such plan may
provide for such consideration as may be fixed therein, for the payment of such
shares in installments or at one time and for aiding any such employees in
paying for such shares by compensation for
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services or otherwise. Any such plan before becoming effective must be approved
or authorized by the board of directors of the corporation.
Such plan may include, among other things, provisions determining of
providing for the determination by the board of directors, or any committee
thereof designated by the board of directors, of:
(a) eligibility of employees (including officers and
directors) to participate therein, (b) the number and class
of shares which may be subscribed for or for which options
may be granted under the plan, (c) the time and method of
payment therefor, (d) the price or prices at which such
shares shall be issued or sold, (e) whether or not title to
the shares shall be reserved to the corporation until full
payment therefor, (f) the effect of the death of an employee
participating in the plan or termination of his employment,
including whether there shall be any option or obligation on
the part of the corporation to repurchase the shares
thereupon, (g) restrictions, if any, upon the transfer of the
shares, and the time limits and termination of the plan, (h)
termination, continuation or adjustments of the rights of
participating employees upon the happening of specified
contingencies, including increase or decrease in the number
of issued shares of the class covered by the plan without
receipt of consideration by the corporation or any exchange
of shares of such class for stock or securities of another
corporation pursuant to a reorganization or merger,
consolidation or dissolution of the corporation, (i)
amendment, termination, interpretation and administration of
such plan by the board of directors, and (j) any other
matters, not repugnant to law, as may be included in the plan
as approved or authorized by the board of directors or any
committee.
Section 10. ANNUAL REPORT TO SHAREHOLDERS. The annual report to
shareholders referred to in Section 3006 of the Corporations Code of the State
of California is expressly dispensed with, but nothing herein shall be
interpreted as prohibiting the board of directors from issuing annual or other
periodic reports to shareholders, or as affecting the rights of shareholders to
obtain financial statements as provided by Section 3011 of the Corporations
Code.
Section 11. FILING STATEMENT OF CORPORATE OFFICERS. The
secretary or assistant secretary of the corporation, during the period
commencing on April 1 and ending on June 30 in each year, shall file with the
Secretary of State of the State of California, on a form prescribed by him, a
statement of the names and complete business or residence addresses of its
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president, vice-president, secretary, and treasurer, together with a statement
of the location and address of its principal office, in compliance with Section
3301 of the Corporations Code of California.
Section 12. CONSTRUCTION AND DEFINITIONS. Unless the context
otherwise requires, the general provisions, rules of construction and
definitions contained in the California General Corporation Law shall govern
the construction of these by-laws. Without limiting the generality of the
foregoing, the masculine gender includes the plural and the plural number
includes the singular, and the term "person" includes a corporation as well as
a natural person.
ARTICLE VI.
Amendments.
Section 1. POWER OF SHAREHOLDERS. New by-laws may be adopted or
these by-laws may be amended or repealed by the vote of shareholders entitled
to exercise a majority of the voting power of the corporation or by the written
assent of such shareholders, except as otherwise provided by law or by the
articles of incorporation.
Section 2. POWER OF DIRECTORS. Subject to the right of
shareholders as provided in Section 1 of this Article VI to adopt, amended or
repealed by the board of directors, provided, however, that a by-law or
amendment thereof changing the authorized number of directors may be adopted,
amended or repealed by the board of directors only for the purpose of fixing
the exact number of directors within the limits specified in the articles of
incorporation or in Section 2 of Article III of these by-laws.
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CERTIFICATE OF SECRETARY
OF
HOOKER INDUSTRIES, INC.,
a California corporation
I, David V. Spangler, Secretary of Hooker Industries, Inc., a
California corporation (the "Corporation"), hereby certify that attached hereto
as EXHIBIT A is a true, correct and complete copy of the amendments to the
Bylaws of the Corporation, adopted by the shareholders of the Corporation and
effective as of July 1, 1999.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of July 1, 1999.
/s/ David V. Spangler
------------------------------
David V. Spangler
Secretary
<PAGE> 18
EXHIBIT TO CERTIFICATE OF SECRETARY
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The
authorized number of directors shall be three until changed by amendment to the
articles of incorporation or by a by-law duly adopted by the shareholders.
<PAGE> 1
EXHIBIT 3.8(a)
ARTICLES OF INCORPORATION
OF
BIGGS MANUFACTURING, INC.
ARTICLE I
The name of the Corporation shall be Biggs Manufacturing, Inc.
ARTICLE II
The purpose for which the Corporation was organized is the transaction
of any and all lawful business for which corporations may be incorporated under
the laws of the State of Arizona, as they may be amended from time to time.
ARTICLE III
The initial business which the Corporation intends to conduct in the
State of Arizona is to manufacture exhaust products.
ARTICLE IV
The Corporation is hereby authorized to issue 100 shares of voting
common stock without par value.
ARTICLE V
No Director of the Corporation shall be personally liable for money
damages in any action brought by or in the right of the Corporation for breach
of the Directors duties to the Corporation and its Shareholders, set forth in
Section 309, excepting therefrom any liability of the Director for actual
omissions that involve intentional misconduct or a knowing or culpable
violation of any corporate law, for acts or omissions that a Director believes
to be contrary to the best interest of the Corporation or its Shareholders with
the or involve the absence of good faith on the part of the Director, for any
transaction from which a Director derived an improper personal benefit, for
acts or omission that show a reckless disregard for the Directors duty to the
Corporation or its Shareholders in circumstances in which the Director was
aware, or should have been aware, in the ordinary course in performing a
Directors duties, of a risk of serious injury to the Corporation or its
Shareholders, for acts or omissions that constitute an unexcused pattern or an
inattention that amounts to an abdication of the Directors duty to the
Corporation or its Shareholders, under Section 310, or under Section 316.
<PAGE> 2
ARTICLE VI
The initial Directors of the Corporation shall be:
Gary L. Biggs
2605 W. First Street
Tempe, AZ 85281
Jane Gretchen Biggs
2605 W. First Street
Tempe, AZ 85281
The number of persons to serve on the Board shall be set by the By-laws.
ARTICLE VII
Incorporators of the Corporation are:
Gary L. Biggs
2605 W. First Street
Tempe, AZ 85281
Robert A. Cassalia
2605 W. First Street
Tempe, AZ 85281
All powers, duties and responsibilities of the incorporators shall
cease at the time of filing of these Articles of Incorporation with the Arizona
Corporation Commission.
ARTICLE VIII
The initial Statutory Agent for the Corporation shall be:
Gary L. Biggs
2605 W. First Street
Tempe, AZ 85281
-2-
<PAGE> 3
Dated this 6th day of January, 1994.
/s/ Gary L. Biggs
---------------------------------------
Gary L. Biggs
/s/ Robert A. Cassalia
---------------------------------------
Robert A. Cassalia
I consent to act as Statutory Agent for the Biggs Manufacturing, Inc.
/s/ Gary L. Biggs
---------------------------------------
Gary L. Biggs
-3-
<PAGE> 1
EXHIBIT 3.8(b)
BYLAWS
OF
BIGGS MANUFACTURING, INC.
ARTICLE I
OFFICES
The principal office of the Corporation in the State of Arizona shall
be located in the City of Tempe, County of Maricopa. The Corporation may have
such other offices, either within or without the State of Arizona, as the Board
of Directors may designate or as the business of the Corporation may require
from time to time.
ARTICLE II
STOCKHOLDERS
2.1 ANNUAL MEETING. The annual meeting of the Stockholders shall
be held on the 15th in the month of January in each year, beginning with the
year 1992, at the hour of 10:00 o'clock A.M., or such other time on such other
day within such month as shall be fixed by the Board of Directors, for the
purpose of electing Directors and for the transaction of such other business as
may come before the meeting. If the day fixed for the annual meeting shall be a
legal holiday in the State of Arizona, such meeting shall be held on the next
succeeding business day. If the election of Directors shall not be held on the
day designated herein for any annual meeting of the Stockholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the Stockholders as soon thereafter as conveniently may
be held.
2.2 SPECIAL MEETINGS. Special meetings of the Stockholders, for
any purpose or purposes, unless otherwise prescribed by Statute, may be called
by the president at the request of the holders of not less than one-tenth of
all outstanding shares of the Corporation entitled to vote at the meeting.
2.3 PLACE OF MEETING. The Board of Directors may designate any
place, either within or without the State of Arizona, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all stockholders entitled to vote at a
meeting may designate any place, either within or without the State of Arizona,
as the place for the holding of such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting shall be the
principal office of the Corporation in the State of Arizona.
2.4 NOTICE OF MEETING. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall, unless otherwise prescribed by statute,
be delivered not less than ten nor more than fifty days before the date of the
meeting, either personally or by mail, by at the direction of the President, or
<PAGE> 2
the Secretary, or the Officer or other persons calling the meeting, to each
Stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the stockholder at this address as it appears on the stock
transfer books of the Corporation, with postage thereon prepaid.
2.5 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining Stockholders entitled to notice of or to vote at any
meeting of Stockholders or any adjournment thereof, or Stockholders entitled to
receive payment of any dividend, or in order to make a determination of
Stockholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, fifty days. If the stock transfer
books shall be closed for the purpose of determining Stockholders entitled to
notice of or to vote at a meeting of Stockholders, such books shall be closed
for at least ten days immediately preceding such meeting. In lieu of closing
the stock transfer books, the Board of Directors may fix in advance a date as
the record date for any such determination of Stockholders, such date in any
case to be not more than fifty days and, in case of a meeting of Stockholders,
not less than ten days prior to the date on which the particular action,
requiring such determination of Stockholders, is to be taken. If the stock
transfer books are not closed and no record date is fixed for the determination
of Stockholders, or Stockholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of Stockholders.
When a determination of Stockholders entitled to vote at any meeting of
Stockholders has been made as provided in this section, such determination
shall apply to any adjournment thereof.
2.6 VOTING RECORD. The Officer or agent having charge of the
stock transfer books for shares of the Corporation shall make a complete record
of the Stockholders entitled to vote at each meeting of Stockholders or any
adjournment thereof, arranged in alphabetical order, shall be produced and kept
open at the time and place of the meeting and shall be subject to the
inspection of any Stockholder during the whole time of the meeting for the
purpose thereof.
2.7 QUORUM. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of Stockholders. If less than a majority of
the outstanding shares are represented, a majority of the shares so represented
may adjourn the meeting from time to time without further notice. At 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 noticed. The Stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough Stockholders to leave less than a quorum.
2.8 PROXIES. At all meetings of Stockholders, a Stockholder may
vote in person or by proxy executed in writing by the Stockholder or by his
duly authorized attorney-in-fact. Such Proxy shall be filed with the Secretary
of the Corporation before or at the time of the meeting. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy.
2
<PAGE> 3
2.9 VOTING OF SHARES. Subject to the provision of Section 12 of
this Article II, each outstanding share entitled to vote shall be entitled to
one vote upon each matter submitted to a vote at a meeting of Stockholders.
2.10 VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another Corporation may be voted by such Officer, agent or proxy as the
By-laws of such Corporation may prescribe, or, in the absence of such
provision, as the Board of Directors of such other Corporation may determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy without a transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed.
A Stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the Corporation, nor
shares held by another Corporation, if a majority of the shares entitled to
vote for the election of Directors of such other Corporation are held by the
Corporation, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time for purposes of any meeting.
2.11 INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at a meeting of the Stockholders may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the Stockholders entitled to vote with respect to the subject
matter thereof.
ARTICLE III
BOARD OF DIRECTORS
3.1 GENERAL POWERS. The business and affairs of the Corporation
shall be managed by its Board of Directors.
3.2 NUMBER, TENURE AND QUALIFICATIONS. The number of Directors of
the Corporation shall be two. Each Director shall hold office until the next
annual meeting of Stockholders and until his successor shall have been elected
and qualified. Directors need not be residents of the State of Arizona or
Stockholders of the Corporation.
3
<PAGE> 4
3.3 REGULAR MEETINGS. A regular meeting of the Board of Directors
shall be held without other notice than this By-law immediately after, and at
the same place as the annual meeting of Stockholders. The Board of Directors
may provide, by resolution, the time and place, either within or without the
State of Arizona, for the holding of additional regular meetings without other
notice than such resolution.
3.4 SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the President or any two Directors. The
person or persons authorized to call special meetings of the Board of Directors
may fix any place, either within or without the State of Arizona, as the place
for holding any special meeting of the Board of Directors called by them.
3.5 NOTICE. Notice of any special meeting shall be given at least
two days previously thereto by written notice delivered personally or mailed to
each Director at his business address, or a telegram. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail, so
addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Any Director may waive notice of any meeting. The attendance
of a Director at a meeting shall constitute a waiver of notice of such meeting,
except where a Director attends a meeting because the meeting is not lawfully
called or convened. Neither the business to be transacted at1 nor the purpose
of, any regular or special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting.
3.6 QUORUM. A majority of the number of Directors fixed by
Section 2 of this Article III shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors, but if less than such
majority is present at a meeting, a majority of the Directors present may
adjourn the meeting from time to time without further notice.
3.7 MANNER OF ACTING. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
3.8 ACTION WITHOUT A MEETING. Any action required or permitted to
be taken by the Board of Directors at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the Directors.
3.9 VACANCIES. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining Directors
though less than a quorum of the Board of Directors. A Director elected to fill
a vacancy shall be elected for the unexpired term of his predecessor in the
office. Any directorship to be filled by reason of an increase in the number of
Directors may be filled by an election by the Board of Directors for a term of:
office continuing only until the next election of Directors by the
Stockholders.
3.10 COMPENSATION. By resolution of the board of Directors each
Director may be paid his expenses, if any, of attendance at each meeting of the
Board of Directors, and may be paid a stated salary as director or a fixed sum
for attendance at each meeting of the Board of Directors, or both. No such
payment shall preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
4
<PAGE> 5
3.11 PRESUMPTION OF ASSENT. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered to such action with the person acting as the
secretary of the meeting before the adjournment thereof or shall forward such
dissent by registered mail to the Secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to
a Director who voted in favor of such action.
ARTICLE IV
OFFICERS
4.1 NUMBER. The officers of the Corporation shall be a President,
one or more Vice-Presidents (the number thereof to be determined by the Board
of Directors), a Secretary, and a Treasurer, each of whom shall be elected by
the Board of Directors. Such other Officers and assistant Officers as may be
deemed necessary may be elected or appointed by the Board of Directors. Any two
or more Offices may be held by the same person, except the Offices of President
and Secretary.
4.2 ELECTION AND TERM OF OFFICE. The Officers of the Corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after each
annual meeting of the Stockholders. If the election of Officers shall not be
held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each Officer shall hold office until his successor shall
have been duly elected and shall have qualified or until his death or until he
shall resign or shall have been removed in the manner hereinafter provided.
4.3 REMOVAL. Any Officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the Corporation will
be served thereby, but such removal shall not be without prejudice to the
contract rights, it any, of the person so removed. Election or appointment of
an Officer or agent shall not of itself create contract rights.
4.4 VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
4.5 PRESIDENT. The President shall be the Principal Executive
Officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the Corporation. He shall, when present, preside at all meetings of
the stockholders and of the Board of Directors, certificates for shares of the
corporation and deeds, mortgages, bonds, contracts, or other instruments which
the Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these By-laws to some other Officer or agent of the
corporation, or shall be required by laws to be otherwise signed or executed;
and in general shall perform all duties incident to the office of President and
such other duties as may be prescribed by the Board of Directors from time to
time.
5
<PAGE> 6
4.6 THE VICE PRESIDENTS. In the absence of the President or in
the event of his death, inability or refusal to act, the Executive
Vice-President shall perform the duties of the President, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
President. Any Executive Vice-President may sign, with the Secretary of
Assistant Secretary, certificates for shares of the Corporation; and shall
perform such other duties as from time to- time may be assigned to him by the
President or by the Board of Directors.
4.7 THE SECRETARY. The Secretary shall: (a) keep the minutes of
the proceedings of the Stockholders and of the Board of Directors in one or
more books provided for that purpose; (b) see that all notices are duly given
in accordance with the provisions of these By-laws or as required by law; (c)
be custodian of the corporate records and of the seal of the corporation and
see that the seal of the Corporation is affixed to all documents the execution
of which on behalf of the Corporation under its seal is duly authorized; (d)
keep a register of the post office address of each Stockholder which shall be
furnished to the Secretary by such Stockholder; (e) sign with the President, or
a Vice-President, certificates for shares of the Corporation, the issuance of
which shall have been authorized by resolution of the Board of Directors; (f)
have general charge of the stock transfer books of the Corporation; and (g) in
general perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the President or by the
Board of Directors.
4.8 THE TREASURER. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the Corporation;
(b) receive and give receipts for moneys due and payable to the Corporation
from any source whatsoever, and deposit all such moneys in the name of the
Corporation in such banks, trust companies or other depositories as shall be
selected in accordance with the provisions of Article V of these By-laws; and
(c) in general perform all of the duties incident to the Office of Treasurer
and such other duties as from time to time may be assigned to him by the
President or by the Board of Directors. If required by the Board of Directors,
the Treasurer shall give a bond for faithful discharge of his duties in such
sum and with such surety or sureties as the Board of Directors shall determine.
4.9 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Assistant
Secretaries, when authorized by the Board of Directors, may sign with the
President or a Vice-President certificates for shares of the Corporation the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall respectively, if required by the
Board of Directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall determine. The
Assistant Secretaries and Assistant Treasurers, in general, shall perform such
duties as shall be assigned to them by the Secretary of the Treasurer,
respectively, or by the President or the Board of Directors.
4.10 SALARIES. The salaries of the Officers shall be fixed from
time to time by the Board of Directors and no Officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
Corporation.
6
<PAGE> 7
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.1 CONTRACTS. The Board of Directors may authorize any Officer
or Officers, agent or agents to enter into any contract or execute and deliver
any instrument in the name of or and behalf of the Corporation, and such
authority may be general or confined to specific instances.
5.2 LOANS. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
5.3 CHECKS, DRAFTS, ETC. 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 or Officers, agent or agents
of the Corporation and in such manner as shall from time to time be determined
by resolution of the Board of Directors.
5.4 DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.
ARTICLE VI
CERTIFICATION FOR SHARES AND THEIR TRANSFER
6.1 CERTIFICATES FOR SHARES. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or a
Vice-President and by the Secretary or an Assistant Secretary and sealed with
the corporate seal or a facsimile thereof. The signatures of such Officers upon
a certificate may be facsimiles if the certificate is manually signed on behalf
of a transfer agent or a registrar, other than the Corporation itself or one of
its employees. Each certificate for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled, except that in case
of a lost, destroyed or mutilated certificate a new one may be issued therefore
upon such terms and indemnity to the Corporation as the Board of Directors may
prescribe.
6.2 TRANSFER OF SHARES. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the secretary of the
Corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the Corporation
shall be deemed by the Corporation to be the owner thereof for all purposes.
7
<PAGE> 8
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of
January and end on the thirty-first day of December in each year.
ARTICLE VIII
The board of Directors may, from time to time, declare and the
Corporation may pay dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its Articles of Incorporation.
ARTICLE IX
WAIVER OF NOTICE
Whenever any notice is required to be given to any Stockholder or
Director of the Corporation under the provisions of these By-laws or under the
provisions of the Articles of Incorporation or under the provisions. of the
Arizona Business Corporation Act, a waiver thereof in writing signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
ARTICLE X
AMENDMENTS
These By-laws may be altered, amended or repealed and new By-laws may
be adopted by the Board of Directors or by the Stockholders at any regular or
special meeting.
8
<PAGE> 9
FIRST MEETING OF
THE BOARD OF DIRECTORS OF
BIGGS MANUFACTURING, INC.
The first meeting of the Board of Directors of Biggs Manufacturing,
Inc. was held at 2605 w. First Street, Tempe, AZ on the 10th day of January,
1994 at 2:00 p.m.
Present at the meeting were Gary L. Biggs and Joan Gretchen Biggs
being all of the Directors.
Presented to the Board for approval was the Articles of Incorporation
as filed with the Arizona Corporation Commission. On motion duly made and
seconded, the following resolution passed (by a unanimous vote):
RESOLVED, that the Articles of Incorporation as filed with the Arizona
Corporation Commission be and hereby are approved and accepted; and it
is
FURTHER RESOLVED, that said Articles be published in a paper of
general circulation in the County of Maricopa as. is prescribed by
law.
The next item of business was the ratification of all acts of the
incorporators in forming the corporation and acceptance ~f all liabilities for
said acts. On motion duly made and seconded, the following resolution passed by
unanimous vote:
RESOLVED, that all acts of the incorporators in forming the
corporation be and hereby are ratified and all liabilities created by
them on behalf of the Corporation hereby accepted by the Corporation;
and it is
FURTHER RESOLVED, that the incorporators, Gary L. Biggs and Robert A.
Cassalia be and hereby are indemnified from any and all liability
resulting from their acting as incorporators of this Corporation.
The next order of business was consideration of the By-laws of Biggs
Manufacturing, Inc. The Board was presented with proposed By-laws of the
Corporation. Upon review and after due consideration, the following resolution
passed by unanimous vote:
RESOLVED, that the By-laws as presented to the Board by and hereby are
approved as the By-laws of the Corporation, and the Secretary is
hereby directed to enter same in the corporate record book.
The next order of business was the subscription for shares by Gary L.
Biggs and Joan Gretchen Biggs to purchase 100 shares of stock in the
Corporation for $1,000.00.
Upon motion duly made and seconded, and after due consideration, the
following resolution passed by unanimous vote:
<PAGE> 10
RESOLVED, that the share subscription by Gary L. Biggs and Joan
Gretchen Biggs be and hereby is accepted by the Corporation; and it is
FURTHER RESOLVED, that the Secretary of the Corporation be and hereby
is authorized and directed to issue 100 shares to Gary L. Biggs and
Joan Gretchen Biggs, or their nominee, on receipt of $1,000.00 as full
payment.
The next order of business was the election of officers of the
Corporation. The following persons were nominated to the positions set forth
next to their names:
Gary L. Biggs President
Joan Gretchen Biggs Secretary/Treasurer
On motion duly made and seconded, the following resolution passed by
unanimous vote:
RESOLVED, that Gary L. Biggs be and hereby is elected to serve as
President of the Corporation and Joan Gretchen Biggs be and hereby is
elected to serve as Secretary/Treasurer of the Corporation.
There being no further business to come before the Board, on motion
duly made and seconded the meeting was adjourned.
/S/ Joan Gretchen Biggs
---------------------------------
Joan Gretchen Biggs, Secretary
<PAGE> 1
EXHIBIT 4.1
- -------------------------------------------------------------------------------
HOLLEY PERFORMANCE PRODUCTS INC.
12 1/4% SENIOR NOTES DUE 2007
INDENTURE
------------------------------
Dated as of September 20, 1999
------------------------------
STATE STREET BANK AND TRUST COMPANY
Trustee
- -------------------------------------------------------------------------------
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
310 (a)(1).................................................................................. 7.10
(a)(2).................................................................................. 7.10
(a)(3).................................................................................. N.A.
(a)(4).................................................................................. N.A.
(a)(5).................................................................................. 7.10
(b)(i).................................................................................. 7.10
(c)(ii)................................................................................. N.A.
311 (a)..................................................................................... 7.11
(b)..................................................................................... 7.11
(c)..................................................................................... N.A.
312 (a)..................................................................................... 2.05
(b)..................................................................................... 11.03
(iv)(c)................................................................................. 11.03
313 (a)..................................................................................... 7.06
(b)(2).................................................................................. 7.06; 7.07
(c)..................................................................................... 7.06; 11.02
(d)..................................................................................... 7.06
314 (a)..................................................................................... 4.03; 11.02
(a)(4).................................................................................. 11.05
(c)(1).................................................................................. 11.04
(c)(2).................................................................................. 11.04
(c)(3).................................................................................. N.A.
(e)..................................................................................... 11.05
(f)..................................................................................... NA
315 (a)..................................................................................... 7.01
(b)..................................................................................... 7.05; 11.02
(c)..................................................................................... 7.01
(d)..................................................................................... 7.01
(e)..................................................................................... 6.11
316 (a)(last sentence)...................................................................... 2.09
(a)(1)(A)............................................................................... 6.05
(a)(1)(B)............................................................................... 6.04
(a)(2).................................................................................. N.A.
(b)..................................................................................... 6.07
(c)..................................................................................... 2.12
317 (a)(1).................................................................................. 6.08
(a)(2).................................................................................. 6.09
(b)..................................................................................... 2.04
318 (a)..................................................................................... 11.01
(b)..................................................................................... N.A.
(c)..................................................................................... 11.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions........................................................................ 1
Section 1.02. Other Definitions.................................................................. 17
Section 1.03. Terms of TIA....................................................................... 18
Section 1.04. Rules of Construction.............................................................. 18
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.................................................................... 19
Section 2.02. Execution and Authentication....................................................... 20
Section 2.03. Registrar and Paying Agent......................................................... 21
Section 2.04. Paying Agent to Hold Money in Trust................................................ 21
Section 2.05. Holder Lists....................................................................... 22
Section 2.06. Transfer and Exchange.............................................................. 22
Section 2.07. Replacement Notes.................................................................. 32
Section 2.08. Outstanding Notes.................................................................. 33
Section 2.09. Treasury Notes..................................................................... 33
Section 2.10. Temporary Notes.................................................................... 33
Section 2.11. Cancellation....................................................................... 34
Section 2.12. Defaulted Interest................................................................. 34
Section 2.13. CUSIP Numbers...................................................................... 34
Section 2.14. Designation........................................................................ 34
Section 2.15. Deposit of Moneys.................................................................. 35
ARTICLE 3.
REDEMPTION
Section 3.01. Notice of Redemption to Trustee.................................................... 35
Section 3.02. Selection of Notes to Be Redeemed.................................................. 35
Section 3.03. Notice of Redemption to Holders.................................................... 36
Section 3.04. Effect of Notice of Redemption..................................................... 36
Section 3.05. Deposit of Redemption Price........................................................ 36
Section 3.06. Notes Redeemed in Part............................................................. 37
Section 3.07. Optional Redemption................................................................ 37
Section 3.08. Mandatory Redemption............................................................... 38
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes................................................................... 38
Section 4.02. Maintenance of Office or Agency.................................................... 38
</TABLE>
ii
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<TABLE>
<S> <C> <C>
Section 4.03. Reports............................................................................. 39
Section 4.04. Compliance Certificate.............................................................. 40
Section 4.05. Taxes............................................................................... 40
Section 4.06. Stay, Extension and Usury Laws...................................................... 40
Section 4.07. Restricted Payments................................................................. 41
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries................................................................... 43
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred
Stock.......................................................................... 45
Section 4.10. Asset Sales......................................................................... 48
Section 4.11. Transactions with Affiliates........................................................ 50
Section 4.12. Liens............................................................................... 51
Section 4.13. Issuances and Sales of Equity Interests in Restricted
Subsidiaries................................................................... 53
Section 4.14. Corporate Existence................................................................. 53
Section 4.15. Offer to Repurchase upon Change of Control.......................................... 53
Section 4.16. Payments for Consent................................................................ 55
Section 4.17. Additional Subsidiary Guarantees.................................................... 55
Section 4.18. Designation of Restricted and Unrestricted Subsidiaries............................. 56
Section 4.19. Issuances of Guarantees of Indebtedness............................................. 57
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Assets............................................. 58
Section 5.02. Successor Corporation Substituted................................................... 59
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default................................................................... 59
Section 6.02. Acceleration........................................................................ 61
Section 6.03. Other Remedies; Optional Redemption Premium......................................... 62
Section 6.04. Waiver of Past Defaults............................................................. 62
Section 6.05. Control by Majority................................................................. 62
Section 6.06. Limitation on Suits................................................................. 63
Section 6.07. Rights of Holders of Notes to Receive Payment....................................... 63
Section 6.08. Collection Suit by Trustee.......................................................... 63
Section 6.09. Trustee May File Proofs of Claim.................................................... 63
Section 6.10. Priorities.......................................................................... 64
Section 6.11. Undertaking for Costs............................................................... 64
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee................................................................... 65
Section 7.02. Rights of Trustee................................................................... 66
Section 7.03. Individual Rights of Trustee........................................................ 67
</TABLE>
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<TABLE>
<S> <C> <C>
Section 7.04. Trustee's Disclaimer................................................................ 67
Section 7.05. Notice of Defaults.................................................................. 67
Section 7.06. Reports by Trustee to Holders of the Notes.......................................... 68
Section 7.07. Compensation and Indemnity.......................................................... 68
Section 7.08. Replacement of Trustee.............................................................. 69
Section 7.09. Successor Trustee by Merger, etc.................................................... 70
Section 7.10. Eligibility; Disqualification....................................................... 70
Section 7.11. Preferential Collection of Claims Against the Company............................... 70
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE; DISCHARGE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance............................ 70
Section 8.02. Legal Defeasance and Discharge...................................................... 71
Section 8.03. Covenant Defeasance................................................................. 71
Section 8.04. Conditions to Legal or Covenant Defeasance.......................................... 72
Section 8.05. Deposited Money and Government Securities to
Be Held in Trust; Other Miscellaneous Provisions................................. 73
Section 8.06. Repayment to the Company............................................................ 73
Section 8.07. Reinstatement....................................................................... 74
Section 8.08. Discharge........................................................................... 74
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes................................................. 75
Section 9.02. With Consent of Holders of Notes.................................................... 75
Section 9.03. Compliance with Trust Indenture Act................................................. 77
Section 9.04. Revocation and Effect of Consents................................................... 77
Section 9.05. Notation on or Exchange of Notes.................................................... 77
Section 9.06. Trustee to Sign Amendments, etc..................................................... 77
ARTICLE 10.
SUBSIDIARY GUARANTEES
Section 10.01. Guarantee........................................................................... 78
Section 10.02. Limitation on Guarantor Liability................................................... 79
Section 10.03. Execution and Delivery of Subsidiary Guarantee...................................... 79
Section 10.04. Guarantors May Consolidate, etc., on Certain Terms.................................. 80
Section 10.05. Releases Following Sale of Assets or Capital Stock.................................. 80
ARTICLE 11.
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls........................................................ 81
Section 11.02. Notices............................................................................. 81
</TABLE>
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<TABLE>
<S> <C> <C>
Section 11.03. Communication by Holders of Notes with Other Holders of
Notes.......................................................................... 82
Section 11.04. Certificate and Opinion as to Conditions Precedent.................................. 82
Section 11.05. Statements Required in Certificate or Opinion....................................... 83
Section 11.06. Rules by Trustee and Agents......................................................... 83
Section 11.07. No Personal Liability of Directors, Officers, Employees and
Stockholders................................................................... 83
Section 11.08. Governing Law....................................................................... 84
Section 11.09. No Adverse Interpretation of Other Agreements....................................... 84
Section 11.10. Successors.......................................................................... 84
Section 11.11. Severability........................................................................ 84
Section 11.12. Counterpart Originals; Acceptance by Trustee........................................ 84
Section 11.13. Table of Contents, Headings, etc.................................................... 84
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A-1 Form of Note
Exhibit A-2 Form of Regulation S Temporary Global Note
Exhibit B Form of Certificate of Transfer
Exhibit C Form of Certificate of Exchange
Exhibit D Form of Certificate From Acquiring Institutional
Accredited Investor
Exhibit E Form of Subsidiary Guarantee
Exhibit F Form of Supplemental Indenture
</TABLE>
v
<PAGE> 7
INDENTURE dated as of September 20, 1999 by and among Holley
Performance Products Inc., a Delaware corporation (the "Company"), the
Guarantors (as defined) and State Street Bank and Trust Company, a
Massachusetts trust company, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit
of each other and for the equal and ratable benefit of the Holders of the
Notes:
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a global note in the form of Exhibit
A-1 hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person,
(1) Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a Restricted Subsidiary of such specified Person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a
Restricted Subsidiary of, such specified Person; and (2) Indebtedness secured by
a Lien encumbering any asset existing at the time acquired by such specified
Person.
"Acquisition Facility" means one or more credit facilities or
subfacilities, the proceeds from which are used to make Asset Acquisitions,
acquire Replacement Assets, repay Acquired Debt and/or pay related fees and
expenses or other reasonably related uses.
"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.
"Agent" means any Registrar, Paying Agent or co-registrar.
<PAGE> 8
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"Applicable Procedures" means, with respect to any transfer
or exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer
or exchange.
"Asset Acquisition" means (1) an Investment by the Company or
any Restricted Subsidiary in any other Person pursuant to which such Person
shall become a Restricted Subsidiary, or shall be merged with or into the
Company or any Restricted Subsidiary, or (2) the acquisition by the Company or
any Restricted Subsidiary of the assets of any Person (other than a Restricted
Subsidiary) which constitute all or substantially all of the assets of such
Person or comprise any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.
"Asset Sale" means: (1) the sale, lease, conveyance or other
disposition of any property, assets or rights, other than sales of inventory in
the ordinary course of business consistent with past practices; 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 4.15 and Article 5 hereof and not by Section 4.10; and (2)
the issuance of Equity Interests by any of the Company's Restricted
Subsidiaries or the sale of Equity Interests in any of its Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales: (i) any single transaction or series of related transactions that:
(a) involves assets having a fair market value of less than $1.0 million; or
(b) results in net proceeds to the Company and its Restricted Subsidiaries of
less than $1.0 million; (ii) a transfer of assets between or among the Company
and its Restricted Subsidiaries; (iii) an issuance of Equity Interests by a
Restricted Subsidiary to the Company or to another Restricted Subsidiary; (iv)
disposals or replacements of obsolete equipment in the ordinary course of
business; and (v) a Restricted Payment or a Permitted Investment that is
permitted by Section 4.07 hereof.
"Attributable Value" means, as to any particular lease under
which any Person is at the time liable other than a Capital Lease Obligation,
and at any date as of which the amount thereof is to be determined, the total
net amount of rent required to be paid by such Person under such lease during
the initial term thereof as determined in accordance with generally accepted
accounting principles, discounted from the last date of such initial term to
the date of determination at a rate per annum equal to the discount rate which
would be applicable to a Capital Lease Obligation with like term in accordance
with generally accepted accounting principles. The net amount of rent required
to be paid under any such lease for any such period shall be the aggregate
amount of rent payable by the lessee with respect to such period after
excluding amounts required to be paid on account of insurance, taxes,
assessments, utility, operating and labor costs and similar charges. In the
case of any lease which is terminable by the lessee upon the payment of a
penalty, such net amount shall also include the lesser of the amount of such
penalty (in which case no rent shall be considered as required to be paid under
such lease subsequent to the first date upon which it may be so terminated) or
the rent which would otherwise be required to be paid if such lease is not so
terminated.
<PAGE> 9
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"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state 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.
"Broker-Dealer" means any broker or dealer registered with
the Commission under the Exchange Act.
"Business Day" means any day other than a Legal Holiday.
"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, all
corporate stock (however designated); (2) in the case of an association or
business entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock; (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: (1) United States dollars; (2)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof (provided that the
full faith and credit of the United States is pledged in support thereof)
having maturities of not more than twelve months from the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case,
with any domestic commercial bank or trust company having capital and surplus
in excess of $500 million and a Thompson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above; (5) commercial paper having the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Corporation and in each case maturing within twelve months after the date of
acquisition; and (6) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (1) through (5)
of this definition, including in the case of obligations of the types described
in clauses (3) and (4), obligations
<PAGE> 10
-4-
of any bank or trust company acting as Trustee hereunder meeting the
qualifications set forth in clause (3).
"Cedel" means Cedel Bank, S.A.
"Change of Control" means the occurrence of any of the
following: (1) the sale, transfer, conveyance or other disposition (other than
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" or "group" (as such terms are used in Section
13(d)(3) of the Exchange Act); (2) the adoption of a plan relating to the
liquidation or dissolution of the Company; (3) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" or "group" (as defined above), other than
one or more Permitted Holders, becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Stock of the Company, measured by
voting power rather than number of shares; (4) the first day on which a
majority of the members of the Board of Directors of the Company are not
Continuing Directors; or (5) the Company consolidates with, or merges with or
into, any Person, or any Person consolidates with, or merges with or into, the
Company, in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of the Company is converted into or exchanged for
cash, securities or other property, other than any such transaction where the
Voting Stock of the Company outstanding immediately prior to such transaction
is converted into or exchanged for Voting Stock (other than Disqualified Stock)
of the surviving or transferee Person constituting a majority of the
outstanding shares of such Voting Stock of such surviving or transferee Person
immediately after giving effect to such issuance.
"Commission" means the Securities and Exchange Commission.
"Consolidated EBITDA" 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; 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, the provision for taxes based on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Restricted
Subsidiary of the Company shall be added to Consolidated Net Income to compute
Consolidated EBITDA of the Company only to the extent that a corresponding
amount would be
<PAGE> 11
-5-
permitted at the date of determination to be dividended to the Company by such
Restricted Subsidiary without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to that Subsidiary or its stockholders.
"Consolidated Interest Expense" of any Person for any period
means the aggregate interest expense of such Person and its Restricted
Subsidiaries (whether paid or accrued and whether or not capitalized)
determined on a consolidated basis in accordance with GAAP, including, without
limitation or duplication, 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 expense with respect to
Attributable Value, interest on Indebtedness Guaranteed by (or secured by a
Lien on any assets of) such Person or any of its Restricted Subsidiaries,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments pursuant to
Hedging Obligations.
"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 or that is accounted
for by the equity method of accounting shall be included only to the extent of
the amount of dividends or distributions received in cash by the specified
Person or a Restricted 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 that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Restricted Subsidiary or its stockholders; (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; (4) the Net Income (but not
loss) of any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the specified Person or one of its Subsidiaries; (5) the
cumulative effect of a change in accounting principles shall be excluded; (6)
any restoration to income of any contingency reserve of an extraordinary,
non-recurring or unusual nature shall be excluded, except to the extent that
provision for such reserve was made out of Consolidated Net Income accrued at
any time following the Issue Date; (7) 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 shall be excluded; (8) any
extraordinary gain or loss, together with any related provision for taxes on
such extraordinary gain or loss, shall be excluded; (9) any income or loss
attributable to discontinued operations shall be excluded; and (10) in the case
of a successor to the specified Person by consolidation or merger or as a
transferee of the specified Person's assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets shall be
excluded.
<PAGE> 12
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"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 date hereof; 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" of the Trustee shall be at the
address of the Trustee specified in Section 11.02 hereof or such other address
as to which the Trustee may give notice to the Company.
"Credit Facility" means the amended and restated Credit
Agreement dated as of September 20, 1999, among the Company, the Guarantors,
the lenders party thereto in their capacities as lenders thereunder and Credit
Agricole Indosuez, as agent, together with the related documents thereto
(including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from
time to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including (a) adding an Acquisition
Facility, (b) increasing the amount of available borrowings thereunder
(provided that such increase in borrowings is permitted by Section 4.09 hereof
as evidenced by an Officers' Certificate delivered to the Trustee, which shall
be conclusive) or (c) adding Subsidiaries as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Custodian" means the Trustee, as custodian with respect to
the Notes in global form, or any successor entity thereto.
"Default" means any event that is, or with the passage of
time or the giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the
name of the Holder thereof and issued in accordance with Section 2.06 hereof,
in the form of Exhibit A-1 hereto except that such Note shall not bear the
Global Note Legend and shall not have the "Schedule of Exchanges of Interests
in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Notes, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to
the applicable provision of this Indenture.
"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, in each case at the option of the holder thereof), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder thereof, in whole or in part, on or prior to the date on which the Notes
mature. Notwithstanding the preceding sentence, any Capital Stock that would
constitute Disqualified
<PAGE> 13
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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 unless such repurchase or redemption
complies with Section 4.07 hereof.
"Domestic Restricted Subsidiary" means a Restricted
Subsidiary incorporated or otherwise 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).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Notes issued in exchange for the
Initial Notes in the Exchange Offer pursuant to Section 2.06(f) hereof or, with
respect to Initial Notes issued under this Indenture subsequent to the date of
this Indenture pursuant to Section 2.02 hereof, the exchange offer contemplated
by the registration rights agreement relating thereto substantially identical
to the Registration Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set
forth in the Registration Rights Agreement.
"Exchange Offer" has the meaning set forth in the
Registration Rights Agreement.
"Existing Indebtedness" means the Obligations of the Company
and its Restricted Subsidiaries in existence on the date hereof, until such
amounts are repaid.
"Fixed Charge Coverage Ratio" means, with respect to any
specified Person for any period, the ratio of the Consolidated EBITDA 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, Guarantees, redeems or repays any
Indebtedness (other than borrowings under working capital facilities in the
ordinary course of business) or issues or redeems preferred stock subsequent to
the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation
Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro
forma effect to such incurrence, assumption, Guarantee, redemption or repayment
of Indebtedness, or such issuance or redemption of preferred stock, as if the
same had occurred at the beginning of the applicable four-quarter reference
period. In addi-
<PAGE> 14
-8-
tion, 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 EBITDA 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 EBITDA
attributable to operations or businesses disposed of prior to the Calculation
Date shall be excluded; and (3) the Fixed Charges attributable to 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.
"Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of: (1) the Consolidated Interest Expense
of such Person; plus (2) the product of (a) all dividend payments, whether or
not in cash, on any series of Disqualified Stock of such Person and on any
series of preferred stock of any of its Restricted Subsidiaries, other than
dividend payments on Equity Interests payable solely in Equity Interests of the
Company (other than Disqualified Stock) or payable 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.
"Foreign Restricted Subsidiary" means any Restricted
Subsidiary that is organized and existing under the laws of a jurisdiction
other than the United States, any state thereof or the District of Columbia.
"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 Note Legend" means the legend set forth in Section
2.06(g)(ii) which is required to be placed on all Global Notes issued under
this Indenture.
"Global Notes" means, individually and collectively, each of
the Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America, and the payment for
which the United States pledges its full faith and credit.
<PAGE> 15
-9-
"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.
"Guarantors" means each of: (1) Holley Performance Systems,
Inc., Weiand Automotive Industries, Inc., Lunati Cams, Inc., Lunati & Taylor
Pistons, Inc., LTM Motor Sports Corporation and Hooker Industries, Inc.; and
(2) any other Subsidiary that executes a Subsidiary Guarantee in accordance
with the provisions of this Indenture; and, in the case of clause (1) and (2),
their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under: (1) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements entered into in the
ordinary course of business relating to Indebtedness permitted to be incurred
under this Indenture; and (2) other agreements or arrangements designed to
protect such Person against fluctuations in interest rates or foreign currency
exchange rates entered into in the ordinary course of business.
"Holder" means the registered holder of a Note.
"Holdings" means KHPP Holdings, Inc., a Delaware corporation.
"Indebtedness" means, with respect to any specified Person,
any indebtedness of such Person, whether or not contingent: (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 balance deferred and unpaid of the
purchase price of any property, except any such balance that constitutes an
accrued expense or trade payable; (6) representing any Hedging Obligations; or
(7) representing any Disqualified Stock of such Person and any preferred stock
issued by a Restricted Subsidiary of such Person, if and to the extent any of
the preceding items (other than letters of credit, Hedging Obligations,
Disqualified Stock and preferred stock of a Restricted Subsidiary) would appear
as a liability upon a balance sheet of the specified Person prepared in
accordance with GAAP. In addition, the term "Indebtedness" includes (a) all
Indebtedness of others secured by a Lien on any asset of the specified Person
(whether or not such Indebtedness is assumed by the specified Person), (b) any
sale of receivables of such Person, other than in connection with a disposition
of the business operations of such Person relating thereto or a disposition of
defaulted receivables for purpose of collection and not as a financing
arrangement, and (c) to the extent not otherwise included, the Guarantee by
such Person of any indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be: (1) the accreted value
thereof, in the case of any Indebtedness issued with original issue discount;
(2) the amount of the unrecovered capital or principal investment of the
purchaser (other than the Company or a Restricted Subsidiary of the Company)
excluding amounts representative of yield or interest earned on such
investment, in the case of any sale of receivables; (3) the maximum fixed
redemption or repurchase price, in the case of Disqualified Stock of such
Person; (4) the maximum voluntary or invol-
<PAGE> 16
-10-
untary liquidation preferences plus accrued and unpaid dividends, in the case
of preferred stock of a Restricted Subsidiary of such Person; and (5) the
principal amount thereof, together with any interest thereon that is more than
30 days past due, in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Initial Notes" means, collectively, (i) the 12 1/4% Senior
Notes due 2007 of the Company issued on the date of this Indenture and (ii) one
or more series of 12 1/4% Senior Notes due 2007 that are issued subsequent to
the date of this Indenture pursuant to Section 2.02 hereof, in each case for so
long as such securities constitute "restricted securities" as such term is
defined 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 any Note constitutes such a restricted security; and
further provided that the Issuer shall notify the Trustee in writing promptly
after any such security becomes a "restricted security."
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act.
"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, purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.
"Issue Date" means the date of original issuance of Notes.
"Kohlberg" means Kohlberg & Co., L.L.C., a Delaware limited
liability company, and its affiliates.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York (or any city in which the
Corporate Trust Office is located) are authorized by law, regulation or
executive order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue on such payment for
the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
<PAGE> 17
-11-
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law, including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction.
"Net 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 and Disqualified Stock dividends.
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result thereof or 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 net of appropriate
amounts to be provided by the Company or any Restricted Subsidiary, as the case
may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale.
"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; (2) no default with
respect to which (including any rights that the holders thereof may have to
take enforcement action against an Unrestricted Subsidiary) would permit upon
notice, lapse of time or both any holder of any other Indebtedness (other than
the Notes) of the Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (3) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Restricted Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Notes" means, collectively, the Initial Notes and the
Unrestricted Notes, treated as a single class of securities, as amended or
supplemented from time to time in accordance with the terms hereof, that are
issued pursuant to the terms of this Indenture.
<PAGE> 18
-12-
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer, the Controller or the Secretary of such Person.
"Officers' Certificate" means a certificate signed by two
Officers of the Company.
"Opinion of Counsel" means a written opinion from legal
counsel who are reasonably acceptable to the Trustee.
"Participant" means, with respect to the Depositary,
Euroclear or Cedel, a Person who has an account with the Depositary, Euroclear
or Cedel, respectively (and, with respect to The Depository Trust Company,
shall include Euroclear and Cedel).
"Permitted Holders" means Holdings, Kohlberg, any of their
respective controlled Affiliates, Jeffrey G. King, Robert L. Wineland, James R.
Vance and John H. Nickoloff.
"Permitted Investments" means: (1) any Investment in the
Company or in a Restricted Subsidiary of the Company; (2) any Investment in
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 Restricted Subsidiary of the Company or (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
Restricted Subsidiary of the Company; (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 4.10 hereof; (5) any acquisition of assets
solely in exchange for the issuance of Equity Interests (other than
Disqualified Stock) of the Company; (6) loans and advances to employees and
officers of the Company and its Restricted Subsidiaries in the ordinary course
of business for bona fide business purposes not in excess of $1.0 million at
any one time outstanding; (7) Investments in securities of trade creditors or
customers received pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers; (8) other Investments in any Person 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 (8) since the date hereof, not to
exceed $1.0 million at any one time outstanding; (9) Investments in Hedging
Obligations; and (10) Investments in the Notes.
"Permitted Liens" means: (1) Liens for taxes, assessments,
governmental charges or claims which are not yet delinquent or which are being
contested in good faith by appropriate proceedings, if a reserve or other
appropriate provision, if any, as shall be required in conformity with
generally accepted accounting principles shall have been made
<PAGE> 19
-13-
therefor; (2) pledges and deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types
of statutory obligations (including to secure government contracts); (3)
deposits made to secure the performance of tenders, bids, leases and other
obligations of like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (4) zoning
restrictions, servitudes, easements, rights-of-way, restrictions and other
similar charges or encumbrances incurred in the ordinary course of business
which, in the aggregate, do not materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the business
of the Company or the Guarantors; (5) Liens arising out of judgments or awards
against the Company or any Guarantor with respect to which the Company or such
Guarantor is prosecuting an appeal or proceeding for review and the Company or
such Guarantor is maintaining adequate reserves in accordance with generally
accepted accounting principles; (6) any interest or title of a lessor in the
property subject to any lease other than a Capital Lease Obligation; and (7)
any statutory warehousemen's, materialmen's or other similar Liens for sums not
then due and payable (or which, if due and payable, are being contested in good
faith and with respect to which adequate reserves are being maintained to the
extent required by generally accepted accounting principles).
"Permitted Refinancing Indebtedness" means any Indebtedness
of the Company or any of its Restricted Subsidiaries issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace,
defease or refund, other Indebtedness of the Company or any of its Restricted
Subsidiaries (other than intercompany Indebtedness); provided that: (1) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus accrued interest on, and any reasonable prepayment
premium with respect to, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith); (2) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, or has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (3) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes or a Subsidiary Guarantee, such Permitted Refinancing Indebtedness
has a final maturity date later than the final maturity date of, and is
subordinated in right of payment to, the Notes or such Subsidiary Guarantee, as
the case may be, on terms at least as favorable to the Holders of Notes as
those contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (4) such Indebtedness
is incurred either by the Company or by the Restricted Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Person" means an individual, partnership, corporation,
limited liability company, unincorporated organization, trust or joint venture,
or a governmental agency or political subdivision thereof.
<PAGE> 20
-14-
"Private Placement Legend" means the legend set forth in
Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"Public Equity Offering" means any underwritten public
offering of common stock of the Company or of Holdings pursuant to a
registration statement filed with the Commission in accordance with the
Securities Act; provided that in the event of a Public Equity Offering by
Holdings, Holdings contributes to the common equity capital of the Company
(other than Disqualified Stock of the Company) the portion of the net cash
proceeds of such Public Equity Offering necessary to pay the aggregate
redemption price (plus accrued and unpaid interest and Special Interest, if
any, thereon to the redemption date) of any Notes to be redeemed pursuant to
Section 3.07(b) hereof.
"Purchase Money Indebtedness" means Indebtedness of the
Company or any Restricted Subsidiary incurred for the purpose of financing all
or any part of the purchase price or the cost of an Asset Acquisition or
construction or improvement of any property; provided that the aggregate
principal amount of such Indebtedness does not exceed such purchase price or
cost.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registration Rights Agreement" means the Exchange Offer and
Registration Rights Agreement, dated as of the date of this Indenture, by and
among the Company, the Guarantors and the other parties named on the signature
pages thereof, as such agreement may be amended, modified or supplemented from
time to time, and, with respect to Initial Notes issued under this Indenture
subsequent to the date of this Indenture pursuant to Section 2.02 hereof, the
registration rights agreement relating thereto relating thereto substantially
identical to the Registration Rights Agreement.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Regulation S Global Note" means a Regulation S Temporary
Global Note or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global
Note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the
Private Placement Legend and deposited with or on behalf of and registered in
the name of the Depositary or its nominee, issued in a denomination equal to
the outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global
Note in the form of Exhibit A-2 hereto bearing the Global Note Legend and the
Private Placement Legend and deposited with or on behalf of and registered in
the name of the Depositary or its nominee, issued in a denomination equal to
the outstanding principal amount of the Notes initially sold in reliance on
Rule 903 of Regulation S.
<PAGE> 21
-15-
"Replacement Assets" means assets and property that will be
used in the business of the Company and/or its Restricted Subsidiaries as
existing on the Issue Date or in a business the same, similar or reasonably
related thereto (including Equity Interests of a Person which becomes a
Restricted Subsidiary).
"Responsible Officer," when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing
the Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the
Private Placement Legend.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Period" means the 40-day restricted period as
defined in Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of
the referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities
Act.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
"Rule 903" means Rule 903 promulgated under the Securities
Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"Sale and Leaseback Transaction" of any Person means an
arrangement with any lender or investor or to which such lender or investor is
a party providing for the leasing by such Person of any property or asset of
such Person which has been or is being sold or transferred by such Person more
than 365 days after the later of the acquisition thereof or the completion of
construction or commencement of operation thereof to such lender or investor or
to any Person to whom funds have been or are to be advanced by such lender or
investor on the security of such property or asset. The Stated Maturity of such
arrangement shall be the date of the last payment of rent or any other amount
due under such arrangement prior to the first date on which such arrangement
may be terminated by the lessee without payment of a penalty.
<PAGE> 22
-16-
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined 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 Securities Act, as such Regulation is in effect on
the date hereof.
"Special Interest" means all liquidated damages, if any, then
owing pursuant to Section 2(c) of the Registration Rights Agreement.
"Stated Maturity" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"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 partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means a Guarantee of the Notes issued
by a Guarantor pursuant to this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 9.03 hereof.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"U.S. Person" means a U.S. person as defined in Rule 902(o)
under the Securities Act.
"Unrestricted Definitive Notes" means one or more Definitive
Notes that do not bear and are not required to bear the Private Placement
Legend.
<PAGE> 23
-17-
"Unrestricted Global Note" means a permanent global Note in
the form of Exhibit A-1 attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not and are not
required to bear the Private Placement Legend.
"Unrestricted Notes" means one or more Unrestricted Global
Notes and/or Unrestricted Definitive Notes, including, without limitation, the
Exchange Notes.
"Unrestricted Subsidiary" means any Subsidiary of the Company
that is designated by the Board of Directors as an Unrestricted Subsidiary in
accordance with Section 4.18 hereof.
"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 payment
of principal, including payment at final maturity, in respect thereof, by (b)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment; by (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.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined
Term in Section
---- ----------
<S> <C>
"Affiliate Transaction"................................................ 4.11
"Alternate Offer"...................................................... 4.15
"Asset Sale Offer"..................................................... 4.10
"Asset Sale Offer Amount" 4.10
"Asset Sale Payment"................................................... 4.10
"Asset Sale Payment Date" 4.10
"Authentication Order"................................................. 2.02
"Change of Control Offer".............................................. 4.15
"Change of Control Payment"............................................ 4.15
"Change of Control Payment Date" ...................................... 4.15
"Covenant Defeasance".................................................. 8.03
</TABLE>
<PAGE> 24
-18-
<TABLE>
<S> <C>
"Designation Amount"................................................... 4.18
"DTC".................................................................. 2.03
"Event of Default"..................................................... 6.01
"Excess Proceeds"...................................................... 4.10
"incur"................................................................ 4.09
"Legal Defeasance" .................................................... 8.02
"Paying Agent"......................................................... 2.03
"Payment Default"...................................................... 6.01
"Permitted Debt"....................................................... 4.09
"Registrar"............................................................ 2.03
"Restricted Payments".................................................. 4.07
</TABLE>
Section 1.03. Terms of TIA.
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 Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Notes and the Subsidiary Guarantees means
the Company and the Guarantors, respectively, and any successor obligor upon
the Notes and the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by Commission
rule under the TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires: (i) a term has the
meaning assigned to it; (ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP; (iii) "or" is not exclusive;
(iv) words in the singular include the plural, and in the plural include the
singular; (v) provisions apply to successive events and transactions; and (vi)
references to sections of or rules under the Securities Act shall be deemed to
include substitute, replacement or successor sections or rules adopted by the
Commission from time to time.
<PAGE> 25
-19-
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof.
The terms and provisions contained in the Notes 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 any Note conflicts with the
express provisions of this Indenture, the provisions of this Indenture shall
govern and be controlling.
(b) Global Notes. Notes issued in global form shall be
substantially in the form of Exhibits A-1 or A-2 attached hereto (including the
Global Note Legend thereon and the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Notes issued in definitive form shall be
substantially in the form of Exhibit A-1 attached hereto (but without the
Global Note Legend thereon and without the "Schedule of Exchanges of Interests
in the Global Note" attached thereto). Each Global Note shall represent such of
the outstanding Notes as shall be specified therein and each shall provide that
it shall represent the aggregate principal amount of outstanding Notes from
time to time endorsed thereon and that the aggregate principal amount of
outstanding Notes represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Note to reflect the amount of any increase or decrease
in the aggregate principal amount of outstanding Notes represented thereby
shall be made by the Trustee or the Custodian, at the direction of the Trustee,
in accordance with instructions given by the Holder thereof as required by
Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in
reliance on Regulation S shall be issued initially in the form of the
Regulation S Temporary Global Note, which shall be deposited on behalf of the
purchasers of the Notes represented thereby with the Trustee, at its Corporate
Trust Office, as custodian for the Depositary, and registered in the name of
the Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Cedel, duly executed by the Company
and authenticated by the Trustee as hereinafter provided. The Restricted Period
shall terminate upon the receipt by the Trustee of (i) a written certificate
from the Depositary, together with copies of certificates from Euroclear and
Cedel Bank certifying that they have received certification of non-United
States beneficial ownership of 100% of the aggregate principal amount of the
Regulation S Temporary Global Note (except to the extent of any beneficial
owners thereof who acquired an interest therein during the Restricted Period
pursuant to another exemption
<PAGE> 26
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from registration under the Securities Act and who will take delivery of a
beneficial ownership interest in a 144A Global Note bearing a Private Placement
Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an
Officers' Certificate from the Company. Following the termination of the
Restricted Period, beneficial interests in the Regulation S Temporary Global
Note shall be exchanged for beneficial interests in Regulation S Permanent
Global Notes pursuant to the Applicable Procedures. Simultaneously with the
authentication of Regulation S Permanent Global Notes, the Trustee shall cancel
the Regulation S Temporary Global Note. The aggregate principal amount of the
Regulation S Temporary Global Note and the Regulation S Permanent Global Notes
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee, as the case may be,
in connection with transfers of interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable. The
provisions of the "Operating Procedures of the Euroclear System" and "Terms and
Conditions Governing Use of Euroclear" and the "General Terms and Conditions of
Cedel Bank" and "Customer Handbook" of Cedel Bank shall be applicable to
transfers of beneficial interests in the Regulation S Temporary Global Note and
the Regulation S Permanent Global Notes that are held by Participants through
Euroclear or Cedel Bank. The Trustee has no duty or obligation to monitor or
otherwise determine compliance with such provisions, and the Trustee may rely
on the register described in Section 2.03 for all purposes hereunder.
Section 2.02. Execution and Authentication.
An Officer shall sign the Notes for the Company by manual or
facsimile signature. If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
or facsimile signature of the Trustee. The signature shall be conclusive
evidence that the Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by an Officer (an "Authentication Order"), authenticate (i) Initial Notes for
original issue up to a maximum aggregate principal amount of $250.0 million and
(ii) Unrestricted Notes from time to time only (x) in exchange for a like
principal amount of Initial Notes or (y) in an aggregate principal amount of
not more than the excess of $250.0 million over the sum of the aggregate
principal amount of (A) Initial Notes then outstanding and (B) Unrestricted
Notes issued in accordance with (ii)(x) above. The aggregate principal amount
of Notes outstanding at any time may not exceed $250.0 million except as
provided in Section 2.07 hereof.
In the event that the Company shall issue and the Trustee
shall authenticate any Notes issued under this Indenture subsequent to the date
of this Indenture, the Company shall use its reasonable best efforts to obtain
the same "CUSIP" number for such Notes as is printed on the Notes outstanding
at such time; provided, however, that if any series of Notes issued under this
Indenture subsequent to the date of this Indenture is determined, pursuant to
an Opinion of Counsel of the Company to be a different class of security
<PAGE> 27
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than the Notes outstanding at such time for federal income tax purposes, the
Issuer may obtain a "CUSIP" number for such Notes that is different than the
"CUSIP" number printed on the Notes then outstanding. Notwithstanding the
foregoing, all Notes issued and outstanding under this Indenture shall vote and
consent together on all matters as one class and no series of Notes will have
the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes
may be presented for registration of transfer or for exchange ("Registrar") and
an office or agency where Notes may be presented for payment ("Paying Agent").
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and
the term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The Company
or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Custodian with respect to the Global
Notes.
The Company shall, prior to each interest record date, notify
the Paying Agent of any wire transfer instructions for payments that it
receives from Holders.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or Special Interest, if any, or interest on the
Notes, and will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee.
Upon payment over to the Trustee, the Paying Agent (if other than the Company
or a Subsidiary) shall have no
<PAGE> 28
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further liability for the money so paid. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon any
bankruptcy or reorganization proceedings relating to the Company, the Trustee
shall serve as Paying Agent for the Notes.
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 all Holders and shall otherwise comply with TIA ss. 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
seven Business Days before each interest payment date and at such other times
as the Trustee may request in writing, a list in such form and as of such date
as the Trustee may reasonably require of the names and addresses of the Holders
of Notes and the Company shall otherwise comply with TIA ss. 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. Global Notes
will not be exchanged by the Company for Definitive Notes unless (i) the
Company delivers to the Trustee notice from the Depositary that it is unwilling
or unable to continue to act as Depositary or that it is no longer a clearing
agency registered under the Exchange Act and, in either case, a successor
Depositary is not appointed by the Company within 120 days after the date of
such notice from the Depositary; (ii) the Company in its sole discretion
determines that the Global Notes (in whole but not in part) should be exchanged
for Definitive Notes and delivers a written notice to such effect to the
Trustee (provided that in no event shall the Regulation S Temporary Global Note
be exchanged by the Company for Definitive Notes prior to (x) the expiration of
the Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act as
specified in an Opinion of Counsel delivered to the Trustee by the Company, and
provided further, there shall be no continuing Default or Event of Default); or
(iii) an Event of Default shall have occurred and be continuing with respect to
the Notes and the Trustee has received a request from DTC or any Holder to
issue Definitive Notes. Upon the occurrence of any of the preceding events in
(i), (ii) or (iii) above, Definitive Notes shall be issued in such names as the
Depositary shall instruct the Trustee. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or
2.10 hereof, shall be authenticated and delivered in the form of, and shall be,
a Global Note. A Global Note may not be exchanged for another Note other than
as provided in this Section 2.06(a), however, beneficial interests in a Global
Note may be transferred and exchanged as provided in Section 2.06(b) or (f)
hereof.
<PAGE> 29
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(b) Transfer and Exchange of Beneficial Interests in
Global Notes. The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial
interests in the Restricted Global Notes shall be subject to restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Notes also
shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs, as
applicable:
(i) Transfer of Beneficial Interests in the Same Global
Note. Beneficial interests in any Restricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Note in accordance
with the transfer restrictions set forth in the Private Placement
Legend; provided, however, that prior to the expiration of the
Restricted Period, transfers of beneficial interests in the Temporary
Regulation S Global Note may not be made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser).
Beneficial interests in any Unrestricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders
or instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial
Interests in Global Notes. In connection with all transfers and
exchanges of beneficial interests in any Global Note that is not
subject to Section 2.06(b)(i) above, the transferor of such beneficial
interest must deliver to the Registrar (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
credit or cause to be credited a beneficial interest in another Global
Note in an amount equal to the beneficial interest to be transferred
or exchanged and (2) instructions given in accordance with the
Applicable Procedures (AND THE REGISTRAR MAY ASSUME, WITHOUT FURTHER
INVESTIGATION, THAT SUCH INSTRUCTIONS ARE IN ACCORDANCE WITH THE
APPLICABLE PROCEDURES) containing information regarding the
Participant account to be credited with such increase. Upon
consummation of the Exchange Offer by the Company in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii)
shall be deemed to have been satisfied upon receipt by the Registrar
of the instructions contained in the Letter of Transmittal delivered
by the holder of such beneficial interests in the Restricted Global
Notes. Upon satisfaction of all of the requirements for transfer or
exchange of beneficial interests in Global Notes contained in this
Indenture and the Notes or otherwise applicable under the Securities
Act, the Trustee shall adjust the principal amount of the relevant
Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another
Restricted Global Note. A beneficial interest in any Restricted Global
Note may be transferred to a Person who takes delivery thereof in the
form of a beneficial interest in another Restricted Global Note if the
transfer complies with the requirements of Section 2.06(b)(ii) above
and the Registrar receives the following:
<PAGE> 30
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(A) if the transferee will take delivery in the
form of a beneficial interest in a 144A Global Note, then the
transferor must deliver a certificate in the form of Exhibit
B hereto, including the certifications in item (1) thereof;
and
(B) if the transferee will take delivery in the
form of a beneficial interest in a Regulation S Global Note,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2)
thereof;
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in an Unrestricted
Global Note. A beneficial interest in any Restricted Global Note may
be exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Note or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note if the exchange or transfer complies with the requirements of
Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of the
beneficial interest to be transferred, in the case of an
exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is
not (1) a Broker-Dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer
pursuant to the Shelf Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial
interest in a Restricted Global Note proposes to
exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit
C hereto, including the certifications in item
(1)(a) thereof; or
(2) if the holder of such beneficial
interest in a Restricted Global Note proposes to
transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note,
a certificate from such holder in the form of
Exhibit B hereto, including the certifications in
item (4) thereof;
<PAGE> 31
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and, in each such case set forth in this subparagraph (D), if
the Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel to the effect that such
exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in
the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B)
or (D) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer and Exchange of Beneficial Interests in
Global Notes for Definitive Notes. A beneficial interest in a Global Note may
not be exchanged for a Definitive Note except under the circumstances described
in Section 2.06(a) hereof. A beneficial interest in a Global Note may not be
transferred to a Person who takes delivery thereof in the form of a Definitive
Note except under the circumstances described in Section 2.06(a) hereof.
(d) Transfer and Exchange of Definitive Notes for
Beneficial Interests in Global Notes.
(i) Restricted Definitive Notes to Beneficial Interests
in Restricted Global Notes. If any Holder of a Restricted Definitive
Note proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Notes
to a Person who takes delivery thereof in the form of a beneficial
interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive
Note proposes to exchange such Note for a beneficial interest
in a Restricted Global Note, a certificate from such Holder
in the form of Exhibit C hereto, including the certifications
in item (2)(a) thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1)
thereof;
(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction
in accordance with Rule 903 or Rule
<PAGE> 32
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904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule
144 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration requirements
of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required
by item (3)(d) thereof, if applicable;
(F) if such Restricted Definitive Note is being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, and increase
or cause to be increased the aggregate principal amount of, in the
case of clause (A) above, the appropriate Restricted Global Note, in
the case of clause (B) above, the 144A Global Note, and in the case of
clause (c) above, the Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests
in Unrestricted Global Notes. A Holder of a Restricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Restricted Definitive Note to a Person
who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is
not (1) a Broker-Dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
<PAGE> 33
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(C) such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive
Notes proposes to exchange such Notes for a
beneficial interest in the Unrestricted Global Note,
a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in
item (1)(b) thereof; or
(2) if the Holder of such Definitive
Notes proposes to transfer such Notes to a Person
who shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note,
a certificate from such Holder in the form of
Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (D), if
the Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel to the effect that such
exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in
the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive
Notes and increase or cause to be increased the aggregate principal
amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial
Interests in Unrestricted Global Notes. A Holder of an Unrestricted
Definitive Note may exchange such Note for a beneficial interest in an
Unrestricted Global Note or transfer such Definitive Notes to a Person
who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note at any time. Upon receipt of a request for
such an exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Note and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for
Definitive Notes. Upon request by a Holder of Definitive Notes and such
Holder's compliance with the provisions of
<PAGE> 34
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this Section 2.06(e), the Registrar shall register the transfer or exchange of
Definitive Notes. Prior to such registration of transfer or exchange, the
requesting Holder shall present or surrender to the Registrar the Definitive
Notes duly endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar duly executed by such Holder or by its attorney,
duly authorized in writing. In addition, the requesting Holder shall provide
any additional certifications, documents and information, as applicable,
required pursuant to the following provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive
Notes. Any Restricted Definitive Note may be transferred to and
registered in the name of Persons who take delivery thereof in the
form of a Restricted Definitive Note if the Registrar receives the
following:
(A) if the transfer will be made pursuant to
Rule 144A under the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to
Rule 903 or Rule 904, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any
other exemption from the registration requirements of the
Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required
by item (3)(d) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted
Definitive Notes. Any Restricted Definitive Note may be exchanged by
the Holder thereof for an Unrestricted Definitive Note or transferred
to a Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Note if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is
not (1) a Broker-Dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to
the Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
<PAGE> 35
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(D) the Registrar receives the following:
(1) if the Holder of such Restricted
Definitive Notes proposes to exchange such Notes for
an Unrestricted Definitive Note, a certificate from
such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(c) thereof;
or
(2) if the Holder of such Restricted
Definitive Notes proposes to transfer such Notes to
a Person who shall take delivery thereof in the form
of an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if
the Registrar so requests, an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such
exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in
the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted
Definitive Notes. A Holder of Unrestricted Definitive Notes may
transfer such Notes to a Person who takes delivery thereof in the form
of an Unrestricted Definitive Note. Upon receipt of a request to
register such a transfer, the Registrar shall register the
Unrestricted Definitive Notes pursuant to the instructions from the
Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange
Offer in accordance with the Registration Rights Agreement, the Company shall
issue and, upon receipt of an Authentication Order in accordance with Section
2.02, the Trustee shall authenticate (i) one or more Unrestricted Global Notes
in an aggregate principal amount equal to the principal amount of the
beneficial interests in the Restricted Global Notes tendered for acceptance by
Persons that certify in the applicable Letters of Transmittal that (x) they are
not Broker-Dealers, (y) they are not participating in a distribution of the
Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the
Company, and accepted for exchange in the Exchange Offer and (ii) Definitive
Notes in an aggregate principal amount equal to the principal amount of the
Restricted Definitive Notes accepted for exchange in the Exchange Offer.
Concurrently with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the
face of all Global Notes and Definitive Notes issued under this Indenture
unless specifically stated otherwise in the applicable provisions of this
Indenture.
<PAGE> 36
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(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B)
below, each Global Note and each Definitive Note (and all
Notes issued in exchange therefor or substitution thereof)
shall bear the legend in substantially the following form:
"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1)
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,
(3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO AN
INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES."
(B) Notwithstanding the foregoing, any Global
Note or Definitive Note issued pursuant to subparagraph
(b)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) of this
Section 2.06 (and all Notes issued in exchange therefor or
substitution thereof) shall not bear the Private Placement
Legend.
(ii) Global Note Legend. Each Global Note shall bear a
legend in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN
THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO THE
INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN
PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL
NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT
OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The
Regulation S Temporary Global Note shall bear a legend in
substantially the following form:
<PAGE> 37
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"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL
NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN)."
(h) Cancellation and/or Adjustment of Global Notes. At
such time as all beneficial interests in a particular Global Note have been
exchanged for Definitive Notes or a particular Global Note has been redeemed,
repurchased or canceled in whole and not in part, each such Global Note shall
be returned to or retained and canceled by the Trustee in accordance with
Section 2.11 hereof. At any time prior to such cancellation, if any beneficial
interest in a Global Note is exchanged for or transferred to a Person who will
take delivery thereof in the form of a beneficial interest in another Global
Note, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and
Exchanges.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate Global
Notes and Definitive Notes upon the Company's order or at the
Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note 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 (other
than any such transfer taxes or similar governmental charge payable
upon exchange or transfer pursuant to Sections 2.10, 3.06, 4.10, 4.15
and 9.05 hereof).
(iii) All Global Notes and Definitive Notes issued upon
any registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.
(iv) The Registrar shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and ending
at the close of business on the day of selection, (B) to register the
transfer of or to exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being
redeemed in part or (c) to register
<PAGE> 38
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the transfer of or to exchange a Note between a record date and the
next succeeding Interest Payment Date.
(v) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes,
and none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
(vi) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Sections 2.02,
2.06(i), 2.07, and 2.10 hereof.
(vii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a registration of transfer or exchange may be
submitted by facsimile.
(viii) Each Holder of a Note agrees to indemnify the
Company and the Trustee against any liability that may result from the
transfer, exchange or assignment of such Holder's Note in violation of
any provision of this Indenture and/or applicable United States
federal or state securities law.
The Trustee and the Registrar 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 Note (including any transfers between or among Depositary
Participants or beneficial owners of interests in any Global Note) other than
to require delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly required by the
terms of, this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
Section 2.07. Replacement Notes
If any mutilated Note is surrendered to the Registrar or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the
Trustee, upon receipt of an Authentication Order, shall authenticate a
replacement Note. An indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
<PAGE> 39
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Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Note
effected by the Trustee in accordance with the provisions hereof and those
described in this Section as not outstanding. Except as set forth in Section
2.09 hereof, a Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note; however, Notes held by the Company or
a Subsidiary of the Company shall not be deemed to be outstanding for purposes
of Section 3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary of
the Company or an Affiliate of any thereof) holds, on a redemption date or
maturity date, money sufficient to pay Notes payable on that date, then on and
after that date such Notes shall be deemed to be no longer outstanding and
shall cease to accrue interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company,
shall be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that a Responsible Officer of the
Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes
The Company may prepare and the Trustee, upon receipt of an
Authentication Order, shall authenticate temporary Notes. Temporary Notes shall
be substantially in the form of permanent Notes but may have variations that
the Company considers appropriate for temporary Notes and as shall be
reasonably acceptable to the Trustee. The Company may prepare and the Trustee,
upon receipt of an Authentication Order, shall authenticate permanent Notes in
exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
<PAGE> 40
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Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall dispose
of the Notes in accordance with its customary procedures (subject to the record
retention requirement of the Exchange Act). The Company may not issue new Notes
to replace Notes that it has paid or that have been delivered to the Trustee
for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the
Notes, such interest shall cease to be payable to the Holders on the relevant
record date and the Company shall instead pay the defaulted interest in any
lawful manner plus, to the extent lawful, interest payable on the defaulted
interest, to the Persons who are Holders on a subsequent special record date,
in each case at the rate provided in the Notes and in Section 4.01 hereof. The
Company shall notify the Trustee in writing of the amount of defaulted interest
proposed to be paid on each Note and the date of the proposed payment. The
Company shall fix or cause to be fixed each such special record date and
payment date; provided that no such special record date shall be less than 10
days prior to the related payment date for such defaulted interest. At least 15
days before the special record date, the Company (or, upon the written request
of the Company, the Trustee in the name and at the expense of the Company)
shall mail or cause to be mailed to Holders a notice that states the special
record date, the related payment date and the amount of such interest to be
paid.
Section 2.13. CUSIP Numbers.
The Company, in issuing the Notes, may use "CUSIP" numbers
(if then generally in use) and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Notes or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Notes, and any such redemption shall not be affected by
any defect in or omission of such numbers. The Company will promptly notify the
Trustee of any change in the "CUSIP" numbers.
Section 2.14. Designation.
(a) The Indebtedness evidenced by the Notes is hereby
irrevocably designated as "senior indebtedness" or such other term denoting
seniority (i) for all purposes of the provisions defining subordination
contained in agreements that provide that the Indebtedness of the Company
issued pursuant to such agreements is subordinate to Indebtedness designated as
senior indebtedness and (ii) for the purposes of any future Indebtedness of the
Company which the Company expressly makes subordinate to any senior
indebtedness
<PAGE> 41
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or such other term denoting seniority. In connection with the issuance of any
such future subordinated Indebtedness, the Company shall take all necessary
steps to effectuate the foregoing.
(b) The Initial Notes and the Exchange Notes shall vote
and consent together on all matters as one class, and neither the Initial Notes
nor the Exchange Notes will have the right to vote or consent as a separate
class on any matter.
SECTION 2.15. Deposit of Moneys.
Prior to the close of business of the Paying Agent on the
Business Day next prior to each Interest Payment Date and the Final Maturity
Date, the Company shall deliver by wire transfer to the Paying Agent in
immediately available funds money sufficient to make cash payments due on such
Interest Payment Date or the 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 or the Final Maturity Date, as the case may be.
ARTICLE 3.
REDEMPTION
Section 3.01. Notice of Redemption to Trustee.
If the Company elects to redeem Notes pursuant to the
optional redemption provisions of Section 3.07 hereof, it shall furnish to the
Trustee, at least 30 days but not more than 60 days before the redemption date,
an Officers' Certificate setting forth (i) the clause of this Indenture
pursuant to which the redemption shall occur, (ii) the redemption date, (iii)
the principal amount of Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed at any time
pursuant to Section 3.07 hereof, the Trustee shall select the Notes to be
redeemed among the Holders of the Notes in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or by
such method as the Trustee shall deem fair and appropriate. Within five days
after the listing of the Notes on any such principal national securities
exchange, the Company shall deliver to the Trustee a written copy of the
appropriate redemption selection requirements of such exchange. In the event of
partial redemption by lot pursuant to Section 3.07 hereof, the particular Notes
to be redeemed shall be selected, unless otherwise provided herein, not less
than 30 nor more than 60 days prior to the redemption date by the Trustee from
the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the princi-
<PAGE> 42
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pal amount thereof to be redeemed. Notes and portions of Notes selected shall
be in amounts of $1,000 or whole multiples of $1,000; except that if all of the
Notes of a Holder are to be redeemed, the entire outstanding amount of Notes
held by such Holder, even if not a multiple of $1,000, shall be redeemed.
Except as provided in the preceding sentence, provisions of this Indenture that
apply to Notes called for redemption also apply to portions of Notes called for
redemption.
Section 3.03. Notice of Redemption to Holders.
If the Company elects to redeem Notes pursuant to the
optional redemption provisions of Section 3.07 hereof, at least 30 days but not
more than 60 days before the redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address. The notice shall identify
the Notes to be redeemed (including "CUSIP" number(s)) and shall state: (i) the
redemption date; (ii) the redemption price; (iii) if any Note is being redeemed
in part, the portion of the principal amount of such Note to be redeemed and
that, after the redemption date upon surrender of such Note, a new Note or
Notes in principal amount equal to the unredeemed portion shall be issued upon
cancellation of the original Note; (iv) the name and address of the Paying
Agent; (v) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price; (vi) that, unless the Company defaults
in making such redemption payment, interest on Notes called for redemption
ceases to accrue on and after the redemption date; (vii) the paragraph of the
Notes and/or Section of this Indenture pursuant to which the Notes called for
redemption are being redeemed; and (viii) that no representation is made as to
the correctness or accuracy of the "CUSIP" number, if any, listed in such
notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice
of redemption in the Company's name and at its expense; provided, however, that
the Company shall have delivered to the Trustee, at least 60 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with
Section 3.03 hereof, Notes called for redemption become irrevocably due and
payable on the redemption date at the redemption price. A notice of redemption
may not be conditional.
Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Company
shall deposit with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Notes to be redeemed on that date. The
Paying Agent shall promptly return to the Company any money deposited with the
Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Notes to be redeemed.
<PAGE> 43
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If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note 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 Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the
Company shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section
3.07, the Company shall not have the option to redeem the Notes pursuant to
this Section 3.07 prior to September 15, 2003. On or after September 15, 2003,
the Notes will be subject to redemption at any time at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Special Interest thereon,
if any, to, but not including the applicable redemption date, if redeemed
during the twelve-month period beginning on September of the years indicated
below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003.................................................... 106.125%
2004.................................................... 104.083%
2005.................................................... 102.042%
2006 and thereafter..................................... 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this
Section 3.07, at any time on or prior to September 15, 2002, the Company may on
any one or more occasions redeem up to 35% of the aggregate principal amount of
Notes originally issued hereunder at a redemption price of 112.25% of the
principal amount thereof, plus accrued and unpaid interest and Special Interest
thereon, if any, to, but not including the redemption date, with the net cash
proceeds of one or more Public Equity Offerings by the Company; provided that
(i) at least 65% of the aggregate principal amount of Notes originally issued
remains outstanding immediately after the occurrence of such redemption
(excluding Notes held by the Company and its Subsidiaries) and (ii) such
redemption occurs within 180 days of the date of the closing of such Public
Equity Offering.
<PAGE> 44
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(c) Any redemption pursuant to this Section 3.07 shall
be made pursuant to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
Except as set forth in Sections 4.10 and 4.15 hereof, the
Company shall not be required to make mandatory redemption payments with
respect to the Notes.
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date
money deposited by the Company in immediately available funds and designated
for and sufficient to pay all principal, premium, if any, and interest then
due. The Company shall pay all Special Interest, if any, in the same manner on
the dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at
the rate equal to 1% per annum in excess of the then applicable interest rate
on the Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Special Interest (without regard to any applicable
grace period) at the same rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may
be served. 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 Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such des-
<PAGE> 45
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ignation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, the
City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.03. The Company hereby initially designates State Street Bank and
Trust Company, N.A., at its address at 61 Broadway, New York, New York 10006,
Attention: Corporate Trust Department, as its office or agency in the Borough
of Manhattan, the City of New York, for such purposes.
Section 4.03. Reports.
(a) Whether or not required by the rules and regulations
of the Commission, so long as any Notes are outstanding, the Company shall
furnish to the Holders of Notes, within the time periods specified in the
Commission's rules and regulations: (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission 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 thereon by the Company's certified independent accountants; and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports. In addition, whether or
not required by the Commission, the Company shall file a copy of all of the
information and reports referred to in clause (i) and (ii) above with the
Commission for public availability within the time periods specified in the
Commission's rules and regulations (unless the Commission will not accept such
a filing) and make such information available to securities analysts and
prospective investors upon request.
(b) In addition, for so long as any Restricted Global
Notes or Restricted Definitive Notes remain outstanding, the Company and the
Guarantors shall furnish to the Holders 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. Any materials
required to be furnished to Holders of Notes by this Section 4.03 shall
discuss, in reasonable detail, either on the face of the financial statements
included therein or in the notes thereto and in any "Management's Discussion
and Analysis of Financial Condition and Results of Operations," the financial
condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company.
(c) 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 actual or 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). The Trustee
shall not be required to examine any of such reports, information and documents
for any
<PAGE> 46
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reason hereunder, including, without limitation, determining whether the Company
has complied with its covenants or obligations hereunder.
Section 4.04. Compliance Certificate.
(a) The Company and each Guarantor (to the extent that
such Guarantor is so required under the TIA) shall deliver to the Trustee,
within 90 days after the end of each fiscal year, an Officers' Certificate
stating that a review of the activities of the Company and its Subsidiaries
during the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions of this Indenture (or, if a Default or Event of Default shall have
occurred and be continuing, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee as soon as possible and in any event within
five days, forthwith upon the Company becoming aware of any Default or Event of
Default that has occurred and is continuing, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company and each of 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, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Indenture;
and the Company and each of the Guarantors (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it shall not, by resort to any such law, 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 has been
enacted.
<PAGE> 47
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Section 4.07. 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 (including, without limitation, any payment in
connection with any merger or consolidation involving the Company or
any of its Restricted Subsidiaries) or to the direct or indirect
holders of the Company's or any of its Restricted Subsidiaries' Equity
Interests in their capacity as such (other than dividends or
distributions payable solely in Equity Interests (other than
Disqualified Stock) of the Company or dividends or distributions
payable to the Company or a Restricted Subsidiary of the Company);
(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation
involving the Company) 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);
(3) make any payment on or with respect to, or purchase, redeem, defease
or otherwise acquire or retire for value, any Indebtedness that is
subordinated to the Notes or the Subsidiary Guarantees, except a
payment of interest or principal at the Stated Maturity thereof; 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"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
(2) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in Section 4.09 (a)
hereof; 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 date of this Indenture (excluding Restricted
Payments permitted by clauses (2) and (3) of the succeeding
paragraph), is less than the sum, without duplication, of
<PAGE> 48
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(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 date of this
Indenture 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 since the date of this Indenture as a contribution to
its common equity capital or from the issue or sale of Equity
Interests of the Company (other than Disqualified Stock) or
from the issue 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), excluding, in each case, net
cash proceeds from a Public Equity Offering to the extent
used to redeem Notes, plus
(c) an amount equal to the lesser of (A) the sum of the fair
market value of the Equity Interests of an Unrestricted
Subsidiary owned by the Company and/or the Restricted
Subsidiaries and aggregate amount of all Indebtedness of such
Unrestricted Subsidiary owed to the Company and each
Restricted Subsidiary on the date of redesignation of such
Unrestricted Subsidiary as a Restricted Subsidiary in
accordance with Section 4.18 hereof or (B) the Designation
Amount with respect to such Unrestricted Subsidiary on the
date of the Designation of such Subsidiary as an Unrestricted
Subsidiary in accordance with Section 4.18 hereof; plus
(d) to the extent that any Restricted Investment that was made
after the date of this Indenture is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (i)
the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) or (ii) the
initial amount of such Restricted Investment, in each case,
to the extent Consolidated Net Income is not already
increased thereby.
So long as no Default has occurred and is continuing or would
be caused thereby, the preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would
have complied with the provisions of this Indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of the Company or any
Guarantor or of any Equity Interests of the Company or 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
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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) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company or any Guarantor with the net
cash proceeds from an incurrence of Permitted Refinancing
Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of the Company
to the holders of its common Equity Interests on a pro rata basis;
(5) repurchases of Equity Interests of the Company or Holdings from
officers, directors, employees or consultants of the Company or any of
its Restricted Subsidiaries or of Holdings pursuant to equity
ownership or compensation plans or stockholders agreements not to
exceed $1.0 million in the aggregate;
(6) the payment of management fees to Kohlberg in aggregate amount not to
exceed for any calendar year the sum of (a) $850,000 plus (b) 2.0% of
the aggregate net cash proceeds in excess of $5.0 million received by
the Company from Kohlberg and/or its controlled Affiliates from (I)
the issuance to Kohlberg and/or such controlled Affiliates of Equity
Interests of the Company (other than Disqualified Stock) after the
Issue Date and (II) without duplication of any amounts included in the
immediately preceding clause (I), any contribution to the common
equity capital of the Company; or
(7) the payment of dividends and distributions to Holdings to (a) fund
payments for taxes attributable to the business and operations of the
Company and its Subsidiaries and (b) other expenses of Holdings not to
exceed $250,000 in any calendar year.
The amount of all Restricted Payments (other than cash) shall
be the fair market value on the date of the Restricted Payment of the asset(s)
or securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any assets or securities that are required to be
valued by this Section 4.07 shall be determined by the Board of Directors,
whose resolution with respect thereto shall be delivered to the Trustee.
Section 4.08. 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 encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to
the Company or any of the Company's Restricted Subsidiaries, or with
respect to any other interest or participation in, or measured by, its
profits, 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.
However, the preceding restrictions will not apply to
encumbrances or restrictions existing under or by reason of:
(1) the Credit Facility and Existing Indebtedness, in each case, as in
effect on the date of this Indenture 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, taken as a whole, with respect to such dividend and other
payment restrictions than those contained in the Credit Facility or
such Existing Indebtedness, as the case may be, as in effect on the
date of this Indenture; provided, further, however, that restrictions
under the Credit Facility may provide for more restrictive limitations
on the ability of the Company to make Investments in Restricted
Subsidiaries or on the ability of Guarantors to make Investments in
non-Guarantor Restricted Subsidiaries;
(2) this Indenture and the Notes;
(3) applicable law;
(4) any instrument governing Indebtedness of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time
of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any Person, or
the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that such
Indebtedness was permitted by the terms of this Indenture to be
incurred;
(5) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(6) Purchase Money Indebtedness that imposes restrictions on the property
so acquired of the nature described in clause (3) of the preceding
paragraph;
(7) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions 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 re-
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strictive, taken as a whole, than those contained in the agreements
governing the Indebtedness being refinanced;
(9) Liens securing Indebtedness otherwise permitted to be incurred
pursuant to Section 4.12 hereof;
(10) any instrument governing Indebtedness of a Foreign Restricted
Subsidiary;
(11) 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; and
(12) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
(a) 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), and the Company may
issue Disqualified 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 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 the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period.
(b) So long as no Default shall have occurred and be
continuing or would be caused thereby, clause (a) of this Section 4.09 will not
prohibit the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(1) the incurrence by the Company and the
Guarantors of Indebtedness represented by the Notes, and the
Subsidiary Guarantees thereof, not to exceed $150.0 million
at any one time outstanding;
(2) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness incurred pursuant to
a revolving credit facility under the Credit Facility in an
aggregate principal amount at any time outstanding not to
exceed the greater of:
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(a) $25.0 million (reduced by any required
permanent repayments or prepayments with the proceeds of
Asset Sales actually made (which are accompanied by a
corresponding permanent commitment reduction) thereunder); or
(b) the sum of (I) 85% of the net book value of
the accounts receivable of the Company and the Restricted
Subsidiaries and (II) 55% of the net book value of the
inventory of the Company and the Restricted Subsidiaries,
less the amount of Indebtedness outstanding pursuant to
clause (14) below;
(3) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness incurred pursuant to an Acquisition
Facility under the Credit Facility in an aggregate principal amount
not to exceed $30.0 million (reduced by any permanent repayments or
prepayments with the proceeds of Asset Sales actually made
thereunder);
(4) other Indebtedness of the Company and the Restricted
Subsidiaries outstanding on the Issue Date reduced by the amount of
any scheduled amortization payments or mandatory prepayments when
actually paid or permanent reductions therein;
(5) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations
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 or Purchase Money Indebtedness, in an aggregate principal
amount not to exceed $5.0 million at any time outstanding;
(6) 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
to be incurred under clause (a) of this Section 4.09 or clause (1)
(without limitation as to principal amount outstanding), (4) or (5) of
this paragraph;
(7) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company
and any of its Wholly Owned Restricted Subsidiaries; provided that:
(a) if the Company or any Guarantor is the
obligor on such Indebtedness, such Indebtedness must be
unsecured and expressly subordinated to the prior payment in
full in cash 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
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(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 Wholly Owned
Restricted Subsidiary thereof and (ii) any sale or other
transfer of any such Indebtedness to a Person that is not
either the Company or a Wholly Owned Restricted Subsidiary
thereof shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be, that was not
permitted by this clause (7);
(8) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations;
(9) the guarantee by the Company or any of the Guarantors
of Indebtedness of the Company or a Restricted Subsidiary of the
Company that was permitted to be incurred by another provision of this
Section 4.09;
(10) the incurrence by the Company or any of the
Guarantors of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, including
all Permitted Refinancing Indebtedness incurred to refund, refinance
or replace any Indebtedness incurred pursuant to this clause (10), not
to exceed $10.0 million at any one time outstanding;
(11) 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 in the form
of additional shares of the same class of Disqualified Stock;
provided, in each such case, that the amount thereof is included in
Fixed Charges of the Company as accrued;
(12) the incurrence by the Company of Indebtedness arising
from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary
course of business; provided that such Indebtedness is extinguished
within five Business Days of incurrence;
(13) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by letters of credit for the
account of the Company or such Restricted Subsidiary, as the case may
be, in order to provide security for workers' compensation claims,
payment obligations in connection with self-insurance or similar
requirements in the ordinary course of business; and
(14) the incurrence by Foreign Restricted Subsidiaries of
Indebtedness in an aggregate principal amount at any one time
outstanding not to ex-
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ceed the greater of $5.0 million or the sum of (a) 85% of the
net book value of accounts receivable of the Foreign
Restricted Subsidiaries and (b) 55% of the net book value of
the inventory of the Foreign Restricted Subsidiaries.
For purposes of determining compliance with this Section
4.09, 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 (14) above, or is entitled to be incurred pursuant to clause (a) of
this Section 4.09, the Company will be permitted to classify such item of
Indebtedness on the date of its incurrence in any manner that complies with
this covenant.
(c) The Company will not incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is subordinate
or junior in right of payment to any other Indebtedness of the Company unless
such Indebtedness is equally subordinate or junior in right of payment to the
Notes. No Guarantor will incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any other Indebtedness of such Guarantor unless such Indebtedness is
equally subordinate or junior in right of payment to such Guarantor's
Subsidiary Guarantee.
Section 4.10. 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 the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal
to the fair market value of the assets or Equity Interests issued or
sold or otherwise disposed of;
(2) 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 Officers' 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 liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet), of the Company or
any Restricted Subsidiary (other than contingent liabilities
and 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 a customary
novation agreement that releases the Company or such
Restricted Subsidiary from further liability; and
(b) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such
transferee that are contemporaneously
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(subject to ordinary settlement periods) converted by the
Company or such Restricted Subsidiary into cash (to the
extent of the cash received in that conversion).
Within 360 days after the receipt of any Net Proceeds from an
Asset Sale, the Company or the applicable Restricted Subsidiary may apply such
Net Proceeds at its option:
(1) to permanently repay Indebtedness secured by
assets or Equity Interests owned by the Company or any
Restricted Subsidiary;
(2) to acquire Replacement Assets; or
(3) to the extent the Net Proceeds are derived from
assets or Equity Interests sold by a Foreign Restricted
Subsidiary, to repay Indebtedness of such Foreign Restricted
Subsidiary.
Pending the final application of any such Net Proceeds, the Company or the
applicable Restricted Subsidiary may temporarily reduce revolving credit
borrowings 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." When the aggregate amount of Excess Proceeds exceeds $5.0 million,
the Company will make an offer (an "Asset Sale Offer") to all Holders of Notes
to purchase the maximum principal amount of Notes that may be purchased out of
the Excess Proceeds (the "Asset Sale Offer Amount"). 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 (the "Asset Sale Payment"),
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 tendered into such Asset Sale Offer exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro
rata basis to the extent practicable. Upon completion of each Asset Sale Offer,
the amount of Excess Proceeds shall be reset at zero.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and to each Holder at
its registered address. The notice shall contain all instructions and materials
necessary to enable such Holder to tender Notes pursuant to the Asset Sale
Offer. Any Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state: (1) that the Asset
Sale Offer is being made pursuant to this Section 4.10; (2) the Asset Sale
Offer Amount, the Asset Sale Payment and the date on which Notes tendered and
accepted for payment shall be purchased, which date shall be at least 30 days
and no later than 60 days from the date such notice is mailed (the "Asset Sale
Payment Date"); (3) that any Note not tendered or accepted for payment shall
continue to accrete or accrue interest; (4) that, unless the Company defaults
in making such payment, any Note accepted for payment pursuant to the Asset
Sale Offer shall cease to accrete or accrue interest after the Asset Sale
Payment
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Date; (5) that Holders electing to have a Note purchased pursuant to the Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased; (6) that Holders electing to
have a Note purchased pursuant to any Asset Sale Offer shall be required to
surrender the Note, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Note completed, or transfer by book-entry transfer, to
the Company, a depositary, if appointed by the Company, or the Paying Agent at
the address specified in the notice at least three days before the Asset Sale
Payment Date; (7) that Holders shall be entitled to withdraw their election if
the Company, the depositary or the Paying Agent, as the case may be, receives,
not later than the Asset Sale Payment Date, a notice setting forth the name of
the Holder, the principal amount of the Note the Holder delivered for purchase
and a statement that such Holder is withdrawing his election to have such Note
purchased; (8) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Asset Sale Offer Amount, the Company shall select the Notes
to be purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and (9) that Holders whose
Notes were purchased only in part shall be issued new Notes equal in principal
amount to the unpurchased portion of the Notes surrendered (or transferred by
book-entry transfer). 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 the Notes as a result of an Asset Sale.
On the Asset Sale Payment Date, the Company shall, to the
extent lawful: (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Asset Sale Offer; (2) deposit with the Paying Agent an
amount equal to the Asset Sale Payment in respect of all Notes or portions
thereof so tendered; and (3) deliver or cause to be delivered to the Trustee
the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being repurchased by
the Company. The Company shall publicly announce the results of the Asset Sale
Offer on the Asset Sale Payment Date.
The Paying Agent shall promptly mail to each Holder of Notes
so tendered the Asset Sale Payment for such Notes, and the Trustee shall
promptly authenticate pursuant to an Authentication Order and mail (or cause to
be transferred by book entry) to each Holder a new Note equal in principal
amount to any unrepurchased portion of the Notes surrendered, if any; provided
that each such new Note shall be in a principal amount of $1,000 or an integral
multiple thereof. However, if the Asset Sale Payment Date is on or after an
interest record date and on or before the related interest payment date, any
accrued and unpaid interest shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Notes pursuant to the Asset
Sale Offer.
Section 4.11. Transactions with Affiliates.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or
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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 the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by the Company or
such Restricted Subsidiary with an unrelated Person; and
(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 $1.0 million, a resolution of the
Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with this
Section 4.11 and that such Affiliate Transaction 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 Holders of such Affiliate Transaction
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 agreement entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Restricted
Subsidiary or that is approved by a majority of the disinterested
directors of the Company;
(2) transactions between or among the Company and/or its Restricted
Subsidiaries;
(3) payment of reasonable directors fees to Persons who are not otherwise
Affiliates of the Company; and
(4) Restricted Payments and Permitted Investments that are permitted by
the provisions of Section 4.07 hereof.
Section 4.12. Liens.
The Company will not, and will not permit any Guarantor to,
incur or suffer to exist any Lien on or with respect to any property or assets
now owned or hereafter acquired by the Company or any Guarantor to secure any
Indebtedness without making, or causing such Guarantor to make, effective
provision for securing the Notes or such Guarantor's Sub-
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sidiary Guarantee, as the case may be, (x) equally and ratably with (or prior
to) such Indebtedness as to such property for so long as such Indebtedness will
be so secured or (y) in the event such Indebtedness is subordinate in right of
payment to the Notes or such Guarantor's Subsidiary Guarantee, as the case may
be, prior to such Indebtedness as to such property for so long as such
Indebtedness will be so secured.
The foregoing restrictions on the Company and the Guarantors
shall not apply to:
(1) Liens existing on the Issue Date and securing Indebtedness outstanding
on the Issue Date or Liens securing the Notes or the Subsidiary
Guarantees;
(2) Liens securing Indebtedness incurred pursuant to the Credit Facility
in an aggregate principal amount not to exceed amounts permitted to be
incurred pursuant to clauses (2) and (3) under Section 4.09(b) hereof;
(3) Liens in favor of the Company or any Guarantor that is Wholly Owned
Restricted Subsidiary of the Company;
(4) Liens on real or personal property of the Company or a Restricted
Subsidiary of the Company acquired, constructed or constituting
improvements made after the Issue Date to secure Capital Lease
Obligations or Purchase Money Indebtedness, provided, however, that:
(a) the Incurrence of such Indebtedness was permitted under Section
4.09 hereof; (b) the principal amount of any Indebtedness secured by
such a Lien does not exceed 100% of such purchase price or cost of
construction or improvement of the property subject to such Lien; (c)
such Lien attaches to such property prior to, at the time of or within
180 days after the acquisition, completion of construction or
commencement of operation of such property; and (d) such Lien does not
extend to or cover any property other than the property (or
identifiable portions thereof) acquired, constructed or constituting
improvements made with the proceeds of such Purchase Money
Indebtedness;
(5) Liens to secure Acquired Debt; provided, however, that (a) such Lien
attaches to the acquired asset prior to the time of the acquisition of
such asset and (b) such Lien does not extend to or cover any other
asset;
(6) Liens to secure Indebtedness incurred to extend, renew, refinance or
refund (or successive extensions, renewals, refinancings or refundings
of), in whole or in part, Indebtedness secured by any Lien referred to
in the foregoing clauses (1), (2), (4) and (5) so long as such Lien
does not extend to any other property and the principal amount of
Indebtedness so secured is not increased except as otherwise permitted
under clause (6) of Section 4.09(b) hereof;
(7) Liens on Equity Interests issued by a Restricted Subsidiary that is
not a Guarantor securing Indebtedness of such Restricted Subsidiary;
provided however, that the
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Liens may not extend to any other property owned by the Company or any
Guarantor;
(8) Liens securing Hedging Obligations; and
(9) Permitted Liens.
Section 4.13. Issuances and Sales of Equity Interests in Restricted
Subsidiaries.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, transfer, convey, sell, lease or otherwise dispose
of any Equity Interests in any Restricted Subsidiary of the Company to any
Person (other than the Company or a Restricted Subsidiary of the Company),
unless:
(1) such transfer, conveyance, sale, lease or other disposition is of all
the Equity Interests in such Restricted Subsidiary; and
(2) the cash Net Proceeds from such transfer, conveyance, sale, lease or
other disposition are applied in accordance with Section 4.10 hereof.
In addition, the Company will not permit any Restricted Subsidiary of the
Company to issue any of its Equity Interests (other than, if necessary, shares
of its Capital Stock constituting directors' qualifying shares) to any Person
other than to the Company or a Restricted Subsidiary of the Company.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence of
each of its Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Subsidiary and (ii) the rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Subsidiaries, if
the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes.
Section 4.15. Offer to Repurchase upon Change of Control.
If a Change of Control occurs, each Holder of 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 such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof
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plus accrued and unpaid interest and Special Interest thereon, if any, to the
date of purchase (the "Change of Control Payment").
Within 30 days following any Change of Control, the Company
shall send, by first class mail, a notice to the Trustee and to each Holder at
its registered address. The notice shall contain all instructions and materials
necessary to enable such Holder to tender Notes pursuant to the Change of
Control Offer. Any Change of Control Offer shall be made to all Holders. The
notice, which shall govern the terms of the Change of Control Offer, shall
state: (1) that the Change of Control Offer is being made pursuant to this
Section 4.15; (2) the Change of Control Payment and the date on which Notes
tendered and accepted for payment shall be purchased, which date shall be at
least 30 days and no later than 60 days from the date such notice is mailed
(the "Change of Control Payment Date"); (3) that any Note not tendered or
accepted for payment shall continue to accrete or accrue interest; (4) that,
unless the Company defaults in making such payment, any Note accepted for
payment pursuant to the Change of Control Offer shall cease to accrete or
accrue interest after the Change of Control Payment Date; (5) that Holders
electing to have a Note purchased pursuant to the Change of Control Offer may
only elect to have all of such Note purchased and may not elect to have only a
portion of such Note purchased; (6) that Holders electing to have a Note
purchased pursuant to any Change of Control Offer shall be required to
surrender the Note, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Note completed, or transfer by book-entry transfer, to
the Company, a depositary, if appointed by the Company, or the Paying Agent at
the address specified in the notice at least three days before the Change of
Control Payment Date; (7) that Holders shall be entitled to withdraw their
election if the Company, the depositary or the Paying Agent, as the case may
be, receives, not later than the Change of Control Payment Date, a notice
setting forth the name of the Holder, the principal amount of the Note the
Holder delivered for purchase and a statement that such Holder is withdrawing
his election to have such Note purchased; (8) that Notes and portions of Notes
purchased shall be in amounts of $1,000 or whole multiples of $1,000, except
that if all of the Notes of a Holder are to be purchased, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be purchased; and (9) that Holders whose Notes were purchased
only in part shall be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered (or transferred by book-entry
transfer). 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 the Notes as a result of a Change of Control.
On the Change of Control Payment Date, the Company shall, to
the extent lawful: (1) accept for payment all 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
Notes or portions thereof so tendered; and (3) deliver or cause to be delivered
to the Trustee the Notes so accepted together with an Officers' Certificate
stating the aggregate principal amount of Notes or portions thereof being
repurchased by the Company. The Company shall publicly announce the results of
the Change of Control Offer on the Change of Control Payment Date.
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The Paying Agent shall promptly mail to each Holder of Notes
so tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate pursuant to an Authentication Order and mail (or cause to
be transferred by book entry) to each Holder a new Note equal in principal
amount to any unrepurchased portion of the Notes surrendered, if any; provided
that each such new Note shall be in a principal amount of $1,000 or an integral
multiple thereof. However, if the Change of Control Payment Date is on or after
an interest record date and on or before the related interest payment date, any
accrued and unpaid interest shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Notes pursuant to the Change of
Control Offer.
Subject to the second succeeding paragraph, 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.
Notwithstanding anything to the contrary in this Section
4.15, the Company shall not be required to make a Change of Control Offer upon
a Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in this Section 4.15 and purchases all Notes validly tendered and not
withdrawn under such Change of Control Offer.
Notwithstanding anything to the contrary in this Section
4.15, the Company shall not be required to make a Change of Control Offer, as
provided above, if, in connection with or in contemplation of any Change of
Control, it has made an offer to purchase (an "Alternate Offer") any and all
Notes validly tendered at a cash price equal to or higher than the Change of
Control Payment and has purchased all Notes properly tendered in accordance
with the terms of such Alternate Offer.
Section 4.16. 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 Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered
to be paid and is paid to all Holders of the 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.
Section 4.17. Additional Subsidiary Guarantees
If the Company or any of its Restricted Subsidiaries creates
another Domestic Restricted Subsidiary after the date of this Indenture or
acquires another Domestic Restricted Subsidiary that is a Wholly Owned
Restricted Subsidiary after the date of this Indenture, then that newly
acquired or created Domestic Restricted Subsidiary must become a Guarantor and
shall (i) execute and deliver to the Trustee a supplemental indenture in form
substantially similar to Exhibit F hereto pursuant to which such Domestic
Restricted Subsidi-
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ary shall unconditionally guarantee all of the Company's obligations under the
Notes and this Indenture on the terms set forth in this Indenture and (ii)
deliver to the Trustee an Opinion of Counsel that such supplemental indenture
has been duly authorized, executed and delivered by such Restricted Subsidiary
and constitutes a legal, valid, binding and enforceable obligation of such
Restricted Subsidiary, subject to normal exceptions. Thereafter, such Domestic
Restricted Subsidiary shall be a Guarantor for all purposes of this Indenture.
In addition, if the Company or any of its Restricted
Subsidiaries acquires a Domestic Restricted Subsidiary that is not a Wholly
Owned Restricted Subsidiary at the time of acquisition, but shall thereafter
become a Wholly Owned Restricted Subsidiary, such Domestic Restricted
Subsidiary shall comply with the provisions of clauses (i) and (ii) of the
immediately preceding paragraph, and shall thereafter be a Guarantor for all
purposes of this Indenture. The Company, at its option, may cause a Domestic
Restricted Subsidiary that is not a Wholly Owned Restricted Subsidiary to
become a Guarantor in accordance with the provisions of clauses (i) and (ii) of
the immediately preceding paragraph.
Section 4.18. Designation of Restricted and Unrestricted Subsidiaries.
The Board of Directors may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if:
(1) that designation would not cause a Default;
(2) the Company will, on the date of such designation after giving pro
forma effect thereto 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 4.09(a) hereof;
(3) such Subsidiary has no Indebtedness other than Non-Recourse Debt;
(4) such Subsidiary 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;
(5) such Subsidiary is a Person with respect to which neither the Company
nor any of its Restricted Subsidiaries has any direct or indirect
obligation to subscribe for additional Equity Interests or to maintain
or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; and
(6) such Subsidiary 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
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resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the preceding conditions and was
permitted by Section 4.07 hereof.
If a Restricted 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 a Restricted
Investment made as of the time of such designation and will reduce the amount
available for Restricted Payments under the first paragraph of Section 4.07
hereof or Permitted Investments, as applicable. All such outstanding
Investments will be valued at their fair market value at the time of such
designation (the amount of such Investments, the "Designation Amount"). That
designation will only be permitted if such Restricted Payment would be
permitted at that time.
If, at any time, any Unrestricted Subsidiary would fail to
meet any of the requirements set forth in clauses (3) through (6) of the first
paragraph of this Section 4.18, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness and Liens of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
the Company as of such date and, if any such Indebtedness or Lien is not
permitted to be incurred as of such date under this Indenture, the Company
shall be in default of the applicable covenant(s). 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 and Liens by a Restricted Subsidiary of the Company
of any outstanding Indebtedness and Liens of such Unrestricted Subsidiary and
such designation shall only be permitted if:
(1) such Indebtedness is permitted under Section 4.09 hereof, calculated
on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period;
(2) such Liens are permitted under Section 4.12 hereof; and
(3) no Default or Event of Default would be in existence following such
designation.
Section 4.19. Issuances of Guarantees of Indebtedness.
The Company will not permit any of its Restricted
Subsidiaries that are not Guarantors to, directly or indirectly, Guarantee or
pledge any assets to secure the payment of any other Indebtedness of the
Company or any Guarantor unless such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture providing for the Guarantee of
the payment of the Notes by such Restricted Subsidiary, which Guarantee shall
be senior to or pari passu with such Restricted Subsidiary's Guarantee of or
pledge to secure such other Indebtedness.
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ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Assets.
The Company may not, directly or indirectly: (i) consolidate or merge
with or into another Person (whether or not the Company is the surviving
corporation); or (ii) sell, assign, lease, transfer, convey or otherwise
dispose of (or cause or permit any of its Restricted Subsidiaries to sell,
assign, transfer, convey or otherwise dispose of) all or substantially all of
the Company's 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 corporation; 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 Notes, this Indenture and
the Registration Rights Agreement pursuant to agreements reasonably
satisfactory to the Trustee;
(3) immediately after such transaction, no Default or Event of Default
exists (including, without limitation, after giving effect to any
Liens incurred, assumed or granted in connection with or in respect of
such transaction); and
(4) the Company or the Person formed by or surviving any such
consolidation or merger (if other than the Company) 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 Section 4.09(a) hereof.
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. The provisions of 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 Guarantors which are Wholly Owned
Restricted Subsidiaries.
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Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
conveyance or other disposition of all or substantially all of the assets of
the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, assignment, transfer, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets that meets the requirements of Section
5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
Each of the following is an "Event of Default":
(a) default for a continued period of 30 days in the payment when due
of interest on, or Special Interest on, the Notes;
(b) default in the payment when due of the principal of or premium, if
any, on the Notes;
(c) failure by the Company or any of its Subsidiaries to comply with
any of the provisions of Section 4.07, 4.09, 4.10 or 4.15 hereof;
(d) failure by the Company or any of its Restricted Subsidiaries for
30 days after notice to comply with any of the other agreements in this
Indenture;
(e) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced 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 date of this Indenture, if that default (i)
is caused by a failure to pay principal of or premium, if any, or interest
on such Indebtedness after the expiration of the grace period provided in
such Indebtedness on the date of such default (a "Payment Default") or (ii)
results in the acceleration of such Indebtedness prior to its Stated
Matur-
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ity, and, in each case, the principal amount of 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 $10.0 million or more;
(f) failure by the Company or any of its Restricted Subsidiaries
to pay final judgments aggregating in excess of $10.0 million, which judgments
are not paid, discharged or stayed for a period of 60 days;
(g) the Company or any of its Restricted Subsidiaries that are
Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as
a whole, would constitute a Significant Subsidiary pursuant to or within the
meaning of the Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against
it in an involuntary case,
(iii) consents to the appointment of a custodian of it or
for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become
due;
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Restricted Subsidiaries that are Significant Subsidiaries or any group
of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary in an involuntary case;
(ii) appoints a custodian of the Company or any of its
Restricted Subsidiaries that are Significant Subsidiaries or any group
of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary or for all or substantially all of the property
of the Company or any of its Restricted Subsidiaries that are
Significant Subsidiaries or any group of Restricted Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Restricted Subsidiaries that are Significant Subsidiaries or any group
of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary;
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and the order or decree remains unstayed and in effect for 60
consecutive days; or
(i) except as permitted by this Indenture, any
Subsidiary Guarantee is held in any judicial proceeding to be
unenforceable or invalid or ceases for any reason to be in full force
and effect or any Guarantor, or any Person acting on behalf of any
Guarantor, denies or disaffirms in writing its obligations under its
Subsidiary Guarantee.
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default
specified in clause (g) or (h) of Section 6.01 hereof 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) occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Notes may declare all
the Notes to be due and payable immediately. Notwithstanding the foregoing, if
an Event of Default specified in clause (g) or (h) of Section 6.01 hereof
occurs with respect to the Company, any of its Restricted Subsidiaries that are
Significant Subsidiaries or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding Notes
shall be due and payable without further action or notice.
At any time after a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee, the Holders of a majority in aggregate principal amount of the
Notes outstanding, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences:
(a) if the rescission would not conflict with any
judgment or decree;
(b) if all existing Events of Default have been cured or
waived as provided in Section 6.04 except nonpayment of principal of or
interest on the Notes that has become due solely because of the acceleration;
(c) to the extent the payment of such interest is
lawful, if interest on overdue installments of interest and overdue principal,
which has become due otherwise than by such declaration of acceleration, has
been paid;
(d) if the Company has paid the Trustee its reasonable
compensation and reimbursed the Trustee for its expenses, disbursements and
advances; and
(e) in the event of the cure or waiver of an Event of
Default specified in clause (g) or (h) of Section 6.01 hereof, the Trustee
shall have received an Officers' Certificate and an Opinion of Counsel that
such Event of Default has been cured or waived.
No such rescission shall affect any subsequent default or impair any right
consequent thereon provided in Section 6.04.
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Section 6.03. Other Remedies; Optional Redemption Premium.
(a) If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy to collect the payment of principal,
premium, if any, and interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any
right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
(b) In the case of any Event of Default occurring by
reason of any willful action or inaction taken or not taken by or on behalf of
the Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.07 hereof, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the Notes. If an Event of Default occurs prior to September 15,
2003 by reason of any willful action (or inaction) taken (or not taken) by or
on behalf of the Company with the intention of avoiding the prohibition
contained in Section 3.07 hereof on redemption of the Notes prior to September
15, 2003, then the premium specified in Section 3.07 hereof shall also become
immediately due and payable to the extent permitted by law upon the
acceleration of the Notes.
Section 6.04. Waiver of Past Defaults.
Holders of a majority in aggregate principal amount of the
Notes then outstanding by notice to the Trustee may on behalf of the Holders of
all of the Notes waive any past or existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Special Interest, if any, or interest
on the Notes. Upon such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. Holders may not enforce this Indenture or the
Notes, however, except as provided in this Indenture. In addition, 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 other
Holders of Notes or that may involve the Trustee in personal liability.
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Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if: (a) the Holder of a Note gives to the Trustee
written notice of a continuing Event of Default; (b) the Holders of at least
25% in principal amount of the then outstanding Notes make a written request to
the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes
offer and, if requested, provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense; (d) 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; and (e) during such 60-day period the
Holders of a majority in principal amount of the then outstanding Notes do not
give the Trustee a direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice
the rights of another Holder of a Note or to obtain a preference or priority
over another Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture and
subject to Section 10.02, the right of any Holder of a Note to receive payment
of principal, premium and Special Interest, if any, and interest on the Note,
on or after the respective due dates expressed in the Note (including in
connection with an offer to purchase), or to bring suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Special Interest, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest 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 is authorized to file such proofs of claim and
other papers or documents and take other actions (including participating as a
member of any creditor's committee acting in the matter) as the Trustee may
determine, in its reasonable discretion, to 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 of the Notes allowed in any judicial proceedings
relative to the Company (or any other obligor upon the Notes), its creditors or
its property and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on any such
claims and any custodian in any such judicial pro-
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ceeding 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 agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 7.07 hereof out of the
estate in any such proceeding, shall be denied for any reason, payment of the
same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article,
it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation,
expense and liabilities incurred, and all advances made, by the Trustee
and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium and Special Interest, if any, and
interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal,
premium and Special Interest, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a 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 does not apply to a suit by the
Trustee, a suit by a Holder of a Note pursuant to Sec-
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tion 6.07 hereof, or a suit by Holders of more than 10% in principal amount of
the then outstanding Notes.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in its
exercise, 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:
(i) 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
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, 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 examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) 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
(iii) 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 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to the paragraphs of this Section.
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(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed
by it to be genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
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 of such counsel or any
Opinion of Counsel 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 reliance thereon.
(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.
(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) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights or powers under this Indenture at
the request or direction of any of the Holders unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to the Trustee
against any loss, liability or expense that might be incurred by it in
compliance with such request or direction.
(g) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any 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 the 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.
(h) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the
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Trustee shall not be responsible for any misconduct or negligence on the part
of any agent or attorney appointed with due care by it hereunder.
(i) The Trustee shall not be deemed to have notice of any Default
or Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the
Trustee, and such notice references the Securities and this Indenture.
(j) 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 Notes 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, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the
Commission for permission to continue as trustee or resign. Any Agent may do
the same with like rights and duties. The Trustee is also subject to Sections
7.10 and 7.11 hereof.
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 Notes,
it shall not be accountable for the Company's use of the proceeds from the
Notes 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 Notes or any other document in connection with the sale of the
Notes 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 Holders of Notes as it appears on the Registrar a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default relating to the payment of principal or
interest on any Note, the Trustee may withhold the notice if it determines, in
good faith, that withholding the notice is in the interest of the Holders of
the Notes.
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Section 7.06. Reports by Trustee to Holders of the Notes.
Within 90 days after each December 31 beginning with the
December 31 following the date of this Indenture, and for so long as Notes
remain outstanding, the Trustee shall mail to the Holders of the Notes a brief
report dated as of such reporting date that complies with TIA ss. 313(a) (but
if no event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail
all reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the Commission
and each stock exchange on which the Notes are listed in accordance with TIA
ss. 313(d). The Company shall promptly notify the Trustee when the Notes are
listed on any stock exchange and of any delisting thereof.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
compensation for its acceptance of this Indenture and services as the Company
and the Trustee shall from time to time agree in writing. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee promptly upon request
for all reasonable disbursements, advances and expenses incurred or made by it
in addition to the compensation for its services. Such expenses shall include
the compensation, disbursements and expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee against any and all
losses, damages, claims, liabilities or expenses incurred by it including taxes
(other than taxes based upon, measured by or determined by the income of the
Trustee) arising out of or in connection with the acceptance or administration
of its duties under this Indenture, including the 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 acceptance,
exercise or performance of any of its powers or duties hereunder, except to the
extent any such loss, damage, claim, 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 shall not relieve the Company of its obligations hereunder,
except to the extent that the Company is actually prejudiced thereby. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any settlement
made without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.
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To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) hereof occurs, 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 any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss.
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 of Notes of a majority in principal amount of the then outstanding
Notes 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 custodian or 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 Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of Notes of at least 10% in principal amount of the
then outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee, at the expense of the Company.
If the Trustee, after written request by any Holder of a Note
who has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
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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 Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee 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, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof 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.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
Section 7.11. Preferential Collection of Claims Against the Company.
The Trustee is subject to TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated
therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE; DISCHARGE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes and Subsidiary Guarantees upon compliance with the conditions set forth
below in this Article 8.
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Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all outstanding Notes
on the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Notes to receive, solely from the trust fund described
in Section 8.04 hereof, and as more fully set forth in such Section 8.04,
payments in respect of the principal of, premium, if any, and interest and
Special Interest on such Notes when such payments are due, (b) the Company's
obligations with respect to such Notes under Article 2 and Section 4.02 hereof,
(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder
and the Company's obligations in connection therewith and (d) this Article 8.
Subject to compliance with this Article Eight, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under the covenants contained in Sections 4.03, 4.04,
4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.19 and
clauses (3) and (4) of Section 5.01 hereof with respect to the outstanding
Notes on and after the date the conditions set forth in Section 8.04 are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.01 hereof, but, except as
specified above, the remainder of this Indenture and such Notes shall be
unaffected thereby. In addition, upon the Company's exercise under Section 8.01
hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(c) through 6.01(f) hereof shall not constitute Events of Default.
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Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:
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 of the 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, to pay
the principal of, premium, if any, and interest on the outstanding
Notes on the Stated Maturity or on the applicable redemption date, as
the case may be, and the Company must specify whether the Notes 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 confirming that
(1) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (2) since the date of this
Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding
Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had
not occurred;
(c) in the case of Covenant Defeasance, the Company
shall have delivered to the Trustee an Opinion of Counsel confirming
that the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred
and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied
to such deposit);
(e) such Legal Defeasance or Covenant Defeasance will
not result in a breach or violation of, or constitute a default under,
any material agreement or instrument (other than this 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
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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 Officers'
Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders of Notes 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 Officers'
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.
Section 8.05. Deposited Money and Government Securities to Be Held in
Trust; Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or
non-callable Government Securities deposited pursuant to Section 8.04 hereof or
the principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable Government Securities held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
Section 8.06. Repayment to the Company.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of,
premium, if any, or interest on any Note and remaining unclaimed for two years
after such principal, and premium, if any, or interest has become due and
payable shall be paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
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thereafter, as a secured creditor, look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in The New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with Section
8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit
had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if
the Company makes any payment of principal of, premium, if any, or interest on
any Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.
Section 8.08. Discharge.
This Indenture will be discharged and will cease to be of
further effect (except as to surviving rights of registration of transfer or
exchange of the Notes, as expressly provided for in this Indenture) as to all
outstanding Notes when (a) either (i) all Notes theretofore authenticated and
delivered (except lost, stolen or destroyed Notes which have been replaced or
paid and Notes for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust) have been delivered to the Trustee for
cancellation or (ii) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together with
irrevocable instructions from the Company directing the Trustee to apply such
funds to the payment thereof at maturity or redemption, as the case may be; (b)
the Company has paid all other sums payable under this Indenture by the
Company; and (c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel stating that all conditions precedent
under this Indenture relating to the satisfaction and discharge of this
Indenture have been complied with; provided, however, that such counsel may
rely, as to matters of fact, on a certificate or certificates of officers of
the Company.
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ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company
and the Trustee may amend or supplement this Indenture or the Notes without
notice to or the consent of any Holder of a Note: (a) to cure any ambiguity,
defect or inconsistency; (b) to provide for uncertificated Notes in addition to
or in place of certificated Notes; (c) to provide for the assumption of the
Company's obligations to the Holders of the Notes in the case of a merger or
consolidation of the Company or sale of all or substantially all of the
Company's assets; (d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely
affect the legal rights hereunder of any such Holder; or (e) to comply with
requirements of the Commission in order to effect or maintain the qualification
of this Indenture under the TIA.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company
and the Trustee may amend or supplement this Indenture (including Sections 4.10
and 4.15 hereof) or the Notes and/or any Subsidiary Guarantees with the consent
of the Holders of at least a majority in principal amount of the Notes then
outstanding voting as a single class (including, without limitation, consents
obtained in connection with a purchase of, tender offer or exchange offer for,
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of
the principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture, the Notes or the Subsidiary Guarantees
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes (including consents obtained in connection with a
purchase of, tender offer or exchange offer for, Notes). Section 2.08 hereof
shall determine which Notes are considered to be "outstanding" for purposes of
this Section 9.02.
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Company shall mail to the Holders of Notes 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 amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding voting as a single class may waive compliance in a particular
instance by the Company and/or the Guarantors with any provision of this
Indenture, the Notes or the Subsidiary Guarantees.
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Notwithstanding anything in this Section 9.02 to the
contrary, without the consent of each Holder affected, an amendment or waiver
under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change or have the effect
of changing the Stated Maturity of any Note or alter the provisions
with respect to the redemption of the Notes (except as provided above
with respect to Sections 4.10 and 4.15 hereof);
(c) reduce the rate of or change the time for payment of
interest on any Note;
(d) waive a Default or Event of Default in the payment
of principal of or premium, if any, or interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver of
the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that
stated in the Notes;
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes
to receive payments of principal of or premium, if any, or interest on
the Notes;
(g) waive a redemption payment with respect to any Note
(other than a payment required by Section 4.10 or 4.15 hereof);
(h) amend, change or modify in any material respect the
obligation of the Company to make and consummate a Change of Control
Offer in the event that a Change of Control has already occurred or
make and consummate an Asset Sale Offer with respect to any Asset Sale
that has been consummated or modify any of the provisions or
definitions with respect thereto in this Indenture or the Notes;
(i) release any Guarantor from any of its obligations
under its Subsidiary Guarantee or this Indenture otherwise than in
accordance with the terms of this Indenture;
(j) adversely affect the ranking of the Notes or any
Subsidiary Guarantee; or
(k) make any change in Section 6.04 or 6.07 hereof or in
the preceding amendment and waiver provisions.
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Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in a amended or supplemental Indenture that complies with
the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent
Holder of a Note may revoke the consent as to its Note if the Trustee receives
written notice of revocation before the date the amendment, supplement or
waiver becomes effective. An amendment, supplement or waiver becomes effective
in accordance with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall, upon receipt
of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental indenture until its Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 12.04 hereof, an Officers' Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
<PAGE> 84
-78-
ARTICLE 10.
SUBSIDIARY GUARANTEES
Section 10.01. Guarantee.
Subject to this Article 10, each of the Guarantors hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Company hereunder or thereunder,
that: (a) the principal of and interest on the Notes will be promptly paid in
full when due, whether at maturity, by acceleration, redemption or otherwise,
and interest on the overdue principal of and interest on the Notes, if any, if
lawful, and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other obligations,
that same will be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at Stated Maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed
or any performance so guaranteed for whatever reason, the Guarantors shall be
jointly and severally obligated to pay the same immediately. Each Guarantor
agrees that this is a guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice
and all demands whatsoever and covenant that this Subsidiary Guarantee shall
not be discharged except by complete performance of the obligations contained
in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company
or the Guarantors, any amount paid by either to the Trustee or such Holder,
this Subsidiary Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Guarantor further agrees that, as between the Guarantors, 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 6
<PAGE> 85
-79-
hereof for the purposes of this Subsidiary 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 declaration of
acceleration of such obligations as provided in Article 6 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Guarantee.
Section 10.02. Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Notes, each Holder,
hereby confirms that it is the intention of all such parties that the
Subsidiary Guarantee of such Guarantor not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to
the extent applicable to any Subsidiary Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor under its Subsidiary Guarantee and this
Article 10 shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 10, result in the obligations of such Guarantor
under its Subsidiary Guarantee not constituting a fraudulent transfer or
conveyance.
Section 10.03. Execution and Delivery of Subsidiary Guarantee.
To evidence its Subsidiary Guarantee set forth in Section
10.01, each Guarantor hereby agrees that a notation of such Subsidiary
Guarantee substantially in the form included in Exhibit E shall be endorsed by
an Officer of such Guarantor on each Note authenticated and delivered by the
Trustee and that this Indenture shall be executed on behalf of such Guarantor
by its Chairman of the Board, Chief Executive Officer, President, Vice
President, Chief Financial Officer, Controller or Secretary. Further, the
Company shall cause all future Guarantors to execute a Supplemental Indenture
substantially in the form of Exhibit F.
Each Guarantor hereby agrees that its Subsidiary Guarantee
set forth in Section 10.01 shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
<PAGE> 86
-80-
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new
Subsidiaries subsequent to the date of this Indenture, if required by Section
4.17 hereof the Company shall cause such Subsidiaries to execute supplemental
indentures to this Indenture and Subsidiary Guarantees in accordance with
Section 4.17 hereof and this Article 10, to the extent applicable; provided
that all Subsidiaries that have properly been designated as Unrestricted
Subsidiaries in accordance with this Indenture will (i) not be subject to the
requirements of Section 4.17 hereof and (ii) be released from all Obligations
under any Subsidiary Guarantee, in each case for so long as they continue to
constitute Unrestricted Subsidiaries.
Section 10.04. Guarantors May Consolidate, etc., on Certain Terms.
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), another Person unless:
(i) immediately after giving effect to such transaction, no Default or Event of
Default exists; (ii) 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 (if other than such Guarantor) assumes all the obligations of such
Guarantor under the Notes, this Indenture and the Registration Rights Agreement
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 this Indenture, including, without
limitation, Section 4.10 hereof and (iii) if the Guarantor is merging or
consolidating with or transferring its assets to a Person other than the
Company and/or other Guarantors, the Company 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
Section 4.09(a) hereof.
Section 10.05. Releases Following Sale of Assets or Capital Stock.
The Subsidiary Guarantee of a Guarantor will be released:
(1) in connection with any sale or other disposition of all or
substantially all of the assets of such Guarantor (including 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 this Indenture, including, without limitation, Section
4.10 hereof; or
(2) in connection with any sale of all of the Capital Stock of a
Guarantor, if the Company applies the Net Proceeds of that sale in
accordance with the applicable provisions of this Indenture,
including, without limitation, Section 4.10 hereof; or
<PAGE> 87
-81-
(3) if the Company designates any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary in accordance with this
Indenture.
Any Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of
and interest on the Notes and for the other obligations of any Guarantor under
this Indenture as provided in this Article 10.
ARTICLE 11.
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA ss. 318(c), the imposed duties shall
control.
Section 11.02. Notices.
Any notice or communication by the Company, any Guarantor or
the Trustee to the others is duly given if in writing and delivered in person
or mailed by first class mail (registered or certified, return receipt
requested), or sent by telecopier or overnight courier guaranteeing next day
delivery, to the other's address.
If to the Company and/or any Guarantor:
Holley Performance Products Inc.
1801 Russellville Road
P.O. Box 10360
Bowling Green, Kentucky 42102-7360
Telecopier No.: (502) 745-9545
Attention: Chief Financial Officer
With a copy to:
Hunton & Williams
Bank of America Plaza
600 Peachtree Street, N.E.
Suite 4100
Atlanta, Georgia 30308
Telecopier No.: (404) 888-4190
Attention: Adam L. Salassi
<PAGE> 88
-82-
If to the Trustee:
State Street Bank and Trust Company
2 Avenue de Lafayette
Boston, Massachusetts 02111-1724
Telecopier No.: (617) 662-1460
Attention: Corporate Trust
Re: Holley Performance Products Inc.
The Company, any Guarantor or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices
or communications.
All notices and communications (other than those sent to
Holders) 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
mail, postage prepaid, if mailed; when receipt is acknowledged, if telecopied;
and the next Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first class mail, or by overnight air courier guaranteeing next day delivery to
its address shown on the register kept by the Registrar. Any notice or
communication shall also be so mailed to any Person described in TIA ss.
313(c), to the extent required by the TIA. 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.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
Section 11.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection
of TIA ss. 312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 11.05 hereof) stating that, in the
opinion of the signers, all conditions precedent and covenants, if
<PAGE> 89
-83-
any, provided for in this Indenture relating to the proposed action
have been satisfied; and
(b) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 11.05 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants
have been satisfied.
Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he
or she 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 satisfied; and
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been satisfied.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
Section 11.07. 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 such Guarantor under the Notes, this Indenture,
the Subsidiary Guarantees or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes.
<PAGE> 90
-84-
Section 11.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section 11.10. Successors.
All agreements of the Company in this Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successors.
Section 11.11. Severability.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 11.12. Counterpart Originals; Acceptance by Trustee.
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. State Street Bank and Trust Company hereby accepts the trusts
in this Indenture declared or provided, upon the terms and conditions
hereinabove set forth.
Section 11.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table 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.
[Signatures on following page]
<PAGE> 91
SIGNATURES
Dated as of September 20, 1999
Holley Performance Products Inc.
By: /s/ Robert L. Wineland
------------------------------
Name: Robert L. Wineland
Title: Chief Financial Officer
Guarantors:
Holley Performance Systems, Inc.
By: /s/ Robert L. Wineland
------------------------------
Name: Robert L. Wineland
Title: Chief Financial Officer
Weiand Automotive Industries, Inc.
By: /s/ Robert L. Wineland
------------------------------
Name: Robert L. Wineland
Title: Chief Financial Officer
Lunati Cams, Inc.
By: /s/ Robert L. Wineland
------------------------------
Name: Robert L. Wineland
Title: Chief Financial Officer
<PAGE> 92
Lunati & Taylor Pistons, Inc.
By: /s/ Robert L. Wineland
------------------------------
Name: Robert L. Wineland
Title: Chief Financial Officer
LMT Motor Sports Corporation
By: /s/ Robert L. Wineland
------------------------------
Name: Robert L. Wineland
Title: Chief Financial Officer
Hooker Industries, Inc.
By: /s/ Robert L. Wineland
------------------------------
Name: Robert L. Wineland
Title: Chief Financial Officer
State Street Bank and Trust Company
as Trustee
By: /s/ Andrew Sinasky
------------------------------
Name: Andrew Sinasky
Title: Assistant Vice President
<PAGE> 1
EXHIBIT 4.2
FORM OF GLOBAL NOTE
(Face of Note)
===============================================================================
CUSIP: ___________________________
12 1/4% Senior Notes due 2007
No.: $__________________________
Holley Performance Products Inc.
promises to pay to ____________________________________________________________
or registered assigns,
the principal sum of __________________________________________________________
Dollars on September 15, 2007.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated:
----------------------
Holley Performance Products Inc.
By:
---------------------------------------
Name:
Title:
Certificate of Authentication
- -----------------------------
This is one of the
Notes referred to in the
within-mentioned Indenture:
State Street Bank and Trust Company
as Trustee
By:
---------------------------------
Authorized Signatory
===============================================================================
<PAGE> 2
(Back of Note)
12 1/4% Senior Notes due 2007
[INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE
INDENTURE]
[INSERT THE PRIVATE PLACEMENT LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS
OF THE INDENTURE]
FOR PURPOSES OF SECTION 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS
SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000
PRINCIPAL AMOUNT OF THIS SECURITY, (1) THE ISSUE PRICE IS $963.46; (2) THE
AMOUNT OF THE ORIGINAL ISSUE DISCOUNT IS $36.54; (3) THE ISSUE DATE IS
SEPTEMBER 20, 1999; AND (4) THE YIELD TO MATURITY IS 13.00% (COMPOUNDED
SEMI-ANNUALLY).
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Holley Performance Products Inc., a Delaware
corporation (the "Company"), promises to pay interest on the principal amount
of this Note at 12 1/4% per annum from September 20, 1999 until maturity and
shall pay the Special Interest payable pursuant to Section 2(c) of the
Registration Rights Agreement referred to below. The Company will pay interest
and Special Interest semi-annually on March 15 and September 15 of each year,
or if any such day is not a Business Day, on the next succeeding Business Day
(each an "Interest Payment Date"). Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of original issuance; provided that if there is no existing
Default in the payment of interest, and if this Note is authenticated between a
record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the first Interest Payment Date shall be March
15, 2000. The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, from time to time on demand to the extent lawful at a rate that is 1% per
annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Special Interest (without regard to any applicable
grace periods) from time to time on demand at the same rate to the extent
lawful. Interest will be computed on the basis of a 360-day year of twelve
30-day months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Special Interest to the Persons who are
registered Holders of Notes at the close of business on March 1 or September 1
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
Principal, premium, if any, and interest and Special Interest on the Notes will
be payable at the office or agency of the Company maintained for such purpose
or, at the option of the Company, payment
<PAGE> 3
of interest and Special Interest may be made by check mailed to the Holders of
the Notes at their respective addresses set forth in the register of Holders of
Notes; provided that all payments of principal, premium, interest and Special
Interest with respect to Notes the Holders of which have given wire transfer
instructions to the Company prior to the Record Date will be required to be
made by wire transfer of immediately available funds to the accounts specified
by the Holders thereof. Until otherwise designated by the Company, the
Company's office or agency in New York will be the office of the Trustee
maintained for such purpose. The Notes will be issued in denominations of
$1,000 and integral multiples thereof. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, State Street Bank and
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Notes under an Indenture dated
as of September 20, 1999 ("Indenture") by and among the Company, the Guarantors
and the Trustee. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb) (the "TIA"). The Notes are
subject to all such terms, and Holders are referred to the Indenture and such
Act for a statement of such terms. To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling.
5. Optional Redemption. Except as set forth in the following
paragraph, the Notes will not be redeemable at the Company's option prior to
September 15, 2003. Thereafter, the Notes will be subject to redemption at any
time at the option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Special Interest thereon to but not including the applicable
redemption date, if redeemed during the twelve-month period beginning on
September 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003.......................................... 106.125%
2004.......................................... 104.083%
2005.......................................... 102.042%
2006 and thereafter........................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to September 15, 2002
the Company may on any one or more occasions redeem up to 35% of the aggregate
principal amount of Notes originally issued under the Indenture at a redemption
price of 112.25% of the principal amount thereof, plus accrued and unpaid
interest and Special Interest thereon, if any, to but not including the
redemption date, with the net cash proceeds of one or more Public Equity
Offerings by the Company; provided that (i) at least 65% of the aggregate
principal amount of Notes remain
<PAGE> 4
outstanding immediately after the occurrence of such redemption (excluding
Notes held by the Company and its Subsidiaries); and (ii) such redemption shall
occur within 180 days of the date of the closing of such Public Equity
Offering.
6. Mandatory Redemption. Except as set forth in Paragraph 7, the
Company shall not be required to make mandatory redemption payments with
respect to the Notes.
7. Repurchase at Option of Holder. If a Change of Control occurs,
each Holder of Notes will have the right to require the Company to make an
offer to all Holders to repurchase Notes on the terms, in accordance with the
procedures and subject to the limitations set forth in the Indenture. If the
Company or a Restricted Subsidiary consummates any Asset Sales, when the
aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be
required to make an offer to all Holders of Notes to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds on
the terms, in accordance with the procedures and subject to the limitations set
forth in the Indenture.
8. Notice of Redemption. Notice of redemption will be mailed by
first class mail at least 30 days but not more than 60 days before the
redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional. Notes in denominations
larger than $1,000 may be redeemed in part. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in principal
amount equal to the unredeemed portion thereof will be issued in the name of
the Holder thereof upon cancellation of the original Note. On and after the
redemption date interest ceases to accrue on Notes or portions thereof called
for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in 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 or the Registrar is not required to
transfer or exchange any Note selected for redemption. Also, the Company or the
Registrar is not required to transfer or exchange any Notes for a period of 15
days before a selection of Notes to be redeemed.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture, the Notes or the Subsidiary Guarantees may be amended or
supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes) and any existing default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including, without
limitation, consents obtained in
<PAGE> 5
connection with a purchase of, or tender offer or exchange offer for, Notes).
Without the consent of any Holder of Notes, the Company and the Trustee may
amend or supplement the Indenture or the Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place
of certificated Notes, to provide for the assumption of the Company's
obligations to Holders of the Notes in case of a merger or consolidation or
sale of all or substantially all of the Company's assets, to make any change
that would provide any additional rights or benefits to the Holders of the
Notes or that does not adversely affect the legal rights under the Indenture of
any such Holder, or to comply with the requirements of the Commission in order
to effect or maintain the qualification of the Indenture under the TIA.
12. Defaults and Remedies. If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency as set forth in the
Indenture, 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 Notes will
become due and payable without further action or notice. Holders of the Notes
may not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of
the then outstanding Notes may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event
of Default and its consequences under the Indenture except a continuing Default
or Event of Default in the payment of interest on, or the principal of, the
Notes.
13. Trustee Dealings with the Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall
not have any liability for any obligations of the Company or any Guarantor
under the Notes, 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 Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
15. Guarantees. This Note will be entitled to the benefits of
certain Guarantees made for the benefit of the Holders. Reference is hereby
made to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and
the Holders.
<PAGE> 6
16. Authentication. This Note shall not be valid until authenticated
by the manual or facsimile signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name
of a Holder 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).
18. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Exchange and
Registration Rights Agreement dated as of the date of the Indenture, between
the Company and the parties named on the signature pages thereof (the
"Registration Rights Agreement").
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
20. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS NOTE WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS
OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to: Holley Performance Products Inc., 1801
Russellville Road, P.O. Box 10360, Bowling Green, Kentucky 42102, Attention:
Chief Financial Officer.
<PAGE> 7
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- -------------------------------------------------------------------------------
Date:
----------------------------
Your Signature:
---------------------------
(Sign exactly as your name
appears on the Note)
SIGNATURE GUARANTEE
- ----------------------------------------
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE> 8
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $_______________________________
Date: Your Signature:
---------------------- ------------------------------
(Sign exactly as your name
appears on the Note)
Tax Identification No:
-----------------------
SIGNATURE GUARANTEE
- ----------------------------------------
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE> 9
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Amount of decrease Amount of Principal Amount
in increase in of this Signature of
Principal Principal Global Note authorized signatory
Amount of Amount of following such of Trustee or
Date of Exchange this Global Note this Global Note decrease (or increase) Custodian
---------------- ---------------- ---------------- ---------------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 1
EXHIBIT 4.3
FORM OF EXCHANGE GLOBAL NOTE
(Face of Note)
===============================================================================
CUSIP:
--------------------
12 1/4% Senior Notes due 2007, Series B
No.: $
-------------------------
Holley Performance Products Inc.
promises to pay to
-------------------------------------------------------------
or registered assigns,
the principal sum of
-----------------------------------------------------------
Dollars on September 15, 2007.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated:
---------------
Holley Performance Products Inc.
By:
----------------------------------
Name:
Title:
Certificate of Authentication
- -----------------------------
This is one of the
Notes referred to in the
within-mentioned Indenture:
State Street Bank and Trust Company
as Trustee
By:
-------------------------------------
Authorized Signatory
===============================================================================
<PAGE> 2
(Back of Note)
12 1/4% Senior Notes due 2007
[INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE
INDENTURE]
FOR PURPOSES OF SECTION 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS
SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000
PRINCIPAL AMOUNT OF THIS SECURITY, (1) THE ISSUE PRICE IS $963.46; (2) THE
AMOUNT OF THE ORIGINAL ISSUE DISCOUNT IS $36.54; (3) THE ISSUE DATE IS
SEPTEMBER 20, 1999; AND (4) THE YIELD TO MATURITY IS 13.00% (COMPOUNDED
SEMI-ANNUALLY).
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Holley Performance Products Inc., a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at 12 1/4% per annum from September 20, 1999 until maturity and shall
pay the Special Interest payable pursuant to Section 2(c) of the Registration
Rights Agreement referred to below. The Company will pay interest and Special
Interest semi-annually on March 15 and September 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of original issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be March 15, 2000. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand to the extent lawful at a rate that is 1% per annum in excess of
the rate then in effect; it shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue installments of interest
and Special Interest (without regard to any applicable grace periods) from time
to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Special Interest to the Persons who are
registered Holders of Notes at the close of business on March 1 or September 1
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. Principal,
premium, if any, and interest and Special Interest on the Notes will be payable
at the office or agency of the Company maintained for such purpose or, at the
option of the Company, payment of interest and Special Interest may be made by
check mailed to the Holders of the Notes at their respective addresses set forth
in the register of Holders of Notes; provided that all payments of principal,
premium, interest and Special Interest with respect to Notes the Holders of
which have
<PAGE> 3
given wire transfer instructions to the Company prior to the Record Date will be
required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof. Until otherwise designated by the
Company, the Company's office or agency in New York will be the office of the
Trustee maintained for such purpose. The Notes will be issued in denominations
of $1,000 and integral multiples thereof. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, State Street Bank and
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Notes under an Indenture
dated as of September 20, 1999 ("Indenture") by and among the Company, the
Guarantors and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb) (the
"TIA"). The Notes are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. To the extent any
provision of this Note conflicts with the express provisions of the Indenture,
the provisions of the Indenture shall govern and be controlling.
5. Optional Redemption. Except as set forth in the following
paragraph, the Notes will not be redeemable at the Company's option prior to
September 15, 2003. Thereafter, the Notes will be subject to redemption at any
time at the option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Special Interest thereon to but not including the applicable
redemption date, if redeemed during the twelve-month period beginning on
September 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003.......................................... 106.125%
2004.......................................... 104.083%
2005.......................................... 102.042%
2006 and thereafter........................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to September 15, 2002
the Company may on any one or more occasions redeem up to 35% of the aggregate
principal amount of Notes originally issued under the Indenture at a redemption
price of 112.25% of the principal amount thereof, plus accrued and unpaid
interest and Special Interest thereon, if any, to but not including the
redemption date, with the net cash proceeds of one or more Public Equity
Offerings by the Company; provided that (i) at least 65% of the aggregate
principal amount of Notes remain outstanding immediately after the occurrence
of such redemption (excluding Notes held by the Company and its Subsidiaries);
and (ii) such redemption shall occur within 180 days of the date of the closing
of such Public Equity Offering.
<PAGE> 4
6. Mandatory Redemption. Except as set forth in Paragraph 7, the
Company shall not be required to make mandatory redemption payments with respect
to the Notes.
7. Repurchase at Option of Holder. If a Change of Control occurs,
each Holder of Notes will have the right to require the Company to make an offer
to all Holders to repurchase Notes on the terms, in accordance with the
procedures and subject to the limitations set forth in the Indenture. If the
Company or a Restricted Subsidiary consummates any Asset Sales, when the
aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be
required to make an offer to all Holders of Notes to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds on
the terms, in accordance with the procedures and subject to the limitations set
forth in the Indenture.
8. Notice of Redemption. Notice of redemption will be mailed by
first class mail at least 30 days but not more than 60 days before the
redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional. Notes in denominations
larger than $1,000 may be redeemed in part. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Note. On and after the
redemption date interest ceases to accrue on Notes or portions thereof called
for redemption.
9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in 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 or the Registrar
is not required to transfer or exchange any Note selected for redemption. Also,
the Company or the Registrar is not required to transfer or exchange any Notes
for a period of 15 days before a selection of Notes to be redeemed.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain
exceptions, the Indenture, the Notes or the Subsidiary Guarantees may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes) and any existing default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes). Without the consent of any Holder of Notes, the
Company and the Trustee may amend or supplement the Indenture or the Notes to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of certificated Notes, to provide for the assumption
of the Company's
<PAGE> 5
obligations to Holders of the Notes in case of a merger or consolidation or sale
of all or substantially all of the Company's assets, to make any change that
would provide any additional rights or benefits to the Holders of the Notes or
that does not adversely affect the legal rights under the Indenture of any such
Holder, or to comply with the requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the TIA.
12. Defaults and Remedies. If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency as set forth in the
Indenture, 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 Notes will
become due and payable without further action or notice. Holders of the Notes
may not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of
the then outstanding Notes may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event
of Default and its consequences under the Indenture except a continuing Default
or Event of Default in the payment of interest on, or the principal of, the
Notes.
13. Trustee Dealings with the Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall not
have any liability for any obligations of the Company or any Guarantor under the
Notes, 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 Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
15. Guarantees. This Note will be entitled to the benefits of
certain Guarantees made for the benefit of the Holders. Reference is hereby made
to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.
16. Authentication. This Note shall not be valid until
authenticated by the manual or facsimile signature of the Trustee or an
authenticating agent.
<PAGE> 6
17. Abbreviations. Customary abbreviations may be used in the name
of a Holder 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).
18. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Exchange and
Registration Rights Agreement dated as of the date of the Indenture, between the
Company and the parties named on the signature pages thereof (the "Registration
Rights Agreement").
19. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
20. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS NOTE WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to: Holley Performance Products Inc., 1801 Russellville
Road, P.O. Box 10360, Bowling Green, Kentucky 42102, Attention: Chief Financial
Officer.
<PAGE> 7
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- -------------------------------------------------------------------------------
Date:
------------------
Your Signature:
----------------------------
(Sign exactly as your name
appears on the Note)
SIGNATURE GUARANTEE
- -------------------------------------
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE> 8
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $_______________________________
Date: Your Signature:
-------------------- ----------------------------
(Sign exactly as your name
appears on the Note)
Tax Identification No:
---------------------
SIGNATURE GUARANTEE
- --------------------------------------
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE> 9
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Amount of decrease Amount of Principal Amount
in increase in of this Signature of
Principal Principal Global Note authorized signatory
Amount of Amount of following such of Trustee or
Date of Exchange this Global Note this Global Note decrease (or increase) Custodian
---------------- ---------------- ---------------- ---------------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 1
EXHIBIT 5
[Letterhead of Hunton & Williams]
October 14, 1999
Holley Performance Products Inc.
1801 Russellville Road
Bowling Green, Kentucky 42101
HOLLEY PERFORMANCE PRODUCTS INC.
12 1/4% SENIOR NOTES DUE 2007, SERIES B
Ladies and Gentlemen:
We have acted as counsel to Holley Performance Products Inc., a
Delaware corporation (the "Company"), in connection with the registration by the
Company of $150,000,000 in aggregate principal amount of the Company's 12 1/4%
Senior Notes due 2007, Series B (the "Exchange Notes"), pursuant to a
Registration Statement on Form S-4 (as amended and supplemented, the
"Registration Statement") filed with the Securities and Exchange Commission (the
"SEC") under the securities Act of 1933, as amended (the "Securities Act"), for
the purpose of effecting an exchange offer (the "Exchange Offer") for the
Company's outstanding 12 1/4% Senior Notes due 2007 (the "Old Notes"). The
Exchange Notes are to be issued in the Exchange Offer pursuant to the Indenture
(the "Indenture"), dated as of September 20, 1999, between the Company as
issuer, Holley Performance Systems, Inc., a Delaware corporation, Lunati Cams,
Inc., a Tennessee corporation, Weiand Automotive Industries, Inc., a California
corporation, LMT Motor Sports Corporation, a Mississippi corporation, Lunati &
Taylor Pistons, Incorporated and Hooker Industries, Inc., a California
corporation (collectively, the "Guarantors") and State Street Bank and Trust
Company, as Trustee, in exchange for the Old Notes, of which $150,000,000 in
aggregate principal amount is outstanding.
In connection with the foregoing, we have examined the following
documents:
(i) the Registration Statement, including the Prospectus
contained therein, together with all amendments thereto;
(ii) the Indenture;
(iii) the global security representing the Old Notes;
(iv) a specimen of the global security representing the
Exchange Notes; and
(v) the originals (or copies identified to our satisfaction)
of such documents and records of the Company, together with certificates of
public officials and officers of the
<PAGE> 2
Holley Performance Products Inc.
October 14, 1999
Page 2
Company, and such other documents, certificates, records and papers as we have
deemed necessary for purposes of the opinions set forth in this letter.
For purposes of the opinions expressed below, we have assumed (i) the
authenticity of all documents submitted to us as originals, (ii) the conformity
to originals of all documents submitted to us as certified or photostatic copies
and the authenticity of the originals, and (iii) the genuineness of all
signatures (other than the signatures of current officers or directors of the
Company) not witnessed by us.
We are members of the Bar of the State of New York, and we do not
express an opinion on any laws other than those of such state. We do not purport
to cover herein and do not express an opinion with respect to the application of
the securities or "Blue Sky" laws of the various states to issuance of the
Exchange Notes.
Based upon the foregoing and such other information and documents as we
have considered necessary for the purposes hereof, we are of the opinion that:
When, as and if (i) the Registration Statement has become effective
pursuant to the provisions of the Securities Act, (ii) the indenture has been
qualified pursuant to the provisions of the Trust Indenture Act of 1939, as
amended, (iii) the Old Notes are validly tendered to the Company in the Exchange
Offer, (iv) the Exchange Notes are issued pursuant to the Exchange Offer and in
the form and containing the terms described in the Registration Statement and
the Indenture, (v) the Exchange Notes are duly authenticated by the Trustee, and
(vi) all legally required consents, approvals and authorizations of governmental
regulatory authorities have been obtained, including without limitation the
order of effectiveness from the SEC, the Exchange Notes will constitute the
legally binding obligations of the Company, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement. We also consent to the reference to our firm under the
heading "Legal Matters" in the Registration Statement.
The foregoing opinion is rendered solely for the addressees, and except
for State Street Bank & Trust Company, may not be relied upon by any other
person or entity, reproduced or quoted in whole or in part or otherwise referred
to, nor is it to be delivered to or filed with any governmental agency or other
person, without out prior written consent.
<PAGE> 3
Holley Performance Products Inc.
October 14, 1999
Page 3
Sincerely,
/s/ Daniel O. Kennedy
----------------------------------------
Hunton & Williams
<PAGE> 1
EXHIBIT 10
===============================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
among
KHPP HOLDINGS, INC.,
HOLLEY PERFORMANCE PRODUCTS INC.
and
CREDIT AGRICOLE INDOSUEZ,
as Administrative Agent,
COMERICA BANK,
as Co-Agent,
and
THE LENDING INSTITUTIONS LISTED HEREIN
----------------
Dated as of May 15, 1998
Amended and Restated as of September 20, 1999
----------------
$25,000,000
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. Amount and Terms of Credit..................................................................................2
1.01. Commitments..........................................................................................2
1.02. Minimum Amount of Each Borrowing; Maximum Number of Borrowings.......................................2
1.03. Notice of Borrowings.................................................................................3
1.04. Disbursement of Funds................................................................................4
1.05. Notes................................................................................................5
1.06. Continuations and Conversions........................................................................6
1.07. Pro rata Borrowings..................................................................................7
1.08. Interest.............................................................................................7
1.09. Interest Periods.....................................................................................9
1.10. Special Provisions Governing Reserve Adjusted Eurodollar Loans......................................10
1.11. Capital Requirements................................................................................14
1.12. Total Revolving Loan Commitments; Limitations on Outstanding Loan Amounts...........................15
1.13. Letters of Credit...................................................................................15
1.14. Restatement Effective Date; Effect of Restatement...................................................26
SECTION 2. Commitments................................................................................................27
2.01. Voluntary Reduction of Commitments..................................................................27
2.02. Mandatory Adjustments of Commitments, etc...........................................................28
2.03. Commitment Commission...............................................................................28
SECTION 3. Payments...................................................................................................29
3.01. Voluntary Prepayments...............................................................................29
3.02. Mandatory Prepayments...............................................................................29
3.03. Method and Place of Payment.........................................................................31
3.04. Net Payments........................................................................................32
3.05. Replacement of Banks................................................................................35
</TABLE>
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SECTION 4. Conditions Precedent..........................................................................................36
4.01. Conditions Precedent to Effectiveness of Agreement.....................................................36
4.02. Conditions Precedent to All Revolving Loans............................................................41
4.03. Conditions Precedent to All Letters of Credit..........................................................43
SECTION 5. Representations, Warranties and Agreements....................................................................44
5.01. Corporate Status.......................................................................................44
5.02. Corporate Power and Authority; Business................................................................45
5.03. No Violation...........................................................................................45
5.04. Litigation.............................................................................................46
5.05. Use of Proceeds........................................................................................46
5.06. Governmental Approvals, etc............................................................................46
5.07. Investment Company Act.................................................................................46
5.08. Public Utility Holding Company Act.....................................................................47
5.09. True and Complete Disclosure...........................................................................47
5.10. Environmental Investigations...........................................................................48
5.11. Financial Condition; Financial Statements; Projections.................................................48
5.12. Year 2000..............................................................................................50
5.13. Security Interests.....................................................................................51
5.14. Tax Returns and Payments...............................................................................51
5.15. ERISA..................................................................................................52
5.16. Subsidiaries...........................................................................................52
5.17. Patents, etc...........................................................................................52
5.18. Compliance with Laws, etc..............................................................................53
5.19. Properties.............................................................................................53
5.20. Securities.............................................................................................54
5.21. Collective Bargaining Agreements.......................................................................54
5.22. Indebtedness Outstanding...............................................................................54
5.23. Environmental Protection...............................................................................55
SECTION 6. Affirmative Covenants.........................................................................................57
6.01. Information Covenants..................................................................................57
6.02. Books, Records and Inspections.........................................................................62
6.03. Maintenance of Property; Insurance.....................................................................63
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6.04. Payment of Taxes.......................................................................................64
6.05. Corporate Franchises...................................................................................64
6.06. Compliance with Statutes, etc..........................................................................64
6.07. ERISA..................................................................................................64
6.08. Subsidiary Guarantees..................................................................................65
6.09. End of Fiscal Years; Fiscal Quarters...................................................................65
6.10. Use of Proceeds........................................................................................65
6.11. Interest Rate Protection...............................................................................65
6.12. Equal Security for Revolving Loans and Revolving Notes; No Further Negative Pledges....................66
6.13. Lender Meeting.........................................................................................66
6.14. Year 2000..............................................................................................66
6.15. Security Interests.....................................................................................67
6.16. Environmental Events...................................................................................67
SECTION 7. Negative Covenants............................................................................................68
7.01. Changes in Business....................................................................................68
7.02. Amendments or Waivers of Certain Documents.............................................................69
7.03. Liens..................................................................................................69
7.04. Indebtedness...........................................................................................71
7.05. Sale or Discount of Receivables........................................................................72
7.06. Advances, Investments and Loans........................................................................73
7.07. Prepayments of Indebtedness, etc.......................................................................74
7.08. Dividends, etc.........................................................................................74
7.09. Transactions with Affiliates...........................................................................75
7.10. Total Interest Coverage Ratio..........................................................................76
7.11. Sale and Lease-Backs...................................................................................77
7.12. Leverage Ratio.........................................................................................77
7.13. Minimum Consolidated EBITDA............................................................................78
7.14. Issuance of Subsidiary Stock...........................................................................78
7.15. Disposition of Assets..................................................................................79
7.16. Contingent Obligations.................................................................................79
7.17. Holdings' Equity Sales and Net Financing Proceeds......................................................80
7.18. Merger and Consolidations..............................................................................80
</TABLE>
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SECTION 8. Events of Default.............................................................................................80
8.01. Payments...............................................................................................80
8.02. Representations, etc...................................................................................81
8.03. Covenants..............................................................................................81
8.04. Default Under Other Agreements.........................................................................81
8.05. Bankruptcy, etc........................................................................................81
8.06. ERISA..................................................................................................82
8.07. Security Documents.....................................................................................82
8.08. Guarantees.............................................................................................83
8.09. Judgments..............................................................................................83
8.10. Ownership..............................................................................................83
8.11. Environmental Expenditures.............................................................................83
SECTION 9. Definitions...................................................................................................84
SECTION 10. The Agents..................................................................................................116
10.01. Appointment..........................................................................................116
10.02. Delegation of Duties.................................................................................116
10.03. Exculpatory Provisions...............................................................................117
10.04. Reliance by the Agents...............................................................................117
10.05. Notice of Default....................................................................................118
10.06. Non-Reliance on Agent and Other Banks................................................................118
10.07. Indemnification......................................................................................119
10.08. The Agents in Their Individual Capacities............................................................120
10.09. Successor Administrative Agent.......................................................................120
10.10. Resignation by Administrative Agent..................................................................121
10.11. Co-Agent.............................................................................................122
SECTION 11. Miscellaneous...............................................................................................122
11.01. Payment of Expenses, etc.............................................................................122
11.02. Right of Setoff......................................................................................123
11.03. Notices..............................................................................................124
11.04. Benefit of Agreement.................................................................................124
11.05. No Waiver; Remedies Cumulative.......................................................................127
11.06. Payments Pro rata....................................................................................128
11.07. Calculations; Computations...........................................................................128
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11.08. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.....................................................129
11.09. Counterparts.........................................................................................130
11.10. Effectiveness........................................................................................131
11.11. Headings Descriptive.................................................................................131
11.12. Amendment or Waiver..................................................................................131
11.13. Survival.............................................................................................132
11.14. Domicile of Loans....................................................................................132
11.15. Waiver of Jury Trial.................................................................................132
11.16. Independence of Covenants............................................................................132
11.17. Affirmation of Guarantees............................................................................132
Annex I - List of Banks
Annex II - Bank Addresses
Annex III - Summary of Corporate Insurance Policies
Annex IV - Schedule of Subsidiaries
Annex V - Schedule of Existing Indebtedness
Annex VI - Schedule of Collective Bargaining Agreements
Annex VII - Environmental
Annex VIII [Intentionally Omitted]
Annex IX - Environmental Contingency
Annex X - Liens
Exhibit A - Form of Revolving Note
Exhibit B - Form of Opinion of Hunton & Williams
Exhibit C-1 - Form of Holdings Guarantee
Exhibit C-2 - Form of Subsidiary Guarantee
Exhibit D - Form of Security Agreement
Exhibit E-1 - Form of Notice of Assignment
Exhibit E-2 - Form of Assignment and Assumption Agreement
Exhibit F - Form of Notice of Borrowing
Exhibit G - Form of Notice of Continuation/Conversion
Exhibit H - Form of Officers' Solvency Certificate
Exhibit I - Form of Borrowing Base Certificate
Exhibit J - Form of Officer's Certificate Regarding
Environmental Review
</TABLE>
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<PAGE> 7
AMENDED AND RESTATED CREDIT AGREEMENT, among KHPP HOLDINGS, INC., a
Delaware corporation ("Holdings"), HOLLEY PERFORMANCE PRODUCTS INC., a Delaware
corporation (the "Borrower"), the lending institutions listed in Annex I (each
a "Bank" and, collectively, the "Banks"), COMERICA BANK, as co-agent for the
Banks (in such capacity, the "Co-Agent") and CREDIT AGRICOLE INDOSUEZ
("Indosuez"), as the administrative agent and collateral agent for the Banks
(in such capacities, the "Administrative Agent" and, together with the
Co-Agent, "Agents"). Unless otherwise defined herein, all capitalized terms
used herein and defined in Section 9 are used herein as so defined.
W I T N E S S E T H:
WHEREAS, Holdings, the Borrower, Agents and the Banks entered into the
Credit Agreement (the "Original Credit Agreement") dated May 15, 1998, as
amended by Amendment No. 1 dated July 31, 1998, Amendment No. 2 dated September
11, 1998, Amendment No. 3 dated October 21, 1998, Amendment No. 4 dated March
11, 1999, Amendment No. 5 dated May 28, 1999 and Amendment No. 6 dated July 29,
1999;
WHEREAS, the Borrower is offering to investors $150,000,000 aggregate
principal amount of 12 1/4% senior notes due 2007 ("Senior Notes"), the
proceeds of which will be used in part (i) to repay the Term Loans (as defined
in the Original Credit Agreement) in full and (ii) to repay temporarily
outstanding Revolving Loans, in each case including all accrued interest
thereon;
WHEREAS, Borrower has requested that the Banks amend and restate the
Original Credit Agreement to reflect the repayment in full of all Term Loans
(as defined in the Original Credit Agreement) and make available to Borrower
the revolving credit facilities described herein;
WHEREAS, Borrower has requested that the Banks amend and restate the
General Security Agreement to provide, inter alia, for security with respect to
inventory, accounts receivable
<PAGE> 8
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and pledges of the capital stock of the Borrower and its Subsidiaries; and
WHEREAS, the Banks are willing to amend and restate the Original
Credit Agreement and to make available the revolving credit facility provided
for herein.
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01. Commitments. Subject to and upon the terms and conditions herein
set forth, each Bank severally agrees to make a loan or loans to the Borrower,
which loans (each a "Revolving Loan" and, collectively, the "Revolving Loans")
(i) shall be made at any time and from time to time on or after the Closing
Date and prior to the Revolving Loan Commitment Termination Date; provided that
in no event shall the aggregate amount of Revolving Loans at any time exceed
$25,000,000, (ii) except as hereinafter provided, shall initially be Base Rate
Loans and shall, at the Borrower's option and subject to the terms hereof,
thereafter be converted into Reserve Adjusted Eurodollar Loans; provided that
all Revolving Loans made by all Banks pursuant to the same Borrowing shall,
unless otherwise specifically provided herein, consist entirely of Revolving
Loans of the same Type, (iii) may be repaid and reborrowed in accordance with
the provisions hereof, (iv) shall not exceed for any Bank at any time
outstanding the Revolving Loan Commitment of such Bank at such time and (v)
shall not be made if the aggregate principal amount of Revolving Loans then
outstanding, after giving effect to the Revolving Loan requested by the
relevant Notice of Borrowing, plus the then outstanding Letters of Credit
Usage, after giving effect to the issuance of all Letters of Credit subject to
outstanding requests for issuance, would exceed the lesser of the Borrowing
Base as shown in the Borrowing Base Certificate that was last required to be
delivered pursuant to Section 6.01 or the Total Revolving Loan Commitment.
1.02. Minimum Amount of Each Borrowing; Maximum Number of Borrowings.
The minimum aggregate principal amount of any Borrowing shall be the Minimum
Borrowing Amount (other than a Borrowing under the Loan Facility of Base Rate
Loans such that the total amount of Revolving Loans to be outstanding after
giving effect to such Borrowing shall be equal to the Total Revolving
Commitment) and, if greater, shall be in integral
<PAGE> 9
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multiples of $100,000. More than one Borrowing may be incurred on any date;
provided that at no time shall there be outstanding more than 6 Borrowings of
Reserve Adjusted Eurodollar Loans.
1.03. Notice of Borrowings. Whenever the Borrower desires that the
Banks make Reserve Adjusted Eurodollar Loans under the Loan Facility, an
Authorized Officer of the Borrower shall give the Administrative Agent at the
Administrative Agent's Office prior to Noon (New York time) at least three
Business Days' prior written notice (or telephonic notice promptly confirmed in
writing) of each such Borrowing of Reserve Adjusted Eurodollar Loans. Whenever
the Borrower desires that the Banks make Base Rate Loans under the Loan
Facility after the Closing Date an Authorized Officer of the Borrower shall
give the Administrative Agent at the Administrative Agent's Office prior to
Noon (New York time) on the proposed date of such Borrowing prior written
notice (or telephonic notice promptly confirmed in writing) of each such
Borrowing of Base Rate Loans. Each such notice, which shall be substantially in
the form of Exhibit F hereto (each a "Notice of Borrowing"), shall be
irrevocable, shall be deemed a representation by the Borrower that all
conditions precedent to such Borrowing have been satisfied and shall specify
(i) the aggregate principal amount in U.S. dollars of the Revolving Loans to be
made pursuant to such Borrowing, all of which shall be specified in such manner
as is necessary to comply with all limitations on Revolving Loans outstanding
hereunder, including without limitation, availability under the Borrowing Base
as shown by the Borrowing Base Certificate that was last required to be
delivered pursuant to Section 6.01, (ii) the requested date of Borrowing (which
shall be a Business Day in the United States) and (iii) for notices delivered
after the Closing Date, whether the respective Borrowing shall consist of Base
Rate Loans or Reserve Adjusted Eurodollar Loans and, if Reserve Adjusted
Eurodollar Loans, the requested Interest Period to be initially applicable
thereto. The Administrative Agent shall as promptly as practicable give each
Bank written notice (or telephonic notice promptly confirmed in writing) of
each proposed Borrowing, of such Bank's proportionate share thereof and of the
other matters covered by the Notice of Borrowing.
<PAGE> 10
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1.04. Disbursement of Funds. (a) No later than 1:00 P.M. (New York
time) on the date specified in each Notice of Borrowing, each Bank will make
available to the Administrative Agent in New York its pro rata portion of each
Borrowing requested to be made on such date in the manner provided below.
(b) Each Bank shall make available all amounts it is to fund under any
Borrowing on or after the Closing Date in immediately available funds to the
Administrative Agent to the account specified therefor by the Administrative
Agent or if no account is so specified at the Administrative Agent's Office and
the Administrative Agent will make such funds available to the Borrower by
depositing to the account specified therefor by the Borrower or if no account
is so specified to its account at the Administrative Agent's Office the
aggregate of the amounts so made available in the type of funds received.
Unless the Administrative Agent shall have been notified by any Bank prior to
the date of any such Borrowing that such Bank does not intend to make available
to the Administrative Agent its portion of the Borrowing or Borrowings to be
made on such date, the Administrative Agent may assume that such Bank has made
such amount available to the Administrative Agent on such date of Borrowing,
and the Administrative Agent, in reliance upon such assumption, may (in its
sole discretion and without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Bank and the Administrative
Agent has made such corresponding amount available to the Borrower, the
Administrative Agent shall be entitled to recover such amount from such Bank.
If such Bank does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall promptly
notify the Borrower, and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent. The Administrative Agent shall also be
entitled to recover from such Bank or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrower to the date such amount is recovered by the Administrative Agent, at a
rate per annum equal to (x) if paid by such Bank, the Federal Funds Rate or
<PAGE> 11
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(y) if paid by the Borrower (and/or one or more other Credit Parties), the then
applicable rate of interest, calculated in accordance with Section 1.08, for
the respective Loans. The Administrative Agent shall also be entitled to
recover from any Bank an amount equal to any other losses incurred by the
Administrative Agent as a result of the failure of such Bank to provide such
amount as provided in this Agreement.
(c) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its Commitment hereunder or to prejudice any rights which
the Borrower or any other Credit Party may have against any Bank as a result of
any default by such Bank hereunder.
1.05. Notes. (a) The Borrower's obligation to pay the principal of and
interest on all the Loans made to it by each Bank shall be evidenced by a
promissory note (each, a "Revolving Note" and, collectively, the "Revolving
Notes") duly executed and delivered by the Borrower substantially in the form
of Exhibit A hereto, with blanks appropriately completed in conformity
herewith.
(b) The Revolving Note of the Borrower issued to each Bank shall (i)
be executed by the Borrower, (ii) be payable to the order of such Bank and be
dated the Closing Date, (iii) be in a stated principal amount equal to the
Revolving Loan Commitment of such Bank and be payable in the aggregate
principal amount of the Revolving Loans evidenced thereby, (iv) mature, with
respect to each Revolving Loan evidenced thereby, on the Revolving Maturity
Date, (v) be subject to mandatory prepayment as provided in Section 3.02, (vi)
bear interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans and Reserve Adjusted Eurodollar Loans, as the case may
be, evidenced thereby and (vii) be entitled to the benefits of this Agreement
and the other applicable Credit Documents.
(c) Each Bank will note on its internal records the amount of each
Revolving Loan made by it and each payment in respect thereof and will, prior
to any transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make
<PAGE> 12
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any such notation shall not affect the Borrower's or any Credit Party's
obligations hereunder or under the other applicable Credit Documents in respect
of such Revolving Loans.
(d) Notwithstanding anything to the contrary contained above or
elsewhere in this Agreement, Revolving Notes shall only be delivered to Banks
which at any time specifically request the delivery of such Notes. No failure
of any Bank to request or obtain a Revolving Note evidencing its Revolving
Loans of any kind or to the Borrower shall affect or in any manner impair the
obligations of the Borrower to pay the Revolving Loans (and all related
Obligations) which would otherwise be evidenced thereby in accordance with the
requirements of this Agreement, and shall not in any way affect the security or
guarantees therefor provided pursuant to the various Credit Documents. Any Bank
which does not have a Revolving Note evidencing its outstanding Revolving Loans
shall in no event be required to make the notations on a Note otherwise
described in the preceding clause (c). At any time when any Bank requests the
delivery of a Revolving Note to evidence its Loans of any kind, the Borrower
shall promptly execute and deliver to the respective Bank the requested
Revolving Note or Revolving Notes in the appropriate amount or amounts to
evidence such Revolving Loans.
1.06. Continuations and Conversions. The Borrower shall have the
option to convert on any Business Day all or a portion (which portion shall not
be less than the Minimum Borrowing Amount) of the outstanding principal amount
of the Revolving Loans owing by the Borrower into a Borrowing or Borrowings of
another Type of Revolving Loan; provided that (i) except as otherwise provided
in Section 1.10(b), Reserve Adjusted Eurodollar Loans may be converted into
Base Rate Loans or continued as Reserve Adjusted Eurodollar Loans only on the
last day of an Interest Period applicable thereto, (ii) no such partial
conversion of Reserve Adjusted Eurodollar Loans shall reduce the outstanding
principal amount of Reserve Adjusted Eurodollar Loans under the Loan Facility
(or Portion thereof) made pursuant to a single Borrowing to less than the
Minimum Borrowing Amount, (iii) an outstanding Revolving Loan may only be
continued as or converted into Reserve Adjusted Eurodollar Loans if no Default
or Event of Default is in existence on the
<PAGE> 13
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date of the conversion or continuation and (iv) Borrowings resulting from
conversions pursuant to this Section 1.06 shall be limited in amount and number
as provided in Section 1.02. Each such conversion (or continuation) shall be
effected by the Borrower by giving the Administrative Agent at the
Administrative Agent's Office prior to Noon (New York time) at least three
Business Days' (or the same Business Day in the case of a conversion into or
continuation of Base Rate Loans) prior written notice (or telephonic notice
promptly confirmed in writing) (each a "Notice of Continuation/Conversion")
specifying the Revolving Loans to be so converted or continued, the Type of
Revolving Loans to be converted into and, if to be converted into or continued
as Reserve Adjusted Eurodollar Loans, the Interest Period to be initially
applicable thereto. The Administrative Agent shall give each Bank notice as
promptly as practicable of any such proposed conversion affecting any of its
Revolving Loans. Notwithstanding the foregoing or the provisions of Section
1.09, if a Default or Event of Default is in existence at the time any Interest
Period in respect of any Borrowing of Reserve Adjusted Eurodollar Loans is to
expire, such Revolving Loans may not be continued as Reserve Adjusted
Eurodollar Loans but instead shall be automatically converted on the last day
of such Interest Period into Base Rate Loans. If no Notice of
Continuation/Conversion has been duly delivered with respect to a Reserve
Adjusted Eurodollar Loan on or before the third Business Day prior to the last
day of the Interest Period applicable thereto, such Reserve Adjusted Eurodollar
Loan shall be automatically converted into a Base Rate Loan.
1.07. Pro Rata Borrowings. All Borrowings under this Agreement shall
be loaned by the Banks pro rata on the basis of their Revolving Loan
Commitments. No Bank shall be responsible for any default by any other Bank in
its obligation to make Revolving Loans hereunder and each Bank shall be
obligated to make the Revolving Loans provided to be made by it hereunder,
regardless of the failure of any other Bank to fulfill its commitments
hereunder.
1.08. Interest. (a) The unpaid principal amount of each Base Rate Loan
shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) (or unless sooner converted into a
Reserve Adjusted
<PAGE> 14
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Eurodollar Loan) at a rate per annum equal to the sum of (i) the Base Rate in
effect from time to time and (ii) the applicable Interest Margin.
(b) The unpaid principal amount of each Reserve Adjusted Eurodollar
Loan shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) (or unless sooner converted to a Base
Rate Loan) at a rate per annum equal to the sum of (i) the Eurodollar Rate and
(ii) the applicable Interest Margin.
(c) The unpaid principal amount of each Revolving Loan, upon the
occurrence and during the continuance of a payment default specified in Section
8.01 or an Event of Default, overdue principal and, to the extent permitted by
law, overdue interest in respect of each Revolving Loan shall bear interest at
a rate per annum equal to 2% plus the rate of interest applicable to such
Revolving Loan in effect from time to time; provided that the amount of the
unpaid principal and overdue principal of each Reserve Adjusted Eurodollar Loan
shall bear interest at the rate of interest applicable thereto plus 2% for the
balance of the then current Interest Period.
(d) Interest shall accrue from and including the date of any Borrowing
to but excluding the date of any repayment thereof and shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on the last Business Day
of each March, June, September, and December beginning September 30, 1999; (ii)
in respect of each Reserve Adjusted Eurodollar Loan, in arrears on the last day
of each Interest Period applicable thereto and, in the case of an Interest
Period in excess of three months, on each date occurring at three-month
intervals after the first date of such Interest Period; and (iii) in respect of
each Loan, on any prepayment (on the amount prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand. Notwithstanding
the foregoing, interest payable at the rate provided in Section 1.08(c) shall
be payable on demand.
(e) All computations of interest hereunder shall be made in accordance
with Section 11.07(b).
<PAGE> 15
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(f) The Administrative Agent, upon determining the interest rate for
any Borrowing of Reserve Adjusted Eurodollar Loans for any Interest Period,
shall promptly notify the Borrower and the Banks thereof. Such determination
shall, absent manifest error, be final, conclusive and binding upon all parties
hereto.
1.09. Interest Periods. At the time the Borrower gives a Notice of
Borrowing or Notice of Continuance/Conversion in respect of the making of,
continuance of, or conversion into, a Borrowing of Reserve Adjusted Eurodollar
Loans, it shall have the right to elect, by giving the Administrative Agent
written notice (or telephonic notice promptly confirmed in writing), the
Interest Period applicable to the Borrowing, which Interest Period shall, at
the option of the Borrower, be a one, two, three or six month period.
Notwithstanding anything to the contrary contained above:
(a) the initial Interest Period for any Borrowing of Reserve Adjusted
Eurodollar Loans shall commence on the date of such Borrowing (including
the date of any conversion from a Borrowing of Base Rate Loans) and each
Interest Period occurring thereafter in respect of such Borrowing shall
commence on the date on which the next preceding Interest Period expires;
(b) if any Interest Period relating to a Borrowing of Reserve
Adjusted Eurodollar Loans begins on a date for which there is no
numerically corresponding date in the calendar month in which such
Interest Period ends, such Interest Period shall end on the last Business
Day of such calendar month;
(c) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that if any Interest Period in respect
of a Reserve Adjusted Eurodollar Loan would otherwise expire on a day
which is not a Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day; and
<PAGE> 16
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(d) no Interest Period shall extend beyond the Revolving Maturity
Date.
1.10. Special Provisions Governing Reserve Adjusted Eurodollar Loans.
Notwithstanding any other provision of this Agreement, the following
provisions shall govern with respect to Reserve Adjusted Eurodollar Loans as to
the matters covered:
(a) On an Interest Rate Determination Date, the Administrative Agent
shall determine (which determination shall, absent manifest error, be
final, conclusive and binding upon all parties hereto) the interest rate
which shall apply to the Reserve Adjusted Eurodollar Loans for which an
interest rate is then being determined for the applicable Interest Period
and shall promptly give notice thereof (in writing or by telephone
confirmed in writing) to the Borrower and to each Bank.
(b) In the event that (x) in the case of clause (i) below, the
Administrative Agent or (y) in the case of clause (ii) or (iii) below, any
Bank shall have determined (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising on or after
the Effective Date affecting the interbank eurodollar market,
adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of
Eurodollar Rate;
(ii) at any time that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Reserve Adjusted Eurodollar Loans or its obligation to
make Reserve Adjusted Eurodollar Loans because of (x) any change
since the Effective Date (including changes proposed or published
prior to the Effective Date but taking effect thereafter) in any
applicable law, governmental rule, regulation, guideline or order (or
in the interpretation or administration thereof and including
<PAGE> 17
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the introduction of any new law or governmental rule, regulation,
guideline or order) such as, for example, but not limited to, a
change in official reserve requirements, but, in all events,
excluding reserves required under Regulation D to the extent included
in the computation of the Eurodollar Rate and/or (y) other
circumstances affecting such Bank, the interbank eurodollar market,
or the position of such Bank in such market; or
(iii) at any time that the making or continuance of any Reserve
Adjusted Eurodollar Loan has become unlawful by compliance by such
Bank in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental
rule, regulation, guideline or order not having the force of law even
though the failure to comply therewith would not be unlawful), or has
become impracticable as a result of a contingency occurring after the
Effective Date which materially and adversely affects the interbank
eurodollar market;
then, and in any such event, the Administrative Agent in the case of
clause (i) above or such Bank in the case of clause (ii) or (iii) above
shall on such date give notice (by telephone confirmed in writing) to the
Borrower and, in the case of clause (ii) or (iii), to the Administrative
Agent of such determination (which notice the Administrative Agent shall
promptly transmit to each of the other Banks). Thereafter (x) in the case
of clause (i) above, Reserve Adjusted Eurodollar Loans shall no longer be
available until such time as the Administrative Agent notifies the
Borrower and the Banks that the circumstances giving rise to such notice
by the Administrative Agent no longer exist, and any Notice of Borrowing
or Notice of Continuance/Conversion given by the Borrower with respect to
the borrowing of or conversion into (including continuance of) Reserve
Adjusted Eurodollar Loans which have not yet been incurred shall be deemed
rescinded by the Borrower, (y) in the case of clause (ii) above, the
Borrower shall pay to such Bank, upon written demand therefor, such
additional amounts (in the form of an increased rate of,
<PAGE> 18
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or a different method of calculating, interest or otherwise as such Bank
in its reasonable discretion shall determine) as shall be required to
compensate such Bank for such increased costs or reductions in amounts
receivable hereunder (a written notice as to the additional amounts owed
to such Bank, showing the basis for the calculation thereof, submitted to
the Borrower by such Bank shall, absent manifest error, be final,
conclusive and binding upon all parties hereto) and (z) in the case of
clause (iii) above, the Borrower shall take one of the actions specified
in Section 1.10(c) as promptly as possible and, in any event, within the
time period required by law.
(c) At any time that any Reserve Adjusted Eurodollar Loan is affected
by the circumstances described in Section 1.10(b)(ii) or (iii), the
Borrower may (and in the case of a Reserve Adjusted Eurodollar Loan
affected pursuant to Section 1.10(b)(iii) shall) either (i) if a Notice of
Borrowing or Notice of Continuance/Conversion has been given with respect
to the affected Reserve Adjusted Eurodollar Loan cancel said Notice of
Borrowing or Notice of Continuance/Conversion by giving the Administrative
Agent telephonic notice (confirmed promptly in writing) thereof on the
same date that the Borrower was notified by a Bank pursuant to Section
1.10(b)(ii) or (iii), or (ii) if the affected Reserve Adjusted Eurodollar
Loan is then outstanding, upon at least three Business Days' notice to the
Administrative Agent, require the affected Bank to convert each such
Reserve Adjusted Eurodollar Loan into a Base Rate Loan, or prepay such
Reserve Adjusted Eurodollar Loan; provided that if more than one Bank is
affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(c); and provided, further, that the Borrower
shall compensate any such affected Banks as set forth in Section 1.10(f).
(d) Anything herein to the contrary notwithstanding, if on any
Interest Rate Determination Date no Eurodollar Rate is available by reason
of the inability of the Administrative Agent to determine such interest
rate in accordance with the definition thereof, the Administrative Agent
shall give the Borrower and each Bank prompt notice
<PAGE> 19
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thereof and the Loans requested to be made as Reserve Adjusted Eurodollar
Loans shall, subject to the applicable notice requirements, be made as
Base Rate Loans.
(e) Each Bank agrees that, as promptly as practicable after it
becomes aware of the occurrence of any event or the existence of a
condition that would cause it to be an affected Bank under Section
1.10(b)(ii) or (iii), it will, to the extent not inconsistent with such
Bank's internal policies, use reasonable efforts to make, fund or maintain
the affected Reserve Adjusted Eurodollar Loans of such Bank through
another lending office of such Bank if as a result thereof the additional
moneys which would otherwise be required to be paid in respect of such
Loans pursuant to Section 1.10(b)(ii) would be materially reduced or the
illegality or other adverse circumstances which would otherwise require
prepayment of such Loans pursuant to Section 1.10(b)(iii) would cease to
exist, and if, as determined by such Bank, in its reasonable discretion,
the making, funding or maintaining of such Loans through such other
lending office would not otherwise adversely affect such Loans or such
Bank. The Borrower hereby agree to pay all reasonable expenses incurred by
any Bank in transferring the Loans to another lending office of such Bank
pursuant to this Section 1.10(e).
(f) The Borrower shall compensate each Bank, upon written request by
that Bank, for all reasonable losses, expenses and liabilities (including,
without limitation, such factors as any interest paid by that Bank to
lenders of funds borrowed by it to make or carry its Reserve Adjusted
Eurodollar Loans and any loss sustained by that Bank in connection with
re-employment of such funds (based upon the difference between the amount
earned in connection with re-employment of such funds and the amount
payable by the Borrower if such funds had been borrowed or remained
outstanding) which that Bank may sustain with respect to the Borrower's
Reserve Adjusted Eurodollar Loans: (i) if for any reason (other than a
default or error by that Bank) a Borrowing of any such Reserve Adjusted
Eurodollar Loan does not occur on a date specified therefor in a Notice of
Borrowing or a Notice of Continuance/
<PAGE> 20
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Conversion or in a telephonic request for borrowing or conversion, or a
successive Interest Period in respect of any such Reserve Adjusted
Eurodollar Loan does not commence after notice therefor is given pursuant
to Section 1.06, (ii) if any prepayment (as required by Sections 3.01 and
3.02, by acceleration or otherwise) or conversion of any of such Bank's
Reserve Adjusted Eurodollar Loans to the Borrower occurs on a date which
is not the last day of the Interest Period applicable to that Loan, (iii)
if any prepayment of any such Bank's Reserve Adjusted Eurodollar Loans to
the Borrower is not made on any date specified in a notice of prepayment
given by the Borrower, or (iv) as a consequence of any other failure by
the Borrower to repay such Bank's Reserve Adjusted Eurodollar Loans to the
Borrower when required by the terms of this Agreement.
1.11. Capital Requirements. If any Bank shall have determined that the
adoption or effectiveness after the Effective Date of any applicable law, rule
or regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank or such Bank's parent with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency
(including in each case any such change proposed or published prior to the date
hereof but taking effect thereafter), has or would have the effect of reducing
the rate of return on such Bank's or such Bank's parent's capital or assets as
a consequence of such Bank's obligations hereunder to a level below that which
such Bank or such Bank's parent could have achieved but for such adoption,
effectiveness or change or as a consequence of an increase in the amount of
capital required to be maintained by such Bank (including in each case, without
limitation, with respect to any Bank's Commitment or any Loan), then from time
to time, within 15 days after demand by such Bank (with a copy to the
Administrative Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank or such Bank's parent, as the
case may be, for such reduction. Each Bank, upon determining in
<PAGE> 21
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good faith that any additional amounts will be payable pursuant to this Section
1.11, will give prompt written notice thereof to the Borrower, which notice
shall set forth in reasonable detail the basis of the calculation of such
additional amounts, although any delay in giving any notice shall not release
or diminish the Borrower's obligations to pay additional amounts pursuant to
this Section 1.11.
1.12. Total Revolving Loan Commitments; Limitations on Outstanding
Loan Amounts. The amount of the Total Revolving Loan Commitment is $25,000,000,
including up to $3,000,000 of Letters of Credit; provided that no more than
$5,000,000 of Revolving Loans may be incurred or remain outstanding on the
Closing Date. Anything contained in this Agreement to the contrary
notwithstanding, (a) in no event shall the sum of the aggregate principal
amount of all Revolving Loans and Letters of Credit of any Bank at any time
exceed such Bank's portion of the Total Revolving Loan Commitments, and (b) in
no event shall the outstanding Revolving Loans and Letters of Credit Usage
exceed the lesser of the Borrowing Base as shown in the Borrowing Base
Certificate that was last required to be delivered pursuant to Section 6.01 or
the Total Revolving Loan Commitments.
1.13. Letters of Credit.
(a) Letters of Credit. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the
Borrower set forth herein and in the other Credit Documents, in addition to
requesting that the Banks make Revolving Loans pursuant to Section 1.03, the
Borrower may request, in accordance with the provisions of this Section 1.13,
that one or more Issuing Banks issue Letters of Credit for the account of the
Borrower; provided that (i) the Borrower shall not request that any Bank issue
any Letter of Credit and a Bank shall not issue any Letter of Credit, if after
giving effect to such issuance the sum of (A) the Letters of Credit Usage on
the date of such issuance, after giving effect to the issuance of all Letters
of Credit subject to outstanding requests for issuance of a Letter of Credit,
plus (B) the aggregate principal amount of Revolving Loans then outstanding,
after giving effect to the making of all Revolving Loans then requested by all
outstanding but unfunded Notices of
<PAGE> 22
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Borrowing, would exceed the lesser of the Borrowing Base as would be shown in
the Borrowing Base Certificate that was last required to be delivered pursuant
to Section 6.01 or the Total Revolving Loan Commitment then in effect, (ii) in
no event shall any Issuing Bank issue (A) any Letter of Credit having an
expiration date later than thirty (30) Business Days prior to the Revolving
Maturity Date, after giving effect to any possible renewal of such Letter of
Credit pursuant to the proviso to the following clause (ii)(B), (B) subject to
the foregoing clause (ii)(A), any Letter of Credit having an expiration date
more than one year after its date of issuance; provided that, subject to the
foregoing clause (ii)(A), this clause (B) shall not prevent any Issuing Bank
from issuing a Letter of Credit containing a provision to the effect that such
Letter of Credit will automatically be renewed annually for a period not to
exceed one year, so long as such renewable Letter of Credit provides that it
shall not at any time be renewed for an additional year if (I) the Borrower
notifies the Issuing Bank in writing one Business Day prior to the applicable
renewal date that such Borrower elects to allow the Letter of Credit to expire
without being renewed, or (II) the Issuing Bank or the Required Banks notify
the Borrower in writing, prior to the date set forth in such Letter of Credit
as the date by which the beneficiary thereof is to be notified whether such
Letter of Credit is to be renewed, that such Letter of Credit shall not be so
renewed, in which case such Letter of Credit shall not be so renewed, (C) any
Letter of Credit, the initial stated amount of which is less than $100,000, or
(D) any Letter of Credit (I) as to which a drawing can be made in a location
other than in the United States of America, (II) which is governed by laws
other than the laws of the State of New York, without regard to the principles
of conflicts of laws or (III) as to which the beneficiary is not required, by
acceptance of the Letter of Credit, to be subject to the exclusive jurisdiction
of any competent state or federal court in the State of New York with regard to
such Letter of Credit and (iii) the Borrower shall not request that any Issuing
Bank issue and no Issuing Bank shall issue any Letter of Credit if, after
giving effect to such issuance and the issuance of all other requested Letters
of Credit, the then outstanding Letters of Credit Usage in respect of all
Letters of Credit would exceed $3,000,000. The issuance
<PAGE> 23
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of any Letter of Credit in accordance with the provisions of this Section 1.13
shall be given effect in the calculation of the aggregate principal amount of
Revolving Loans outstanding and the Letters of Credit Usage and shall require
the satisfaction of each condition set forth in Sections 4.01, 4.02 and 4.03.
Immediately upon the issuance of each Letter of Credit, each Bank
other than the Issuing Bank or Banks shall be deemed to, and hereby agrees to,
have irrevocably purchased from the Issuing Bank a participation (such
participation of each Bank in each Letter of Credit being hereinafter referred
to as its "Letter of Credit Participation") in such Letter of Credit and each
drawing thereunder in an amount equal to such Bank's pro rata share (determined
on the basis of such Bank's Revolving Loan Commitment) of the maximum amount
which is or at any time may become available to be drawn thereunder.
Each Letter of Credit may provide that the Issuing Bank may (but shall
not be required to) pay the beneficiary thereof upon the occurrence of an Event
of Default and the acceleration of the maturity of the Revolving Loans or, if
payment is not then due to the beneficiary, provide for the deposit of funds in
an account to secure payment to the beneficiary and that any funds so deposited
shall be paid to the beneficiary of the Letter of Credit if conditions to such
payment are satisfied or returned to the Issuing Bank for distribution to the
Banks (or, if all Obligations shall have been indefeasibly paid in full, to the
Borrower) if no payment to the beneficiary has been made and the final date
available for drawings under the Letter of Credit has passed. Each payment or
deposit of funds by an Issuing Bank as provided in this paragraph shall be
treated for all purposes of this Agreement as a drawing duly honored by such
Issuing Bank under the related Letter of Credit.
(b) Request for Issuance. Whenever the Borrower desires the issuance
of a Letter of Credit, it shall deliver to the Administrative Agent a request
for issuance of a Letter of Credit no later than 1:00 P.M. (New York time) at
least three Business Days, or such shorter period as may be agreed to by any
Issuing Bank in any particular instance, in advance of the
<PAGE> 24
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proposed date of issuance. The request for issuance with respect to any Letter
of Credit shall specify (i) the proposed date of issuance (which shall be a
business day under the laws of the jurisdiction of the Issuing Bank) of such
Letter of Credit, (ii) the face amount of such Letter of Credit, (iii) the
expiration date of such Letter of Credit and (iv) the name and address of the
beneficiary of such Letter of Credit. As soon as practicable after delivery of
such request for issuance of a Letter of Credit, the Issuing Bank for such
Letter of Credit shall be determined as provided in Section 1.13(c). Prior to
the date of issuance, the Borrower shall specify a precise description of the
documents and the verbatim text of any certificate to be presented by the
beneficiary of such Letter of Credit which, if presented by such beneficiary
prior to the expiration date of the Letter of Credit, would require the Issuing
Bank to make payment under the Letter of Credit; provided that the Issuing
Bank, in its sole judgment, may require changes in any such documents and
certificates; and provided, further, that no Letter of Credit shall require
payment against a conforming draft to be made thereunder earlier than 1:00 P.M.
in the time zone of the Issuing Bank on the Business Day (which shall be a
business day under the laws of the jurisdiction of the Issuing Bank) next
succeeding the Business Day (which shall be a Business Day under the laws of
the jurisdiction of the Issuing Bank) that such draft is presented. In
determining whether to pay under any Letter of Credit, the Issuing Bank shall
be responsible only to determine that the documents and certificates required
to be delivered under that Letter of Credit have been delivered and that they
comply on their face with the requirements of that Letter of Credit. Promptly
after receipt of a request for issuance of a Letter of Credit and the
determination of the Issuing Bank thereof, the Administrative Agent shall
notify each Bank of the proposed issuance, the identity of the Issuing Bank and
the amount of each other Bank's respective participation therein, determined in
accordance with Section 1.13(a).
(c) Determination of Issuing Bank.
(1) Upon receipt by the Administrative Agent of a request for
issuance pursuant to Section 1.13(b) with respect to a Letter of Credit, in the
event the Administrative Agent
<PAGE> 25
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elects to issue such Letter of Credit, the Administrative Agent shall so notify
the Borrower, and the Administrative Agent shall be the Issuing Bank with
respect thereto. In the event that the Administrative Agent, in its sole
discretion, elects not to issue such Letter of Credit, the Administrative Agent
shall promptly so notify the Borrower, and the Borrower may request any other
Bank to issue such Letter of Credit. Each such Bank so requested to issue such
Letter of Credit shall promptly notify the Borrower and the Administrative
Agent whether or not, in its sole discretion, it has elected to issue such
Letter of Credit, and any such Bank that so elects to issue such Letter of
Credit shall be the Issuing Bank with respect thereto, it being expressly
understood that no Bank will have any obligation to issue any Letter of Credit.
No Issuing Bank shall issue any Letter of Credit denominated in a currency
other than Dollars.
(2) Each Issuing Bank that elects to issue a Letter of Credit shall
promptly give written notice to the Administrative Agent and each other Bank of
the information required under Section 1.13(b)(i)-(iv) relating to the Letter
of Credit.
(d) Payment of Amounts Drawn Under Letters of Credit. In the event of
any request for drawing under any Letter of Credit by the beneficiary thereof,
the Issuing Bank shall notify such Borrower and the Administrative Agent on or
before the date on which such Issuing Bank intends to honor such drawing, and
the Borrower shall reimburse such Issuing Bank on the day on which such drawing
is honored in an amount in same day funds equal to the amount of such drawing;
provided that, anything contained in this Agreement to the contrary
notwithstanding, (i) unless the Borrower shall have notified the Administrative
Agent and such Issuing Bank prior to Noon (New York time) on the Business Day
of the date of such drawing that the Borrower intends to reimburse such Issuing
Bank for the amount of such drawing with funds other than the proceeds of
Revolving Loans, the Borrower shall be deemed to have timely given a Notice of
Borrowing to the Administrative Agent requesting the Banks to make Revolving
Loans that are Base Rate Loans on the date on which such drawing is honored in
an amount equal to the amount of such drawing, and (ii) subject to satisfaction
or waiver of the conditions specified in Section 4.02,
<PAGE> 26
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the Banks shall, on the date of such drawing, make Revolving Loans that are
Base Rate Loans in the amount of such drawing, the proceeds of which shall be
applied directly by the Administrative Agent to reimburse such Issuing Bank for
the amount of such drawing; and further provided that if, for any reason,
proceeds of Revolving Loans are not received by such Issuing Bank on such date
in an amount equal to the amount of such drawing, the Borrower shall reimburse
such Issuing Bank, on the Business Day (which shall be a business day under the
laws of the jurisdiction of such Issuing Bank) immediately following the date
of such drawing, in an amount in same day funds equal to the excess of the
amount of such drawing over the amount of such Revolving Loans, if any, that
are so received, plus accrued interest on such amount at the rate set forth in
Section 1.13(f)(1)(i).
(e) Payment by Banks. In the event that the Borrower shall fail to
reimburse an Issuing Bank as provided in Section 1.13(d) in an amount equal to
the amount of any drawing honored by such Issuing Bank under a Letter of Credit
issued by it, such Issuing Bank shall promptly notify each Bank of the
unreimbursed amount of such drawing and of such Bank's respective participation
therein. Each Bank shall make available to such Issuing Bank an amount equal to
its respective participation in same day funds, at the office of such Issuing
Bank specified in such notice, not later than 1:00 P.M. (New York time) on the
Business Day (which shall be a business day under the laws of the jurisdiction
of such Issuing Bank) after the date notified by such Issuing Bank. In the
event that any Bank fails to make available to such Issuing Bank the amount of
such Bank's participation in such Letter of Credit as provided in this Section
1.13(e), such Issuing Bank shall be entitled to recover such amount on demand
from such Bank together with interest at the customary rate set by the
Administrative Agent for the correction of errors among banks for three
Business Days and thereafter at the Base Rate. Each Issuing Bank shall
distribute to each other Bank which has paid all amounts payable by it under
this Section 1.13(e) with respect to any Letter of Credit issued by such
Issuing Bank such other Bank's pro rata share of all payments received by such
Issuing Bank from the Borrower in reimbursement of drawings honored by such
<PAGE> 27
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Issuing Bank under such Letter of Credit when such payments are received.
Nothing in this Section 1.13(e) shall be deemed to relieve any Bank from its
obligation to pay all amounts payable by it under this Section 1.13(e) with
respect to any Letter of Credit issued by an Issuing Bank or to prejudice any
rights that the Borrower or any other Bank may have against a Bank as a result
of any default by such Bank hereunder.
(f) Compensation.
(1) The Borrower agrees to pay the following amount with respect to
all Letters of Credit:
(i) with respect to drawings made under any Letter of Credit,
interest, payable on demand, on the amount paid by such Issuing Bank in
respect of each such drawing from and including the date of the drawing
through the date such amount is reimbursed by the Borrower (including any
such reimbursement out of the proceeds of Revolving Loans pursuant to
Section 1.13(d)) at a rate which is equal to the interest rate then
applicable to Base Rate Loans for the period from the date of such drawing
to and including the first Business Day after the date of such drawing and
thereafter at a rate equal to 2% per annum in excess of the rate of
interest otherwise payable under this Agreement for Base Rate Loans during
such period; provided that amounts reimbursed after 12:00 noon (New York
time) on any date shall be deemed to be reimbursed on the next succeeding
Business Day; and
(ii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each drawing made thereunder, documentary and
processing charges in accordance with such Issuing Bank's standard
schedule for such charges in effect at the time of such amendment,
transfer or drawing, as the case may be.
(2) The Borrower agrees to pay to the Administrative Agent for
distribution to each Bank in respect of each Letter of Credit outstanding such
Bank's pro rata share of a commission equal to 2% per annum of the maximum
amount available from time to time to be drawn under such outstanding Letters
of
<PAGE> 28
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Credit, payable in arrears on and through the last day of each fiscal quarter
of the Borrower and calculated on the basis of a 365-day year and the actual
number of days elapsed. Upon the happening and during the continuance of a
payment default specified in Section 8.01 or an Event of Default, the
commission referred to in the preceding sentence shall be 4% per annum.
(3) The Borrower agrees to pay to each Issuing Bank in respect of each
Letter of Credit on the date of issuance a commission equal to 1/2% per annum
of the maximum amount available at any time to be drawn under such Letter of
Credit issued by such Issuing Bank, payable in arrears on and through the last
day of each fiscal quarter of the Borrower and calculated on the basis of a
365-day year and the actual number of days elapsed.
Amounts payable under clauses (1)(i) and (2) of this Section 1.13(f),
shall be paid to the Administrative Agent on behalf of the Banks. The
Administrative Agent shall distribute promptly to each Bank its pro rata share
of such amount. Amounts payable under clauses (1)(ii) and (3) of this Section
1.13(f) shall be paid directly to the Issuing Bank.
(g) Obligations Absolute. The obligation of the Borrower to reimburse
each Issuing Bank for drawings made under the Letters of Credit issued by it
and the obligations of the Banks under Section 1.13(e) shall be unconditional
and irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without limitation, the following
circumstances:
(1) any lack of validity or enforceability of any Letter of Credit;
(2) the existence of any claim, setoff, defense or other right that
the Borrower or any Affiliate of the Borrower or any other Person may have
at any time against a beneficiary or any transferee of any Letter of
Credit (or any persons or entities for whom any such beneficiary or
transferee may be acting), such Issuing Bank, any Bank or any other
Person, whether in connection with this Agreement,
<PAGE> 29
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the transactions contemplated herein or any unrelated transaction;
(3) any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(4) payment by such Issuing Bank under any Letter of Credit against
presentation of a demand, draft or certificate or other document that does
not comply with the terms of such Letter of Credit;
(5) any other circumstance or happening whatsoever that is similar to
any of the foregoing; or
(6) the fact that a Default or Event of Default shall have occurred
and be continuing.
(h) Additional Payments. If by reason of (a) any change after the
Effective Date in applicable law, regulation, rule, decree or regulatory
requirement or any change in the interpretation or application by any judicial
or regulatory authority of any law, regulation, rule, decree or regulatory
requirement or (b) compliance by any Issuing Bank or any Bank with any
direction, request or requirement (whether or not having the force of law) of
any governmental or monetary authority including, without limitation,
Regulation D:
(i) such Issuing Bank or any Bank shall be subject to any tax, levy,
charge or withholding of any nature or to any variation thereof or to any
penalty with respect to the maintenance or fulfillment of its obligations
under this Section 1.13, whether directly or by such being imposed on or
suffered by such Issuing Bank or any Bank;
(ii) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letter of Credit issued
by such Issuing Bank or participations therein purchased by any Bank; or
<PAGE> 30
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(iii) be imposed on such Issuing Bank or any Bank any other condition
regarding this Section 1.13, any Letter of Credit or any participation
therein;
and the result of the foregoing is to directly or indirectly increase the cost
to such Issuing Bank or any Bank of issuing, making or maintaining any Letter
of Credit or of purchasing or maintaining any participation therein, or to
reduce the amount receivable in respect thereof by such Issuing Bank or any
Bank, then and in any such case such Issuing Bank or such Bank shall, as
promptly as practical after the additional cost is incurred or the amount
received is reduced, notify the Borrower and the Borrower shall pay on demand
such amounts as such Issuing Bank or such Bank may specify to be necessary to
compensate such Issuing Bank or such Bank for such additional cost or reduced
receipt, together with interest on such amount from the date demanded until
payment in full thereof at a rate per annum equal at all times to the rate
applicable to Base Rate Loans then in effect; provided, however, that the
failure of any Bank to timely give such notice shall not affect the obligation
of the Borrower to pay such amounts. A certificate in reasonable detail as to
the amount of such increased cost or reduced receipt, submitted to the Borrower
and the Administrative Agent by that Issuing Bank or any Bank, as the case may
be, shall, absent manifest error, be final, conclusive and binding for all
purposes.
(i) Indemnification; Nature of Issuing Bank's Duties. In addition to
amounts payable as elsewhere provided in this Section 1.13, without
duplication, the Borrower hereby agrees to protect, indemnify, pay and save
each Issuing Bank (and if the other Banks have been requested to participate
pursuant to Section 1.13(e), the Banks) harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees and allocated costs of internal counsel)
which such Bank may incur or be subject to as a consequence, direct or
indirect, of (i) the issuance of the Letters of Credit or (ii) the failure of
such Issuing Bank to honor a drawing under any Letter of Credit as a result of
any act or omission, whether rightful or wrongful, of any present or future de
jure or de
<PAGE> 31
-25-
facto government or Governmental Authority (all such acts or omissions herein
called "Government Acts").
As between the Borrower and each Issuing Bank, the Borrower assumes
all risks of the acts and omissions of, or misuse of the Letters of Credit
issued by such Issuing Bank at the Borrower's request by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation
of the foregoing, such Issuing Bank shall not be responsible: (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effects of any document
submitted by any party in connection with the application for and issuance of
such Letters of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, that may prove to
be invalid or ineffective for any reason; (iii) for failure of the beneficiary
of any such Letter of Credit to comply fully with conditions required in order
to draw upon such Letter of Credit; (iv) for errors, omissions, interruptions
or delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they are in cipher; (v) for
errors in interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; and (viii) for any consequences
arising from causes beyond the control of such Issuing Bank, including, without
limitation, any Government Acts. None of the above shall affect, impair, or
prevent the vesting of any of such Issuing Bank's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by any Issuing
Bank in connection with the Letters of Credit issued by it or the related
certificates, if taken or omitted in good faith, shall not put such Issuing
Bank under any resulting liability to the Borrower.
<PAGE> 32
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Notwithstanding anything to the contrary contained in this Section
1.13, the Borrower shall have no obligation to indemnify any Issuing Bank in
respect of any liability incurred by such Issuing Bank arising solely out of
and to the extent of the gross negligence or willful misconduct of such Issuing
Bank or out of the wrongful dishonor by such Issuing Bank of a proper demand
for payment under the Letters of Credit issued by it.
1.14. Restatement Effective Date; Effect of Restatement.
(a) This Agreement shall become effective as provided in Section
11.10.
(b) Upon the effectiveness of this Agreement in accordance with the
terms hereof:
(i) the terms and conditions of the Original Credit Agreement shall
be restated in their entirety, but only with respect to the rights,
duties and obligations among the Agents, the Banks and the Borrower
accruing from and after the Closing Date;
(ii) this Agreement shall not in any way release or impair the
rights, duties, obligations or Liens with respect to the Collateral
created pursuant to the Original Credit Agreement or any other Credit
Document or affect the relative priorities thereof, in each case to the
extent in force and effect hereunder and thereunder as of the Effective
Date under this Agreement and except as modified hereby or thereby or
by documents, instruments and agreements executed and delivered in
connection herewith or therewith, and all of such rights, duties,
obligations and Liens with respect to the Collateral are ratified and
affirmed by the parties hereto;
(iii) notwithstanding any other provisions of this Agreement, all
indemnification obligations of the Borrower under the Original Credit
Agreement and any other Credit Document shall survive the execution
<PAGE> 33
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and delivery of this Agreement and shall continue in full force and
effect for the benefit of the Agents and the Banks;
(iv) the obligations incurred under the Original Credit Agreement
shall, to the extent outstanding on the Closing Date, continue to be
outstanding under this Agreement and shall not be deemed to be paid,
released, discharged or otherwise satisfied by the execution of this
Agreement, and this Agreement shall not be deemed to constitute a
refinancing, substitution or novation of such obligations;
(v) the execution, delivery and effectiveness of this Agreement
shall not operate as a waiver of any right, power or remedy of any of
the Banks or the Agents under the Original Credit Agreement, nor
constitute a waiver of any covenant, agreement or obligation of the
Borrower under the Original Credit Agreement, except to the extent that
any such covenant, agreement or obligation is no longer set forth in
this Agreement or is modified hereby; and
(vi) any and all references in the Credit Documents to the Original
Credit Agreement shall, without further action of the parties, be
deemed a reference to the Original Credit Agreement as restated by this
Agreement, and as this Agreement shall be further amended or amended
and restated from time to time hereafter.
SECTION 2. Commitments.
2.01. Voluntary Reduction of Commitments. Upon at least one Business
Day's prior written notice (or telephonic notice promptly confirmed in writing)
to the Administrative Agent at the Administrative Agent's Office (which notice
the Administrative Agent shall promptly transmit to each of the Banks), the
Borrower shall have the right, without premium or penalty, to terminate the
unutilized portion of the Total Revolving Loan Commitments in part or in whole;
provided that (x) any such termination shall apply to proportionately and
<PAGE> 34
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permanently reduce the Revolving Loan Commitment of each of the Banks and (y)
any partial reduction of the Total Revolving Loan Commitments pursuant to this
Section 2.01 shall, in each case, be in the amount of at least $100,000 and
integral multiples of $100,000 in excess of that amount; provided, further,
that the Total Revolving Loan Commitments shall not be reduced to an amount
less than the aggregate Revolving Loans and Letters of Credit Usage then
outstanding.
2.02. Mandatory Adjustments of Commitments, etc. (a) The Total
Revolving Loan Commitments shall terminate on the earlier of (i) the Revolving
Loan Commitment Termination Date and (ii) the voluntary reduction by the
Borrower pursuant to Section 2.01 of the Revolving Loan Commitment to zero.
(b) Each termination of the Total Revolving Loan Commitments pursuant
to this Section 2.02 shall apply proportionately to the Revolving Loan
Commitment of each Bank.
(c) The Total Revolving Loan Commitments shall be permanently reduced
in the amount and at the time of any payment on the Revolving Loans required to
be applied pursuant to Section 3.02(B)(a) to the Revolving Loans or to cash
collateralize Letters of Credit and to reduce Total Revolving Loan Commitments.
2.03. Commitment Commission. The Borrower agrees to pay the
Administrative Agent a commitment commission ("Commitment Commission") for the
account of each Bank for the period from and including the Effective Date to
but not including the date the Total Revolving Loan Commitments have been
terminated, computed at a rate equal to 1/2% per annum on the daily average
unutilized Revolving Loan Commitment (after taking into effect Letters of
Credit Usage) of such Bank. Accrued Commitment Commission (including amounts
accrued but unpaid under the Original Credit Agreement) shall be due and
payable in arrears on the last Business Day of each March, June, September and
December, commencing September 30, 1999, and on each of (i) the Revolving Loan
Commitment Termination Date and (ii) the date on which the Total Revolving Loan
Commitments have been terminated pursuant to the terms of this Agreement.
<PAGE> 35
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SECTION 3. Payments.
3.01. Voluntary Prepayments. The Borrower shall have the right to
prepay Revolving Loans incurred by it in whole or in part from time to time,
without premium or penalty, on the following terms and conditions: (i) the
Borrower shall give the Administrative Agent at the Administrative Agent's
Office written notice (or telephonic notice promptly confirmed in writing) of
its intent to prepay the Revolving Loans, the amount of such prepayment and, in
the case of Reserve Adjusted Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which made, which notice shall be given by the Borrower
at least one Business Day prior to the date of such prepayment and which notice
shall promptly be transmitted by the Administrative Agent to each of the Banks;
(ii) each partial prepayment of any Borrowing shall be in an aggregate
principal amount of at least $100,000 and integral multiples of $100,000 in
excess of that amount; provided that no partial prepayment of Reserve Adjusted
Eurodollar Loans made pursuant to a single Borrowing under the Loan Facility
shall reduce the outstanding Revolving Loans made pursuant to such Borrowing to
an amount less than the Minimum Borrowing Amount; and (iii) Reserve Adjusted
Eurodollar Loans may only be prepaid pursuant to this Section 3.01 on the last
day of an Interest Period applicable thereto.
3.02. Mandatory Prepayments.
(A) Requirements:
(a) The Borrower shall prepay the outstanding principal amount of the
Revolving Loans on any date on which the aggregate outstanding principal
amount of Revolving Loans (after giving effect to any other repayments or
prepayments on such day and together with the outstanding principal amount
of Letters of Credit Usage) exceeds the Total Revolving Loan Commitments
in the amount of such excess.
(b) If the aggregate principal amount of outstanding Revolving Loans
and Letters of Credit Usage exceeds the Borrowing Base as set forth in the
most recent Borrowing Base Certificate required to be delivered pursuant
to Section
<PAGE> 36
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6.01 of this Agreement (such amount is hereinafter referred to as the
"Excess"), then the Borrower shall prepay Revolving Loans in a principal
amount equal to such Excess no later than two (2) Business Days after the
Borrower has delivered, or was required to deliver, such Borrowing Base
Certificate to the Administrative Agent and the Banks.
(c) After the Closing Date, on the date of receipt by Holdings and/or
any of its Subsidiaries of Net Cash Proceeds or Net Financing Proceeds
(except as set forth in clause (d) hereof), an amount equal to 100% of
such Net Cash Proceeds or Net Financing Proceeds shall be applied as
provided in Section 3.02(B)(a).
(d) On the date of the receipt thereof by Holdings and/or any of its
Subsidiaries, an amount equal to 100% of the proceeds received by such
Person (net of underwriting discounts and commissions and other costs and
expenses directly associated therewith) of the sale after the Closing Date
of equity securities (other than upon the exercise of Vested Options)
(including the sale of equity by Holdings or Net Financing Proceeds of
Holdings the proceeds of which are required to be contributed to the
Borrower in accordance with the provisions of Section 7.17) shall be
applied as provided in Section 3.02(B)(a).
(e) On the date of the receipt thereof by Holdings and/or any of its
Subsidiaries, an amount equal to 100% of (i) any surplus assets of any
Pension Plan returned to Holdings or such Subsidiary or (ii) any tax
refund made to Holdings or such Subsidiary shall be applied as provided in
Section 3.02(B)(a).
(f) On the date of receipt thereof by Holdings or the Borrower, an
amount equal to 100% of any net cash payments received as a result of any
indemnities provided for in the Acquisition Documents, in each case to the
extent paid in cash and to the extent such payments exceed out-of-pocket
losses actually incurred or paid by Holdings or the Borrower under the
Acquisition Documents, shall be applied as provided in Section 3.02(B)(a).
<PAGE> 37
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(B) Application:
(a) Prepayments to be applied pursuant to this Section 3.02(B)(a)
shall be applied to prepay Revolving Loans (but not reduce the Total Revolving
Loan Commitments).
(b) With respect to each prepayment of Revolving Loans required by
Section 3.02(A), the Borrower shall give the Administrative Agent two Business
Days notice and may designate the Types of Revolving Loans and the specific
Borrowing or Borrowings which are to be prepaid; provided that (i) Reserve
Adjusted Eurodollar Loans may be designated for prepayment pursuant to this
Section 3.02 only on the last day of an Interest Period applicable thereto
unless all Reserve Adjusted Eurodollar Loans with Interest Periods ending on
such date of required prepayment and all Base Rate Loans have been or are
concurrently being paid in full and (ii) if any prepayment of Reserve Adjusted
Eurodollar Loans made pursuant to a single Borrowing shall reduce the
outstanding Revolving Loans made pursuant to such Borrowing to an amount less
than the Minimum Borrowing Amount, such Borrowing shall immediately be
converted into Base Rate Loans. In the absence of a designation by the
Borrower, the Administrative Agent shall, subject to the above, make such
designation in its sole discretion. All prepayments shall include payment of
accrued interest on the principal amount so prepaid, shall be applied to the
payment of interest before application to principal and shall include amounts
payable, if any, under Section 1.10(f).
3.03. Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments under this Agreement shall be made
to the Administrative Agent, for the ratable account of the Banks entitled
thereto, not later than 1:00 P.M. (New York time) on the date when due and
shall be made in immediately available funds in lawful money of the United
States of America to the account specified therefor by the Administrative Agent
or if no account has been so specified at the Administrative Agent's Office, it
being understood that written notice by the Borrower to the Administrative
Agent to make a payment from the funds in the Borrower's account at the
Administrative Agent's Office shall constitute the making of such payment to
the extent of such funds held in such account.
<PAGE> 38
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The Administrative Agent will thereafter cause to be distributed on the same
day (if payment is actually received by the Administrative Agent in New York
prior to 1:00 P.M. (New York time) on such day) funds relating to the payment
of principal or interest or fees ratably to the Banks entitled to receive any
such payment in accordance with the terms of this Agreement. If and to the
extent that any such distribution shall not be so made by the Administrative
Agent in full on the same day (if payment is actually received by the
Administrative Agent prior to 1:00 P.M. (New York time) on such day), the
Administrative Agent shall pay to each Bank its ratable amount thereof and each
such Bank shall be entitled to receive from the Administrative Agent, upon
demand, interest on such amount at the Federal Funds Rate for each day from the
date such amount is paid to the Administrative Agent until the date the
Administrative Agent pays such amount to such Bank.
(b) Any payments under this Agreement which are made by the Borrower
later than 1:00 P.M. (New York time) shall be deemed to have been made on the
next succeeding Business Day (other than for purposes of Section 8.01).
Whenever any payment to be made hereunder shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
shall be payable during such extension at the applicable rate in effect
immediately prior to such extension, except that with respect to Reserve
Adjusted Eurodollar Loans, if such next succeeding applicable Business Day is
not in the same month as the date on which such payment would otherwise be due
hereunder or under any Note, the due date with respect thereto shall be the
next preceding applicable Business Day.
3.04. Net Payments. (a) All payments by the Borrower under this
Agreement or under any Credit Document shall be made without set-off or
counterclaim and in such amounts as may be necessary in order that all such
payments (after deduction or withholding for or on account of any present or
future taxes, levies, imposts, duties or other charges of whatsoever nature
imposed by any government or any political subdivision or taxing authority
thereof, other than any tax on or measured by the net income of a Bank or the
Administrative Agent pursuant
<PAGE> 39
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to the income tax laws of the United States or of the jurisdiction in which
such Bank is incorporated or the jurisdiction where such Bank's lending or
principal executive office is located or organized or in which it has any other
contacts or connections that would subject it to taxation therein
(collectively, "Taxes")) shall not be less than the amounts otherwise specified
to be paid under this Agreement and/or any Credit Document. In the event that a
Bank receives a refund of any Tax included in a payment made by the Borrower
pursuant to the preceding sentence, the Bank agrees to pay the Borrower any
amount refunded to the Bank which shall be determined in the Bank's sole
discretion to be a refund in respect of such Tax, and in no case shall the
Borrower be entitled to review any tax returns or tax records of any Bank for
any reason whatsoever. A certificate as to the calculation of any additional
amounts payable to a Bank under this Section 3.04 submitted to the Borrower by
such Bank shall, absent manifest error, be final, conclusive and binding for
all purposes upon all parties hereto. With respect to each deduction or
withholding for or on account of any Taxes, the Borrower shall promptly furnish
to each Bank such certificates, receipts and other documents as may be required
(in the reasonable judgment of such Bank) to establish any tax credit to which
such Bank may be entitled. The Borrower shall also reimburse each Bank, upon
the written request of such Bank, for taxes imposed on or measured by the net
income of such Bank pursuant to the laws of the United States of America, any
State or political subdivision thereof, or the jurisdiction in which such Bank
is incorporated, or a jurisdiction in which the principal office or lending
office of such Bank is located, or under the laws of any political subdivision
or taxing authority of any such jurisdiction, as such Bank shall determine are
or were payable by such Bank, in respect of amounts payable to such Bank
pursuant to this Section 3.04; provided that no assignee or transferee of any
Bank shall be entitled to receive any greater payment under this Section 3.04
than such Bank would have been entitled to receive with respect to the rights
assigned, or otherwise transferred unless (1) such assignment or transfer shall
have been made at a time when the circumstances (including changes in
applicable law) giving rise to such greater payment did not exist or had not
yet occurred
<PAGE> 40
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or (2) such assignment or transfer shall have been at the request of the
Borrower.
(b) Without prejudice to the provisions of clause (a) of this Section
3.04, if any Bank, or the Administrative Agent on its behalf, is required by
law to make any payment on account of Taxes on or in relation to any sum
received or receivable under this Agreement and/or the other Credit Documents
by such Bank, or the Administrative Agent on its behalf, or any liability for
Tax in respect of any such payment is imposed, levied or assessed against any
Bank, or the Administrative Agent on its behalf, the Borrower will promptly
indemnify such Person against such Tax payment or liability, together with any
interest, penalties and reasonable expenses (including counsel fees and
expenses) payable or incurred in connection therewith, including any tax of any
Bank arising by virtue of payments under this clause (b), computed in a manner
consistent with clause (a) of this Section 3.04. A certificate by such Bank, or
the Administrative Agent on its behalf, as to the calculation and amount of
such payments shall, absent manifest error, be final, conclusive and binding
upon all parties hereto for all purposes.
(c) Each Bank that is not incorporated or otherwise formed under the
laws of the United States of America or a state thereof (a "Non-U.S. Person")
agrees that it shall, on or prior to the Closing Date, or, if later, the date
it becomes a Bank hereunder, deliver to the Borrower and the Administrative
Agent (A) two duly completed copies of United States Internal Revenue Service
Forms 1001 or 4224, or (B) in the case of Banks exempt from United States
Federal withholding tax pursuant to Section 871(h) or 881(c) of the Internal
Revenue Code, two United States Internal Revenue Service Forms W-8 and a
certificate, representing that such Non-U.S. Person is not a bank described in
Section 881(c)(3)(A) of the Internal Revenue Code, or any successor applicable
form of any thereof, certifying in each case that such Bank is entitled to
receive payments hereunder payable to it without deduction or withholding of
any United States Federal income taxes, or subject to a reduced rate thereof.
Each Bank that delivers to the Borrower and the Administrative Agent any such
form or certification further undertakes to deliver to the Borrower and the
Administrative
<PAGE> 41
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Agent further copies of any such form or certification or other manner of
certification reasonably satisfactory to the Borrower on or before the date
that any such form or certification expires or becomes obsolete or of the
occurrence of any event requiring a change in the most recent form or
certification previously delivered by it to the Borrower or the Administrative
Agent, and such extensions or renewals thereof as may reasonably be requested
by the Borrower or the Administrative Agent, certifying that the Bank is
entitled to receive payments hereunder without deduction or withholding of any
United States Federal income taxes, or subject to a reduced rate thereof. If at
any time after the date of this Agreement there has occurred, on or prior to
the date on which any delivery of any such form or certification would
otherwise be required, any change in law, rule, regulation, treaty, convention
or directive, or any change in the interpretation or application of any
thereof, that renders all such forms or certification inapplicable or which
would prevent the Bank from duly completing and delivering any such form or
certificate with respect to it, the Bank shall advise the Borrower that under
applicable law it shall be subject to withholding of United States Federal
income tax at the full statutory rate, a reduced rate of withholding or without
deduction or withholding. A Non-U.S. Person shall be required to furnish any
such form or certification only if it is entitled to claim an exemption from or
a reduced rate of withholding.
3.05. Replacement of Banks. If any Bank (a) fails or refuses to fund
any Revolving Loan or (b) refuses to consent to proposed waivers or
modifications to the terms of this Agreement as provided in Section 11.12 that
have been approved by the Required Banks or (c) makes a claim for additional
payments or indemnification under Section 1.10 (other than subsection (f)
thereof), 1.11 or 3.04, then the Borrower may identify a bank or financial
institution acceptable to the Administrative Agent in its discretion, willing
to acquire in accordance with the provisions of Section 11.04(b)(A), all of the
rights and obligations hereunder and under the Revolving Notes (if any) of such
Bank. If such prospective assignee is identified, such Bank shall convey all of
its rights and obligations hereunder and under its Notes to such prospective
assignee in
<PAGE> 42
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accordance with Section 11.04(b)(A); provided that the successor
Bank shall purchase without recourse (except as to matters of title) such
replaced Bank's interest in the Obligations of the Borrower and shall assume
such replaced Bank's Commitments hereunder for cash in an aggregate amount
equal to the aggregate unpaid principal of such Obligations, all unpaid
interest accrued thereon, all unpaid commitment and other fees accrued for the
account of such replaced Bank, any breakage costs incurred by the replaced Bank
because of the repayment of Reserve Adjusted Eurodollar Loans and all other
amounts then owing to such replaced Bank under this Agreement or any other
Credit Document.
SECTION 4. Conditions Precedent.
4.01. Conditions Precedent to Effectiveness of Agreement. The
effectiveness of this Agreement is subject to the substantially contemporaneous
satisfaction of the following conditions:
(a) Officers' Certificate. On the Closing Date, the Agents shall have
received certificates dated such date signed by appropriate officers of each of
Holdings and the Borrower, respectively, stating that all of the applicable
conditions set forth in Sections 4.01, 4.02 and 4.03 (in each case disregarding
any reference therein that such condition be deemed satisfactory by the Agents
and/or the Required Banks) have been satisfied or waived as of such date.
(b) Opinions of Counsel. On or prior to the Closing Date, the Agents
shall have received an opinion or opinions addressed to each of the Banks and
dated the Closing Date, each in form and substance satisfactory to the Agents,
from Hunton & Williams, counsel to Holdings and the Borrower, which opinion
shall be in the form of Exhibit B hereto.
(c) Corporate Proceedings. All corporate and legal proceedings and all
instruments and agreements in connection with the transactions contemplated by
the Credit Documents shall be satisfactory in form and substance to the Agents,
and the Agents shall have received all information and copies of all
certificates, documents and papers, including records of corporate proceedings
and governmental approvals, if any, which
<PAGE> 43
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the Agents reasonably may have requested from Holdings, the Borrower or any
Affiliate of any thereof or any Credit Party in connection therewith, such
documents and papers where appropriate to be certified by proper corporate or
governmental authorities. Without limiting the foregoing, the Agents shall have
received on or prior to the Closing Date (i) resolutions of the Board of
Directors of Holdings, the Borrower and any Affiliate thereof or any Credit
Party approving and authorizing such documents and actions as are contemplated
hereby in form and substance reasonably satisfactory to the Agents including
without limitation the execution and delivery of the Credit Documents to be
executed by such Person, certified by its corporate secretary or an assistant
secretary as being in full force and effect without modification or amendment,
and (ii) signature and incumbency certificates of officers of Holdings, each of
the Borrower and any Affiliate thereof or any Credit Party executing
instruments, documents or agreements required to be executed in connection with
this Agreement.
(d) Financing. (i) The Borrower shall have issued the Senior Notes on
the Closing Date on the terms and conditions set forth in the Indenture.
(ii) Holdings shall have received not less than $5,000,000 from
the sale of its Common Stock which shall have been contributed to the
Borrower.
(e) Organizational Documentation, etc. On or prior to the Closing
Date, to the extent not previously delivered to the Banks under the Original
Credit Agreement, the Banks shall have received copies of true and complete
certified copies of the following documents of Holdings, the Borrower and each
Credit Party, the provisions of which shall be reasonably satisfactory to the
Agents:
(i) Copies of each such Person's respective Certificate or
Articles of Incorporation or foreign equivalent, which shall be
certified and be accompanied by a good standing certificate or
foreign equivalent, if any, from the jurisdiction of its organization
and good standing certificates or foreign equivalent, if any, from
the jurisdictions in which it is qualified to do business as a
<PAGE> 44
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foreign corporation, each to be dated a recent date prior to the
Closing Date; and
(ii) Copies of each such Person's respective By-laws or foreign
equivalent, certified as of the Closing Date by its corporate
secretary.
(f) Solvency. On the Closing Date, the Banks shall have received an
Officers' Solvency Certificate in form and substance satisfactory to the Agents
and supporting the conclusions that, prior to and after giving effect to the
contemplated borrowings of the full amounts which will be available under the
Total Revolving Loan Commitments and the Guarantees and the proceeds from the
issuance of the Senior Notes, none of the Credit Parties is or will be
insolvent, will be rendered insolvent by the indebtedness incurred in
connection therewith, is or will be left with unreasonably small capital with
which to engage in its respective business or has or will have incurred debts,
including Contingent Obligations, beyond its ability to pay such debts as they
mature.
(g) Credit Documents. Each of this Agreement and each other Credit
Document shall (i) be in form and substance satisfactory to the Agents and (ii)
have been, on or prior to the Closing Date, duly authorized, executed and
delivered by each of the parties thereto (other than the Banks).
(h) Revolving Notes. There shall have been delivered to the
Administrative Agent for the account of each of the Banks which has requested
Revolving Notes, the Revolving Notes executed by the Borrower in the amounts
and maturities and as otherwise provided herein.
(i) Certain Fees. A fee of 0.125% of the Total Revolving Loan
Commitments shall have been paid to the Administrative Agent for the account of
the Banks, and Holdings and the Borrower shall have paid or have caused to be
paid the commitment and other fees and expenses (including, without limitation,
reasonable documented legal fees and expenses) contemplated hereby and/or in
connection with the other Documents.
<PAGE> 45
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(j) Financial Statements, etc. (i) Prior to the Closing Date, the
Agents shall have received the financial statements (including pro forma
financial statements) set forth in the Offering Memorandum.
(ii) Prior to the Closing Date, Holdings shall have delivered to
the Agents financial projections, accompanied by a statement by Holdings that
such projections are based on assumptions believed by it in good faith to be
reasonable as to the future financial performance of Holdings, reasonably
satisfactory to the Required Banks.
(k) Insurance. Set forth on Annex III is a summary of all insurance
policies maintained by the Credit Parties and their respective Subsidiaries,
and the insurance coverage provided for the Credit Parties and their respective
Subsidiaries by such insurance policies shall be reasonably satisfactory to the
Required Banks.
(l) Performance Bonds. On the Closing Date, the Agents shall be
reasonably satisfied that the Borrower will be able to service and maintain any
performance bonds that may be required in the ordinary course of business on
reasonable terms and conditions.
(m) Indebtedness, etc. On or prior to the Closing Date and except as
set forth on Annex V, the Credit Parties and their respective Subsidiaries
shall have received all necessary consents or waivers or amended, supplemented
or otherwise modified, repaid or defeased their outstanding Indebtedness, in a
manner and on terms reasonably satisfactory to the Agents such that there
exists no default or potential default (as a result of the consummation of the
transactions contemplated hereby) with respect to such Indebtedness or under
any note, evidence of indebtedness, mortgage, deed of trust, security document
or other agreement relating to such Indebtedness and such indentures, notes,
evidences of indebtedness, mortgages, deeds of trust or other agreements
relating to such Indebtedness shall not contain any restriction on the ability
of any of the Credit Parties or any of their respective Subsidiaries to enter
into the Security Documents or the granting of any Lien in favor of the Banks
in connection therewith, or (other than as set forth
<PAGE> 46
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in the Indenture) contain any financial covenants, agreements or tests
applicable to any of the Credit Parties or any of their respective
Subsidiaries. Annex X sets forth a true list of all Liens other than Permitted
Encumbrances on the property of the Credit Parties as of the Closing Date.
(n) Security Documents. On or prior to the Closing Date, amendments to
the Security Documents shall have been duly executed and delivered by the
respective parties thereto and, except to the extent previously provided, there
shall have been delivered to the Collateral Agent with respect to such Security
Documents (i) certificates representing all Pledged Securities (if
certificated), together with executed and undated stock powers and/or
assignments in blank, (ii) appropriate financing statements or comparable
documents of, and executed by, the appropriate entities in proper form for
filing under the provisions of the UCC and applicable domestic or local laws,
rules or regulations in each of the offices where such filing is necessary or
appropriate, in the Collateral Agent's sole discretion, to grant to the
Collateral Agent a perfected first priority Lien in such Collateral superior to
and prior to the rights of all third persons other than the holders of Prior
Liens and subject to no other Liens except those expressly permitted by the
applicable Security Document, (iii) UCC, judgment and tax lien search reports
listing all effective financing statements or comparable documents which name
any applicable Credit Party as debtor and which are filed in those
jurisdictions in which any of such Collateral is located and the jurisdictions
in which any applicable Credit Party's principal place of business is located
in the United States, none of which shall encumber such Collateral covered or
intended or purported to be covered by the Security Documents, (iv) unless
waived by the Collateral Agent, to the extent inventory is maintained on leased
premises, agreements from the respective landlords of such of the Real Property
which is being leased by any Credit Party confirming that such landlords have
subordinated their landlord liens in such Credit Party's personal property to
the security interests held by Collateral Agent pursuant to the applicable
Security Documents and that such landlords will provide Collateral Agent with
reasonable access to such facilities to exercise Collateral Agent's remedies
pursuant to such applicable
<PAGE> 47
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Security Documents, and (v) evidence of the completion of all recordings and
filings of each such Security Document and delivery of such other security and
other documents as may be necessary or, in the opinion of Collateral Agent,
desirable to perfect the Liens created, or purported or intended to be created,
by such Security Documents.
(o) Consents, etc. All material governmental and third party approvals
and consents (including, without limitation, all material approvals and
consents required in connection with any environmental statutes, rules or
regulations), if any, in connection with the transactions contemplated by the
Credit Documents and otherwise referred to herein or therein to be completed on
or before the Closing Date shall have been obtained and remain in effect. On
the Closing Date, there shall not exist any judgment, order, injunction or
other restraint issued or filed with respect to the making of the Loans
hereunder.
(p) Environmental Review. On or prior to the Closing Date, there shall
have been delivered to the Agents for each of the Banks an Officer's
Certificate substantially in the form of Exhibit J hereto.
All of the certificates, legal opinions and other documents and papers
referred to in this Section 4.01, unless otherwise specified, shall be
delivered to each Agent at the Administrative Agent's Office (or such other
location as may be specified by the Agents) for the account of each of the
Banks and in sufficient counterparts for each of the Banks and shall be
satisfactory in form and substance to the Agents.
4.02. Conditions Precedent to All Revolving Loans. The obligation of
the Banks to make all Revolving Loans (which term shall not include a
conversion or continuation of a Revolving Loan) is subject, at the time of each
such Revolving Loan, to the satisfaction of the following conditions:
(a) Effectiveness. This Agreement shall have become effective as
provided in Section 11.10.
<PAGE> 48
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(b) No Default; Representations and Warranties. At the time of the
making of each Revolving Loan and also after giving effect thereto (i) there
shall exist no Default or Event of Default and (ii) all representations and
warranties contained herein or in the other Credit Documents in effect at such
time shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of the date
of the making of such Revolving Loan, unless such representation and warranty
expressly indicates that it is being made as of any other specific date in
which case on and as of such other date.
(c) Adverse Change, etc. (i) Since December 31, 1998, nothing shall
have occurred or become known which the Required Banks or the Administrative
Agent shall have determined has a Materially Adverse Effect.
(ii) All material governmental and third party approvals and
consents (including, without limitation, all material approvals and consents
required in connection with any environmental statutes, rules or regulations),
if any, in connection with the conduct of the business of each Credit Party or
its respective Subsidiaries shall have been obtained and remain in effect.
(iii) There shall not exist any judgment, order, injunction or other
restraint issued or filed with respect to the making of any Revolving Loans
hereunder the effect of which judgment, order, injunction or restraint is
adverse to any Bank.
(d) Documentation and Opinions of Counsel. The Administrative Agent
shall have received such documentation and opinion or opinions, addressed to
each of the Banks, from counsel to each Credit Party as may be reasonably
required, with reasonable notice under the circumstances, by and shall be
reasonably satisfactory to the Administrative Agent from (i) such counsel to
each Credit Party and (ii) appropriate local counsel, which opinions shall
cover such matters as reasonably requested by, and be in form and substance
satisfactory to, the Administrative Agent.
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(e) Margin Rules. On the date of each Borrowing of Loans, neither the
making of any Revolving Loan nor the use of the proceeds thereof will violate
the provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System.
(f) Borrowing Base Certificate. The Administrative Agent and the
Required Banks shall have received and shall be reasonably satisfied (both as
to form and substance) with the Borrowing Base Certificate last required to be
delivered to the Banks.
The acceptance of the proceeds of each Borrowing of Loans shall
constitute a representation and warranty by each Credit Party to each of the
Banks that all of the applicable conditions specified in Section 4.02 have been
satisfied or waived.
All of the certificates, legal opinions and other documents and papers
referred to in this Section 4.02, unless otherwise specified, shall be
delivered to the Administrative Agent at the Administrative Agent's Office (or
such other location as may be specified by the Administrative Agent) for the
account of each of the Banks and in sufficient counterparts for each of the
Banks and shall be satisfactory in form and substance to the Administrative
Agent.
4.03. Conditions Precedent to All Letters of Credit. The right of the
Borrower to obtain the issuance of any Letter of Credit that the relevant
Issuing Bank determines to issue in its sole discretion hereunder is subject to
prior or concurrent satisfaction of all of the following conditions:
(A) Required Documentation. On or prior to the date of issuance of a
Letter of Credit, the Administrative Agent shall have received, in
accordance with the provisions of Section 1.13(f), a request for issuance
with respect to such Letter of Credit (the furnishing by the Borrower of
each such request for issuance shall be deemed to constitute a
representation and warranty of the Borrower to the effect that the
conditions set forth in Sections 4.01 and 4.02 are satisfied as of the
date of delivery and
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will be satisfied on the relevant date of issuance), all other information
specified in Section 1.13(f), and such other documents as the Issuing Bank
may reasonably require in connection with the issuance of such Letter of
Credit.
(B) Conditions. On the date of issuance of each such Letter of
Credit, all conditions precedent described in Sections 4.01 and 4.02 shall
be satisfied to the same extent as though the issuance of such Letter of
Credit were the making of a Revolving Loan.
SECTION 5. Representations, Warranties and Agreements. In order to
induce the Banks to enter into this Agreement and to make the Revolving Loans
provided for herein, Holdings and the Borrower, jointly and severally, make the
following representations and warranties to, and agreements with, the Banks,
all of which shall survive the execution and delivery of this Agreement and the
making of the Revolving Loans (with the execution and delivery of this
Agreement and each request or deemed request for and acceptance of the proceeds
of each Revolving Loan thereafter being deemed to constitute a representation
and warranty that the matters specified in this Section 5 are true and correct
in all material respects both before and after giving effect to such Revolving
Loan and the application of the proceeds thereof as of the date of such
Revolving Loan unless such representation and warranty expressly indicates that
it is being made as of any specific date):
5.01. Corporate Status. Each Credit Party and each of its respective
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization; (ii) has the
requisite corporate or other organizational power and authority and has
obtained all requisite governmental licenses, authorizations, consents and
approvals to own and operate its property and assets and to transact the
business in which it is engaged and presently proposes to engage, except for
those governmental licenses, authorizations, consents or approvals the failure
of which to be so obtained would not have a Materially Adverse Effect; and
(iii) is duly qualified and is authorized to do business and is in good
standing in all jurisdictions where it is required to be so
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qualified, except where the failure to be so qualified could not reasonably be
expected to have a Materially Adverse Effect.
5.02. Corporate Power and Authority; Business. Each Credit Party and
each of its respective Subsidiaries has the requisite corporate power and
authority to execute, deliver and carry out the terms and provisions of the
Documents to which it is a party and has taken all necessary corporate action
to authorize the execution, delivery and performance of the Documents to which
it is a party. Each Credit Party and each of its respective Subsidiaries has
duly executed and delivered each Document to which it is a party and each such
Document constitutes the legal, valid and binding obligation of such Person
enforceable in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
5.03. No Violation. Neither the execution, delivery and performance by
any Credit Party or its respective Subsidiaries of this Agreement or the other
Documents to which it is a party nor compliance with the terms and provisions
hereof and thereof, nor the consummation of the transactions contemplated
herein and therein (i) will contravene any applicable provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default under,
or (other than pursuant to the Security Documents) result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of the
property or assets of any Credit Party or its respective Subsidiaries pursuant
to the terms of any indenture, mortgage, deed of trust, agreement or other
instrument to which any Credit Party or its respective Subsidiaries is a party
or by which it or any of its property or assets is bound or to which it may be
subject or (iii) will violate any provision of the charter or by-laws of any
Credit Party or its respective Subsidiaries, except, in each case, where such
contravention, conflict, inconsistency, breach, default, creation, imposition,
obligation or violation would not have a Materially Adverse Effect.
<PAGE> 52
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5.04. Litigation. There are no actions, judgments, suits or
proceedings pending or, to Holdings' or the Borrower's knowledge, threatened
with respect to any Credit Party or its respective Subsidiaries as to which
there is a reasonable likelihood of a Materially Adverse Effect.
5.05. Use of Proceeds. (a) The proceeds of Revolving Loans incurred on
or after the Closing Date will be utilized for working capital and general
corporate purposes (including, as to any Revolving Loans incurred on the
Closing Date, the refinancing of Revolving Loans made under and as defined in
the Original Credit Agreement and used for such purposes).
(b) Neither the making of any Revolving Loan hereunder, nor the use of
the proceeds thereof, will violate or be inconsistent with the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve System.
5.06. Governmental Approvals, etc. No order, consent, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, any third party or any foreign or domestic governmental
or public body or authority, or by any subdivision thereof (other than those
orders, consents, approvals, licenses, authorizations or validations which, if
not obtained or made, would not reasonably be expected to have a Materially
Adverse Effect or which have previously been obtained or made and except for
filings to perfect security interests granted pursuant to the Security
Documents, all of which will be accomplished on, prior to or promptly after the
Closing Date (unless otherwise agreed to by the Administrative Agent)), is
required to authorize or is required in connection with (i) the execution,
delivery and performance of any Document or the transactions contemplated
therein or (ii) the legality, validity, binding effect or enforceability of any
Document.
5.07. Investment Company Act. None of Holdings, the Borrower or any of
their respective Subsidiaries is, or will be after giving effect to the
transactions contemplated hereby, an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company
<PAGE> 53
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Act of 1940, as amended, or subject to any foreign, federal or local statute or
regulation limiting its ability to incur indebtedness for money borrowed or
guarantee such indebtedness as contemplated hereby or by any other Credit
Document.
5.08. Public Utility Holding Company Act. None of Holdings, the
Borrower or any of their respective Subsidiaries is, or will be after giving
effect to the transactions contemplated hereby, a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
5.09. True and Complete Disclosure. All factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of the
Credit Parties in writing to any Bank (including, without limitation, all
information contained in the Credit Documents and the Evaluation Materials) for
purposes of or in connection with this Agreement or any transaction
contemplated herein is (or was, on the Closing Date), and all other such
factual information (taken as a whole) hereafter furnished by or on behalf of
any such Person in writing to any Bank will be, true and accurate in all
material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary
to make such information not misleading at such time in light of the
circumstances under which such information was provided. The projections and
pro forma financial information contained in such materials are based on good
faith estimates and assumptions believed by such Persons to be reasonable at
the time made, it being recognized by the Banks that such projections as to
future events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ from the projected
results. There is no fact known to Holdings or the Borrower which materially
and adversely affects the business, operations, properties, assets, nature of
assets, liabilities (contingent or otherwise), condition (financial or
otherwise) or prospects of the Credit Parties, taken as a whole, which has not
been disclosed herein or in such other documents, certificates
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and written statements furnished to the Banks for use in connection with the
transactions contemplated hereby.
5.10. Environmental Investigations. All environmental investigations,
assessments, studies, audits or reviews conducted of which Holdings or the
Borrower have actual knowledge in relation to the current or prior business of
any Credit Party or its respective Subsidiaries or any Real Property or
facility now or previously owned or leased by any Credit Party or its
respective Subsidiaries have been delivered to the Administrative Agent.
5.11. Financial Condition; Financial Statements; Projections. (a) No
Credit Party is entering into the arrangements contemplated hereby and by the
other Credit Documents, or intends to make any transfer or incur any
obligations hereunder or thereunder, with actual intent to hinder, delay or
defraud either present or future creditors. On and as of the Closing Date, on a
pro forma basis after giving effect to all Indebtedness incurred and Liens and
Guarantees created, or to be created, by each Credit Party or its respective
Subsidiaries in connection with the Senior Notes, (w) Holdings and the Borrower
do not expect that final judgments against any Credit Party or its respective
Subsidiaries in actions for money damages with respect to pending or threatened
litigation will be rendered at a time when, or in an amount such that, such
Credit Party will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum reasonable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered and the cash available to each Credit Party or
its respective Subsidiaries, after taking into account all other anticipated
uses of the cash of such Credit Party or its respective Subsidiaries (including
the payments on or in respect of debts (including their Contingent
Obligations)); (x) no Credit Party or its respective Subsidiaries will have
incurred or intends to, or believes that it will, incur debts beyond its
ability to pay such debts as such debts mature (taking into account the timing
and amounts of cash to be received by such Credit Party or its respective
Subsidiaries from any source, and of amounts to be payable on or in respect of
debts of such Credit Party or its respective Subsidiaries and the amounts
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referred to in the preceding clause (w)); (y) each Credit Party or its
respective Subsidiaries, after taking into account all other anticipated uses
of the cash of such Credit Party or its respective Subsidiaries, anticipates
being able to pay all amounts on or in respect of debts of such Credit Party or
its respective Subsidiaries when such amounts are required to be paid; and (z)
each Credit Party and its respective Subsidiaries will have sufficient capital
with which to conduct its present and presently proposed business and the
property of such Credit Party and its respective Subsidiaries does not
constitute unreasonably small capital with which to conduct its present or
proposed business. For purposes of this Section 5.11, "debt" means any
liability on a claim, and "claim" means a (i) right to payment whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured; or (ii) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured. On the date of each Borrowing and the
issuance of each Letter of Credit (and after giving effect to all Borrowings
and Letters of Credit as of such date), the representations set forth in this
Section 5.11(a) shall be true and correct with respect to the Borrower and any
Credit Party which is a guarantor with respect to any or all of such Borrowings
or Letters of Credit.
(b) Holdings has heretofore delivered to the Banks the financial
statements described in Section 4.01(j). The financial statements referred to
in the preceding sentence were prepared in accordance with GAAP consistently
applied and fairly present the financial position of such Persons for the
periods covered thereby, and the pro forma financial statements referred to in
the preceding sentence present a good faith estimate of the consolidated pro
forma financial position and results of operations of Holdings and its
Subsidiaries for such period.
The assumptions made in preparing such pro forma consolidated
financial statements are reasonable as of the date of such statements and as of
the Closing Date and all material
<PAGE> 56
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assumptions are set forth therein. Except as contemplated hereby or in the
Evaluation Materials, since December 31, 1998 (on a pro forma basis after
giving effect to the incurrence of the Senior Notes) no event or events have
occurred that could reasonably be expected to have a Materially Adverse Effect.
(c) There have heretofore been delivered to the Banks pro forma
consolidating income projections for Holdings and its Subsidiaries, pro forma
consolidating balance sheet projections for Holdings and its Subsidiaries and
pro forma consolidating cash flow projections for Holdings and its
Subsidiaries, all for the fiscal years ending December 31, 1999 through
December 31, 2003, inclusive (the "Projected Financial Statements"). The
assumptions made in preparing the Projected Financial Statements are reasonable
as of the date of such projections and as of the Closing Date and all material
assumptions with respect to the Projected Financial Statements are set forth
therein. The Projected Financial Statements present a good faith estimate of
the consolidated financial information contained therein at the date thereof.
(d) As of the Closing Date, except as fully reflected or reserved
against in the financial statements and the notes thereto referred to in
Section 5.11(b) or in the Evaluation Materials, there were no liabilities or
obligations with respect to any Credit Party or its respective Subsidiaries of
any nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in the aggregate, would
reasonably be expected to result in a Materially Adverse Effect on such Credit
Party and its respective Subsidiaries, taken as a whole. As of the Closing
Date, the Borrower does not know of any basis for the assertion against any
Credit Party or its respective Subsidiaries of any liability or obligation of
any nature whatsoever that is not fully reflected in the financial statements
referred to in Section 5.11(b) or (c), the Evaluation Materials or otherwise
disclosed herein, which, either individually or in the aggregate, could
reasonably be expected to be material to such Credit Party and its respective
Subsidiaries.
5.12. Year 2000. Each Credit Party and its respective Subsidiaries has
reviewed its operations and those of its
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Subsidiaries with a view to assessing whether its or its Subsidiaries'
respective businesses will, in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization of data,
be vulnerable to a Year 2000 Problem. Based on such review, neither Holdings
nor the Borrower has any reason to believe that a Materially Adverse Effect
will occur with respect to its or its Subsidiaries' businesses or operations
resulting from a Year 2000 Problem.
5.13. Security Interests. The Security Documents, when filed and/or
recorded, will create, in favor of the Collateral Agent for the benefit of the
Banks, as security for the obligations purported to be secured thereby, a valid
and enforceable perfected first priority security interest in and Lien upon all
of the Collateral, superior to and prior to the rights of all third persons
other than the holders of Prior Liens and subject to no other Liens except
those Liens expressly permitted by the applicable Security Document. The
respective pledgor or assignor, as the case may be, has (or on and after the
time it executes the respective Security Document, will have) good and
marketable title to all items of Collateral covered by such Security Document
free and clear of all Liens except Prior Liens and other Liens expressly
permitted by the applicable Security Document. No filings or recordings are
required in order to perfect the security interests created under any Security
Document except for filings or recordings required in connection with any such
Security Document which shall have been made prior to, contemporaneously with,
or promptly after the execution and delivery thereof (unless otherwise agreed
to by the Collateral Agent).
5.14. Tax Returns and Payments. Each of the Credit Parties and each of
its respective Subsidiaries has filed all tax returns, or extensions thereon,
required to be filed by it and has paid all material taxes and assessments
payable by it which have become due, other than those not yet delinquent and
except for those contested in good faith and for which adequate reserves have
been established. Each of the Credit Parties and each of its respective
Subsidiaries has paid, or has provided adequate reserves (in accordance with
GAAP) for the payment of, all federal, state, local and foreign income taxes
(including, without limitation, franchise taxes based upon income) applicable
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for all prior fiscal years and for the current fiscal year to the date hereof.
The Borrower knows of no proposed tax assessment against any Credit Party or
any of its respective Subsidiaries that could reasonably be expected to have a
Materially Adverse Effect which is not being actively contested in good faith
by such Person to the extent affected thereby; provided that such reserves or
other appropriate provisions, if any, as shall be required in conformity with
GAAP shall have been made or provided for.
5.15. 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, could reasonably be expected to
result in a Materially Adverse Effect. The present value of all accumulated
benefit obligations of all underfunded Pension 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 $100,000 the fair market value of the assets of
all such underfunded Pension Plans. Each ERISA Entity is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Code with respect to each Employee Benefit Plan. Each ERISA Entity and each of
the Foreign Plans, if any, are in compliance in all material respects with all
applicable laws and regulations with respect to such Foreign Plans and the
terms of such Foreign Plans, and all required contributions have been made to
such Foreign Plans.
5.16. Subsidiaries. Annex IV hereto lists each Subsidiary of Holdings
existing on the Closing Date, indicating (a) its jurisdiction of incorporation
and (b) its owners (by holder and percentage interest).
5.17. Patents, etc. Each Credit Party or its respective Subsidiaries
owns or possesses adequate licenses or other rights to use all material
patents, patent applications, trademark registrations, trademark applications,
servicemark registrations, servicemark applications, trade names, copyright
registrations, trade secrets and know how (collectively, the "Intellectual
Property") that are necessary for the operation of its respective businesses as
presently conducted and as currently
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proposed to be conducted. No claim is pending or, to the knowledge of Holdings
or the Borrower, threatened to the effect that any Credit Party or its
respective Subsidiaries infringes upon or conflicts with the asserted rights of
any other person under any Intellectual Property, and, to the knowledge of
Holdings or the Borrower, there is no basis for any such claim (whether or not
pending or threatened). No claim is pending or, to the knowledge of Holdings or
the Borrower, threatened to the effect that any such Intellectual Property
owned or licensed by any Credit Party or its respective Subsidiaries or which
any Credit Party or its respective Subsidiaries otherwise has the right to use,
is invalid or unenforceable by such Credit Party or its respective
Subsidiaries, and, to the knowledge of Holdings or the Borrower, there is no
basis for any such claim (whether or not pending or threatened).
5.18. Compliance with Laws, etc. Each Credit Party and its respective
Subsidiaries is in material compliance with all laws and regulations in all
jurisdictions in which it is presently doing business.
5.19. Properties. Each Credit Party or its respective Subsidiaries has
(i) good and marketable title to and beneficial ownership of all material
properties owned by it and (ii) a valid, marketable and insurable leasehold
interest in all properties leased by it, including after the Closing Date all
property reflected in the most recent balance sheet referred to in Section
5.11(b) (except as sold or otherwise disposed of since the date of such balance
sheet in the ordinary course of business or as disclosed in the Evaluation
Materials), free and clear of all Liens, other than, in the case of property
not constituting Collateral, Permitted Encumbrances and, in the case of
property constituting Collateral, Prior Liens and other Liens expressly
permitted by the applicable Security Document. Each Credit Party or its
respective Subsidiaries holds all material licenses, certificates of occupancy
or operation and similar certificates and clearances of municipal and other
authorities necessary to own and operate its properties in the manner and for
the purposes currently operated by such party, except as disclosed in the
Evaluation Materials. Each parcel of Real Property is suitable for its intended
purposes and is served by such utilities as are necessary for the
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operation thereof. There are no actual, threatened or alleged defaults of a
material nature with respect to any leases of Real Property under which any
Credit Party or its respective Subsidiaries is lessor or lessee.
5.20. Securities. Upon the issuance thereof, the Common Stock will
have been duly authorized, issued and delivered and will be fully paid,
nonassessable and free of preemptive rights that have not been waived. In
connection with such issuance of all of such securities, it is not necessary to
register such securities under the Securities Act and the rules and regulations
thereunder and no action has been taken in connection with any such
registration. There are not, as of the Closing Date, any existing options,
warrants, calls, subscriptions, convertible or exchangeable securities, rights,
agreements, commitments or arrangements for any Person to acquire any capital
stock of the Borrower or any of its Subsidiaries or any other securities
convertible into, exchangeable for or evidencing the right to subscribe for any
such capital stock, except as disclosed in the financial statements delivered
pursuant to Section 5.11(c) or otherwise disclosed to the Banks prior to the
Closing Date.
5.21. Collective Bargaining Agreements. Set forth on Annex VI hereto
is a list and description (including dates of termination) of all collective
bargaining or similar agreements between or applicable to any Credit Party or
its respective Subsidiaries as of the date hereof and any union, labor
organization or other bargaining agent in respect of the employees of any
Credit Party or its respective Subsidiaries on the date indicated in Annex VI
hereto.
5.22. Indebtedness Outstanding. Set forth on Annex V hereto is a list
and description of (a) all Indebtedness of the Credit Parties and their
respective Subsidiaries (other than the Revolving Loans) that will be
outstanding immediately after the Closing Date and (b) all Indebtedness of the
Credit Parties and their respective Subsidiaries that will be repaid, defeased,
transferred or otherwise terminated on or prior to the Closing Date.
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5.23. Environmental Protection. Except as would not reasonably be
expected to have a Materially Adverse Effect or as disclosed on Annex VII or
Annex IX hereto:
(a) Each Credit Party and its respective Subsidiaries has obtained
all permits, licenses and other authorizations (hereinafter collectively
referred to as "Authorizations") which are required with respect to the
current operation of its business, assets and the use, ownership and
operation of Real Property under any Environmental Law and each such
Authorization is in full force and effect.
(b) Each Credit Party and its respective Subsidiaries is in
compliance with all terms and conditions of the Authorizations specified
in subsection 5.23(a) above, and are also in compliance with, and not
subject to liability under, any Environmental Law (including, without
limitation, compliance with standards, schedules and timetables therein),
including without limitation those arising under the Resource Conservation
and Recovery Act of 1976, as amended, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"), the
Federal Water Pollution Control Act, as amended, the Federal Clean Air
Act, as amended, and the Toxic Substances Control Act.
(c) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding,
notice (other than routine notices) or demand letter or request for
information pending or, to the knowledge of Holdings or the Borrower,
threatened against any Credit Party or its respective Subsidiaries under
any Environmental Law.
(d) No Lien has been recorded under any Environmental Law with
respect to any assets, facility or Real Property owned, operated, leased
or controlled by any of the Credit Parties or any of their respective
Subsidiaries.
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(e) None of the Credit Parties nor its respective Subsidiaries has
received notice that it has been identified as a potentially responsible
party under CERCLA or any comparable state or foreign law nor has any
Credit Party received any notification that any hazardous substances or
any pollutant or contaminant, as defined in CERCLA and its implementing
regulations, or any toxic substance, hazardous waste, hazardous
constituents, hazardous materials, asbestos or asbestos containing
material, petroleum, including crude oil and any fractions thereof, or
other wastes, chemicals, substances or materials regulated by any
Environmental Laws (collectively "Hazardous Materials") that it or any of
its respective predecessors in interest has used, generated, stored,
treated, handled, transported or disposed of or arranged for transport for
disposal or treatment of, or arranged for disposal or treatment of, has
been found at any site at which any governmental agency or private party
is conducting or planning to conduct an investigation or other action
pursuant to any Environmental Law.
(f) There have been no releases (i.e., any past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping) of Hazardous
Materials by any Credit Party or its respective Subsidiaries on, at, upon,
into or from any of the Real Properties or facilities thereon. Except as
disclosed on Annex IX annexed hereto, to the best knowledge of Holdings
and the Borrower after due inquiry, there have been no such releases on,
at, upon, under, from or into any real properties adjacent to any of the
Real Properties that, through soil, air, surface water or groundwater
migration or contamination, may be located on, in or under such Real
Properties.
(g) There is no asbestos in, on, or at any Real Property or any
facility or equipment of any Credit Party or its respective Subsidiaries.
(h) No Real Property of any Credit Party or its respective
Subsidiaries is (i) listed or proposed for listing on the National
Priorities List under CERCLA or is
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(ii) listed in the Comprehensive Environmental Response, Compensation,
Liability Information System List promulgated pursuant to CERCLA, or on
any comparable list maintained by any foreign, state or local governmental
authority having jurisdiction over any such Real Property.
(i) There are no past or present events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere
with or prevent compliance by any of the Credit Parties or any of their
respective Subsidiaries with any Environmental Law, or which may give rise
to any liability under any Environmental Law, including, without
limitation, liability under CERCLA or similar state, local or foreign
laws, or otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing or notice of violation, study or investigation, based
on or related to the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport, shipping or handling,
or the emission, discharge, release or threatened release into the
environment, of any Hazardous Materials.
SECTION 6. Affirmative Covenants. Holdings and the Borrower covenant
and agree that on the Closing Date and thereafter for so long as this Agreement
is in effect and until the Commitments have terminated and the Loans together
with interest and fees are paid in full and all other Obligations incurred
hereunder, to the extent due and payable, are paid in full:
6.01. Information Covenants. Holdings will furnish or cause to be
furnished to each Bank:
(a) As soon as available and in any event within 90 days after the
close of each fiscal year of Holdings, the consolidated balance sheets of
Holdings and its Subsidiaries as at the end of such fiscal year and the
related consolidated statements of income, of stockholders' equity and of
cash flows for such fiscal year, setting forth comparative consolidated
figures for the preceding fiscal year and a report on such consolidated
balance sheets and financial statements by a "Big Five" firm of
independent
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certified public accountants, which report shall not be qualified as to
the scope of audit or as to the status of Holdings and its Subsidiaries as
a going concern and shall state that such consolidated financial
statements present fairly the consolidated financial position of Holdings
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years (except for such
changes with which the independent certified public accountants concur)
and the examination by such accountants was conducted in accordance with
generally accepted auditing standards.
(b) As soon as practicable and in any event within 30 days (45 days
as to any month that is the third month of a fiscal quarter) after the end
of the first full month ending after the Closing Date and each calendar
month thereafter (exclusive of the twelfth month of any fiscal year), (i)
the consolidated balance sheet of Holdings and its Subsidiaries as at the
end of such period and (ii) the related statements of income and cash
flows of Holdings and its Subsidiaries, in each case for such month and
for the period from the beginning of the then current fiscal year to the
end of such month, setting forth in comparative form the corresponding
periods of the prior fiscal year.
(c) Together with each delivery of financial statements of Holdings
and its Subsidiaries pursuant to subsection (a) above, a written statement
by the independent public accountants giving the report thereon (i)
stating that their audit examination has included a review of the terms of
Sections 6, 7, 8 and 9 of this Agreement as they relate to accounting
matters but without having conducted any special auditing procedures in
connection therewith, (ii) stating whether, in connection with their audit
examination, any condition or event which constitutes a Default or Event
of Default has come to their attention, and if such a condition or event
has come to their attention, specifying the nature and period of existence
thereof; provided that such accountants shall not be liable by reason of
any failure to obtain knowledge of any such Default
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or Event of Default that would not be disclosed in the course of their
audit examination, and (iii) stating that based on their audit examination
nothing has come to their attention which causes them to believe that as
of the end of such fiscal year of Holdings there existed a Default or an
Event of Default related to the breach of any covenant set forth in
Section 6 or 7 as they relate to accounting matters and if such a
condition or event has come to their attention, specifying the nature and
period of existence thereof and what action the Borrower taken, is taking
and proposes to take with respect thereto.
(d) At the time of the delivery of the financial statements provided
for in Sections 6.01(a) and (b) for any fiscal quarter, (x) certificates
of the chief financial officer, controller, chief accounting officer or
other Authorized Officer of Holdings to the effect that no Default or
Event of Default exists, or, if any Default or Event of Default does
exist, specifying the nature and extent thereof and what actions has been
or will be taken in respect thereof, which certificate shall be
accompanied by a Compliance Certificate in a form reasonably acceptable to
the Administrative Agent setting forth the calculations required to
establish whether Holdings was in compliance with the covenants in this
Agreement (including without limitation the covenants set forth in
Sections 7.10 and 7.12 through 7.13 inclusive) as at the end of such
fiscal quarter or year, as the case may be, (y) a Management's Discussion
and Analysis for such fiscal year or portion thereof ending with such
fiscal quarter and (z) a comparison of the current year to date financial
results against the plan/budget required to be submitted pursuant to
subsection (k) shall be presented.
(e) Promptly after review by the Board of Directors or any audit
committee of the Board, a copy of each annual "management letter"
submitted to Holdings by its independent accountants in connection with
any annual audit made by them of the books of Holdings or any of its
Subsidiaries.
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(f) Promptly upon their becoming available, copies of all
consolidated financial statements, reports, notices and proxy statements
sent or made available generally by Holdings or any Subsidiary of Holdings
to its security holders in their capacity as such (other than to Holdings
or another Subsidiary), of all regular and periodic reports and all
registration statements and prospectuses, if any, filed by Holdings or any
of its Subsidiaries with any securities exchange or with the SEC and of
all press releases and other statements made available generally by
Holdings or any Subsidiary of Holdings to the public concerning material
developments in the business of Holdings and its Subsidiaries.
(g) Promptly upon any officer of Holdings or the Borrower obtaining
knowledge (w) of any condition or event which constitutes a Default or
Event of Default, or becoming aware that any Bank has given any notice or
taken any other action with respect to a claimed Default or Event of
Default under this Agreement, (x) that any Person has given any notice to
the Borrower or taken any other action with respect to a claimed default
or event or condition of the type referred to in Section 8.04, or (y) of a
material adverse change in the business, operations, properties, assets,
nature of assets, liabilities (contingent or otherwise), condition
(financial or otherwise) or prospects of Holdings and its Subsidiaries,
taken as a whole, an Officers' Certificate specifying the nature and
period of existence of any such condition or event, or specifying the
notice given or action taken by such holder or Person and the nature of
such claimed Default, Event of Default, event or condition, or material
adverse change, and what action Holdings or the Borrower has taken, is
taking and proposes to take with respect thereto.
(h) Promptly upon any officer of Holdings or the Borrower obtaining
knowledge of the institution of, or written threat of, any action, suit,
proceeding, governmental investigation or arbitration against or affecting
any Credit Party or its respective Subsidiaries or any property of any
Credit Party or its respective Subsidiaries not previously disclosed to
the Banks, which action,
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suit, proceeding, governmental investigation or arbitration seeks (or in
the case of multiple actions, suits, proceedings, governmental
investigations or arbitrations arising out of the same general allegations
or circumstances which seek) recovery from any Credit Party or its
respective Subsidiaries aggregating $500,000 or more (exclusive of claims
covered by insurance policies unless the insurers of such claims have
disclaimed coverage or reserved the right to disclaim coverage on such
claims), Holdings or the Borrower shall give notice thereof to the
Administrative Agent, and, upon request, Holdings and the Borrower shall
promptly report the status of any action, suit, proceeding, governmental
investigation or arbitration previously disclosed to the Administrative
Agent and provide such information as may be reasonably available to them
to enable the Banks and their counsel to evaluate such matters.
(i) Within 15 days after any material changes to the terms of any
insurance policy as in effect on the Closing Date and described on Annex
III or any cancellation of any such policy without replacement with a
substantially similar policy, a report in form and substance reasonably
satisfactory to the Administrative Agent outlining such changes or the
terms of the replacement policy, as the case may be.
(j) To the extent reasonably requested by the Administrative Agent,
as soon as practicable and in any event within ten days of the later of
such request and the making of any such amendment or waiver, copies of
material amendments or waivers with respect to Indebtedness of any Credit
Party or its respective Subsidiaries.
(k) Holdings shall provide to the Administrative Agent (A) on or
prior to December 15, 1999 and each December 15 thereafter, a consolidated
plan/budget for each month in the succeeding fiscal year and (B) on or
prior to December 15, 1999 and each December 15 thereafter, a consolidated
plan for the next succeeding five fiscal years, in each case prepared in
accordance with Holdings' normal accounting procedures (and which will
represent management's
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reasonable estimate of Holdings' projected performance during such
periods) applied on a consistent basis, including, without limitation, (i)
forecasted consolidated balance sheets, consolidated statements of
operations, of stockholders' equity and of cash flows of Holdings and its
Subsidiaries on a consolidated basis for such periods, (ii) the amount of
forecasted capital expenditures for such fiscal periods, (iii) forecasted
compliance with Sections 7.10 and 7.12-7.13 and (iv) an appropriate
discussion of the principal assumptions on which such plan/budget is
based; provided that if any such forecast indicates that Holdings may not
be in compliance with any provision of this Agreement at some future date,
such forecast shall not constitute a Default or an Event of Default or
anticipatory or other breach thereof.
(l) Within ten (10) Business Days after the last Business Day of each
month, a borrowing base certificate in the form of Exhibit I hereto (the
"Borrowing Base Certificate") detailing the Eligible Accounts Receivable
and Eligible Inventory as of the last day of such month, certified as
complete and correct on behalf of the Borrower and the other Credit
Parties by the chief executive officer, chief financial officer,
controller or other Authorized Officer of the Borrower. In addition, each
Borrowing Base Certificate shall have attached to it such additional
schedules and/or other information as the Administrative Agent may
reasonably request. If such Borrowing Base Certificate is not delivered
within twenty-five (25) days after the end of any such month, then the
Borrowing Base shall be deemed to be $0 until such time as such required
Borrowing Base Certificate is delivered.
(m) With reasonable promptness, such other information and data with
respect to any Credit Party or its respective Subsidiaries, as from time
to time may be reasonably requested by the Administrative Agent or any
Bank.
6.02. Books, Records and Inspections. Each Credit Party will keep true
books of records and accounts in which full and correct entries will be made of
all of its business transactions, and will reflect in its financial statements
adequate
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accruals and appropriations to reserves, all in accordance with GAAP. Each
Credit Party and its respective Subsidiaries will permit officers and
designated representatives of the Administrative Agent or any Bank to visit and
inspect any of the properties or assets of any Credit Party or its respective
Subsidiaries, and to examine the books of account of any Credit Party or its
respective Subsidiaries and discuss the affairs, finances and accounts of any
Credit Party or its respective Subsidiaries with, and be advised as to the same
by, its and their officers and independent accountants (in the presence of such
officers), all at such reasonable times and intervals and to such reasonable
extent as the Administrative Agent or any Bank may reasonably request.
6.03. Maintenance of Property; Insurance. (a) Each Credit Party and
its Subsidiaries will exercise commercially reasonable efforts to maintain or
cause to be maintained in good repair, working order and condition (subject to
normal wear and tear) all properties used in its businesses and from time to
time will make or cause to be made all appropriate repairs, renewals and
replacements thereof and will maintain and renew as necessary all licenses,
permits and other clearances necessary to use and occupy such properties.
(b) Subject to the provisions of subsection 6.03(c) below, each Credit
Party and its Subsidiaries will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured
against by corporations of established reputation engaged in the same or
similar businesses and similarly situated, of such types and in such amounts as
are customarily carried under similar circumstances by such other corporations
to the extent that such types and such amounts of insurance are available at
commercially reasonable rates. Each Credit Party will, and will cause each of
its respective Subsidiaries to, furnish to each Bank, upon reasonable request,
information as to the insurance carried, and will not cancel, without
replacement with a substantially similar policy, any such insurance without the
reasonable consent of the Required Banks.
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(c) Each Credit Party and its Subsidiaries will maintain in full force
the insurance coverages in respect of the Collateral as set forth in the
Security Documents.
6.04. Payment of Taxes. Each Credit Party and its respective
Subsidiaries will pay and discharge all material taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits,
or upon any properties belonging to it, prior to the date on which material
penalties attach thereto, and all lawful claims which, if unpaid, might become
a Lien or charge upon any properties of such Credit Party or any of its
respective Subsidiaries or cause a failure or forfeiture of title thereto;
provided that neither such Credit Party nor any of its respective Subsidiaries
shall be required to pay any such tax, assessment, charge, levy or claim that
is being contested in good faith and by proper proceedings promptly instituted
and diligently conducted, which proceedings have the effect of preventing the
forfeiture or sale of the property or asset that may become subject to such
Lien, if it has maintained adequate reserves with respect thereto in accordance
with and to the extent required under GAAP.
6.05. Corporate Franchises. Each Credit Party and its respective
Subsidiaries will do or cause to be done, all things necessary to preserve and
keep in full force and effect its existence, rights and authority, except where
such failure to keep in full force and effect such rights and authority could
not reasonably be expected to have a Materially Adverse Effect.
6.06. Compliance with Statutes, etc. Each Credit Party and its
respective Subsidiaries will comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls) other than
non-compliance which could not reasonably be expected to have a Materially
Adverse Effect.
6.07. ERISA. Holdings will furnish to each of the Banks:
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(a) promptly, upon 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 the Credit Parties in an aggregate
amount exceeding $250,000, a written notice specifying the nature thereof,
what action the Credit Parties or members of their ERISA Group have taken,
are taking or propose to take with respect thereto, and, when known, any
action taken or threatened by the Internal Revenue Service, Department of
Labor, PBGC or Multiemployer Plan sponsor with respect thereto; and
(b) upon request by the Administrative Agent, copies of: (i) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by an ERISA Entity with the Internal Revenue Service with respect to
each Pension Plan; (ii) the most recent actuarial valuation report for
each Pension Plan; (iii) all notices received by an ERISA Entity from a
Multiemployer Plan sponsor or any governmental agency concerning an ERISA
Event; and (iv) such other documents or governmental reports or filings
relating to any Employee Benefit Plan as the Administrative Agent shall
reasonably request.
6.08. Subsidiary Guarantees. In the event the Borrower or any of its
Subsidiaries creates or acquires a Subsidiary, the Borrower will cause such
Subsidiary to execute and deliver to the Collateral Agent for the benefit of
the Banks a subsidiary guarantee, in form and substance satisfactory to the
Collateral Agent, guaranteeing the Obligations.
6.09. End of Fiscal Years; Fiscal Quarters. Holdings will, for
financial reporting purposes, and will cause each of its Subsidiaries to, have
its (i) fiscal years end on December 31, and (ii) fiscal quarters end on March
31, June 30, September 30, and December 31.
6.10. Use of Proceeds. All proceeds of the Revolving Loans shall be
used as provided in Section 5.05.
6.11. Interest Rate Protection. The Borrower shall cause at least 50%
of its consolidated Indebtedness to bear interest
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at a fixed, rather than floating, rate of interest. The Borrower may enter into
Interest Rate Agreements reasonably acceptable to the Administrative Agent in
order to comply with the preceding sentence.
6.12. Equal Security for Revolving Loans and Revolving Notes; No
Further Negative Pledges. (a) If any Credit Party or any of its respective
Subsidiaries shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired and whether or not such
property or assets constitutes Collateral, other than Permitted Encumbrances
permitted by the applicable Security Document (unless prior written consent to
the creation or assumption thereof shall have been obtained from the
Administrative Agent and the Required Banks), it shall make or cause to be made
effective provisions whereby the Obligations will be secured by such Lien
equally and ratably with any and all other Indebtedness thereby secured as long
as any such Indebtedness shall be secured; provided that this covenant shall
not be construed as consent by the Administrative Agent and the Required Banks
to any violation by the Borrower of the provisions of Section 7.03.
(b) Except pursuant to the Indenture or with respect to prohibitions
against other encumbrances on specific property encumbered to secure payment of
particular Indebtedness permitted hereunder (which Indebtedness relates solely
to the acquisition or improvement of such specific property), none of the
Credit Parties nor any of their respective Subsidiaries shall enter into any
agreement prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired.
6.13. Lender Meeting. The Borrower will participate in a meeting of
the Banks once during each fiscal year (commencing with the fiscal year ending
December 31, 1998) to be held at a location and a time selected by the Borrower
and reasonably acceptable to the Administrative Agent.
6.14. Year 2000. Each Credit Party and its respective Subsidiaries
will take all action necessary to assure that their computer-based systems are
able to effectively process data, including dates on or after January 1, 2000.
At the request
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of the Administrative Agent or any Bank, the Borrower shall provide the
Administrative Agent or such Bank, as the case may be, with assurance
reasonably acceptable to the Administrative Agent or such Bank, as the case may
be, of the year 2000 capability of the Borrower and its Subsidiaries.
6.15. Security Interests. Each Credit Party will perform any and all
acts and execute any and all documents (including, without limitation, the
execution, amendment or supplementation of any financing statement and
continuation statement) for filing in any appropriate jurisdiction under the
provisions of the UCC, local law or any statute, rule or regulation of any
applicable jurisdiction which are necessary in order to maintain or confirm in
favor of the Collateral Agent for the benefit of the Banks a valid and
perfected Lien on the Collateral and any property of the same type acquired
after the Closing Date (the "Additional Collateral"), subject to no Liens
except for Prior Liens and other Liens expressly permitted by the applicable
Security Document with respect to such Collateral or Additional Collateral. The
Borrower shall, as promptly as practicable after the filing of any financing
statements, deliver to the Administrative Agent, at the Administrative Agent's
request, acknowledgment copies of, or copies of lien search reports confirming
the filing of, financing statements duly filed under the UCC of all
jurisdictions as may be necessary or, in the reasonable judgment of the
Administrative Agent, desirable to perfect the Lien created, or purported or
intended to be created, by each Security Document.
6.16. Environmental Events. (a) The Borrower will promptly give notice
to the Administrative Agent upon becoming aware thereof (i) of any violation of
any Environmental Law, (ii) of any inquiry, proceeding, investigation or other
action under any Environmental Law, including without limitation a request for
information or a notice of potential environmental liability from any foreign,
federal, state or local environmental agency or board or any other Person, or
(iii) of the discovery of the release of any Hazardous Material at, on, under
or from any of the Real Properties or any facility or equipment thereat in
excess of reportable or allowable standards or levels under any Environmental
Law, or in a manner and/or amount which could reasonably be expected to result
in
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liability under any Environmental Law, in each case as to which there is a
reasonable possibility of a Materially Adverse Effect.
(b) In the event of the presence of any Hazardous Material on any of
the Real Properties which is in violation of, or which could reasonably be
expected to result in liability under, any Environmental Law, in each case
which could reasonably be expected to have a Materially Adverse Effect, each
Credit Party and its respective Subsidiaries, upon discovery thereof, shall
take all necessary steps to initiate and expeditiously complete all response,
corrective and other action to mitigate and eliminate any such adverse effect,
and shall keep the Administrative Agent informed of their actions and the
results of such actions.
(c) The Borrower shall provide the Administrative Agent with copies of
any notice, submittal or documentation provided by any Credit Party or any of
its respective Subsidiaries to any governmental authority or other Person under
any Environmental Law if the matter which is subject to the notice, submittal
or other documentation could reasonably be expected to result in a Materially
Adverse Effect. Such notice, submittal or documentation shall be provided to
the Administrative Agent promptly and, in any event, within 5 Business Days
after such material is provided to the governmental authority or third party.
SECTION 7. Negative Covenants. Holdings and the Borrower hereby
covenant and agree that as of the Closing Date and thereafter for so long as
this Agreement is in effect and until the Revolving Loan Commitments have
terminated and the Revolving Loans together with interest and fees are paid in
full and all other Obligations incurred hereunder, to the extent due and
payable, are paid in full:
7.01. Changes in Business. (a) No Credit Party will materially alter
the character of its business from that conducted by such Credit Party at the
Closing Date as described in the Evaluation Materials.
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(b) Holdings will not engage in any business other than holding the
common stock of the Borrower.
7.02. Amendments or Waivers of Certain Documents. After the Closing
Date, no Credit Party or its respective Subsidiaries will amend the terms of
its respective certificate of incorporation or by-laws (or analogous
organizational documents) in a manner adverse to the Banks without the prior
written consent of the Required Banks, provided that this Section 7.02 shall
not restrict Holdings' ability to consummate public offerings under the
Securities Act otherwise in compliance with this Agreement.
7.03. Liens. No Credit Party or its respective Subsidiaries will
directly or indirectly create, incur, assume or permit or suffer to exist any
Lien upon or with respect to any item constituting Collateral, whether now
owned or hereafter acquired, or sell any such Collateral subject to an
understanding or agreement, contingent or otherwise, to repurchase such
Collateral or assign any right to receive income, or file or permit the filing
of any financing statement under the UCC or any other similar notice of Lien
under any similar recording or notice statute, except for the Lien of the
Security Document relating thereto, Prior Liens applicable thereto and other
Liens expressly permitted by such Security Document. No Credit Party or its
respective Subsidiaries will create, incur, assume or suffer to exist any Lien
upon or with respect to any property or assets of such Credit Party or its
respective Subsidiaries which does not constitute Collateral whether now owned
or hereafter acquired, or sell any Collateral, property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets or assign any right to receive income, or file or permit the
filing of any financing statement under the UCC or any other similar notice of
Lien under any similar recording or notice statute, except the following, which
are herein collectively referred to as "Permitted Encumbrances":
(a) Liens for taxes, assessments or governmental charges or claims
not yet delinquent or Liens for taxes, assessments or governmental charges
or claims being contested in good faith and by appropriate proceedings for
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which adequate reserves, as may be required by GAAP, have been
established;
(b) Liens in respect of property or assets of any Credit Party or its
respective Subsidiaries imposed by law (i) which were incurred in the
ordinary course of business, such as carriers', warehousemen's and
mechanics' Liens and other similar Liens arising in the ordinary course of
business, and (x) which do not in the aggregate materially detract from
the value of such property or assets or materially impair the use thereof
in the operation of the business of any Credit Party or its respective
Subsidiaries or (y) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property or asset subject to such Lien or (ii)
which do not relate to material liabilities of any Credit Party or its
respective Subsidiaries and do not in the aggregate materially detract
from the value of the property and assets of Holdings and its Subsidiaries
taken as a whole;
(c) Liens in connection with any attachment or judgment (including
judgment or appeal bonds) not in excess of $500,000 individually or
$1,000,000 in the aggregate for a Credit Party and its respective
Subsidiaries (exclusive of any amount adequately covered by insurance as
to which the insurance company has acknowledged coverage) unless the
judgment it secures shall, within 60 days after the entry thereof, not
have been discharged or execution thereof not stayed pending appeal, or
shall not have been discharged within 30 days after the expiration of any
such stay;
(d) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security,
or to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business (exclusive of obligations in respect of the
payment for borrowed money or the equivalent);
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(e) Subject to the provisions of Section 7.11, Leases with respect to
the assets or properties of any Credit Party or its respective
Subsidiaries entered into in the ordinary course of such Credit Party's or
Subsidiary's business and subordinate in all respects to the Liens granted
and evidenced by the Security Documents;
(f) Easements, rights of way, restrictions, minor defects or
irregularities in title not interfering in any material respect with the
business of any Credit Party or its respective Subsidiaries, in each case
incurred in the ordinary course of business and which do not materially
impair for its intended purposes the use or value of the Real Property to
which it relates;
(g) Liens upon real or tangible personal property acquired by any
Credit Party or its respective Subsidiaries after the date hereof;
provided that (i) any such Lien is created solely for the purpose of
securing Indebtedness representing, or incurred to finance, the cost of
the item of property subject thereto, (ii) the original principal amount
of the Indebtedness secured by such Lien is at least 70%, and does not
exceed 100% of the fair value (as determined in good faith by the Board of
Directors of the appropriate entity) of the respective property at the
time it was so acquired, (iii) such Lien does not extend to or cover any
other property other than such item of property and (d) the incurrence of
such Indebtedness secured by such Lien is permitted by Section 7.04; and
(h) Liens in favor of the Industrial Authority of Warren County,
Kentucky securing the Indebtedness incurred pursuant to Section 7.04(g).
Holdings and the Borrower shall use their reasonable best efforts to
obtain the waiver of any Lien referred to in clause (b)(i) above on or in
respect of any Equipment or Inventory.
7.04. Indebtedness. No Credit Party or its respective Subsidiaries
will contract, create, incur, assume or suffer to exist any Indebtedness,
except:
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(a) Indebtedness incurred pursuant to the Credit Documents; provided
that the aggregate Indebtedness incurred pursuant to this Agreement shall
in no event exceed the Total Revolving Loan Commitments;
(b) Interest Rate Agreements;
(c) $500,000 of Indebtedness in the aggregate for all Credit Parties
and their respective Subsidiaries incurred to finance the cost of the
acquisition of real or personal tangible property (including Capital
Leases), which shall be in addition to any Indebtedness reflecting Capital
Lease payments made with respect to the Indebtedness set forth in Section
7.04(g); provided that the original principal amount of such Indebtedness
shall be at least 70% and shall not exceed 100% of the fair value of such
property when acquired; and provided, further, that such Indebtedness is
not secured by any Lien other than a Lien referred to in clause (g) of
Section 7.03;
(d) Contingent Obligations permitted by Section 7.16;
(e) Indebtedness set forth on Annex V hereto (including $150,000,000
of Senior Notes and related guarantees issued pursuant to the Indenture);
(f) other unsecured Indebtedness not exceeding $1,000,000 in the
aggregate for all Credit Parties and their respective Subsidiaries at any
time outstanding; and
(g) $2,900,000 of Indebtedness in the aggregate for all Credit
Parties and their respective Subsidiaries incurred to finance the cost of
the Distribution Center; provided that such Indebtedness is not secured by
any Lien other than a Lien referred to in Section 7.03(h).
7.05. Sale or Discount of Receivables. No Credit Party or its
respective Subsidiaries will sell, with or without recourse, or discount (other
than in connection with trade discounts in the ordinary course of business
consistent with past
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practice) or otherwise sell for less than the face value thereof, notes or
accounts receivable.
7.06. Advances, Investments and Loans. No Credit Party or its
respective Subsidiaries will after the date hereof lend money or credit or make
advances to any Person other than to the Borrower or a Subsidiary of the
Borrower which is a Credit Party, or purchase or acquire any stock, obligations
or securities of, or any other interest in, or make any capital contribution to
any such Person, except:
(a) investments in Cash and Cash Equivalents;
(b) receivables owing to them and advances to customers and
suppliers, in each case if created, acquired or made in the ordinary
course of business and payable or dischargeable in accordance with
customary trade terms;
(c) investments (including debt obligations) received in connection
with the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business;
(d) the acceptance of a form of consideration other than Cash or Cash
Equivalents in connection with the sale or disposition of assets to the
extent provided in Section 7.15;
(e) any purchase or acquisition of stock or other securities (i)
expressly permitted by Section 7.08 hereof or (ii) in connection with the
Pending Acquisitions; and
(f) additional loans, advances and/or investments (including
additional capital contributions to Subsidiaries of the Borrower) of a
nature not contemplated by the foregoing clauses (a) through (e); provided
that all loans, advances and investments made pursuant to this clause (f)
shall not exceed $825,000 in the aggregate at any time outstanding for all
Credit Parties and their respective Subsidiaries; and provided, further,
that all Securities or other instruments evidencing such loans,
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investments or advances shall be pledged pursuant to an appropriate
Security Document in the event that such Securities or other instruments
shall have been acquired for aggregate consideration in excess of
$100,000; and provided, further, that loans, advances or investments made
to any Subsidiary of the Borrower pursuant to this clause (f) shall not
exceed $300,000.
7.07. Prepayments of Indebtedness, etc. No Credit Party or its
respective Subsidiaries will: (a) after the issuance thereof, amend or modify
(or permit the amendment or modification of) any of the terms or provisions, to
the extent any such amendment or modification (on the whole) would be adverse
to the issuer thereof or to the interests of the Banks, of any of the
Indebtedness (or any agreement relating thereto) of the type described in
Sections 7.04(e) and (g); or (b) make (or give any notice in respect of) any
voluntary or optional principal payment or prepayment or redemption or
acquisition for value of (including, without limitation, by way of depositing
with any trustee with respect thereto money or securities before such
Indebtedness is due for the purpose of paying such Indebtedness when due) or
exchange of any such Indebtedness, if at such time a Default or Event of
Default shall have occurred or be continuing or would result therefrom.
7.08. Dividends, etc. No Credit Party or its respective Subsidiaries
will declare or pay any dividends or return any capital to, its stockholders or
authorize or make any other distribution, payment or delivery of property or
cash to its stockholders as such, or redeem, retire, purchase or otherwise
acquire, directly or indirectly, for any consideration, any shares of any class
of its capital stock now or hereafter outstanding (or any warrants for or
options or stock appreciation rights in respect of any of such shares), or make
any loans or advances to Affiliates, or set aside any funds for any of the
foregoing purposes, or permit any of its Subsidiaries to purchase or otherwise
acquire for consideration any shares of any class of the capital stock of such
Credit Party or any other Subsidiary, as the case may be, now or hereafter
outstanding (or any options or warrants or stock appreciation rights issued by
such Person with respect to its capital stock) (all of the foregoing,
"Dividends"), except that (i) any Credit
<PAGE> 81
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Party or its respective Subsidiaries may pay Dividends to its parent
corporation if such parent corporation is (y) the Borrower or (z) a
Wholly-Owned Subsidiary of the Borrower, (ii) any Subsidiary of the Borrower
may pay to the Borrower, and the Borrower may pay to Holdings, any amounts
required for the payment of any taxes payable (y) by the Borrower or (z) by the
Borrower and/or its Subsidiaries on a consolidated, combined or unitary basis;
(iii) as long as no Default or Event of Default shall have occurred or be
continuing or would result therefrom, any Credit Party or its respective
Subsidiaries may pay Dividends to Holdings which Holdings will apply to
purchase Management Stock and Vested Options from the Management Stockholders
and their permitted transferees in an amount not to exceed $100,000 in any
fiscal year and $250,000 in the aggregate; provided that such payments may only
be made in connection with purchases of Management Stock and Vested Options
upon the termination of employment, death or disability of the person to whom
such shares of Management Stock or Vested Options were initially issued; (iv)
the Borrower may pay Dividends to Holdings in an amount not to exceed $600,000
in any fiscal year to pay the ordinary operating and administrative expenses of
Holdings and (v) as long as no Default or Event of Default shall have occurred
and be continuing or would result therefrom, and without duplication, the
Borrower may pay Dividends to Holdings to enable Holdings to make the payments
set forth in Section 7.09(vi).
7.09. Transactions with Affiliates. No Credit Party or its respective
Subsidiaries will after the date hereof enter into any transaction or series of
transactions, whether or not in the ordinary course of business, with any
holder of 5% or more of any class of equity securities or with any Affiliate of
the Borrower other than on terms and conditions substantially as favorable to
such Credit Party or Subsidiary as would be obtainable by such Credit Party or
Subsidiary at the time in a comparable arm's-length transaction with a Person
other than a holder of 5% or more of any class of equity securities of Holdings
or an Affiliate; provided that the foregoing restrictions shall not apply to
(i) transactions between or among any Credit Parties and their Wholly-Owned
Subsidiaries excluding any Person which is not a Wholly-Owned Subsidiary of
Holdings, (ii) payments permitted by Section 7.08(ii) and (iii), (iii) loans,
advances and/or investments permitted by Section 7.06(f), (iv) the payment of
fees to Indosuez and its Affiliates
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for financial services, such fees not to exceed Indosuez's usual and customary
fees for similar services, (v) payments to Kohlberg for management services
pursuant to documentation satisfactory to the Administrative Agent not to
exceed in any fiscal year $850,000 plus an amount equal to 2% of the net cash
proceeds in excess of $5,000,000 received by the Borrower from Kohlberg and/or
its controlled Affiliates from (y) the issuance to Kohlberg and/or such
controlled Affiliates of capital stock after the Closing Date and (z) without
duplication of any amounts included in the immediately preceding clause (y),
any contribution to the equity capital of the Borrower; provided that no
Default or Event of Default shall have occurred and be continuing or would
result from such payment, and (vi) advances to employees of the Borrower not to
exceed $250,000 at any one time outstanding.
7.10. Total Interest Coverage Ratio. The ratio of (i) Consolidated
EBITDA to (ii) Consolidated Interest Expense for Holdings and its Subsidiaries
set forth below for the Test Period ending on the last day of each calendar
quarter listed below shall not be less than the ratio set forth opposite such
date below; provided that for purposes of determining Consolidated EBITDA for
any Test Period occurring on or before December 31, 1999, demonstrable
annualized cost savings achieved during such Test Period and related to the
Weiand Acquisition and Lunati Acquisition to the extent that such annualized
savings are not already included in the calculation of Consolidated EBITDA
shall be given effect as of the first day of such Test Period; provided further
that in no event shall such adjustments exceed $1,500,000 for Weiand or
$3,500,000 for Lunati in any Test Period:
<TABLE>
<CAPTION>
Test Period Ratio
----------- -----
<S> <C>
December 31, 1999.................................................................................... 1.40 to 1.00
March 31, 2000....................................................................................... 1.40 to 1.00
June 30, 2000........................................................................................ 1.45 to 1.00
September 30, 2000................................................................................... 1.45 to 1.00
December 31, 2000 and each calendar quarter thereafter............................................... 1.50 to 1.00
</TABLE>
<PAGE> 83
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7.11. Sale and Lease-Backs. Unless a permitted disposition of Assets
under Section 7.15 hereof, no Credit Party or its respective Subsidiaries will
directly or indirectly, become or thereafter remain liable as lessee or as
guarantor or other surety with respect to the lessee's obligations under any
lease, whether an Operating Lease or a Capital Lease, of any property (whether
real or personal or mixed) whether now owned or hereafter acquired, (i) which
any Credit Party or its respective Subsidiaries has sold or transferred or is
to sell or transfer to any other Person or (ii) which any Credit Party or its
respective Subsidiaries intends to use for substantially the same purpose as
any other property which has been or is to be sold or transferred by any Credit
Party or its respective Subsidiaries to any Person in connection with such
lease, if in the case of clause (i) or (ii) above, such sale and such lease are
part of the same transaction or a series of related transactions or such sale
and such lease occur within one year of each other or are with the same other
Person.
7.12. Leverage Ratio. Holdings and the Borrower will not permit the
ratio of (i) Indebtedness of Holdings and its Subsidiaries on the last day of
each calendar quarter listed below to (ii) Consolidated EBITDA of Holdings for
the Test Period ending on the last day of each calendar quarter listed below to
be more than the ratio set forth below; provided that the portion of
Indebtedness of Holdings and its Subsidiaries which constitute Revolving Loans
shall be the average amount outstanding during the Test Period ending on such
date:
<TABLE>
<CAPTION>
Test Period Ratio
----------- -----
<S> <C>
December 31, 1999.................................................................................... 6.00 to 1.00
March 31, 2000....................................................................................... 5.85 to 1.00
June 30, 2000........................................................................................ 5.75 to 1.00
September 30, 2000................................................................................... 5.65 to 1.00
December 31, 2000 and each calendar quarter thereafter............................................... 5.50 to 1.00
</TABLE>
<PAGE> 84
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provided that for purposes of determining Consolidated EBITDA for any Test
Period occurring on or before December 31, 1999, demonstrable annualized cost
savings achieved during such Test Period and related to the Weiand Acquisition
and Lunati Acquisition to the extent that such annualized savings are not
already included in the calculation of Consolidated EBITDA shall be given
effect as of the first day of such Test Period; provided further that in no
event shall such adjustments exceed $1,500,000 for Weiand or $3,500,000 for
Lunati in any Test Period.
7.13. Minimum Consolidated EBITDA. Holdings will maintain a
Consolidated EBITDA of at least the amount set forth below for the Test Period
ending on each date listed below:
<TABLE>
<CAPTION>
Minimum EBITDA
Test Period ($ Millions)
----------- ------------
<S> <C>
December 31, 1999.................................................................................... $24.90
March 31, 2000....................................................................................... 25.40
June 30, 2000........................................................................................ 25.90
September 30, 2000................................................................................... 26.40
December 31, 2000.................................................................................... 27.00
March 31, 2001....................................................................................... 27.50
June 30, 2001........................................................................................ 27.90
September 30, 2001................................................................................... 28.50
December 31, 2001.................................................................................... 28.80
March 31, 2002....................................................................................... 28.80
June 30, 2002........................................................................................ 28.80
September 30, 2002................................................................................... 28.80
December 31, 2002.................................................................................... 30.60
March 31, 2003....................................................................................... 31.50
June 30, 2003........................................................................................ 32.00
</TABLE>
7.14. Issuance of Subsidiary Stock. No Credit Party or any of its
respective Subsidiaries will, directly or indirectly issue, sell, assign,
pledge or otherwise encumber or dispose of any shares of the Subsidiaries'
capital stock or
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other securities (or warrants, rights or options to acquire capital stock or
convertible securities or other equity securities) of such Subsidiary, other
than to another Credit Party and other than pursuant to the Security Documents
or as contemplated by Section 6.17.
7.15. Disposition of Assets. No Credit Party or its respective
Subsidiaries will dispose of all or any part of its interest in any asset,
except that such Credit Party or Subsidiary may sell assets so long as either
(i) such sales are approved by the Required Banks and the sales price thereof
is, in the reasonable judgment of the Administrative Agent, at least equal to
the fair market value of such assets, (ii) such sales are for at least the fair
market value of such assets and the aggregate amount of such asset sales is
less than $500,000 in any 12-month period, (iii) such sales are of Inventory in
the ordinary course of business or (iv) such sales are (A) of obsolete
equipment, (B) for at least the fair market value of such equipment, (C) not in
excess of $100,000 individually or $500,000 per year in the aggregate and (D)
the proceeds of such sales are used within 90 days of such sales to (1)
purchase equipment used in substantially similar lines of business or (2) to
repay Indebtedness under this Agreement.
The consideration received by any Credit Party or its respective
Subsidiaries from each sale of assets permitted above shall be received in
whole at the time of sale and at least 75% of the consideration from each sale
shall consist of Cash or Cash Equivalents.
7.16. Contingent Obligations. No Credit Party or its respective
Subsidiaries will directly or indirectly, create or become or be liable with
respect to any Contingent Obligation except:
(i) guarantees resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(ii) Interest Rate Agreements;
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(iii) Contingent Obligations arising pursuant to the terms of the
Purchase Agreement;
(iv) Obligations of each Credit Party to or for the benefit of
the Banks hereunder or under the other Credit Documents;
(v) Currency Protection Agreements; and
(vi) other Contingent Obligations not to exceed $250,000 in the
aggregate for all Credit Parties and their respective Subsidiaries outstanding
at any one time.
7.17. Holdings' Equity Sales and Net Financing Proceeds. Holdings
shall (i) upon the sale of any of the equity of itself or the Borrower,
contribute an amount equal to 100% of the net proceeds thereof to the Borrower
in the form of Cash or Cash Equivalents and (ii) on the date of receipt by
Holdings of any Net Financing Proceeds, contribute an amount equal to 100% of
such Net Financing Proceeds to the Borrower in the form of Cash or Cash
Equivalents.
7.18. Merger and Consolidations. No Credit Party will merge or
consolidate with or into any other entity; provided that a Subsidiary of the
Borrower may merge with or into the Borrower or another Subsidiary of the
Borrower so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom.
SECTION 8. Events of Default. Upon the occurrence and during the
continuance of any of the following specified events (each an "Event of
Default"):
8.01. Payments. The Borrower shall (i) default in the payment when due
of any principal of the Revolving Loans, (ii) default, and such default shall
continue for two or more Business Days, in the payment when due of any interest
on the Loans or under any other Credit Document or (iii) fail to pay any other
amounts owing hereunder for five days after receiving notice from the
Administrative Agent of such default; or
<PAGE> 87
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8.02. Representations, etc. Any representation, warranty or
statement made or deemed made by any Credit Party herein or in any other Credit
Document or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove to be untrue in any material
respect on the date as of which made or deemed made; or
8.03. Covenants. Any Credit Party or its respective
Subsidiaries shall (a) default in the due performance or observance by it of
any term, covenant or agreement contained in Section 6.12, 6.14, 6.15 or
Section 7 hereof or (b) default in the due performance or observance by it of
any other term, covenant or agreement contained in this Agreement or any
Security Document (other than those referred to in Section 8.01, 8.02 or clause
(a) of this Section 8.03) and such default shall continue unremedied for a
period of at least thirty days after the date of such default; or
8.04. Default Under Other Agreements. (a) Any Credit Party or
its respective Subsidiaries shall (i) default in any payment with respect to
any Indebtedness (other than Obligations) having a principal amount in excess
of $500,000 individually or $1,000,000 in the aggregate for all Credit Parties
and their Subsidiaries, beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created or (ii)
default in the observance or performance of any agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause any such Indebtedness to
become due prior to its stated maturity; or (b) any such Indebtedness of any
Credit Party or any of its respective Subsidiaries shall be declared to be due
and payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof; or
8.05. Bankruptcy, etc. Any Credit Party or its respective
Subsidiaries shall commence a voluntary case concerning itself under Title 11
of the United States Code entitled
<PAGE> 88
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"Bankruptcy," as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against any Credit
Party or any of its respective Subsidiaries and the petition is not timely
controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
any Credit Party or any of its respective Subsidiaries; or any Credit Party or
any of its respective Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to any Credit Party or any of its
respective Subsidiaries; or there is commenced against any Credit Party or any
of its respective Subsidiaries any such proceeding which remains undismissed
for a period of 60 days; or any Credit Party or any of its respective
Subsidiaries is adjudicated insolvent or bankrupt; or any order for relief or
other order approving any such case or proceeding is entered; or any Credit
Party or any of its respective Subsidiaries suffers any appointment of any
custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or any Credit Party
or any of its respective Subsidiaries makes a general assignment for the
benefit of creditors; or any corporate action is taken by any Credit Party or
any of its respective Subsidiaries for the purpose of effecting any of the
foregoing; or
8.06. ERISA. An ERISA Event or noncompliance with respect to
Foreign Plans shall have occurred that, in the opinion of the Required Banks,
when taken together with all other ERISA Events that have occurred, could
reasonably be expected to result in liability of the Credit Parties in an
aggregate amount exceeding $250,000; or
8.07. Security Documents. Any Security Document shall cease
to be in full force and effect, or shall cease to give the Collateral Agent the
Liens, rights, powers and privileges purported to be created thereby, in favor
of the Collateral Agent, superior to and prior to the rights of all third
Persons other than the holders of Prior Liens and subject to no
<PAGE> 89
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Liens other than those Liens expressly permitted by the applicable Security
Document; or
8.08. Guarantees. Any Guarantee or any provisions thereof
shall cease to be in full force or effect in all material respects, or the
Guarantor thereunder or Person acting by or on behalf of such Guarantor shall
deny or disaffirm such Guarantor's obligations under such Guarantee or the
Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to any
Guarantee; or
8.09. Judgments. One or more judgments or decrees shall be
entered against any Credit Party or any of its respective Subsidiaries
involving a liability of $300,000 or more in the case of any one such judgment
or decree and $1,000,000 or more in the aggregate for all such judgments and
decrees for all Credit Parties and their respective Subsidiaries (in either
case in excess of the amount covered by insurance as to which the insurance
company has acknowledged coverage) and (i) any such judgments or decrees shall
not have been vacated, discharged, bonded or enforcement thereof stayed pending
appeal within 60 days from the entry thereof or (ii) any enforcement proceeding
therefor shall have been commenced; or
8.10. Ownership. A Change of Control shall occur.
8.11. Environmental Expenditures. The expenditures incurred
by the Credit Parties (and not reimbursed by Seller) from and after the Closing
Date with respect to the environmental matters set forth on Annex XI
(Environmental Contingencies) hereto in excess of (i) the Environmental
Deductible (as defined in the Holley Purchase Agreement) and (ii) any
co-payment obligation of the Borrower pursuant to the Holley Purchase Agreement
shall exceed $7,500,000 in the aggregate or $1,500,000 in any fiscal year of
Holdings.
Then, and in any such event, and at any time thereafter, if
any Event of Default shall then be continuing, the Administrative Agent shall,
upon the written request of the Required Banks, by written notice to the
Borrower, take any or all of the following actions, without prejudice to the
rights
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of the Administrative Agent or any Bank to enforce its claims against the
Borrower, except as otherwise specifically provided for in this Agreement
(provided that, if an Event of Default specified in Section 8.05 shall occur,
the result which would occur upon the giving of written notice by the
Administrative Agent as specified in clauses (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) declare the Total
Revolving Loan Commitments terminated, whereupon the Revolving Loan Commitment
of each Bank shall forthwith terminate immediately and any accrued and unpaid
Commitment Commission shall forthwith become due and payable without any other
notice of any kind; (ii) declare the principal of and accrued interest in
respect of all Revolving Loans and all Obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Credit Party; and/or (iii) enforce, as Collateral
Agent (or direct the Collateral Agent to enforce), any or all of the remedies
created pursuant to the Security Documents. If an Event of Default is cured or
waived in accordance with the terms of the Agreement, it ceases (and, if
waived, pursuant to the terms, and to the extent, of such waiver).
SECTION 9. Definitions. As used herein, the following terms
shall have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Account" means all of the "accounts" of the Borrower and its
Subsidiaries (as that term is defined in Section 9-106 of the Uniform
Commercial Code as in effect in the State of New York) whether or not such
Account has been earned by performance, whether now existing or existing in the
future, including, without limitation, all (i) accounts receivable, including,
without limitation, all accounts created by or arising from the Borrower's
sales of goods or rendition of services made under the Borrower's trademarks or
trade names; (ii) unpaid seller's rights (including rescission, replevin,
reclamation and stopping in transit) relating to the foregoing or arising
therefrom; (iii) rights to any goods represented by
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any of the foregoing, including returned or repossessed goods; (iv) reserves
and credit balances held by the Borrower with respect to any such accounts
receivable or any account debtor; (v) guarantees or collateral for any of the
foregoing; and (vi) insurance policies or rights relating to any of the
foregoing.
"Acquisition Documents" means the Purchase Agreement and all
other documents entered into or delivered in connection therewith.
"Additional Collateral" has the meaning provided in Section
6.15.
"Administrative Agent" means Indosuez, or any successor
thereto appointed in accordance herewith, in its capacity as administrative
agent for the Banks.
"Administrative Agent's Office" means the office of the
Administrative Agent located at 1211 Avenue of the Americas, New York, New York
10036, or such other office in New York as the Administrative Agent may
hereafter designate in writing as such to the other parties hereto.
"Affiliate" means with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to all
directors and executive officers of such Person), controlled by, or under
direct or indirect common control with such Person. A Person shall be deemed to
control a corporation for the purposes of this definition if such Person
possesses, directly or indirectly, the power (i) to vote 10% or more of the
securities having ordinary voting power for the election of directors of such
corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" or "Agents" has the meaning provided in the first
paragraph of this Agreement and shall include any successor or successors
thereto appointed in accordance herewith.
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"Agreement" means this Amended and Restated Credit Agreement,
as the same may after its execution be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Approved Fund" means, with respect to any Bank that is a
fund that invests in bank loans, any other fund that invests in bank loans and
is advised or managed by the same investment advisor as such Bank or by an
affiliate of such investment advisor.
"Asset Sale" means the sale, transfer or other disposition,
to the extent consummated after the Closing Date, by any Credit Party or any of
its respective Subsidiaries of any asset of such Credit Party or its respective
Subsidiaries to any Person (other than transactions included in the definition
of Net Financing Proceeds and sales, transfers or other dispositions of
inventory in the ordinary course of business and/or of obsolete equipment
effected in compliance with Section 7.15(a)(iv)).
"Authorized Officer" means any senior officer of Holdings or
the Borrower to the extent acceptable to the Administrative Agent.
"Bank" has the meaning provided in the first paragraph of
this Agreement and in Section 11.04.
"Bankruptcy Code" has the meaning provided in Section 8.05.
"Base Rate" means the higher of (x) 1/2% per annum in excess
of the Federal Funds Rate and (y) the rate which the Administrative Agent
announces from time to time as its prime lending rate, as in effect from time
to time. The rate the Administrative Agent announces as its prime lending rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. The Administrative Agent may make commercial
loans or other loans at rates of interest at, above or below the rate it
announces as its prime lending rate.
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"Base Rate Loan" means each Loan bearing interest at the rate
provided in Section 1.08(a).
"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.
"Borrower" means Holley Performance Products Inc.
"Borrowing" means the incurrence pursuant to a Notice of
Borrowing and to the Loan Facility of one Type of Loan by a Borrower from all
of the Banks on a pro rata basis on a given date (or resulting from conversions
on a given date), having in the case of Reserve Adjusted Eurodollar Loans the
same Interest Period.
"Borrowing Base" means an amount equal to the sum of (i) 85%
of the Eligible Accounts Receivable and (ii) 55% of the Eligible Inventory.
"Borrowing Base Certificate" has the meaning assigned to that
term in Section 6.01.
"Business Day" means (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which shall be in the City of New York a legal holiday or a day on which
banking institutions are authorized by law or other governmental actions to
close and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Reserve Adjusted Eurodollar
Loans, any day which is a Business Day described in clause (i) and which is
also a day for trading by
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and between banks in U.S. dollar deposits in the interbank eurodollar market.
"Capital Lease" of any Person means any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, is, or is required to be, accounted for as a capital lease on the
balance sheet of that Person, together with any renewals of such leases (or
entry into new leases) on substantially similar terms.
"Capital Stock" means: (1)in the case of a corporation, all
corporate stock (however designated); (2)in the case of an association or
business entity, any and all shares, interests, participants, rights or other
equivalents (however designated) of corporate stock; (3)in the case of a
partnership or limited liability company, partnership or member 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, the issuing Person.
"Capitalized Lease Obligations" of any Person means all
obligations under Capital Leases of such Person or any of its Subsidiaries in
each case taken at the amount thereof accounted for as liabilities in
accordance with GAAP.
"Cash" means money, currency or a credit balance in a Deposit
Account.
"Cash Equivalents" means (i) securities issued or directly
and fully guaranteed or insured by the United States of America or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities of
not more than three years from the date of acquisition, (ii) marketable direct
obligations issued by any State of the United States of America or any local
government or other political subdivision thereof rated (at the time of
acquisition of such security) at least AA by Standard & Poor's Ratings Group
("S&P") or the equivalent thereof by Moody's Investors Service, Inc.
("Moody's") having maturities of not more than one year from the date of
acquisition, (iii) U.S. dollar denominated time deposits,
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certificates of deposit and bankers' acceptances of (x) any Bank, (y) any
domestic commercial bank of recognized standing having capital and surplus in
excess of $250,000,000 or (z) any bank whose short-term commercial paper rating
(at the time of acquisition of such security) by S&P is at least A-1 or the
equivalent thereof or by Moody's is at least P-1 or the equivalent thereof (any
such bank, an "Approved Bank"), in each case with maturities of not more than
six months from the date of acquisition, (iv) commercial paper and variable or
fixed rate notes issued by any Bank or Approved Bank or by the parent company of
any Bank or Approved Bank and commercial paper and variable rate notes issued
by, or guaranteed by, any industrial or financial company with a short-term
commercial paper rating (at the time of acquisition of such security) of at
least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's, or guaranteed by any industrial company with a long-term
unsecured debt rating (at the time of acquisition of such security) of at least
AA or the equivalent thereof by S&P or the equivalent thereof by Moody's and in
each case maturing within one year after the date of acquisition, and (v)
repurchase agreements with any Bank or any primary dealer maturing within one
year from the date of acquisition that are fully collateralized by investment
instruments that would otherwise be Cash Equivalents; provided that the terms of
such repurchase agreements comply with the guidelines set forth in the Federal
Financial Institutions Examination Council Supervisory Policy -- Repurchase
Agreements of Depository Institutions With Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31, 1985.
"Change of Control" means the occurrence of any of the
following:
(1) the sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the assets of
Holdings or the Borrower taken as a whole to any "person" or "group"
(as such terms are used in Section 13(d)(3) of the Exchange Act);
(2) the adoption of a plan relating to the liquidation or
dissolution of Holdings or the Borrower;
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(3) the consummation of any transaction(including, without
limitation, any merger or consolidation) the result of which is that
any "person" or "group" (as defined above), other than one or more
Permitted Holders, becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Stock of Holdings, measured
by voting power rather than number of shares;
(4) the first day on which a majority of the members of the
Board of Directors of Holdings are not Continuing Directors;
(5) Holdings consolidates with, or merges with or into, any
Person, or any Person consolidates with, or merges with or into,
Holdings, in any such event pursuant to a transaction in which any of
the outstanding Voting Stock of Holdings is converted into or
exchanged for cash, securities or other property, other than any such
transaction where the Voting Stock of Holdings outstanding immediately
prior to such transaction is converted into or exchanged for Voting
Stock (other than Disqualified Stock) of the surviving or transferee
Person constituting a majority of the outstanding shares of such
Voting Stock of such surviving or transferee Person immediately after
giving effect to such issuance; or
(6) the Borrower ceases to be a Wholly-Owned Subsidiary of
Holdings.
"Closing Date" means September 20, 1999.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means all of the Pledged Collateral and Pledged
Securities.
"Collateral Agent" means the Administrative Agent in its
capacity as collateral agent for the Banks.
"Commercial Letter of Credit" means any letter of credit or
similar instrument issued for the account of the Bor-
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rower for the benefit of the Borrower or any of its Subsidiaries, for the
purpose of providing the primary payment mechanism in connection with the
purchase of any materials, goods or services by the Borrower or any of its
Subsidiaries in the ordinary course of business of the Borrower or such
Subsidiaries.
"Commitment Commission" has the meaning provided in Section
2.03.
"Common Stock" means the Common Stock, par value $.01 per
share, of Holdings.
"Compliance Certificate" means a certificate issued pursuant
to Section 6.01(f) signed by a chief financial officer, controller, chief
accounting officer or other Authorized Officer of Holdings.
"Consolidated Amortization Expense" for any Person means, for
any period, the consolidated amortization expense of such Person for such
period, determined on a consolidated basis for such Person and its Subsidiaries
in conformity with GAAP.
"Consolidated Depreciation Expense" for any Person means, for
any period, the consolidated depreciation expense of such Person for such
period, determined on a consolidated basis for such Person and its consolidated
Subsidiaries in conformity with GAAP.
"Consolidated EBITDA" for any Person means, for any period,
the difference between (A) the sum of the amounts for such period of (i)
Consolidated Net Income, (ii) Consolidated Tax Expense related to income, (iii)
Consolidated Interest Expense, (iv) Consolidated Amortization Expense, (v)
Consolidated Depreciation Expense, (vi) to the extent deducted in computing
Consolidated Net Income, one-time severance and moving costs incurred by the
Borrower prior to December 31, 1998 as a result of or in connection with the
acquisition of the Borrower and (vii) to the extent deducted in computing
Consolidated Net Income, one-time severance, integration and moving costs
incurred by the Borrower prior to December 31, 1999 as a result of or in
connection with the Weiand Acquisition and the Lunati Acquisition, less (B) the
sum of the amounts for such period of
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(i) interest income and (ii) net gains on sales of assets to the extent
included in Consolidated Net Income, whether or not extraordinary (excluding
sales in the ordinary course of business) and other extraordinary gains, all as
determined on a consolidated basis for such Person and its consolidated
Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" for any Person shall means,
for any period, the sum of (x) total interest expense (including that
attributable to Capital Leases in accordance with GAAP) and (y) total cash
dividends paid on any preferred stock, in each case of such Person and its
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness and preferred stock of such Person and its Subsidiaries,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, but excluding, however, any amortization of deferred financing
costs, all as determined on a consolidated basis for such Person and its
consolidated Subsidiaries in accordance with GAAP. For purposes of clause (y)
above, dividend requirements shall be increased to an amount representing the
pretax earnings that would be required to cover such dividend requirements;
accordingly, the increased amount shall be equal to such dividend requirements
multiplied by a fraction, the numerator of which is such dividend requirement
and the denominator of which is 1 minus the applicable actual combined Federal,
state, local and foreign income tax rate of such Person and its subsidiaries
(expressed as a decimal), on a consolidated basis, for the fiscal year
immediately preceding the date of the transaction giving rise to the need to
calculate Consolidated Interest Expense.
"Consolidated Net Income" for any Person means, for any
period, the net income (or loss) of such Person and its Subsidiaries on a
consolidated basis for such period taken as a single accounting period
determined on a consolidated basis for such Person and its consolidated
Subsidiaries in conformity with GAAP; provided that there shall be excluded (i)
the income (or loss) of any other Person (other than consolidated Subsidiaries
of such Person) in which any third Person (other than such Person or any of its
consolidated Subsidiaries) has a joint interest, except to the extent of the
amount of dividends
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or other distributions actually paid to such Person or any of its Subsidiaries
by such other Person during such period, (ii) the income (or loss) of any other
Person accrued prior to the date it becomes a consolidated Subsidiary of such
Person or is merged into or consolidated with such Person or any of its
consolidated Subsidiaries or such other Person's assets are acquired by such
Person or any of its consolidated Subsidiaries, and (iii) the income of any
consolidated Subsidiary of such Person to the extent that the declaration or
payment of dividends or similar distributions by that consolidated Subsidiary
of that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that consolidated Subsidiary.
"Consolidated Tax Expense" for any Person means, for any
period, the consolidated tax expense of such Person for such period, determined
on a consolidated basis for such Person and its consolidated Subsidiaries in
conformity with GAAP.
"Contingent Obligations" means, as to any Person, without
duplication, any obligation of such Person guaranteeing or intended to
guarantee any Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, any obligation
of such Person, whether or not contingent, (a) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(b) to advance or supply funds (i) for the purchase or payment of any such
primary obligation or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the owner of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business and amounts that are included in
Section 7.16. The amount of any Contingent Obligation shall be deemed to be an
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amount equal to the maximum amount that such Person may be obligated to expend
pursuant to the terms of such Contingent Obligation or, if such Contingent
Obligation is not so limited, the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
"Continuing Directors" means, as of any date of
determination, any member of the Board of Directors of the Borrower who: (1)
was a member of such Board of Directors on the date hereof; 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 Documents" means (i) this Agreement, (ii) each Note,
(iii) each Guarantee and (iv) each Security Document.
"Credit Party" means at all times Holdings, the Borrower and
each Subsidiary thereof that pledges any stock, grants any Lien or issues any
guarantee pursuant to any Credit Document.
"Currency Protection Agreement" shall mean any foreign
exchange contract, currency swap agreement, or other financial agreements or
arrangements designed to protect any Borrower against fluctuations in currency
values.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Deposit Account" means a demand, time, savings, passbook or
like account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
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"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, in each case at the option of the holder thereof), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder thereof, in whole or in part, on or prior to the date on which the
Senior 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 Borrower 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 provided that the
Borrower may not repurchase or redeem any such repurchase or redemption
complies with Section 7.08 hereof.
"Distribution Center" means the distribution center
constructed or to be constructed in Warren County, Kentucky.
"Dividends" has the meaning provided in Section 7.08.
"Documents" means each Credit Document and the Indenture.
"Dollars" means United States Dollars.
"Effective Date" has the meaning provided in Section 11.10.
"Eligible Accounts Receivable" means, as at any applicable
date of determination, the aggregate face amount of the Accounts of the Credit
Parties included in clause (i) of the definition of Account hereunder
(excluding any Accounts set forth in clauses (ii) through (vi) of such
definition), without duplication, in each case less (without duplication) the
aggregate amount of all reserves, limits and deductions with respect to such
Accounts set forth below and less the aggregate amount of all returns,
discounts, claims, rebates, offsets, credits, charges (including warehouseman's
charges) and allowances of any nature with respect to such Accounts (whether or
not reflected on the balance sheet and whether issued, owing, granted
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or outstanding). Unless otherwise approved in writing by the Administrative
Agent in its sole discretion, no individual Account shall be deemed to be an
Eligible Account Receivable if:
(a) the Credit Party does not have legal and valid title to
the Account; or
(b) the Account is not the valid, binding and legally
enforceable obligation of the account debtor subject, as to
enforceability, only to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in effect
affecting the enforceability of creditors' rights generally and (ii)
judicial discretion in connection with the remedy of specific
performance and other equitable remedies; or
(c) the Account arises out of a sale made by a Credit Party
to an Affiliate of such Credit Party; or
(d) the Account or any portion thereof is unpaid (y) more
than 60 days after the original invoice date, with respect to Accounts
the invoice for which provides that payment is due in 30 days or less
from the date of such invoice or (z) more than 90 days after the
original invoice date, with respect to Accounts the invoice for which
provides that payment is due more than 30 days from the date of such
invoice; or
(e) the Account is unpaid more than 30 days after the
original payment due date, with respect to Accounts the invoice for
which provides that payment is due more than 90 days from the date of
such invoice; provided, however, that the aggregate amount of all
invoices providing for payment more than 30 days from the date of the
invoice that may constitute Eligible Accounts Receivable shall not
exceed $1,000,000 at any one time; or
(f) such Account, when aggregated with all other Accounts of
the same account debtor (or any Affiliate thereof), exceeds ten
percent in face value of all Accounts of the Credit Parties then
outstanding (fifteen percent with respect to Accounts to Advance Auto
and
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twelve percent with respect to Accounts of Autozone, Buckeye Sales
Company, Pep Boys and Western Auto), to the extent of such excess; or
(g) (i) the account debtor for such Account is also a
creditor of a Credit Party, to the extent of the amount owed by such
Credit Party to the account debtor, (ii) the Account is subject to any
claim on the part of the account debtor disputing liability under such
Account in whole or in part, to the extent of the amount of such
dispute or (iii) the Account otherwise is or is reasonably likely to
become subject to any right of setoff or any counterclaim, claim or
defense by the account debtor, to the extent of the amount of such
setoff or counterclaim, claim or defense; or
(h) the account debtor for such Account has commenced a
voluntary case under the federal bankruptcy laws, as now constituted
or hereafter amended, or made an assignment for the benefit of
creditors or if a decree or order for relief has been entered by a
court having jurisdiction in the premises in respect of the account
debtor in an involuntary case under the federal bankruptcy laws, as
now constituted or hereafter amended, or if any other petition or
other application for relief under the federal bankruptcy laws has
been filed by or against the account debtor, or if the account debtor
has failed, suspended business, ceased to be solvent, or consented to
or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets or
affairs; or
(i) the Administrative Agent does not have a valid and
perfected first priority security interest in such Account (subject
only to a tax lien being contested in good faith and by appropriate
proceedings and permitted by Section 7.03(a)); or
(j) the sale to the account debtor for such Account is on a
consignment, sale on approval, guaranteed sale or sale-and-return
basis or pursuant to any written agreement requiring repurchase or
return; or
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(k) such Account is from an account debtor (or any Affiliate
thereof) and fifty percent (50%) or more, in face amount, of other
Accounts from either such account debtor or any Affiliate thereof do
not meet the requirements for eligible status set forth in
subparagraph (d) or (e) above, as applicable; or
(l) fifty percent (50%) or more, in face amount, of other
Accounts from the same account debtor for such Account are deemed not
to be Eligible Accounts Receivable hereunder; or
(m) the account debtor for such Account is a foreign
government or any agency, department or institution thereof; or
(n) such Account is an Account a security interest in which
would be subject to the Federal Assignment of Claims Act of 1940, as
amended (31 U.S.C. ss. 3727 et seq.), unless the Credit Party has
assigned the Account to the Administrative Agent in compliance with
the provisions of such Act; or
(o) the account debtor for such Account is outside the
continental United States or incorporated in or conducting
substantially all of its business in any jurisdiction located outside
the continental United States, unless the sale is (i) on letter of
credit or sight draft, guaranty or acceptance terms, in each case
acceptable to the Administrative Agent, (ii) such Account is otherwise
approved by and reasonably acceptable to the Administrative Agent; or
(p) the Administrative Agent determines in good faith in
accordance with its internal credit policies that (i) collection of
the account is insecure or (ii) such Account may not be paid by reason
of the account debtor's financial inability to pay; provided, however,
that any Account referred to in this clause (p) shall not become
ineligible until the Administrative Agent shall have given the Credit
Party three Business Days' advance notice of such determination; or
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(q) the goods giving rise to such Account have not been
shipped or the services giving rise to such Account have not been
performed by a Credit Party or the Account otherwise does not
represent a final sale; or
(r) such Account does not comply in all material respects
with all applicable legal requirements, including, where applicable,
the Federal Consumer Credit Protection Act, the Federal Truth in
Lending Act and Regulation Z of the Board of Governors of the Federal
Reserve System, in each case as amended.
In addition to the foregoing, Eligible Accounts Receivable
includes such Accounts as the Borrower requests and that the Administrative
Agent approves in advance, in writing and in its sole discretion (or if the
aggregate face amount to be approved exceeds $1,500,000 at any one time, the
approval of the Required Banks has been obtained in writing).
"Eligible Inventory" means (A) the gross amount of Inventory
of the Credit Parties, valued at the lower of cost (on a FIFO basis) or market,
which (i) is owned solely by a Credit Party and with respect to which such
Credit Party has good, valid and marketable title; (ii) is stored on property
that is either (a) leased by a Credit Party or (b) owned or leased by a
warehouseman that has contracted with a Credit Party to store Inventory on such
warehouseman's property (provided that with respect to Inventory stored on
property leased by a Credit Party or owned or leased by a warehouseman, such
Credit Party shall have delivered to the Administrative Agent an agreement
satisfactory to the Administrative Agent executed by such lessor or
warehouseman); (iii) is subject to a valid, enforceable and first priority Lien
in favor of the Administrative Agent; (iv) is located in the continental United
States; and (v) is not, in the reasonable judgment of the Administrative Agent,
obsolete or slow moving in relation to customary industry practice, and which
otherwise conforms to the requirements for eligibility contained herein; (B)
less the amount of any goods returned or rejected by the Credit Parties'
customers and goods in transit to third parties (other than to the Credit
Parties' agents or warehousemen that comply with clause (A)(ii)(b) above); and
(C) less the amount of any re-
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serves for special order goods or otherwise. In addition to the foregoing,
Eligible Inventory shall include such items of the Credit Parties' Inventory as
the Borrower shall request and that the Administrative Agent approves in
advance, in writing and in its sole discretion (or if the aggregate amount to
be approved exceeds $1,000,000 at any one time, the approval of the Required
Banks has been obtained).
"Employee Benefit Plan" shall mean an employee benefit plan
(as defined in Section 3(3) of ERISA) that is maintained or contributed to by
any ERISA Entity or with respect to which a Credit Party could incur liability.
"Environmental Laws" means the common law and all applicable
federal, state, local and foreign laws or regulations, codes, orders, decrees,
judgments or injunctions issued, promulgated, approved or entered thereunder,
now or hereafter in effect, relating to pollution or protection of public or
employee health and safety or the environment, including, without limitation,
laws relating to (i) emissions, discharges, releases or threatened releases of
Hazardous Materials, into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata),
(ii) the manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of Hazardous Materials, and (iii)
underground and aboveground storage tanks, and related piping, and emissions,
discharges, releases or threatened releases therefrom.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Entity" shall mean any member of an ERISA Group.
"ERISA Event" shall mean (a) any "reportable event," as
defined in Section 4043 of ERISA or the regulations issued thereunder with
respect to a Pension Plan (other than an event for which the 30-day notice
period is waived); (b) the existence with respect to any Pension Plan of an
"accumulated funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived, the failure to make
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by its due date a required installment under Section 412(m) of the Code with
respect to any Pension Plan or the failure to make any required contribution to
a Multiemployer Plan; (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 Pension Plan; (d) the incurrence by any ERISA
Entity of any liability under Title IV of ERISA with respect to the termination
of any Pension Plan; (e) the receipt by any ERISA Entity from the PBGC or a
plan administrator of any notice relating to an intention to terminate any
Pension Plan or to appoint a trustee to administer any Pension Plan, or the
occurrence of any event or condition which could reasonably be expected to
constitute grounds under ERISA for the termination of or the appointment of a
trustee to administer, any Pension Plan; (f) the incurrence by any ERISA Entity
of any liability with respect to the withdrawal or partial withdrawal from any
Pension Plan or Multiemployer Plan; (g) the receipt by an ERISA Entity of any
notice, or the receipt by any Multiemployer Plan from any ERISA Entity 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; (h) the failure to
make any payment or contribution to any Pension Plan or the making of any
amendment to any Pension Plan which could result in the imposition of a lien or
the posting of a bond or other security; or (i) the occurrence of a nonexempt
prohibited transaction (within the meaning of Section 4975 of the Code or
Section 406 of ERISA) which could result in liability to a Credit Party.
"ERISA Group" shall mean each Credit Party and all members of
a controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which together with a Credit Party, are
treated as a single employer under Section 414 of the Code.
"Eurodollar Rate" means with respect to each Interest Period
for a Reserve Adjusted Eurodollar Loan, (i) the arithmetic average (rounded to
the nearest 1/100 of 1%) of the offered quotation to first-class banks in the
interbank Eurodollar market by each of the Reference Banks for dollar deposits
of amounts in same day funds comparable to the outstanding princi-
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pal amount of the Reserve Adjusted Eurodollar Loan of such Reference Bank for
which an interest rate is then being determined with maturities comparable to
the Interest Period to be applicable to such Eurodollar Loan, determined as of
10:00 A.M. (New York time) on the date which is two Business Days prior to the
commencement of such Interest Period divided (and rounded upward to the next
whole multiple of 1/16 of 1%) by (ii) a percentage equal to 100% minus the then
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) applicable to
any member bank of the Federal Reserve System in respect of Eurocurrency
liabilities as defined in Regulation D (or any successor category of
liabilities under Regulation D); provided that if the Reference Banks fail to
provide the Administrative Agent with its aforesaid rate, then the Eurodollar
Rate shall be determined based on the rate or rates provided to the
Administrative Agent by a bank designated by the Required Banks.
"Evaluation Materials" means the Offering Memorandum, this
Agreement and all documents delivered to the Banks on or prior to the Closing
Date pursuant to this Agreement.
"Event of Default" has the meaning provided in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Federal Funds Rate" means on any one day the weighted
average of the rate on overnight Federal funds transactions with members of the
Federal Reserve System only arranged by Federal funds brokers as published as
of such day by the Federal Reserve Bank of New York, or if not so published,
the rate then used by first class banks in extending overnight loans to other
first class banks.
"Financing Proceeds" means the cash (other than Net Cash
Proceeds) received by Holdings, the Borrower and/or any of their respective
Subsidiaries, directly or indirectly, from any financing transaction of
whatever kind or nature, including without limitation from any incurrence of
Indebtedness, any
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mortgage or pledge of an asset or interest therein (including a transaction
which is the substantial equivalent of a mortgage or pledge), from the sale of
tax benefits, from a lease to a third party and a pledge of the lease payments
due thereunder to secure Indebtedness, from a joint venture arrangement, from
an exchange of assets and a sale of the assets received in such exchange, or
any other similar arrangement or technique whereby the Borrower or any of their
respective Subsidiaries obtains Cash in respect of an asset, net of direct
costs associated therewith.
"Foreign Plan" shall mean any employee benefit plan, program,
policy, arrangement or agreement maintained or contributed to by, or entered
into with, a Credit Party with respect to employees employed outside the United
States.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time it being understood and
agreed that determinations in accordance with GAAP for purposes of Section 7,
including defined terms as used therein, are subject (to the extent provided
therein) to Section 11.07(a).
"General Security Agreement" means the Amended and Restated
Security Agreement executed and delivered by Holdings, the Borrower and each
Subsidiary substantially in the form of Exhibit D hereto, except for such
changes as shall have been approved by the Collateral Agent, as the same may be
amended, supplemented or otherwise modified from time to time in accordance
with its terms and the terms hereof.
"Government Acts" shall have the meaning provided in Section
1.13(i).
"Governmental Authority" shall mean any federal, state,
local, foreign or other governmental or administrative body, instrumentality,
department or agency or any court, tribunal, administrative hearing body,
arbitration panel, commission, or other similar dispute-resolving panel or
body.
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"Guarantees" means and includes, once executed and delivered,
the Holdings Guarantee and the Subsidiary Guarantees.
"Guarantor" for purposes of this Agreement means Holdings or
any of the Subsidiary Guarantors.
"Hazardous Materials" has the meaning assigned to that term
in Section 5.23(e).
"Holdings" means KHPP Holdings, Inc., a Delaware corporation.
"Holdings Guarantee" means the Guarantee executed and
delivered by Holdings substantially in the form of Exhibit C-1, except for such
changes as shall have been approved by the Administrative Agent, as the same
may after its execution be amended, supplemented or otherwise modified from
time to time in accordance with its terms and the terms hereof.
"Holley Purchase Agreement" means the Stock Purchase
Agreement dated as of April 21, 1998 among the Borrower, Holley Performance
Products Inc. and Coltec Industries Inc.
"Hooker Purchase Agreement" means the Stock Purchase
Agreement dated as of May 5, 1999 among, inter alia, the Borrower and Hooker
Industries, Inc.
"Indebtedness" of any Person means, without duplication, (i)
all indebtedness of such Person for borrowed money, (ii) the deferred purchase
price of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of
all letters of credit issued for the account of such Person and, without
duplication, all unreimbursed drafts drawn thereunder, (iv) all Indebtedness of
a second Person secured by any Lien on any property owned by such first Person,
whether or not such Indebtedness has been assumed by such first Person, (v) all
Capitalized Lease Obligations of such Person, (vi) all obligations of such
Person to pay a specified purchase price for goods or services whether or not
delivered or accepted, i.e., take-or-pay and similar obligations, (vii) all
obligations of
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such Person under Interest Rate Agreements or Currency Protection Agreements
and (viii) all Contingent Obligations of such Person; provided that
Indebtedness shall not include trade payables, accrued expenses, accrued
dividends, stock redemption payments, royalty payments, accrued retirees or
employees benefits, deferred taxes and accrued income taxes, in each case
arising in the ordinary course of business. For purposes of clause (iv) above
(where the relevant Indebtedness has not been assumed by such first Person),
the amount of Indebtedness is equal to the lesser of the amount of Indebtedness
secured or the fair market value of the property subject to the Lien.
"Indenture" means the Indenture dated as of September 20,
1999 between the Borrower and State Street Bank and Trust Company, as Trustee,
in the form previously delivered to the Agents, and any related documents
pursuant to which the Borrower will issue the Senior Notes.
"Indosuez" means Credit Agricole Indosuez.
"Interest Margin" shall mean, in respect of (i) Base Rate
Loans, 1.00% and (ii) Reserve Adjusted Eurodollar Loans, 2.50%.
"Interest Period" means, with respect to any Reserve Adjusted
Eurodollar Loan, the interest period applicable thereto, as determined pursuant
to Section 1.09.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement,
interest rate futures contract, interest rate option contract or other similar
agreement or arrangement to which the Borrower is a party, designed to protect
the Borrower or any of its Subsidiaries against fluctuations in interest rates.
"Interest Rate Determination Date" means each date for
calculating the Eurodollar Rate for purposes of determining the interest rate
in respect of an Interest Period. The Interest Rate Determination Date shall be
the second Business Day prior to the first day of the related Interest Period
for a Reserve Adjusted Eurodollar Loan.
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"Inventory" means all of the inventory of the Borrower and
its Subsidiaries including without limitation: (i) all raw materials, work in
process, parts, components, assemblies, supplies and materials used or consumed
in their business; (ii) all goods, wares and merchandise, finished or
unfinished, held for sale or lease or leased or furnished or to be furnished
under contracts of service; and (iii) all goods returned or repossessed by the
Borrower or its Subsidiaries.
"Issuing Bank" means the Bank that agrees to issue a Letter
of Credit, determined as provided in Section 1.13(c).
"Kohlberg" shall mean Kohlberg & Co., L.L.C., a Delaware
limited liability company.
"Lease" means any lease, sublease, franchise agreement,
license, occupancy or concession agreement.
"Letter of Credit" or "Letters of Credit" means (i) Standby
Letter or Letters of Credit and (ii) Commercial Letter or Letters of Credit, in
each case, issued or to be issued by Issuing Banks for the account of any
Borrower pursuant to Section 1.13.
"Letter of Credit Participation" has the meaning assigned to
that term in Section 1.13(a).
"Letters of Credit Usage" means, as at any date of
determination, the sum of (i) the maximum aggregate amount that is or at any
time thereafter may become available under all Letters of Credit then
outstanding plus (ii) the aggregate amount of all drawings under Letters of
Credit honored by all Issuing Banks and not theretofore reimbursed by the
Borrower; provided, however, the Letters of Credit Usage of an Issuing Bank
shall be deemed to be only such portion of the Letters of Credit Usage of such
Issuing Bank which Banks have not bought by participation pursuant to Section
1.13(a).
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien, claim, hypothecation, assignment for security or charge of
any kind (including any agreement to give any of the foregoing, any conditional
sale or other title retention
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agreement or any lease in the nature thereof) and, to the extent not
co-extensive with such definitions, the definition of "Lien" or "Liens" in the
Security Documents.
"Loan Facility" means the credit facility evidenced by the
Total Revolving Loan Commitment.
"Lunati" means Lunati Cams, Inc., LMT Motor Sports
Corporation and Lunati & Taylor Pistons, Incorporated.
"Lunati Acquisition" means the acquisition of all of the
capital stock of Lunati by the Borrower for total consideration, including fees
and expenses, of approximately $20,000,000.
"Lunati Purchase Agreement" means the Stock Purchase
Agreement dated as of October 26, 1998 among, inter alia, the Borrower and
Lunati Cams, Inc., LMT Motor Sports Corporation and Lunati & Taylor Pistons,
Incorporated.
"Management Stock" means the Common Stock held by the
Management Stockholders or their permitted transferees.
"Management Stockholder" means the members of management of
Holdings and its Subsidiaries who are parties to a stockholders agreement with
Holdings and the other parties named therein or who otherwise have agreed to be
bound by the provisions thereof.
"Materially Adverse Effect" means (i) any materially adverse
effect (both before and after giving effect to the transactions contemplated
hereby and by the other Documents) with respect to the operations, business,
properties, assets, nature of assets, liabilities (contingent or otherwise),
condition (financial or otherwise) or prospects of Holdings and its
Subsidiaries, taken as a whole, (ii) any fact or circumstance (whether or not
the result thereof would be covered by insurance) as to which singly or in the
aggregate there is a reasonable likelihood of (w) a materially adverse change
described in clause (i) with respect to Holdings and its Subsidiaries, taken as
a whole, (x) the inability of any Credit Party to perform in any material
respect its Obligations hereunder or under any of
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the other Documents or the inability of the Lenders to enforce in any material
respect their rights purported to be granted hereunder or under any of the
other Documents or the Obligations (including realizing on the Collateral), or
(y) a materially adverse effect on the ability to effect (including hindering
or unduly delaying) the transactions contemplated hereby and by the Documents
on the terms contemplated hereby and thereby or (iii) any fact or circumstance
relating to any Credit Party as to which singly or in the aggregate there is a
reasonable likelihood of any significant liability on the part of the Banks or
the Administrative Agent.
"Maturity Date" shall mean the Revolving Maturity Date.
"Minimum Borrowing Amount" means $250,000.
"Multiemployer Plan" shall mean a multiemployer plan within
the meaning of Section 4001(a)(3) of ERISA (i) to which any ERISA Entity is
then making or accruing an obligation to make contributions, (ii) to which any
ERISA Entity has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be an ERISA Entity
during such five year period, or (iii) with respect to which a Credit Party is
reasonably likely to incur liability.
"Net Cash Proceeds" means, with respect to any Asset Sale,
the aggregate cash payments received by the Borrower and/or any of its
Subsidiaries, as the case may be, from such Asset Sale, net of direct expenses
of sale; provided that, with respect to taxes, expenses shall only include
taxes to the extent that taxes are payable in cash in the current year or in
the next succeeding year with respect to the current year as a result of such
Asset Sale; and provided, further, that Net Cash Proceeds shall not include any
amounts or items included in the definition of Financing Proceeds or Net
Financing Proceeds (including in any proviso appearing therein or exclusion
therefrom).
"Net Financing Proceeds" means Financing Proceeds, net of
direct expenses of the transaction and net of taxes (including income taxes)
currently paid or payable in cash as a
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result thereof in the current year or in the next succeeding year with respect
to the current year as a result of the transaction generating Net Financing
Proceeds.
"Notice of Borrowing" has the meaning provided in Section
1.03.
"Notice of Continuance/Conversion" has the meaning provided
in Section 1.06 and shall be substantially in the form of Exhibit G hereto.
"Obligations" means all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time existing,
owing to the Administrative Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document or secured by any of the Security
Documents.
"Offering Memorandum" means the offering circular dated
September 15, 1999 relating to the Senior Notes.
"Officers' Certificate" means, as applied to any corporation,
a certificate executed on behalf of such corporation by its Chairman of the
Board (if an officer) or its President or one of its Vice Presidents and by its
Chief Financial Officer or its Treasurer or any Assistant Treasurer; provided
that every Officers' Certificate with respect to compliance with a condition
precedent to the making of any Loan hereunder shall include, on behalf of
Holdings or the Borrower, (i) a statement that the officers making or giving
such Officers' Certificate have read such condition and any definitions or
other provisions contained in this Agreement relating thereto, (ii) a statement
that, in the opinion of the signers, they have made or have caused to be made
such examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such condition has been complied with,
and (iii) a statement as to whether, in the opinion of the signers, such
condition has been complied with.
"Officers' Solvency Certificate" means the Officers' Solvency
Certificate in the form set forth as Exhibit K hereto.
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"Operating Lease" of any Person, shall mean any lease
(including, without limitation, leases which may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) by such Person as
Lessee which is not a Capital Lease.
"Original Credit Agreement" has the meaning provided in the
recitals.
"PBGC" shall mean the United States Pension Benefit Guaranty
Corporation or any successor thereto.
"Pending Acquisitions" means the potential acquisition by the
Borrower or any of its Subsidiaries of Biggs Manufacturing, Inc., Nitrous Oxide
Systems, Inc. and Earl's Supply Company, Inc.
"Pension Plan" shall mean an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code or
Section 302 of ERISA and is maintained or contributed to by an ERISA or with
respect to which a Credit Party could incur liability.
"Permitted Encumbrances" has the meaning provided in Section
7.03.
"Permitted Holders" means Holdings, Kolhberg, any of their
respective controlled Affiliates, Jeffrey G. King, Robert L. Wineland, James R.
Vance and John H. Nickoloff.
"Person" means any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Pledged Collateral" means all the Pledged Collateral as
defined in each of the Security Agreements.
"Pledged Securities" has the meaning provided in the Security
Agreements.
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"Prior Liens" means Liens which, to the extent permitted by
the provisions of any Security Document, are or may be superior to the Lien of
such Security Document.
"Projected Financial Statements" has the meaning provided in
Section 5.11(c).
"Purchase Agreement" means, collectively, the Holley Purchase
Agreement, the Hooker Purchase Agreement, the Weiand Purchase Agreement, the
Lunati Purchase Agreement, and any purchase agreements entered into in
connection with the Pending Acquisitions.
"Real Property" means all right, title and interest of any
Credit Party or its respective Subsidiaries (including, without limitation, any
leasehold estate) in and to a parcel of real property owned or operated by any
Credit Party together with, in each case, all improvements and appurtenant
fixtures, equipment, personal property, easements and other property and rights
incidental to the ownership, lease or operation thereof.
"Reference Banks" means Indosuez, Citibank, N.A. and Chase
Bank.
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing reserve requirements.
"Regulation T" means Regulation T of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing margin requirements.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing margin requirements.
"Regulation X" means Regulation X of the Board of Governors
of the Federal Reserve System as from time to time in
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effect and any successor to all or a portion thereof establishing margin
requirements.
"Required Banks" shall mean at any time two or more Banks (if
at the time there are at least two Banks) holding at least 51% of the Total
Commitments held by Banks (or, if the Total Commitments shall have been
terminated, Banks holding at least 51% of the outstanding Loans); provided that
for the purposes of Section 4, the requirement that any document, agreement,
certificate or other writing is to be satisfactory to the Required Banks shall
be satisfied if (x) such document, agreement, certificate or other writing was
delivered in its final form to the Banks prior to the Effective Date (or if
amended or modified thereafter, the Administrative Agent has reasonably
determined such amendment or modification not to be material), (y) such
document, agreement, certificate or other writing is satisfactory to the
Administrative Agent and (z) Banks holding more than 33-1/3% of the Total
Commitments held by Banks have not objected in writing to such document,
agreement, certificate or other writing to the Administrative Agent prior to
the Closing Date.
"Reserve Adjusted Eurodollar Loan" means each Loan bearing
interest based on the Eurodollar Rate as provided in Section 1.08(b).
"Revolving Loan Commitment" means, with respect to each Bank,
the amount set forth below such Bank's name on the signature pages hereto
directly below the column entitled "Revolving Loan Commitment," as such amount
may be reduced from time to time pursuant to Sections 2.01, 2.02 and/or 8.
"Revolving Loan Commitment Termination Date" means the
Business Day immediately preceding the Revolving Maturity Date.
"Revolving Loans" has the meaning provided in Section 1.01.
"Revolving Maturity Date" shall mean, with respect to each
Bank, the last Business Day of June 2003.
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"Revolving Note" has the meaning provided in Section 1.05(a).
"SEC" means the Securities and Exchange Commission or any
successor thereto.
"Securities" means any stock, shares, voting trust
certificates, bonds, debentures, options, warrants, notes, or other evidences
of indebtedness, secured or unsecured, convertible, subordinated or otherwise,
or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as
amended.
"Security Agreements" means and includes the General Security
Agreement and any other general security agreements delivered pursuant to
Section 6.15.
"Security Documents" means each of the Security Agreements
and any other documents utilized to pledge as Collateral for the Obligations
any property or assets of whatever kind or nature.
"Senior Notes" has the meaning provided in the recitals.
"Standby Letter of Credit" means any standby letter of credit
or similar instrument issued for the purpose of supporting (i) workers'
compensation liabilities of the Borrower or any of its Subsidiaries, (ii) the
obligations of third-party insurers of the Borrower or any of its Subsidiaries
arising by virtue of the laws of any jurisdiction requiring third-party
insurers to obtain such letters of credit, or (iii) performance, payment,
deposit or surety obligations of the Borrower or any of its Subsidiaries if
required by law or governmental rule or regulation or in accordance with custom
and practice in the industry.
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"State, Local and Foreign Real Property Disclosure
Requirements" means any state or local laws requiring notification of the buyer
of real property, or notification, registration, or filing to or with any state
or local agency, prior to the sale of any real property or transfer of control
of an establishment, of the actual or threatened presence or release into the
environment, or the use, disposal, or handling of Hazardous Materials on, at,
under, or near the real property to be sold or the establishment for which
control is to be transferred.
"Subsidiary" of any Person means and includes (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (excluding stock of any class or classes of such corporation
that might have voting power solely by reason of the happening of any
contingency) is at the time owned by such Person directly or indirectly through
Subsidiaries and (ii) any partnership, association, joint venture or other
entity in which such Person directly or indirectly through Subsidiaries has
more than a 50% equity interest at the time.
"Subsidiary Guarantees" means each subsidiary guarantee
executed and delivered by the Subsidiaries of the Borrower, substantially in
the form of Exhibit C-2, except for such changes as shall have been approved by
the Administrative Agent, as the same may after its execution be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Subsidiary Guarantor" means any Credit Party other than
Holdings that executes and delivers a Subsidiary Guaranty.
"Taxes" has the meaning provided in Section 3.04.
"Test Period" means the four consecutive complete fiscal
quarters of Holdings then last ended.
"Total Revolving Loan Commitments" means the sum of the
Revolving Loan Commitment of each of the Banks.
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"Type" means a Base Rate Loan or Reserve Adjusted Eurodollar
Loan.
"UCC" means the Uniform Commercial Code as in effect in the
State of New York.
"Vested Options" means exercisable options to purchase shares
of Common Stock granted to any Management Stockholder pursuant to Holdings'
stock option plan or any similar plan.
"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.
"Weiand Acquisition" means the acquisition of all of the
capital stock of Weiand Automotive Industries, Inc. by the Borrower for total
consideration, including fees and expenses, of approximately $6,900,000.
"Weiand Purchase Agreement" means the Stock Purchase
Agreement dated as of August 7, 1998 among, inter alia, the Borrower and Weiand
Automotive Industries, Inc.
"Withdrawal Liability" shall mean 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 1 of Subtitle E of Title
IV of ERISA.
"Wholly-Owned Subsidiary" of any Person means any Subsidiary
of such Person to the extent all of the capital stock or other ownership
interests in such Subsidiary, other than directors' or nominees' qualifying
shares, is owned directly or indirectly by such Person.
"Written" or "in writing" means any form of written
communication or a communication by means of telex, telecopier device,
telegraph or cable.
"Year 2000 Problem" means any significant risk that computer
hardware or software used in the Borrower's or its Subsidiaries' businesses or
operations will not, in the case of dates or time periods occurring after
December 31, 1999, func-
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tion at least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000.
SECTION 10. The Agents.
10.01. Appointment. Each Bank hereby irrevocably designates
and appoints Indosuez as Administrative Agent (such term to include the
Administrative Agent acting as Collateral Agent or in any other representative
capacity under any other Credit Document) and Comerica Bank as Co-Agent, of
such Bank to act as specified herein and in the other Credit Documents and each
such Bank hereby irrevocably authorizes the Agents to take such action on its
behalf under the provisions of this Agreement and the other Credit Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Agents by the terms of this Agreement and the other Credit Documents,
together with such other powers as are reasonably incidental thereto. The
Agents agree to act as such upon the express conditions contained in this
Section 10. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agents shall not have any duties or responsibilities, except
those expressly set forth herein or in the other Credit Documents, or any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Agents. The provisions of this Section
10 are solely for the benefit of the Agents and the Banks, and no Credit Party
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, the Agents
shall act solely as agents of the Banks and do not assume and shall not be
deemed to have assumed any obligation or relationship of agency or trust with
or for any Credit Party. The Borrower hereby agrees to pay the Administrative
Agent an annual agency fee of $100,000.
10.02. Delegation of Duties. The Agents may execute any of
their duties under this Agreement or any other Credit Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. No Agent shall be responsible
for the negligence or misconduct of any agents or attorneys-in-fact selected
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by it with reasonable care except to the extent otherwise required by Section
10.03.
10.03. Exculpatory Provisions. None of the Agents nor any of
their officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement (except for its or
such Person's own gross negligence or willful misconduct) or (ii) responsible
in any manner to any of the Banks for any recitals, statements, representations
or warranties by any Credit Party or any of its respective officers contained
in this Agreement, any other Document or in any certificate, report, statement
or other document referred to or provided for in, or received by such Agent
under or in connection with, this Agreement or any other Document or for any
failure of any Credit Party or any Subsidiary of a Credit Party or any of their
respective officers to perform its obligations hereunder or thereunder. No
Agent shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement, or to inspect the properties, books or records
of any Credit Party or any Subsidiary of a Credit Party. No Agent shall be
responsible to any Bank for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Credit
Document or for any representations, warranties, recitals or statements made
herein or therein or made in any written or oral statement or in any financial
or other statements, instruments, reports, certificates or any other documents
in connection herewith or therewith furnished or made by such Agent to the
Banks or by or on behalf of any Credit Party to such Agent or any Bank or be
required to ascertain or inquire as to the performance or observance of any of
the terms, conditions, provisions, covenants or agreements contained herein or
therein or as to the use of the proceeds of the Loans or of the existence or
possible existence of any Default or Event of Default.
10.04. Reliance by the Agents. Each Agent shall be entitled
to rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or
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teletype message, statement, order or other document or conversation believed
by it to be genuine and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Credit Parties), independent accountants and other
experts selected by such Agent. Each Agent shall be fully justified in failing
or refusing to take any action under this Agreement or any other Credit
Document unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate or it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
Each Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement and the other Credit Documents in accordance
with a request of the Required Banks (or to the extent specifically provided in
Section 11.12, all the Banks), and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Banks.
10.05. Notice of Default. No Agent shall be deemed to have
knowledge of the occurrence of any Default or Event of Default, other than a
default in the payment of principal or interest on the Loans hereunder, unless
it has received notice from a Bank or the Borrower or any other Credit Party
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall
give prompt notice thereof to the Banks. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Banks; provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable in best interest of the Banks.
10.06. Non-Reliance on Agent and Other Banks. Each Bank
expressly acknowledges that neither the Agents nor any of their officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it
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and that no act by any Agent hereinafter taken, including any review of the
affairs of any Credit Party or any Subsidiary of a Credit Party, shall be
deemed to constitute any representation or warranty by such Agent to any Bank.
Each Bank represents to each Agent that it has, independently and without
reliance upon such Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Credit Parties and
their respective Subsidiaries and made its own decision to make its Loans
hereunder and enter into this Agreement and the other agreements contemplated
hereby. Each Bank also represents that it will, independently and without
reliance upon any Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement, and to make such investigation as it deems necessary to inform
itself as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Credit Parties and their
respective Subsidiaries. Except for notices, reports and other documents
expressly required to be furnished to the Banks by the Administrative Agent
hereunder, no Agent shall have any duty or responsibility to provide any Bank
with any credit or other information concerning the business, operations,
assets, property, financial and other conditions, prospects or creditworthiness
of the Credit Parties or any of their respective Subsidiaries which may come
into the possession of such Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates. Neither of the Agents nor any Bank
shall be deemed to be a fiduciary or have any fiduciary duty to any other Bank
or any Credit Party.
10.07. Indemnification. The Banks agree to indemnify each
Agent in its capacity as such or in any other representative capacity under any
other Credit Document ratably according to their aggregate Commitments, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, reasonable expenses or disbursements of any
kind whatsoever which may at any time
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(including, without limitation, at any time following the payment of the
Obligations) be imposed on, incurred by or asserted against such Agent in its
capacity as such in any way relating to or arising out of this Agreement or any
other Credit Document, or any documents contemplated by or referred to herein
or the transactions contemplated hereby or any action taken or omitted to be
taken by such Agent under or in connection with any of the foregoing, but only
to the extent that any of the foregoing is not paid by the Credit Parties or
any of their respective Subsidiaries; provided that no Bank shall be liable to
any Agent for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from such Agent's gross negligence or willful
misconduct. If any indemnity furnished to any Agent for any purpose shall, in
the opinion of such Agent, be insufficient or become impaired, such Agent may
call for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished. The
agreements in this Section 10.07 shall survive the payment of all Obligations.
10.08. The Agents in Their Individual Capacities. Each Agent
and its Affiliates may make loans to, accept deposits from and generally engage
in any kind of business with the Credit Parties, their respective Subsidiaries
and other Affiliates of the Borrower as though such Agent were not an Agent
hereunder. With respect to the Loans made by it and all Obligations owing to
it, each Agent shall have the same rights and powers under this Agreement as
any Bank and may exercise the same as though it were not an Agent, and the
terms "Bank" and "Banks" shall include each Agent in its individual capacity.
10.09. Successor Administrative Agent. Upon the acceptance of
any appointment as Administrative Agent and Collateral Agent hereunder by a
successor Agent, the term "Administrative Agent" shall include such successor
administrative agent effective upon its appointment, and the resigning
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent or any of the parties to this Agreement. After the retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
pro-
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visions of this Section 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under this
Agreement.
10.10. Resignation by Administrative Agent. (a) The
Administrative Agent may resign from the performance of all its functions and
duties hereunder at any time by giving 15 Business Days' prior written notice
to the Borrower and the Banks. Such resignation shall take effect upon the
acceptance by a successor Administrative Agent of appointment pursuant to
subsections (b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation of the Administrative
Agent, the Required Banks shall appoint a successor Administrative Agent
acceptable to the Borrower and which shall be an incorporated bank or trust
company or other qualified financial institution with operations in the United
States and total assets of at least $1 billion.
(c) If a successor Administrative Agent shall not have been
so appointed within said 15 Business Day period, the resigning Administrative
Agent with the consent of the Borrower shall then appoint a successor
Administrative Agent (which shall be an incorporated bank or trust company or
other qualified financial institution with operations in the United States and
total assets of at least $1 billion) who shall serve as Administrative Agent
until such time, if any, as the Required Banks appoint a successor
Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed
pursuant to subsection (b) or (c) by the 20th Business Day after the date such
notice of resignation was given by the resigning Administrative Agent, such
Administrative Agent's resignation shall become effective and the Required
Banks shall thereafter perform all the duties of Administrative Agent hereunder
until such time, if any, as the Required Banks appoint a successor
Administrative Agent as provided above.
(e) Notwithstanding anything to the contrary contained in
this Section 10, Indosuez, as Administrative Agent, may transfer its rights and
obligations to perform all of its
<PAGE> 128
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functions and duties hereunder to its parent company or to any Affiliate of it
or its parent company.
10.11. Co-Agent. Notwithstanding anything to the contrary in
this Agreement, the Co-Agent, in such capacity, shall have no obligations,
duties or responsibilities, and shall incur no liabilities, under this
Agreement or any other Document.
SECTION 11. Miscellaneous.
11.01. Payment of Expenses, etc. The Borrower agrees to: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses (x) of the Administrative Agent in
connection with the negotiation, preparation, execution and delivery of the
Credit Documents and the documents and instruments referred to therein and any
amendment, waiver or consent relating thereto (including, without limitation,
the reasonable fees and disbursements of Cahill Gordon & Reindel and local
counsel to the Banks) with prior notice to the Borrower of the engagement of
any counsel and (y) of each of the Banks in connection with the enforcement of
the Credit Documents (including in connection with any "work-out" or other
restructuring of the Borrower's Obligations or in connection with any
bankruptcy, reorganization or similar proceeding with respect to any Credit
Party or its Subsidiaries) and the documents and instruments referred to
therein (including, without limitation, the reasonable fees and disbursements
of counsel for each of the Banks) with prior notice to the Borrower of the
engagement of any counsel and the reasonable fees and expenses of any
appraisers or any consultants or other advisors engaged with prior notice to
the Borrower of any such engagement with respect to environmental or other
matters; (ii) pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent or Indosuez in connection with the assignment or attempted
assignment to any other Person of all or any portion of Indosuez's interest
under this Agreement pursuant to Section 11.04 incurred prior to 120 days
following the Closing Date; (iii) pay and hold each of the Banks harmless from
and against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save each of the Banks harmless from and
against any and
<PAGE> 129
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all liabilities with respect to or resulting from any delay or omission (other
than to the extent attributable to such Bank) to pay such taxes; and (iv)
indemnify each Bank, its officers, directors, employees, representatives and
agents from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses (including, without limitation, any
and all losses, liabilities, claims, damages or expenses arising under
Environmental Laws) incurred by any of them as a result of, or arising out of,
or in any way related to the entering into and/or performance of any Credit
Document or the use of the proceeds of any Revolving Loans hereunder or the
consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the documented reasonable fees and disbursements
of counsel incurred by any of them (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified).
11.02. Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance
of an Event of Default, each Bank is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind to
any Credit Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general
or special) and any other Indebtedness at any time held or owing by such Bank
(including, without limitation, by branches and agencies of such Bank wherever
located) to or for the credit or the account of any Credit Party against and on
account of the Obligations and liabilities of such Credit Party to such Bank
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations of such Credit Party purchased
by such Bank pursuant to Section 11.06(b), and all other claims of any nature
or description arising out of or connected with this Agreement or any other
Credit Document, irrespective of whether or not such Bank shall have made any
demand hereunder and although said Obligations, liabilities or claims, or any
of them, shall be contingent or unmatured.
<PAGE> 130
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11.03. Notices. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telex, telecopier or cable communication) and mailed,
telexed, telecopied, cabled, hand delivered, if to any Credit Party, to:
Holley Performance Products Inc.
P.O. Box 10360
Bowling Green, Kentucky 42102
Telecopy No.: (502) 745-9545
Attention: Robert L. Wineland
With copies to:
Kohlberg & Co.
111 Radio Circle
Mt. Kisco, NY 10549
Telecopy No.: (914)-241-7476
Attention: Christopher Lacovara
Hunton & Williams
NationsBank Plaza
Suite 4100
600 Peachtree Street N.E.
Atlanta, GA 30308-2216
Telecopy No.: (404) 888-4190
Attention: Adam Salassi, Esq.
if to any Bank, at its address specified for such Bank on Annex II hereto; or,
at such other address as shall be designated by any party in a written notice
to the other parties hereto. All such notices and communications shall, when
mailed, be effective upon receipt, or when telexed, telecopied, or cabled or
sent by overnight courier, be effective when delivered to the cable company or
overnight courier, as the case may be, or when sent by telex or telecopier,
except that notices and communications to the Administrative Agent shall not be
effective until received by the Administrative Agent.
11.04. Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto, all future holders of the
<PAGE> 131
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Notes, and their respective successors and assigns; provided that no Credit
Party may assign or transfer any of its interests hereunder without the prior
written consent of all of the Banks in their sole discretion; and provided,
further, that the rights of each Bank to transfer, assign or grant
participations in its rights and/or obligations hereunder shall be limited as
set forth below in this Section 11.04; provided that nothing in this Section
11.04 shall prevent or prohibit any Bank, without the consent of the
Administrative Agent, from (i) pledging its Loans hereunder to a Federal
Reserve Bank in support of borrowings made by such Bank from such Federal
Reserve Bank or, with respect to any bank that is a fund that invests in bank
loans, pledging all or any portion of its interests, rights and obligations
under this Agreement (including all or a portion of the Loans owing to it) to
any trustee or any other representative of holders of obligations owed or
securities issued by such fund as security for such obligations or securities,
and (ii) subject to Section 11.04(b)(B), granting participations in or
assignments of all or a portion of such Bank's Loans, Notes and/or Commitments
hereunder (y) to its parent company and/or to any Affiliate of such Bank that
is at least 50% owned by such Bank or its parent company or to an Approved Fund
of any Bank, (z) to an entity managed by a Person referred to in Section
11.04(a)(ii)(y).
(b) Each Bank shall have the right to transfer, assign or
grant participations in all or any part of its remaining Loans, Notes and/or
Commitments hereunder on the basis set forth below in this clause (b). Each
Bank may furnish any information concerning the Borrower in the possession of
such Bank from time to time to assignees and participants (including
prospective assignees and participants).
(A) Assignments. Each Bank, with the written consent of the
Administrative Agent, which consent shall not be unreasonably withheld
or delayed, which shall be evidenced on the notice in the form of
Exhibit E-1 hereto, may assign pursuant to an Assignment and
Assumption Agreement substantially in the form of Exhibit E-2 hereto
all or a portion of its Revolving Loans, Revolving Notes and/or
Revolving Loan Commitments hereunder pursuant to this clause (b)(A) to
(x) one or more Banks or (y) one or
<PAGE> 132
-126-
more commercial banks, funds or other financial or lending
institutions; provided that any such assignment pursuant to this
clause (y) shall be in an amount equal to at least $1,000,000 or such
Bank's remaining Revolving Loans, Revolving Notes or Revolving Loan
Commitments. Any assignment pursuant to this clause (b)(A) will become
effective no later than five Business Days after the Administrative
Agent's receipt of (i) a written notice in the form of Exhibit H-1
hereto from the assigning Bank and the assignee Bank and (ii) a
processing and recordation fee of $3,500 from the assigning Bank in
connection with the Administrative Agent's recording of such sale,
assignment, transfer or negotiation; provided that such fee shall only
be payable if the assignment is between a Bank and a party that is not
a Bank, a Bank's parent or its Affiliate prior to the assignment. If
requested, the Borrower shall issue new Notes to the assignee in
conformity with Section 1.05 and the assignor shall return the old
Revolving Notes, if any, to the Borrower. Upon the effectiveness of
any assignment in accordance with this clause (b)(A), the assignee
will become a "Bank" for all purposes of this Agreement and the other
Credit Documents and, to the extent of such assignment, the assigning
Bank shall be relieved of its obligations hereunder with respect to
the Revolving Loans, Revolving Notes or Revolving Loan Commitments
being assigned. The Administrative Agent shall maintain at its address
specified in Annex II hereto a copy of each Assignment Agreement
delivered to and accepted by it and a register in which it shall
record the names and addresses of the Banks and the Commitment of, and
principal amount of the Loans owing to, each Bank from time to time
(the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent demonstrable error, and the Borrower,
the Administrative Agent and the Banks may treat each Person whose
name is recorded in the Register as a Bank hereunder for all purposes
of this Agreement. The Register shall be available for inspection by
the Borrower, the Administrative Agent or any Bank at any reasonable
time and from time to time upon reasonable prior notice.
<PAGE> 133
-127-
(B) Participations. Each Bank may transfer, grant or assign
participations in all or any part of such Bank's Revolving Loans,
Revolving Notes and/or Revolving Loan Commitments hereunder pursuant
to this clause (b)(B) to any Person; provided that (i) such Bank shall
remain a "Bank" for all purposes of this Agreement and the transferee
of such participation shall not constitute a Bank hereunder and (ii)
no participant under any such participation shall have rights to
approve any amendment to or waiver of this Agreement or any other
Credit Document except to the extent such amendment or waiver would
(x) extend the scheduled final maturity date of any of the Revolving
Loans, Revolving Notes or Revolving Loan Commitments in which such
participant is participating or (y) reduce the principal amount,
interest rate or fees applicable to any of the Revolving Loans,
Revolving Notes or Revolving Loan Commitments in which such
participant is participating or postpone the payment of any interest
or fees or (z) release all or substantially all of the Collateral
(except as expressly permitted by the Credit Documents). In the case
of any such participation, the participant shall not have any rights
under this Agreement or any of the other Credit Documents (the
participant's rights against the granting Bank in respect of such
participation to be those set forth in the agreement with such Bank
creating such participation) and all amounts payable by the Borrower
hereunder shall be determined as if such Bank had not sold such
participation; provided that such participant shall be considered to
be a "Bank" for purposes of Sections 11.02 and 11.06(b).
11.05. No Waiver; Remedies Cumulative. No failure or delay on
the part of the Administrative Agent or any Bank in exercising any right, power
or privilege hereunder or under any other Credit Document and no course of
dealing between any Credit Party and the Administrative Agent or any Bank shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power, or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights and remedies
herein ex-
<PAGE> 134
-128-
pressly provided are cumulative and not exclusive of any rights or remedies
which the Agents or any Bank would otherwise have. No notice to or demand on
any Credit Party in any case shall entitle any Credit Party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agents or the Banks to any other or further action
in any circumstances without notice or demand.
11.06. Payments Pro Rata. (a) The Administrative Agent agrees
that promptly after its receipt of each payment from or on behalf of any Credit
Party in respect of any Obligations of such Credit Party, it shall distribute
such payment to the Banks pro rata based upon their respective shares, if any,
of the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security,
by the exercise of the right of setoff or banker's lien, by counterclaim or
cross action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans, of a sum which with respect to the related sum or sums received
by other Banks is in a greater proportion than the total of such Obligations
then owed and due to such Bank bears to the total of such Obligations then owed
and due to all of the Banks immediately prior to such receipt, then such Bank
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Banks an interest in the Obligations of the respective
Credit Party to such Banks in such amount as shall result in a proportional
participation by all of the Banks in such amount; provided that if all or any
portion of such excess amount is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
11.07. Calculations; Computations. (a) The financial
statements to be furnished to the Banks pursuant hereto shall be made and
prepared in accordance with GAAP consistently applied throughout the periods
involved (except as set forth in the notes thereto or as otherwise disclosed in
writing by Bor-
<PAGE> 135
-129-
rower to the Banks); provided that, except as otherwise specifically provided
herein, all computations determining compliance with Section 7 and all
definitions used herein for any purpose shall utilize accounting principles and
policies in effect at the time of the preparation of, and in conformity with
those used to prepare, the historical financial statements delivered to the
Banks pursuant to Section 4.01(j). In the event any "Accounting Changes" (as
defined below) shall occur and such changes affect financial covenants,
standards or terms in this Agreement, then Borrower and the Administrative
Agent agree to enter into negotiations in order to amend such provisions of
this Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating the financial condition of the
Borrower shall be the same after such Accounting Changes as if such Accounting
Changes had not been made, and until such time as such an amendment shall have
been executed and delivered by the Borrower and the Required Banks, (i) all
financial covenants, standards and terms in this Agreement shall be calculated
and/or construed as if such Accounting Changes had not been made, and (ii) the
Borrower shall prepare footnotes to each Compliance Certificate and the
financial statements required to be delivered hereunder that show the
difference between the financial statements delivered (which reflect such
Accounting Changes) and the basis for calculating financial covenant compliance
(without reflecting such Accounting Changes). "Accounting Changes" means: (i)
changes in accounting principles required by GAAP and implemented by the
Borrower; and (ii) changes in accounting principles recommended by Borrower's
certified public accountants and implemented by Borrower.
(b) All computations of interest and fees hereunder shall be
made on the actual number of days elapsed over a year of 365 days; provided,
however, that all computations of interest on Reserve Adjusted Eurodollar Loans
and Commitment Commission shall be made on the actual number of days elapsed
over a year of 360 days.
11.08. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE. THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK AP-
<PAGE> 136
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PLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN. ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH CREDIT PARTY AND ITS RESPECTIVE SUBSIDIARIES HEREBY IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH
CREDIT PARTY AND ITS RESPECTIVE SUBSIDIARIES FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO CORPORATION SERVICE COMPANY (116 JOHN
STREET, NEW YORK, NEW YORK), ITS AGENT FOR SERVICE OF PROCESS, SUCH SERVICE TO
BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH CREDIT PARTY AND ITS
RESPECTIVE SUBSIDIARIES HEREBY IRREVOCABLY APPOINTS CORPORATION SERVICE
COMPANY, TO SERVE AS ITS AGENT FOR SERVICE OF PROCESS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY
BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY OR ITS RESPECTIVE
SUBSIDIARIES IN ANY OTHER JURISDICTION.
EACH CREDIT PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN THE
CLAUSE ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
11.09. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall be
lodged with the Borrower and the Administrative Agent.
<PAGE> 137
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11.10. Effectiveness. This Agreement shall become effective
on the date (the "Effective Date") on which the Borrower and each of the Banks
shall have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Administrative Agent at the Administrative
Agent's Office or, in the case of the Banks, shall have given to the
Administrative Agent telephonic (confirmed in writing), written, telex or
telecopy notice (actually received) at such office that the same has been
signed and mailed to it. The Administrative Agent will give the Borrower and
each Bank prompt written notice of the occurrence of the Effective Date.
11.11. Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision of
this Agreement.
11.12. Amendment or Waiver. Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination
is in writing signed by the Required Banks; provided that no such change,
waiver, discharge or termination shall, without the consent of each affected
Bank and the Administrative Agent, (i) extend the scheduled final maturity date
of any Loan, or any portion thereof, or reduce the rate or extend the time of
payment of interest thereon or fees or reduce the principal amount thereof, or
increase the Commitments of any Bank or the Total Revolving Loan Commitments,
in each case over the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default shall not constitute a change in the
terms of any Revolving Loan Commitment of any Bank), (ii) release all or
substantially all of the Collateral or Guarantees (except as expressly
permitted by the Credit Documents), (iii) amend, modify or waive any provision
of Section 1.10, 1.11, 3.04, 8.01, 8.05, 10.07, 11.01, 11.02, 11.04, 11.06,
11.07(b) or 11.12, (iv) reduce any percentage specified in, or otherwise
modify, the definition of Required Banks or (v) consent to the assignment or
transfer by any Credit Party of any of its rights and obligations under this
Agreement. No provision of Section 10 may be amended without the written
consent of the Administra-
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tive Agent and no provision of Section 10.11 may be amended without the written
consent of the Co-Agent.
11.13. Survival. All indemnities set forth herein or in the
Original Credit Agreement, including, without limitation, in Section 1.11,
3.04, 10.07 or 11.01 shall survive the execution and delivery of this Agreement
and the making of the Revolving Loans, the repayment of the Obligations and the
termination of the Total Revolving Commitments.
11.14. Domicile of Loans. Each Bank may transfer and carry
its Loans at, to or for the account of any branch office, Subsidiary or
Affiliate of such Bank.
11.15. Waiver of Jury Trial. Each of the parties to this
Agreement hereby irrevocably waives all right to a trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement, the
Credit Documents or the transactions contemplated hereby or thereby.
11.16. Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition
is not permitted by any of such covenants, the fact that it would be permitted
by an exception to, or be otherwise within the limitation of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or condition exists.
11.17. Affirmation of Guarantees. Each Guarantor hereby
acknowledges that it has read this Agreement and consents to the terms hereof
and further confirms and agrees that, notwithstanding the effectiveness of this
Agreement, its obligations under its guarantee under the Original Credit
Agreement shall not be impaired or affected and such guarantee is, and shall
continue to be, in full force and effect as a guarantee with respect to the
Obligations under this Agreement and is hereby confirmed and ratified in all
respects.
<PAGE> 139
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
KHPP HOLDINGS, INC.
By: /s/ Christopher Lacuvara
---------------------------------------
Name: Christopher Lacuvara
Title:
HOLLEY PERFORMANCE PRODUCTS INC.
By: /s/ Robert L. Wineland
---------------------------------------
Name: Robert L. Wineland
Title: Chief Financial Officer
WEIAND AUTOMOTIVE INDUSTRIES, INC.
By: /s/ Robert L. Wineland
---------------------------------------
Name: Robert L. Wineland
Title: Chief Financial Officer
LUNATI CAMS, INC.
By: /s/ Robert L. Wineland
---------------------------------------
Name: Robert L. Wineland
Title: Chief Financial Officer
LMT MOTOR SPORTS CORPORATION
By: /s/ Robert L. Wineland
---------------------------------------
Name: Robert L. Wineland
Title: Chief Financial Officer
<PAGE> 140
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LUNATI & TAYLOR PISTONS, INCORPORATED
By: /s/ Robert L. Wineland
---------------------------------------
Name: Robert L. Wineland
Title: Chief Financial Officer
HOLLEY PERFORMANCE SYSTEMS, INC.
By: /s/ Robert L. Wineland
---------------------------------------
Name: Robert L. Wineland
Title: Chief Financial Officer
HOOKER INDUSTRIES INC.
By: /s/ Robert L. Wineland
---------------------------------------
Name: Robert L. Wineland
Title: Chief Financial Officer
<PAGE> 141
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
CREDIT AGRICOLE INDOSUEZ,
as Administrative Agent and as a Bank
By: /s/ Ian Sugarman
----------------------------------------
Name:
Title:
By: /s/
----------------------------------------
Name:
Title:
Revolving Loan Commitment: $8,300,000.00
<PAGE> 142
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
COMERICA BANK,
as Co-Agent and as a Bank
By: /s/
----------------------------------------
Name:
Title:
Revolving Loan Commitment: $8,000,000.000
<PAGE> 143
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE,
INC., as a Bank
By: /s/
-------------------------------------------
Name:
Title:
By: /s/
-------------------------------------------
Name:
Title:
Revolving Loan Commitment: $5,000,000.00
<PAGE> 144
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
CIBC INC.,
as a Bank
By: /s/
---------------------------------------
Name:
Title:
By: /s/
---------------------------------------
Name:
Title:
Revolving Loan Commitment: $3,700,000.00
<PAGE> 145
Annexes, Schedules and Exhibits are intentionally omitted but
will be provided upon request.
<PAGE> 1
EXHIBIT 12
CALCULATION OF EARNINGS TO FIXED CHARGES
(Dollars in thousands)
<TABLE>
<CAPTION>
Fiscal years ended January 1, May 16, 1998 May 16, 1998 Six Months
---------------------------------- 1998 to May to December, to June 28, Ended June
1994 1995 1996 1997 15, 1998 31, 1998 1998 27, 1999
------- ------- ------- ------- ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Calculation of rental expense fixed charge, as Defined:
Total rental expense $ 848 $ 542 $ 584 $ 603 $ 215 $ 444 $ 69 $ 409
======= ======= ======= ======= ======= ======= ======= =======
One-third of rental expense $ 283 $ 181 $ 195 $ 201 $ 72 $ 148 $ 23 $ 136
======= ======= ======= ======= ======= ======= ======= =======
Earnings, as Defined:
Income before income taxes $10,439 $11,278 $11,758 $ 6,784 $ 1,848 $ 1,653 $ 1,623 $ 3,552
Interest expense -- -- -- -- -- 4,705 900 4,341
One-third of rental expense 283 181 195 201 72 148 23 136
------- ------- ------- ------- ------- ------- ------- -------
Total earnings as defined (A) $10,722 $11,459 $11,953 $ 6,985 $ 1,920 $ 6,506 $ 2,546 $ 8,029
======= ======= ======= ======= ======= ======= ======= =======
Fixed Charges, as Defined:
Interest expense $ -- $ -- $ -- $ -- $ -- $ 4,705 $ 900 $ 4,341
One-third of rental expense 283 181 195 201 72 148 23 136
------- ------- ------- ------- ------- ------- ------- -------
Total fixed charges, as defined (B) $ 283 $ 181 $ 195 $ 201 $ 72 $ 4,853 $ 923 $ 4,477
======= ======= ======= ======= ======= ======= ======= =======
Ratio of Earnings to Fixed
Charges (A)/(B) 37.9 63.4 61.4 34.8 26.8 1.3 2.8 1.8
</TABLE>
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF HOLLEY PERFORMANCE PRODUCTS INC.
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
- ---------------------------------- ---------------
<S> <C>
Holley Performance Systems, Inc. Delaware
Weiand Automotive Industries, Inc. California
Lunati Cams, Inc. Tennessee
LMT Motor Sports Corporation Mississippi
Lunati & Taylor Pistons Mississippi
Hooker Industries, Inc. California
Biggs Manufacturing, Inc. Arizona
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
on the consolidated financial statements of Holley Performance Products Inc.
and Hooker Industries, Inc. and on the combined financial statements of Lunati
& Taylor Pistons, Incorporated, Lunati Cams, Incorporated and LMT Motor Sports
Corporation, and to all references to our firm included in or made a part of
this registration statement of Holley Performance Products Inc., relating to
the registration of its 12 1/4% Senior Notes due 2007, Series B.
/s/ Arthur Andersen
Nashville, Tennessee
October 13, 1999
<PAGE> 1
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
---------
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)
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
HOLLEY PERFORMANCE PRODUCTS INC.
(Exact name of obligor as specified in its charter)
DELAWARE 61-1291482
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1801 RUSSELLVILLE ROAD
BOWLING GREEN, KENTUCKY
(502) 782-2900
(Address of principal executive offices) (Zip Code)
SENIOR NOTES
(Title of indenture securities)
<PAGE> 2
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System,
Washington, D.C., Federal Deposit Insurance Corporation,
Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its
parent, State Street Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as
now in effect, is on file with the Securities and Exchange
Commission as Exhibit 1 to Amendment No. 1 to the Statement
of Eligibility and Qualification of Trustee (Form T-1)
filed with the Registration Statement of Morse Shoe, Inc.
(File No. 22-17940) and is incorporated herein by reference
thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the
trustee to commence business was necessary or issued is on
file with the Securities and Exchange Commission as Exhibit
2 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by
reference thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is
on file with the Securities and Exchange Commission as
Exhibit 4 to the Statement of Eligibility and Qualification
of Trustee (Form T-1) filed with the Registration Statement
of Eastern Edison Company (File No. 33-37823) and is
incorporated herein by reference thereto.
1
<PAGE> 3
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS
IN DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(B) OF THE ACT.
The consent of the trustee required by Section 321(b) of
the Act is annexed hereto as Exhibit 6 and made a part
hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority is annexed hereto as
Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates
to matters peculiarly within the knowledge of the obligor or any underwriter
for the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 8TH DAY OF OCTOBER, 1999.
STATE STREET BANK AND TRUST COMPANY
By: /s/ ANDREW M. SINASKY
-----------------------------------
NAME ANDREW M. SINASKY
TITLE ASSISTANT VICE PRESIDENT
2
<PAGE> 4
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by HOLLEY
PERFORMANCE PRODUCTS INC., of its SENIOR NOTES, we hereby consent that reports
of examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ ANDREW M. SINASKY
-----------------------------------
NAME ANDREW M. SINASKY
TITLE ASSISTANT VICE PRESIDENT
DATED: OCTOBER 8, 1999
3
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking
institution organized and operating under the banking laws of this commonwealth
and 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 and in
accordance with a call made by the Commissioner of Banks under General Laws,
Chapter 172, Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ................................... 1,755,237
Interest-bearing balances ............................................................ 14,209,161
Securities .................................................................................... 13,027,148
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary .................................................. 7,840,413
Loans and lease financing receivables:
Loans and leases, net of unearned income ............................................. 8,134,756
Allowance for loan and lease losses .................................................. 88,351
Allocated transfer risk reserve....................................................... 0
Loans and leases, net of unearned income and allowances .............................. 8,046,405
Assets held in trading accounts ............................................................... 1, 753,511
Premises and fixed assets ..................................................................... 529,247
Other real estate owned ....................................................................... 0
Investments in unconsolidated subsidiaries .................................................... 603
Customers' liability to this bank on acceptances outstanding .................................. 76,078
Intangible assets ............................................................................. 223,035
Other assets .................................................................................. 1,481,250
-----------
Total assets .................................................................................. 48,942,088
===========
LIABILITIES
Deposits:
In domestic offices .................................................................. 13,006,374
Noninterest-bearing ......................................................... 9,462,505
Interest-bearing ............................................................ 3,543,869
In foreign offices and Edge subsidiary ............................................... 19,913,151
Noninterest-bearing ......................................................... 444,189
Interest-bearing ............................................................ 19,468,962
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary .................................................. 10,510,055
Demand notes issued to the U.S. Treasury ...................................................... 0
Trading liabilities .................................................................. 1,151,604
Other borrowed money .......................................................................... 198,253
Subordinated notes and debentures ............................................................. 0
Bank's liability on acceptances executed and outstanding ...................................... 76,078
Other liabilities ............................................................................. 1,291,791
Total liabilities ............................................................................ 46,147,306
-----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ................................................. 0
Common stock .................................................................................. 29,931
Surplus ....................................................................................... 489,739
Undivided profits and capital reserves/Net unrealized holding gains (losses) .................. 2,313,006
Net unrealized holding gains (losses) on available-for-sale securities ............... (25,610)
Cumulative foreign currency translation adjustments ........................................... (12,284)
Total equity capital .......................................................................... 2,794,782
-----------
Total liabilities and equity capital .......................................................... 48,942,088
-----------
</TABLE>
4
<PAGE> 6
I, Rex S. Schuette, 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.
Rex S. Schuette
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.
David A. Spina
Marshall N. Carter
Truman S. Casner
5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF HOLLEY PERFORMANCE PRODUCTS FOR THE SEVEN MONTHS ENDED
DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 7-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> MAY-16-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 2,013
<SECURITIES> 0
<RECEIVABLES> 16,860
<ALLOWANCES> 1,686
<INVENTORY> 4,151
<CURRENT-ASSETS> 44,856
<PP&E> 28,328
<DEPRECIATION> 1,557
<TOTAL-ASSETS> 178,072
<CURRENT-LIABILITIES> 25,294
<BONDS> 0
0
0
<COMMON> 250
<OTHER-SE> 42,789
<TOTAL-LIABILITY-AND-EQUITY> 178,072
<SALES> 64,731
<TOTAL-REVENUES> 64,731
<CGS> 44,269
<TOTAL-COSTS> 58,142
<OTHER-EXPENSES> 231
<LOSS-PROVISION> 397
<INTEREST-EXPENSE> 4,705
<INCOME-PRETAX> 1,653
<INCOME-TAX> 1,034
<INCOME-CONTINUING> 619
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 619
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF HOLLEY PERFORMANCE PRODUCTS FOR THE 6 MONTHS ENDED JUNE
27, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-27-1999
<EXCHANGE-RATE> 1
<CASH> 2,222
<SECURITIES> 0
<RECEIVABLES> 22,566
<ALLOWANCES> 1,753
<INVENTORY> 4,257
<CURRENT-ASSETS> 48,504
<PP&E> 31,188
<DEPRECIATION> 3,642
<TOTAL-ASSETS> 183,607
<CURRENT-LIABILITIES> 27,165
<BONDS> 0
0
0
<COMMON> 250
<OTHER-SE> 44,337
<TOTAL-LIABILITY-AND-EQUITY> 183,607
<SALES> 64,932
<TOTAL-REVENUES> 64,932
<CGS> 42,571
<TOTAL-COSTS> 57,032
<OTHER-EXPENSES> 7,348
<LOSS-PROVISION> 105
<INTEREST-EXPENSE> 4,341
<INCOME-PRETAX> 3,552
<INCOME-TAX> 2,004
<INCOME-CONTINUING> 1,548
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,548
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
12 1/4% SENIOR NOTES DUE 2007
OF
HOLLEY PERFORMANCE PRODUCTS INC.
PURSUANT TO THE PROSPECTUS DATED OCTOBER ___, 1999
- -------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON NOVEMBER ___, 1999 UNLESS EXTENDED (THE "EXPIRATION DATE").
- -------------------------------------------------------------------------------
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal should be
completed, signed, and submitted to the Exchange Agent:
STATE STREET BANK AND TRUST COMPANY
<TABLE>
<CAPTION>
<S> <C> <C>
BY MAIL: BY FACSIMILE FOR BY OVERNIGHT DELIVERY OR HAND:
ELIGIBLE INSTITUTIONS:
State Street Bank State Street Bank
and Trust Company (617) 662-1452 and Trust Company
Corporate Trust Department Corporate Trust Department
P.O. Box 778 2 Avenue de Lafayette, 5th Floor
Boston, MA 02102-0778 Boston, MA 02111-1724
Attention: Ralph Jones Attention: Ralph Jones
</TABLE>
FOR INFORMATION TELEPHONE:
(617) 662-1548
Attention: Ralph Jones
Delivery of this Letter of Transmittal to an address, or transmission
via facsimile to a number, other than as set forth above will not constitute a
valid delivery.
For any questions regarding this Letter of Transmittal or for any
additional information, you may contact the Exchange Agent.
The undersigned hereby acknowledges receipt of the Prospectus dated
October ___, 1999 (as it may be supplemented and amended from time to time, the
"Prospectus") of Holley Performance Products Inc., a Delaware corporation
("Company"), and this Letter of Transmittal (the "Letter of Transmittal"), that
together constitute the Company's offer (the "Exchange Offer") to exchange
$1,000 in principal amount of its 12 1/4% Senior Subordinated Notes due 2007,
Series B (the "Exchange Notes"), which have been registered under the Securities
Act of 1933, as amended (the "Securities Act"), pursuant to a Registration
Statement, for each $1,000 in principal amount of its outstanding 12 1/4% Senior
Subordinated Notes due 2007 (the "Notes"), of which $150,000,000 aggregate
principal amount is outstanding. Capitalized terms used but not defined herein
have the meanings ascribed to them in the Prospectus.
The undersigned hereby tenders the Notes described in Box 1 below (the
"Tendered Notes") pursuant to the terms and conditions described in the
Prospectus and this Letter of Transmittal. The undersigned is the registered
<PAGE> 2
owner of all the Tendered Notes and the undersigned represents that it has
received from each beneficial owner of the Tendered Notes ("Beneficial Owners")
a duly completed and executed form of "Instruction to Registered Holder and/or
Book-Entry Transfer Facility Participant from Beneficial Owner" accompanying
this Letter of Transmittal, instructing the undersigned to take the action
described in this Letter of Transmittal.
Subject to, and effective upon, the acceptance for exchange of the
Tendered Notes, the undersigned hereby exchanges, assigns and transfers to, or
upon the order of, the Company all right, title, and interest in, to and under
the Tendered Notes.
Please issue the Exchange Notes exchanged for Tendered Notes in the
name(s) of the undersigned. Similarly, unless otherwise indicated under "SPECIAL
DELIVERY INSTRUCTIONS" below (see Box 3), please send or cause to be sent the
certificates for the Exchange Notes (and accompanying documents, as appropriate)
to the undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent as the true and lawful agent and attorney in fact of the
undersigned with respect to the Tendered Notes, with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with an
interest), to (i) deliver the Tendered Notes to the Company or cause ownership
of the Tendered Notes to be transferred to, or upon the order of, the Company,
on the books of the registrar for the Notes and deliver all accompanying
evidences of transfer and authenticity to, or upon the order of, the Company
upon receipt by the Exchange Agent, as the undersigned's agent, of the Exchange
Notes to which the undersigned is entitled upon acceptance by the Company of the
Tendered Notes pursuant to the Exchange Offer, and (ii) receive all benefits and
otherwise exercise all rights of beneficial ownership of the Tendered Notes, all
in accordance with the terms of the Exchange Offer.
The undersigned understands that tenders of Notes pursuant to the
procedures described under the caption "The Exchange Offer" in the Prospectus
and in the instructions hereto will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of the
Exchange Offer, subject only to withdrawal of such tenders on the terms set
forth in the Prospectus under the caption "The Exchange Offer-- Withdrawal
Rights." All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and any Beneficial Owner(s), and
every obligation of the undersigned or any Beneficial Owner(s) hereunder shall
be binding upon the heirs, representatives, successors, and assigns of the
undersigned and such Beneficial Owner(s).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign, and transfer the Tendered
Notes and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges, encumbrances, and adverse
claims when the Tendered Notes are acquired by the Company as contemplated
herein. The undersigned and each Beneficial Owner will, upon request, execute
and deliver any additional documents reasonably requested by the Company or the
Exchange Agent as necessary or desirable to complete and give effect to the
transactions contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 2 is true and correct.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that (i) the Exchange Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being acquired by
the undersigned and any Beneficial Owner(s) in the ordinary course of business
of the undersigned and any Beneficial Owner(s), (ii) the undersigned and each
Beneficial Owner are not participating, do not intend to participate, and have
no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes, (iii) except as otherwise disclosed in
writing herewith, neither the undersigned nor any Beneficial Owner is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company,
and (iv) the undersigned and each Beneficial Owner acknowledge and agree that
any person participating in the Exchange Offer with the intention or for the
purpose of distributing the Exchange Notes must comply with the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended
(together with the rules and regulations promulgated thereunder, the "Securities
Act"), in connection with a secondary resale of the Exchange Notes acquired by
such person and cannot rely on the position of the Staff of the Securities and
Exchange Commission (the "Commission")
-2-
<PAGE> 3
set forth in the no-action letters that are discussed in the section of the
Prospectus entitled "The Exchange Offer." In addition, by accepting the Exchange
Offer, the undersigned hereby (i) represents and warrants that, if the
undersigned or any Beneficial Owner of the Notes is a Participating
Broker-Dealer, such Participating Broker-Dealer acquired the Notes for its own
account as a result of market-making activities or other trading activities and
has not entered into any arrangement or understanding with the Company or any
"affiliate" of the Company (within the meaning of Rule 405 under the Securities
Act) to distribute the Exchange Notes to be received in the Exchange Offer, and
(ii) acknowledges that, by receiving Exchange Notes for its own account in
exchange for Notes, where such Notes were acquired as a result of market-making
activities or other trading activities, such Participating Broker-Dealer will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes.
Holders of Notes that are tendering by book-entry transfer to the
Exchange Agent's account at DTC can execute the tender through the DTC Automated
Tender Offer Program ("ATOP"), for which the transaction will be eligible. DTC
participants that are accepting the Exchange Offer must transmit their
acceptance to DTC, which will verify the acceptance and execute a book-entry
delivery to the Exchange Agent's DTC account. DTC will then send an Agent's
Message to the Exchange Agent for its acceptance. DTC participants may also
accept the Exchange Offer prior to the Expiration Date by submitting a Notice of
Guaranteed Delivery through ATOP.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED HEREWITH.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND
COMPLETE "USE OF GUARANTEED DELIVERY" BELOW (Box 4).
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE "USE OF BOOK-ENTRY TRANSFER" BELOW (Box 5).
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
BOX 1
DESCRIPTION OF NOTES
(ATTACH ADDITIONAL SIGNED PAGES, IF NECESSARY)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AGGREGATE
PRINCIPAL AGGREGATE PRINCIPAL
NAMES(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S), CERTIFICATE AMOUNT AMOUNT TENDERED**
EXACTLY AS NAME(S) APPEAR(S) ON NOTE CERTIFICATE(S) NUMBER(S) OF REPRESENTED BY
(PLEASE FILL IN, IF BLANK) NOTES* CERTIFICATE(S)
- --------------------------------------------------------------- -------------------- ------------------- ----------------------
-------------------- ------------------- ----------------------
-------------------- ------------------- ----------------------
-------------------- ------------------- ----------------------
-------------------- ------------------- ----------------------
- --------------------------------------------------------------- -------------------- ------------------- ----------------------
TOTAL
- -------------------------------------------------------------------------------------------------------------------------------
* Need not be completed by persons tendering by book-entry transfer.
** The minimum permitted tender is $1,000 in principal amount of Notes. All
other tenders must be in integral multiples of $1,000 of principal amount.
Unless otherwise indicated in this column, the principal amount of all Note
Certificates identified in this Box 1 or delivered to the Exchange Agent
herewith shall be deemed tendered. See Instruction 4.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-3-
<PAGE> 4
<TABLE>
<CAPTION>
BOX 2
BENEFICIAL OWNERS(S)
- -------------------------------------------------------------- -----------------------------------------------------------
<S> <C> <C>
STATE OF PRINCIPAL RESIDENCE OF EACH PRINCIPAL AMOUNT OF TENDERED NOTES
BENEFICIAL OWNER OF TENDERED NOTES HELD FOR ACCOUNT OF BENEFICIAL OWNER
- -------------------------------------------------------------- -----------------------------------------------------------
- -------------------------------------------------------------- -----------------------------------------------------------
- -------------------------------------------------------------- -----------------------------------------------------------
- -------------------------------------------------------------- -----------------------------------------------------------
- -------------------------------------------------------------- -----------------------------------------------------------
- -------------------------------------------------------------- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
<S> <C>
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
TO BE COMPLETED ONLY IF EXCHANGE NOTES EXCHANGED FOR NOTES AND UNTENDERED NOTES
ARE TO BE SENT TO SOMEONE OTHER THAN THE UNDERSIGNED, OR TO THE UNDERSIGNED AT
AN ADDRESS OTHER THAN THAT SHOWN ABOVE.
Mail Exchange Note(s) and any untendered Notes to:
Name(s):
- -------------------------------------------------------------------------------
(please print)
Address:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(include Zip Code)
Tax Identification or
Social Security No.:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE> 5
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
<S> <C>
BOX 4
USE OF GUARANTEED DELIVERY
(SEE INSTRUCTION 2)
TO BE COMPLETED ONLY IF NOTES ARE BEING TENDERED BY MEANS OF A NOTICE OF
GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
----------------------------------------------
Window Ticket No. (if any):
--------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
---------------------------
Name of Institution that Guaranteed Delivery:
---------------------------------
If Delivered by Book-Entry Transfer:
Account Number with DTC:
---------------------------------------------
Transaction Code Number:
---------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
<S> <C>
BOX 5
USE OF BOOK-ENTRY TRANSFER
(SEE INSTRUCTION 1)
TO BE COMPLETED ONLY IF DELIVERY OF TENDERED NOTES IS TO BE MADE BY BOOK-ENTRY
TRANSFER.
Name of Tendering Institution:
------------------------------------------------
Account Number:
---------------------------------------------------------------
Transaction Code Number:
------------------------------------------------------
- ------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
-5-
<PAGE> 6
BOX 6
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-9
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------- ------------------------------------------------------
x Signature Guarantee
------------------------------------------------- (If required by Instruction 5)
x
------------------------------------------------
(Signature of Registered Holder(s) Authorized Signature
or Authorized Signatory)
Note: The above lines must be signed by the x
registered holder(s) of Notes as their name(s) ---------------------------------------------------
appear(s) on the Notes or by persons (s) authorized Name:
to become registered holder (a) (evidence of such -----------------------------------------------
authorization must be transmitted with this Letter of (please print)
Transmittal). If signature is by a trustee, Title:
executor, administrator, guardian, attorney-in-fact,
officer, or other person acting in a fiduciary or Name of Firm:
representative capacity, such person must set forth ---------------------------------------
his or her full title below. See Instruction 5 (Must be an Eligible Institution as
defined in Instruction 2 )
Name ( s ): Address:
--------------------------------------- --------------------------------------------
Capacity:
----------------------------------------- --------------------------------------------
Street Address:
----------------------------------- --------------------------------------------
(Zip Code)
--------------------------------------------
(Zip Code) Area Code and Telephone Number:
Area Code and Telephone Number:
--------------------------------------------
Dated:
Tax Identification or Social Security Number: ----------------------------------------------
--------------------------------------------
- ------------------------------------------------------- ------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
BOX 7
BROKER-DEALER STATUS
[ ] Check this box if the Beneficial Owner of the Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Notes for
its own account as a result of market-making activities or other trading
activities. If this box is checked, regardless of whether you are
tendering by book-entry transfer through ATOP, an executed copy of this
Letter of Transmittal must be received within three NYSE trading days
after the Expiration Date by Holley Performance Products, Inc., attention
Robert L. Wineland, facsimile (270) 745-9544.
- -------------------------------------------------------------------------------
-6-
<PAGE> 7
<TABLE>
<CAPTION>
<S> <C>
PAYORS NAME: STATE STREET BANK AND TRUST COMPANY
- ------------------------------------ ------------------------------------------------------------------------------------------
NAME: (If joint names, list first and circle the name of the person or entity whose
number you enter in Part 1 below. See instructions if your name has changed.
------------------------------------------------------------------------------------------
ADDRESS:
-------------------------------------------------------------------------------
SUBSTITUTE ---------------------------------------------------------------------------------------
FORM W-9 CITY, STATE AND ZIP CODE:
--------------------------------------------------------------
DEPARTMENT OF THE LIST ACCOUNT NUMBER(S) (OPTIONAL):
TREASURY -----------------------------------------------------
INTERNAL REVENUE SERVICE
PAYER'S REQUEST FOR ------------------------------------------------------------------------------------------
TAXPAYER IDENTIFICATION
NUMBER (TIN) ---------------------------------------
PART 1--PLEASE PROVIDE YOUR TAXPAYOR Social Security Number
IDENTIFICATION NUMBER IN THE BOX AT
RIGHT AND CERTIFY BY SIGNING AND OR
DATING BELOW
---------------------------------------
Taxpayor Identification Number
-------------------------------------- ---------------------------------------------------
PART 2--Check the box if you are NOT subject PART 3--
to backup withholding under the provisions
of section 3406(a)(1)(C) of the Internal
Revenue Code because (1) you have not Awaiting TIN [ ]
been notified that you are subject
to backup withholding as a result of
failure to report all interest or dividends
or (2) the Internal Revenue Service has
notified you that you are no longer subject
to backup withholding.
- -------------------------------------------------------------------------------------------------------------------------------
CERTIFICATION-UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE INFORMATION
PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
SIGNATURE DATE , 1999
-------------------------------------------------------- -------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W- 9 FOR ADDITIONAL
DETAILS.
-7-
<PAGE> 8
HOLLEY PERFORMANCE PRODUCTS INC.
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND NOTES. This Letter of
Transmittal is to be completed by registered Holders of Notes if certificates
representing such Notes are to be forwarded herewith pursuant to the procedures
set forth in the Prospectus under The Exchange Offer -- Procedures for Tendering
Outstanding Notes unless delivery of such certificates is to be made by
book-entry transfer to the Exchange Agent's account maintained by DTC through
ATOP. For a holder to properly tender Notes pursuant to the Exchange Offer, a
properly completed and duly executed copy of this Letter of Transmittal,
including Substitute Form W-9, and any other documents required by this Letter
of Transmittal must be received by the Exchange Agent at its address set forth
herein, and either (i) certificates for Tendered Notes must be received by the
Exchange Agent at its address set forth herein, or (ii) such Tendered Notes must
be transferred pursuant to the procedures for book-entry transfer described in
the Prospectus under the caption "The Exchange Offer--Procedures for Tendering
Outstanding Notes" (and a confirmation of such transfer received by the Exchange
Agent) in each case prior to 5:00 p.m., New York City time, on the Expiration
Date. The method of delivery of certificates for Tendered Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the tendering holder and the delivery will be deemed made
only when actually received by the Exchange Agent. If delivery is by mail,
registered mail with return receipt requested, properly insured, is recommended.
Instead of delivery by mail, it is recommended that the Holder use an overnight
or hand delivery service. In all cases, sufficient time should be allowed to
assure timely delivery. No Letter of Transmittal or Tendered Notes should be
sent to the Company. Neither the Company nor the Exchange Agent is under any
obligation to notify any tendering holder of the Company's acceptance of
tendered Notes prior to the closing of the Exchange Offer.
2. GUARANTEED DELIVERY PROCEDURES. If a registered Holder desires to
tender Notes pursuant to the Exchange Offer and (a) certificates representing
such tendered Notes are not immediately available, (b) time will not permit such
Holders Letter of Transmittal, certificates representing such tendered Notes and
all other required documents to reach the Exchange Agent on or prior to the
Expiration Date, or (c) the procedures for book-entry transfer cannot be
completed on or prior to the Expiration Date, such Holder may nevertheless
tender such tendered Notes with the effect that such tender will be deemed to
have been received on or prior to the Expiration Date if the procedures set
forth below and in the Statement under The Exchange Offer -- Procedures For
Tendering Outstanding Notes (including the completion of Box 4 above) are
followed. Pursuant to such procedures, (i) the tender must be made by or through
an Eligible Institution (as defined), (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
the Company herewith, or an Agent's Message with respect to a guaranteed
delivery that is accepted by the Company, must be received by the Exchange Agent
on or prior to the Expiration Date, and (iii) the certificates for the tendered
Notes, in proper form for transfer (or a Book-Entry Confirmation of the transfer
of such tendered Notes to the Exchange Agent's account at DTC as described in
the Prospectus), together with a Letter of Transmittal (or manually signed
facsimile thereof) properly completed and duly executed, with any required
signature guarantees and any other documents required by the Letter of
Transmittal or a properly transmitted Agent's Message, must be received by the
Exchange Agent within three New York Stock Exchange trading days after the date
of execution of the Notice of Guaranteed Delivery. Any holder who wishes to
tender Notes pursuant to the guaranteed delivery procedures described above must
ensure that the Exchange Agent's receives the Notice of Guaranteed Delivery
relating to such tendered Notes prior to 5:00 p.m., New York City time, on the
Expiration Date. Failure to complete the guaranteed delivery procedures outlined
above will not, of itself, affect the validity or effect a revocation of any
Letter of Transmittal form properly completed and executed by an Eligible Holder
who attempted to use the guaranteed delivery process.
3. BENEFICIAL OWNER INSTRUCTIONS TO REGISTERED HOLDERS. Only a holder
in whose name Tendered Notes are registered on the books of the registrar (or
the legal representative or attorney-in-fact of such registered holder) may
execute and deliver this Letter of Transmittal. Any Beneficial Owner of Tendered
Notes who is not the registered holder must arrange promptly with the registered
holder to execute and deliver this Letter of Transmittal on his or her behalf
through the execution and delivery to the registered holder of the n
Instructions to Registered
-8-
<PAGE> 9
Holder and/or Book-Entry Transfer Facility Participant from Beneficial Owner"
form accompanying this Letter of Transmittal.
4. PARTIAL TENDERS. Tenders of Notes will be accepted only in integral
multiples of $1,000 in principal amount. If less than the entire principal
amount of Notes held by the holder is tendered, the tendering holder should fill
in the principal amount tendered in the column labeled "Aggregate Principal
Amount Tendered" of the box entitled "Description of Notes Tendered" (see Box 1)
above. The entire principal amount of Notes delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated. If the entire
principal amount of all Notes held by the holder is not tendered, then Notes for
the principal amount of Notes not tendered and Exchange Notes issued in exchange
for any Notes tendered and accepted will be sent to the Holder at his or her
registered address, unless a different address is provided in the appropriate
box on this Letter of Transmittal, as soon as practicable following the
Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered holder(s) of the Tendered Notes, the signature must correspond
with the name(s) as written on the face of the Tendered Notes without
alteration, enlargement or any change whatsoever.
If any of the Tendered Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any Tendered
Notes are held in different names, it will be necessary to complete, sign and
submit as many separate copies of the Letter of Transmittal as there are
different names in which Tendered Notes are held.
If this Letter of Transmittal is signed by the registered holder(s) of
Tendered Notes, and Exchange Notes issued in exchange therefor are to be issued
(and any untendered principal amount of Notes is to be reissued) in the name of
the registered holder(s), then such registered holder(s) need not and should not
endorse any Tendered Notes, nor provide a separate bond power. In any other
case, such registered holder(s) must either properly endorse the Tendered Notes
or transmit a properly completed separate bond power with this Letter of
Transmittal with the signature(s) on the endorsement or bond power guaranteed by
a Medallion Signature Guarantor (as defined below).
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any Tendered Notes, such Tendered Notes must be endorsed
or accompanied by appropriate bond powers, in each case, signed as the name(s)
of the registered holder(s) appear(s) on the Tendered Notes, with the
signature(s) on the endorsement or bond power guaranteed by a Medallion
Signature Guarantor.
If this Letter of Transmittal or any Tendered Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorney-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, evidence satisfactory to the Company of their authority to so act must
be submitted with this Letter of Transmittal.
Signatures on this Letter of Transmittal must be guaranteed by a
recognized participant in the Securities Transfer Agents Medallion Program, the
New York Stock Exchange Medallion Signature Program or the Stock Exchange
Medallion Program (each a "Medallion Signature Guarantor"), unless the Tendered
Notes are tendered (i) by a registered Holder of Tendered Notes (or by a
participant in DTC whose name appears on a security position listing as the
owner of such Tendered Notes) who has not completed Box 3 ("Special Delivery
Instructions") on this Letter of Transmittal, or (ii) for the account of a
member firm of a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc. ("NASD") or a commercial bank
or trust company having an office or correspondent in the United States (each of
the foregoing being referred to as an "Eligible Institution"). If the Tendered
Notes are registered in the name of a person other than the Signor of the Letter
of Transmittal or if Notes not tendered are to be returned to a person other
than the registered Holder, then the signature on this Letter of Transmittal
accompanying the Tendered Notes must be guaranteed by a Medallion Signature
Guarantor as described above. Beneficial owners whose Notes are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if they desire to tender such Notes.
-9-
<PAGE> 10
6. SPECIAL DELIVERY INSTRUCTIONS. Tendering holders should indicate in
Box 3 the name and address to which the Exchange Notes and/or substitute Notes
for principal amounts not tendered or not accepted for exchange are to be sent,
if different from the name and address of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the taxpayer
identification or social security number of the person named must also be
indicated.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Tendered Notes pursuant to the Exchange Offer. If,
however, a transfer tax is imposed for any reason other than the transfer and
exchange of Tendered Notes pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or on any
other person) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with this
Letter of Transmittal, the amount of such transfer taxes will be billed directly
to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Tendered Notes listed in this Letter of
Transmittal.
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that the
holder(s) of any Tendered Notes which are accepted for exchange must provide the
Exchange Agent (as payor) with its correct taxpayer identification number
("TIN"), which, in the case of a holder who is an individual, is his or her
social security number. If the Exchange Agent is not provided with the correct
TIN, the Holder may be subject to backup withholding and a $50 penalty imposed
by the Internal Revenue Service. (If withholding results in an over-payment of
taxes, a refund may be obtained.) Certain holders (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
To prevent backup withholding, each holder of Tendered notes must
provide such holder's correct TIN by completing the Substitute Form W-9 set
forth herein, certifying that the TIN provided is correct (or that such holder
is awaiting a TIN), and that (i) the holder has not been notified by the
Internal Revenue Service that such holder is subject to backup withholding as a
result of failure to report all interest or dividends or (ii) if previously so
notified, the Internal Revenue Service has notified the holder that such holder
is no longer subject to backup withholding. If the Tendered Notes are registered
in more than one name or are not in the name of the actual owner, consult the
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for information on which TIN to report.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form,
eligibility (including time of receipt), acceptance and withdrawal of Tendered
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the right to
reject any and all Notes not validly tendered or any Notes the Company's
acceptance of which would, in the opinion of the Company or its counsel, be
unlawful. The Company also reserves the right to waive any conditions of the
Exchange Offer or defects or irregularities in tenders of Notes as to any
ineligibility of any holder who seeks to tender Notes in the Exchange Offer. The
interpretation of the terms and conditions of the Exchange Offer (including this
Letter of Transmittal and the instructions hereto) by the Company shall be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Notes must be cured within such time as the Company
shall determine. Neither the Company, the Exchange Agent nor any other person
shall be under any duty to give notification of defects or irregularities with
respect to tenders of Notes, nor shall any of them incur any liability for
failure to give such notification. Tenders of Notes will not be deemed to have
been made until such defects or irregularities have been cured or waived. Any
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in this Letter of Transmittal, as soon as practicable following the
Expiration Date.
-10-
<PAGE> 11
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to
amend waive or modify any of the conditions in the Exchange Offer in the case of
any Tendered Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular, or
contingent tender of Notes or transmittal of this Letter of Transmittal will be
accepted.
12. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any tendering Holder
whose Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated herein for further instructions.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance and requests for additional copies of the Prospectus or
this Letter of Transmittal may be directed to the Exchange Agent at the address
indicated herein. Holders may also contact their broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Exchange
Offer.
14. ACCEPTANCE OF TENDERED NOTES AND ISSUANCE OF EXCHANGE NOTES; RETURN
OF NOTES. Subject to the terms and conditions of the Exchange Offer, the Company
will accept for exchange all validly tendered Notes as soon as practicable after
the Expiration Date and will issue Exchange Notes therefor as soon as
practicable thereafter. For purposes of the Exchange Offer, the Company shall be
deemed to have accepted Tendered Notes when, as and if the Company has given
written or oral notice (immediately followed in writing) thereof to the Exchange
Agent. If any Tendered Notes are not exchanged pursuant to the Exchange Offer
for any reason, such unexchanged Notes will be returned, without expense, to the
undersigned at the address shown in Box 1 or at a different address as may be
indicated herein under "Special Delivery Instructions" (Box 3).
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the
procedures set forth in the Prospectus under the caption "The Exchange
Offer--Withdrawal Rights."
-11-
<PAGE> 1
EXHIBIT 99.2
Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees
Holley Performance Products Inc.
Offer to Exchange its
12 1/4% Senior Notes Due 2007, Series B
Which Have Been Registered Under
the Securities Act of 1933
For Any and All of its Outstanding
12 1/4% Senior Notes Due 2007
Pursuant to the Prospectus Dated __________, 1999
TO: BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES:
Holley Performance Products Inc. ("Holley") is offering to exchange,
upon and subject to the terms and conditions set forth in the enclosed
prospectus, dated __________, 1999 (the "prospectus"), and the enclosed Letter
of Transmittal (the "Letter of Transmittal"), its 12 1/4% Senior Notes due 2007,
Series B, which have been registered under the Securities Act of 1933 (the
"exchange notes"), for any and all of its outstanding 12 1/4% Senior Notes due
2007 (the "outstanding notes"). The exchange offer is being made in order to
satisfy certain of Holley's obligations contained in the Registration Rights
Agreement dated as of September 20, 1999, among Holley, the Guarantors, Goldman,
Sachs & Co., Salomon Smith Barney and CIBC World Markets Corp.
In connection with the exchange offer, we are requesting that you
contact your clients for whom you hold outstanding notes registered in your name
or in the name of your nominee, or who hold outstanding notes registered in
their own names. Holley, Goldman, Sachs & Co., Salomon Smith Barney and CIBC
World Markets Corp. will not pay any fees or commissions to any broker, dealer
or other person in connection with the solicitation of tenders pursuant to the
exchange offer. However, you will, upon request, be reimbursed for reasonable
out-of-pocket expenses incurred in connection with soliciting acceptances of the
exchange offer. Holley, Goldman, Sachs & Co., Salomon Smith Barney and CIBC
World Markets Corp. will pay or cause to be paid all transfer taxes applicable
to the exchange of outstanding notes pursuant to the exchange offer, except as
set forth in the prospectus and the Letter of Transmittal.
For your information and for forwarding to your clients, we are
enclosing the following documents:
1. Prospectus dated _____________, 1999;
2. A Letter of Transmittal for your use and for the information of your
clients; and
3. A form of Notice of Guaranteed Delivery.
<PAGE> 2
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON ___________, 1999 (THE "EXPIRATION DATE"), UNLESS
EXTENDED BY HOLLEY (IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE
LATEST DATE AND TIME TO WHICH THE EXCHANGE OFFER IS EXTENDED). THE OUTSTANDING
NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN, SUBJECT TO THE
PROCEDURES DESCRIBED IN THE PROSPECTUS AND THE LETTER OF TRANSMITTAL, AT ANY
TIME PRIOR TO THE EXPIRATION DATE.
To participate in the exchange offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
exchange agent and certificates representing the outstanding notes should be
delivered to the exchange agent, all in accordance with the instructions set
forth in the prospectus and the Letter of Transmittal.
If holders of outstanding notes wish to tender, but it is impracticable
for them to forward their certificates for outstanding notes prior to the
expiration of the exchange offer or to comply with the book-entry transfer
procedures on a timely basis, a tender may be effected by following the
guaranteed delivery procedures described in the prospectus and the Letter of
Transmittal.
Any inquiries you may have with respect to the exchange offer, or
requests for additional copies of the enclosed materials, should be directed to
the exchange agent for the outstanding notes, at its address and telephone
number set forth on the front of the Letter of Transmittal.
Very truly yours,
Holley Performance Products Inc.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
OTHER PERSON AS AN AGENT OF HOLLEY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER
OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE
IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
2
<PAGE> 1
EXHIBIT 99.3
NOTICE OF GUARANTEED DELIVERY
IN RESPECT OF
12 1/4% SENIOR NOTES DUE 2007
OF
HOLLEY PERFORMANCE PRODUCTS INC.
PURSUANT TO THE PROSPECTUS
DATED OCTOBER ___, 1999
The Exchange Agent for the Exchange Offer is:
STATE STREET BANK AND TRUST COMPANY
<TABLE>
<CAPTION>
BY MAIL: BY FACSIMILE FOR BY OVERNIGHT DELIVERY OR HAND:
ELIGIBLE INSTITUTIONS
<S> <C> <C>
State Street Bank State Street Bank
and Trust Company (617) 662-1452 and Trust Company
Corporate Trust Department Corporate Trust Department
P.O. Box 778 2 Avenue de Lafayette, 5th Floor
Boston, MA 02102-0778 Boston, MA 02111-1724
Attention: Ralph Jones Attention: Ralph Jones
</TABLE>
FOR INFORMATION TELEPHONE:
(617) 662-1548
Attention: Ralph Jones
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE VALID DELIVERY.
As set forth in the Prospectus dated October ___, 1999 (as it may be
supplemented and amended from time to time, the "Prospectus") of Holley
Performance Products Inc. (the "Company") under "The Exchange Offer --
Procedures for Tendering Outstanding Notes," and in the Instructions to the
related Letter of Transmittal (the "Letter of Transmittal"), this form, or one
substantially equivalent hereto, or an Agent's Message relating to the
guaranteed delivery procedures, must be used to accept the Company's offer (the
"Exchange Offer") to exchange any and all of its outstanding $150,000,000 12
1/4% Senior Notes due 2007 (the "Notes"), for new $150,000,000 12 1/4% Senior
Notes due 2007, Series B (the "Exchange Notes"), if time will not permit the
Letter of Transmittal, certificates representing such Notes and other required
documents to reach the Exchange Agent, or the procedures for book-entry
transfer cannot be completed, on or prior to the Expiration Date (as defined).
This form must be delivered by an Eligible Institution (as defined
herein) by mail or hand delivery or transmitted via facsimile to the Exchange
Agent as set forth above. If a signature on the Letter of Transmittal is
required to be guaranteed by a Medallion Signature Guarantor under the
instructions thereto, such signature guarantee must appear in the applicable
space provided in the Letter of Transmittal. This form is not to be used to
guarantee signatures.
Questions and requests for assistance and requests for additional copies
of the Prospectus may be directed to the Exchange Agent at the address above.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
- -------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON _______________ ___, 1999, UNLESS EXTENDED ("THE EXPIRATION
DATE").
- -------------------------------------------------------------------------------
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and
subject to the conditions set forth in the Prospectus and the related Letter of
Transmittal (receipt of which is hereby acknowledged), the principal amount of
the Notes specified below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under "The Exchange Offer -- Procedures For Tendering
Outstanding Notes" and in Instruction 2 to the Letter of Transmittal. The
undersigned hereby authorizes the Exchange Agent to deliver this Notice of
Guaranteed Delivery to the Company with respect to the Notes tendered pursuant
to the Exchange Offer.
The undersigned understands that Notes will be exchanged only after
timely receipt by the Exchange Agent of (i) such Notes, or a Book-Entry
Confirmation, and (ii) a Letter of Transmittal (or a manually signed facsimile
thereof), including by means of an Agent's Message, of the transfer of such
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility,
with respect to such Notes, properly completed and duly executed, with any
signature guarantees and any other documents required by the Letter of
Transmittal within three New York Stock Exchange, Inc. trading days after the
execution hereof. The undersigned also understands that the method of delivery
of this Notice of Guaranteed Delivery and any other required documents to the
Exchange Agent is at the election and sole risk of the holder, and the delivery
will be deemed made only when actually received by the Exchange Agent.
THE UNDERSIGNED UNDERSTANDS THAT TENDERS OF NOTES WILL BE ACCEPTED ONLY
IN PRINCIPAL AMOUNTS EQUAL TO $1,000 OR INTEGRAL MULTIPLES THEREOF. THE
UNDERSIGNED ALSO UNDERSTANDS THAT TENDERS OF NOTES MAY BE WITHDRAWN AT ANY TIME
PRIOR TO THE EXPIRATION DATE.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall not be affected by, and shall survive, the death or
incapacity of the undersigned, and every obligation of the undersigned under
this Notice of Guaranteed Delivery shall be binding upon the heirs, executors,
administrators, trustees in bankruptcy, personal and legal representatives,
successors and assigns of the undersigned.
All capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Prospectus.
-2-
<PAGE> 3
PLEASE SIGN AND COMPLETE
<TABLE>
<S> <C>
Signature(s) of Registered Holder(s) or Date:________________________________________________
Authorized Signatory:________________________________
Address:_____________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________ Area Code and Telephone No:._________________________
Name(s) of Registered Holder(s):_____________________ _____________________________________________________
_____________________________________________________
If Notes will be delivered by book-entry transfer,
_____________________________________________________ check book-entry facility below:
Principal Amount of Notes Tendered:__________________ The Depository Trust Company
_____________________________________________________ Depository
Account No.__________________________________________
Certificate No.(s) of Notes
(if available):______________________________________
</TABLE>
This Notice of Guaranteed Delivery must be signed by the holder(s)
exactly as their name(s) appear(s) on certificate(s) for Notes or on a security
position listing as the owner of Notes, or by person(s) authorized to become
Holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery without alteration, enlargement or any change whatsoever.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es)
Name(s):_______________________________________________________________________
_______________________________________________________________________________
Capacity:______________________________________________________________________
Address(es):___________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
DO NOT SEND NOTES WITH THIS FORM. NOTES SHOULD BE SENT TO THE EXCHANGE
AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL.
-3-
<PAGE> 4
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock Exchange,
Inc. Medallion Signature Program (each, an "Eligible Institution"), hereby (i)
represents that the above-named persons are deemed to own the Notes tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 14e-4"), (ii) represents that such
tender of Notes complies with Rule 14e-4 and (iii) guarantees that the Notes
tendered hereby are in proper form for transfer (pursuant to the procedures set
forth in the Prospectus under "The Exchange Offer -- Guaranteed Delivery
Procedures"), and that the Exchange Agent will receive (a) such Notes, or a
Book-Entry Confirmation of the transfer of such Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility and (b) a properly completed and
duly executed Letter of Transmittal or facsimile thereof (or Agent's message)
with any required signature guarantees and any other documents required by the
Letter of Transmittal within three New York Stock Exchange, Inc. trading days
after the date of execution hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Exchange Agent and must deliver the Letter of Transmittal and
Notes to the Exchange Agent within the time period shown herein. Failure to do
so could result in a financial loss to such Eligible Institution.
Name of
Firm:__________________________________________________________________________
Authorized Signature:__________________________________________________________
Title:_________________________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________________
(Zip Code)
Area Code and Telephone Number:________________________________________________
Dated:______________________________________, 1999
-4-
