As filed with the Securities and Exchange Commission on April 27, 2000
Registration No. 333-33572
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DIAMOND TRIUMPH AUTO GLASS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 7536 23-2758853
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Incorporation Industrial Classification Identification No.)
or Organization) Code Number)
220 Division Street
Kingston, Pennsylvania 18704
(570) 287-9915
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
Michael A. Sumsky
220 Division Street
Kingston, Pennsylvania 18704
(570) 287-9915
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
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Copies to:
Howard A. Sobel, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
(212) 715-9100
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective
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If any of 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 statement for the same offering. [ ] ___________
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ] __________
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<PAGE>
Explanatory Note
This Amendment No. 1 to the Registration Statement on Form S-4 (File
No. 333-33572) of Diamond Triumph Auto Glass, Inc. is filed solely for the
purpose of filing with the Commission copies of the exhibits listed in Item 21
of Part II hereto.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL")
permits a corporation in its certificate of incorporation or an amendment
thereto to eliminate or limit the personal liability of a director for
violations of the director's fiduciary duty, except (i) for any breach of the
director's fiduciary duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
DGCL (providing for liability of directors for unlawful payment of dividends or
unlawful stock purchases or redemptions), or (iv) for any transaction from which
the director derived an improper personal benefit. The Registrant's Amended and
Restated Certificate of Incorporation contains the provisions permitted by
Section 102(b)(7) of the DGCL.
Section 145(a) of the DGCL provides that a corporation shall have power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that the person's
conduct was unlawful.
Section 145(b) of the DGCL provides that a corporation shall have power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that the
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection with the defense or settlement
of such action or suit if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 145(c) of the DGCL provides that, to the extent that a present or
former director or officer of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
Sections 145(a) and 145(b) of the DGCL, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
therewith.
The Registrant's Amended and Restated Certificate of Incorporation
provides indemnification of directors and officers of the Registrant to the
fullest extent permitted by the DGCL. The Registrant's Amended and Restated
Certificate of Incorporation also provides that neither Kenneth Levine nor
Richard Rutta shall be entitled to indemnification against any Liability (as
defined in the Agreement (as defined below)) to the extent that such Liability
arises out of a breach of (i) the Second Amended and Restated Stock Purchase and
Sale Agreement, dated as of January 15, 1998, by and among, VGMC Corp., Green
Equity Investors II, L.P., Diamond Triumph Auto Glass, Inc., Triumph Auto Glass,
Inc., Diamond Auto Glass Works, Inc., A Above Average Glass Company by Diamond,
Inc., A-AA Triumph
II-1
<PAGE>
Auto Glass, Inc., Scranton Holdings, Inc., Diamond/Triumph Auto Export Sales Co.
Inc., A-Auto Glass by Triumph, Inc., A-Auto Glass Company by Diamond, Inc. and
Kenneth Levine and Richard Rutta (the "Agreement"); or (ii) any of the
Transaction Documents (as defined in the Agreement). In addition, pursuant to
their Registration Rights Agreement with the Registrant, dated as of March 31,
1998, First Union Capital Markets, a division of Wheat First Securities, Inc.,
BT Alex. Brown Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation have agreed to indemnify directors and officers of the Registrant
against certain liabilities, including liabilities under the Securities Act.
The Registrant maintains liability insurance for each director and officer
for certain losses arising from claims or charges made against them while acting
in their capacities as directors or officers of the Registrant.
Item 21. Exhibits
Exhibit
Number Description
------ -----------
2.1* Second Amended and Restated Stock Purchase and Sale Agreement,
dated as of January 15, 1998, by and among, VGMC Corp., Green
Equity Investors II, L.P., Diamond Triumph Auto Glass, Inc.,
Triumph Auto Glass, Inc., Diamond Auto Glass Works, Inc., A
Above Average Glass Company by Diamond, Inc., A-AA Triumph Auto
Glass, Inc., Scranton Holdings, Inc., Diamond/Triumph Auto
Export Sales Co. Inc., A-Auto Glass by Triumph, Inc., A-Auto
Glass Company by Diamond, Inc. and Kenneth Levine and Richard
Rutta.
3.1* Amended and Restated Certification of Incorporation of Diamond
Triumph Auto Glass, Inc.
3.2* Certificate of Designations of Series A 12% Senior Redeemable
Cumulative Preferred Stock of Diamond Triumph Auto Glass, Inc.
3.3* Certificate of Amendment of Certificate of Incorporation of
Diamond Triumph Auto Glass, Inc., dated April 28, 1998.
3.4* Certificate of Amendment of Certificate of Incorporation of
Diamond Triumph Auto Glass, Inc., dated September 15, 1998.
3.5* By-laws of Diamond Triumph Auto Glass, Inc.
4.1* Indenture, dated as of March 31, 1998, between Diamond Triumph
Auto Glass, Inc., as Issuer, and State Street Bank and Trust
Company, as Trustee, regarding the 9 1/4% Senior Notes Due
2008.
4.2* Registration Rights Agreement, dated as of March 31, 1998,
among Diamond Triumph Auto Glass, Inc., First Union Capital
Markets, a division of Wheat First Securities, Inc., BT Alex.
Brown Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation.
4.3* Note Purchase Agreement, dated March 26, 1998, among Diamond
Triumph Auto Glass, Inc., First Union Capital Markets, a
division of Wheat First Securities, Inc., BT Alex. Brown
Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation.
5.1** Opinion of Kramer Levin Naftalis & Frankel LLP.
10.1* Management Subscription and Stockholders Agreement, dated as of
March 31, 1998, among Diamond Triumph Auto Glass, Inc., Green
Equity Investors II, L.P. and Norman Harris.
10.2* Management Subscription and Stockholders Agreement, dated as of
March 31, 1998, among Diamond Triumph Auto Glass, Inc., Green
Equity Investors II, L.P. and Michael Sumsky.
II-2
<PAGE>
Exhibit
Number Description
------ -----------
10.3* Stockholders Agreement, dated as of March 31, 1998, among Green
Equity Investors II, L.P., Kenneth Levine, Richard Rutta and
Diamond Triumph Auto Glass, Inc.
10.4* Employment Agreement, dated as of March 31, 1998, between
Diamond Triumph Auto Glass, Inc. and Kenneth Levine.
10.5* Employment Agreement, dated as of March 31, 1998, between
Diamond Triumph Auto Glass, Inc. and Richard Rutta.
10.6* Employment Agreement, dated as of March 31, 1998, between
Diamond Triumph Auto Glass, Inc. and Norman Harris.
10.7* Employment Agreement, dated as of March 31, 1998, between
Diamond Triumph Auto Glass, Inc. and Michael Sumsky.
10.8* Non-Competition Agreement, dated March 31, 1998, between
Kenneth Levine and Diamond Triumph Auto Glass, Inc.
10.9* Non-Competition Agreement, dated March 31, 1998, between
Richard Rutta and Diamond Triumph Auto Glass, Inc.
10.10* Management Services Agreement, dated as of March 31, 1998,
between Diamond Triumph Auto Glass, Inc. and Leonard Green &
Partners, L.P.
10.11** Finance Agreement, dated March 27, 2000, between The CIT
Business Group/Business Credit, Inc. and Diamond Triumph Auto
Glass, Inc.
10.12* Diamond Triumph Auto Glass, Inc. 1998 Management Stock Option
Plan.
23.1* Consent of KPMG LLP.
23.2** Consent of Kramer Levin Naftalis & Frankel LLP (contained in
the opinion filed as Exhibit 5.1.)
25* Form T-1 Statement of Eligibility and Qualification of State
Street Bank and Trust.
27* Financial Data Schedule.
99.1** Form of Letter of Transmittal.
99.2** Form of Notice of Guaranteed Delivery.
- ---------------------
* Previously filed.
** Filed herewith.
Item 22. Undertakings
(a) 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
II-3
<PAGE>
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 Securities Act and will be governed by the final adjudication
of such issue.
(b) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
(c) The undersigned Registrant hereby undertakes to supply by means to a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York on this 27th day of
April, 2000.
DIAMOND TRIUMPH AUTO GLASS, INC.
By: /s/ Kenneth Levine
---------------------------------
Name: Kenneth Levine
Title: Co-Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Kenneth Levine and Richard Rutta,
and each of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments to this
registration statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully for all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons on April
27, 2000 in the capacities indicated.
Signature Title(s)
--------- --------
/s/ Kenneth Levine Co-Chairman of the Board, Co-Chief
- --------------------------------- Executive Officer and Director
Kenneth Levine
/s/ Richard Rutta Co-Chairman of the Board, Co-Chief
- --------------------------------- Executive Officer and Director
Richard Rutta
/s/ Michael A. Sumsky Executive Vice President,
- --------------------------------- Chief Financial Officer and
Michael A. Sumsky General Counsel
/s/ Norman Harris President
- ---------------------------------
Norman Harris
/s/ Gregory J. Annick Director
- ---------------------------------
Gregory J. Annick
/s/ John G. Danhakl Director
- ---------------------------------
John G. Danhakl
/s/ Jonathan D. Sokoloff Director
- ---------------------------------
Jonathan D. Sokoloff
II-5
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
2.1* Second Amended and Restated Stock Purchase and Sale Agreement,
dated as of January 15, 1998, by and among, VGMC Corp., Green
Equity Investors II, L.P., Diamond Triumph Auto Glass, Inc.,
Triumph Auto Glass, Inc., Diamond Auto Glass Works, Inc., A Above
Average Glass Company by Diamond, Inc., A-AA Triumph Auto Glass,
Inc., Scranton Holdings, Inc., Diamond/Triumph Auto Export Sales
Co. Inc., A-Auto Glass by Triumph, Inc., A-Auto Glass Company by
Diamond, Inc. and Kenneth Levine and Richard Rutta.
3.1* Amended and Restated Certification of Incorporation of Diamond
Triumph Auto Glass, Inc.
3.2* Certificate of Designations of Series A 12% Senior Redeemable
Cumulative Preferred Stock of Diamond Triumph Auto Glass, Inc.
3.3* Certificate of Amendment of Certificate of Incorporation of Diamond
Triumph Auto Glass, Inc., dated April 28, 1998.
3.4* Certificate of Amendment of Certificate of Incorporation of Diamond
Triumph Auto Glass, Inc., dated September 15, 1998.
3.5* By-laws of Diamond Triumph Auto Glass, Inc.
4.1* Indenture, dated as of March 31, 1998, between Diamond Triumph Auto
Glass, Inc., as Issuer, and State Street Bank and Trust Company, as
Trustee, regarding the 9 1/4% Senior Notes Due 2008.
4.2* Registration Rights Agreement, dated as of March 31, 1998, among
Diamond Triumph Auto Glass, Inc., First Union Capital Markets, a
division of Wheat First Securities, Inc., BT Alex. Brown
Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation.
4.3* Note Purchase Agreement, dated March 26, 1998, among Diamond
Triumph Auto Glass, Inc., First Union Capital Markets, a division
of Wheat First Securities, Inc., BT Alex. Brown Incorporated and
Donaldson, Lufkin & Jenrette Securities Corporation.
5.1** Opinion of Kramer Levin Naftalis & Frankel LLP.
10.1* Management Subscription and Stockholders Agreement, dated as of
March 31, 1998, among Diamond Triumph Auto Glass, Inc., Green
Equity Investors II, L.P. and Norman Harris.
10.2* Management Subscription and Stockholders Agreement, dated as of
March 31, 1998, among Diamond Triumph Auto Glass, Inc., Green
Equity Investors II, L.P. and Michael Sumsky.
10.3* Stockholders Agreement, dated as of March 31, 1998, among Green
Equity Investors II, L.P., Kenneth Levine, Richard Rutta and
Diamond Triumph Auto Glass, Inc.
10.4* Employment Agreement, dated as of March 31, 1998, between Diamond
Triumph Auto Glass, Inc. and Kenneth Levine.
10.5* Employment Agreement, dated as of March 31, 1998, between Diamond
Triumph Auto Glass, Inc. and Richard Rutta.
10.6* Employment Agreement, dated as of March 31, 1998, between Diamond
Triumph Auto Glass, Inc. and Norman Harris.
<PAGE>
10.7* Employment Agreement, dated as of March 31, 1998, between Diamond
Triumph Auto Glass, Inc. and Michael Sumsky.
10.8* Non-Competition Agreement, dated March 31, 1998, between Kenneth
Levine and Diamond Triumph Auto Glass, Inc.
10.9* Non-Competition Agreement, dated March 31, 1998, between Richard
Rutta and Diamond Triumph Auto Glass, Inc.
10.10* Management Services Agreement, dated as of March 31, 1998, between
Diamond Triumph Auto Glass, Inc. and Leonard Green & Partners, L.P.
10.11** Finance Agreement, dated March 27, 2000, between The CIT Business
Group/Business Credit, Inc. and Diamond Triumph Auto Glass, Inc.
10.12* Diamond Triumph Auto Glass, Inc. 1998 Management Stock Option Plan.
23.1* Consent of KPMG LLP
23.2** Consent of Kramer Levin Naftalis & Frankel LLP (contained in
the opinion filed as Exhibit 5.1.)
25* Form T-1 Statement of Eligibility and Qualification of State Street
Bank and Trust.
27* Financial Data Schedule.
99.1** Form of Letter of Transmittal.
99.2** Form of Notice of Guaranteed Delivery.
- ---------------------
* Previously filed.
**Filed herewith.
Exhibit 5.1
KRAMER LEVIN NAFTALIS & FRANKEL LLP
919 THIRD AVENUE
NEW YORK, N.Y. 10022 - 3852
TEL (212) 715-9100 47, Avenue Hoche
FAX (212) 715-8000 75008 Paris
France
April 27, 2000
Diamond Triumph Auto Glass, Inc.
220 Division Street
Kingston, Pennsylvania 18704
Ladies and Gentlemen:
We have acted as counsel for Diamond Triumph Auto Glass, Inc.
(the "Company") in connection with the registration statement on Form S-4 (Reg.
No. 333-33-33572), as amended by Amendment No. 1 thereto (the "Registration
Statement"), filed by the Company with the Securities and Exchange Commission
(the "Commission") relating to the proposed offer by the Company of $100,000,000
aggregate principal amount of 9 1/4% Senior Notes due 2008 (the "New Notes") of
the Company for a like amount of privately placed 9 1/4% Senior Notes due 2008
(the "Old Notes") (the "Exchange Offer"). The New Notes will be issued pursuant
to the Indenture (the "Indenture") dated March 31, 1998 between the Company and
State Street Bank and Trust Company, as trustee. All capitalized terms not
otherwise defined herein have the same meanings given to such terms in the
Indenture.
In connection with the foregoing, we have examined, among
other things, (i) the Registration Statement, (ii) the Indenture, (iii) the form
of New Notes to be issued pursuant to the Indenture and (iv) originals,
photocopies or conformed copies of all such corporate records, agreements,
instruments and documents of the Company, certificates of public officials and
other certificates and opinions, and have made such other investigations as we
have deemed necessary for the purpose of rendering the opinion set forth herein.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to originals of all documents submitted to us as photocopies or conformed
copies, and the authenticity of the originals of such latter documents. We have
relied, to the extent we deem such reliance proper, upon representations,
statements or certificates of public officials and officers and representatives
of the Company.
Based upon and subject to the foregoing, we are of the opinion
that the New Notes have been duly authorized by the Company and, when issued and
delivered in exchange for the Old Notes in the manner set forth in the
Registration Statement and executed and authenticated in accordance with the
terms and conditions of the Indenture, will constitute legal, valid and binding
obligations of the Company.
<PAGE>
Diamond Triumph Auto Glass, Inc.
April 27, 2000
Page 2
We hereby consent to the use of this opinion as an exhibit to
the Registration Statement and to the reference to our firm under the heading
"Legal Matters" in the prospectus that forms a part thereof.
We are delivering this opinion to the Company, and no person
other than the Company and its securityholders may rely upon it.
Very truly yours,
/s/ Kramer Levin Naftalis & Frankel LLP
Exhibit 10.11
FINANCING AGREEMENT
The CIT Group/Business Credit, Inc.
(as Lender)
And
DIAMOND TRIUMPH AUTO GLASS, INC.
(as Borrower)
Dated: March 27, 2000
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1 Definitions..................................................1
SECTION 2. Conditions Precedent........................................10
SECTION 3. Revolving Loans.............................................13
SECTION 4. Intentionally Omitted.......................................15
SECTION 5. Letters of Credit...........................................15
SECTION 6. Collateral..................................................18
SECTION 7. Representations, Warranties and Covenants...................20
SECTION 8. Interest, Fees and Expenses.................................25
SECTION 9. Powers......................................................27
SECTION 10. Events of Default and Remedies..............................28
SECTION 11. Termination.................................................31
SECTION 12. Miscellaneous...............................................31
Schedules
Schedule 1 - Existing Liens
Schedule 2 - Collateral Locations, Chief Executive Office, Jurisdiction of
Organization
i
<PAGE>
THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation,
(hereinafter "CITBC") with offices located at 300 South Grand Avenue, Third
Floor, Los Angeles, California 90071, is pleased to confirm the terms and
conditions under which CITBC shall make revolving loans, advances and other
financial accommodations to DIAMOND TRIUMPH AUTO GLASS, INC. (herein the
"Company"), a Delaware corporation with a principal place of business at 220
Division Street, Kingston, Pennsylvania 18704.
SECTION 1. Definitions
Accounts shall mean all of the Company's now existing and future: (a)
accounts receivable, (whether or not specifically listed on schedules furnished
to CITBC), and any and all instruments, documents, contract rights, chattel
paper, general intangibles, including, without limitation, all accounts created
by or arising from all of the Company's sales of goods or rendition of services
to its customers, and all accounts arising from sales or rendition of services
made under any of the Company's trade names or styles, or through any of the
Company's divisions; (b) unpaid seller's rights (including rescission, replevin,
reclamation and stoppage in transit) relating to the foregoing or arising
therefrom; (c) rights to any goods represented by any of the foregoing,
including rights to returned or repossessed goods; (d) reserves and credit
balances arising hereunder; (e) guarantees or collateral for any of the
foregoing; (f) insurance policies or rights relating to any of the foregoing;
and (g) cash and non-cash proceeds of any and all the foregoing.
Anniversary Date shall mean the date occurring one (1) year from the
date hereof and the same date in every year thereafter.
Availability shall mean at any time the lesser of: (I) the Line of
Credit, or (II) the excess of the sum of a) eighty-five percent (85%) of
Eligible Accounts Receivable and b) eighty-five percent (85%) of Eligible
Inventory, valued at the lower of cost or market, or (III) one and one-half
(1.5) multiplied by EBITDA of the Company for the prior rolling 12-month period,
over the sum, without duplication, of x) the outstanding aggregate amount of all
Obligations of the Company, and y) the Availability Reserve.
Availability Reserve shall mean, at any time of determination, the sum
of the then outstanding amount of all Letters of Credit, plus the sum of three
(3) months rental payments with respect to all of Company's leased distribution
centers for which it has not delivered to CITBC a landlord's waiver (in form and
substance satisfactory to CITBC in the exercise of its reasonable business
judgment), as such amounts may be adjusted from time to time hereafter upon (i)
delivery to CITBC of any such acceptable waiver, (ii) the opening or closing of
a distribution center and/or (iii) any change in rental payment.
Business Day shall mean any day on which both CITBC and The Chase
Manhattan Bank are open for business.
Blocked Account shall mean each Concentration Account owned by the
Company which is governed by a blocked account or similar agreement in form
substantially similar to Exhibit A attached hereto and which account is subject
to written instructions only from the Company unless and until CITBC shall give
the institution holding such Concentration Account written
1
<PAGE>
instructions to the contrary in accordance with the terms of paragraph 4 of
Section 3 of this Financing Agreement.
Capital Expenditures for any period shall mean the aggregate of all
expenditures of the Company during such period that in conformity with GAAP are
required to be included in or reflected by the property, plant or equipment or
similar fixed asset account reflected in the balance sheet of the Company.
Capital Lease shall mean any lease of property (whether real, personal
or mixed) which, in conformity with GAAP, is accounted for as a capital lease or
a Capital Expenditure on the balance sheet of the Company.
Chase Bank Rate shall mean the rate of interest per annum announced by
The Chase Manhattan Bank from time to time as its prime rate in effect at its
principal office in the City of New York. (The prime rate is not intended to be
the lowest rate of interest charged by The Chase Manhattan Bank to its
borrowers).
Chase Bank Rate Margin shall mean the amounts corresponding to EBITDA,
calculated quarterly, for the prior rolling four-quarter period:
EBITDA Chase Bank Rate Margin
------ ----------------------
In excess of $17 million 0.25 percentage points
$13 million - $17 million 0.50 percentage points
Less than $13 million 0.75 percentage points
Collateral shall mean all present and future Accounts, Equipment,
Inventory, Documents of Title, General Intangibles and Real Estate of the
Company. In addition, the Collateral shall include, to the extent not included
in the foregoing, the following property of the Company: (a) investment
property, documents, instruments, deposit accounts, letter-of-credit rights,
accounts, chattel paper, commercial tort claims, goods, equipment, fixtures,
inventory and general intangibles as such terms are defined under the Uniform
Commercial Code; and (b) all cash and other monies and property in the
possession or control of CITBC, all books, records, ledger cards, disks and
related data processing software at any time evidencing or containing
information relating to any of the Collateral described herein or otherwise
necessary or helpful in the collection thereof or realization thereon, and all
cash and non-cash proceeds of any of the foregoing.
Collateral Management Fee shall mean the sum of $50,000 which shall be
paid to CITBC in accordance with paragraph 8 of Section 8 hereof to offset the
expenses and costs of CITBC in connection with record keeping, periodic
examinations, analyzing and evaluating the Collateral.
Concentration Account shall mean any account owned by the Company which
receives funds from (i) the Depository Accounts, (ii) the credit card companies
and/or (iii) another Concentration Account.
2
<PAGE>
Consolidated Financial Statement shall mean a consolidated balance
sheet, income statement, cash flow statement and statement of stockholders'
equity for the Company, and its subsidiaries, if any, eliminating all
inter-company transactions and prepared in accordance with GAAP, except that
monthly and quarterly financial statements need not have footnotes.
Consolidating Financial Statement shall mean a Consolidated Financial
Statement plus, if the Company has any subsidiaries, individual balance sheets,
income statements, cash flow statements and statements of stockholders' equity
for the Company each showing all elimination of inter-company transactions and
prepared in accordance with GAAP and including a balance sheet for the Company
exclusively, except that monthly and quarterly financial statements need not
have footnotes.
Credit Card Agreement shall mean the Credit Card Agreements entered
into among the Company, CITBC, and the credit card payment clearing
organizations, respecting payments made to the Company by credit card charges.
Customarily Permitted Liens shall mean
(a) liens of local or state authorities for franchise or other like
taxes provided the aggregate amounts of such liens shall not exceed $250,000 in
the aggregate at any one time;
(b) statutory liens of landlords and liens of carriers, warehousemen,
mechanics, materialmen and other like liens imposed by law, created in the
ordinary course of business and for amounts not yet due (or which are being
contested in good faith by appropriate proceedings or other appropriate actions
which are sufficient to prevent imminent foreclosure of such liens) and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP; and
(c) deposits made (and the liens thereon) in the ordinary course of
business consistent with past practices (including, without limitation, security
deposits for leases, surety bonds and appeal bonds), deposits in connection with
utilities, workers' compensation, unemployment insurance and other types of
social security benefits or to secure the performance of tenders, bids,
contracts (other than for the repayment or guarantee of borrowed money or
purchase money obligations), statutory obligations and other similar
obligations.
Default shall mean any event specified in Section 10 hereof, whether or
not any requirement for the giving of notice, the lapse of time, or both, or any
other condition, event or act, has been satisfied.
Default Rate of Interest shall mean a rate of interest per annum equal
to the sum of: a) two percent (2%) and b) the applicable Chase Bank Rate, which
CITBC shall be entitled to charge the Company on all Obligations due CITBC by
the Company to the extent provided in paragraph 2 of Section 10 of this
Financing Agreement.
Depository Accounts shall mean those accounts (other than the
Concentration Accounts) designated for the deposit of proceeds of Collateral.
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Documentation Fee shall mean CITBC's standard and reasonable fees
relating to any and all modifications, waivers, releases, amendments or
additional collateral with respect to this Financing Agreement, the Collateral
and/or the Obligations.
Documents of Title shall mean all present and future warehouse
receipts, bills of lading, shipping documents, chattel paper, instruments and
similar documents, all whether negotiable or not and all goods and inventory
relating thereto and all cash and non-cash proceeds of the foregoing.
Early Termination Date shall mean the date on which the Company
terminates this Financing Agreement or the Line of Credit which date is prior to
the third Anniversary Date.
Early Termination Fee shall: i) mean the fee CITBC is entitled to
charge the Company in the event the Line of Credit or this Financing Agreement
is terminated by the Company on a date prior to the third Anniversary Date; and
ii) be determined by multiplying the Line of Credit by (x) one percent (1%) if
the Early Termination Date occurs on or prior to the first Anniversary Date, or
(y) one-half percent (1/2%) if the Early Termination Date occurs after the first
Anniversary Date but prior to the third Anniversary Date.
EBITDA shall mean, in any period, all earnings before all (i) interest
and tax obligations, (ii) depreciation, (iii) amortization for said period, all
determined in accordance with GAAP on a basis consistent with the latest audited
financial statements of the Company, and calculated based upon the most recent
financial statements, and (iv) LGP Management Fees accrued and unpaid during
such period.
Event(s) of Default shall have the meaning provided for in Section 10
of this Financing Agreement.
Eligible Accounts Receivable shall mean the gross amount of the
Company's Trade Accounts Receivable that conform to the warranties contained
herein, less, without duplication, the sum of (a) allowances for doubtful
accounts and other reserves as required by GAAP, and (b) the sum of reserves
for: i) sales in excess of ten percent (10%) to the United States of America or
to any agency, department or division thereof; ii) foreign sales in excess of
ten percent (10%) other than sales secured by stand-by letters of credit (in
form and substance satisfactory to CITBC) issued or confirmed by, and payable
at, banks having a place of business in the United States of America and payable
in United States currency, and which sales otherwise comply with all other
criteria for eligibility hereunder; iii) Trade Accounts Receivable of any
customer to the extent in excess of twenty-five percent (25%) or more of all
outstanding Trade Accounts Receivable; iv) Trade Accounts Receivable which
remain unpaid more than 180 days from invoice date; and v) Trade Accounts
Receivable arising from sales to any company affiliated with the Company in any
way.
Eligible Inventory shall mean the gross amount of the Company's
inventory that conform to the warranties contained herein less reserves required
by GAAP, any work-in-process and goods (other than goods in transit) not present
in the United States of America.
Equipment shall mean all present and hereafter acquired machinery,
equipment, furnishings and fixtures, and all additions, substitutions and
replacements thereof, wherever
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located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto and all proceeds of whatever
sort.
ERISA shall mean the Employee Retirement Income Security Act or 1974,
as amended from time to time and the rules and regulations promulgated
thereunder from time to time.
GAAP shall mean generally accepted accounting principles in the United
States of America as in effect from time to time and for the period as to which
such accounting principles are to apply.
General Intangibles shall have the meaning set forth in the Uniform
Commercial Code as in effect in the State of Pennsylvania and shall include,
without limitation, all present and future right, title and interest in and to
all tradenames, trademarks (together with the goodwill associated therewith),
patents, licenses, customer lists, distribution agreements, supply agreements
and tax refunds, together with all monies and claims for monies now or hereafter
due and payable in connection with any of the foregoing or otherwise, and all
cash and non-cash proceeds thereof.
Indebtedness shall mean, without duplication, all liabilities,
contingent or otherwise, which are any of the following: (a) obligations in
respect of borrowed money or for the deferred purchase price of property,
services or assets, other than Inventory, or (b) lease obligations which, in
accordance with GAAP, have been, or which should be capitalized.
Intellectual Property Security Agreement shall mean a security
agreement executed by Company, in form and substance reasonably acceptable to
CITBC, by which the Company grants a security interest and lien in all of its
patents, trademarks, and copyrights to CITBC.
Inventory shall mean all of the Company's present and hereafter
acquired merchandise and inventory, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging, selling, promoting or
shipping same; in all stages of production- from raw materials through
work-in-process to finished goods - and all proceeds thereof of whatever sort.
Issuing Bank shall mean any bank issuing Letters of Credit for the
Company.
Letters of Credit shall mean all letters of credit issued with the
assistance of CITBC by the Issuing Bank for or on behalf of the Company.
Letter of Credit Guaranty shall mean any guaranty delivered by CITBC to
the Issuing Bank of the Company's reimbursement obligation under the Issuing
Bank's reimbursement agreement, application for Letter of Credit or other like
document.
Letter of Credit Guaranty Fee shall mean the fee CITBC may charge the
Company under paragraph 3 of Section 8 of this Financing Agreement for: i)
issuing the Letter of Credit Guaranty or ii) otherwise aiding the Company in
obtaining Letters of Credit pursuant to Section 5.
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LGP Management Fees shall mean the management fees payable by the
Company to Leonard Green & Partners, L.P. pursuant to that certain Management
Services Agreement, dated March 31, 1998, as in effect as of the date hereof.
Libor shall mean at any time of determination, and subject to
availability, for each interest period the higher of the applicable London
Interbank Offered rate paid in London on dollar deposits from other banks as (x)
quoted by The Chase Manhattan Bank or (y) published under "Money Rates" in the
New York City edition of the Wall Street Journal or if there is no such
publication or statement therein as to Libor then in any publication used in the
New York City financial community.
Libor Loan shall mean those Revolving Loans for which the Company has
elected to use Libor for interest rate computations.
Libor Period shall mean the Libor for one month, two month or three
month U.S. dollar deposits, as selected by the Company.
Libor Margin shall mean the amounts corresponding to EBITDA, determined
quarterly, for the prior rolling four-quarter period:
EBITDA Libor Margin
------ ------------
In excess of $17 million 2.00 percentage points
$13 million - $17 million 2.25 percentage points
Less than $13 million 2.50 percentage points
Line of Credit shall mean the commitment of CITBC to make loans and
advances pursuant to Section 3 of this Financing Agreement and to assist the
Company in obtaining Letters of Credit under Section 4 of this Financing
Agreement in the aggregate amount equal to $25,000,000; provided, however, that
the amount of the Line of Credit may from time to time be permanently reduced
under paragraph 9 of Section 3.
Line of Credit Fee shall: i) mean the fee due CITBC at the end of each
month for the Line of Credit, and ii) be determined by multiplying the
difference between the Line of Credit, and the average daily Revolving Loans and
outstanding Letters of Credit of the Company for said month by one-quarter of
one percent (1/4 of 1%) per annum for the number of days in said month during
which this Financing Agreement was in effect.
Loan Facility Fee shall mean the fee payable to CITBC in accordance
with, and pursuant to, the provisions of paragraph 7 of Section 8 of this
Financing Agreement.
Obligations shall mean all loans and advances made or to be made by
CITBC to the Company or to others for the Company's account; any and all
indebtedness and obligations which may at any time be owing by the Company to
CITBC howsoever arising, whether now in existence or incurred by the Company
from time to time hereafter; whether secured by pledge, lien upon or security
interest in any of the Company's assets or property or the assets or property of
any other person, firm, entity or corporation; whether such indebtedness is
absolute or contingent, joint or several, matured or unmatured, direct or
indirect and whether the Company is
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liable to CITBC for such indebtedness as principal, surety, endorser, guarantor
or otherwise. Obligations shall also include indebtedness owing to CITBC by the
Company under this Financing Agreement or under any other agreement or
arrangement now or hereafter entered into between the Company and CITBC;
indebtedness or obligations incurred by, or imposed on, CITBC as a result of
environmental claims arising out of the Company's operation, premises or waste
disposal practices or sites; the Company's liability to CITBC as maker or
endorser on any promissory note or other instrument for the payment of money;
the Company's liability to CITBC under any instrument of guaranty or indemnity,
or arising under any guaranty, endorsement or undertaking which CITBC may make
or issue to others for the Company's account, including any accommodation
extended with respect to applications for Letters of Credit, CITBC's acceptance
of drafts or CITBC's endorsement of notes or other instruments for the Company's
account and benefit.
Out-of-Pocket Expenses shall mean all of CITBC's present and future
reasonable and documented expenses incurred relative to this Financing
Agreement, whether incurred heretofore or hereafter, which expenses shall
include, without being limited to, the cost of record searches, all costs and
expenses incurred by CITBC in opening bank accounts, depositing checks,
receiving and transferring funds, and any charges imposed on CITBC due to
"insufficient funds" of deposited checks and CITBC's standard fees relating
thereto, any amounts paid by, incurred by or charged to, CITBC by the Issuing
Bank under the Letter of Credit Guaranty or the Company's reimbursement
agreement, application for Letter of Credit or other like document which pertain
either directly or indirectly to such Letters of Credit, and CITBC's standard
fees relating to the Letters of Credit and any drafts thereunder, local counsel
fees, if any, and taxes relative to the filing of financing statements, and all
expenses, costs and fees set forth in paragraph 3 of Section 10 of this
Financing Agreement; provided that Out-of-Pocket Expenses shall not include
internal, administrative, or overhead costs of CITBC (other than allocated fees
of internal legal counsel), or items covered by the Collateral Management Fee.
Permitted Affiliate Transactions shall mean: (i) transactions, expenses
and payments pursuant to the terms of or contemplated by (a) the Employment
Agreements and Non-Competition Agreements between the Company and each of
Kenneth Levine and Richard Rutta, each dated as of March 31, 1998, as in effect
on the date hereof; (b) the Employment Agreements between the Company and each
of Norman Harris and Michael A. Sumsky, each dated as of March 31, 1998, as in
effect on the date hereof; (c) the Management Services Agreement between Leonard
Green & Partners, L.P. and the Company dated as of March 31, 1998, as in effect
on the date hereof; (d) the Stockholders Agreement among Green Equity Investors
II, L.P., Kenneth Levine, Richard Rutta and the Company dated as of March 31,
1998, as in effect on the date hereof; (e) the Management Subscription and
Stockholders Agreements among the Company, Green Equity Investors II, L.P. and
each of Norman Harris and Michael A. Sumsky, each dated as of March 31, 1998, as
in effect on the date hereof; (f) the leases between the Company and Richard
Rutta and Kenneth Levine, General Partnership as in effect on the date hereof,
and as any such leases may be extended or amended from time to time if on
substantially identical terms; and (g) indemnification and other similar
obligations under the Stock Purchase Agreement (as such term is defined in the
Indenture governing the Senior Unsecured Debt), as in effect on the date hereof;
(ii) compensation, indemnification and other benefits paid or made available for
or in connection with services actually rendered and comparable to those
generally paid or made available in the same or similar businesses (including
stock options and related
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stock option agreements, reimbursement of reasonable out-of-pocket expenses,
loans to officers, directors and employees in the ordinary course of business
consistent with past practice and directors' and officers' liability insurance)
as determined in good faith by the Company's Board of Directors or senior
management; and (iii) other transactions on terms that are no less favorable to
the Company than those that could reasonably be expected to be obtained in a
comparable transaction entered into on an arm's length basis from a person or
entity that is not an affiliate of the Company.
Permitted Encumbrances shall mean: i) liens expressly permitted, or
consented to, by CITBC and listed on such Schedule 1, if any, as is attached
hereto or as may be consented to, in writing, by CITBC in the future; ii)
Purchase Money Liens; iii) Customarily Permitted Liens; iv) liens granted CITBC
by the Company; v) liens of judgment creditors provided such liens do not
exceed, in the aggregate, at any time, $150,000.00 (other than liens stayed,
satisfied, bonded or insured to the reasonable satisfaction of CITBC); vi) liens
for taxes, levies or assessments not yet due and payable or which are being
diligently contested in good faith by the Company by appropriate proceedings and
which liens are not for taxes due the United States of America; vii) liens and
other encumbrances in existence on the date hereof and disclosed in writing to
CITBC and accepted in writing by CITBC; viii) any extension, renewal or
replacement of any of the foregoing, provided that any extension, renewal or
replacement lien shall be limited to the property or assets covered by the lien
extended, renewed or replaced and the obligation secured by such extension,
renewal or replacement lien shall be in an amount not greater than the
obligations secured by the lien extended, renewed or replaced plus the amount of
all expenses, fees, premiums and penalties paid in connection with such
extension, renewal or replacement; (ix) easements, licenses, rights-of-way,
restrictions, encroachments, minor defects or irregularities in title, charges
or other encumbrances, in each case not interfering in any material respect with
the ordinary conduct of the business of the Company or any of its subsidiaries;
(x) any (a) interest or title of a lessor or sublessor under any lease not
prohibited by this Financing Agreement, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease to any
restriction or encumbrance referred to in the preceding clause (b); (xi) any
zoning or similar law or right reserved to or vested in any governmental office
or agency to control or regulate use of any real property and (xii) leases or
subleases in the ordinary course of business, not involving Inventory or Trade
Accounts Receivable, and granted to third parties not otherwise prohibited by
this Financing Agreement and not interfering in any material respect with the
ordinary conduct of the business of the Company or any of its subsidiaries.
Permitted Indebtedness shall mean: i) current indebtedness maturing in
less than one year and incurred in the ordinary course of business for
Inventory, supplies, equipment, services, or taxes and indebtedness incurred in
the ordinary course of business for labor; ii) the indebtedness secured by the
Purchase Money Liens; iii) future Subordinated Debt, if any, which is
subordinated to the prior payment and satisfaction of the Company's Obligations
to CITBC by means of a subordination agreement in form and substance
satisfactory to CITBC; iv) indebtedness arising under or in connection with the
Letters of Credit and this Financing Agreement; v) deferred taxes and other
expenses incurred in the ordinary course of business; vi) the Senior Unsecured
Debt and other indebtedness existing on the date of execution of this Financing
Agreement and listed in the most recent financial statement delivered to CITBC
or otherwise disclosed to CITBC in writing; (vii) Capital Leases provided that
the Indebtedness
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incurred under such Capital Leases shall not exceed $250,000 in any fiscal year;
(viii) other unsecured Indebtedness in an aggregate principal amount not
exceeding $5,000,000 at any time outstanding; and (ix) any extension, renewal or
replacement of any of the foregoing, provided that any extension, renewal or
replacement shall (a) be in an amount not greater than the Indebtedness so
extended, renewed or replaced (plus the amount of expenses, fees and any premium
or penalty paid in connection with such extension, renewal or replacement), and
(b) in the case of Subordinated Debt, shall (1) have an amortization schedule
that results in the same or longer average life to maturity than the
Subordinated Debt and (2) contain subordination provisions which are
substantially similar to those in the documents evidencing the Subordinated
Debt.
Permitted Investments shall mean (i) commercial paper and municipal
bonds, in each case issued or guaranteed by a party rated P-1 or better by
Moody's Investors Service, Inc. ("Moody's") or A-1 or MIG-1 or better by
Standard & Poor's Rating Services ("S & P"), (ii) certificates of deposit, time
deposits, Eurodollar deposits or bankers' acceptances maturing not more than one
year after the date of issue, issued by any commercial banking institution,
which is a member of the Federal Reserve System and has a combined capital and
surplus and undivided profits of not less than $100,000,000, (iii) repurchase
agreements having maturities of not more than one year and which are secured by
readily marketable direct obligations of the Government of the United States of
America or any agency thereof, (iv) readily marketable obligations of the
Government of the United States of America or any agency thereof; (v) readily
marketable obligations issued by any state of the United States or any political
subdivision thereof having a rating by Moody's or S & P of "A" or its equivalent
or better; (vi) mutual funds which are regularly traded in the United States of
America whose investments are limited to those described in clauses (i) through
(v) above or the Evergreen Money Market Fund; (vii) investments received by the
Company in settlement of or other resolution of claims or disputes or in
connection with a plan of reorganization in connection with a bankruptcy or
insolvency of an entity indebted to the Company and, in each case, extensions,
modifications and renewals thereof; (viii) loans and advances to officers,
directors and employees of the Company in an aggregate amount not to exceed
$200,000 outstanding at any time; and (ix) other loans, advances and investments
in an aggregate amount not to exceed $500,000 at any time outstanding.
Purchase Money Liens shall mean liens on any items of Equipment
acquired after the date of this Financing Agreement provided that i) each such
lien shall attach only to the property to be acquired, ii) a description of the
property so acquired is furnished to CITBC, and iii) the debt incurred in
connection with such acquisitions shall not exceed in the aggregate $500,000 in
any fiscal year.
Real Estate shall mean the Company's fee and/or leasehold interests in
the real property which has been, or will be, encumbered, mortgaged, pledged or
assigned to CITBC or its designee.
Retained Cash shall mean an amount of cash sufficient to provide the
Company with cash in an amount necessary to stock the Company's cash registers
at its retail locations and consistent with the business practices of the
Company as of the date hereof.
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Revolving Loans shall mean the loans and advances made, from time to
time, to or for the account of the Company by CITBC pursuant to Section 3 of
this Financing Agreement.
Senior Unsecured Debt shall mean that unsecured Indebtedness
outstanding from time to time under that certain Indenture, dated as of March
31, 1998, between the Company, as issuer, and State Street Bank and Trust
Company, as trustee.
Subordinated Debt shall mean any future debt due a Subordinating
Creditor (and the note evidencing such) which will be subordinated, by the
Subordination Agreement, to the prior payment and satisfaction of the
Obligations of the Company to CITBC.
Subordinating Creditor shall mean any future holder of future
Subordinated Debt.
Subordination Agreement shall mean any future agreement respecting any
future Subordinated Debt among the Company, the Subordinating Creditor and CITBC
pursuant to which the Subordinated Debt will be subordinated to the prior
payment and satisfaction of the Company's Obligations to CITBC.
Trade Accounts Receivable shall mean, at any time of determination, the
amounts due the Company by (i) any credit card issuer and (ii) any customer
obligated on an invoice, in each instance due as a result of a sale of inventory
and/or the rendition of services by the Company.
Uniform Commercial Code shall mean the Uniform Commercial Code, as
amended and supplemented from time to time, as in effect in the applicable
jurisdiction.
SECTION 2. Conditions Precedent
The obligation of CITBC to make loans hereunder is subject to the
satisfaction of, or waiver of, immediately prior to or concurrently with the
making of such loans, the following conditions precedent (or as conditions
subsequent if so expressly indicated):
(a) Lien Searches - CITBC shall have received tax, judgment and Uniform
Commercial Code searches satisfactory to CITBC for all locations presently
occupied or used by the Company.
(b) Casualty Insurance - The Company shall have delivered to CITBC
evidence satisfactory to CITBC that casualty insurance policies listing CITBC as
loss payee or mortgagee, as the case may be, are in full force and effect, all
as set forth in Section 7, paragraph 5 of this Financing Agreement.
(c) Financial Projections - CITBC shall have received, reviewed and be
satisfied with a two years Company financial projections, including monthly
detail and projected borrowing availability for the first year, together with a
balance sheet, profit and loss statement, and statement of cash flows,
accompanied by a management discussion and analysis as well as detail of
material assumptions, all in form an substance satisfactory to CITBC.
(d) UCC Filings - Any documents (including without limitation, financing
statements) required to be filed in order to create, in favor of CITBC, a first
and exclusive
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perfected security interest in the Collateral with respect to which a security
interest may be perfected by a filing under the Uniform Commercial Code shall
have been properly filed in each office in each jurisdiction required in order
to create in favor of CITBC a perfected lien on the Collateral under the Uniform
Commercial Code in effect as of the date hereof and as would be in effect if the
revisions to Uniform Commercial Code Article 9 are adopted in any relevant
jurisdiction as adopted in California effective July 1, 2001. CITBC shall have
received acknowledgement copies of all such filings (or, in lieu thereof, CITBC
shall have received other evidence satisfactory to CITBC that all such filings
have been made); and CITBC shall have received evidence that all necessary
filing fees and all taxes or other expenses related to such filings have been
paid in full.
(e) Blocked Account Agreements - CITBC shall have received the Blocked
Account Agreements, duly executed by all parties thereto.
(f) Credit Card Agreements - CITBC shall have received the Credit Card
Agreements, duly executed by all parties thereto; provided that the Credit Card
Agreements may be delivered within 21 days after the date hereof (and Company
covenants to do the same).
(g) Examination & Verification - CITBC shall have completed to the
satisfaction of CITBC an examination and verification of the Trade Accounts
Receivable, Inventory, books and records of the Company, which examination shall
indicate that, after giving effect to all loans, advances and extensions of
credit to be made at closing, the Company shall have an opening additional
aggregate Availability of at least $5,000,000. It is understood that such
requirement contemplates that all debts, obligations and payables are current in
accordance with the Company's usual business practices. The Company shall
deliver all agreements in effect as of the Closing Date with respect to
Permitted Affiliate Transactions with 21 days following the Closing Date (and
Company covenants to do the same).
(h) Opinions - Counsel for the Company shall have delivered to CITBC
opinions satisfactory to CITBC opining, inter alia, that, subject to the i)
filing, priority and remedies provisions of the Uniform Commercial Code, ii) the
provisions of the Bankruptcy Code, insolvency statutes or other like laws, iii)
the equity powers of a court of law and iv) such other matters as may be agreed
upon with CITBC: a) this Financing Agreement x) is valid, binding and
enforceable according to its terms, y) is duly authorized and z) does not
violate any terms, provisions, representations or covenants in the charter or
by-laws of the Company or, to the best knowledge of such counsel, of any loan
agreement, mortgage, deed of trust, note, security or pledge agreement or
indenture, identified by the Company to such counsel as material, to which the
Company is a signatory or by which the Company or its assets are bound.
(i) Additional Documents - The Company shall have executed and delivered
to CITBC all loan documents necessary to consummate the lending arrangement
contemplated between the Company and CITBC; provided that the Intellectual
Property Security Agreement may be delivered within 21 days after the date
hereof (and the Company covenants to do the same).
(j) Board Resolution - CITBC shall have received a copy of the
resolutions of the Board of Directors of the Company authorizing the execution,
delivery and performance
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of (i) this Financing Agreement, and (ii) any related agreements, in each case
certified by the Secretary or Assistant Secretary of the Company as of the date
hereof, together with a certificate of the Secretary or Assistant Secretary of
the Company as to the incumbency and signature of the officers of the Company
executing this Financing Agreement and any certificate or other documents to be
delivered by it pursuant hereto, together with evidence of the incumbency of
such Secretary or Assistant Secretary.
(k) Corporate Organization - CITBC shall have received (i) a copy of the
Certificate of Incorporation of the Company certified by the Secretary of State
of its incorporation, and (ii) a copy of the By-Laws (as amended through the
date hereof) of the Company and certified by the Secretary or Assistant
Secretary of the Company.
(l) Officer's Certificate - CITBC shall have received an executed
Officer's Certificate of the Company, satisfactory in form and substance to
CITBC, certifying that (i) the representations and warranties contained herein
are true and correct in all material respects on and as of the date hereof; (ii)
the Company is in compliance with all of the terms and provisions set forth
herein; and (iii) no Event of Default or Default has occurred.
(m) Absence of Default - No Default, Event of Default or material
adverse change in the financial condition, business, prospects, profits,
operations or assets of the Company shall have occurred since January 31, 2000.
(n) Existing Revolving Credit Agreement -- The Company's existing credit
agreement with the syndicate of financial institutions lead by Deutsche Bank
shall be (x) terminated, (y) all loans and obligations of the Company thereunder
shall be paid or satisfied in full utilizing the proceeds of the initial
Revolving Loans to be made under this Financing Agreement and (z) all liens upon
or security interest in favor of such lending syndicate shall be terminated
and/or released upon such payment.
(o) Legal Restraints/Litigation - At the date of execution of this
Financing Agreement, there shall be no x) litigation, investigation or
proceeding (judicial or administrative) pending or threatened against the
Company or its assets by any agency, division or department of any county, city,
state or federal government arising out this Financing Agreement, y) injunction,
writ or restraining order restraining or prohibiting the consummation of the
financing arrangements contemplated under this Financing Agreement or z) suit,
action, investigation or proceeding (judicial or administrative) pending or
threatened against the Company or its assets, which is reasonably likely to
result in a material adverse effect on the business, operation, assets,
financial condition or Collateral of the Company.
(p) Disbursement Authorization - The Company shall have delivered to
CITBC all information necessary for CITBC to issue wire transfer instructions on
behalf of the Company for the initial and subsequent loans and/or advances to be
made under this Agreement including, but not limited to, disbursement
authorizations in form acceptable to CITBC.
Upon the execution of this Financing Agreement and the initial
disbursement of loans hereunder, all of the above Conditions Precedent shall
have been deemed satisfied except as the Company and CITBC shall otherwise agree
herein or in a separate writing.
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SECTION 3. Revolving Loans
1. CITBC agrees, subject to the terms and conditions of this Financing
Agreement from time to time, and within the Availability, but subject to CITBC's
right to make "overadvances", to make loans and advances to the Company on a
revolving basis (i.e. subject to the limitations set forth herein, the Company
may borrow, repay and re-borrow Revolving Loans). All requests for loans and
advances must be received by an officer of CITBC no later than 1:00 p.m., New
York time, of the Business Day on which such loans and advances are required.
Should CITBC for any reason honor requests for advances in excess of the
limitations set forth herein, such advances shall be considered "overadvances"
and shall be made in CITBC's sole discretion, subject to any additional terms
CITBC deems necessary.
2. In furtherance of the continuing collateral assignment and security
interest in the Company's Trade Accounts Receivable and Inventory, the Company
shall deliver to CITBC not later than: (1) twenty (20) days after the end of
each month an aging of the Company's Trade Accounts Receivable in such form and
manner as CITBC may reasonably require but consistent with the current practices
of the Company and (2) twenty (20) days after the end of each month, a monthly
inventory confirmation statement stating the aggregate amount of Eligible
Inventory of the Company. In addition, the Company will provide to CITBC such
additional information and material with respect to the Trade Accounts
Receivable and Inventory, in such form and detail, as CITBC may reasonably
request to effectively evaluate the Trade Accounts Receivable and the
collectibility thereof and the mix of the Inventory and such other information
as CITBC may reasonably require to evaluate the Company's Trade Accounts
Receivable and Inventory, such as returns, claims, credits, allowances and
information identifying and describing the Trade Accounts Receivable. Failure to
provide CITBC with the foregoing information will in no way affect, diminish,
modify or limit the security interest granted herein. Such reports are to be
executed by an authorized officer of the Company. The Company shall deliver
monthly (by the last Business Day of the month) reports respecting the preceding
month with respect to the borrowing base.
3. The Company hereby represents and warrants that: each Trade Accounts
Receivable is based on an actual and bona fide sale and delivery of goods or
rendition of services to customers, made by the Company in the ordinary course
of its business; the Inventory being sold and/or supplied and the Trade Accounts
Receivable created are the exclusive property of the Company and are not and
shall not be subject to any lien, consignment arrangement, encumbrance, security
interest or financing statement whatsoever, other than the Permitted
Encumbrances; the invoices evidencing such Trade Accounts Receivable or credit
card receipts evidencing credit card sales are in the name of the Company; and
except for disputes, offsets, defenses, counterclaims, contras, returns or
credits, all arising in the normal course of the Company's business or except as
may be promptly disclosed to the CITBC, the Company's customers owe and are
obligated to pay the amount stated in the invoices or credit card receipts. The
Company confirms to CITBC that any and all taxes or fees relating to its
business, its sales, the Trade Accounts Receivable or goods relating thereto,
are its sole responsibility and that same will be paid by the Company (except as
otherwise permitted by this Financing Agreement) and that none of said taxes or
fees represent a lien on or claim against the Trade Accounts Receivable. The
Company also warrants and represents that it is a duly and validly existing
corporation and is qualified in all states where the failure to so qualify would
have a material
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adverse effect on the business of the Company or the ability of the Company to
enforce collection of Trade Accounts Receivable due from customers residing in
that state. The Company agrees to maintain such books and records regarding
Trade Accounts Receivable as CITBC may reasonably require, consistent with the
Company's current recordkeeping practices, and agrees that the books and records
of the Company will reflect CITBC's interest in the Trade Accounts Receivable as
CITBC may reasonably request. All of the books and records of the Company will
be available to CITBC at normal business hours, including any records handled or
maintained for the Company by any other company or entity.
4. During the term of this Financing Agreement, the Company may and
will, at its expense, consistent with the Company's existing practices, enforce,
collect and receive all amounts owing on the Trade Accounts Receivable. Except
for the Retained Cash, checks or cash from the sale of Inventory or the
rendering of services must be deposited promptly to a Blocked Account or to the
Depository Accounts, and promptly thereafter and therefrom, to a Blocked
Account. The Company shall require that all amounts due under credit card sales
be remitted by the credit card companies to a Blocked Account. The Company
agrees that it will only direct the flow of funds from the Depository Accounts
and the credit card remitters to the Blocked Accounts. The institutions holding
such Blocked Accounts will be instructed that when it is satisfied that such
funds on deposit are "good funds", such institution will remit such "good funds"
to the Company's operating account. Notwithstanding anything herein contained to
the contrary, if there is then an Event of Default, CITBC may advise the banks
holding the Blocked Accounts to remit all proceeds of Collateral to CITBC for
its account. CITBC will immediately rescind those instructions upon the waiver
of the Event of Default or upon the cure thereof to CITBC's reasonable
satisfaction. All amounts received by CITBC will be credited to the Obligations
upon CITBC's receipt of "good funds" at its bank account in New York, New York
on the Business Day of receipt if received no later than 2 p.m. New York time or
on the next succeeding Business Day if received after 2 p.m. New York time. No
checks, drafts or other instruments received by CITBC will constitute final
payment unless and until such instruments have actually been collected. If the
loan account reflects a zero Revolving Loan balance and there is then no Event
of Default, then CITBC shall promptly remit to the operating account of the
Company any credit balances in the loan account.
5. The Company agrees to notify CITBC promptly of any matters materially
affecting the value, enforceability or collectability of the Trade Accounts
Receivable and of all material customer disputes, offsets, defenses,
counterclaims, returns, rejections and all material reclaimed or repossessed
merchandise or goods.
6. CITBC shall maintain a separate account on its books in the Company's
name in which the Company will be charged with loans and advances made by CITBC
to it or for its account, and with any other Obligations, including any and all
reasonable and documented costs, expenses and reasonable and documented
attorney's fees which CITBC may incur in connection with the exercise by or for
CITBC of any of the rights or powers herein conferred upon CITBC, or in the
prosecution or defense of any action or proceeding to enforce or protect any
rights of CITBC in connection with this Financing Agreement or the Collateral
assigned hereunder, or any Obligations owing to CITBC by the Company. The
Company will be credited with all amounts received by CITBC from the Company or
from others for the Company's account, including, as above set forth, all
amounts received by CITBC in payment of assigned Accounts and such
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amounts will be applied to payment of the Obligations. In no event shall prior
recourse to any Accounts or other security granted to or by the Company be a
prerequisite to CITBC's right to demand payment of any Obligation. Further, it
is understood that CITBC shall have no obligation whatsoever to perform in any
respect any of the Company's contracts or obligations relating to the Accounts.
7. After the end of each month, CITBC shall promptly send the Company a
statement showing the accounting for the charges, loans, advances and other
transactions occurring between CITBC and the Company during that month. The
monthly statements shall be deemed correct and binding upon the Company and
shall constitute an account stated between the Company and CITBC unless CITBC
receives a written statement of the exceptions within thirty (30) days of the
date of the monthly statement.
8. In the event that the sum of (i) the outstanding balance of Revolving
Loans and (ii) outstanding balance of Letters of Credit exceeds (x) the maximum
amount thereof available under Section 3 and 5 hereof or (y) the Line of Credit
(herein the amount of any such excess shall be referred to as the "Excess") such
Excess shall be due and payable to CITBC immediately upon CITBC's demand
therefor.
9. The Company may at any time, on five (5) Business Days prior written
notice to CITBC, reduce the Line of Credit provided that: (i) any reduction
shall be permanent and irrevocable; (ii) a reduction must be for at least
$2,500,000.00 or whole multiples thereof; (iii) the Company shall immediately
repay CITBC the amount by which the Obligations exceed Availability; (iv) the
Company may not reduce the Line of Credit to less than $15,000,000; and (v) if
the Company shall reduce the amount of the Line of Credit pursuant to the
proviso in the preceding sentence prior to the third Anniversary Date, the
Company shall immediately pay CITBC a fee determined by multiplying the amount
of the reduction by (x) one percent (1%) if the reduction occurs prior to the
first Anniversary Date or (y) one-half percent (1/2%) if the reduction occurs on
or after the first Anniversary Date but prior to the third Anniversary Date.
SECTION 4. Intentionally Omitted
SECTION 5. Letters of Credit
In order to assist the Company in establishing or opening Letters of
Credit with an Issuing Bank to cover the purchase of imported Inventory,
Equipment or otherwise (including standby Letters of Credit), the Company has
requested CITBC to join in the applications for such Letters of Credit, and/or
guarantee payment or performance of such Letters of Credit and any drafts or
acceptances thereunder through the issuance of the Letters of Credit Guaranty,
thereby lending CITBC's credit to the Company and CITBC has agreed to do so.
These arrangements shall be handled by CITBC subject to the terms and conditions
set forth below.
1. Within the Line of Credit and Availability, CITBC shall assist the
Company in obtaining Letter(s) of Credit in an amount not to exceed $3,000,000
in the aggregate outstanding at any one time. CITBC's assistance for amounts in
excess of the limitation set forth herein shall at all times and in all respects
be in CITBC's sole discretion. It is understood that the form and purpose of
each Letter of Credit must be acceptable to CITBC in its reasonable business
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judgment. Any and all outstanding Letters of Credit shall be treated as a
Revolving Loan for Availability purposes. Notwithstanding anything herein to the
contrary, upon the occurrence of a Default and/or Event of Default, CITBC's
assistance in connection with the Letter of Credit Guaranty shall be in CITBC's
sole discretion unless such Default and/or Event of Default is cured to CITBC's
reasonable satisfaction or waived by CITBC in writing. The amount, purpose and
extent of the Letters of Credit and changes or modifications thereof by the
Company and/or the Issuing Bank of the terms and conditions thereof shall in all
respects be subject to the prior approval of CITBC in the exercise of its
reasonable discretion, and the Letter of Credit and all documentation in
connection therewith shall be in form and substance satisfactory to the Company,
CITBC and the Issuing Bank.
2. CITBC shall have the right, without notice to the Company, to charge
the Company's account on CITBC's books with the amount of any and all
indebtedness, liability or obligation of any kind incurred by CITBC under the
Letters of Credit Guaranty at the earlier of a) payment by CITBC under the
Letters of Credit Guaranty, or b) upon the termination of this Financing
Agreement. Any amount charged to Company's loan account shall be deemed a
Revolving Loan hereunder and shall incur interest at the rate provided in
Section 8, paragraph 1 of this Financing Agreement.
3. The Company unconditionally indemnifies CITBC and holds CITBC
harmless from any and all loss, claim or liability incurred by CITBC arising
from any transactions or occurrences relating to Letters of Credit established
or opened for the Company's account, the collateral relating thereto and any
drafts or acceptances thereunder, and all Obligations thereunder, including any
such loss or claim due to any action taken by, or any errors, omissions,
negligence or misconduct by, any Issuing Bank, other than for any such loss,
claim or liability arising out of the gross negligence or willful misconduct by
CITBC. The Company's unconditional obligation to CITBC hereunder shall not be
modified or diminished for any reason or in any manner whatsoever, other than as
a result of CITBC's gross negligence or willful misconduct. The Company agrees
that any charges incurred by CITBC for the Company's account by the Issuing Bank
shall be conclusive on CITBC and may be charged to the Company's account.
4. In connection with any Letter of Credit, CITBC shall not be
responsible for: the existence, character, quality, quantity, condition,
packing, value or delivery of the goods purporting to be represented by any
documents; any difference or variation in the character, quality, quantity,
condition, packing, value or delivery of the goods from that expressed in the
documents; the validity, sufficiency or genuineness of any documents or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, insufficient, fraudulent or forged, other than as a
result of the gross negligence or willful misconduct of CITBC; the time, place,
manner or order in which shipment is made; partial or incomplete shipment, or
failure or omission to ship any or all of the goods referred to in the Letters
of Credit or documents; any deviation from instructions; delay, default, or
fraud by the shipper and/or anyone else in connection with the goods which are
the subject of any Letter of Credit or the shipping thereof; or any breach of
contract between the shipper or vendors and the Company. Furthermore, without
being limited by the foregoing, CITBC shall not be responsible for any act or
omission with respect to or in connection with any good which are the subject of
any Letter of Credit.
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5. In connection with any Letter of Credit, the Company agrees that any
action taken by CITBC, if taken in good faith, or any action taken by any
Issuing Bank, under or in connection with the Letters of Credit, the guarantees,
the drafts or acceptances, or the goods which are the subject of any Letter of
Credit, shall, as between CITBC and the Company, be binding on the Company and
shall not put CITBC in any resulting liability to the Company other than as a
result of the gross negligence or willful misconduct of CITBC. During the
continuance of an Event of Default, CITBC shall have the full right and
authority to clear and resolve any questions of non-compliance of documents; to
give any instructions as to acceptance or rejection of any documents or goods;
to execute any and all steamship or airways guaranties (and applications
therefor), indemnities or delivery orders; to grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents; and to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Letters of Credit, drafts or acceptances; all in CITBC's
sole name, and the Issuing Bank shall be entitled to comply with and honor any
and all such documents or instruments executed by or received solely from CITBC,
all without any notice to or any consent from the Company.
6. In connection with any Letter of Credit, the Company agrees that any
necessary import, export or other licenses or certificates for the import or
handling of the goods which are the subject of any Letter of Credit will have
been promptly procured and all foreign and domestic governmental laws and
regulations in regard to the shipment and importation of such goods, or the
financing thereof will have been promptly and full complied with, except to the
extent that any such non-procurement or non-compliance will not materially
adversely effect the Collateral by $250,000 or more; and any certificates in
that regard that CITBC may at any time reasonably request will be promptly
furnished. In this connection, the Company warrants and represents that all
shipments made under any such Letters of Credit are in accordance with the laws
and regulations of the countries in which the shipments originate and terminate,
and are not prohibited by any such laws and regulations, except to the extent
that any failure to so comply will not materially adversely effect the
Collateral by $250,000 or more. The Company assumes all risk, liability and
responsibility for, and agrees to pay and discharge, all present and future
local, state, federal or foreign taxes, duties, or levies in connection with any
goods purchased, imported or acquired under a Letter of Credit. Any embargo,
restriction, laws, customs or regulations of any country, state, city, or other
political subdivision, where the Collateral is or may be located, or wherein
payments are to be made, or wherein drafts may be drawn, negotiated, accepted,
or paid, shall be solely the Company's risk, liability and responsibility.
7. Upon any payments made to the Issuing Bank under the Letter of Credit
Guaranty, CITBC shall acquire by subrogation, any rights, remedies, duties or
obligations granted or undertaken by the Company to the Issuing Bank in any
application for Letters of Credit, any standing agreement relating to Letters of
Credit or otherwise, all of which shall be deemed to have been granted to CITBC
and apply in all respects to CITBC and shall be in addition to any rights,
remedies, duties or obligations contained herein.
8. Nothing in this Financing Agreement is intended to relieve any
Issuing Bank from any liability to any person or entity.
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SECTION 6. Collateral
1. As security for the prompt payment in full of all loans and advances
made and to be made to the Company from time to time by CITBC pursuant hereto,
as well as to secure the payment in full of the other Obligations, the Company
hereby pledges and grants to CITBC a continuing general lien upon and security
interest in all of its:
(a) present and hereafter acquired Inventory;
(b) present and hereafter acquired Equipment;
(c) present and future Accounts;
(d) present and future Documents of Title;
(e) present and future General Intangibles;
(f) Real Estate; and
(g) all other present and future Collateral.
2. The security interests granted hereunder shall extend and attach to
the following property of the Company:
(a) All Collateral which is presently in existence and which is
owned by the Company or in which the Company has any interest including as
lessee (but only to the extent of such interest), whether held by the Company or
others for its account, and, if any Collateral is Equipment, whether the
Company's interest in such Equipment is as owner or conditional vendee;
(b) All Equipment whether the same constitutes personal property or
fixtures, including, but without limiting the generality of the foregoing, all
dies, jigs, tools, benches, tables, accretions, component parts thereof and
additions thereto, as well as all accessories, motors, engines and auxiliary
parts used in connection with or attached to the Equipment; and
(c) All Inventory and any portion thereof which may be returned,
rejected, reclaimed or repossessed by either CITBC or the Company from the
Company's customers.
Anything in this Financing Agreement to the contrary notwithstanding, the
Collateral shall not include, and no security interest granted hereunder shall
extend or attach to, the Company's rights (other than rights to payment) under
any license agreements or lease agreements existing as of the date hereof, or
any leases of real property or leases of motor vehicles or other personal
property now or hereafter existing that prohibit the grant of a security
interest or lien therein to the extent, and only to the extent, that the terms
prohibiting the grant of such security interest or lien have not been waived or
consented to by the licensor, lessor or other necessary person or entity under
such agreement.
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3. The Company agrees to take reasonable steps, consistent with current
business practices, to safeguard, protect and hold all Inventory and make no
disposition thereof except in the regular course of the business of the Company.
Inventory sold to customers may only be sold and shipped by the Company to its
customers in the ordinary course of the Company's business, for cash, credit
card sales or on open account on terms customary in the industry, provided that
all proceeds of all sales (but excluding the Retained Cash and accounts
receivable) are deposited in accordance with paragraph 4 of Section 3 of this
Financing Agreement. Upon the sale, exchange, or other disposition of Inventory,
as herein provided, the security interest in the Company's Inventory provided
for herein shall, without break in continuity and without further formality or
act, continue in, and attach to, all proceeds, including any instruments for the
payment of money, accounts receivable, contract rights, documents of title,
shipping documents, chattel paper and all other cash and non-cash proceeds of
such sale, exchange or disposition. As to any such sale, exchange or other
disposition, CITBC shall have a security interest in all of the rights of the
Company as an unpaid seller, including stoppage in transit, replevin, rescission
and reclamation.
4. The Company agrees at its own cost and expense to take reasonable
steps, consistent with current business practices, to safeguard, protect and
hold all Equipment and to make no dispositions thereof except in the ordinary
course of business, provided that all proceeds of all dispositions of Equipment
in the form of cash, checks, notes, instruments for the payment of money and
similar proceeds shall be deposited in the Depository Accounts and/or the
Concentration Accounts or otherwise paid over or delivered to CITBC; provided,
that in no event shall the aggregate amount of all such dispositions exceed
$500,000 per year. Upon the sale, exchange, or other disposition of the
Equipment, as herein provided, the security interest provided for herein shall,
without break in continuity and without further formality or act, continue in,
and attach to, all proceeds, including any instruments for the payment of money,
accounts receivable, contract rights, documents of title, shipping documents,
chattel paper and all other cash and non-cash proceeds of such sales, exchange
or disposition. As to any such sale, exchange or other disposition, CITBC shall
have a security interest in all of the rights of the Company as an unpaid
seller, including stoppage in transit, replevin, rescission and reclamation.
5. The rights and security interests granted to CITBC hereunder are to
continue in full force and effect, notwithstanding the termination of this
Financing Agreement or the fact that the account maintained in the Company's
name on the books of CITBC may from time to time be temporarily in a credit
position, until the satisfaction in full of all Obligations and the termination
of this Financing Agreement. Any delay, or omission by CITBC to exercise any
right hereunder, shall not be deemed a waiver thereof, or be deemed a waiver of
any other right, unless such waiver be in writing and signed by CITBC. A waiver
on any one occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion. Upon the final satisfaction in full of all
Obligations and the termination of this Financing Agreement, CITBC will take, at
the Company's request and expense, all actions and do all things reasonably
necessary to release the rights and security interests in the Collateral. Upon a
disposition of Collateral permitted hereunder, CITBC will take, at the Company's
request and expense, all actions and do all things reasonably necessary to
release the rights and security interests in the Collateral that is the subject
of such partial release.
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6. To the extent that the Obligations are now or hereafter secured by
any assets or property other than the Collateral or by the guarantee,
endorsement, assets or property of any other person, then CITBC shall have the
right in its sole discretion to determine which rights, security, liens,
security interests or remedies CITBC shall at any time pursue, foreclose upon,
relinquish, subordinate, modify or take any other action with respect to,
without in any way modifying or affecting any of them, or any of CITBC's rights
hereunder.
7. Any reserves or balances to the credit of the Company and any other
property or assets of the Company in the possession of CITBC may be held by
CITBC as security for any Obligations and applied in whole or partial
satisfaction of such Obligations when due. The liens and security interests
granted herein and any other lien or security interest CITBC may have in any
other assets of the Company, shall secure payment and performance of all now
existing and future Obligations. CITBC may in its discretion charge any or all
of the Obligations to the account of the Company when due.
8. The Company shall give to CITBC from time to time such pledge or
security agreements with respect to General Intangibles and capital stock owned
by the Company as CITBC shall require to obtain valid first liens thereon.
SECTION 7. Representations, Warranties and Covenants
1. The Company hereby warrants and represents and/or covenants that: i)
the fair value of the Company's assets exceeds the book value of the Company's
liabilities; ii) the Company is generally able to pay its debts as they become
due and payable; and iii) the Company does not have unreasonably small capital
to carry on its business as it is currently conducted absent extraordinary and
unforeseen circumstances. The Company further warrants and represents that
except for the Permitted Encumbrances, the security interests granted herein
constitute and shall at all times constitute the first and only liens on the
Collateral; that, except for the Permitted Encumbrances, the Company is or will
be at the time additional Collateral is acquired by it, the absolute owner of
the Collateral with full right to pledge, sell, consign, transfer and create a
security interest therein, free and clear of any and all claims or liens in
favor of others; that the Company will at its expense warrant and, at CITBC's
request, defend the same from any and all claims and demands of any other person
other than the Permitted Encumbrances; that the Company will not grant, create
or permit to exist, any lien upon or security interest in the Collateral, or any
proceeds thereof, in favor of any other person other than the holders of the
Permitted Encumbrances; and that the Equipment does not comprise a part of the
Inventory of the Company and that the Equipment is and will only be used by the
Company in its business and will not be held for sale or lease, or removed,
except in the ordinary course of business, from its premises, or otherwise
disposed of by the Company without the prior written approval of CITBC except as
otherwise permitted in paragraph 4 of Section 6 of this Financing Agreement.
Company further warrants and represents that Schedule 2 hereto correctly and
completely sets forth its chief executive office, jurisdiction of organization,
and all of its Collateral locations.
2. The Company is also to advise CITBC promptly, in sufficient detail,
of any material adverse change relating to the type, quantity or quality of the
Collateral or on the security interests granted to CITBC therein. The Company
agrees to maintain accurate books and
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records pertaining to the Collateral consistent with past practices. If an Event
of Default does not exist, CITBC or its agents may, from time to time upon
reasonable notice, enter upon the Company's premises at any time during normal
business hours, or at such other times as CITBC and the Company may agree upon,
for the purpose of inspecting the Collateral and any and all records pertaining
thereto, all at CITBC's expense. During the continuance of an Event of Default,
CITBC or its agents may, at the Company's expense, enter the Company's premises,
upon reasonable notice and during normal business hours, and as often as it
deems reasonably necessary, to inspect the Collateral and the books and records
of the Company. The Company agrees to afford CITBC prior written notice of any
change in the location of any Collateral (other than motor vehicles and other
than Collateral that is in transit), other than to locations that are known to
CITBC and at which CITBC has filed financing statements and otherwise fully
perfected its liens thereon.
3. The Company agrees to: execute and deliver to CITBC, from time to
time, solely for CITBC's convenience in maintaining a record of the Collateral,
such written statements, and schedules as CITBC may reasonably require,
designating, identifying or describing the Collateral pledged to CITBC
hereunder. The Company's failure, however, to promptly give CITBC such
statements, or schedules shall not affect, diminish, modify or otherwise limit
CITBC's security interests in the Collateral.
4. The Company agrees, to the extent reasonably requested by CITBC, to
comply with the requirements of all state and federal laws in order to grant to
CITBC valid and perfected first security interests in the Collateral, subject
only to the Permitted Encumbrances, provided, however, that perfection as to
leasehold interests in Real Estate shall not be required, and further provided
that (except in the case of distribution centers) fixture filings shall not be
required. CITBC is hereby authorized, to the extent permitted by applicable law,
by the Company to file any financing statements covering the Collateral whether
or not the Company's signature appears thereon. The Company agrees to do
whatever CITBC may reasonably request, from time to time, by way of: filing
notices of liens, financing statements, amendments, renewals and continuations
thereof; cooperating with CITBC's agents and employees; keeping Collateral
records; transferring proceeds of Collateral to CITBC's possession in accordance
with the terms of this Financing Agreement; and performing such further acts as
CITBC may reasonably require in order to effect the purposes of this Financing
Agreement.
5. The Company agrees to maintain insurance on the Equipment and
Inventory in amounts and on terms no less favorable than the insurance coverage
on Equipment and Inventory in place as of the date hereof. All policies covering
the Equipment and Inventory are, subject to the rights of any holders of
Permitted Encumbrances holding claims senior to CITBC, to be made payable to
CITBC, in case of loss, under a standard non-contributory "mortgagee", "lender"
or "secured party" clause and are to contain such other provisions as CITBC may
reasonably require to fully protect CITBC's interest in the Inventory and
Equipment and to any payments to be made under such policies with respect to the
Inventory and the Equipment. All original policies or true copies thereof or
certificates thereof are to be delivered to CITBC, with all premiums current,
with the loss payable endorsement in CITBC's favor, and shall provide for not
less than thirty (30) days prior written notice to CITBC of the exercise of any
right of cancellation. At the Company's request, or if the Company fails to
maintain such insurance, CITBC may arrange for such insurance, but at the
Company's expense and without any
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responsibility on CITBC's part for: obtaining the insurance, the solvency of the
insurance companies, the adequacy of the coverage, or the collection of claims.
During the continuance of an Event of Default which is not waived, CITBC shall,
subject to the rights of any holders of Permitted Encumbrances holding claims
senior to CITBC, have the sole right, in the name of CITBC or the Company, to
file claims under any insurance policies with respect to the Inventory and the
Equipment, to receive, receipt and give acquittance for any payments that may be
payable thereunder with respect to the Inventory and the Equipment, and to
execute any and all endorsements, receipts, releases, assignments, reassignments
or other documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies. In the event of any
loss or damage by fire or other casualty, insurance proceeds relating to
Collateral shall be deposited in the Depository Accounts or the Concentration
Accounts in accordance with paragraph 4 of Section 3 of this Financing
Agreement.
6. The Company agrees to pay, when due, all taxes, assessments, claims
and other charges (herein "taxes") lawfully levied or assessed upon the Company
or the Collateral; provided, however, that such taxes need not be paid on or
before the due date thereof if: (i) such taxes are being diligently contested by
the Company in good faith and by appropriate proceedings; (ii) the Company
establishes such reserves as may be required by GAAP; (iii) such taxes (if in
excess of $100,000) are not secured by a filed lien which CITBC reasonably
determines could be or become senior to the liens of CITBC on the Collateral,
and (iv) such taxes secured by a filed lien are not due to the United States of
America. To prevent the imminent foreclosure of any tax liens (whether such
liens are senior or junior to the liens of CITBC) or in the event CITBC is
exercising its remedies as a secured creditor on Collateral, then CITBC may, on
the Company's behalf, pay any taxes then due and secured by a lien on the
Collateral and the amount thereof shall be an Obligation secured hereby.
7. Subject to the provisions of the preceding paragraph, the Company:
(a) agrees to comply with all acts, rules, regulations and orders of any
legislative, administrative or judicial body or official, which the failure to
comply with would have a material and adverse impact on the Collateral, or any
material part thereof, or on the operation of the Company's business, provided
that the Company may contest any acts, rules, regulations, orders and directions
of such bodies or officials in any reasonable manner which will not materially
and adversely effect CITBC's rights or priority in the Collateral; (b) agrees to
comply with all environmental statutes, acts, rules, regulations or orders as
presently existing or as adopted or amended in the future, applicable to the
ownership and/or use of its real property and operation of its business, which
the failure to comply with would have a material and adverse impact on the
Collateral, or any material part thereof, or on the operation of the business of
the Company. The Company hereby indemnifies CITBC and agrees to defend and hold
CITBC harmless from and against any and all loss, damage, claim, liability,
injury or expense which CITBC may sustain or incur in connection with: any claim
or expense asserted against CITBC as a result of any environmental pollution,
hazardous material or environmental clean-up of the Company's real property; or
any claim or expense which results from the Company's operations (including, but
not limited to, the Company's off-site disposal practices) and the Company
further agrees that this indemnification shall survive termination of this
Financing Agreement as well as the payment of all Obligations or amounts payable
hereunder; and (c) shall not be deemed to have breached any provision of this
paragraph 7 if (i) the failure to comply with the requirements of this paragraph
7 resulted
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from good faith error or innocent omission, (ii) the Company promptly commences
and diligently pursues a cure of such breach and such cure is eventually, within
a reasonably time frame, but not to exceed 45 days, based upon the circumstances
and the amount work required, completed and (iii) such failure has not resulted
in a materially adverse effect on any material portion of the Collateral or the
business, financial condition or operations of the Company.
8. Until termination of this Financing Agreement and payment and
satisfaction of all Obligations due hereunder, the Company agrees that, unless
CITBC shall have otherwise consented in writing, the Company will furnish to
CITBC, within ninety (90) days after the end of each fiscal year of the Company,
a Consolidated Financial Statement and a Consolidating Financial Statement as at
the close of and for such year, audited by independent public accountants
selected by the Company and satisfactory to CITBC (CITBC hereby agrees that KPMG
Peat Marwick or any other "big 5" accounting firm is satisfactory CITBC); within
forty-five (45) days after the end of each fiscal quarter a Consolidated
Financial Statement and Consolidating Financial Statement as at the end of such
period, certified by an authorized financial or accounting officer of the
Company; and within thirty (30) days after the end of each month a Consolidated
Financial Statement as at the end of and for such period, certified by an
authorized financial or accounting officer of the Company; and from time to
time, such further information regarding the business affairs and financial
condition of the Company as CITBC may reasonably request, including without
limitation annual cash flow projections in form reasonably satisfactory to
CITBC. Each financial statement which the Company is required to submit
hereunder must be accompanied by an officer's certificate, signed by the
President, Vice President, Controller, or Treasurer, pursuant to which any one
such officer must certify that: (i) the financial statement(s) in all material
respects fairly and accurately represent(s) the Company's financial condition at
the end of the particular accounting period, as well as the Company's operating
results during such accounting period, subject to year-end audit adjustments
and, in the case of monthly and quarterly financial statements, the absence of
footnotes; (ii) during the particular accounting period: (x) there has been no
Default or Event of Default under this Financing Agreement, provided, however,
that if any such officer has knowledge that any such Default or Event of
Default, has occurred during such period, the existence of and a detailed
description of same shall be set forth in such officer's certificate; and (y)
the Company has not received any notice of cancellation with respect to its
property insurance policies or certifying as to replacement policies therefor;
and (iii) the exhibits attached to such financial statement(s) constitute
detailed calculations showing compliance with all financial covenants contained
in this Financing Agreement.
9. The Company shall maintain EBITDA, calculated monthly, for each
rolling 12-month period of at least $10,500,000.
10. Until termination of the Financing Agreement and payment and
satisfaction of all Obligations due hereunder, the Company agrees that, without
the prior written consent of CITBC, except as otherwise herein provided, the
Company will not:
A. Mortgage, pledge, or otherwise permit any lien, charge, security
interest, encumbrance or judgment, (whether as a result of a
purchase money or title retention transaction, or other security
interest, or otherwise) to exist on any of its
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assets or goods, whether real, personal or mixed, whether now owned
or hereafter acquired, except for the Permitted Encumbrances;
B. Incur or create any Indebtedness other than the Permitted
Indebtedness;
C. Except for Permitted Indebtedness secured by Permitted
Encumbrances, borrow any money on the security of the Company's
Collateral from sources other than CITBC;
D. Sell, lease, assign, transfer or otherwise dispose of i) Collateral
consisting of cash, Trade Accounts Receivable, Inventory, Equipment
or Permitted Investments, except as otherwise permitted by this
Financing Agreement, ii) or any other Collateral having a value in
excess of $250,000 per year, or iii) either all or substantially
all of the Company's assets, which do not constitute Collateral;
E. Merge, consolidate, reincorporate or otherwise alter or modify its
corporate name, principal place of business, jurisdiction of
incorporation and organization, its structure, corporate good
standing status or existence, or enter into or engage in any
business other than businesses engaged in by the Company on the
date hereof and similar or related businesses or businesses
incidental thereto; provided, however, that on thirty (30) days
prior notice to CITBC, the Company may, without obtaining the
consent of CITBC, alter or modify its corporate name or principal
place of business;
F. Assume, guarantee, endorse, or otherwise become liable upon the
obligations of any other person, firm, entity or corporation,
except (i) by the endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
business, (ii) in connection with subleases or assignments of
leases or (iii) in the ordinary course of the Company's business
consistent with current practices provided that the outstanding
obligations under this clause (iii) shall not at any time exceed
$500,000;
G. Declare or pay any dividend of any kind on, or purchase, acquire,
redeem or retire, any of its capital stock or equity interest, of
any class whatsoever, whether now or hereafter outstanding other
than (i) dividends payable solely in shares of capital stock of the
Company and (ii) dividends on the Company's Preferred Stock to the
extent paid by increasing the liquidation preference of such
Preferred Stock; or
H. Make any advance or loan to, or any investment in, any firm,
entity, person or corporation other than Permitted Investments.
11. Without the prior written consent of CITBC, the Company will not
make Capital Expenditures (whether subject to a security interest or otherwise)
during any fiscal year in the aggregate amount in excess of $3,000,000.
12. Intentionally Omitted
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13. Intentionally Omitted
14. The Company agrees to advise CITBC in writing of: a) all
expenditures (actual or anticipated) in excess of $50,000.00 in any fiscal year
for x) environmental clean-up, y) environmental compliance or z) environmental
testing and the impact of said expenses on the Company's working capital; and b)
any notices the Company receives from any local, state or federal authority
advising the Company of any environmental liability (real or potential) stemming
from the Company's operations, its premises, its waste disposal practices, or
waste disposal sites used by the Company and to provide CITBC with copies of all
such notices if so required.
15. Except for Permitted Affiliate Transactions, without the prior
written consent of CITBC, the Company agrees that it will not enter into any
transaction, including, without limitation, any purchase, sale, lease, loan or
exchange of property with any subsidiary or affiliate of the Company.
SECTION 8. Interest, Fees and Expenses
1. (a) Interest on the Revolving Loans shall be payable monthly as of
the end of each month and shall be an amount equal to (a) the applicable Chase
Bank Rate Margin plus the Chase Bank Rate, per annum, on the average of the net
balances owing by the Company to CITBC in the Company's account at the close of
each day during such month on balances other than Libor Loans and (b) the
applicable Libor Margin plus the applicable Libor on each Libor Loan, on a per
annum basis, on the average of the net balances owing by the Company to CITBC in
the Company's account in respect of such Libor Loan at the close of each day
during such month. In the event of any change in said Chase Bank Rate, the rate
under clause (a) above shall change, as of the first of the month following any
change, so as to remain equal to the new Chase Bank Rate plus the applicable
Chase Bank Rate Margin. In addition, the rate applicable under clause (a) or (b)
above shall change based upon any change of the applicable Chase Bank Rate
Margin or the Libor Margin; provided that any such change in such a margin such
be effective on the first Business Day of the month following the month in which
the Company shall have delivered, at least five (5) Business Days before the end
of the month, to CITBC the financial statements demonstrating the change in
EBITDA giving rise to such change in the margin, and any change in the Libor
Margin shall affect only Libor Loans not yet funded as of that date. The rate
hereunder shall be calculated based on a 360-day year. CITBC shall be entitled
to charge the Company's account at the rate provided for herein when due until
all Obligations have been paid in full.
(b) During the continuance of an Event of Default, after the giving of
any required notice by CITBC, and the satisfaction of any other applicable
conditions, in accordance with the provisions of Section 10, Paragraph 2, clause
ii) hereof, all Obligations shall bear interest at the Default Rate of Interest.
2. The Company may elect to use Libor as to any new or then outstanding
Revolving Loans provided A) there is then no Default or Event of Default, B) the
Company has so advised CITBC of its election to use Libor and the Libor Period
selected no later than three (3) Business Days preceding the first day of a
Libor Period and C) the election and Libor shall be
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effective, provided, there is then no Default or Event of Default, on the fourth
Business Day following said notice. The Libor elections must be for $500,000 or
whole multiples thereof and there shall be no more than five (5) Libor Loans
outstanding at one time. If no such election is timely made or can be made, or
if the Libor rate can not be determined, then CITBC shall use the Chase Bank
Rate to compute interest. In addition, the Company shall pay to CITBC, upon the
request of CITBC such amount or amounts as shall compensate CITBC for any loss,
costs or expenses incurred by CITBC (as reasonably determined by CITBC) as a
result of: (i) any payment or prepayment on a date other than the last day of a
Libor Period for such Libor Loan, or (ii) any failure of the Company to borrow a
Libor Loan on the date for such borrowing specified in the relevant notice; such
compensation to include, without limitation, an amount equal to any loss or
expense suffered by CITBC during the period from the date of receipt of such
payment or prepayment or the date of such failure to borrow to the last day of
such Libor Period if the rate of interest obtained by CITBC upon the
reemployment of an amount of funds equal to the amount of such payment,
prepayment or failure to borrow is less than the rate of interest applicable to
such Libor Loan for such Libor Period. The determination by CITBC of the amount
of any such loss or expense, when set forth in a written notice to the Company,
containing CITBC calculations thereof in reasonable detail, shall be conclusive
on the Company, in the absence of manifest error. Calculation of all amounts
payable to the CITBC under this paragraph with regard to Libor Loans shall be
made as though CITBC had actually funded the Libor Loans through the purchase of
deposits in the relevant market and currency, as the case may be, bearing
interest at the rate applicable to such Libor Loans in an amount equal to the
amount of the Libor Loans and having a maturity comparable to the relevant
interest period provided, however, that CITBC may fund each of the Libor Loans
in any manner the CITBC see fit and the foregoing assumption shall be used only
for calculation of amounts payable under this paragraph. In addition,
notwithstanding anything to the contrary contained herein, CITBC shall apply all
proceeds of Collateral, including the Accounts, and all other amounts received
by it from or on behalf of the Company (i) initially to the Chase Bank Rate
loans and (ii) subsequently to Libor Loans; provided, however, during the
continuance of an Event of Default or y) in the event the aggregate amount of
outstanding Libor Rate Loans exceeds Availability or the applicable maximum
levels set forth therefor, CITBC may apply all such amounts received by it to
the payment of Obligations in such manner and in such order as CITBC may elect
in its reasonable business judgment. In the event that any such amounts are
applied to Revolving Loans which are Libor Loans, such application shall be
treated as a prepayment of such loans and CITBC shall be entitled to
indemnification hereunder.
3. In consideration of the Letter of Credit Guaranty of CITBC, the
Company shall pay CITBC the Letter of Credit Guaranty Fee which shall be an
amount equal to one and one-half percent per annum, payable monthly, on the face
amount of each outstanding Letter of Credit less the amount of any and all
amounts previously drawn under such Letters of Credit.
4. Any charges, fees, commissions, costs and expenses charged to CITBC
for the Company's account by any Issuing Bank in connection with or arising out
of Letters of Credit issued pursuant to this Financing Agreement or out of
transactions relating thereto will be charged to the Company's account in full
when charged to or paid by CITBC and when made by any such Issuing Bank shall be
conclusive on CITBC.
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5. The Company shall reimburse or pay CITBC, as the case may be, for:
i) all Out-of-Pocket Expenses of CITBC and b) any applicable Documentation Fee.
6. Upon the last Business Day of each month, commencing with April,
2000, so long as this Financing Agreement is in effect, the Company shall pay
CITBC the Line of Credit Fee.
7. To induce CITBC to enter into this Financing Agreement and to extend
to the Company the Revolving Loans, the Company shall pay to CITBC a Loan
Facility Fee in the amount of $220,000 payable upon execution of this Financing
Agreement.
8. Upon the execution of this Agreement and annually thereafter on each
Anniversary Date, so long as this Financing Agreement is in effect, the Company
shall pay to CITBC the Collateral Management Fee.
9. The Company hereby authorizes CITBC to charge the Company's accounts
with CITBC with the amount of all payments due hereunder as such payments become
due. In the event CITBC is unable or unwilling to charge any such payment to the
Company's account, then CITBC shall so notify the Company in writing and the
amount of such payment shall be immediately due and payable.
SECTION 9. Powers
The Company hereby constitutes CITBC or any person or agent CITBC may
designate as its attorney-in-fact, at the Company's cost and expense, to
exercise all of the following powers, which being coupled with an interest,
shall be irrevocable until all of the Company's Obligations to CITBC have been
paid in full:
(a) To receive, take, endorse, sign, assign and deliver, all in the
name of CITBC or the Company, any and all checks, notes, drafts, and other
documents or instruments relating to the Collateral for (i) deposit to a Blocked
Account (consistent with the terms of paragraph 4 of Section 3 of this Financing
Agreement) or (ii) after the acceleration by CITBC of the Obligations, for
application to satisfaction of the Obligations consistent with the terms of
Paragraph 3 of Section 10 hereof;
(b) To receive, open and dispose of all mail addressed to the
Company and to notify postal authorities to change the address for delivery
thereof to such address as CITBC may designate;
(c) To request from customers indebted on Accounts at any time, in
the name of CITBC or the Company or that of CITBC's designee, information
concerning the amounts owing on the Accounts;
(d) To transmit to customers indebted on Trade Accounts Receivable
notice of CITBC's interest therein and to notify customers indebted on Trade
Accounts Receivable to make payment directly to CITBC for the Company's account;
and
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(e) To take or bring, in the name of CITBC or the Company, all
steps, actions, suits or proceedings reasonably deemed by CITBC necessary or
desirable to enforce or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the contrary, the
powers set forth in (a), (b), (d) and (e) above may only be exercised after the
occurrence of an Event of Default and until such time as such Event of Default
is waived.
SECTION 10. Events of Default and Remedies
1. Notwithstanding anything hereinabove to the contrary, CITBC may
terminate this Financing Agreement immediately upon the occurrence of any of the
following (herein "Events of Default"):
(a) cessation of the business of the Company or the calling of a
general meeting of the creditors of the Company for purposes of compromising the
debts and obligations of the Company;
(b) the Company admits in writing its inability to generally pay
its debts as they mature;
(c) the commencement by the Company of any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceedings under any
federal or state law;
(d) the commencement against the Company of any bankruptcy,
insolvency, arrangement, reorganization, receivership or similar proceedings
under any federal or state law, provided, however, that such Default shall not
be deemed an Event of Default if the proceeding, petition, case or arrangement
is commenced or supported by creditors by creditors holding $2,500,000 or less
of indebtedness and is dismissed within 60 days of the filing of, or the
commencement of, such petition, case, proceeding or arrangement;
(e) material breach by the Company of any warranty, representation
or covenant contained herein (other than those referred to in sub-paragraph f
below) or in any other written agreement between the Company or CITBC relating
to this Financing Agreement, provided that such Default by the Company of any of
the warranties, representations or covenants referred in this clause e shall not
be deemed to be an Event of Default unless and until such Default shall remain
unremedied to CITBC's satisfaction for a period of fifteen (15) Business Days
from the date of such Default;
(f) breach by the Company of any warranty, representation or
covenant of Section 3, Paragraphs 3 (other than the third sentence of paragraph
3) and 4; Section 6, Paragraphs 3 and 4 (other than the first sentence of
paragraph 4); Section 7, Paragraphs 1,5,6, and 9 through 11 (other than 10E as
it relates to corporate good standing status);
(g) failure of the Company to pay any of the Obligations within
five (5) Business Days of the due date thereof, provided that nothing contained
herein shall prohibit CITBC from charging such amounts to the Company's account
on the due date thereof;
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(h) Company shall i) engage in any "prohibited transaction" as
defined in ERISA, ii) have any "accumulated funding deficiency" as defined in
ERISA, iii) have any Reportable Event as defined in ERISA, iv) terminate any
Plan, as defined in ERISA or v) be engaged in any proceeding in which the
Pension Benefit Guaranty Corporation shall seek appointment, or is appointed, as
trustee or administrator of any Plan, as defined in ERISA, and with respect to
this sub-paragraph h such event or condition x) remains uncured for a period of
60 days from date of occurrence and y) could reasonably be expected to subject
the Company to any tax, penalty or other liability materially adverse to the
business, operations or financial condition of the Company;
(i) without the prior written consent of CITBC, the Company shall
x) amend or modify the Senior Unsecured Debt, any Subordinated Debt, or y) make
any payment on account of any Subordinated Debt except as permitted in the
applicable Subordination Agreement or on account of the Senior Unsecured Debt
except for regularly scheduled payments (but no prepayments or redemptions,
including optional redemptions or those arising due to a Change of Control under
and as defined in the Senior Unsecured Debt) as contemplated under the Indenture
evidencing the Senior Unsecured Debt as in effect as of the date hereof; or
(j) the occurrence of any default or event of default (after giving
effect to any applicable grace or cure periods) under any instrument or
agreement evidencing (x) Subordinated Debt, (y) the Senior Unsecured Debt, or
(z) any other Indebtedness of the Company having a principal amount in excess of
$1,000,000 if the effect of such default or event of default is to permit the
holder or holders of such Subordinated Debt, Senior Unsecured Debt or other
Indebtedness, as the case may be, to cause the same to become or be declared due
and payable prior to its stated maturity or (except in the case of the Senior
Unsecured Debt relating to the March 2000 SEC filing) charge an increased rate
of interest.
2. Upon the occurrence of a Default and/or an Event of Default, at the
option of CITBC, all loans and advances provided for in Sections 3 and 5 of this
Financing Agreement shall be thereafter in CITBC's sole discretion and the
obligation of CITBC to make revolving loans and/or open Letters of Credit shall
cease unless such Default is cured to CITBC's reasonable satisfaction within the
applicable grace period or Event of Default is waived by CITBC and at the option
of CITBC upon the occurrence of an Event of Default: i) all Obligations shall
upon notice (provided, however, that no such notice is required if the Event of
Default is the Event of Default listed in paragraph 1(c) or 1(d) of this Section
10) become immediately due and payable; ii) CITBC may charge the Company the
Default Rate of Interest on all then outstanding or thereafter incurred
Obligations in lieu of the interest provided for in Section 8 of this Financing
Agreement; provided (a) the CITBC has given notice of the imposition of the
Default Rate of Interest, provided, however, that no notice is required if the
Event of Default is the Event listed in paragraph 1(c) or 1(d) of this Section
10 and b) the Company has failed to cure the Event of Default within ten (10)
Business Days after x) CITBC deposited such notice in the United States mail or
y) the occurrence of the Event of Default listed in paragraph 1(c) or 1(d) of
this Section 10; and iii) CITBC may immediately terminate this Financing
Agreement upon notice to the Company, provided, however, that no notice of
termination is required if the Event of Default is the Event listed in paragraph
1(c) or 1(d) of this Section 10. Notwithstanding anything herein contained to
the contrary, if CITBC waives all Events of Default, then by written notice to
the Company, the acceleration of the Obligations
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will be rescinded and all remedies and actions then being exercised by CITBC
shall cease. The exercise of any option is not exclusive of any other option
which may be exercised at any time by CITBC.
3. Immediately upon the occurrence of any Event of Default, CITBC may
to the extent permitted by law: (a) remove from any premises where same may be
located any and all documents, instruments, files and records relating to the
Accounts, or CITBC may use, at the Company's expense, such of the Company's
personnel, supplies or space at the Company's places of business or otherwise,
as may be necessary to properly administer and control the Accounts or the
handling of collections and realizations thereon; (b) bring suit, in the name of
the Company or CITBC, and generally shall have all other rights respecting said
Accounts, including without limitation the right to: accelerate or extend the
time of payment, settle, compromise, release in whole or in part any amounts
owing on any Accounts and issue credits in the name of the Company or CITBC; (c)
sell, assign and deliver the Collateral and any returned, reclaimed or
repossessed merchandise, with or without advertisement, at public or private
sale, for cash, on credit or otherwise, at CITBC's sole option and discretion,
and, to the extent permitted by applicable law, CITBC may bid or become a
purchaser at any such sale, free from any right of redemption, which right is
hereby expressly waived by the Company; (d) foreclose the security interests
created herein by any available judicial procedure, or to take possession of any
or all of the Inventory and Equipment without judicial process, and to enter any
premises where any Inventory and Equipment may be located for the purpose of
taking possession of or removing the same; and (e) exercise any other rights and
remedies provided in law, in equity, by contract or otherwise, to the extent
permitted by applicable law. CITBC shall have the right, without notice or
advertisement, to sell, lease, or otherwise dispose of all or any part of the
Collateral whether in its then condition or after further preparation or
processing, in the name of the Company or CITBC, or in the name of such other
party as CITBC may designate, either at public or private sale or at any
broker's board, in lots or in bulk, for cash or for credit, with or without
warranties or representations, and upon such other terms and conditions as CITBC
in its sole discretion may deem advisable, and CITBC shall have the right to
purchase at any such sale. If any Inventory and Equipment shall require
rebuilding, repairing, maintenance or preparation, CITBC shall have the right,
at its option, to do such of the aforesaid as is necessary, for the purpose of
putting the Inventory and Equipment in such saleable form as CITBC shall deem
appropriate. The Company agrees, at the request of CITBC, to assemble the
Inventory and Equipment and to make it available to CITBC at premises of the
Company or such other location reasonably designated by CITBC and to make
available to CITBC the premises and facilities of the Company for the purpose of
CITBC's taking possession of, removing or putting the Inventory and Equipment in
saleable form. However, if notice of intended disposition of any Collateral is
required by law, it is agreed that ten (10) Business Days notice shall
constitute reasonable notification and full compliance with the law. The net
cash proceeds resulting from CITBC's exercise of any of the foregoing rights,
(after deducting all charges, costs and expenses, including reasonable
attorneys' fees) shall be applied by CITBC to the payment of the Company's
Obligations, whether due or to become due, in such order as CITBC may elect, and
the Company shall remain liable to CITBC for any deficiencies, and CITBC in turn
agrees to remit to the Company or its successors or assigns, any surplus
resulting therefrom. The enumeration of the foregoing rights is not intended to
be exhaustive and the exercise of any right shall not preclude the exercise of
any other rights, all of which shall be cumulative.
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SECTION 11. Termination
Except as otherwise permitted herein, CITBC may terminate this
Financing Agreement and the Line of Credit only as of the fourth or any
subsequent Anniversary Date and then only by giving the Company at least sixty
(60) days prior written notice of termination. Notwithstanding the foregoing
CITBC may terminate the Financing Agreement immediately upon the occurrence of
an Event of Default upon notice to the Company, provided, however, that if the
Event of Default is an event listed in paragraph 1(c) or 1(d) of Section 10 of
this Financing Agreement, CITBC may regard the Financing Agreement as terminated
and notice to that effect is not required. This Financing Agreement, unless
terminated as herein provided, shall automatically continue from Anniversary
Date to Anniversary Date. The Company may terminate this Financing Agreement and
the Line of Credit at any time upon at least sixty (60) days' prior written
notice to CITBC. If the Financing Agreement is terminated by the Company on a
date earlier than the third Anniversary Date, then the Company shall pay to
CITBC immediately on demand, an Early Termination Fee. All Obligations shall
become due and payable as of any termination hereunder or under Section 10
hereof and, pending final payment in full of all Obligations, CITBC may withhold
any balances in the Company's account (unless supplied with an indemnity
satisfactory to CITBC) to cover all of the Company's Obligations, whether
absolute or contingent provided, however, that if the remaining unpaid
Obligations arise solely out of the outstanding amounts of Letters of Credit,
CITBC will, at the Company's request, retain, solely as collateral, cash
collateral in an amount equal to one hundred and five percent (105%) of the then
outstanding amounts of Letters of Credit unless the Company provides CITBC with
back-to-back letters of credit from a financial institution reasonably
acceptable to CITBC on terms reasonably acceptable to CITBC, in an amount equal
to one hundred and five percent (105%) of the then outstanding amounts of
Letters of Credit. When the outstanding amount of Letters of Credit have been so
secured by cash or by the back-to-back letter of credit, in either event, in an
amount equal to one hundred and five percent (105%) of the then outstanding
amounts of Letters of Credit pursuant to a fully executed agreement between
CITBC and the Company and pursuant to which the Company agrees to reimburse
CITBC for any Letter of Credit claims that exceed the cash collateral or the
back-to-back letter of credit, then for all purposes of this Financing
Agreement, this Financing Agreement shall be treated by the parties thereto as
terminated and all other Collateral will be released. All of CITBC's rights,
liens and security interests shall continue after any termination until all
Obligations have been paid and satisfied in full.
SECTION 12. Miscellaneous
1. Except as otherwise expressly provided in this Financing Agreement,
the Company hereby waives diligence, demand, presentment and protest and any
notices thereof as well as notice of nonpayment. No delay or omission of CITBC
or the Company to exercise any right or remedy hereunder, whether before or
after the happening of any Event of Default, shall impair any such right or
shall operate as a waiver thereof or as a waiver of any such Event of Default.
No single or partial exercise by CITBC of any right or remedy precludes any
other or further exercise thereof, or precludes any other right or remedy.
2. This Financing Agreement and the documents executed and delivered in
connection therewith constitute the entire agreement between the Company and
CITBC;
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supersede any prior agreements; can be changed only by a writing signed by both
the Company and CITBC; and shall bind and benefit the Company and CITBC and
their respective successors and assigns.
3. In no event shall the Company, upon demand by CITBC for payment of
any indebtedness relating hereto, by acceleration of the maturity thereof, or
otherwise, be obligated to pay interest and fees in excess of the amount
permitted by law. Regardless of any provision herein or in any agreement made in
connection herewith, CITBC shall never be entitled to receive, charge or apply,
as interest on any indebtedness relating hereto, any amount in excess of the
maximum amount of interest permissible under applicable law. If CITBC ever
receives, collects or applies any such excess, it shall be deemed a partial
repayment of principal and treated as such; and if principal is paid in full,
any remaining excess shall be refunded to the Company. This paragraph shall
control every other provision hereof and of any other agreement made in
connection herewith.
4. If any provision hereof or of any other agreement made in connection
herewith is held to be illegal or unenforceable, such provision shall be fully
severable, and the remaining provisions of the applicable agreement shall remain
in full force and effect and shall not be affected by such provision's
severance. Furthermore, in lieu of any such provision, there shall be added
automatically as a part of the applicable agreement a legal and enforceable
provision as similar in terms to the severed provision as may be possible.
5. THE COMPANY AND CITBC EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS FINANCING AGREEMENT. THE COMPANY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE OF
PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED.
6. Except as otherwise herein provided, any notice or other
communication required hereunder shall be in writing, and shall be deemed to
have been validly served, given or delivered when hand delivered or sent by
facsimile, or three Business Days after deposit in the United State mails, with
proper first class postage prepaid and addressed to the party to be notified as
follows:
(A) if to CITBC, at:
The CIT Group/Business Credit, Inc.
300 South Grand Avenue, Third Floor
Los Angeles, California 90071
Attn: Regional Manager
Facsimile Number: (213) 346-3361
32
<PAGE>
(B) if to the Company at:
Diamond Triumph Auto Glass, Inc.
220 Division Street
Kingston, Pennsylvania 18704
Attn: Chief Financial Officer
Facsimile Number: (570) 287-2149
with a copy to:
Green Equity Investors II, L.P.
11111 Santa Monica Boulevard
Los Angeles, California 90025
Attention: Gregory J. Annick
Facsimile Number: (310) 954-0404
or to such other address as any party may designate for itself by like notice.
7. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.
IN WITNESS WHEREOF, the parties hereto have caused this Financing
Agreement to be executed, agreed to, accepted and delivered in Los Angeles,
California by their proper and duly authorized officers as of the date set forth
above.
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Frank Brown
---------------------------------
Vice President
DIAMOND TRIUMPH AUTO GLASS, INC.
By: /s/ Michael A. Sumsky
-----------------------------
Title: Executive Vice President
33
Exhibit 99.1
LETTER OF TRANSMITTAL
DIAMOND TRIUMPH AUTO GLASS, INC.
Offer to Exchange
9 1/4% Senior Notes Due 2008
for
9 1/4% Senior Notes Due 2008
Pursuant to the Prospectus Dated April 27, 2000
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON _________, 2000, UNLESS THE EXCHANGE OFFER IS
EXTENDED.
The Exchange Agent for the Exchange Offer is:
State Street Bank and Trust Company
<TABLE>
<S> <C> <C>
By Hand or Overnight Delivery: Facsimile Transactions: By Registered or Certified Mail:
(Eligible Institutions Only)
State Street Bank and Trust (617) 662-1452 State Street Bank and Trust Company
Company Corporate Trust Department
Corporate Trust Department To Confirm by Telephone Two Avenue de Lafayette
Two Avenue de Lafayette or for Information Call: Fifth Floor
Fifth Floor (617) 662-1603 Boston, MA 02111-1724
Boston, MA 02111-1724 Attention: Meaghan Haight
Attention: Meaghan Haight
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OR TRANSMISSION TO A FACSIMILE NUMBER
OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE METHOD
OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES, IS AT THE RISK OF THE
HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. YOU SHOULD READ THE INSTRUCTIONS ACCOMPANYING
THIS LETTER OF TRANSMITTAL CAREFULLY BEFORE YOU COMPLETE THE LETTER OF
TRANSMITTAL.
The undersigned acknowledges that he or she has received the Prospectus,
dated ________, 2000 (the "Prospectus"), of Diamond Triumph Auto Glass, Inc., a
Delaware corporation (the "Company"), and this Letter of Transmittal and the
instructions hereto (the "Letter of Transmittal"), which together constitute the
Company's offer (the "Exchange Offer") to exchange $1,000 principal amount of
its 9 1/4% Senior Notes due 2008 (the "New Notes"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a Registration Statement of which the Prospectus is a part, for each $1,000
principal amount of its outstanding 9 1/4% Senior Notes due 2008 (the "Old
Notes"), of which $100,000,000 aggregate principal amount is outstanding, upon
the terms and subject to the conditions set forth in the Prospectus. The term
"Expiration Date" shall mean 5:00 p.m., New York City time, on _______, 2000,
unless the Company, in its sole discretion, extends the Exchange Offer, in which
case the term shall mean the latest date and time to which the Exchange Offer is
extended by the Company. Capitalized terms used but not defined herein have the
meaning given to them in the Prospectus.
This Letter of Transmittal is to be used if either (1) certificates
representing Old Notes are to be physically delivered to the Exchange Agent
herewith by Holders (as defined below), (2) tender of Old Notes is to be made by
book-entry transfer to an account maintained by the Exchange Agent at The
Depository Trust Company ("DTC"), pursuant to the procedures set forth in "The
Exchange Offer--How to Tender Old Notes for Exchange" in the Prospectus by any
financial institution that is a participant in DTC and whose name appears on a
security position listing as the owner of Old Notes or (3) tender of Old Notes
is to be made according to the guaranteed delivery procedures set forth in the
Prospectus under "The Exchange Offer--Guaranteed Delivery Procedures." Delivery
of this Letter of Transmittal and any other required documents must be made to
the Exchange Agent.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC's PROCEDURES WILL NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
<PAGE>
The term "Holder" as used herein means any person in whose name Old Notes are
registered on the books of the Company or any other person who has obtained a
properly completed bond power from the registered holder.
All Holders of Old Notes who wish to tender their Old Notes must, prior to
the Expiration Date: (1) complete, sign, date and deliver this Letter of
Transmittal, or a facsimile thereof, to the Exchange Agent, in person or to the
address set forth above; and (2) tender (and not withdraw) his or her Old Notes
or, if a tender of Old Notes is to be made by book-entry transfer to the account
maintained by the Exchange Agent at DTC, confirm such book-entry transfer (a
"Book-Entry Confirmation"), in each case in accordance with the procedures for
tendering described in the Instructions to this Letter of Transmittal. Holders
who wish to tender their Old Notes and (1) whose Old Notes are not immediately
available, or (2) who cannot deliver their Old Notes, this Letter of Transmittal
or any other documents required by this Letter of Transmittal to the Exchange
Agent prior to the Expiration Date or (3) who cannot complete the book-entry
transfer procedures on a timely basis may tender their Old Notes according to
the guaranteed delivery procedures set forth under the caption "The Exchange
Offer--Guaranteed Delivery Procedures" in the Prospectus. (See Instruction 2.)
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of the Old Notes validly tendered and not withdrawn and
the issuance of the New Notes will be made promptly following the Expiration
Date. For the purposes of the Exchange Offer, the Company shall be deemed to
have accepted for exchange validly tendered Old Notes when, as and if the
Company has given written notice thereof to the Exchange Agent.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW. THE INSTRUCTIONS INCLUDED IN THIS LETTER OF
TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR
ADDITIONAL COPIES OF THE PROSPECTUS, THIS LETTER OF TRANSMITTAL AND THE NOTICE
OF GUARANTEED DELIVERY MAY BE DIRECTED TO THE EXCHANGE AGENT. SEE INSTRUCTION
12.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD NOTES MUST
COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY AND COMPLY WITH ALL OF ITS
TERMS.
List below the Old Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, the Certificate Numbers and Principal
Amounts should be listed on a separate signed schedule, attached hereto. The
minimum permitted tender is $1,000 in principal amount of the 9 1/4% Senior
Notes due 2008. All other tenders must be in integral multiples of $1,000.
<TABLE>
<CAPTION>
DESCRIPTION
OF OLD
NOTES 1 2 3
- ---------------------------------------------
Name(s) and
Address(es)
of
Registered Principal
Holder(s): Aggregate Amount
(Please Principal of Old
fill in, if Certificate Amount Notes
blank) Number(s)* of Notes Tendered**
- ---------------------------------------------
<S> <C> <C> <C>
-----
-----
-----
Total
</TABLE>
- --------------------------------------------------------------------------------
* Need not be completed by book-entry holders.
** Need not be completed by Holders who wish to tender all Old Notes listed.
2
<PAGE>
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL REGISTRATION INSTRUCTIONS
(See Instructions 4, 5 and 6) (See Instructions 4, 5 and 6)
To be completed ONLY if To be completed ONLY if certificates
certificates for Old Notes in a for Old Notes in a principal amount
principal amount not tendered, or not tendered, or New Notes issued in
New Notes issued in exchange for exchange for Old Notes accepted for
Old Notes accepted for exchange, exchange, are to be delivered to
are to be issued in the name of someone someone other the undersigned.
someone other than the undersigned.
Issue certificate(s) to: Deliver certificate(s) to:
Name(s) ____________________________ Name(s) ____________________________
(Please Print) (Please Print)
Address ____________________________ Address ____________________________
(Include Zip Code) (Include Zip Code)
____________________________________ ____________________________________
(Tax Identification or Social (Tax Identification or Social
Security Number(s)) Security Number(s))
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF (TOGETHER WITH THE
CERTIFICATE(S) FOR OLD NOTES OR A CONFIRMATION OF BOOK-ENTRY TRANSFER
OF SUCH OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS) OR, IF GUARANTEED
DELIVERY PROCEDURES ARE TO BE COMPLIED WITH, A NOTICE OF GUARANTEED
DELIVERY, MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION DATE.
[_]CHECK HERE IF OLD NOTES ARE BEING DELIVERED BY DTC TO AN ACCOUNT MAINTAINED
BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ________________________________________________
Account Number _______________________________________________________________
Transaction Code Number ______________________________________________________
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes and all other documents required hereby to the Exchange Agent
on or prior to the Expiration Date may tender their Old Notes according to the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures." (See Instruction 2.)
[_]CHECK HERE IF OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of tendering Holder(s) _______________________________________________
Date of Execution of Notice of Guaranteed Delivery ___________________________
Name of Institution which Guaranteed Delivery ________________________________
Transaction Code Number ______________________________________________________
[_]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ________________________________________________________________________
Address: _____________________________________________________________________
3
<PAGE>
The undersigned represents and warrants that (1) it is acquiring the New
Notes in the ordinary course of its business, (2) it is not participating, does
not intend to participate and does not have any arrangement or understanding
with any person to participate in the distribution (as that term is interpreted
by the SEC) of the New Notes and (3) it is not an "affiliate" (as that term is
defined in Rule 405 under the Securities Act) of the Company, or, if the
undersigned is an affiliate of the Company, that it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable. If the undersigned is a broker-dealer that will receive New
Notes for its own account in exchange for Old Notes that were acquired by it as
a result of market-making or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such New Notes. By so
acknowledging and by delivering a prospectus, the undersigned broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to Diamond Triumph Auto Glass, Inc. (the "Company") the principal
amount of Old Notes indicated above.
Subject to and effective upon the acceptance for exchange of the principal
amount of Old Notes tendered hereby in accordance with this Letter of
Transmittal, the undersigned sells, assigns and transfers to, or upon the order
of, the Company all right, title and interest in and to the Old Notes tendered
hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as its agent and attorney-in-fact (with full knowledge that the Exchange
Agent also acts as the agent of the Company and as Trustee and Registrar under
the Indenture for the Old Notes and the New Notes) with respect to the tendered
Old Notes with full power of substitution (such power of attorney being deemed
an irrevocable power coupled with an interest), subject only to the right of
withdrawal described in the Prospectus, to (1) deliver certificates for such Old
Notes to the Company or transfer ownership of such Old Notes on the account
books maintained by DTC, together, in either such case, with all accompanying
evidences of transfer and authenticity to, or upon the order of, the Company and
(2) present such Old Notes for transfer on the books of the Company and receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Old Notes, all in accordance with the terms of the Exchange Offer.
The undersigned acknowledges that the Exchange Offer is being made in
reliance upon certain no-action letters issued by the staff of the SEC to third
parties in connection with transactions similar to the Exchange Offer, so that
the New Notes issued pursuant to the Exchange Offer in exchange for the Old
Notes may be offered for resale, resold and otherwise transferred by holders
thereof (other than a broker-dealer who purchased such Old Notes directly from
the Company for resale pursuant to Rule 144A, Regulation S or any other
available exemption under the Securities Act or a person that is an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holders' business, such holders are not participating, do not intend to
participate and have no arrangement or understanding with any person to
participate, in the distribution of such New Notes, and such holder is not an
"affiliate" (as that term is defined in Rule 405 under the Securities Act) of
the Company, or, if such holder is an affiliate of the Company, that it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable.
The undersigned agrees that acceptance of any tendered Old Notes by the
Company and the issuance of New Notes in exchange therefor shall constitute
performance in full by the Company of its obligations under the Registration
Rights Agreement (as defined in the Prospectus) and that, upon the issuance of
the New Notes, the Company will have no further obligations or liabilities
thereunder (except in certain limited circumstances).
The undersigned represents and warrants that (1) the New Notes acquired
pursuant to the Exchange Offer are being acquired in the ordinary course of
business of the person receiving New Notes (which shall be the undersigned
unless
4
<PAGE>
otherwise indicated in the box entitled "Special Delivery Instructions" above)
(the "Recipient"), (2) neither the undersigned nor the Recipient (if different)
is participating in, intends to participate in or has any arrangement or
understanding with any person to participate in the distribution (as that term
is interpreted by the SEC) of such New Notes, and (3) neither the undersigned
nor the Recipient (if different) is an "affiliate" (as that term is defined in
Rule 405 under the Securities Act) of the Company, or, if the undersigned or the
Recipient (if different) is an affiliate of the Company that it will comply with
the registration and prospectus delivery requirements of the Securities Act to
the extent applicable.
If the undersigned is a broker-dealer, the undersigned further (1) represents
and warrants that it acquired Old Notes for the undersigned's own account as a
result of market-making or other trading activities, (2) represents and warrants
that it has not entered into any arrangement or understanding with the Company
or any "affiliate" of the Company (within the meaning of Rule 405 under the
Securities Act) to distribute the New Notes to be received in the Exchange Offer
and (3) acknowledges that it will deliver a prospectus meeting the requirements
of the Securities Act (for which purposes, the delivery of the Prospectus, as
the same may be hereafter supplemented or amended, shall be sufficient) in
connection with any resale of New Notes received in the Exchange Offer. By so
acknowledging and by delivering a prospectus, such a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
The undersigned understands and agrees that the Company reserves the absolute
right to (1) reject any and all Old Notes improperly tendered, (2) refuse to
accept any Old Note if, in the Company's judgment or the judgment of the
Company's counsel, acceptance of the Old Note may be deemed unlawful, and (3)
waive any defects or irregularities or conditions of the Exchange Offer as to
particular Old Notes.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, sell, assign and transfer the Old Notes
tendered hereby and to acquire New Notes issuable upon the exchange of such
tendered Old Notes, and that, when the same are accepted for exchange, the
Company will acquire good and unencumbered title thereto, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim. The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed to be necessary or desirable by the
Exchange Agent or the Company in order to complete the exchange, assignment and
transfer of tendered Old Notes or transfer of ownership of such Old Notes on the
account books maintained by a book-entry transfer facility.
The undersigned understands and acknowledges that the Company reserves the
right in its sole discretion to purchase or make offers for any Old Notes that
remain outstanding after the Expiration Date or, as set forth in the Prospectus
under the caption "The Exchange Offer--How to Tender Old Notes for Exchange," to
terminate the Exchange Offer and, to the extent permitted by applicable law, to
purchase Old Notes during the pendency of the Exchange Offer in the open market,
in privately negotiated transactions or otherwise. The terms of any such
purchases or offers may differ from the terms of the Exchange Offer.
The undersigned understands that the first interest payment following the
Expiration Date will include unpaid interest on the Old Notes accrued through
the date of issuance of the New Notes.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer--How to Tender Old
Notes for Exchange" in the Prospectus and in the Instructions hereto will
constitute a binding agreement between the undersigned, the Company and the
Exchange Agent in accordance with the terms and subject to the conditions of the
Exchange Offer set forth in the Prospectus and this Letter of Transmittal.
Any Old Notes that have been tendered for exchange but are not accepted for
exchange will be returned (except as noted below with respect to tenders through
DTC), at no cost to the Holder thereof, to the undersigned at the address shown
below or at a different address as may be indicated herein under "Special
Delivery Instructions" as promptly as practicable after withdrawal, rejection of
tender or termination of the Exchange Offer.
5
<PAGE>
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding on the undersigned's heirs, personal
representatives, successors and assigns. This tender may be withdrawn only in
accordance with the procedures set forth in this Letter of Transmittal.
By acceptance of the Exchange Offer, each broker-dealer that receives New
Notes pursuant to the Exchange Offer hereby acknowledges and agrees that upon
the receipt of notice by the Company of the happening of any event that makes
any statement in the Prospectus untrue in any material respect or that requires
the making of any changes in the Prospectus in order to make the statements
therein not misleading (which notice the Company agrees to deliver promptly to
such broker-dealer), such broker-dealer will suspend use of the Prospectus until
the Company has amended or supplemented the Prospectus to correct such
misstatement or omission and has furnished copies of the amended or supplemented
prospectus to such broker-dealer.
Unless otherwise indicated under "Special Registration Instructions," please
issue the certificates representing the New Notes issued in exchange for the Old
Notes accepted for exchange and return any certificates for Old Notes not
tendered or not exchanged, in the name(s) of the undersigned (or, in either such
event in the case of Old Notes tendered by DTC, by credit to the account at
DTC). Similarly, unless otherwise indicated under "Special Delivery
Instructions," please send the certificates representing the New Notes issued in
exchange for the Old Notes accepted for exchange and any certificates for Old
Notes not tendered or not exchanged (and accompanying documents, as appropriate)
to the undersigned at the address shown below the undersigned's signature(s),
unless, in either event, tender is being made through DTC. In the event that
both "Special Registration Instructions" and "Special Delivery Instructions" are
completed, please issue the certificates representing the New Notes issued in
exchange for the Old Notes accepted for exchange in the name(s) of, and return
any certificates for Old Notes not tendered or not exchanged to, the person(s)
so indicated. The undersigned understands that the Company has no obligations
pursuant to the "Special Registration Instructions" or "Special Delivery
Instructions" to transfer any Old Notes from the name of the registered
Holder(s) thereof if the Company does not accept for exchange any of the Old
Notes so tendered.
Holders who wish to tender the Old Notes and (1) whose Old Notes are not
immediately available, (2) who cannot deliver their Old Notes, this Letter of
Transmittal or any other documents required by this Letter of Transmittal to the
Exchange Agent prior to the Expiration Date, or (3) who cannot complete the
book-entry transfer procedures on a timely basis may tender their Old Notes
according to the guaranteed delivery procedures set forth in the Prospectus
under the caption "The Exchange Offer--Guaranteed Delivery Procedures." See
Instruction 2 regarding the completion of the Letter of Transmittal.
6
<PAGE>
PLEASE SIGN HERE WHETHER OR NOT OLD NOTES ARE BEING PHYSICALLY TENDERED
HEREBY AND WHETHER OR NOT TENDER IS TO BE MADE PURSUANT TO THE
GUARANTEED DELIVERY PROCEDURES
(PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN)
This Letter of Transmittal must be signed by the registered holder(s) as
their name(s) appear on the Old Notes or, if tendered by a participant in DTC,
exactly as such participant's name appears on a security listing as the owner
of Old Notes, or by person(s) authorized to become registered holder(s) by a
properly completed bond power from the registered holder(s), a copy of which
must be transmitted with this Letter of Transmittal. If Old Notes to which
this Letter of Transmittal relate are held of record by two or more joint
holders, then all such holders must sign this Letter of Transmittal. If
signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, then such person must (1) set forth his
or her full title below and (2) unless waived by the Company, submit evidence
satisfactory to the Company of such person's authority to so act. (See
Instruction 6).
______________________________________________________________________________
(Signature(s) of Holder(s))
Date: _______________________________________________________________ , 2000
Name(s): ___________________________________________________________________
(Please Print)
Capacity (full title): _____________________________________________________
Address: ___________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number: ____________________________________________
(Tax Identification or Social Security Number(s))
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTION 1)
______________________________________________________________________________
(Authorized Signature)
Date: _________________ , 2000
Name of Firm: ______________________________________________________________
Capacity (full title): _____________________________________________________
Address: ___________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number: ____________________________________________
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal need not
be guaranteed if (a) this Letter of Transmittal is signed by the registered
holder(s) of the Old Notes tendered who has not completed the box set forth
herein entitled "Special Registration Instructions" or the box entitled "Special
Delivery Instructions" or (b) such Old Notes are tendered for the account of a
member firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States or an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Exchange Act of 1934,
as amended (each, an "Eligible Institution"). (See Instruction 6.) Otherwise,
all signatures on this Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution. All signatures on
bond powers and endorsements on certificates must also be guaranteed by an
Eligible Institution.
2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES. Certificates for all
physically delivered Old Notes or confirmation of any book-entry transfer to the
Exchange Agent at DTC of Old Notes tendered by book-entry transfer, as well as,
in each case (including cases where tender is affected by book-entry transfer),
a properly completed and duly executed copy of this Letter of Transmittal or
facsimile hereof and any other documents required by this Letter of Transmittal,
must be received by the Exchange Agent at its address set forth herein prior to
5:00 p.m., New York City time, on the Expiration Date. The method of delivery of
the tendered Old Notes, this Letter of Transmittal and all other required
documents to the Exchange Agent is at the election and risk of the Holder and
the delivery will be deemed made only when actually received by the Exchange
Agent. Instead of delivery by mail, the Company recommends that you use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to ensure timely delivery to the Exchange Agent prior to the Expiration
Date. No Letter of Transmittal or Old Notes should be sent directly to the
Company.
The Exchange Agent will make a request promptly after receipt of the
Prospectus to establish accounts with respect to the Old Notes at DTC for
purposes of facilitating the Exchange Offer. Any financial institution that is a
participant in DTC's system may make book-entry delivery of Old Notes by causing
DTC to transfer such Old Notes into the Exchange Agent's DTC account in
accordance with DTC's procedures for transfer. The exchange for tendered Old
Notes will only be made after a timely confirmation of a book entry transfer of
the Old Notes into the Exchange Agent's account, and timely receipt by the
Exchange Agent of an Agent's Message.
The term "Agent's Message" means a message, transmitted by DTC and received
by the Exchange Agent and forming part of the Book-Entry Confirmation, which
states that DTC has received an express acknowledgment from a participant in DTC
tendering the Old Notes and that such participant has received an appropriate
Letter of Transmittal and agrees to be bound by the terms of the Letter of
Transmittal and the Company may enforce such agreement against such participant.
Delivery of an Agent's Message will also consititute acknowledgement from the
tendering DTC participant that the representations and warranties in this Letter
of Transmittal are true and correct.
Holders who wish to tender their Old Notes and (1) whose Old Notes are not
immediately available, or (2) who cannot deliver their Old Notes, this Letter of
Transmittal or any other documents required by this Letter of Transmittal to the
Exchange Agent prior to the Expiration Date or (3) who cannot complete the
book-entry transfer procedures on a timely basis may tender their Old Notes
according to the guaranteed delivery procedures set forth in the Prospectus. See
"Exchange Offer--Guaranteed Delivery Procedures." Pursuant to such procedure:
(1) such tender must be made through an Eligible Institution; (2) prior to the
Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, overnight courier, mail or hand delivery) setting
forth the name and address of the Holder of the Old Notes, the certificate
number or numbers of such Old Notes and the principal amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing that,
8
<PAGE>
within three business days after the Expiration Date, a properly completed and
executed Letter of Transmittal (or facsimile hereof) together with the
certificate(s) representing the Old Notes to be tendered in proper form for
transfer and all other documents required by this Letter of Transmittal, or
confirmation of a book-entry transfer into the Exchange Agent's account at DTC
of Old Notes delivered electronically, will be deposited by the Eligible
Institution with the Exchange Agent; and (3) the Exchange Agent receives
certificates representing all tendered Old Notes in proper form for transfer,
together with a properly completed and executed Letter of Transmittal (or
facsimile hereof), and all other documents required by this Letter of
Transmittal (or confirmation of a book-entry transfer into the Exchange Agent's
account at DTC of the Old Notes delivered electronically), within three business
days after the Expiration Date, all in the manner provided in the Prospectus
under the caption "The Exchange Offer--Guaranteed Delivery Procedures." Any
Holder who wishes to tender his or her Old Notes pursuant to the guaranteed
delivery procedures described above must ensure that the Exchange Agent receives
the Notice of Guaranteed Delivery prior to 5:00 p.m., New York City time, on the
Expiration Date. Upon request to the Exchange Agent, a Notice of Guaranteed
Delivery will be sent to Holders who wish to tender their Old Notes according to
the guaranteed delivery procedures set forth above.
The Company, in its sole discretion, will determine all questions as to the
validity, form, eligibility (including time of receipt), acceptance of tendered
Old Notes, and withdrawal of tendered Old Notes. The Company's determination
will be final and binding. The Company reserves the absolute right to (1) reject
any and all Old Notes improperly tendered, (2) refuse to accept any Old Note if,
in the Company's judgment or the judgment of the Company's counsel, acceptance
of the Old Note may be deemed unlawful and (3) waive any defects or
irregularities or conditions of the Exchange Offer as to particular Old Notes.
The Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in this Letter of Transmittal) shall be final and
binding on all parties. Any defects or irregularities in connection with tenders
of Old Notes must be cured within such time as the Company shall determine,
unless the Company waives those defects or irregularities. Neither the Company,
the Exchange Agent nor any other person shall be under any duty or obligation to
give notification of defects or irregularities with respect to tenders of Old
Notes, and no person shall incur any liability for failure to give such
notification. Old Notes will not be validly tendered until any defects or
irregularities have been cured to the Company's satisfaction or the Company has
waived such defects or irregularities. Any Old Notes received by the Exchange
Agent that the Company determines are not properly tendered or the tender of
which the Company otherwise rejects will be returned by the Exchange Agent to
the tendering Holders or other person specified in this Letter of Transmittal as
soon as practicable following the Expiration Date. The Exchange Agent has no
fiduciary duties to the Holders with respect to the Exchange Offer and is acting
solely on the basis of directions of the Company.
3. INADEQUATE SPACE. If the space provided is inadequate, the certificate
numbers and/or the number of Old Notes should be listed on a separate signed
schedule attached hereto.
4. TENDER BY HOLDER. Only a registered Holder of Old Notes may tender such
Old Notes in the Exchange Offer. If this Letter of Transmittal is signed by a
person other than the registered Holder, the corresponding Old Notes must be
endorsed or accompanied by appropriate bond powers which authorize that person
to tender the Old Notes on behalf of the registered Holder, in either case
signed exactly as the name of the registered Holder or Holders appears on the
Old Notes. If this Letter of Transmittal or any Old Notes or bond powers are
signed or endorsed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, those persons should so indicate when signing this
Letter of Transmittal and submit evidence satisfactory to the Company of their
authority to so act, unless the Company waives this requirement.
5. PARTIAL TENDERS; WITHDRAWALS. Tenders of Old Notes will be accepted only
in integral multiples of $1,000. If less than the entire principal amount of any
Old Notes is tendered, the tendering Holder should fill in the principal amount
tendered in the third column of the box entitled "Description of Old Notes"
above. The entire principal amount of any Old Notes delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated. If the
entire principal amount of all Old Notes is not tendered, then Old Notes for the
principal amount of Old Notes not tendered and a certificate or certification
representing New Notes issued in exchange for any Old Notes accepted will be
sent to the Holder at his or her registered address, unless a different address
is provided in the "Special Delivery Instructions" box above on this Letter of
Transmittal or unless tender is made through DTC, promptly after the Old Notes
are accepted for exchange.
9
<PAGE>
Except as otherwise provided herein, tenders of Old Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date by
delivery of a written or facsimile transmission notice of withdrawal to the
Exchange Agent at its address set forth herein. Any such notice of withdrawal
must (1) specify the name of the person having deposited the Old Notes to be
withdrawn (the "Depositor"), (2) identify the Old Notes to be withdrawn
(including the certificate number or numbers and principal amount of such Old
Notes, or, in the case of Old Notes transferred by book-entry transfer, the name
and number of the account at DTC to be credited), (3) be signed by the Depositor
in the same manner as the original signature on the Letter of Transmittal by
which such Old Notes were tendered (including any required signature guarantee)
or be accompanied by documents of transfer sufficient to permit the Registrar
with respect to the Old Notes to register the transfer of such Old Notes into
the name of the person withdrawing the tender and (4) specify the name in which
any such Old Notes are to be registered, if different from that of the
Depositor. The Company will determine all questions as to the validity, form and
eligibility (including time of receipt) of any withdrawal notices. The Company's
determination shall be final and binding on all parties. Any Old Notes which are
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer, and no New Notes will be issued with respect to those Old Notes
unless they are validly retendered. Any Old Notes that have been tendered for
exchange but are not accepted for exchange by the Company will be returned to
the Holder thereof without cost to such Holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Old Notes may be retendered by following one of the procedures
described in the Prospectus under "The Exchange Offer-- How to Tender Old Notes
for Exchange" at any time prior to the Expiration Date.
6. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS. If
this Letter of Transmittal (or facsimile hereof) is signed by the registered
Holder(s) of the Old Notes tendered hereby, the signature must correspond with
the name(s) as written on the face of the Old Note without alteration,
enlargement or any change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Old Notes registered in different names are tendered, it will
be necessary to complete, sign and submit as many copies of this Letter of
Transmittal as there are different registrations of Old Notes.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder or Holders (which term, for the purposes described herein,
shall include a book-entry transfer facility whose name appears on a security
listing as the owner of the Old Notes) of Old Notes tendered and the certificate
or certificates for New Notes issued in exchange therefor is to be issued (or
any untendered principal amount of Old Notes to be reissued) to the registered
Holder, then such Holder need not and should not endorse any tendered Old Notes,
nor provide a separate bond power. In any other case, such Holder must either
properly endorse the Old Notes tendered or transmit a properly completed
separate bond power with this Letter of Transmittal with the signatures on the
endorsement or bond power guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder or Holders of any Old Notes listed, such Old
Notes must be endorsed or accompanied by appropriate bond powers which authorize
that person to tender the Old Notes on behalf of the registered Holder or
Holders, in either case signed exactly as the name of the registered Holder or
Holders appears on the Old Notes.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes or bond
powers are signed or endorsed by trustees, executors, administrators, guardians,
attorneys-in-fact, or officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing this
Letter of Transmittal and submit evidence satisfactory to the Company of their
authority so to act, unless the Company waives this requirement.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 6 must be guaranteed by an Eligible Institution.
7. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering Holders should
indicate, in the applicable box or boxes, the name and address to which New
Notes or substitute Old Notes for principal amounts not tendered or not accepted
for exchange are to be issued or 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.
10
<PAGE>
8. BACKUP FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9. Under the
federal income tax laws, payments that may be made by the Company on account of
New Notes issued pursuant to the Exchange Offer may be subject to backup
withholding at the rate of 31%. In order to avoid such backup withholding, each
tendering Holder should compete and sign the Substitute Form W-9 included in
this Letter of Transmittal and either (a) provide the correct taxpayer
identification number ("TIN") and certify, under penalties of perjury, that the
TIN provided is correct and that (1) the Holder has not been notified by the
Internal Revenue Service the ("IRS") that the Holder is subject to backup
withholding as a result of failure to report all interest or dividends or (2)
the IRS has notified the Holder that the Holder is no longer subject to backup
withholding; or (b) provide an adequate basis for exemption. If the tendering
Holder has not been issued a TIN and has applied for one, or intends to apply
for one in the near future, such Holder should write "Applied For" in the space
provided for the TIN in Part I of the Substitute Form W-9, sign and date the
Substitute Form W-9 and sign the Certificate of Payee Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I, the Company (or
the Paying Agent under the Indenture governing the New Notes) shall retain 31%
of payments made to the tendering Holder during the 60-day period following the
date of the Substitute Form W-9. If the Holder furnishes the Exchange Agent or
the Company with its TIN within 60 days after the date of the Substitute Form
W-9, the Company (or the Paying Agent) shall remit such amounts retained during
the 60-day period to the Holder and no further amounts shall be retained or
withheld from payments made to the Holder thereafter. If, however, the Holder
has not provided the Exchange Agent or the Company with its TIN within such 60-
day period, the Company (or the Paying Agent) shall remit such previously
retained amounts to the IRS as backup withholding. In general, if a Holder is an
individual, the TIN is the Social Security number of such individual. If the
Exchange Agent or the Company are not provided with the correct TIN, the Holder
may be subject to a $50 penalty imposed by the Internal Revenue Service.
Certain Holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such Holder must submit a statement (generally, IRS Form W-8BEN),
signed under penalties of perjury, attesting to that individual's exempt status.
Such statements can be obtained from the Exchange Agent. For further information
concerning backup withholding and instructions for completing the Substitute
Form W-9 (including how to obtain a taxpayer identification number if you do not
have one and how to complete the Substitute Form W-9 if Old Notes are registered
in more than one name), consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9. Failure to complete the
Substitute Form W-9 will not, by itself, cause Old Notes to be deemed invalidly
tendered, but may require the Company (or the Paying Agent) to withhold 31% of
the amount of any payments made on account of the New Notes. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the IRS.
9. TRANSFER TAXES. The Company will pay any transfer taxes applicable to the
exchange of Old Notes pursuant to the Exchange Offer. If, however, a transfer
tax is imposed for any reason other than the exchange of Old Notes pursuant to
the Exchange Offer, then the amount of any such transfer taxes (whether imposed
on the registered Holder or on any other persons) 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. See the
Prospectus under "The Exchange Offer--Solicitation of Tenders; Fees and
Expenses."
Except as provided in this Instruction 9, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
10. WAIVER OF CONDITIONS. The Company reserves the right, in its sole
discretion, to amend, waive or modify the Exchange Offer in any manner.
11. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any tendering Holder
whose Old Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated herein for further instructions.
11
<PAGE>
12. REQUESTS FOR ASSISTANCE, COPIES. 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 specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company or
other nominee for assistance concerning the Exchange Offer.
(DO NOT WRITE IN SPACE BELOW)
Certificate Tendered Old Notes Accepted Old Notes Surrendered
____________________ ______________________ ______________________
Received _____ Accepted by _____ Checked by _____
Delivery Prepared by ______ Checked by ______ Date ______
12
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder whose tendered Old Notes are accepted
for payment is required to provide the Exchange Agent (as payer) with such
Holder's correct TIN on Substitute Form W-9 below or otherwise establish a basis
for exemption from backup withholding. If such Holder is an individual, the TIN
is his social security number. If the Exchange Agent is not provided with the
correct TIN, a $50 penalty may be imposed by the Internal Revenue Service, and
payments made pursuant to the Exchange Offer may be subject to backup
withholding.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on Substitute
Form W-9. A foreign person may qualify as an exempt recipient by submitting to
the Exchange Agent a properly completed Internal Revenue Service Form W-8BEN,
signed under penalties of perjury, attesting to that Holder's exempt status. A
Form W-8BEN can be obtained from the Exchange Agent. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold 31%
of any payments made to the Holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to the Exchange
Offer, the Holder is required to provide the Exchange Agent with either (a) the
Holder's correct TIN by completing the form below, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such Holder is awaiting a
TIN) and that (1) the Holder has been notified by the Internal Revenue Service
that the Holder is subject to backup withholding as a result of failure to
report all interest or dividends or (2) the Internal Revenue Service has
notified the Holder that the Holder is no longer subject to backup withholding
or (b) an adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered Holder of
the Old Notes. If the Old Notes are held in more than one name or are held not
in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
13
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify, under penalties of perjury, that a Taxpayer Identification Number
has not been issued to me, and that I mailed or delivered an application to
receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office (or I intend to mail or
deliver an application in the near future). I understand that if I do not
provide a Taxpayer Identification Number to the payer, 31% of all payments made
to me on account of the New Notes shall be retained until I provide a Taxpayer
Identification Number within 60 days, such retained amounts shall be remitted
to the Internal Revenue Service as backup withholding and 31% of all reportable
payments made to me thereafter will be withheld and remitted to the Internal
Revenue Service until I provide a Taxpayer Identification Number.
Signature __________________________ Date ________________________ , 2000
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR
PRIOR TO THE EXPIRATION DATE.
TO BE COMPLETED BY ALL TENDERING SECURITYHOLDERS
(See Instruction 8)
PAYER'S NAME: STATE STREET BANK AND TRUST COMPANY
_______________________________________________________________________________
PART 1--PLEASE PROVIDE YOUR TIN:
SUBSTITUTE TIN ON THE LINE AT RIGHT _____________________
AND CERTIFY BY SIGNING AND Social Security Number
Form W-9 DATING BELOW. or Employer
Department of the Identification Number
Treasury Internal ______________________________
Revenue Service
PART 2--TIN Applied For: [_]
---------------------------------------------------------
CERTIFICATIONS--Under penalties of perjury, I certify
Payer's Request for that:
Taxpayer
Identification (1) the number shown on this form is my correct
Number ("TIN") and Taxpayer Identification Number (or I am waiting
Certification for a number to be issued to me),
(2) I am not subject to backup withholding either
because (i) I am exempt from backup withholding,
(ii) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to
report all interest or dividends, or (iii) the IRS
has notified me that I am no longer subject to
backup withholding, and
(3) any other information provided on this form is
true and correct.
Signature: _______________ Date: _________ , 2000
- --------------------------------------------------------------------------------
You must cross out Part (2) above if you have been notified by the IRS that you
are subject to backup withholding because of underreporting interest or
dividends on your tax return and you have not been notified by the IRS that you
are no longer subject to backup withholding.
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID 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.
14
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
9 1/4% SENIOR NOTES DUE 2008
OF
DIAMOND TRIUMPH AUTO GLASS, INC.
As set forth in the prospectus dated ________, 2000 (the "Prospectus") of
Diamond Triumph Auto Glass, Inc. (the "Company") and in the Letter of
Transmittal (the "Letter of Transmittal"), this form or a form substantially
equivalent to this form must be used to accept the Exchange Offer (as defined
below) if (1) the certificates for the outstanding 9 1/4% Senior Notes due 2008
(the "Old Notes") of the Company are not immediately available or (2)
certificates for the Old Notes, the Letter of Transmittal or any other documents
required by the Letter of Transmittal cannot be delivered to the Exchange Agent
prior to the expiration of the Exchange Offer or (3) compliance with book-entry
transfer procedures cannot be completed on a timely basis. Such form may be
delivered by hand or transmitted by facsimile transmission, telex or mail to the
Exchange Agent no later than the Expiration Date, and must include a signature
guarantee by an Eligible Institution as set forth below. Capitalized terms used
herein but not defined herein have the meanings ascribed thereto in the
Prospectus.
The Exchange Agent For The Exchange Offer Is:
State Street Bank and Trust Company
<TABLE>
<C> <S> <C>
By Registered or Certified Mail: Facsimile Transmissions: By Hand or Overnight Delivery:
(Eligible Institutions
Only)
State Street Bank and Trust Company (617) 662-1452 State Street Bank and Trust Company
Corporate Trust Department Corporate Trust Department
Two Avenue de Lafayette Two Avenue de Lafayette
Fifth Floor Fifth Floor
Boston, Massachusetts 0211-1724 Boston, Massachusetts 0211-1724
Attention: Meaghan Haight Attention: Meaghan Haight
</TABLE>
Information or Confirmation by
Telephone:
(617) 662-1603
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OR TRANSMISSION TO A FACSIMILE
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE
METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES, IS AT THE RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, THE COMPANY RECOMMENDS THAT YOU USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. YOU SHOULD READ THE INSTRUCTIONS
ACCOMPANYING THE LETTER OF TRANSMITTAL CAREFULLY BEFORE YOU COMPLETE THIS NOTICE
OF GUARANTEED DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee signatures.
If a signature on a Letter of Transmittal is required to be guaranteed by an
Eligible Institution under the instruction thereto, such signatures must appear
in the applicable space provided on the Letter of Transmittal for Guarantee of
Signature(s).
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON _______, 2000 UNLESS THE EXCHANGE OFFER IS EXTENDED.
<PAGE>
Ladies and Gentlemen:
The undersigned acknowledges receipt of the Prospectus and the related Letter
of Transmittal which describes the Company's offer (the "Exchange Offer") to
exchange $1,000 in principal amount of 9 1/4% Senior Notes due 2008 (the "New
Notes") for each $1,000 in principal amount of 9 1/4% Senior Notes due 2008 (the
"Old Notes"). The undersigned hereby tenders to the Company the aggregate
principal amount of Old Notes set forth below on the terms and conditions set
forth in the Prospectus and the related Letter of Transmittal pursuant to the
guaranteed delivery procedures set forth in the "The Exchange Offer--Guaranteed
Delivery Procedures" section in the Prospectus and the accompanying Letter of
Transmittal.
The undersigned understands that no withdrawal of a tender of Old Notes may
be made on or after the Expiration Date. The undersigned understands that for a
withdrawal of a tender of Old Notes to be effective, a written notice of
withdrawal that complies with the requirements of the Exchange Offer must be
timely received by the Exchange Agent at its address specified on the cover of
this Notice of Guaranteed Delivery prior to the Expiration Date.
The undersigned understands that the exchange of Old Notes for New Notes
pursuant to the Exchange Offer will be made only after timely receipt by the
Exchange Agent of (a) (1) certificates representing such Old Notes or timely
confirmation of a book-entry transfer of such Old Notes into the Exchange
Agent's account at The Depository Trust Company ("DTC") pursuant to the
procedures set forth in the Prospectus under the caption "Exchange Offer--How to
Tender Old Notes for Exchange," (2) the Letter of Transmittal (or facsimile
thereof) properly completed and duly executed, with any required signature
guarantees, and (3) this Notice of Guaranteed Delivery and any other documents
required by the Letter of Transmittal or (b) a properly transmitted Agent's
Message from DTC. The term "Agent's Message" means a message, transmitted by DTC
and received by the Exchange Agent and forming part of the confirmation of a
book-entry transfer, which states that DTC has received an express
acknowledgment from a participant in DTC tendering the Old Notes and that such
participant has received the Letter of Transmittal and agrees to be bound by the
terms of the Letter of Transmittal, and the Company may enforce such agreement
against such participant. Delivery of an Agent's Message will also constitute
acknowledgment from the tendering DTC participant that the representations and
warranties in the Letter of Transmittal are true and correct.
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 on the heirs, executors,
administrators, trustees in bankruptcy, personal and legal representatives,
successors and assigns of the undersigned.
2
<PAGE>
PLEASE COMPLETE
Principal Amount of Old Notes Name(s) of Registered Holder(s):
Tendered for Exchange: $ _____________ ____________________________________
Old Notes Certificate No.(s)
(if available): ______________________
If Old Notes will be tendered by book-entry transfer, provide the following
information:
DTC Account Number: __________________
Date: ________________________________
PLEASE SIGN HERE
X ____________________________________ ____________________________________
X ____________________________________ ____________________________________
Signature(s) of Owner(s) or Date
Authorized Signatory
Area Code and Telephone Number: ____________________________________________
This Notice of Guaranteed Delivery must be signed by the registered
Holder(s) of Old Notes exactly as its (their) name(s) appear on certificates
for Old Notes or on a security position listing as the owner of Old Notes, or
by person(s) authorized to become registered Holder(s) by endorsements and
documents transmitted with this Notice of Guaranteed Delivery. 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):________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
3
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange or
of the National Association of Securities Dealers, Inc. or a commercial bank or
trust company having an office or a correspondent in the United States, or
otherwise an "eligible guarantor institution" within the meaning of Rule 17Ad-
15 under the Securities Exchange Act of 1934, as amended, hereby (1) represents
that each holder of Old Notes on whose behalf this tender is being made "own(s)"
the Old Notes covered hereby within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (2) represents
that such tender of Old Notes complies with Rule 14e-4 of the Exchange Act and
(3) guarantees that, within three business days after the expiration of the
Exchange Offer, a properly completed and duly executed Letter of Transmittal (or
a facsimile thereof), together with certificates representing the Old Notes
covered hereby in proper form for transfer and all other documents required by
the Letter of Transmittal (or confirmation of a book-entry transfer into the
Exchange Agent's account at DTC of the Old Notes delivered electronically,
pursuant to the procedure for book-entry transfer set forth in the Prospectus),
will be deposited by the undersigned with the Exchange Agent.
The undersigned acknowledges that it must deliver the Letter of Transmittal
and Old Notes tendered hereby to the Exchange Agent within the time period set
forth above and the failure to do so could result in financial loss to the
undersigned.
______________________________________ _______________________________________
Name of Firm Authorized Signature
______________________________________ _______________________________________
Address Title
______________________________________ _______________________________________
Zip Code (Please Type or Print)
Area Code and Telephone No. __________ Dated ________________________________
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES FOR
OLD NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
4
