<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 15, 1999
REGISTRATION NO. 333-71137
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
HARVARD INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 2522 21-0715310
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
3 WERNER WAY, LEBANON, NEW JERSEY 08833,
(908) 437-4100
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
(Cover continued on next page)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED OFFER TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS PROPOSED PROPOSED
OF SECURITIES TO BE AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
14 1/2% Senior Secured Notes
due 2003.................... $25,000,000 100% $25,000,000 $6,950(1)
Guarantees of the 14 1/2%
Senior Secured Notes........ (2) (2) $25,000,000 (2)
</TABLE>
(1) Previously paid.
(2) This Registration Statement covers the guarantees to be issued by the
domestic subsidiaries of Harvard Industries, Inc. of its obligations under
the 14 1/2% Senior Secured Notes. Such guarantees are to be issued for no
additional consideration, and therefore no registration fee is required.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
(Cover continued on next page)
DOEHLER-JARVIS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 3490 34-1771418
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
3 WERNER WAY, LEBANON, NEW JERSEY 08833,
(908) 437-4100
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
HARVARD TRANSPORTATION CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MICHIGAN 3714 38-2346867
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
3 WERNER WAY, LEBANON, NEW JERSEY 08833,
(908) 437-4100
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DOEHLER-JARVIS GREENEVILLE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 3490 62-1560084
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
3 WERNER WAY, LEBANON, NEW JERSEY 08833,
(908) 437-4100
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
POTTSTOWN PRECISION CASTING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 3490 23-2756073
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
3 WERNER WAY, LEBANON, NEW JERSEY 08833,
(908) 437-4100
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DOEHLER-JARVIS TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 3490 34-1764722
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
3 WERNER WAY, LEBANON, NEW JERSEY 08833,
(908) 437-4100
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
<PAGE>
DOEHLER-JARVIS TOLEDO, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 3490 34-1764769
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
3 WERNER WAY, LEBANON, NEW JERSEY 08833,
(908) 437-4100
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
HARMAN AUTOMOTIVE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MICHIGAN 3714 38-1181030
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
3 WERNER WAY, LEBANON, NEW JERSEY 08833,
(908) 437-4100
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
HAYES-ALBION CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MICHIGAN 3714 38-0636070
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
3 WERNER WAY, LEBANON, NEW JERSEY 08833,
(908) 437-4100
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
THE KINGSTON-WARREN CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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NEW HAMPSHIRE 3714 02-0212731
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
3 WERNER WAY, LEBANON, NEW JERSEY 08833,
(908) 437-4100
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ROGER G. POLLAZZI
CHIEF EXECUTIVE OFFICER
HARVARD INDUSTRIES, INC.
3 WERNER WAY
LEBANON, NEW JERSEY 08833
(908) 437-4100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copy to:
PHILIP A. HABER, ESQ.
SONNENSCHEIN NATH & ROSENTHAL
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
(212) 768-6700
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not offer these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JUNE 15, 1999
PROSPECTUS
HARVARD INDUSTRIES, INC.
$25,000,000
OFFER TO EXCHANGE NEW 14 1/2% SENIOR SECURED NOTES DUE 2003
FOR ALL OUTSTANDING 14 1/2% SENIOR SECURED NOTES DUE 2003
THE NEW NOTES
o The terms of the new notes are substantially identical to the
outstanding notes, except that the new notes will be freely tradable.
o The following domestic subsidiaries will fully and unconditionally
guarantee the notes on a joint and several basis: Doehler-Jarvis,
Inc., Harvard Transportation Corporation, Doehler-Jarvis Greeneville,
Inc., Pottstown Precision Casting, Inc., Doehler-Jarvis Technologies,
Inc., Doehler-Jarvis Toledo, Inc., Harman Automotive, Inc.,
Hayes-Albion Corporation, The Kingston-Warren Corporation.
o The notes and the guarantees are secured by a second priority security
interest in substantially all of our tangible and intangible assets.
o As of March 28, 1999, we had $63.6 million in outstanding senior debt
secured by liens on our assets that are senior to the liens securing
the new notes.
THE EXCHANGE OFFER
o We are offering $25,000,000 in principal amount of our new 14 1/2% Senior
Secured Notes due 2003 in exchange for all $25,000,000 in principal amount of
our outstanding 14 1/2% Senior Secured Notes due 2003.
o The exchange offer expires at 5:00 p.m., New York City time, on
, 1999 unless extended.
o The exchange offer is not subject to any conditions other than that the
exchange offer not violate applicable law or any applicable interpretation of
the staff of the Securities and Exchange Commission.
o All outstanding notes that are validly tendered and not validly withdrawn
will be exchanged.
o Tenders of outstanding notes may be withdrawn at any time prior to the
expiration of the exchange offer.
o We will not receive any proceeds from the exchange offer.
INVESTMENT IN THE NEW NOTES INVOLVES RISKS. CONSIDER CAREFULLY THE RISK FACTORS
BEGINNING ON PAGE 7 IN THIS PROSPECTUS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
THE DATE OF THIS PROSPECTUS IS , 1999.
<PAGE>
TABLE OF CONTENTS
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PAGE
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About This Prospectus...................................................................................... ii
Prospectus Summary......................................................................................... 1
Risk Factors............................................................................................... 7
Forward-Looking Statements................................................................................. 17
Use Of Proceeds............................................................................................ 17
Pro Forma Condensed Consolidated Statement of Operations for the
Year Ended September 30, 1998............................................................................ 18
Capitalization............................................................................................. 19
Selected Historical Consolidated Financial And Operating Data.............................................. 19
The Exchange Offer......................................................................................... 22
Description Of The Notes................................................................................... 31
Description Of Indebtedness Under The Senior Credit Facility............................................... 65
Material Federal Income Tax Consequences................................................................... 69
Plan Of Distribution....................................................................................... 71
Validity Of The Notes...................................................................................... 72
Experts.................................................................................................... 72
Where You Can Find More Information........................................................................ 73
Documents Incorporated By Reference........................................................................ 73
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------------------------
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-4 that we
have filed with the SEC. This prospectus does not contain all of the information
set forth in the registration statement. For further information about us and
the exchange notes, you should refer to the registration statement. This
prospectus summarizes material provisions of contracts and other documents to
which we refer. Since these summaries may not contain all of the information
that you may find important, you should review the full text of these documents.
We have filed many of these documents as exhibits to the registration statement.
See "Where You Can Find More Information" and "Documents Incorporated By
Reference" for more information.
In addition, we have agreed that, even though the SEC may not require us to
do so, for so long as any notes remain outstanding, we will furnish to
noteholders and the trustee for the noteholders, and will file with the SEC all
such information, documents and reports as are specified in Section 13 or 15(d)
of the Securities Exchange Act.
You may request information from us, at no cost, at the following mailing
address and telephone number are: Harvard Industries, Inc., 3 Werner Way,
Lebanon, NJ 08833, Attn: Phyllis Morais, Telephone: (908) 437-4157. You should
direct any request for information at least 10 days before you tender your notes
in the exchange offer.
ii
<PAGE>
PROSPECTUS SUMMARY
Because this is a summary, it does not contain all the information about
Harvard that may be important to you. You should read the more detailed
information and the financial statements and related notes which are
incorporated by reference in this prospectus. You should read this entire
prospectus and carefully consider the information under the heading "Risk
Factors." The term "old notes" refers to the 14 1/2% Senior Secured Notes due
2003 that we issued on November 24, 1998. The term "new notes" refers to the
14 1/2% Senior Secured Notes due 2003 that have been registered under the
Securities Act and that we are offering in exchange for the old notes as
described in this prospectus, and the term "notes" refers to both the old notes
and the new notes.
SUMMARY OF THE EXCHANGE OFFER
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The Exchange Offer........................ We are offering to exchange $1,000 principal amount of our new notes
for each $1,000 principal amount of our outstanding old notes. In
order to be exchanged, an old note must be properly presented by you
and accepted by us. All old notes that are properly presented and not
properly withdrawn will be exchanged. When the exchange offer is
complete, the terms of the new notes will be identical in all
material respects to the terms of the old notes, except that the new
notes have been registered under the Securities Act. Therefore, the
new notes will not bear certain legends restricting their transfer.
Expiration Date........................... The exchange offer will expire at 5:00 p.m., New York City time, on
, 1999, unless we decide to extend the expiration date.
Conditions to the Exchange Offer.......... The exchange offer is subject only to the condition that the exchange
offer not violate applicable law or any applicable interpretation of
the Staff of the SEC. The exchange offer is not subject to any
minimum amount of old notes being tendered for exchange.
Withdrawal Rights......................... Tenders may be withdrawn at any time before 5:00 p.m., New York City
time, on the expiration date.
Federal Income Tax Consequences........... The exchange of notes will not be a taxable event for United States
federal income tax purposes. You will not recognize any taxable gain
or loss or any interest income as a result of the exchange.
Procedures for Tendering Old Notes........ If you are a holder of old notes and wish to accept the exchange
offer, you must:
o complete, sign and date the accompanying letter of transmittal, or
a facsimile thereof, and mail or otherwise deliver that
documentation, together with your old notes to the exchange agent
at the address set forth under "The Exchange Offer--Exchange Agent;" or
o in the case of a book-entry transfer, arrange for The Depository
Trust Company to transmit your old notes into the exchange
agent's account and to transmit to the exchange agent an agent's
message in which you agree to be bound by the terms of the
letter of transmittal.
We will accept old notes tendered in accordance with the terms
described in this prospectus beginning on , 1999 and
ending on , 1999.
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Special Procedures for Beneficial
Owners.................................. If you beneficially own old notes registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and you wish
to tender your old notes in the exchange offer, you should contact
the registered holder promptly and instruct it to tender on your
behalf. If you wish to tender on your own behalf, you must, prior to
completing and executing the letter of transmittal and delivering
your old notes, either arrange to have your old notes registered in
your name or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership may take
considerable time.
Guaranteed Delivery Procedures............ If you wish to tender your old notes and time will not permit your
required documents to reach the exchange agent by the expiration
date, or the procedures for book-entry transfer cannot be completed
on time, you may tender your old notes according to the guaranteed
delivery procedures set forth in "The Exchange Offer--Guaranteed
Delivery Procedures."
Transfer Restrictions on New Notes........ By tendering your notes, you will be representing, among other
things, that:
o you are not one of our "affiliates", as defined in SEC Rule 405;
o you are not engaged in, do not intend to engage in, and have no
arrangement or understanding with any person to participate in,
a distribution of the new notes; and
o you are acquiring the new notes in the ordinary course of your
business.
Based on interpretations by the SEC set forth in no-action letters
issued to third parties, we believe that the notes issued in the
exchange offer may be offered for resale, resold and otherwise
transferred by you without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that
the above representations are true.
If our belief is inaccurate and you transfer any registered note
issued to you without delivering a prospectus meeting the
requirements of the Securities Act or without an exemption from
registration of your notes from such requirements, you may incur
liability under the Securities Act. We do not assume or indemnify you
against such liability.
TERMS OF THE NEW NOTES
New Notes Offered......................... $25 million aggregate principal amount of 14 1/2% Senior Secured
Notes due 2003.
Issuer.................................... Harvard Industries, Inc.
Maturity.................................. September 1, 2003.
Interest.................................. Coupon interest accrues from November 24, 1998 at the rate equal to
the sum of 14 1/2% per annum on the principal amount of notes
outstanding, payable semi-annually in arrears on each March 1 and
September 1, beginning on March 1, 1999. In addition to coupon
interest, cash flow participation interest is paid semi-annually.
Cash flow participation interest is equal to the product of our
consolidated cash flow for the six month period ending on December 1,
for interest payments due March 1, or on June 30,
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2
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for interest payments due September 1, multiplied by the applicable
percentage as set forth below:
<CAPTION>
INTEREST PAYMENT DATE PERCENTAGE
--------------------------------------- ----------
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March 1, 1999.......................... 2.00%
September 1, 1999...................... 2.00%
March 1, 2000.......................... 2.50%
September 1, 2000...................... 2.50%
March 1, 2001.......................... 3.50%
September 1, 2001...................... 3.50%
March 1, 2002.......................... 4.50%
September 1, 2002...................... 4.50%
March 1, 2003.......................... 4.50%
September 1, 2003...................... 4.50%
<CAPTION>
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Ranking................................... The new notes:
o are secured by a second priority security interest in substantially
all of our assets;
o rank equally in right of payment with all of our existing and
future senior debt including our senior credit facility;
o will be senior in right of payment to any of our future subordinated
indebtedness; and
o will be effectively subordinated to our senior credit facility up
to the value of the working capital and fixed assets securing the
senior credit facility.
Mandatory Redemption...................... We will only be required to redeem the notes:
o with respect to a special redemption of additional notes that may
be issued later, as discussed in "Description of the Notes--Principal,
Maturity and Interest"; and
o upon a change of control, as set out under "Change of Control" below.
Optional Redemption....................... Before September 1, 2001, we may redeem all or part of the new notes,
upon not less than 30 and no more than 60 days' prior notice on any
March 1, June 1, September 1 or December 1 of any year at a
redemption price equal to 100% of the principal amount, plus accrued
and unpaid interest and liquidated damages, if any, and an additional
premium calculated as described in "Description of the
Notes--Optional Redemption." On or after September 1, 2001, we may
redeem all or part of the new notes, upon not less than 30 and not
more than 60 days' prior notice, at the redemption prices as set
forth below:
o 107.250% of the principal amount plus accrued and unpaid interest and
liquidated damages if we redeem the new notes during the twelve-month
period beginning on September 1, 2001; and
o 103.625% of the principal amount plus accrued and unpaid interest and
liquidated damages if we redeem the new notes during the twelve-month
period beginning on September 1, 2002.
These terms are more fully described in this prospectus under the
heading "Description of the Notes--Optional Redemption."
Change of Control......................... Upon a change of control of Harvard, we are required to make an offer
to purchase the new notes from you at a purchase price in
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3
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cash equal to 101% of their aggregate principal amount, plus accrued
and unpaid interest to the date of purchase and liquidated damages,
if any.
Collateral................................ The new notes are secured, subject to liens permitted under the
indenture, by a second priority security interest in substantially
all of our working capital and fixed assets and all the proceeds of
these assets. These assets include all accounts receivable,
equipment, real property, intellectual property, all of the capital
stock of our domestic subsidiaries and a portion of the capital stock
of one of our foreign subsidiaries.
Guarantees................................ The new notes are fully and unconditionally guaranteed on a joint and
several basis by our domestic subsidiaries. These guarantees:
o are secured on a second priority basis by substantially all of the
subsidiaries' tangible and intangible assets;
o are senior obligations of the subsidiaries;
o rank equally in right of payment with all of the existing and future
senior debt of these subsidiaries, including our senior credit
facility;
o will rank senior to any future subordinated debt of such subsidiaries; and
o will be effectively subordinated to the senior credit facility up to
the value of the working capital and fixed assets of the subsidiaries
securing the senior credit facility.
Covenants................................. The indenture under which the old notes have been and the new notes
are being issued contains covenants for your benefit which, among
other things and subject to a number of exceptions, restrict our
ability and the ability of our subsidiaries to engage in transactions
such as the paying dividends, incurring of additional debt, creating
liens or selling assets. See "Description of the Notes--Covenants"
and "Description of Indebtedness under the Senior Credit Facility."
The indenture also contains covenants which require us to maintain a
leverage ratio and an interest coverage ratio as described under the
section "Description of the Notes--Covenants."
In addition, the indenture provides that under specified
circumstances, we will be required to offer to purchase the notes
with net cash sales and other dispositions of assets at a price equal
to 100% of the principal amount of the notes. This requirement is
discussed in this prospectus under the section "Description of the
Notes--Covenants" and "--Repurchase at the Option of Holders--Asset
Sales."
The indenture allows modification and amendment of these and other
covenants, with our agreement, by a vote of holders of a majority in
aggregate principal amount of the notes. Also, holders of a majority
in aggregate principal amount of the notes may waive our compliance
with other restrictive covenants in the indenture. For a description
of the amendment, modification and waiver provisions in the
indenture, see "Description of the Notes--Events of Default and
Remedies" and "--Amendment, Supplement and Waiver."
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4
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Form of New Notes......................... The notes will be available initially in book-entry form. We expect
that the notes will be issued in the form of a global note, which
will be deposited with, or on behalf of, The Depository Trust Company
and registered in its name or in the name of Cede & Co., its nominee.
Beneficial interests in the global note representing the notes will
be shown on, and transfers thereof to qualified institutional buyers
will be effected through, records maintained by The Depository Trust
Company and its participants. After the initial issuance of the
global note, notes in certificated form will be issued in exchange
for the global note on the terms set forth in the indenture. See
"Description of the Notes--Book Entry, Delivery and Form."
Use of Proceeds........................... We will not receive any proceeds from the exchange offer.
</TABLE>
For additional information regarding the notes, see "Description of the
Notes" and "Material Federal Income Tax Consequences."
HARVARD INDUSTRIES, INC.
Our corporate name is Harvard Industries, Inc. We are headquartered at 3
Werner Way in Lebanon, New Jersey, and are a direct supplier of components for
original equipment manufacturers producing cars and light trucks in North
America. In the fiscal year 1998, 82% of our sales were to General Motors
Corporation, Ford Motor Company and Chrysler Corporation.
On May 8, 1997, we filed a petition for relief under Chapter 11 of the
Bankruptcy Code with the United States Bankruptcy Court for the District of
Delaware. On November 24, 1998, we substantially consummated our plan of
reorganization under Chapter 11 of the Bankruptcy Code dated August 19, 1998 and
emerged from bankruptcy.
While we were in bankruptcy proceedings the Bankruptcy Court appointed a
creditors' committee. The creditors' committee retained Roger Pollazzi as an
automotive industry consultant. Mr. Pollazzi acted in this capacity until
November 1997, when, with the support of the creditors' committee, the Board of
Directors appointed him as our Chief Operating Officer. Prior to such
appointment, Mr. Pollazzi had served as Chairman of the Board and Chief
Executive Officer of The Pullman Company from 1992 to 1997. The creditors'
committee was disbanded on November 24, 1998.
Shortly after his appointment, Mr. Pollazzi hired approximately fifteen
professionals as employees of Harvard to assist him in analyzing our operations,
eliminating on-going negative cash flows associated with cash drains at several
of our operations and coordinating and implementing our restructuring efforts.
Since the effective date, our management team includes, in addition to Roger
Pollazzi, who now serves as Chief Executive Officer:
o James Gray, President of Harvard, an automotive executive who previously
ran Tenneco Automotive's European Operations as well as the Clevite
division of Pullman;
o Theodore Vogtman, Chief Financial Officer of Harvard, who has over twenty
years of industry experience including serving as Chief Financial Officer
of Pullman; and
o Vincent Toscano, Executive Vice President of Strategic Planning of
Harvard, who was formerly the Vice President of Operations at Pullman and
has over 21 years of experience in the automotive industry.
THE TURNAROUND BUSINESS STRATEGY
In connection with our reorganization, our new management team has outlined
the following turnaround business strategies for restoring our profitability:
o Close and/or Sell Underperforming Facilities: Since taking over in late
1997, the new management team has closed, sold, or is in the process of
selling manufacturing facilities that had a combined negative cash flow
of $46.7 million in fiscal 1997.
5
<PAGE>
o Exit Unprofitable Lines of Business: We are exiting unprofitable lines of
business that management believes cannot meet their targeted margins. For
example:
- We ceased production at our Harman subsidiary, exiting the molded
plastic and die-cast mirror business,
- We sold the Greeneville, Tennessee plant of Doehler-Jarvis Greeneville,
Inc.,
- We sold the Tiffin, Ohio plant of Hayes-Albion Corporation,
- In April 1999, we announced our intention to shut down our Ripley,
Tennessee plant later in 1999 after current orders are filled,
reflecting the changing market for magnesium products,
- We are exploring alternatives with respect to the assets of our
Kingston-Warren subsidiary including the possible sale of substantially
all those assets, and
- We are looking at potential acquisitions to diversify our industrial
base.
o Diversify Product Mix and Customer Base: We are developing business in
those segments of the automotive aftermarket and industrial markets where
we can take advantage of our core manufacturing competencies and achieve
higher profit margins. We will focus on (1) OEM automotive components,
i.e., seat brackets, door modules, steering assemblies; (2) the
industrial market, i.e., building components, construction equipment,
sealing systems, lawn and garden maintenance machinery; and (3) the
automotive replacement parts market, i.e., bumper brackets, torque rods
and Class-8 truck components.
o Invest in Management Information Systems: We are in the process of
installing a new software package that will provide increased flexibility
and enhance our management's access to operating data on a timely basis.
Our management has allocated $16.7 million in fiscal years 1998 and 1999
for this project, which will upgrade our information systems and achieve
Year 2000 compliance. We spent approximately $7.7 million for Year 2000
compliance in fiscal 1998 and plan to spend approximately $6.3 million in
fiscal 1999.
o Reduce Purchased Material Costs: Our management has been consolidating
our purchasing functions and reducing our supplier base to gain economies
of scale and significant discounts from our largest suppliers.
THE FINANCINGS
Upon our emergence from bankruptcy, we issued $25.0 million of 14 1/2%
Senior Secured Notes due September 1, 2003. We also entered into a $115.0
million senior secured credit facility with a group of lenders led by General
Electric Capital Corporation. This senior credit facility provides for up to
$50.0 million in term loan borrowings and up to $65.0 million of revolving
credit borrowings.
The combined proceeds from the issuance of the senior secured notes and the
term loan borrowings under the senior credit facility were used to:
o refinance the senior and junior debtor-in-possession credit facilities
that provided financing to Harvard while we were in bankruptcy
proceedings;
o pay administrative expenses due under the plan of reorganization and pay
related fees and expenses;
o provide cash for working capital purposes; and
o provide funds for general corporate purposes.
The $65.0 million revolving credit portion of the senior credit facility
will be used to finance working capital and other general corporate purposes.
RISK FACTORS
See "Risk Factors" immediately following this summary for a discussion of
factors that you should consider in connection with your investment in the new
notes to be issued in the exchange offer.
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RISK FACTORS
Before you tender your old notes for the new notes offered in this
prospectus, you should carefully consider the following risk factors as well as
the other information contained and incorporated by reference in this
prospectus. Additional risks and uncertainties not presently known to us or that
we currently believe to be immaterial may also impair our business operations.
OLD NOTES NOT EXCHANGED IN THE EXCHANGE OFFER WILL BE SUBJECT TO TRANSFER
RESTRICTIONS AND MAY HAVE A MORE LIMITED MARKET.
If you do not exchange your old notes for new notes under the exchange
offer, your old notes will continue to be subject to the restrictions on
transfer of such old notes set forth in the legend printed on the old notes. In
general, you may not offer or sell old notes except under an exemption from, or
in a transaction not subject to, the registration requirements of the Securities
Act and applicable state securities laws. Except under limited circumstances, as
described in "The Exchange Offer," we do not intend to register the old notes
under the Securities Act.
In addition, if old notes are tendered and accepted in the exchange offer,
the trading market, if any, for the old notes not tendered and the price at
which they may be sold, could be adversely affected. See "The Exchange Offer."
YOU CANNOT BE SURE THAT AN ACTIVE TRADING MARKET WILL DEVELOP FOR THE NEW NOTES.
The old notes were offered to a small number of institutional buyers and
are eligible for trading in the PORTAL Market. The new notes will be a new issue
of securities for which there is no existing trading market. We cannot assure
you as to the liquidity of markets that may develop for the new notes, your
ability to sell the new notes or the price at which you would be able to sell
the new notes. If such markets were to exist, the new notes could trade at
prices that may be lower than their principal amount or purchase price depending
on many factors, including prevailing interest rates and the markets for similar
securities. We do not intend to apply for listing of the new notes on any
national securities exchange or on NASDAQ. The liquidity of, and trading market
for, the new notes also may be adversely affected by changes in the market for
high yield securities and by changes in our financial performance or prospects
or in the prospects for companies in our industry generally. As a result, you
cannot be sure that an active trading market will develop for the new notes.
THE PRICE OF THE NOTES MAY BE VOLATILE.
Historically, the market for non-investment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of securities
similar to the notes. Even if a market for the new notes were to develop, we
cannot assure you that such a market would not be subject to similar
disruptions.
OUR LEVERAGE LIMITS OUR FLEXIBILITY AND INCREASES OUR RISK OF DEFAULT.
Our high degree of leverage could have important consequences to you, such
as:
o making it more difficult for us to satisfy our obligations with respect
to the new notes;
o limiting our flexibility in planning for, or reacting to, changes in our
business and the industries in which we compete and increasing our
vulnerability to general adverse economic and industry conditions;
o limiting our ability to obtain additional financing we may need to fund
future working capital, capital expenditures or other corporate
requirements;
o imposing a higher interest expense in the event of an increase in
interest rates for our borrowings based on variable interest rates;
o requiring the dedication of a substantial portion of our cash flow from
operations to the payment of principal of and interest on our debt. This
will reduce the availability of such cash flow to fund working capital,
capital expenditures or other general corporate purposes;
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o restricting our ability to acquire other businesses in the future; and
o placing us at a competitive disadvantage compared to competitors who are
less leveraged and have greater financial and other resources.
In addition, the indenture and the senior credit facility contain
requirements that we maintain stated financial ratios, as well as covenants that
restrict our ability to borrow additional funds and take many other actions. Our
failure to comply with these covenants could result in an event of default under
the senior credit facility as well as under the indenture. If we do not cure or
have waived the event of default, we could suffer a material adverse effect. In
addition, the degree to which we are leveraged could prevent us from
repurchasing all of the notes tendered to us upon a change of control of
Harvard. See "Description of Indebtedness Under the Senior Credit Facility" and
"Description of the Notes--Repurchase at the Option of Holders--Change of
Control."
As of March 28, 1999, we had total indebtedness of $88.6 million, of which
$63.6 million consisted of indebtedness under our senior credit facility and
$25 million consisted of the notes, and equity of approximately $160 million.
Our earnings were insufficient to cover fixed charges for our fiscal years ended
September 30, 1998, September 30, 1997 and September 30, 1996 by $49,497,
$398,367 and $53,062, respectively.
OUR EXISTING DEBT CONTAINS COVENANTS THAT RESTRICT OUR ABILITY TO BORROW
ADDITIONAL FUNDS AND TO TAKE MANY OTHER ACTIONS, AND ALSO CREATE A RISK OF
DEFAULT IF WE ARE UNABLE TO MAINTAIN REQUIRED FINANCIAL RATIOS.
The indenture and the senior credit facility contain covenants that
restrict, among other things, our ability to:
o incur additional debt;
o pay dividends;
o make investments and capital expenditures;
o enter into transactions with affiliates;
o allow our subsidiaries to make specified payments;
o make asset sales;
o merge or consolidate with, or transfer substantially all of our assets to
another person;
o encumber assets; or
o restrict dividends and other payments from our subsidiaries.
Under the senior credit facility and the indenture, we are also required to
maintain specific financial covenants, including a maximum unconsolidated
leverage ratio of 4.50, decreasing to 3.50 by September 30, 2000, a minimum
consolidated interest coverage ratio of 2.00, increasing to 2.75 by
September 30, 2000, and a minimum consolidated fixed charge coverage ratio of
1.10, increasing to 2.75 by September 30, 2001 and then decreasing to 1.00 on
December 31, 2001. As of March 31, 1999, we were in compliance with such
financial covenants. However, we cannot assure you that our future operating
results will be sufficient to enable us to comply with such covenants. We also
cannot assure you that if we do default on such covenants that we will be able
to remedy such default. See "Description of Indebtedness Under the Senior Credit
Facility" and "Description of the Notes--Covenants."
THE NOTES ARE SECURED BY A SECOND PRIORITY SECURITY INTEREST; IN CASE OF A
DEFAULT AND FORECLOSURE, THERE MAY NOT BE SUFFICIENT ASSETS TO PAY AMOUNTS DUE
ON THE NOTES.
The notes are secured by a second priority interest in our assets, while
indebtedness outstanding under our senior credit facility is secured by a first
priority security interest in our assets. As of March 28, 1999, the total
outstanding amount of indebtedness under the senior credit facility was $63.6
million. The proceeds from the sale of such collateral, in the event there is a
default and foreclosure on the collateral, may not be
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sufficient to satisfy our obligations under both the notes and the indebtedness
outstanding under the senior credit facility. This is because proceeds from the
sale of the collateral would be distributed first to satisfy outstanding secured
obligations and then to satisfy our obligations under the senior credit facility
before they would be distributed to holders of the notes. Accordingly, we cannot
assure you that there will be sufficient funds available to repay the notes
after payment in full of debt outstanding under the senior credit facility. See
"Description of the Notes--Collateral" and "--Intercreditor Agreement."
You should not rely upon the book value of the collateral as a measure of
the value of such collateral in the event of a foreclosure sale, and we have not
had any appraisals of the collateral prepared in connection with the exchange
offer. The amount to be received upon a sale of the collateral would depend on a
number of factors, including the timing and the manner of the sale. By its
nature, portions of the collateral will be liquid and may have no readily
ascertainable market value. As a result, we cannot assure you that the
collateral can be sold in a short period of time. In addition, a significant
portion of the collateral includes assets which may only be usable as part of
our existing operating businesses. Accordingly, any such sale of the collateral,
including any real property portion, separate from the sale of our operating
businesses, may not be possible. In addition, if third parties enjoy liens
permitted by the terms of the notes and the indenture these parties may have
rights and remedies with respect to the property that, if exercised, could
adversely affect the value or availability of the collateral. See "Description
of the Notes--Covenants--Liens."
THE REMEDIES SELECTED BY THE AGENT FOR OUR SENIOR LENDERS IN THE EVENT OF A
FORECLOSURE ON THE COLLATERAL MAY RESULT IN THE RELEASE OF THE COLLATERAL AS
SECURITY FOR THE NEW NOTES.
Under (1) the intercreditor agreement among Harvard, the administrative
agent under our senior credit facility and the trustee, and (2) the collateral
agreement among Harvard, the other borrowers under the senior credit facility
and the administrative agent, the loan collateral agent, who acts on behalf of
the lenders and not the noteholders, controls
o foreclosure proceedings;
o the enforcement and amendment of the collateral agreement; and
o the right to take other action with respect to the collateral.
Under conditions specified in the intercreditor agreement and the collateral
agreement, the loan collateral agent can release the collateral, which will
automatically release the collateral as security for the new notes.
OUR RECENT BANKRUPTCY HAS HAD A NEGATIVE IMPACT ON OUR BUSINESS IN THE PAST AND
MAY NEGATIVELY AFFECT OUR ABILITY TO WIN NEW BUSINESS IN THE FUTURE.
We emerged from bankruptcy on November 24, 1998, the effective date of our
plan of reorganization. Our experience in and recent emergence from bankruptcy
could adversely affect our ability to negotiate favorable trade terms with
manufacturers and other vendors. Our experience in bankruptcy could also
adversely affect our ability to obtain new purchase orders from current and
prospective customers. The failure to obtain favorable terms from suppliers or
new business from current and prospective customers could have adverse effects
on our operations, business or financial condition. However, our recent
experience since emergence from bankruptcy indicates that such effects, if any,
are unlikely to be material.
A FUTURE BANKRUPTCY BY HARVARD COULD DELAY OR PREVENT A SALE OF THE COLLATERAL
TO PAY THE NEW NOTES, AND INCREASE THE RISK THAT THE NEW NOTES WILL NOT BE PAID
IN FULL OR AT ALL.
The collateral agent's right to repossess and dispose of the collateral
upon the occurrence of an event of default is likely to be significantly
impaired if we commence, or have commenced against us, a future bankruptcy
proceeding prior to the collateral agent having repossessed and disposed of the
collateral. Under the Bankruptcy Code, the collateral agent cannot repossess its
security from us in a bankruptcy case or dispose of security repossessed from us
without bankruptcy court approval. Moreover, the Bankruptcy Code permits us to
continue to retain and to use the collateral even though we are in default under
our severed financings, provided that the collateral agent is given "adequate
protection" as such term is interpreted by the relevant bankruptcy court.
Because the term "adequate protection" is not given a precise definition and
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varies according to the circumstances and in view of the broad discretionary
powers of a bankruptcy court, it is impossible to predict:
o how long payments under the indenture could be delayed following the
start of a bankruptcy case;
o whether or when the collateral agent could repossess or dispose of the
collateral; or
o whether or to what extent you would be compensated for any delay in
payment or loss of value of the collateral through the requirement of
"adequate protection."
In addition, any disposition of the collateral would also require approval
of the Bankruptcy Court.
A FUTURE BANKRUPTCY BY OUR SUBSIDIARIES COULD NEGATIVELY AFFECT THE VALUE OF OUR
SUBSIDIARIES' GUARANTEES OF OUR OBLIGATIONS UNDER THE NOTES.
Our operations are substantially conducted through our subsidiaries, and,
therefore, we are dependent on the cash flow of our subsidiaries to meet our
obligations, including our obligations under the notes. Our obligations under
the notes are guaranteed by each of our domestic subsidiaries on a senior basis.
If one of the subsidiary guarantors undergoes a bankruptcy, liquidation or
reorganization, holders of that subsidiary guarantor's senior indebtedness will
have a claim to the assets of such subsidiary that is equal with the interest of
the holders of the new notes in those assets. Under limited conditions, the
indenture and the senior credit facility permit us to incur additional
indebtedness, up to a maximum amount of $5.0 million, including $2.5 million in
debt secured by liens permitted under the senior credit facility, $2.0 million
in debt of Harvard's Canadian subsidiary Trim Trends Canada Ltd. and
$0.5 million in other debt. See "Description of the Notes--Covenants--Incurrence
of Indebtedness and Issuance of Preferred Stock" and "Description of
Indebtedness Under the Senior Credit Facility."
IF WE ARE SUED BY UNPAID CREDITORS AND THEY WIN, PAYMENT ON THE NOTES COULD BE
JEOPARDIZED.
Any debt that we issue or the guarantees issued by the subsidiary
guarantors may be subject to review under relevant state and federal fraudulent
conveyance laws if a bankruptcy case or lawsuit is commenced against us or our
subsidiary guarantors by or on behalf of unpaid creditors. A court may find that
after giving effect to the sale of the new notes:
o we issued the new notes with the intent of hindering, delaying or
defrauding current or future creditors, or contemplated insolvency with a
design to prefer one or more creditors to the exclusion in whole or in
part of others; or
o we received less than reasonable equivalent value or fair consideration
for incurring such debt and any one of the following occur:
- we were insolvent or were rendered insolvent by reason of the
issuances to date, in the case of Harvard, or the guarantees, in
the case of our subsidiary guarantors;
- we were engaged, or about to engage, in a business or transaction
for which our remaining assets constituted unreasonably small
capital;
- we intended to incur, or believed that we would incur, debts that
were beyond our ability to pay when they matured, as the relevant
fraudulent transfer or conveyance statutes define or interpret all
of the above mentioned terms; or
- we were a defendant in an action for money damages, or had a
judgment for money damages docketed against us, if unsatisfied
after final judgment.
In such event, the court could avoid or subordinate the amounts owing under
the new notes, in the case of Harvard, or the guarantees, in case of the
subsidiary guarantors, to existing and future debt of Harvard or the subsidiary
guarantors. The court could also take other actions detrimental to the holders
of the new notes.
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The measure of insolvency for purposes of the above listed considerations
will vary depending upon the law of the jurisdiction that is being applied.
Generally, however, an entity would be considered insolvent if, at the time it
took on additional debt, either:
o the sum of its debts, including contingent liabilities, is greater than
its assets, at a fair valuation, or
o the value of its assets is less than the amount required to pay the
probable liability on its total existing debts and liabilities, including
contingent liabilities, as they become due.
Also, if federal bankruptcy or state insolvency proceedings were commenced
within 90 days after a payment by us or our subsidiary guarantors with respect
to the new notes, or if we or our subsidiary guarantors anticipated becoming
insolvent at the time of payment, all or a portion of such payment could be
voided as a preferential transfer and the recipient of such payment could be
required to return the payment.
We cannot assure you what standards a court would use to determine whether
we or our subsidiary guarantors were solvent at the time of the issuance of any
of the notes or guarantees. Whatever standard was used, we cannot assure you
that the new notes or the guarantees would not be avoided or subordinated on one
of the other grounds listed above. In giving their opinions in connection with
the exchange offer, counsel will not express any opinion as to the applicability
of Federal or state fraudulent transfer and conveyance laws.
WE MAY NOT HAVE SUFFICIENT FUNDS TO REPAY THE NEW NOTES UPON A CHANGE OF
CONTROL.
In the event a third party acquires control of Harvard, you will have the
right to require us to purchase all or a portion of your notes at a price equal
to 101% of the aggregate principal amount plus any accrued and unpaid interest
and liquidated damages. If we are involved in a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction that does not
result in a change of control under the indenture, the provisions of the
indenture may not protect you. The definition of "change of control" includes a
phrase relating to the sale, assignment, conveyance, transfer, lease or other
disposition of "all or substantially all" of the assets of Harvard and its
subsidiaries. Although there is a developing body of case law interpreting the
phrase "substantially all," there is not a precise or established definition of
the phrase under applicable law. Accordingly, the ability of a holder of the
notes to require Harvard to repurchase such notes as a result of a sale,
assignment, conveyance, transfer, lease or other disposition of less than all of
the assets of Harvard and its subsidiaries to another person or group may be
uncertain.
A change in control may result in a default under the senior credit
facility. Upon a default under the senior credit facility or other future senior
debt, the lenders involved could prohibit us from repurchasing the notes. They
could also require the payment in full of all such senior debt before allowing
us to repurchase the notes and, if we are not able to make such payment, they
could judge against their collateral the indenture requires that prior to a
repurchase of the notes upon a change of control, we must either repay all
outstanding indebtedness under the senior credit facility or obtain any required
consent to such a repurchase. If we do not obtain such consent or repay our
outstanding indebtedness under the senior credit facility, we would be
prohibited from offering to purchase the notes. In such case, our failure to
offer to purchase the notes could become an event of default under the
indenture. If a change of control were to occur, we cannot assure you that we
would have sufficient financial resources or that we would be able to arrange
financing to repay all of our obligations under the senior credit facility, the
indenture and other debt that may become payable upon the occurrence of such
change of control. See "Description of Indebtedness Under the Senior Credit
Facility" and "Description of the Notes--Repurchase at the Option of
Holders--Change of Control."
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OUR BANKRUPTCY REORGANIZATION MAY LIMIT OUR ABILITY TO CARRY FORWARD NET
OPERATING LOSSES AND BUILT-IN LOSSES TO REDUCE FUTURE INCOME TAXES.
Prior to the plan of reorganization being implemented, Harvard Industries'
consolidated unused net operating loss (NOL) was approximately $243 million.
Harvard did not have any recognized built-in losses before the plan of
reorganization was implemented. As a result of the plan of reorganization,
Harvard anticipates a reduction in the NOL of approximately $147 million, with
approximately $96 million of NOL surviving the reoganization.
Under the Internal Revenue Code of 1986, our use of net operating loss
carry forwards against future taxable income is subject to limitation if we
experienced an "ownership change" as defined in the Code in connection with the
plan of reorganization.
As a result of the implementation of the plan of reorganization, we believe
that we underwent an "ownership change." Generally, a greater than 50 percentage
point change in ownership is considered an "ownership change." As a result, our
ability to use all of our net operating losses and "recognized built-in losses,"
if any, in taxable years beginning after the effective date of the plan or
reorganization, and a portion of the taxable year which includes the effective
date, is subject to limitation. Under this limitation, the income that may be
offset by net operating loss carryovers that occured prior to the effective date
should generally be limited to the product of:
o a rate set by the U.S. Treasury Department, 5.02% on the effective date,
and
o the lower of (a) the value of Harvard's assets immediately prior to the
ownership change, determined without regard to liabilities, or (b) the
aggregate new stock value immediately after the ownership change.
The limitation may also apply to the use of "recognized built-in losses" to
offset other income during the five-year period after the effective date. The
built-in loss limitation will apply if the excess of our tax basis in our assets
over the fair market value of such assets as of the effective date exceeded the
lesser of $10.0 million or 15% of the fair market value of the assets before the
ownership change. Our ability to take depreciation or amortization charges with
respect to its built-in loss assets would also be subject to this built-in loss
limitation. The annual limitation on our ability to use our net operating
losses, and recognized built-in losses, if any, may be significant.
INCOME ATTRIBUTABLE TO CANCELLATION OF INDEBTEDNESS MAY LIMIT OUR ABILITY TO
CARRY FORWARD NET OPERATING LOSSES TO REDUCE FUTURE INCOME TAXES.
Cancellation of indebtedness income that arises in a case under the
Bankruptcy Code is not includible in gross income but it does reduce tax
attributes of the taxpayer, including net operating losses. The plan of
reorganization discharged some general unsecured claims such as our 12% Senior
Notes due 2004 and 11 1/8% Senior Notes due 2005. This discharge will result in
the realization of cancellation of indebtedness income, which will reduce our
tax attributes by the difference between the fair market value of the
consideration paid and the amount of the discharged indebtedness. The exchange
of old notes for new notes under the exchange offer will not result in the
recognition of cancellation of indebtedness income to Harvard.
THERE WILL BE NO ABILITY TO MEANINGFULLY COMPARE OUR RESULTS OF OPERATIONS AND
FINANCIAL CONDITION AFTER THE EFFECTIVE DATE OF THE EXCHANGE OFFER TO PRIOR
PERIODS.
We will be unable to meaningfully compare information reflecting our
results of operations and financial condition after the effective date to prior
periods due to:
o the replacement of the management team and the restructuring of our core
operations and general and administrative activities;
o our bankruptcy proceedings, including the costs and expenses of these
proceedings as well as the effect of settlements of related liabilities;
and
o our application of Fresh Start Reporting in accordance with AICPA
Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code" (SOP 90-7).
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Under SOP 90-7, our equity will be restated at "reorganization equity
value," a value which was determined by the financial advisors to the creditors'
committee under the plan of reorganization. In addition, because we have been in
a restructuring phase and have continued to incur costs and expenses relating to
our bankruptcy proceedings, the results of operations since May 1997 may not
indicate our future performance.
WE CANNOT ASSURE YOU THAT THE STEPS WE ARE TAKING UNDER OUR TURNAROUND BUSINESS
STRATEGY WILL SUCCEED IN IMPROVING OUR FUTURE OPERATING RESULTS.
Our turnaround business strategy includes a substantial restructuring of
our revenue and customer base. As a result, our value and profitability depend
on our ability to successfully implement the turnaround business strategy. We
cannot assure you that the turnaround business strategy will be successful.
Also, we may be unable to operate profitably even if the turnaround business
strategy is successfully implemented. If the turnaround business strategy is not
successful we may be unable to generate sufficient operating funds to pay our
outstanding obligations, including principal and interest in respect of the
notes and indebtedness under the senior credit facility. If this is the case,
the alternative financing we need may not be available at the time we require
it. In addition, that financing may only be available on terms that we find
unacceptable.
Our success will also depend on our ability to do each of the following in
a timely manner:
o terminate existing unprofitable contracts and purchase orders;
o attract new business or customers;
o produce and sell new products at projected margins and at competitive
prices;
o attract key new personnel for our manufacturing facilities;
o dispose of old customer orders, enabling us to utilize capacity for new
business efficiently;
o develop or acquire a distribution network for after-market and industrial
products; and
o appropriately measure the impact of our turnaround business strategy on
relations with current customers.
For fiscal years 1998, 1997 and 1996 we had net losses of $56 million,
$389 million and $69 million, respectively. These losses have been primarily due
to operating inefficiencies and losses associated with our operations that we
had designated for sale or wind-down. If we continue to experience net losses,
or if our cash flow and capital resources are insufficient to pay for our debt
obligations, we may be forced to reduce or delay planned expansion or capital
expenditures, sell assets, obtain additional equity capital or restructure our
indebtedness. However, we cannot assure you that any of these remedies will be
available or satisfactory. We also cannot assure you that our operating results,
cash flow and capital resources will be sufficient for payment of our debt in
the future. This includes the notes and our other liquidity needs. We may need
to refinance all or a portion of the principal of the notes on or prior to their
maturity. We cannot assure you that we will be able to refinance the notes. If
we are able to refinance the notes, we cannot assure you it will be on
commercially reasonable terms.
WE HAVE SIGNIFICANT CAPITAL INVESTMENT AND CAPITAL EXPENDITURE REQUIREMENTS THAT
HAVE NOT BEEN MET IN THE PAST AND MAY NOT BE MET IN THE FUTURE.
We operate in an industry which requires significant capital investment. We
are also required to make capital expenditures to upgrade our facilities. We
believe that our competition will continue to invest heavily to achieve
increased production efficiencies and to improve product quality. Our ability to
compete in such a competitive environment will depend on our ability to make
major capital expenditures over the next several years. These expenditures are
necessary to service existing business, enter new markets and remain competitive
in existing markets. During the past few years, Harvard has put off capital
expenditures because of financial constraints. Our ability to make necessary
capital expenditures may be adversely affected if (1) we are unable to produce
sufficient cash flows from our operations, or (2) we are unable to raise
sufficient debt or equity capital on terms that we consider acceptable. Our
capital expenditures totalled approximately $24.9 million in 1998, and we
expect, based on current information, that our capital
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expenditures will total approximately $20 million in 1999. In addition, through
the year 2002, including the year 1998, we expect that capital expenditures will
be approximately $110 million.
WE MIGHT NOT BE ABLE TO COMPLY WITH CURRENT OR FUTURE SOURCING PROCEDURES OF
U.S. AUTOMAKERS.
In the late 1980's and early 1990's, U.S. automakers made a number of
significant changes in their sourcing procedures which have placed greater
business and financial risk on us as automotive component suppliers.
We may be unable to meet our customers' requirements that we reduce the future
cost of our products to them.
Some of our products are sold under agreements that require us to provide
annual cost reductions to OEMs by specific percentages each year. These
reductions come directly through price reductions or indirectly through
suggestions for manufacturing efficiencies or other cost savings. If we are
unable to generate sufficient cost savings in the future to offset such price
reductions, our profit margins could be adversely affected.
We may be unable to meet our customers' requirements that we must bear a
greater portion of the cost of product design and development than in the
past.
OEMs are requiring potential suppliers of components to become involved
earlier in and share a greater proportion of the costs of the design and
development process for new platforms. They are also requiring suppliers to
develop integrated systems or modules rather than merely manufacturing separate
parts. OEMs expect the component supplier to manage the entire development
cycle, a cycle lasting two to four years, of the product or system, including:
o design and engineering;
o production of prototypes;
o design validation; and
o design of tooling and completion of manufactured products and integrated
systems of products.
Our risk of losing business to our competitors may increase as a result of
U.S. automakers' decisions to reduce the number of suppliers with whom they do
business.
The requirement that automative component suppliers become involved earlier
in the design and development process shifts a larger part of the initial
capital outlays for such new platforms and systems onto component suppliers. As
a result, the automotive supply industry is experiencing a period of significant
consolidation, resulting in fewer, but larger, suppliers who are more divesified
and have access to more capital. This gives the large suppliers a competitive
advantage because, to reduce costs and improve quality, U.S. automakers are
reducing their supplier base by awarding contracts to full-service suppliers who
are able to provide design, engineering and program management capabilities as
well as meet cost, quality and delivery requirements. As a result, if we are
unable to have the financial flexibility to make the necessary capital
expenditures or to make acquisitions to grow our business, we may be unable to
remain competitive and viable in the component supplier industry.
In addition, this trend has had a relatively greater impact on us than on
many of our competitors because of OEMs' reluctance to award new business to
Harvard due to its emergence from bankruptcy. We may be unable to become
involved earlier in the design and development process for new platforms. Even
if we are successful in becoming involved earlier in such processes, we may be
unable to generate sufficient cash or have financing available to fund the
greater costs associated with this effort.
INCREASING SALES OF FOREIGN CARS ARE ADVERSELY AFFECTING THE MARKET FOR U.S.
COMPONENTS, INCLUDING OUR PRODUCTS.
Foreign automotive manufacturers have gained a significant share of the
U.S. market, both from export sales as well as the more recent opening of
domestic manufacturing facilities. Between 1985 and 1997, sales
14
<PAGE>
of automobiles from foreign car makers with U.S. manufacturing facilities
increased from 2.0% to 20.5% of the North American market. The growth of such
"transplant" sales has resulted, and will likely continue to result in, a loss
of market share for U.S. automakers. As a result, we, and other component
suppliers, will experience an adverse effect because most of our current
customers are U.S. automakers. Although we plan to solicit additional business
from foreign automakers, we may be unsuccessful in doing so or such additional
business may fail to make up for lost business that we have already experienced.
WE MIGHT NOT BE ABLE TO IMPLEMENT NEW TECHNOLOGIES NEEDED TO PRODUCE CHANGING
PRODUCTS REQUIRED BY OUR CUSTOMERS.
Today, design, engineering and manufacturing processes are technology
driven, using advanced computers and sophisticated computer programs. Our
customers' requirements for changing products may require that we invest in new
computer systems or in upgading and reprogramming our current computer systems.
If required, expenditures for new technology must be made during the first few
years of the product cycle. However, we do not begin to recover our costs until
our customers start selling the finished products. Our recent bankruptcy
reorganization and subsequent operating performance may hinder our ability to
secure the funds needed to invest in new technology to respond to our customers'
changing needs.
We compete for new business at the beginning of the development of new
models and upon the redesign of existing models by our major customers. New
model development begins two to five years prior to the marketing of such models
to the public, with existing business lasting for the model life cycle. To meet
the needs of customers with changing products, we may need to implement new
technologies and manufacturing processes when launching our new products.
Moreover, in order to meet our customers' requirements, we may be required to
supply our customers regardless of cost. As a result, we may suffer an adverse
impact to our operating profit margins. Although our management believes it has
implemented manufacturing processes that adapt to the changing needs of our
customers, we still may encounter difficulties which could have an adverse
effect when implementing new technologies in future product launches.
OUR BUSINESS COULD BE SIGNIFICANTLY AFFECTED BY THE LOSS OF ANY OF OUR MAJOR
CUSTOMERS.
Our largest customers are General Motors, Ford and Chrysler. For the fiscal
year 1998, General Motors accounted for approximately 39% of our consolidated
net sales, Ford accounted for approximately 34% of our consolidated net sales
and Chrysler accounted for approximately 10% of our consolidated net sales. Our
purchase orders from our customers generally provide for supplying the
customer's annual requirements for a particular model or assembly plant, rather
than for manufacturing a specific quantity of products. These contracts are
renewable on a year-to-year basis. If we lose any one of our major customers or
suffer a significant decrease in demand for key models or a group of related
models sold by any of our major customers, it could have a material adverse
effect on our results of operations.
OUR BUSINESS COULD BE SIGNIFICANTLY AFFECTED BY THE LOSS OF KEY PERSONNEL.
We believe that our future success will depend in large part on the
abilities and continued service of our executive officers and other key
employees. In particular, this means Roger Pollazzi, who serves as Chairman and
Chief Executive Officer and the senior management team. We may be unable to
retain the services of Mr. Pollazzi and other key personnel. The loss of any key
executive officers or employees, including Mr. Pollazzi, could have a material
adverse effect on our business.
WE MAY NOT BE ABLE TO REACH NEW AGREEMENTS WITH OUR UNIONIZED EMPLOYEES.
As of March 29, 1999, we had approximately 4,200 employees. Approximately
42% of our employees are covered by collective bargaining agreements negotiated
with 16 locals of 9 unions. These contracts expire at various times through the
year 2000. Discussions with various unions regarding new labor agreements or an
extension of existing contracts are presently underway. While we believe that
our relations with our employees are good, we could experience a material
adverse effect on our financial position or operating results as a result of a
prolonged dispute with our employees.
15
<PAGE>
WE MAY NOT BE ABLE TO COMPLY WITH LAWS GOVERNING ENVIRONMENTAL MATTERS, AND WE
MAY BE RESPONSIBLE FOR ADDITIONAL REMEDIATION ACTIVITIES AND HELD LIABLE IN
LITIGATION REGARDING ENVIRONMENTAL MATTERS.
Our operations are subject to a variety of local, state and federal laws
governing, among other things, emissions to air, discharge to waters and the
generation, handling, storage, transportation, treatment and disposal of
hazardous substances and other materials. Although we have made and will
continue to make significant expenditures relating to our environmental
compliance obligations, there may be times when we are not in compliance with
all these requirements. We spent $2.7 million in cash in fiscal year 1996, $1.7
million in cash in fiscal year 1997 and $0.1 million in cash in fiscal year 1998
on environmental remediation costs and related expenses.
We have been identified as a defendant or potentially responsible party in
a variety of environmental matters in connection with historical and current
operations involving our use and disposal of hazardous materials. Claims were
filed in our bankruptcy proceedings in connection with most of these matters.
Several large claims were settled for cash and the remaining claims will be paid
as unsecured claims in accordance with the plan of reorganization. We have filed
and will file objections to some claims.
We are also conducting remedial activities at current and former facilities
under governmental orders and private contractual agreements. We have granted
access to the Michigan Department of Environmental Quality at our Hayes-Albion
Corporation plant in Jackson, Michigan for an investigation of the plant's use
and disposal of chlorinated solvents. The investigation is in connection with
the Department's evaluation of an area-wide groundwater contamination problem.
We may be subject to injunctive orders requiring remediation of this property.
Furthermore, we are aware of currently owned facilities that are not required to
be remediated at the present time but that could possibly require remediation
activity in the future.
We have reserved approximately $8.5 million for our share of potential
costs associated with any cash settlement of claims in accordance with the plan
of reorganization and the current remediation activities described above.
However, we cannot assure you that the reserved amounts will be sufficient to
satisfy our obligations. Changes in existing environmental laws or their
interpretation and more rigorous enforcement by regulatory authorities may give
rise to additional expenditures, compliance requirements or liabilities that
could have a material adverse effect on our business, financial condition and
results of operations.
Finally, the discovery of additional environmental liabilities related to
our historical operations involving the use and disposal of hazardous substances
could have a material adverse effect on our business, results of operations or
financial condition.
IF WE DO NOT MEET OUR OBLIGATIONS TO CONTRIBUTE TO OUR DEFINED BENEFIT PENSION
PLANS, OUR PAYMENT OBLIGATIONS MAY BE ACCELERATED.
Upon our emergence from bankruptcy, our unfunded liabilities related to
defined benefit pension plans were approximately $29.8 million. If we are unable
to meet our contribution obligations under such plans, the Pension Benefit
Guaranty Corporation may seek to terminate the affected plan or plans, thus
accelerating payment obligations. Our long-term objective is to fund our entire
pension obligation with funds that are generated from operations, although we
cannot assure you that this will actually occur.
WE COULD BE AFFECTED BY "YEAR 2000" COMPUTER PROBLEMS.
We are addressing the Year 2000 problem and are aware that our information
systems are not completely Year 2000 compliant today. The Year 2000 issue
results from computer programs written with date fields of two digits, rather
than four digits, resulting in the inability of the program to distinguish
between the year 1900 and 2000. Many of our computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000.
If not addressed and corrected on a timely basis, failure of our computer
systems to process Year 2000 related data correctly could have a material
adverse effect on our financial condition and results of operations. Failures of
this kind could, for example, lead to:
o incomplete or inaccurate accounting;
o inaccurate supplier and customer order processing;
16
<PAGE>
o recording errors in inventories or other assets; and
o disruption of our manufacturing process as well as transactions with
third parties.
If not addressed, we face the potential risks of financial loss, legal
liability and interruption to business.
We have surveyed our key utilities and suppliers to determine the extent to
which we are vulnerable to the failure by these parties to fix Year 2000
compliance issues. We are still in the process of assessing the information they
have provided. Failure by such key utilities or suppliers to complete Year 2000
compliance work in a timely manner could have a material adverse effect on our
operations. Examples of problems that could result from the failure of these
utilities and suppliers to remediate Year 2000 problems include, in the case of
utilities, service failures such as power, telecommunications, elevator
operations and loss of security access control and, in the case of suppliers,
failures to satisfy orders on a timely basis and to process orders correctly.
Additionally, general uncertainty regarding the success of remediation may
cause many suppliers to reduce their activities temporarily as they assess and
address their Year 2000 efforts in 1999. This could result in a general
reduction in available supplies in late 1999 and early 2000. Our management
cannot predict the magnitude of any such reduction or its impact on our
financial results. We can give no assurance that the systems of other companies
on which our systems rely will be converted in a timely fashion, or that the
noncompliance of these systems would not have a material adverse effect on our
business, financial condition, competitive position and results of operations.
FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. These
statements discuss our intentions, beliefs or current expectations with respect
to our future operating performance, and may include, but are not limited to,
projections of capital expenditures, plans for future operations, financing
needs or plans, compliance with covenants in loan agreements, sales of assets or
businesses, plans relating to our products or services, assessments of
materiality, predictions of future events, and the ability to obtain additional
financing, including our ability to meet obligations as they become due, and
pending and possible litigation. You can identify forward-looking statements by
our use of forward-looking terminology such as "may," "will," "expect,"
"intend," "estimate," "anticipate" or "believe" as well as the negative of these
terms, variations of these terms, or similar terminology. Although we believe
that the expectations reflected in such forward-looking statements are
reasonable, we cannot assure you that such expectations be correct. The most
significant of such risks, uncertainties and other factors are discussed in this
"Risk Factors" section and you are urged to carefully consider such factors.
Additional risks and uncertainties are detailed in our filings with the SEC. We
do not have any obligation to update forward-looking statements.
We have also made cautionary statements in this prospectus, some of which
accompany the forward-looking statements used in the "Prospectus Summary" and
"Risk Factors" sections regarding important factors that could cause actual
results to differ materially from our expectations. All of our subsequent
written and oral forward-looking statements, or statements of persons acting on
our behalf, are expressly qualified in their entirety by such cautionary
statements.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new notes as
described in this prospectus. We will receive in exchange old notes in like
principal amount. The old notes surrendered in exchange for the new notes will
be retired and canceled and cannot be reissued. Accordingly, the issuance of the
new notes will not result in any change in our indebtedness.
17
<PAGE>
HARVARD INDUSTRIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
The following table summarizes unaudited pro forma financial information as
if our plan of reorganization in bankruptcy had become effective on October 1,
1997. The unaudited pro forma financial information contains adjustments for
depreciation expense, interest expense and the amortization of reorganization
value in excess of amounts allocable to identifiable assets. The unaudited pro
forma financial information does not purport to be indicative of the results
which would have been obtained had the Plan been effective as of October 1,
1997, or which may be obtained in the future.
<TABLE>
<CAPTION>
PRO FORMA
1998 ADJUSTMENTS AS ADJUSTED
-------- ----------- -----------
<S> <C> <C> <C>
Sales...................................................................... $690,076 $ 690,076
Costs and expenses
Cost of sales............................................................ 656,243 (15,496) 640,747
Selling, general and administrative expenses............................. 66,546 66,546
Amortization of intangible assets........................................ 1,584 61,200 62,784
Impairment of long-lived assets and restructuring costs.................. 10,842 10,842
Interest expense......................................................... 14,231 (2,066) 12,165
Gain on sale of operations............................................... (28,673) (28,673)
Other expense............................................................ 3,980 3,980
-------- --------- ---------
Total costs and expenses.............................................. 724,753 43,638 768,391
Loss from operations before reorganization items and income taxes.......... (34,677) (43,638) (78,315)
Reorganization items....................................................... 14,920 (14,920) 0
Provision for income taxes................................................. 6,207 6,207
-------- --------- ---------
Net loss................................................................... $(55,804) $ (28,718) $ (84,522)
-------- --------- ---------
-------- --------- ---------
Basic and diluted earnings per share....................................... $ (10.26)
---------
---------
Weighted average number of common and common equivalent shares
outstanding.............................................................. 8,240,295
---------
---------
</TABLE>
18
<PAGE>
CAPITALIZATION
The following table sets forth the actual consolidated cash and cash
equivalents and capitalization of Harvard at September 30, 1998, the pro forma
adjustments to Harvard's consolidated cash and cash equivalents and
capitalization after giving effect to the transactions contemplated by the plan
of reorganization and our recent financings and the pro forma consolidated cash
and cash equivalents and capitalization of Harvard at September 30, 1998. This
table should be read in conjunction with the Consolidated Financial Statements,
including the notes thereto, included in Harvard's Annual Report on Form 10-K
for the fiscal year ended September 30, 1998, which is incorporated herein by
reference.
<TABLE>
<CAPTION>
ACTUAL PRO-FORMA
SEPTEMBER 30, PRO-FORMA SEPTEMBER 30,
1998 ADJUSTMENTS 1998
------------- ----------- -------------
($ IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents(1).......................................... $ 11,62 $ (11,621) $ 3
--------- --------- ---------
Senior debt:
Existing DIP facility............................................... 39,161 (39,161) --
New revolving facility(2) .......................................... -- -- --
New term facility................................................... -- 50,000 50,000
14 1/2% senior secured notes........................................ -- 25,000 25,000
Subordinated DIP facility........................................... 25,000 (25,000) --
--------- --------- ---------
64,161 75,000
--------- ---------
Total senior debt................................................... 124,637 (124,637) --
--------- --------- ---------
Pay-in-kind exchange preferred stock(3)
Shareholders' equity/(deficit):
New common stock and additional paid-in capital(4) ................. -- 175,000 175,000
Old common stock and additional paid-in capital..................... 20,311 (20,311) --
Accumulated deficit................................................. (629,541) 629,541
--------- --------- ---------
Total shareholders' equity/(deficit)................................ (609,230) 784,230 175,000
--------- --------- ---------
Total capitalization................................................ $(420,432) $ 670,432 $ 250,000
--------- --------- ---------
--------- --------- ---------
</TABLE>
- ------------------
(1) Cash reduced by $15.9 million of transaction fees and reorganization
expenses, offset by a $4.3 million increase in outstanding senior debt.
(2) Approximately $12.5 million of stand-by letters of credit are expected to be
outstanding as part of Harvard's self-insurance programs relating to
workers' compensation and other general insurance.
(3) Includes $10,142 of undeclared accrued dividends.
(4) The $175 million pro forma valuation of the new common stock was derived by
taking the mid-point of the projected valuation range of $150 to $200
million estimated, assuming an effective date of September 30, 1998, by the
financial advisors to the creditors' committee in the bankruptcy.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table presents selected consolidated historical financial
data for Harvard as of the dates and for the fiscal periods indicated. The
selected audited financial data for each of the five years ended September 30,
1998, 1997, 1996, 1995 and 1994 has been derived from the Consolidated Financial
Statements of Harvard included in our Annual Report on Form 10-K for the fiscal
year ended September 30, 1998. As a result of the fact that Harvard will be
emerged from Chapter 11 and the prospective effect of Fresh Start Reporting,
Harvard does not believe that its historical results of operations are
necessarily indicative of its results of operations as an ongoing entity
following its emergence on November 24, 1998 from bankruptcy. The following
information should be read in conjunction with and is qualified by reference to
the audited Consolidated Financial Statements of Harvard and notes thereto
included in Harvard's Annual
19
<PAGE>
Report on Form 10-K for the fiscal year ended September 30, 1998, which is
incorporated herein by reference.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------
1998 1997 1996 1995(1) 1994
--------- --------- --------- --------- ---------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales..................................... $ 690,076 $ 810,769 $ 824,837 $ 631,832 $ 614,952
Cost of sales................................. 656,243 797,774 776,141 557,340 543,532
--------- --------- --------- --------- ---------
Gross profit.................................. 33,833 12,995 48,696 74,492 71,420
Selling, general and administrative
expenses.................................... 66,546 45,822 42,858 33,037 32,217
Amortization of goodwill...................... 1,584 8,448 15,312 2,986 1,584
Impairment and restructuring charges(3) ...... 10,842 288,545 -- -- --
Interest expense(2) .......................... 14,231 36,659 47,004 19,579 11,947
Gain on sale of operations(4) ................ (28,673) -- -- -- --
Other (income) expense, net(5) ............... 3,980 5,530 1,538 (1,789) (532)
--------- --------- --------- --------- ---------
Income (loss) from continuing operations
before reorganization items, income taxes
and extraordinary item...................... (34,677) (372,009) (58,016) 20,679 26,204
Reorganization items.......................... 14,920 16,216 -- -- --
--------- --------- --------- --------- ---------
Income (loss) from continuing operations
before income taxes and, extraordinary
item........................................ (49,597) (388,225) (58,016) 20,679 26,204
Provision (benefit) for income taxes.......... 6,207 1,204 3,196 11,566 9,536
--------- --------- --------- --------- ---------
Income (loss) from continuing operations
before extraordinary item................... (55,804) (389,429) (61,212) 9,113 16,668
Loss from discontinued operations, net of
tax(6) ..................................... -- -- (7,500) -- (9,038)
--------- --------- --------- --------- ---------
Income (loss) before extraordinary item....... (55,804) (389,429) (68,712) 9,113 7,630
Extraordinary item............................ -- -- -- (2,192) --
--------- --------- --------- --------- ---------
Net income (loss)............................. $ (55,804) $(389,429) $ (68,712) $ 6,921 $ 7,630
Pay-in-kind preferred dividends and
accretion(7)................................ -- 10,142 14,844 14,809 14,767
--------- --------- --------- --------- ---------
Net loss attributable to common
stockholders................................ (55,804) (399,571) (83,556) (7,888) (7,137)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
SHARE DATA:
Basic and diluted earnings per share
Income (loss) from continuing operations...... $ (7.94) $ (56.91) $ (10.87) $ (0.82) $ (0.27)
Loss from discontinued operations............. -- -- (1.07) -- (1.28)
Extraordinary Item............................ -- -- -- (0.32) --
Net loss per share............................ $ (7.94) $ (56.91) $ (11.94) $ (1.14) $ (1.01)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average number of shares and
equivalents................................. 7,026,437 7,020,692 6,999,279 6,894,093 7,041,324
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------
1998 1997 1996 1995(1) 1994
--------- --------- --------- --------- ---------
($ IN THOUSANDS)
FINANCIAL RATIOS AND OTHER DATA:
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges............ -- -- -- 1.17 1.42
Depreciation and amortization................. $ 27,904 $ 60,186 $ 65,658 $ 34,856 $ 29,855
Cash flows from continuing operations......... 23,526 11,045 (5,133) 24,305 89,071
Capital expenditures.......................... 24,887 36,572 40,578 22,080 10,141
Cash flows (used) provided by investing
activities.................................. 3,564 (34,156) (48,224) (226,023) (13,954)
Cash flows (used) provided by financing
activities.................................. (24,678) 31,216 27,316 161,283 (30,348)
BALANCE SHEET DATA:
Working capital (deficiency).................. $ (90,024) $ 2,096 $ (7,158) $ 19,417 $ 30,333
Total assets.................................. 250,981 307,494 617,705 662,262 387,942
Liabilities subject to compromise(8).......... 385,665 397,319 -- -- --
Debtor-in-possession credit facilities,
including current portion................... 39,161 87,471 -- -- --
Creditors subordinated term loan.............. 25,000 -- -- -- --
Long-term debt, including current portion..... 0 14,087 360,603 324,801 113,381
Pay-in-kind preferred stock................... 124,637 124,637 114,495 99,651 99,841
Shareholders' equity (deficiency)............. $(609,230) $(547,128) $(145,724) $ (62,206) $ (59,032)
</TABLE>
- ------------------
(1) Includes the results of operations of the Doehler-Jarvis Entities from
July 28, 1995, the effective date of that acquisition.
(2) Interest expense does not include interest after May 7, 1997 amounting to
$13,605 in respect of the old senior notes as all such interest was included
as a liability subject to compromise. See Note 1 to the Consolidated
Financial Statements.
(3) During 1997, Harvard recorded charges for impairment of long-lived assets of
the Doehler-Jarvis Entities and at two other plants. Harvard also recorded
restructuring charges related to two operations scheduled for closing.
During 1998, Harvard recorded charges for impairment of long-lived assets of
its Tiffin, Ohio facility and for certain assets relating to a platform that
will end earlier than anticipated, and a restructuring charge. See Note 13
to the Consolidated Financial Statements. No tax benefit is currently
available for any of these charges.
(4) In November of 1997, Harvard sold Kingston-Warren's Material Handling
division resulting in a gain on sale of $11,354. During 1998, there was a
gain on sale of $17,319 as a result of the sale of the land, building and
certain other assets of the Harvard Interiors' St. Louis, Missouri facility
and the transfer of certain assets at the Doehler-Jarvis Toledo, Ohio
facility and related lease obligations to a third party.
(5) For 1997, other (income) expense, net includes approximately $2,200 related
to joint venture losses.
(6) Harvard, in the first quarter of fiscal 1994, decided to discontinue its
then specialty fastener segment ("ESNA") and therefore applied the
accounting guidelines for discontinued operations. In 1996, Harvard recorded
a $7,500 charge to discontinued operations representing the write-down of
the ESNA facility and continuing carrying costs. See Note 4 to the
Consolidated Financial Statements.
(7) Pay-in-kind preferred dividends after May 7, 1997 do not include $6,749 of
accrued dividends.
(8) September 30, 1998 and 1997, includes $300,000 of old senior notes payable
which are subject to the guaranty of the combined guarantor subsidiaries and
accrued interest of $9,728 which is subject to the guaranty of the combined
guarantor subsidiaries.
21
<PAGE>
THE EXCHANGE OFFER
EXCHANGE OFFER REGISTRATION STATEMENT
The old notes were sold by Harvard on November 24, 1998 to initial
purchasers, who placed the old notes with institutional investors. In connection
therewith, Harvard and the initial purchasers entered into the registration
rights agreement, under which Harvard agreed, for the benefit of the holders of
the old notes, that Harvard would, at its sole cost,
o within 60 days following the original issuance of the old notes, file
with the SEC an exchange offer registration statement, of which this
prospectus is a part, under the Securities Act with respect to an issue
of a series of new notes of Harvard identical in all material respects to
the series of old notes; and
o use its reasonable best efforts to cause such exchange offer registration
statement to become effective under the Securities Act at the earliest
possible time, but in no event later than 120 days following the original
issuance of the old notes.
Upon the effectiveness of the exchange offer registration statement,
Harvard will offer to the holders of the old notes the opportunity to exchange
their old notes for a like principal amount of new notes, to be issued without a
restrictive legend and which may, subject to certain exceptions described below,
be reoffered and resold by the holder without restrictions or limitations under
the Securities Act. The term "holder" with respect to any note means any person
in whose name such note is registered on the books of Harvard.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, Harvard will accept any and all old notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the expiration date. Harvard will issue $1,000 principal amount at stated
maturity of new notes in exchange for each $1,000 principal amount at stated
maturity of outstanding old notes accepted in the exchange offer. Holders may
tender some or all of their old notes under the exchange offer. However, old
notes may be tendered only in integral multiples of $1,000 at stated maturity.
The form and terms of the new notes will be identical in all respects,
including principal amount, interest rate, maturity and ranking, to terms of the
old notes for which they may be exchanged under the exchange offer except that
the new notes have been registered under the Securities Act and, therefore, will
not bear legends restricting their transfer and will not contain terms providing
for an increase in the interest rate on the old notes under circumstances
described in the registration rights agreement. The new notes will evidence the
same debt as the old notes and will be entitled to the benefits of the indenture
under which the old notes were, and the new notes will be, issued.
As of the date of this prospectus, $25 million aggregate principal amount
at stated maturity of the old notes are outstanding. Harvard has fixed the close
of business on , 1999 as the record date for the exchange offer for
purposes of determining the persons to whom this prospectus, together with the
letter of transmittal, will initially be sent. As of such date, there was one
registered holder of the old notes.
Holders of the old notes do not have any appraisal or dissenters' rights
under law or the indenture in connection with the exchange offer. Harvard
intends to conduct the exchange offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations of the SEC
thereunder.
Holders who tender old notes in the exchange offer will not be required to
pay brokerage commission or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of old notes under
the exchange offer. Harvard will pay all charges and expenses, other than
applicable taxes, in connection with the exchange offer. See "--Fees and
Expenses."
22
<PAGE>
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" means 5:00 p.m., New York City time, on
, unless Harvard, in its reasonable discretion, extends the
exchange offer, in which case the term "expiration date" shall mean the latest
date and time to which the exchange offer is extended.
In order to extend the exchange offer, Harvard will notify the exchange
agent of any extension by oral or written notice and will make a public
announcement thereof prior to 9:00 a.m., New York City time, on the next
business day after each previously scheduled expiration date, unless otherwise
required by applicable law or regulation.
Harvard reserves the right, in its reasonable discretion,
o to delay accepting any old notes, to extend the exchange offer or, if in
their reasonable judgment any of the conditions set forth below under the
caption "--Conditions" shall not have been satisfied, to terminate the
exchange offer, by giving oral or written notice of such delay, extension
or termination to the exchange agent, or
o to amend the terms of the exchange offer in any manner.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by a public announcement thereof. If the
exchange offer is amended in a manner determined by Harvard to constitute a
material change, Harvard will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders, and
Harvard will extend the exchange offer for a period of five to ten business
days, depending upon the significance of the amendment and the manner of
disclosure to the registered holders, if the exchange offer would otherwise
expire during such five to ten business day period.
Without limiting the manner in which Harvard may choose to make a public
announcement of any delay, extension, termination or amendment of the exchange
offer, Harvard shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
PROCEDURES FOR TENDERING
Only a holder of old notes may tender them in the exchange offer. A holder
who wishes to tender old notes for exchange under the exchange offer must
transmit a properly completed and duly signed letter of transmittal, or a
facsimile thereof, together with any required signature guarantees, or, in the
case of a book-entry transfer, agent's message, as discussed below under the
caption "--Book-Entry Transfer", and any other required documents, to the
exchange agent prior to the expiration date. In addition, either
o certificates for the old notes must be received by the exchange agent
prior to the expiration date along with the letter of transmittal,
o a timely confirmation of a book-entry transfer of the old notes into the
exchange agent's account at The Depository Trust Company under the
procedure for book-entry transfer described below, must be received by
the exchange agent prior to the expiration date or
o the registered holder must comply with the guaranteed delivery procedures
described below.
To be tendered effectively, the old notes, or book-entry confirmation, as
the case may be, the letter of transmittal and other required documents must be
received by the exchange agent at the address set forth below under "--Exchange
Agent" prior to 5:00 p.m., New York City time, on the expiration date. Delivery
of documents to the book entry transfer facility in accordance with its
procedure does not constitute delivery to the exchange agent.
The Depository Trust Company has authorized its participants that hold old
notes on behalf of beneficial owners of old notes through The Depository Trust
Company to tender their old notes as if they were registered holders. To effect
a tender of old notes, The Depository Trust Company's participants should either
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o complete and sign the letter of transmittal, or a manually signed
facsimile thereof, have the signature thereon guaranteed if required by
the instructions to the letter of transmittal, and mail or deliver the
letter of transmittal, or such manually signed facsimile, to the exchange
agent under the procedure set forth in "Procedures for Tendering" or
o transmit their acceptance to the Depository Trust Company through the its
Automated Tender Offer Program for which the transaction will be eligible
and follow the procedure for book-entry transfer set forth in
"--Book-Entry Transfer."
The tender by a holder will constitute an agreement between such holder and
Harvard in accordance with the terms and subject to the conditions set forth
herein and in the letter of transmittal.
The method of delivery of the old notes and the letter of transmittal and
all other required documents to the exchange agent is at the election and risk
of the holder. Instead of delivery by mail, it is recommended that holders use
an overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure delivery to the exchange agent before the expiration date. No
letter of transmittal or old notes, or book-entry confirmation, as the case may
be, should be sent to Harvard.
Any beneficial owner whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such beneficial owner's own behalf, such
owner must, prior to completing and executing the letter of transmittal and
delivering such beneficial owner's old notes, either make appropriate
arrangement to register ownership of the old notes in such owner's name or
obtain a properly completed bond power from the registered holder. The transfer
of registered ownership may take considerable time.
If the letter of transmittal is signed by a person other than the
registered holder of any old notes listed therein, such old notes must be
endorsed or accompanied by a properly completed bond power and signed by such
registered holder as such registered holder's name appears on such old notes.
If the letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by Harvard, evidence
satisfactory to Harvard of their authority to so act must be submitted with the
letter of transmittal.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the old notes tendered pursuant thereto
are tendered (1) by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on the letter
of transmittal or (2) for the account of an "eligible guarantor institution"
within the meaning of Rule 17Ad-5 under the Exchange Act. In the event that a
guarantee is required, such guarantee must be made by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an eligible guarantor institution.
All questions as to the validity, form, eligibility, including time of
receipt, acceptance and withdrawal of tendered old notes will be determined by
Harvard in its sole discretion, which determination shall be final and binding.
Harvard reserves the absolute right to reject any and all old notes not properly
tendered or any old notes Harvard's acceptance of which would, in the opinion of
counsel for Harvard, be unlawful. Harvard also reserves the right to waive any
defects, irregularities or conditions of tender as to particular old notes.
Harvard's interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, shall be final and
binding on all parties. Unless waived, any defects of irregularities in
connection with tenders of old notes must be cured within such time as Harvard
shall determine. Neither Harvard, the exchange agent nor any other person shall
incur any liability for failure to give notice of any defect or irregularity
with respect to any tender of old notes. Tenders of old notes will not be deemed
to have been made until such defects or irregularities have been cured or
waived. Any old notes received by the exchange agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will not be deemed to have been properly tendered. Any old notes received
by the exchange agent that are not properly tendered and as to which the defects
or irregularities have not been cured or
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<PAGE>
waived will be returned by the exchange agent to the tendering holders, unless
otherwise provided in the letter of transmittal, as soon as practicable
following the expiration date.
By tendering, each Holder will represent to Harvard, among other things,
that
o it is not an "affiliate," as defined in Rule 405 of the Securities Act,
of Harvard;
o it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the new notes; and
o it is acquiring the new notes in the ordinary course of its business, a
"participating broker-dealer".
A holder unable to make the foregoing representations is referred to herein
as a "restricted holder." A restricted holder will not be able to participate in
the exchange offer, and may only sell its old notes under a registration
statement containing the selling securityholder information required by
Item 507 of Regulation S-K of the Securities Act, or under an exemption from the
registration requirement of the Securities Act.
Each participating broker-dealer who holds old notes that were acquired for
its own account as a result of market-making activities or other trading
activities, other than old notes acquired directly from Harvard, may exchange
such old notes under the exchange offer; however, such broker-dealer may be
deemed to be an "underwriter" within the meaning of the Securities Act and must,
therefore, deliver a prospectus meeting the requirements of the Securities Act
in connection with any resales of the new notes received by the broker-dealer in
the exchange offer, which prospectus delivery requirement may be satisfied by
the delivery by such broker-dealer of the prospectus contained in the exchange
offer registration statement. Each participating broker-dealer is required to
acknowledge in the letter of transmittal that it acquired the old notes as a
result of market-making activities or other trading activities and that it will
deliver a prospectus in connection with the resale of such new notes. Based upon
interpretations by the staff of the SEC, Harvard believes that new notes issued
pursuant to the exchange offer to participating broker-dealers may be offered
for resale, resold, and otherwise transferred by a participating broker-dealer
upon compliance with the prospectus delivery requirements, but without
compliance with the registration requirements, of the Securities Act. Harvard
has agreed that for a period of 180 days from the date on which the exchange
offer registration statement is declared effective, they will make this
prospectus available to participating broker-dealers for use in connection with
any such resale. During such period of time, delivery of this prospectus, as it
may be amended or supplemented, will satisfy the prospectus delivery
requirements of a participating broker-dealer engaged in market-making or other
trading activities.
Based upon interpretations by the staff of the SEC, Harvard believes that
new notes issued under the exchange offer may be offered for resale, resold and
otherwise transferred by a holder thereof, other than a participating
broker-dealer, without compliance with the registration and prospectus delivery
requirements of the Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
For each old note accepted for exchange, the holder of such old note will
receive a new note having a principal amount equal to that of the surrendered
old note. For purposes of the exchange offer, Harvard shall be deemed to have
accepted properly tendered old notes for exchange when, as and if Harvard has
given oral or written notice thereof to the exchange agent.
In all cases, issuance of new notes for old notes that are accepted for
exchange under the exchange offer will be made only after timely receipt by the
exchange agent of certificates for such old notes or a timely book-entry
confirmation of such old notes into the exchange agent's account at the
book-entry transfer facility, a properly completed and duly executed letter of
transmittal or agent's message and all other required documents. If any tendered
old notes are not accepted for any reason set forth in the terms and conditions
of the exchange offer or if old notes are submitted for a greater principal
amount than the holder desires to exchange, such unaccepted or non-exchanged old
notes will be returned without expense to the tendering holder thereof as
promptly as practicable after the expiration date. In the case of old notes
tendered by book-entry transfer into the exchange agent's account at the
book-entry transfer facility under the book-entry
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transfer procedures described below, such non-exchanged old notes will be
credited to an account maintained with such book-entry transfer facility as
promptly as practicable after the expiration date.
BOOK-ENTRY TRANSFER
The exchange agent will establish a new account or utilize an existing
account with respect to the old notes at The Depository Trust Company promptly
after the date of this prospectus, and any financial institution that is a
participant in The Depository Trust Company and whose name appears on a security
position listing as the owner of old notes may make a book-entry tender of old
notes by causing The Depository Trust Company to transfer such old notes into
the exchange agent's account in accordance with The Depository Trust Company's
procedures for such transfer. However, although tender of old notes may be
effected through book-entry transfer into the exchange agent's account at The
Depository Trust Company, the letter of transmittal, or a manually signed
facsimile thereof, properly completed and validly executed, with any required
signature guarantees, or an agent's message in lieu of the letter of
transmittal, and any other required documents, must, in any case, be received by
the exchange agent at its address set forth below under the caption "Exchange
Agent" on or prior to the expiration date, or the guaranteed delivery procedures
described below must be complied with. The confirmation of a book-entry transfer
of old notes into the exchange agent's account at The Depository Trust Company
as described above is referred to herein as a "book-entry confirmation."
Delivery of documents to The Depository Trust Company in accordance with The
Depository Trust Company's procedures does not constitute delivery to the
exchange agent.
The term "agent's message" means a message transmitted by The Depository
Trust Company to, and received by, the exchange agent and forming a part of a
book-entry confirmation, which states that The Depository Trust Company has
received an express acknowledgment from the participant in The Depository Trust
Company tendering the old notes stating
o the aggregate principal amount of old notes which have been tendered by
such participant;
o that such participant has received and agrees to be bound by the term of
the letter of transmittal; and
o that Harvard may enforce such agreement against the participant.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their old notes and 1) whose old notes are not
immediately available, 2) who cannot deliver their old notes, the letter of
transmittal or any other required documents to the exchange agent prior to the
expiration date or 3) who cannot complete the procedure for book-entry transfer
on a timely basis, may effect a tender if:
o the tender is made through an "eligible guarantor institution" within the
meaning of 17Ad-5 under the Exchange Act;
o prior to the expiration date, the exchange agent receives from such
eligible guarantor institution a properly completed and duly executed
notice of guaranteed delivery, by facsimile transmission, mail or hand
delivery, setting forth the name and address of the holder, the
certificate number(s) of such old notes and the principal amount of old
notes tendered, stating that the tender is being made thereby and
guaranteeing that, within three New York Stock Exchange trading days
after the expiration date, the letter of transmittal, or facsimile
thereof, or, in the case of a book-entry transfer, an agent's message,
together with the certificate(s) representing the old notes, or a
book-entry confirmation, as the case may be, and any other documents
required by the letter of transmittal will be deposited by the eligible
guarantor institution with the exchange agent; and
o such properly completed and executed letter of transmittal, or facsimile
thereof, or, in the case of a book-entry transfer, an agent's message, as
well as the certificate(s) representing all tendered old notes in proper
form for transfer, or a book-entry confirmation, as the case may be, and
all other documents required by the letter of transmittal are received by
the exchange agent within three New York Stock Exchange trading days
after the expiration date.
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WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of old notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the expiration date.
To withdraw a tender of old notes in the exchange offer, a written or
facsimile transmission notice of withdrawal must be received by the exchange
agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the expiration date. Any such notice of withdrawal must
o specify the name of the person having deposited the old notes to be
withdrawn;
o identify the old notes to be withdrawn including the certificate number
or numbers and principal amount of such old notes;
o be signed by the holder in the same manner as the original signature on
the letter of transmittal by which such old notes were tendered including
any required signature guarantees, or be accompanied by documents of
transfer sufficient to have the trustee with respect to the old notes
register the transfer of such old notes into the name of the person
withdrawing the tender; and
o specify the name in which any such old notes are to be registered, if
different from that of the depositor.
If certificates for old notes have been delivered or otherwise identified
to the exchange agent, then, prior to the release of such certificates, the
withdrawing holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an eligible guarantor institution unless such holder is itself an
eligible guarantor institution. If old notes have been tendered under the
procedure for book-entry transfer described above, any notice of withdrawal must
specify the name and number of the account at the book-entry transfer facility
to be credited with the withdrawn old notes and otherwise comply with the
procedures of the book-entry transfer facility. All questions as to the
validity, form and eligibility, including time of receipt, of such notices will
be determined by Harvard in its sole discretion, which determination shall be
final and binding on all parties. Any old notes so withdrawn will be deemed not
to have been properly tendered for purposes of the exchange offer and no new
notes will be issued with respect thereto unless the old notes so withdrawn are
properly retendered. Properly withdrawn old notes may be retendered by following
one of the procedures described above under "--Procedures for Tendering" at any
time prior to the expiration date.
Any old notes which have been tendered but which are not accepted for
payment due to withdrawal, rejection of tender or termination of the exchange
offer will be returned as soon as practicable after withdrawal, rejection of
tender or termination of the exchange offer to the holder thereof without cost
to such holder. In the case of old notes tendered by book-entry transfer into
the exchange agent's account at the book-entry transfer facility under the
book-entry transfer procedures described above, such old notes will be credited
to an account maintained with such book-entry transfer facility for the old
notes.
CONDITIONS
Harvard will not be required to accept for exchange, or exchange new notes
for, any old notes, and may terminate the exchange offer before the acceptance
of the old notes, if:
o any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the exchange offer
which, in the reasonable judgment of Harvard, might materially impair the
ability of Harvard to proceed with the exchange offer or materially
impair the contemplated benefits of the exchange offer to Harvard, or any
material adverse development has occurred in any existing action or
proceeding with respect to Harvard or any of its subsidiaries;
o any change, or any development involving a prospective change, in the
business or financial affairs of Harvard or any of their subsidiaries has
occurred which, in the reasonable judgment of Harvard, might materially
impair the ability of Harvard to proceed with the exchange offer or
materially impair the contemplated benefits of the exchange offer to
Harvard;
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o any law, statute, rule or regulation is proposed, adopted or enacted,
which, in the reasonable judgment of Harvard, might materially impair the
ability of Harvard to proceed with the exchange offer or materially
impair the contemplated benefits of the exchange offer to Harvard; or
o any governmental approval has not been obtained, which approval Harvard
shall, in its reasonable discretion, deem necessary for the consummation
of the exchange offer as contemplated hereby.
The above conditions are for the sole benefit of Harvard and may be
asserted by Harvard regardless of the circumstances giving rise to any such
condition or may be waived by Harvard in whole or in part at any time and from
time to time in their reasonable discretion. The failure by Harvard at any time
to exercise any of the foregoing rights will not be deemed a waiver of such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
If Harvard determines in its reasonable discretion that any of the
conditions are not satisfied, Harvard may
o refuse to accept any old notes and return all tendered old notes to the
tendering holders;
o extend the exchange offer and retain all old notes tendered prior to the
expiration of the exchange offer, subject, however, to the rights of
holders to withdraw such old notes as described in "--Withdrawal of
Tenders" above; or
o A waive such unsatisfied conditions with respect to the exchange offer
and accept all properly tendered old notes which have not been withdrawn.
If such waiver constitutes a material change to the exchange offer, Harvard
will promptly disclose such waiver by means of a prospectus supplement that will
be distributed to the registered holders, and Harvard will extend the exchange
offer for a period of five to ten business days, depending upon the significance
of the waiver and the manner of disclosure to the registered holders, if the
exchange offer would otherwise expire during such five to ten business day
period.
EXCHANGE AGENT
Norwest Bank Minnesota, National Association has been appointed as exchange
agent for the exchange offer. Requests for additional copies of this prospectus
or of the letter of transmittal should be directed to the exchange agent
addressed as follows:
<TABLE>
<S> <C> <C>
By Registered or By Hand Delivery or
Certified Mail: Overnight Courier: In Person:
Morwest Bank Minnesota, Norwest Bank Minnesota, Norwest Bank Minnesota,
National Association National Association National Association
Corporate Trust Operations Corporate Trust Operations Northstar East Bldg.
P.O. Box 1517 Norwest Center 608 2nd Ave. S.
Minneapolis, MN 55480-1517 Sixth and Marquette 12th Floor
Minneapolis, MN 55479-0113 Corporate Trust Services
Minneapolis, MN 55479-0113
By Facsimile: (612) 667 4927
Confirm by Telephone: (612) 667-9764
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by Harvard. Harvard has
not retained any dealer-manager in connection with the exchange offer and will
not make any payments to brokers, dealers or others soliciting acceptances of
the exchange offer. Harvard, however, will pay the exchange agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith.
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The cash expenses to be incurred in connection with the exchange offer will
be paid by Harvard. Such expenses include fees and expenses of the exchange
agent and trustee, accounting and legal fees and printing costs, among others.
Harvard will pay all transfer taxes, if any, applicable to the exchange of
old notes under the exchange offer. If, however, certificates representing new
notes or old notes for principal amounts not tendered or accepted for exchange
are to be delivered to, or are to be issued in the name of, any person other
than the registered holder of the old notes tendered, or if tendered old notes
are registered in the name of any person other than the person signing the
letter of transmittal, or if a transfer tax is imposed for any reason other than
the exchange of old notes under the exchange offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted with the letter of
transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
SHELF REGISTRATION STATEMENT
If Harvard is not required to file an exchange offer registration statement
because (1) the exchange offer is not permitted by applicable law or SEC policy
or (2) any holder of transfer restricted securities that is either a "qualified
institutional buyer" or an institutional "accredited investor," both as defined
by the Securities Act, shall notify Harvard at least 20 business days prior to
the consummation of the exchange offer that (A) such holder is prohibited by
applicable law or SEC policy from participating in the exchange offer, (B) that
such holder may not resell the new notes acquired by the exchange offer to the
public without delivering a prospectus and that the prospectus contained in the
exchange offer registration statement is not appropriate or available for such
resales by such Holder or (C) that such holder is a broker-dealer and holds
securities acquired directly from Harvard or one of its affiliates, then Harvard
is required under the registration rights agreement, 32 in lieu of, or in the
event of (2) above, in addition to, effecting the registration of the new notes
under the exchange offer registration statement to file with the SEC a shelf
registration statement. Harvard is required under the registration rights
agreement to use its best efforts at the earliest possible time but in no event
later than 120 days after the issuance of the old notes to keep such shelf
registration statement continuously effective for a period ending on the earlier
of the second anniversary of the issuance of the old notes or such time as there
are no longer any registrable securities outstanding.
For purposes of the foregoing, "transfer restricted securities" means each
note until
o the date on which such note has been exchanged by a person other than a
broker-dealer for a new note in the exchange offer;
o following the exchange by a broker-dealer in the exchange offer of a note
for a new note, the date on which such new note is sold to a purchaser
who receives from such broker-dealer on or prior to the date of such sale
a copy of the prospectus contained in the exchange offer registration
statement;
o the date on which such note has been effectively registered under the
Securities Act and disposed of in accordance with the shelf registration
statement; or
o the date on which such note is distributed to the public according to
Rule 144 under the Act.
"Registrable securities" means the old notes unless such old notes are sold
under Rule 144, or any successor provision, promulgated under the Securities Act
under circumstances in which any legend borne by such notes relating to
restrictions on transferability thereof, under the Securities Act or otherwise,
is removed by Harvard or according to the indenture or such notes are eligible
to be sold under paragraph (k) of Rule 144 or when such notes shall cease to be
outstanding.
Harvard will, in the event of the filing of the shelf registration
statement, provide to each holder of registrable securities covered by the shelf
registration statement copies of any shelf registration statement or any
prospectus which is a part of the shelf registration statement, notify each such
holder when the shelf registration statement has become effective and take other
actions as are required to permit unrestricted resales of registrable
securities. A holder of registrable securities that sells such registrable
securities pursuant to the shelf registration statement generally will be
required to be named as a selling security holder in the
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<PAGE>
related prospectus and to deliver a prospectus to the purchaser, will be subject
to civil liability provisions under the Securities Act in connection with such
sales and will be bound by the provisions of the registration rights agreement
which are applicable to such holder, including indemnification obligations. In
addition, holders of registrable securities will be required to deliver
information to be used in connection with the shelf registration statement and
to provide comments on the shelf registration statement within the time periods
set forth in the registration rights agreement in order to have their
registrable securities included in the shelf registration statement and benefit
from the provisions regarding liquidated damages, if any, set forth in the
following paragraph.
LIQUIDATED DAMAGES
If (a) any of the registration statements required under the registration
rights agreement is not filed with the SEC on or prior to the target date
specified for such filing therein, (b) any of such registration statements has
not been declared effective by the SEC on or prior to the date specified for
such effectiveness under the registration rights agreement, (c) the exchange
offer has not been consummated within 30 business days after the effectiveness
target date with respect to the exchange offer registration statement or
(d) any registration statement required under the registration rights agreement
is filed and declared effective but shall thereafter cease to be effective or
fail to be usable for its intended purpose without being succeeded within two
business days by a post-effective amendment to such registration statement that
cures such failure and that is itself immediately declared effective, each such
event referred to in clauses (a) - (d), a "registration default," then
liquidated damages in the form of interest shall accrue, in addition to any
stated interest on the notes, at a rate of 0.50% per annum per $1,000 principal
amount of old notes held by such holder. The amount of liquidated damages will
increase by an additional 0.50% per annum per $1,000 principal amount of notes
with respect to each subsequent 12 week period until all registration defaults
have been cured, up to a maximum amount for all liquidated damages for all
registration defaults of 2.00% per annum per $1,000 principal amount of notes.
All accrued liquidated damages shall be paid to holders by Harvard on a semi-
annual basis every March 1 and September 1 in the same manner as interest is
paid under the indenture. Following the cure of all registration defaults
relating to any particular security whose transfer is restricted, the accrual of
the liquidated damages with respect to such security will cease. Liquidated
damages have been accruing since March 24, 1999. Such liquidated damages will
cease to accrue once the registration statement of which this prospectus forms a
part becomes effective.
ACCOUNTING TREATMENT
The new notes will be recorded at the same carrying value as the old notes,
which is the principal amount as reflected in Harvard's accounting records on
the date of the exchange. Accordingly, no gain or loss for accounting purposes
will be recognized. The expenses of the exchange offer and the unamortized
expenses related to the issuance of the old notes will be amortized over the
term of the notes.
REGULATORY APPROVALS
Harvard does not believe that the receipt of any material federal or state
regulatory approvals will be necessary in connection with the exchange offer,
other than the effectiveness of the exchange offer registration statement under
the Securities Act.
OTHER
Participation in the exchange offer is voluntary and holders of old notes
should carefully consider whether to accept the terms and conditions thereof.
Holders of the old notes are urged to consult their financial and tax advisors
in making their own decisions on what action to take with respect to the
exchange offer.
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DESCRIPTION OF THE NOTES
The new notes will be issued under an indenture among Harvard, the
subsidiary guarantors and Norwest Bank Minnesota, National Association, as
trustee, which is also the indenture under which the old notes were issued. The
terms of the new notes are identical in all respects to the terms of the old
notes, except that the new notes will have been registered under the Securities
Act, and, therefore, will not bear legends restricting their transfer. Also, the
provisions of the registration rights agreement, including those respecting
payment of liquidated damages, will not apply to the new notes. The terms of the
notes include those stated in the indenture and those made part of the indenture
by reference to the Trust Indenture Act of 1939. The notes are subject to all of
those terms, and holders of notes and the related guarantees are referred to the
indenture and the Trust Indenture Act for a complete statement of them. The
following summary of the material provisions of the indenture is not complete.
For a complete understanding of the indenture, you should read the entire
document, including the definitions stated in the indenture of the defined terms
used in it. Copies of the indenture, the collateral agreement and other security
documents and the registration rights agreement were filed as exhibits to the
exchange offer registration statement and are available as set forth under the
caption "Where You Can Find More Information." The definitions of some of the
terms used in the following summary are stated below under "Defined Terms."
The notes:
o are senior obligations of Harvard;
o rank equally in right of payment with all current and future senior debt
of Harvard, including our senior credit facility;
o are secured by liens on substantially all of Harvard's tangible and
intangible assets that are second in priority to the liens securing our
senior credit facility;
o rank senior in right of payment to all future subordinated obligations of
Harvard; and
o are fully and unconditionally guaranteed, jointly and severally, by each
of Harvard's domestic subsidiaries, which guarantees are secured by liens
on substantially all tangible and intangible assets of those subsidiaries
that are likewise second in priority to the liens securing our senior
credit facility.
The operations of Harvard are conducted primarily through its subsidiaries,
and, therefore, Harvard is dependent upon the cash flow of its subsidiaries to
meet its obligations, including its obligations under the notes.
In addition, Harvard and the Restricted Subsidiaries are parties to our
senior credit facility, and all borrowings thereunder are secured by a first
priority security interest in the collateral, subject to specific liens. Because
the notes are secured by a second priority security interest in the collateral,
subject to liens permitted by the covenant entitled "Liens," the notes are
effectively subordinated to our senior credit facility up to the value of the
collateral securing borrowings under our senior credit facility.
As of the date of this prospectus, all of our domestic subsidiaries are
Restricted Subsidiaries. Under specified circumstances, Harvard will be able to
designate current or future subsidiaries as Unrestricted Subsidiaries.
Unrestricted Subsidiaries will not be subject to any of the restrictive
covenants set forth in the indenture.
PRINCIPAL, MATURITY AND INTEREST
The new notes are in the aggregate principal amount of $25.0 million and
will mature on September 1, 2003.
Interest on the notes accrues at a rate equal to the sum of:
o the rate of 14 1/2% per annum on the principal amount of notes
outstanding, which is calculated on the basis of a 360-day year comprised
of twelve 30-day months, plus
o cash flow participation interest.
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Cash flow participation interest for any relevant period equals the product
of:
o Consolidated Cash Flow for the six month period ending, for interest
payments due March 1 of each year, on December 31 and, for interest
payments due on September 1 of each year, on June 30 prior to the next
succeeding interest payment date, multiplied by
o the percentage stated in the following table for the period ending on the
interest payment date shown:
<TABLE>
<CAPTION>
INTEREST PAYMENT DATE PERCENTAGE
- --------------------- ----------
<S> <C>
March 1, 1999................................................. 2.00%
September 1, 1999............................................. 2.00%
March 1, 2000................................................. 2.50%
September 1, 2000............................................. 2.50%
March 1, 2001................................................. 3.50%
September 1, 2001............................................. 3.50%
March 1, 2002................................................. 4.50%
September 1, 2002............................................. 4.50%
March 1, 2003................................................. 4.50%
September 1, 2003............................................. 4.50%
</TABLE>
If, however, the calculation of cash flow participation interest, based on
the percentages stated above, results in an amount that is less than $1 million
for two consecutive six month periods taken together, then the cash flow
participation interest will be a minimum amount of $1 million for the two
corresponding interest payment dates taken together. However:
(1) if Harvard's Fixed Charge Coverage Ratio is less than 2.50 to 1
for any six month period listed above, then Harvard will have the option to
pay cash flow participation interest on the next succeeding interest
payment date for that six month period in kind, rather than in cash, by the
issuance of additional notes equal to the amount of such interest;
(2) if Harvard elects to pay cash flow participation interest for a
six month period by the issuance of pay-in-kind notes, then Harvard will be
required to redeem those pay-in-kind notes on the interest payment date
falling immediately after the next succeeding six month period at a
redemption price equal to 100% of the principal amount of the pay-in-kind
notes plus accrued and unpaid interest and applicable liquidated damages
payable under the registration rights agreement, if any, on such
pay-in-kind notes, to the date of redemption if, but only if:
(a) Harvard's Fixed Charge Coverage Ratio for the four full fiscal
quarters immediately preceding the redemption date would have been at
least 2.50 to 1 determined on a pro forma basis after giving effect to
the redemption as if the redemption had occurred at the beginning of the
applicable four-quarter reference period and
(b) the redemption is permitted by our senior credit facility; and
(3) in the event that any period for which interest, including cash
flow participation interest, accrues and is due is less than 180 days, then
the interest due for that period will be pro rated to reflect the actual
number of days that the notes were outstanding in that period, calculated
on the basis of a 360 day year comprised of twelve 30-day months.
If any pay-in-kind notes are issued, they will have the same form and terms as
the new notes offered hereby. The new notes and any such pay-in-kind notes will
be treated as a single class for all purposes.
Interest will be payable semi-annually in arrears on March 1 and September
1 commencing on March 1, 1999 to noteholders of record on the immediately
preceding February 15 and August 15. Interest on the notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from November 24, 1998, the date the old notes were originally issued.
Interest on overdue principal and on overdue installments of interest will
accrue at the same rate of interest that is borne by the notes.
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<PAGE>
Principal, prepayment premium, if any, and interest and applicable
liquidated damages payable under the registration rights agreement, if any, on
the notes will be payable:
(a) at the office or agency of Harvard maintained for such purpose
within the City and State of New York; or
(b) at the option of Harvard, payment of interest and applicable
liquidated damages, if any, may be made by check mailed to the noteholders
of the notes at their respective addresses set forth in the register of
noteholders; provided that all payments of principal, prepayment premium,
interest and applicable liquidated damages, if any, with respect to notes
the noteholders of which have given wire transfer instructions to Harvard
will be required to be made by wire transfer of immediately available funds
to the accounts specified by the noteholders thereof.
Until otherwise designated by Harvard, Harvard's office or agency in New
York will be the office of the trustee maintained for such purpose. The notes
will be issued in denominations of $1,000 and integral multiples thereof.
GUARANTEES
Harvard's payment obligations under the notes will be fully and
unconditionally guaranteed on a joint and several basis by the subsidiary
guarantors. The guarantees, including the payment of principal and prepayment
premium, if any, and of interest and applicable liquidated damages, if any, on
the notes:
o are senior obligations of the subsidiary guarantors;
o rank pari passu in right of payment with all existing and future senior
obligations of the subsidiary guarantors; and
o are secured by liens on substantially all of the subsidiary guarantors'
tangible and intangible assets that are second in priority to the liens
securing our senior credit facility;
o rank senior to all existing and future subordinated obligations of the
subsidiary guarantors.
The guarantees will be secured as set forth below under "Collateral." The
obligations of each subsidiary guarantor under its guarantee will be limited so
as not to constitute a fraudulent conveyance or fraudulent transfer under
applicable law. We and the subsidiary guarantors believe that at the time we
initially incurred the obligations under the old notes or the guarantees, as the
case may be, we and the subsidiary guarantors together:
o were (a) in possession of sufficient capital to run our businesses
effectively; and (b) incurring debts within our ability to pay as the
same become due;
o were not insolvent nor rendered insolvent by incurring the obligations;
and
o had sufficient assets to satisfy any probable money judgment against us
in any pending action.
In reaching these conclusions, we and the subsidiary guarantors have relied upon
our analysis of internal cash flow projections and estimated values of assets
and liabilities of the subsidiary guarantors. We cannot assure you that a court
ruling on such questions would reach the same conclusions.
The claims of trade creditors and other creditors of any subsidiary that is
not a subsidiary guarantor will generally have priority as to the assets of such
subsidiaries over the claims of the noteholders. At January 3, 1999, the amount
of those liabilities of the subsidiaries that are not subsidiary guarantors were
approximately $4.2 million.
The indenture provides that no subsidiary guarantor may consolidate with or
merge with or into another corporation, person or entity unless:
(1) subject to the provisions of the following paragraph, the person
formed by or surviving any such consolidation or merger assumes all the
obligations of such subsidiary guarantor under a supplemental indenture in
form and substance reasonably satisfactory to the trustee, under the notes
and the indenture; and
33
<PAGE>
(2) immediately after giving effect to such transaction, no default or
event of default exists.
The indenture provides that in the event of a sale or other disposition of
all of the assets of any subsidiary guarantor, by way of merger, consolidation
or otherwise, or a sale or other disposition of all of the capital stock of any
subsidiary guarantor, then the subsidiary guarantor or the corporation acquiring
the property, as applicable, will be released from any obligations under its
guarantee; provided that the net proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of the indenture and the
intercreditor agreement signed in connection therewith. See "Repurchase at the
Option of Noteholders--Asset Sales."
Until all guarantees by the subsidiary guarantors under the indenture and
the notes have been released in accordance with the next succeeding sentence,
Harvard must cause each domestic subsidiary that is an obligor under our senior
credit facility to become a subsidiary guarantor under the indenture and the
notes and thereby issue its guarantee of the notes on the terms and conditions
set forth in the indenture and the notes.
Upon a subsidiary ceasing to be an obligor under our senior credit
facility, the guarantee of such subsidiary under the indenture and the notes
will be released and discharged at such time and will not be reinstated or
renewed so long as the subsidiary's obligations under our senior credit facility
remain discharged.
COLLATERAL
Harvard, the subsidiary guarantors, the trustee and Norwest Bank Minnesota,
National Association, as collateral agent, have entered into a collateral
agreement. Under the collateral agreement, the notes and the guarantees are
secured by a second priority security interest in substantially all the tangible
and intangible assets of Harvard and the subsidiary guarantors and all proceeds
thereof. The collateral also includes all of the outstanding stock of each of
the subsidiary guarantors and 65% of the stock of one of Harvard's Canadian
subsidiaries, which is not a guarantor. Harvard and the subsidiary guarantors
will maintain the security interest created by the security documents as a
perfected security interest and will furnish reports further describing the
collateral as the collateral agent may from time to time request. For a
discussion of the risks relating to the use of the collateral to secure the
notes, see "Risk Factors--The notes are secured by a second priority security
interest; in case of a default or foreclosure, there may not be sufficient
assets to pay amounts due on the notes," "--The remedies selected by the agent
for our senior lenders in the event of a foreclosure on the collateral may
result in the release of the collateral as security for the new notes," and "--A
future bankruptcy by Harvard could delay or prevent a sale of the collateral to
pay the new notes, and increase the risk that the new notes will be paid in full
or at all."
BANKRUPTCY LIMITATIONS
The right of the collateral agent to repossess and dispose of the
collateral upon the occurrence of an event of default would be significantly
impaired by applicable provisions of the Bankruptcy Code in the event that a
bankruptcy proceeding were to be commenced by or against Harvard or the
subsidiary guarantors prior to the collateral agent having repossessed and
disposed of the collateral. Prior to foreclosing on the property securing the
notes and the guarantees, the trustee must pursue payment under the guarantees.
Under the Bankruptcy Code, a secured creditor such as the collateral agent is
prohibited from repossessing its security from a debtor in a bankruptcy case, or
from disposing of security repossessed from such debtor, without bankruptcy
court approval.
Moreover, the Bankruptcy Code permits the debtor to continue to retain and
to use collateral even though the debtor is in default under the applicable debt
instruments, provided that the secured creditor is given "adequate protection."
The meaning of the term "adequate protection" may vary according to
circumstances, but it is intended in general to protect the value of the secured
creditor's interest in the collateral and may include cash payments or the
granting of additional security, if and at such times as the court in its
discretion determines, for any diminution in the value of the collateral as a
result of the stay of repossession or disposition or any use of the collateral
by the debtor during the pendency of the bankruptcy case.
34
<PAGE>
In view of the lack of a precise definition of the term "adequate
protection" and the broad discretionary powers of a bankruptcy court, it is
impossible to predict how long payments under the notes could be delayed
following commencement of a bankruptcy case, whether or when the collateral
agent could repossess or dispose of the collateral or whether or to what extent
noteholders of the notes would be compensated for any delay in payment or loss
of value of the collateral through the requirement of "adequate protection." Any
disposition of the collateral would also require approval of the bankruptcy
court. See "Risk Factors--A future bankruptcy by Harvard could delay or prevent
a sale of the collateral to pay the new notes, and increase the risk that the
new notes will be paid in full or at all."
No appraisals of any of the collateral have been prepared by or on behalf
of Harvard in connection with the issuance and sale of the notes. In the event a
bankruptcy court determines that the value of the collateral is not sufficient
to repay all amounts due under the indenture and the collateral agreement, the
collateral agent, on behalf of the noteholders of notes, would have a secured
claim up to the value of the collateral securing Harvard's and the subsidiary
guarantors' obligations under the notes and the guarantees, subject to the
intercreditor agreement and liens permitted under the covenant described below
under "Liens," and unsecured claims with respect to any shortfall. The
Bankruptcy Code permits the payment and/or accrual of post-petition interest,
costs and attorneys' fees to the collateral agent during a debtor's bankruptcy
case only up to the value of the collateral that is determined by the bankruptcy
court to exceed the aggregate obligation under such note or guarantee.
POSSESSION, USE AND RELEASE OF COLLATERAL
Possession and the Use of Collateral. Unless an event of default occurs and
is continuing, Harvard and the subsidiary guarantors will generally have the
right:
o to remain in possession and retain exclusive control of the collateral
securing Harvard's and the subsidiary guarantors' obligations under the
notes and the guarantees; and
o to freely operate the collateral and to collect, invest and dispose of
any income therefrom.
Release of Collateral. The collateral securing Harvard's and the
subsidiary guarantors' obligations under the notes and the guarantees may be
sold or disposed of free and clear of the security interests referred to above
in connection with:
o sales of inventory and collection of accounts receivable in the ordinary
course of business;
o sales and other dispositions as described below under "Asset Sale
Release;" and
o the release of collateral with the consent of each affected noteholder.
In general, upon compliance by Harvard with the conditions stated below,
under the security documents relating to the notes and those relating to
Harvard's senior credit facility, the intercreditor agreement, and the
applicable provisions of the Trust Indenture Act in respect of any release of
items of collateral, and upon delivery by Harvard to the collateral agent of an
opinion of counsel to the effect that those conditions have been met, the
collateral agent will release the items to be released from the lien of the
collateral agreement and reconvey those items to Harvard and its subsidiaries,
as applicable.
Asset Sale Release. Harvard has the right to obtain a release of items of
collateral that are the subject of an Asset Sale upon compliance with the
condition that Harvard deliver to the collateral agent the following:
(A) a notice from Harvard requesting the release of those items of
collateral:
(1) describing the proposed items to be released;
(2) specifying the purchase price received for such items on a date
within 30 days of such notice;
(3) stating that the purchase price received is at least equal to
the fair market value of the items to be released as well as other
matters, to the extent applicable, relating to restrictions set forth
under the caption "Asset Sales";
35
<PAGE>
(4) stating that the release of such items would not be expected to
interfere with the collateral agent's ability to realize the value of
the remaining collateral and will not impair the maintenance and
operation of the remaining collateral; and
(5) certifying that such Asset Sale complies with the terms and
conditions of the security documents with respect thereto;
(B) an officer's certificate stating that:
(1) such Asset Sale covers only the items to be released and
complies with the terms and conditions of the indenture with respect to
Asset Sales;
(2) all net proceeds from the sale of those items will be applied
under the provisions of the applicable security documents and the
intercreditor agreement;
(3) there is no default or event of default in effect or continuing
on the date thereof, the date the purchase price is received or the date
of such Asset Sale; and
(4) the release of the item of collateral will not result in a
default or event of default under the indenture, the senior credit
facility, or the security documents relating to the release in question;
and
(C) Excess proceeds, if any, that are required to be delivered to the
collateral agent under the indenture and the intercreditor agreement and to
the administrative agent under our senior credit facility and the
intercreditor agreement have been so delivered or are being delivered.
INTERCREDITOR AGREEMENT
Harvard, the administrative agent under our senior credit facility and the
trustee have entered into an intercreditor agreement. The intercreditor
agreement provides for, among other things:
o the allocation of rights between the administrative agent and the trustee
with respect to the collateral;
o enforcement provisions and remedies with respect thereto; and
o the release of the collateral.
The intercreditor agreement includes provisions in which the trustee
acknowledges that:
o the lenders under the senior credit facility will be granted a first
priority security interest in the collateral;
o the trustee will not have any claims to the collateral on either an equal
basis or prior to the administrative agent under the senior credit
facility; and
o so long as the obligations of Harvard and the subsidiary guarantors under
the senior credit facility have not been satisfied, the trustee will not
have any right or claim in respect of the rights and remedies of the
administrative agent and such lenders, except as provided by the
intercreditor agreement. Neither will the administrative agent or the
lenders under the senior credit facility have any obligation regarding
the exercise of such rights or any other obligation or duty in respect of
the trustee, nor may the trustee participate in the commencement or
solicitation of commencement of any bankruptcy proceeding against Harvard
or seek the appointment of a receiver for the affairs or property of
Harvard, except that the trustee may pursue its rights under the
indenture regarding the collection of accrued and unpaid interest unless
a default or event of default has occurred under the senior credit
facility.
The intercreditor agreement also provides that so long as the obligations
or commitments under our senior credit facility have not been paid in full or
terminated, as the case may be, the trustee will not be able to:
o exercise any remedies with respect to the collateral on behalf of the
noteholders;
o institute any action with respect to such remedies, including any
foreclosure action or contest any foreclosure proceeding brought by the
administrative agent or any lender under the senior credit facility or
any other exercise by any such party of any rights and remedies relating
to the collateral under the security documents or otherwise; or
36
<PAGE>
o object to the forbearance by the lenders under the senior credit facility
from bringing or pursuing any foreclosure proceeding or action or any
other exercise of any rights relating to the collateral.
In addition, the administrative agent has the exclusive right to enforce
specified rights, exercise specified remedies and make specified determinations
regarding the disposition of the collateral.
The administrative agent is required, under the terms of the intercreditor
agreement, to apply the proceeds from the sale or other disposition of the
collateral:
o first, to satisfy in full all costs and expenses, including attorneys'
fees and disbursements, incurred by the lenders under the senior credit
facility and the administrative agent in connection with such
disposition;
o second, to satisfy in full the claims of those lenders; and,
o after all commitments of those lenders to make loans under the senior
credit facility have been terminated, to deliver any remaining proceeds
to the trustee to be applied to the claims of the noteholders.
The Uniform Commercial Code, which may not be applicable in a bankruptcy
context, imposes for the benefit of the trustee and the noteholders a
requirement that any foreclosure sale of collateral be conducted in a
commercially reasonable manner, which requirement may be modified, but not
waived, by contract. In addition, the parties to the intercreditor agreement
have agreed that, in the enforcement and exercise of their rights and remedies
under the security documents signed in connection with the senior credit
facility, the administrative agent and the lenders will act in a commercially
reasonable manner.
The administrative agent under the senior credit facility is required to
act in the interest of the lenders under our senior credit facility. Neither the
trustee nor the noteholders may hold the collateral or contest any senior lien
granted by Harvard to the lenders under the senior credit facility. Those
lenders and the administrative agent have the exclusive right to release any or
all of the collateral, subject to the trustee's written notice to the
administrative agent that such release does not violate the indenture. In
addition, in order to facilitate the sale of the capital stock of any subsidiary
guarantor permitted by our senior credit facility and the indenture, the
administrative agent may release such subsidiary guarantor from its obligations
under our senior credit facility without the consent of the trustee, subject to
the trustee's written notice to the administrative agent that such release does
not violate the indenture.
OPTIONAL REDEMPTION
Prior to September 1, 2001, the notes are redeemable, in whole or in part,
at the option of Harvard:
o upon not less than 30 and no more than 60 days' prior notice;
o on any March 1, June 1, September 1 or December 1 of any year; and
o at a redemption price equal to:
(a) 100% of the principal amount thereof, plus
(b) the applicable prepayment premium, plus
(c) to the extent not included in the prepayment premium, accrued
and unpaid interest and liquidated damages, if any, applicable under
the registration rights agreement, to the date of redemption.
For purposes of the foregoing:
o the prepayment premium, with respect to a note, is an amount equal to the
present value of the remaining percentage interest and premium payments
due on such note as if such note were redeemed on September 1, 2001 in
accordance with the next succeeding paragraph, discounted to the date of
redemption on a semi-annual basis, assuming a 360-day year consisting of
twelve 30-day months, at a discount rate equal to the Treasury Rate plus
100 basis points; and
o if Harvard redeems any note on June 1 or December 1 of any year, then
cash flow participation interest must be calculated by multiplying
(a) Consolidated Cash Flow, with respect to any redemption on June 1, for
the quarterly period ended on the preceding March 31 and, with respect to
any
37
<PAGE>
redemption on December 1, for the quarterly period ended on the preceding
September 30 by (b) the applicable percentage, stated under "Principal,
Maturity and Interest," corresponding to the date next succeeding that
June 1 or December 1, as the case may be.
On or after September 1, 2001, the notes are redeemable, in whole or in
part:
o upon not less than 30 nor more than 60 days' prior notice; and
o at the redemption prices, expressed as percentages of principal amount,
set forth below plus accrued and unpaid interest and applicable
liquidated damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on September 1 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2001.......................................................... 107.250%
2002.......................................................... 103.625%
</TABLE>
For purposes of the foregoing, if Harvard redeems any note:
o on March 1 or September 1 of any year, then cash flow participation
interest will be calculated as set forth under "Principal, Maturity and
Interest;"
o on June 1 or December 1 of any year, then cash flow participation
interest will be calculated by multiplying (a) Consolidated Cash Flow,
with respect to any redemption on June 1, for the quarterly period ended
on the preceding March 31 and, with respect to any redemption on
December 1, for the quarterly period ended on the preceding September 30
by (b) the applicable percentage, stated under "Principal, Maturity and
Interest," corresponding to the date next succeeding that June 1 or
December 1, as the case may be; and
o on any date other than March 1, June 1, September 1 or December 1 of any
year, then cash flow participation interest will be calculated as
described under "Principal, Maturity and Interest" with respect to such
calculation for prorated periods.
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time, selection of
notes for redemption will be made by the trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
notes are listed, or, if the notes are not so listed, by lot, pro rata or by
such other method as the trustee may deem fair and appropriate; provided that no
notes of $1,000 or less may be redeemed in part. Notices of redemption must be
mailed by first class mail at least 30 but not more than 60 days before the
redemption date to each noteholder to be redeemed at its registered address.
Notices of redemption may not be conditional. If any note is to be redeemed
in part only, the notice of redemption that relates to such note must state the
portion of the principal amount thereof to be redeemed. A new note in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
noteholder thereof upon cancellation of the original note. notes called for
redemption become due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on notes or portions of them called
for redemption.
MANDATORY REDEMPTION
Except as stated above under "Principal, Maturity and Interest" with
respect to redemption of pay-in-kind notes and below under "Repurchase at the
Option of Noteholders," Harvard is not required to make mandatory redemption or
sinking fund payments with respect to the notes.
REPURCHASE AT THE OPTION OF NOTEHOLDERS
Change of Control. Upon the occurrence of a Change of Control, each
noteholder will have the right to require Harvard to repurchase all or any part
equal to $1,000 or an integral multiple thereof of such noteholder's notes in
accordance with the offer described below at an offer price in cash equal to
101% of the aggregate principal amount thereof plus accrued and unpaid interest
and applicable liquidated damages
38
<PAGE>
thereon, if any, to the date of purchase. The calculation of the portion of
unpaid interest represented by cash flow participation interest must be made in
the same manner as that described under the second paragraph of the caption
above entitled "Optional Redemption."
Within ten days following any Change of Control, Harvard will mail a notice
to each noteholder describing the transaction or transactions that constitute
the Change of Control and offering to repurchase notes on the date specified in
such notice, which date must be no earlier than 30 days and no later than
60 days from the date such notice is mailed, under the procedures required by
the indenture and described in such notice. Harvard will comply with the
requirements of Rule 14e-1 under the Securities Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the notes as a
result of a Change of Control.
On the date specified for repurchase of the notes, Harvard will, if lawful:
o accept for payment all notes properly tendered;
o deposit the required payment amounts with the paying agent for the notes
in respect of all notes so tendered; and
o deliver or cause to be delivered to the trustee the notes so accepted
together with an officers' certificate stating the aggregate principal
amount of notes being purchased by Harvard.
The paying agent will promptly mail to each holder of notes so tendered the
required payment for such notes, and the trustee will promptly authenticate and
mail or cause to be transferred by book entry to each noteholder a new note
equal in principal amount to any unpurchased portion of the notes surrendered,
if any; provided that each such new note will be in a principal amount of $1,000
or an integral multiple thereof. Harvard will publicly announce the results of
the repurchase on or as soon as practicable after the date of payment.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the indenture are applicable. Except as described
above with respect to a Change of Control, the indenture does not contain
provisions that permit the noteholders of the notes to require that Harvard
repurchase or redeem the notes in the event of a takeover, recapitalization or
similar transaction.
Our senior credit facility prohibits Harvard from purchasing any notes
following a Change of Control and also will provide that specified change of
control events with respect to Harvard would constitute an event of default
thereunder. Any future credit agreements or other agreements relating to senior
debt to which Harvard becomes a party may contain similar restrictions and
provisions. In the event a Change of Control occurs at a time when Harvard is
prohibited from purchasing notes, Harvard could seek the consent of the lenders
under the senior credit facility to the purchase of notes or could attempt to
refinance the borrowings that contain such prohibition. If Harvard does not
obtain such a consent or repay such borrowings, Harvard will remain prohibited
from purchasing notes. In such case, Harvard's failure to purchase tendered
notes would constitute an event of default under the indenture which would, in
turn, constitute a default under our senior credit facility. The indenture
provides that, prior to complying with the provisions of this covenant, but in
any event within 60 days following a Change of Control, Harvard will either
repay all outstanding senior debt other than the notes or obtain the requisite
consents or waivers, if any, under all agreements governing outstanding senior
debt to permit the repurchase of notes required by this covenant.
Harvard will not be required to repurchase notes upon a Change of Control
if a third party offers to do so in the manner, at the times and otherwise in
compliance with the requirements set forth in the indenture applicable to a
repurchase by Harvard upon a Change of Control, and purchases all notes properly
tendered and not withdrawn under such offer, or if Harvard exercises an option
to purchase the notes.
The definition of Change of Control includes a phrase relating to sales and
other dispositions of "all or substantially all" of the assets of Harvard and
its subsidiaries. Although there is a developing body of case law interpreting
the phrase "substantially all," there is not a precise or established definition
of the phrase under applicable law. Accordingly, the ability of a noteholder to
require Harvard to repurchase such notes as a result of a sale or other
disposition of less than all of the assets of Harvard and its subsidiaries to
another person or group may be uncertain.
39
<PAGE>
Asset Sales. Harvard will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
o Harvard or such Restricted Subsidiary receives consideration at the time
of such Asset Sale at least equal to the fair market value, evidenced by
a resolution of the Board of Directors set forth in an officers'
certificate delivered to the trustee, of the assets; and
o at least 85% of the consideration received by Harvard or such Restricted
Subsidiary is in the form of cash or Cash Equivalents; provided that the
amount of:
(a) any liabilities, as shown on Harvard's or such Restricted
Subsidiary's most recent balance sheet, of Harvard or any Restricted
Subsidiary, other than contingent liabilities and liabilities that
are by their terms subordinated to the notes or any guarantee
thereof, that are assumed by the transferee of any such assets under
a customary novation agreement that releases Harvard or such
Restricted Subsidiary from further liability; and
(b) any securities, notes or other obligations received by Harvard
or any such Restricted Subsidiary from such transferee that are
immediately converted by Harvard or such Restricted Subsidiary into
cash, up to the amount of the cash received, will be deemed to be
cash for purposes of this provision.
Notwithstanding the above:
o Harvard will not be permitted to make any Asset Sale of its subsidiary
The Kingston-Warren Corporation; and
o Harvard must comply with the applicable requirements of
Section 314(d) of the Trust Indenture Act regarding, and as a condition
to, the release of collateral.
Within 180 days after the receipt of any net proceeds from an Asset Sale,
Harvard may apply such net proceeds, at its option:
o to repay Indebtedness under our senior credit facility and, in the case
of borrowings under the revolving credit portion of our senior credit
facility, to correspondingly permanently reduce the commitments with
respect thereto;
o to the acquisition of a controlling interest in another business,
provided that (a) on a pro forma basis after giving effect to such
acquisition, Harvard's Consolidated Leverage Ratio as of the last day of
the period of four consecutive fiscal quarters preceding such acquisition
is no higher than it would have been without giving pro forma effect to
such acquisition and (b) such other business engages in a Permitted
Business; or
o to make a capital expenditure or the acquisition of other tangible
long-term assets, in each case, in Permitted Businesses.
Pending the final application of any such net proceeds, Harvard may
temporarily reduce Indebtedness under our senior credit facility or otherwise
invest such net proceeds in any manner that is not prohibited by the indenture.
If there are more than $2 million of net proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph, Harvard
will be required to make an offer to all noteholders, an "Asset Sale Offer", to
purchase the maximum principal amount of notes that may be purchased out of
those excess proceeds, at an offer price in cash in an amount equal to 100% of
the principal amount thereof plus accrued and unpaid interest and applicable
liquidated damages thereon, if any, to the date of purchase, in accordance with
the procedures set forth in the indenture. If the aggregate amount of notes
tendered under an Asset Sale Offer is less than those excess proceeds, Harvard
may use any of the remaining excess proceeds for general corporate purposes. If
the aggregate principal amount of notes surrendered by noteholders thereof
exceeds the amount of those excess proceeds, the trustee will select the notes
to be purchased on a pro rata basis.
Our senior credit facility contains covenants that restrict the ability of
Harvard to sell assets, other than the assets of the Toledo, Tiffin and Harman
businesses, obsolete assets, sales of inventory in the ordinary course of
business and other exceptions.
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COVENANTS
Restricted Payments
The indenture provides that Harvard will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly:
o declare or pay any dividend or make any other payment or distribution on
account of Harvard's or any of its Restricted Subsidiaries' equity
interests, including any payment in connection with any merger or
consolidation involving Harvard, or to the direct or indirect holders of
Harvard's or any of its Restricted Subsidiaries' equity interests in
their capacity as such, other than dividends or distributions payable in
equity interests, other than Disqualified Stock, of Harvard and other
than dividends and distributions payable to Harvard or any Restricted
Subsidiary;
o purchase, redeem or otherwise acquire or retire for value, including in
connection with any merger or consolidation involving Harvard, any equity
interests of Harvard or any direct or indirect parent of Harvard or other
affiliate of Harvard, other than a subsidiary of Harvard;
o make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is
subordinated to the notes; or
o make any Restricted Investment;
unless, at the time of and after giving effect to any of these payments or other
actions (collectively, "Restricted Payments"):
(a) no default or event of default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) Harvard would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness under the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the covenant
described below under the caption "Incurrence of Indebtedness and Issuance
of Preferred Stock;" and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Harvard or any of its Restricted
Subsidiaries after November 24, 1998, excluding Restricted Payments
permitted by clauses (2), (3) or (4) of the next succeeding paragraph, is
less than the sum of (1) 50% of the Consolidated Net Income of Harvard for
the period, taken as one accounting period, from the beginning of the first
fiscal quarter immediately following November 24, 1998 to the end of
Harvard's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit, plus (2) 100% of the aggregate net cash proceeds received by
Harvard as a contribution to its common equity capital or from the issue or
sale since November 24, 1998 of equity interests of Harvard, other than
Disqualified Stock, or of Disqualified Stock or debt securities of Harvard
that have been converted into such equity interests, other than equity
interests, or Disqualified Stock or convertible debt securities, sold to a
Restricted Subsidiary of Harvard and other than Disqualified Stock or
convertible debt securities that have been converted into Disqualified
Stock, plus (3) to the extent not already included in Consolidated Net
Income of Harvard for such period without duplication, if any Restricted
Investment that was made by Harvard or any of its Restricted Subsidiaries
after November 24, 1998 is sold for cash or otherwise liquidated or repaid
for cash, or if any Unrestricted Subsidiary which is designated as an
Unrestricted Subsidiary subsequent to the November 24, 1998 is sold for
cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment or
Unrestricted Subsidiary, less the cost of disposition, if any, and (B) the
initial amount of such Restricted Investment or designated amount of such
Unrestricted Subsidiary.
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So long as no default or event of default has occurred and is continuing or
would be caused thereby, the foregoing provisions do not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any Indebtedness which is subordinated to the notes or
equity interests of Harvard in exchange for, or out of the net cash
proceeds of the substantially concurrent sale, other than to a Restricted
Subsidiary of Harvard, of other equity interests of Harvard (other than any
Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement,
defeasance or other acquisition will be excluded from clause (c) (2) of the
preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
Indebtedness which is subordinated to the notes with the net cash proceeds
from an incurrence of Permitted Refinancing Indebtedness;
(4) the payment of any dividend or distribution by a Restricted
Subsidiary of Harvard to the holders of its common equity interests so long
as Harvard or another Restricted Subsidiary receives at least its pro rata
share of such dividend or distribution in accordance with its equity
interests;
(5) the repurchase, redemption or other acquisition or retirement for
value of any equity interests of Harvard that are held by any member of
Harvard's or any of its Restricted Subsidiaries' management under any
management equity subscription agreement or stock option agreement,
provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired equity interests may not exceed $500,000 in any
twelve-month period; and
(6) distributions required under Harvard's plan of reorganization in
bankruptcy, but only in the manner and in the amount contemplated thereby.
The amount of all Restricted Payments other than cash will be the fair
market value on the date of the Restricted Payment of the assets or securities
proposed to be transferred or issued by Harvard or such Restricted Subsidiary of
Harvard, under the Restricted Payment. The fair market value of any non-cash
Restricted Payment will be determined by the Board of Directors of Harvard whose
resolution with respect thereto must bedelivered to the trustee, such
determination to be based upon an opinion or appraisal issued by an investment
banking firm of national standing or by an appraisal firm of national standing,
if such fair market value exceeds or reasonably may exceed $1.0 million. Not
later than the date of making any Restricted Payment, Harvard must deliver to
the trustee an officers' certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the covenant "Restricted Payments" were computed, together with a copy of any
fairness opinion or appraisal required by the indenture.
Incurrence of Indebtedness and Issuance of Preferred Stock
The indenture provides that Harvard will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, become liable with
respect to any Indebtedness, including Acquired Debt, and Harvard will not issue
any Disqualified Stock and will not permit any of its Restricted Subsidiaries to
issue any shares of preferred stock; provided, however, that Harvard may incur
Indebtedness, including Acquired Debt, and issue shares of Disqualified Stock
and any Restricted Subsidiary may incur Acquired Debt if:
o Harvard's Fixed Charge Coverage Ratio for Harvard's most recently ended
four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have
been at least 2.75 to 1, determined on a pro forma basis, as if the
additional Indebtedness had been incurred, or the Disqualified Stock had
been issued, as the case may be, at the beginning of such four-quarter
period; and
o Harvard is in compliance with the covenant described below entitled
"Maintenance of Consolidated Leverage Ratio."
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The provisions of the first paragraph of this covenant shall not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt") so long as no default has occurred and is continuing or would
be caused thereby:
(1) the incurrence by Harvard or its Restricted Subsidiaries of
Indebtedness under our senior credit facility and letters of credit
outstanding thereunder, with such letters of credit being deemed to have a
principal amount equal to the maximum potential liability of Harvard and
its Restricted Subsidiaries thereunder; provided that the sum of the
aggregate principal amount of all Indebtedness of Harvard and its
Restricted Subsidiaries outstanding under our senior credit facility after
giving effect to such incurrence, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any other
Indebtedness incurred under this clause (1) does not exceed an amount equal
to $125.0 million less, without duplication, (x) the aggregate amount of
all repayments, optional or mandatory, of the principal of any Indebtedness
under the term loan portion of our senior credit facility that have been
made by Harvard and its Restricted Subsidiaries since the November 24,
1998, (y) the aggregate amount of pay-in-kind notes issued and outstanding
under the indenture and (z) the aggregate amount of Asset Sale proceeds
applied by Harvard and its Restricted Subsidiaries to permanently reduce
the availability of revolving credit Indebtedness under our senior credit
facility according to the provisions described under the caption "Asset
Sales;"
(2) the incurrence by Harvard of Indebtedness represented by the notes
and the pay-in-kind notes issued under the indenture and the incurrence by
the subsidiary guarantors of the guarantees;
(3) the incurrence by Harvard or any of its Restricted Subsidiaries of
Indebtedness represented by obligations under capital leases, mortgage
financings or purchase money obligations, in each case incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of Harvard or such Restricted Subsidiary, in an aggregate
principal amount, including all Permitted Refinancing Indebtedness incurred
to refund, refinance or replace Indebtedness incurred under this
clause (3), not to exceed $5.0 million at any time outstanding;
(4) the incurrence by Harvard or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness;
(5) the incurrence by Harvard of Indebtedness owing to and held by any
Restricted Subsidiary or Indebtedness of a Restricted Subsidiary which is a
guarantor owing to and held by Harvard or another Restricted Subsidiary
which is a guarantor; provided, however, that (a) if Harvard is the obligor
on such Indebtedness, such Indebtedness is expressly subordinated to the
prior payment in full in cash of all obligations with respect to the notes
and the indenture, (b) if a Restricted Subsidiary of Harvard is the obligor
on such Indebtedness, such Indebtedness is expressly subordinated to the
prior payment in full in cash of such Restricted Subsidiary's guarantee and
(c)(1) any subsequent event or issuance or transfer of equity interests
that results in any such Indebtedness being held by a person other than
Harvard or a Restricted Subsidiary of Harvard and (2) any sale or other
transfer of any such Indebtedness to a person that is not either Harvard or
a subsidiary guarantor shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by Harvard or such Restricted Subsidiary,
as the case may be, that was not permitted by this clause (5);
(6) the incurrence by Harvard or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred in the normal course of business and
consistent with past business practices for the purpose of fixing or
hedging currency, commodity or interest rate risk, including with respect
to any floating rate Indebtedness that is permitted by the terms of the
indenture to be outstanding in connection with the conduct of their
respective businesses and not for speculative purposes;
(7) the guarantee by Harvard or any of the subsidiary guarantors of
Indebtedness of Harvard or a Restricted Subsidiary of Harvard that was
permitted to be incurred by another provision of this covenant "Incurrence
of Indebtedness and Issuance of Preferred Stock;"
(8) the incurrence by Harvard's subsidiary, Trim Trends Canada Ltd.,
of indebtedness under its revolving loan facility with Canadian Imperial
Bank of Commerce, provided that the aggregate principal
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amount of all Indebtedness of Trim Trends Canada Ltd. outstanding under the
that facility, after giving effect to such incurrence, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any other Indebtedness incurred under this clause (8), does not exceed an
amount equal to $2.0 million; and
(9) the incurrence by Harvard of additional Indebtedness in an
aggregate principal amount at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any other
Indebtedness incurred under this clause (9), not to exceed $2.5 million.
For purposes of determining compliance with this covenant, in the event
that an item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (9) above as of
the date of incurrence thereof or is entitled to be incurred pursuant to the
first paragraph of this covenant as of the date of incurrence thereof, Harvard
shall, in its sole discretion, classify such item of Indebtedness as of the date
of incurrence thereof in any manner that complies with this covenant and such
item of Indebtedness shall be treated as having been incurred under only one of
such clauses or under the first paragraph hereof. Accrual of interest, accrual
of dividends, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness will not be deemed to be an incurrence of
Indebtedness for purposes of this covenant.
Maintenance of Consolidated Leverage Ratio
The indenture provides that, so long as the notes are outstanding, Harvard
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly permit the Consolidated Leverage Ratio as of the last day of any
period of four consecutive fiscal quarters of Harvard ending with any fiscal
quarter set forth below to exceed the ratio set forth below opposite such fiscal
quarter:
<TABLE>
<CAPTION>
CONSOLIDATED
LEVERAGE
FISCAL QUARTER RATIO
- -------------- ------------
<S> <C>
December 31, 1998........................................... 4.50
March 31, 1999.............................................. 4.50
June 30, 1999............................................... 4.50
September 30, 1999.......................................... 4.50
December 31, 1999........................................... 4.00
March 31, 2000.............................................. 4.00
June 30, 2000............................................... 4.00
September 30, 2000 and thereafter
until September 1, 2003................................... 3.50
</TABLE>
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<PAGE>
Maintenance of Consolidated Interest Coverage Ratio
So long as the notes are outstanding, Harvard will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly permit the
Consolidated Interest Coverage Ratio for any period of four consecutive fiscal
quarters of Harvard ending with any fiscal quarter set forth below to be less
than the ratio set forth below opposite such fiscal quarter:
<TABLE>
<CAPTION>
CONSOLIDATED
INTEREST
FISCAL QUARTER COVERAGE RATIO
- -------------- --------------
<S> <C>
December 31, 1998......................................... 2.00
March 31, 1999............................................ 2.00
June 30, 1999............................................. 2.00
September 30, 1999........................................ 2.00
December 31, 1999......................................... 2.25
March 31, 2000............................................ 2.25
June 30, 2000............................................. 2.25
September 30, 2000........................................ 2.25
December 31, 2000 and thereafter
until September 1, 2003................................. 2.75
</TABLE>
Liens
Harvard will not, and will not permit any of its Restricted Subsidiaries to
allow the existence of any lien of any kind securing Indebtedness, Attributable
Debt, or trade payables, other than Permitted Liens, upon any of their property
or assets, now owned or hereafter acquired, unless all payments due under the
indenture and the notes are secured on an equal and ratable basis with the
obligations so secured until such time as such obligations are no longer secured
by a lien.
Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
Harvard will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly allow the existence of any encumbrance or restriction
on the ability of any Restricted Subsidiary of Harvard to:
o (x) pay dividends or make any other distributions to Harvard or any of
its Restricted Subsidiaries on its capital stock or with respect to any
other interest or participation in, or measured by, its profits, or
(y) pay any Indebtedness owed to Harvard or any of its Restricted
Subsidiaries;
o make loans or advances to Harvard or any of its Restricted Subsidiaries;
or
o transfer any of its properties or assets to Harvard or any of its
Restricted Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of:
(a) our senior credit facility as originally in effect, and any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof,
provided that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacement or
refinancings are no more restrictive with respect to such dividend
and other payment restrictions than those contained in our senior
credit facility as originally in effect;
(b) the indenture and the notes;
(c) applicable law;
(d) any instrument governing Indebtedness or capital stock of a
person acquired by Harvard or any of its Restricted Subsidiaries as
in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of
such acquisition), which encumbrance or restriction is not
applicable to any person, or the properties or assets of any person,
other than the person, or the property or assets of the person, so
acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of the indenture to be
incurred;
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(e) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business;
(f) capital leases, mortgage financings or purchase money
obligations for property acquired in the ordinary course of business
that impose encumbrances or restrictions on the property so
acquired;
(g) Indebtedness of subsidiary guarantors, provided that such
Indebtedness was permitted to be incurred under the indenture; or
(h) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those
contained in the agreements governing the Indebtedness being
refinanced.
Merger, Consolidation, or Sale of Assets
The indenture provides that Harvard will not, directly or indirectly,
consolidate or merge with or into, whether or not Harvard is the surviving
corporation, or sell, assign, transfer, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to another person unless:
o Harvard is the surviving corporation or the person formed by or surviving
any such consolidation or merger, if other than Harvard, or to which such
sale, assignment, transfer, conveyance or other disposition shall have
been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia;
o the person formed by or surviving any such consolidation or merger, if
other than Harvard, or the person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes
all the obligations of Harvard under the notes and the indenture under a
supplemental indenture in a form reasonably satisfactory to the trustee;
o immediately before and after such transaction no default or event of
default shall have occurred; and
o except in the case of a merger of Harvard with or into a subsidiary
guarantor, Harvard or person formed by or surviving any such
consolidation or merger, if other than Harvard, or to which such sale,
assignment, transfer, conveyance or other disposition shall have been
made:
(a) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of
Harvard immediately preceding the transaction; and
(b) will, immediately after such transaction after giving pro forma
effect thereto and any related financing transactions as if the same
had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness
under the Fixed Charge Coverage Ratio test set forth in the first
paragraph of covenant described above under the caption "Incurrence
of Indebtedness and Issuance of Preferred Stock."
The indenture provides that Harvard may not, directly or indirectly, lease
all or substantially all of its properties or assets, in one or more related
transactions, to any other person.
Transactions with Affiliates
The indenture provides that Harvard will not, and will not permit any of
its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any of their affiliates, unless:
o such transaction is on terms that are no less favorable to Harvard or the
relevant Restricted Subsidiary than those that would have been obtained
in a comparable transaction by Harvard or such Restricted Subsidiary with
an unrelated person; and
o Harvard delivers to the trustee (a) with respect to any transaction with
an affiliate or series of related transactions with affiliates involving
aggregate consideration in excess of $1.0 million, a resolution of its
Board of Directors set forth in an officers' certificate certifying that
such transaction complies with the above requirement and that such
transaction has been approved by a majority of the disinterested members
of its Board of Directors and (b) with respect to any transaction with an
affiliate or series of
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related transactions with affiliates involving aggregate consideration in
excess of $2.5 million, an opinion as to the fairness to the noteholders
of such transaction from a financial point of view issued by an
investment banking firm of national standing or an appraisal firm of
national standing; provided that none of the following shall be deemed to
be transactions:
(1) any employment agreement entered into by Harvard or any of its
Restricted Subsidiaries in the ordinary course of business of
Harvard or such Restricted Subsidiary, as the case may be;
(2) transactions between or among Harvard and/or its subsidiary
guarantors on terms that are no less favorable to Harvard and/or
such subsidiary guarantor than those that would have been obtained
in a comparable transaction by Harvard and/or such subsidiary
guarantor with an unrelated person;
(3) any sale or other issuance of equity interests, other than
Disqualified Stock of Harvard or of equity interests of any
Restricted Subsidiary to Harvard or any other Restricted Subsidiary;
(4) Restricted Payments that are permitted by, and Investments that
are not prohibited by, the covenant described above under the
caption "Restricted Payments;"
(5) fees and compensation paid to members of the Board of Directors
of Harvard and of its Restricted Subsidiaries in their capacity as
such, if such fees and compensation are reasonable and customary;
(6) advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary
course of business; and
(7) fees and compensation paid to, and indemnity provided on behalf
of, officers, directors or employees of Harvard or any of its
Restricted Subsidiaries, as determined by the Board of Directors of
Harvard or of any such Restricted Subsidiary, if such fees and
compensation are reasonable and customary, shall not be treated as
transactions with affiliates covered by these provisions.
For such purposes, an "affiliate" of a person includes any person who controls,
is controlled by, or is under common control with that person, and any person
who beneficially owns 10% or more of the capital stock of that person.
Sale and Leaseback Transactions
The indenture provides that Harvard will not, and will not permit any of
its Restricted Subsidiaries to, enter into any sale and leaseback transaction;
provided that Harvard may enter into a sale and leaseback transaction if:
o Harvard could have incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction under
(a) the Fixed Charge Coverage Ratio test set forth in the first paragraph
of the covenant described above under the caption "Incurrence of
Indebtedness and Issuance of Preferred Stock" and (b) the covenant
described above under the caption "Maintenance of Consolidated Leverage
Ratio;"
o the gross cash proceeds of such sale and leaseback transaction are at
least equal to the fair market value, as determined in good faith by the
Board of Directors and set forth in an officers' certificate delivered to
the trustee, of the property that is the subject of such sale and
leaseback transaction; and
o the transfer of assets in such sale and leaseback transaction is
permitted by, and Harvard applies the proceeds of such transaction in
compliance with, the covenant described above under the caption
"Repurchase at the Option of Noteholders--Asset Sales."
Impairment of Security Interests
The indenture provides that, subject to the intercreditor agreement,
neither Harvard nor any of its subsidiaries will take or omit to take any action
that would adversely affect or impair the security interests granted to the
collateral agent, in favor of the trustee and noteholders of notes, with respect
to the collateral. Neither Harvard nor any of its subsidiaries may grant to any
person, or permit any person to retain, other than the collateral agent, any
interest whatsoever in the collateral, other than the security interest of our
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<PAGE>
senior credit facility and Permitted Liens as permitted under the covenant
entitled "Liens." Neither Harvard nor any of its subsidiaries will enter into
any agreement that requires the proceeds from any sale of collateral to be
applied to repay, redeem, defease or otherwise acquire or retire Indebtedness of
any person, other than as permitted by the indenture, under the covenant
described above under the caption "Liens", the notes, the intercreditor
agreement and the collateral agreement.
Additional Subsidiary Guarantors
The indenture provides that, if Harvard or any of its Restricted
Subsidiaries acquire or create another Restricted Subsidiary after November 24,
1998, then such newly acquired or created Restricted Subsidiary will:
o execute a supplemental indenture in form and substance satisfactory to
the trustee providing that such Restricted Subsidiary will become a
subsidiary guarantor under the indenture and the collateral agreement;
o issue a guarantee or endorse the notes on the same terms and conditions
as the guarantees that will be issued by each subsidiary guarantor
pursuant to the indenture and the collateral agreement; and
o deliver an opinion of counsel to the effect, among other things, that
such supplemental indenture has been duly authorized and executed by such
Restricted Subsidiary.
Business Activities
The indenture provides that Harvard will not, and Harvard will not permit
any of its Restricted Subsidiaries to, directly or indirectly, engage in any
line of business other than a Permitted Business, except to such extent as would
not be material to Harvard and its Restricted Subsidiaries taken as a whole.
Payments for Consent
The indenture provides that Harvard will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any
noteholder of any notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the indenture or the notes unless
such consideration is offered to be paid or is paid to all noteholders of the
notes that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
Reports
The indenture provides that whether or not Harvard is so required by the
rules and regulations of the SEC, so long as any notes are outstanding, Harvard
will furnish to each of the noteholders:
o all quarterly and annual financial information that would be required to
be contained in a filing with the SEC on Forms 10-Q and 10-K if Harvard
were required to file such financial information, including a
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" that describes the financial condition and results of
operations of Harvard and any consolidated Restricted Subsidiaries and,
with respect to the annual information only, reports thereon by Harvard's
independent public accountants, which shall be firm(s) of established
national reputation, and
o all information that would be required to be filed with the SEC on
Form 8-K if Harvard were required to file such reports.
All such information and reports must be filed with the SEC on or prior to
the dates on which such filings would have been required to be made had Harvard
been subject to the rules and regulations of the SEC. In addition, whether or
not required by the rules and regulations of the SEC, Harvard shall file a copy
of all such information and reports with the SEC for public availability within
the time periods specified in the SEC's rules and regulations, unless the SEC
will not accept such a filing, and make such information available to securities
analysts and prospective investors upon request. For so long as any notes remain
outstanding, Harvard and the subsidiary guarantors shall furnish to the
noteholders and to securities analysts
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<PAGE>
and prospective investors, upon their request, the information required to be
delivered under Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The indenture provides that each of the following constitutes an event of
default:
o default for 30 days in the payment when due of interest on, or applicable
liquidated damages, if any, with respect to, the notes;
o default in payment when due of the principal of or premium, if any, on
the notes;
o failure by Harvard or any of its Restricted Subsidiaries to comply with
the provisions described under the captions "Restricted Payments,"
"Incurrence of Indebtedness and Issuance of Preferred Stock" or "Merger,
Consolidation, or Sale of Assets;"
o failure by Harvard or any of its Restricted Subsidiaries for 30 days
after notice to comply with the provisions described under the captions
"Repurchase at the Option of Noteholders--Asset Sales" or "Repurchase at
the Option of Noteholders--Change of Control;"
o failure by Harvard or any of its Restricted Subsidiaries for 60 days
after notice to comply with any of its other agreements in the indenture,
the notes, the guarantees, the collateral agreement and the other
security documents;
o default under any mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any Indebtedness
for money borrowed by Harvard or any of its Restricted Subsidiaries, or
the payment of which is guaranteed by Harvard or any of its Restricted
Subsidiaries, whether such Indebtedness or guarantee now exists, or is
created after November 24, 1998, which default (a) is caused by a failure
to pay principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such Indebtedness
on the date of such default or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the
principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been such a
default in payment or the maturity of which has been so accelerated,
aggregates without duplication $1.0 million or more;
o failure by Harvard or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $1.0 million, excluding amounts
covered by insurance, which judgments are not paid, discharged, stayed,
vacated or bonded pending appeal by a reputable financial intermediary
with an investment grade rating for a period of 60 days from the entry
thereof;
o specified events of bankruptcy or insolvency with respect to Harvard or
any of its Restricted Subsidiaries;
o except as permitted under the indenture and the collateral agreement, any
guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect for
30 days after notice or any subsidiary guarantor, or any person acting on
behalf of any subsidiary guarantor, shall deny or disaffirm its
obligations under its guarantee; and
o except as permitted by the collateral agreement and the other security
documents, any amendments thereto or the covenant described above under
the caption "Liens", any of the collateral agreement or the other
security documents ceases to be in full force and effect or ceases to be
effective, in all material respects, to create the security interest
purported to be created in the collateral in favor of the noteholders for
30 days after notice.
If any event of default occurs and is continuing, the trustee or the
noteholders of at least 25% in principal amount of the then outstanding notes
may declare all the notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an event of default arising from specified events of
bankruptcy or insolvency, with respect to Harvard or any Restricted Subsidiary,
all outstanding notes will become due and payable without further action or
notice. Noteholders of the notes may not enforce the indenture or the notes
except as provided in the indenture. Subject to limitations, noteholders of a
majority in principal amount of the then outstanding notes may direct the
trustee in its exercise of any trust or power. The trustee may withhold from
noteholders of the notes notice of any continuing default or event of default,
except a
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default or event of default relating to the payment of principal or interest, if
it determines that withholding notice is in their interest.
In the case of any event of default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of Harvard with the
intention of avoiding payment of the premium that Harvard would have had to pay
if Harvard then had elected to redeem the notes under the optional redemption
provisions of the indenture, an equivalent premium shall also become and be
immediately due and payable if permitted by law upon the acceleration of the
notes.
The noteholders of a majority in aggregate principal amount of the notes
then outstanding by notice to the trustee may on behalf of the noteholders of
all of the notes waive any default or event of default and its consequences
under the indenture except a default or event of default in the payment of
interest on, or the principal of, the notes.
Harvard is required to deliver to the trustee annually a statement
regarding compliance with the indenture, and Harvard is required upon becoming
aware of any default or event of default or any litigation, investigation,
administrative action or other proceeding by a governmental authority, to
deliver to the trustee a statement specifying such default or event of default
or such proceeding.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
The indenture provides that no director, officer, employee, incorporator or
stockholder of Harvard, as such, will have any liability for any obligations of
Harvard under the notes or the indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each noteholder by
accepting a note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the notes. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is the
view of the SEC that such a waiver is against public policy.
TRANSFER AND EXCHANGE
A noteholder may transfer or exchange notes in accordance with the
indenture. The registrar of the notes and the trustee may require a noteholder,
among other things, to furnish appropriate endorsements and transfer documents
and Harvard may require a noteholder to pay any taxes and fees required by law
or permitted by the indenture. Harvard is not required to transfer or exchange
any note selected for redemption. Also, Harvard is not required to transfer or
exchange any note for a period of 15 days before a selection of notes to be
redeemed.
The registered noteholder of a note will be treated as the owner of it for
all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, the indenture
or the notes may be amended or supplemented with the consent of the noteholders
of at least a majority in principal amount of the notes then outstanding,
including consents obtained in connection with a purchase of, or tender offer or
exchange offer for, notes, and any existing default or compliance with any
provision of the indenture or the notes may be waived with the consent of the
noteholders of a majority in principal amount of the notes then outstanding,
including consents obtained in connection with a tender offer or exchange offer
for notes.
Without the consent of noteholders of notes holding at least two-thirds in
principal amount of the notes then outstanding, an amendment or waiver may not
make any change to those Sections in the indenture that are set forth under the
covenants described above under the captions "Incurrence of Indebtedness and
Issuance of Preferred Stock," "Restricted Payments," "Liens" and "Change of
Control", if such amendment or waiver would adversely affect the rights of
noteholders.
Without the consent of each noteholder affected, an amendment or waiver may
not, with respect to any notes held by a non-consenting noteholder:
o reduce the principal amount of notes whose noteholders must consent to an
amendment, supplement or waiver;
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o reduce the principal of or change the fixed maturity of any note or alter
the provisions with respect to the redemption of the notes, other than
provisions relating to the covenants described above under the caption
"Repurchase at the Option of Noteholders";
o reduce the rate of, amounts due under or change the time for payment of
interest on any note;
o waive a default or event of default in the payment of principal of or
premium, if any, or interest on the notes, except a rescission of
acceleration of the notes by the noteholders of at least a majority in
aggregate principal amount of the notes and a waiver of the payment
default that resulted from such acceleration;
o make any note payable in money other than that stated in the indenture
and the notes;
o make any change in the provisions of the indenture relating to waivers of
past defaults or the rights of noteholders to receive payments of
principal of or premium, if any, or interest on the notes;
o waive a redemption payment with respect to any note, other than a payment
required by one of the covenants described above under the caption
"Repurchase at the Option of Noteholders";
o make any changes that would affect the ranking of the notes and the
guarantees, except in accordance with the terms of the indenture and the
collateral agreement;
o release any subsidiary guarantor from its obligations under the
guarantees, the collateral agreement or the indenture, except in
accordance with the terms of those documents;
o amend or modify any provisions of the indenture, the collateral agreement
or the other security documents, the notes or the guarantees in any
manner adverse to noteholders; or
o make any change in the provisions respecting amendments and waivers.
Notwithstanding the foregoing, without the consent of any noteholder,
Harvard and the trustee may amend or supplement the indenture, the notes, the
guarantees and the collateral agreement:
o to cure any ambiguity, defect or inconsistency, to provide for
uncertificated notes and guarantees in addition to or in place of
certificated notes and guarantees;
o to provide for the assumption of Harvard's obligations to noteholders in
the case of a merger or consolidation;
o to make any change that would provide any additional rights or benefits
to the noteholders or that does not adversely affect the legal rights
under the indenture or the collateral agreement of any such noteholder,
including adding a guarantor under the indenture and adding additional
collateral to the collateral; or
o to comply with requirements of the SEC in order to effect or maintain the
qualification of the indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The indenture contains specific limitations on the rights of the trustee to
obtain payment of claims should the trustee become a creditor of Harvard. The
trustee will be permitted to engage in other transactions; however, if it
acquires any conflicting interest it must eliminate such conflict within
90 days and apply to the SEC for permission to continue or resign.
The noteholders of a majority in principal amount of the then outstanding
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
specific exceptions. The indenture will provide that in case an event of default
shall occur, which shall not be cured, the trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the trustee will be under no
obligation to exercise any of its rights or powers under the indenture at the
request of any noteholder, unless such noteholder shall have offered to the
trustee security and indemnity satisfactory to it against any loss, liability or
expense.
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BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the New notes will initially be
issued in the form of one global note. The global note will be deposited on the
date of the consummation of the exchange offer with, or on behalf of, The
Depository Trust Company and registered in the name of Cede & Co., as nominee of
The Depository Trust Company.
Notes that are issued as described below under "Certificated Securities"
will be issued in the form of definitive registered certificates. Upon the
transfer of those certificated notes, such certificated notes may, unless the
global note has previously been exchanged for such certificates, be exchanged
for an interest in the global note representing the principal amount of notes
being transferred.
The Depository Trust Company is a limited-purpose trust company that was
created to hold securities for its participant organizations and to facilitate
the clearance and settlement of transactions in such securities between those
participants through electronic book-entry changes in accounts of the
participants. The Depository's participants of The Depository Trust Company
include securities brokers and dealers, banks and trust companies, clearing
corporations and other similar organizations. Access to The Depository Trust
Company's system is also available to indirect participants such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. Persons other
than participants and indirect participants may beneficially own securities held
by or on behalf of The Depository Trust Company only through its participants or
such indirect participants.
Harvard expects that under procedures established by The Depository Trust
Company, ownership of the notes evidenced by the global note will be shown on,
and the transfer of ownership thereof will be effected only through, records
maintained by The Depository Trust Company, its participants and its indirect
participants.
Prospective purchasers are advised that the laws of some states require
that you take physical delivery in definitive form of securities that you own.
Consequently, the ability to transfer notes evidenced by the global note will be
limited to such extent.
So long as the global note holder is the registered owner of any notes, the
global note holder will be considered the sole noteholder under the indenture of
any notes evidenced by the global note. Beneficial owners of notes evidenced by
the global note will not be considered the owners or noteholders thereof under
the indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the trustee thereunder. Neither Harvard
nor the trustee will have any responsibility or liability for any aspect of the
records of The Depository Trust Company or for maintaining, supervising or
reviewing any records of The Depository Trust Company relating to the notes.
Payments in respect of the principal of, premium, if any, interest and
applicable liquidated damages, if any, on any notes registered in the name of
the global note holder on the applicable record date will be payable by the
trustee to or at the direction of the global note holder in its capacity as the
registered noteholder under the indenture. Under the terms of the indenture,
Harvard and the trustee may treat the persons in whose names notes, including
the global note, are registered as the owners thereof for the purpose of
receiving such payments. Consequently, neither Harvard nor the trustee has or
will have any responsibility or liability for the payment of such amounts to
beneficial owners of notes. Harvard believes, however, that it is currently the
policy of The Depository Trust Company to immediately credit the accounts of the
relevant participants with such payments, in amounts proportionate to their
interests in such payments, as shown on the records of The Depository Trust
Company. Payments by The Depository Trust Company's participants and its
indirect participants to the beneficial owners of notes will be governed by
standing instructions and customary practice and will be the responsibility of
the participants or the indirect participants.
The Depository Trust Company's management is aware that some computer
applications, systems, and the like for processing data that are dependent upon
calendar dates, including dates before, on, and after January 1, 2000, may
encounter "Year 2000 problems." The Depository Trust Company has informed its
participants and other members of the financial community that it has developed
and is implementing a program so that its data systems relating to the timely
payment of distributions, including principal and income payments, to
securityholders, book-entry deliveries, and settlement of trades within The
Depository Trust Company, continue to function appropriately. This program
includes a technical assessment and a
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remediation plan, each of which is complete. Additionally, The Depository Trust
Company's plan includes a testing phase, which is expected to be completed
within appropriate time frames.
However, The Depository Trust Company's ability to perform properly its
services is also dependent upon other parties, including but not limited to
issuers and their agents, as well as third party vendors from whom The
Depository Trust Company licenses software and hardware, and third party vendors
on whom The Depository Trust Company relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. The Depository Trust Company has informed its participants and
other members of the financial community that it is contacting and will continue
to contact third party vendors from whom The Depository Trust Company acquires
services to: (1) impress upon them the importance of such services being Year
2000 compliant; and (2) determine the extent of their efforts for Year 2000
remediation and testing of their services. In addition, The Depository Trust
Company is in the process of developing such contingency plans as it deems
appropriate.
According to The Depository Trust Company, the foregoing information with
respect to The Depository has been provided to the Industry for informational
purposes only and is not intended to serve as a representation, warranty, or
contract modification of any kind.
CERTIFICATED SECURITIES
Subject to specified conditions, any person having a beneficial interest in
the global note may, upon request to the trustee, exchange such beneficial
interest for notes in the form of certificated notes. Upon any such issuance,
the trustee is required to register such certificated notes in the name of, and
cause the same to be delivered to, such person or persons, or the nominee of any
thereof. In addition, if:
o Harvard notifies the trustee in writing that The Depository Trust Company
is no longer willing or able to act as a depositary and Harvard is unable
to locate a qualified successor within 90 days or
o Harvard, at its option, notifies the trustee in writing that it elects to
cause the issuance of notes in the form of certificated notes under the
indenture, then, upon surrender by the global note holder of its global
note, notes in such form will be issued to each person that the global
note holder and The Depository Trust Company identify as being the
beneficial owner of the related notes.
Neither Harvard nor the trustee will be liable for any delay by the global
note holder or The Depository Trust Company in identifying the beneficial owners
of notes and Harvard and the trustee may conclusively rely on, and will be
protected in relying on, instructions from the global note holder or The
Depository Trust Company for all purposes.
SAME DAY SETTLEMENT AND PAYMENT
The indenture requires that payments in respect of the notes represented by
the global note, including principal, premium, if any, interest and applicable
liquidated damages, if any, be made by wire transfer of immediately available
funds to the accounts specified by the global note holder. With respect to
certificated notes, Harvard will make all payments of principal, premium, if
any, interest and applicable liquidated damages, if any, by wire transfer of
immediately available funds to the accounts specified by the noteholders thereof
or, if no such account is specified, by mailing a check to each such
noteholder's registered address. Harvard expects that secondary trading in the
certificated notes will also be settled in immediately available funds.
DEFINED TERMS
Set forth below are some of the defined terms used in the indenture.
Reference is made to the indenture for a full disclosure of all such terms, as
well as any other capitalized or uncapitalized terms used herein for which no
definition is provided.
"Acquired Debt" means, with respect to any specified person, (1)
Indebtedness of any other person existing at the time such other person is
merged with or into or became a Restricted Subsidiary of such specified person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation
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of, such other person merging with or into or becoming a Restricted Subsidiary
of such specified person, and (2) Indebtedness secured by a lien encumbering any
asset acquired by such specified person.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights, including by way of a sale and leaseback, by Harvard or any
Restricted Subsidiary other than in the ordinary course of business,
provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of Harvard and its Restricted Subsidiaries
taken as a whole will be governed by the covenants described above under
the captions "Repurchase at the Option of Noteholders-Change of Control"
and "Merger, Consolidation, or Sale of Assets" and not by the provisions of
the covenant described above under the caption "Asset Sales", and
(2) the issue or sale by Harvard or any of its Restricted Subsidiaries
of equity interests of any Harvard's Restricted Subsidiaries, in the case
of either clause (1) or (2), whether in a single transaction or a series of
related transactions (a) that have a fair market value in excess of
$1.0 million or (b) for net proceeds in excess of $1.0 million.
Notwithstanding the foregoing, the following shall not be considered "Asset
Sales":
(1) a transfer of assets by Harvard to a subsidiary guarantor or by a
Restricted Subsidiary of Harvard to Harvard or to a subsidiary guarantor;
(2) an issuance or sale of equity interests by a Restricted Subsidiary
of Harvard to Harvard or a subsidiary guarantor;
(3) a Restricted Payment that is permitted by the covenant described
above under the caption "Restricted Payments;"
(4) the sale or transfer of the assets of the Toledo, Tiffin and
Harman businesses; and
(5) the sale by Harvard of the capital stock of an Unrestricted
Subsidiary.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value, discounted at the rate of
interest implicit in such transaction, determined in accordance with generally
accepted accounting principles, of the obligation of the lessee for net rental
payments during the remaining term of the lease included in such sale and
leaseback transaction, including any period for which such lease has been
extended or may, at the option of the lessor, be extended.
"Cash Equivalents" means:
(1) United States dollars,
(2) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof
having maturities of not more than one year from the date of acquisition,
(3) certificates of deposit and eurodollar time deposits with
maturities of not more than one year from the date of acquisition, bankers'
acceptances with maturities of not more than one year from the date of
acquisition and overnight bank deposits, in each case with any domestic
commercial bank having capital and surplus in excess of $500 million and a
Thompson Bank Watch Rating of "B" or better,
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above, and
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or one of the two highest ratings from Standard &
Poor's Ratings Service Group, a division of the McGraw-Hill Companies, with
maturities of not more than 270 days from the date of acquisition.
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"Change of Control" means the occurrence of any of the following:
(1) the sale, lease, transfer, conveyance or other disposition, other
than by way of merger or consolidation, in one or a series of related
transactions, of all or substantially all of the assets of Harvard and its
Restricted Subsidiaries, taken as a whole to any "person" as such term is
used in Section 13(d)(3) of the Exchange Act;
(2) the adoption of a plan relating to the liquidation or dissolution
of Harvard;
(3) the consummation of any transaction, including any merger or
consolidation, the result of which is that any "person" as defined above
becomes the "beneficial owner" as such term is defined in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition, directly or
indirectly, of more than 50% of the total of the Voting Stock of Harvard,
measured by voting power rather than number of shares;
(4) the first day on which a majority of the members of the Board of
Directors of Harvard are not Continuing Directors; or
(5) Harvard consolidates with, or merges with or into, any person or
sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person, or any person consolidates
with, or merges with or into. Harvard, in any such event under a
transaction in which any of the outstanding Voting Stock of Harvard is
converted into or exchanged for cash, securities or other property, other
than any such transaction where the Voting Stock of Harvard outstanding
immediately prior to such transaction is converted into or exchanged for
Voting Stock, other than Disqualified Stock, of the surviving or transferee
person constituting a majority of the outstanding shares of such Voting
Stock of such surviving or transferee person, immediately after giving
effect to such issuance.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such notes.
"Comparable Treasury Price" means, with respect to any redemption date for
the notes, (1) the average of four Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest such Reference Treasury
Dealer Quotations, or (2) if the trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations.
"Consolidated Cash Flow" means, with respect to any person for any period,
the Consolidated Net Income of such person for such period plus
(1) an amount equal to any extraordinary or non-recurring loss plus
any net loss realized in connection with an Asset Sale, up to the amount
such losses were deducted in computing such Consolidated Net Income, plus
(2) provision for taxes based on income or profits of such person and
its Restricted Subsidiaries for such period, up to the amount that such
provision for taxes was included in computing such Consolidated Net Income,
plus
(3) consolidated interest expense of such person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized, including cash flow participation interest expense,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, such as the pay-in-kind notes, the interest component of
any deferred payment obligations, the interest component of all payments
associated with obligations under capital leases, commissions, discounts
and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments, if any, under Hedging
Obligations, if any such expense was deducted in computing such
Consolidated Net Income, plus
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(4) depreciation and amortization, including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period, of such person and its Restricted
Subsidiaries for such period up to the amount that such depreciation and
amortization were deducted in computing such Consolidated Net Income, minus
(5) non-cash items increasing such Consolidated Net Income for such
period, other than items that were accrued in the ordinary course of
business, in each case, on a consolidated basis and determined in
accordance with generally accepted accounting principles.
Notwithstanding the foregoing, the provision for taxes on the income or
profits of, and the depreciation and amortization and other non-cash charges of,
a Restricted Subsidiary of Harvard shall be added to Consolidated Net Income to
compute Consolidated Cash Flow of Harvard only up to the amount, and in same
proportion, that the Net Income of such Restricted Subsidiary was included in
calculating the Consolidated Net Income of such person and only if a
corresponding amount would be permitted at the date of determination to be
dividended to Harvard by such Restricted Subsidiary without prior governmental
approval, that has not been obtained, and without direct or indirect restriction
under the terms of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.
"Consolidated Interest Coverage Ratio" means, for any period, the ratio of
(a) Consolidated Cash Flow for such period to (b) Consolidated Interest Expense
for such period.
"Consolidated Interest Expense" means, with respect to any person for any
period, the sum, without duplication, of
(1) the consolidated interest expense of such person and its
Restricted Subsidiaries for such period, whether paid or accrued, including
cash flow participation interest expense, amortization of debt issuance
costs and original issue discount, non-cash interest payments, such as the
pay-in-kind notes, the interest component of any deferred payment
obligations, the interest component of all payments associated with
obligations under capital leases, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments, if any, under Hedging Obligations,
(2) the consolidated interest of such person and its Restricted
Subsidiaries that was capitalized during such period, including the value
of pay-in-kind notes issued during such period, if applicable, and
(3) any interest expense on Indebtedness of another person that is
guaranteed by such person or one of its Restricted Subsidiaries or secured
by a lien on assets of such person or one of its Restricted Subsidiaries,
whether or not such guarantee or lien is called upon.
"Consolidated Leverage Ratio" means the ratio of:
(1) the aggregate outstanding amount of Indebtedness of each of
Harvard and its Restricted Subsidiaries as of the date of calculation on a
consolidated basis in accordance with generally accepted accounting
principles plus the aggregate liquidation preference of all outstanding
Disqualified Stock of Harvard and preferred stock of Harvard's Restricted
Subsidiaries, except preferred stock issued to Harvard or one of its wholly
owned subsidiaries, on such date to
(2) the aggregate Consolidated Cash Flow of Harvard;
provided that, for the purposes of determining the ratios described above for
(1) the fiscal quarter ending on December 31, 1998, Consolidated Cash Flow shall
be deemed equal to Consolidated Cash Flow for such fiscal quarter multiplied by
four, (2) for the six month period ending on March 31, 1999, Consolidated Cash
Flow shall be deemed equal to Consolidated Cash Flow for such period multiplied
by two and (3) for the nine month period ending on June 30, 1999, Consolidated
Cash Flow shall be deemed equal to Consolidated Cash Flow for such period
multiplied by 1.33.
For purposes of this definition, (1) the amount of Indebtedness which is
issued at a discount shall be deemed to be the accreted value of such
Indebtedness at the end of the quarter, whether or not such amount is the amount
then reflected on a balance sheet prepared in accordance with generally accepted
accounting principles, and (2) the aggregate outstanding principal amount of
Indebtedness of Harvard and its subsidiaries
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and the aggregate liquidation preference of all outstanding preferred stock of
Harvard's subsidiaries for which such calculation is made shall be determined on
a pro forma basis as if the Indebtedness and preferred stock giving rise to the
need to perform such calculation had been incurred and issued and the proceeds
therefrom had been applied, and all other transactions in respect of which such
Indebtedness is being incurred or preferred stock is being issued had occurred,
on the first day of the quarter.
In addition to the foregoing, for purposes of this definition, Consolidated
Cash Flow shall be calculated on a pro forma basis after giving effect to:
(1) the incurrence of the Indebtedness of such person and its
subsidiaries and the issuance of the preferred stock of such subsidiaries,
and the application of the proceeds therefrom, giving rise to the need to
make such calculation and any incurrence, and the application of the
proceeds therefrom, or repayment of other Indebtedness, at any time
subsequent to the beginning of the quarter and on or prior to the date of
determination, as if such incurrence or issuance, and the application of
the proceeds thereof, or the repayment, as the case may be, occurred on the
first day of the quarter, except that, in making such computation, the
amount of Indebtedness under any revolving credit facility shall be
computed based upon the average balance of such Indebtedness at the end of
each month during such period, and
(2) any acquisition, including any acquisition giving rise to the need
to make such calculation as a result of such person or one of its
subsidiaries, including any person that becomes a subsidiary of Harvard as
a result of such acquisition, incurring, assuming or otherwise becoming
liable for Indebtedness or such person's subsidiaries issuing preferred
stock, at any time on or subsequent to the first day of the quarter and on
or prior to the date of determination, as if such acquisition, including
the incurrence, assumption or liability for any such Indebtedness and the
issuance of such preferred stock and also including any Consolidated Cash
Flow associated with such acquisition, occurred on the first day of the
quarter, giving pro forma effect to any cost reductions which Harvard
anticipates if Harvard deliver to the trustee an officers' certificate
executed by the chief financial or accounting officer of Harvard certifying
to and describing and quantifying with reasonable specificity the cost
reductions, non-recurring expenses and non-recurring costs expected to be
attained within the first year after such acquisition.
Furthermore, in calculating Consolidated Interest Expense for purposes of
the calculation of Consolidated Cash Flow, (a) interest on Indebtedness
determined on a fluctuating basis as of the date of determination, including
Indebtedness actually incurred on the date of the transaction giving rise to the
need to calculate the Consolidated Leverage Ratio, and which will continue to be
so determined thereafter shall be deemed to have accrued at a fixed rate per
annum equal to the rate of interest on such Indebtedness as in effect on the
date of determination and (b) notwithstanding (a) above, interest determined on
a fluctuating basis, if such interest is covered by Hedging Obligations, shall
be deemed to accrue at the rate per annum resulting after giving effect to the
operation of such agreements.
"Consolidated Net Income" means, with respect to any person for any period,
the aggregate of the Net Income of such person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with
generally accepted accounting principles; provided that:
(1) the Net Income, but not loss, of any person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only up to the amount of dividends or
distributions paid in cash to the referent person or a Restricted
Subsidiary that is a guarantor,
(2) the Net Income of any Restricted Subsidiary shall be excluded up
to the amount that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
that has not been obtained or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders,
(3) the Net Income of any person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded, and
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(4) the cumulative effect of a change in accounting principles shall
be excluded.
"Consolidated Net Worth" means, with respect to any person as of any date,
the sum of (1) the consolidated equity of the common stockholders of such person
and its consolidated Restricted Subsidiaries as of such date plus (2) the
respective amounts reported on such person's balance sheet as of such date with
respect to any series of preferred stock, other than Disqualified Stock, that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only up to the amount of any cash received by such
person upon issuance of such preferred stock, less:
(x) all write-ups, other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going concern
business made within 12 months after the acquisition of such business,
subsequent to November 24, 1998 in the book value of any asset owned by
such person or a consolidated Restricted Subsidiary of such person,
(y) all investments as of such date in unconsolidated Restricted
Subsidiaries and in persons that are not Restricted Subsidiaries except, in
each case, Permitted Investments, and
(z) all unamortized debt discount and expense and unamortized deferred
charges as of such date, all of the foregoing determined in accordance with
generally accepted accounting principles.
"Continuing Director" means, as of the date of determination, any member of
the Board of Directors of Harvard who (1) was a member of such Board of
Directors on November 24, 1998 or (2) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such board at the time of such nomination or
election.
"Disqualified Stock" means any capital stock that, by its terms, or by the
terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof, or upon the happening of any
event, matures or is mandatorily redeemable, under a sinking fund obligation or
otherwise, or redeemable at the option of the noteholder thereof, in whole or in
part, on or prior to the date that is 91 days after the date on which the notes
mature, except for the amount that such capital stock is solely redeemable with,
or solely exchangeable for, any capital stock of such person that is not
Disqualified Stock.
"Excluded Foreign Subsidiary" means, any Foreign Subsidiary in respect of
which either (1) the pledge of all of the capital stock of such subsidiary as
collateral or (2) the guaranteeing by such subsidiary of the obligations, would,
in the good faith judgment of the Issuer, result in adverse tax consequences to
the Issuer or violate applicable law in any material respect.
"Fixed Charges" means, with respect to any person for any period, the sum,
without duplication, of:
(1) the consolidated interest expense of such person and its
Restricted Subsidiaries for such period, whether paid or accrued, including
cash flow participation interest expense, amortization of debt issuance
costs and original issue discount, non-cash interest payments, such as the
pay-in-kind notes, the interest component of any deferred payment
obligations, the interest component of all payments associated with
obligations under capital leases, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments, if any, under Hedging Obligations,
(2) the consolidated interest of such person and its Restricted
Subsidiaries that was capitalized during such period, including the value
of pay-in-kind notes issued during such period, if applicable,
(3) any interest expense on Indebtedness of another person that is
guaranteed by such person or one of its Restricted Subsidiaries or secured
by a lien on assets of such person or one of its Restricted Subsidiaries,
whether or not such guarantee or lien is called upon, and
(4) the product of (a) all dividend payments, whether or not in cash,
on any series of preferred stock of such person or any of its Restricted
Subsidiaries, other than dividend payments on equity interests payable
solely in equity interests of Harvard, other than Disqualified Stock, times
(b) a fraction, the numerator of which is one and the denominator of which
is one minus the then current combined federal, state and local statutory
tax rate of such person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with generally accepted accounting
principles.
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"Fixed Charge Coverage Ratio" means with respect to any person for any
period, the ratio of the Consolidated Cash Flow of such person for such period
to the Fixed Charges of such person for such period. In the event that Harvard
or any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness, other than revolving credit borrowings under any Credit Facility,
or issues preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but on or prior to the date
on which the event for which the calculation of the Fixed Charge Coverage Ratio
is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period.
In addition, for purposes of making the computation referred to above:
(1) acquisitions that have been made by Harvard or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to
the Calculation Date shall be deemed to have occurred on the first day of
the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause
(3) of the proviso set forth in the definition of Consolidated Net Income,
(2) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with generally accepted accounting
principles, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and
(3) the Fixed Charges attributable to discontinued operations, as
determined in accordance with generally accepted accounting principles, and
operations or businesses disposed of prior to the Calculation Date, shall
be excluded, but only up to the amount that the obligations giving rise to
such Fixed Charges will not be obligations of the referent person or any of
its Restricted Subsidiaries following the Calculation Date.
"Hedging Obligations" means, with respect to any person, the net payment
obligations of such person under (1) interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements and agreements providing
for protection against fluctuations in commodity prices and (2) other agreements
or arrangements in the ordinary course of business which are designed to protect
such person against fluctuations in commodity prices, interest rates or currency
exchange rates.
"Indebtedness" means, with respect to any person:
(1) any indebtedness of such person, whether or not contingent, in
respect of borrowed money or evidenced by bonds, notes, debentures or
similar instruments or letters of credit or reimbursement agreements in
respect thereof or banker's acceptances or representing obligations under
capital leases or the balance deferred and unpaid of the purchase price of
any property or representing any Hedging Obligations, except any such
balance that constitutes an accrued expense or trade payable, if and up to
the amount that any of the foregoing indebtedness, other than letters of
credit and Hedging Obligations, would appear as a liability upon a balance
sheet of such person prepared in accordance with generally accepted
accounting principles, as well as all Indebtedness of others secured by a
lien on any asset of such person, whether or not such Indebtedness is
assumed by such person,
(2) up to the amount not otherwise included, the guarantee by such
person of any Indebtedness of any other person, whether or not it appears
on the balance sheet of such person; provided that the amount of such
Indebtedness shall be the lesser of the amount of Indebtedness that is the
subject of such guarantee and the maximum liability of such person on such
guarantee and
(3) all Indebtedness of other persons secured by a lien on any asset
of such person, whether or not such Indebtedness is assumed by or is
otherwise the legal liability of such person, provided that the amount of
such Indebtedness shall be the lesser of (A) the fair market value of such
asset at such date of determination and (B) the amount of such
Indebtedness.
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The amount of any Indebtedness outstanding as of any date shall be (a) the
accreted value thereof, in the case of any Indebtedness that does not require
current payments of interest or that allows for the payment of interest in kind,
and (b) the principal amount thereof, together with any interest thereon that is
more than 30 days past due, in the case of any other Indebtedness.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the trustee after consultation with Harvard.
"Investments" means, with respect to any person, all investments by such
person in other persons, including affiliates, in the forms of direct or
indirect loans, including guarantees of Indebtedness or other obligations,
advances of assets or capital contributions, excluding commission, travel and
entertainment, moving, and similar advances to officers and employees made in
the ordinary course of business, purchases or other acquisitions for
consideration of Indebtedness, equity interests or other securities, together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with generally accepted accounting principles. If Harvard
or any of its Restricted Subsidiaries sells or otherwise disposes of any equity
interests of any direct or indirect Restricted Subsidiary of Harvard such that,
after giving effect to any such sale or disposition, such person is no longer a
direct or indirect Restricted Subsidiary of Harvard, Harvard or such Restricted
Subsidiary, as the case may be, shall be deemed to have made an Investment on
the date of any such sale or disposition equal to the fair market value of the
equity interests of such Restricted Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of the covenant described
above under the caption "Restricted Payments."
"Net Income" means, with respect to any person, the net income (loss) of
such person, determined in accordance with generally accepted accounting
principles and before any reduction in respect of preferred stock dividends,
excluding, however, (1) any gain, but not loss, together with any related
provision for taxes on such gain, but not loss, realized in connection with (a)
any Asset Sale, including dispositions pursuant to sale and leaseback
transactions, or (b) the disposition of any securities by such person or any of
its Restricted Subsidiaries or the extinguishment of any Indebtedness of such
person or any of its Restricted Subsidiaries and (2) any extraordinary gain, but
not loss, together with any related provision for taxes on such extraordinary
gain, but not loss.
"Non-Recourse Debt" means Indebtedness (1) as to which neither Harvard nor
any of its Restricted Subsidiaries (a) provides credit support of any kind,
including any undertaking, agreement or instrument that would constitute
Indebtedness, (b) is directly or indirectly liable as a guarantor or otherwise,
or (c) constitutes the lender; (2) no default with respect to which,
includingany rights that the holders thereof may have to take enforcement action
against an Unrestricted Subsidiary, would permit, upon notice, lapse of time or
both, any holder of any other Indebtedness, other than the notes being offered
hereby, of Harvard or any of its Restricted Subsidiaries to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity; and (3) as to which the lenders have been
notified in writing that they will not have any recourse to the stock or assets
of Harvard or any of its Restricted Subsidiaries.
"Permitted Business" means the lines of business that Harvard and its
Restricted Subsidiaries currently conduct on the date hereof or that Harvard and
its Restricted Subsidiaries contemplate conducting as set forth in the
Disclosure Statement For Debtors' First Amended and Modified Consolidated Plan
under Chapter 11 of the Bankruptcy Code dated August 19, 1998 filed with the
United States Bankruptcy Court for the District of Delaware in connection with
the plan of reorganization and businesses reasonably related thereto.
"Permitted Investments" means:
(1) any Investment in Harvard or in a Restricted Subsidiary of
Harvard;
(2) any Investment in Cash Equivalents;
(3) any Investment by Harvard or any Restricted Subsidiary of Harvard
in a person engaged in a Permitted Business, if as a result of such
Investment (a) such person becomes a subsidiary guarantor or (b) such
person is merged, consolidated or amalgamated with or into, or transfers or
conveys substantially all of its assets to, or is liquidated into, Harvard
or a subsidiary guarantor;
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(4) any Restricted Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made under and in
compliance with the covenant described above under the caption "Repurchase
at the Option of Noteholders--Asset Sales;"
(5) any acquisition of assets solely in exchange for the issuance of
equity interests, other than Disqualified Stock, of Harvard;
(6) Investments arising in connection with Hedging Obligations that
are incurred in the ordinary course of business, for the purpose of fixing
or hedging currency, commodity or interest rate risk, including with
respect to any floating rate Indebtedness that is permitted by the terms of
the indenture to be outstanding, in connection with the conduct of the
business of Harvard and its Restricted Subsidiaries which are guarantors;
(7) any Investment existing on November 24, 1998 and any Investment
that replaces, refinances or refunds an Investment, provided that the new
Investment is in an amount that does not exceed the amount replaced,
refinanced or refunded and is made in the same person as the Investment
replaced, refinanced or refunded;
(8) Investments in Permitted Joint Ventures that have an aggregate
fair market value, taken together with all other Investments made under
this clause (8) that are at that time outstanding, not to exceed
$7.5 million at the time of such Investment, with the fair market value of
each Investment being measured at the time made and without giving effect
to subsequent changes in value, provided that (a) no more than
$3.0 million of the aggregate amount of Investments, with the fair market
value of each Investment being measured at the time made and without giving
effect to subsequent changes in value, permitted by this clause (8) may be
made in the form of additional investments in the Permitted Joint Ventures
and (b) no more than $4.5 million of the aggregate amount of Investments,
with the fair market value of each Investment being measured at the time
made and without giving effect to subsequent changes in value, permitted by
this clause (8) may be made in the form of loans or advances made to or on
behalf of Hutchinson/Kingston-Warren LLC, under Section 6.6 of the Limited
Liability Company Agreement dated November 27, 1995 by and between
Hutchinson SA and The Kingston-Warren Corporation, for the sole purpose of
funding the working capital needs, capital expenditures and other general
corporate or partnership needs of Hutchinson/Kingston-Warren LLC in
furtherance of its stated business purpose under Article 2 of that
agreement, provided that the terms and conditions of such loans or advances
require their repayment to Harvard or Kingston-Warren or that Harvard or
Kingston-Warren are repaid their share of such expenditures under that
agreement; and
(9) other Investments by Harvard or any of its Restricted Subsidiaries
in any person engaged in one or more Permitted Businesses, other than those
provided for in clause (8), above having an aggregate fair market value,
measured as of the date made and without giving effect to subsequent
changes in value, when taken together with all other Investments made under
this clause (9) that are at the time outstanding, not to exceed
$2.5 million.
"Permitted Joint Venture" means (1) KS-Doehler-Jarvis GmbH, a German joint
venture formed by Doehler-Jarvis, Inc. and KS Aluminum Technologie AG, and
(2) Hutchinson/Kingston-Warren LLC, a Delaware limited liability company formed
by Kingston-Warren and Hutchinson SA.
"Permitted Liens" means:
(1) liens securing our senior credit facility and the notes as
permitted under the indenture;
(2) liens on the assets of Harvard or any of the subsidiary guarantors
to secure Hedging Obligations with respect to Indebtedness under any Credit
Facility permitted by the indenture to be incurred;
(3) liens on property of a person existing at the time such person is
merged into or consolidated with Harvard or any Restricted Subsidiary of
Harvard; provided that such liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
assets other than those of the person merged into or consolidated with
Harvard;
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(4) liens on property existing at the time of acquisition thereof by
Harvard or any Restricted Subsidiary of Harvard, provided that such liens
were in existence prior to the contemplation of such acquisition and only
extend to the property so acquired;
(5) liens existing on November 24, 1998, provided that any liens in
existence on November 24, 1998 that are liens of pre-petition claims,
arising from the filing of a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code of Harvard and certain of its
subsidiaries, or liens to secure the credit facilities which existed while
Harvard was in bankruptcy, which liens will not for any reason have been
extinguished and released by the November 24, 1998, shall not be a
"Permitted Lien" within the meaning of this definition;
(6) liens to secure any Permitted Refinancing Indebtedness incurred to
refinance any Indebtedness secured by any lien referred to in the foregoing
clauses (1) through (5), as the case may be, at the time the original lien
became a Permitted Lien;
(7) liens in favor of the Company or any Restricted Subsidiary that is
a guarantor;
(8) liens incurred in the ordinary course of business, including those
incurred in connection with trade credit in the ordinary course of
business, of Harvard or any Restricted Subsidiary of Harvard with respect
to obligations that do not exceed $5.0 million in the aggregate at any one
time outstanding and that (a) are not incurred in connection with the
borrowing of money or the obtaining of advances or credit, other than trade
credit in the ordinary course of business which shall be a "Permitted Lien"
within the meaning of this definition, and (b) do not in the aggregate
materially detract from the value of the property or materially impair the
use thereof in the operation of business by Harvard or such Restricted
Subsidiary;
(9) liens to secure the performance of statutory obligations, surety
or appeal bonds, performance bonds, deposits to secure the performance of
bids, trade contracts, government contracts, leases, letters of credit or
licenses or other obligations of a like nature incurred in the ordinary
course of business, including landlord liens on leased properties;
(10) liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently prosecuted,
provided that any reserve or other appropriate provision as shall be
required to conform with generally accepted accounting principles shall
have been made therefor;
(11) liens to secure Indebtedness, including obligations under capital
leases and purchase money obligations, permitted by clauses (3) or (4) of
the second paragraph of the covenant described above under the caption
"Incurrence of Indebtedness and Issuance of Preferred Stock" covering only
the assets acquired with such Indebtedness;
(12) carriers', warehousemen's, mechanics', landlords' materialmen's,
repairmen's or other like liens arising in the ordinary course of business
in respect of obligations not overdue for a period in excess of 60 days or
which are being contested in good faith by appropriate proceedings promptly
instituted and diligently prosecuted; provided that any reserve or other
appropriate provision as shall be required to conform with generally
accepted accounting principles shall have been made therefor;
(13) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects incurred, or leases or
subleases granted to others, in the ordinary course of business, which do
not in any case materially detract from the value of the property subject
thereto or do not interfere with or adversely affect in any material
respect the ordinary conduct of the business of Harvard and its Restricted
Subsidiaries taken as a whole;
(14) liens in favor of customs and revenue authorities to secure
payment of customs duties in connection with the importation of goods in
the ordinary course of business and other similar liens arising in the
ordinary course of business;
(15) leases or subleases granted to third persons not interfering with
the ordinary course of business of Harvard or any of its Restricted
Subsidiaries;
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(16) liens, other than any lien imposed by ERISA or any rule or
regulation promulgated thereunder, incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance, and other types of social security;
(17) other deposits made in the ordinary course of business to secure
liability, including letters of credit, to insurance carriers in connection
with insurance policies that our senior credit facility and the indenture
require Harvard and its subsidiaries to carry;
(18) any interest or title of a lessor or sublessor under any
operating lease;
(19) any attachment or judgment lien not constituting an event of
default under clause (7) of the first paragraph of the section described
above under the caption "Events of Default and Remedies";
(20) liens securing the Trim Trends Canada Ltd.'s revolving loan
facility with Canadian Imperial Bank of Commerce, as permitted under the
indenture; and
(21) liens to secure Indebtedness permitted by clause (ix) of the
second paragraph of the covenant entitled "Incurrence of Indebtedness and
Issuance of Preferred Stock."
"Permitted Refinancing Indebtedness" means any Indebtedness of Harvard or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of Harvard or any of its Restricted Subsidiaries, other than
intercompany Indebtedness; provided that:
(1) the principal amount, or accreted value, if applicable, of such
Permitted Refinancing Indebtedness does not exceed the principal amount of,
or accreted value, if applicable, plus premium, accrued and unpaid interest
on, any Indebtedness so extended, refinanced, renewed, replaced, defeased
or refunded, plus the amount of reasonable expenses incurred in connection
therewith;
(2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the notes, such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the
notes on terms at least as favorable to the noteholders as those contained
in the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by Harvard or a Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Reference Treasury Dealer" means Lehman Brothers Inc. and three other
primary U.S. Government securities dealers in New York City, each, a "Primary
Treasury Dealer," appointed by the trustee in consultation with Harvard;
provided, however, that if any of the foregoing shall cease to be a Primary
Treasury Dealer, Harvard shall substitute therefor another Primary Treasury
Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the trustee, of the bid and asked prices for the Comparable Treasury Issue,
expressed in each case as a percentage of its principal amount, quoted in
writing to the trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a person means any subsidiary of that person
that is not an Unrestricted Subsidiary; provided that, on November 24, 1998, all
subsidiaries of Harvard shall be Restricted Subsidiaries of Harvard.
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"Treasury Rate" means, with respect to any redemption date for the notes,
(1) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published statistical
release designated "H.15(519)" or any successor publication which is published
weekly by the Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Comparable Treasury Issue, if no maturity is
within three months before or after September 1, 2003, yields for the two
published maturities most closely corresponding to the Comparable Treasury Issue
shall be determined and the Treasury Rate shall be interpolated or extrapolated
from such yields on a straight line basis, rounding to the nearest month, or
(2) if such release, or any successor release, is not published during the week
preceding the calculation date or does not contain such yields, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable Treasury Issue,
expressed as a percentage of its principal amount, equal to the Comparable
Treasury Price for such redemption date. The Treasury Rate shall be calculated
on the third Business Day preceding the redemption date.
"Unrestricted Subsidiary" means any subsidiary of Harvard that is
designated by the Board of Directors as an Unrestricted Subsidiary through a
Board Resolution, but only if that such subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt,
(2) is not party to any agreement, contract, arrangement or
understanding with Harvard or any Restricted Subsidiary of Harvard unless
the terms of any such agreement, contract, arrangement or understanding are
no less favorable to Harvard or such Restricted Subsidiary than those that
might be obtained at the time from persons who are not affiliates of
Harvard,
(3) is a person with respect to which neither Harvard nor any of its
Restricted Subsidiaries has any direct or indirect obligation (x) to
subscribe for additional equity interests or (y) to maintain or preserve
such person's financial condition or to cause such person to achieve any
specified levels of operating results, and
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of Harvard or any of its Restricted
Subsidiaries; provided that, notwithstanding the above, Harvard and its
Restricted Subsidiaries may make payments to, provide credit or credit
support for or make investments in Unrestricted Subsidiaries to the extent
that such payments or investments are in compliance with the covenant
entitled "Restricted Payments."
"Voting Stock" of any person as of any date means the capital stock of such
person that is at the time entitled to vote in the election of the Board of
Directors of such person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (1) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years, calculated to the nearest one-twelfth, that will elapse between
such date and the making of such payment, by (2) the then outstanding principal
amount of such Indebtedness.
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DESCRIPTION OF INDEBTEDNESS UNDER THE SENIOR CREDIT FACILITY
The following summary of the material terms and provisions of the senior
credit facility does not purport to be complete. For a complete understanding at
the senior credit facility, you should read the entire senior credit facility, a
copy of which was filed as an exhibit to the exchange offer registration
statement and is available as set forth under the caption "Where You Can Find
More Information.".
Concurrently with the effectiveness of the plan of reorganization and the
consummation of the Offering, Harvard entered into the senior credit facility
with a group of lenders led by General Electric Capital Corporation, as
administrative agent, Lehman Brothers Inc., as arranger, and Lehman Brothers
Commercial Paper Inc., as syndication agent. The senior credit facility provides
for up to $50.0 million in term loan borrowings and up to $65.0 million of
revolving credit borrowings.
TERM LOAN
The term loan portion of the senior credit facility will mature on
September 30, 2002, and will be amortized in equal quarterly installments of
$250,000, with the balance of $46,250,000 to be paid on the maturity date.
REVOLVING CREDIT
The revolving credit portion of the senior credit facility will expire on
the third anniversary of the effective date and will be available on a revolving
basis prior to its expiration, provided that the sum of (1) the outstanding
amount of all direct borrowings under the revolving credit facility plus
(2) the outstanding amounts of all undrawn letters of credit under the revolving
credit facility may not exceed the borrowing base. The borrowing base is an
amount calculated as the sum of (1) 85% of eligible accounts receivable, plus
(2) 60% of eligible finished goods and raw materials inventory, plus (3) 33% of
eligible tooling inventory, up to $2 million, plus (4) 25% of eligible
work-in-process inventory, in each case less any reasonable reserves as required
by the administrative agent. Further, total inventory-based commitments cannot
exceed $20 million. The ability to meet the operating cash requirements of
Harvard could be impaired if Harvard fails to meet any of the covenants
contained in the senior credit facility and such noncompliance is not cured by
Harvard or waived by the lenders.
PREPAYMENT
Harvard is required, subject to specific exceptions, to prepay outstanding
borrowings from the net proceeds of asset sales, equity and debt issuances and
100% of annual excess cash flow, provided, however, that under specified
circumstances Harvard may use up to 50% of annual excess cash flow to redeem or
prepay the notes in an amount not to exceed $3 million in any fiscal year and
$5 million in the aggregate. Borrowings under the senior credit facility are
secured by a perfected first priority security interest in the collateral that
secures, on a second priority basis, the notes, in each case subject to existing
and permitted liens.
INTEREST
Funds borrowed under the senior credit facility bear interest at either
(1) the base rate plus the applicable margin or (2) the Eurodollar Rate plus the
Applicable Margin. "Base rate" means the highest of (1) the rate of interest
publicly announced by Bankers Trust Company as its prime rate then in effect,
(2) the secondary market rate for three-month certificates of deposit, adjusted
for statutory reserve requirements, plus 1% and (3) the federal funds effective
rate from time to time plus 0.5%. "Applicable margin" means (1) 2.25% in the
case of base rate term loans, (2) 3.50% in the case of Eurodollar term loans,
(3) 2.125% in the case of base rate loans which are revolving credit loans and
(4) 3.375% in the case of Eurodollar loans which are revolving credit loans.
"Eurodollar rate" means the rate, adjusted for statutory reserve requirements
for eurocurrency liabilities, at which eurodollar deposits for one, two, three
or six months, as selected by Harvard, are offered in the interbank market.
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<PAGE>
RESTRICTIONS
The senior credit facility restricts, among other things and subject to
specified exceptions, Harvard's ability:
o to incur additional indebtedness, except for extensions or refundings of
specified permitted indebtedness;
o to merge, consolidate, liquidate, dissolve, sell or transfer all or
substantially all of its assets or make other similar fundamental
changes;
o to sell assets outside the ordinary course of business, other than the
assets relating to the business of specified subsidiaries under the
senior credit facility, in excess of amounts set forth therein in any
fiscal year;
o to guarantee or invest in, or make loans or advances to, other persons or
entities,
o to declare or pay dividends or make other distributions with respect to
Harvard's equity interests;
o to engage in specified transactions with affiliates and holders of its
equity interests; and
o to redeem or prepay the notes.
The senior credit facility also requires Harvard to maintain financial ratios
relating to leverage, interest coverage and fixed charge coverage. In addition,
the senior credit facility imposes restrictions on capital expenditures of
Harvard.
MAINTENANCE OF CONSOLIDATED LEVERAGE RATIO
While the senior credit facility is outstanding, Harvard and its
subsidiaries will not directly or indirectly permit the consolidated leverage
ratio for any fiscal quarter to exceed the ratio set forth below opposite that
fiscal quarter:
<TABLE>
<CAPTION>
CONSOLIDATED
FISCAL QUARTER LEVERAGE RATIO
- -------------- --------------
<S> <C>
December 31, 1998......................................... 4.00
March 31, 1999............................................ 4.00
June 30, 1999............................................. 4.00
September 30, 1999........................................ 4.00
December 31, 1999......................................... 3.75
March 31, 2000............................................ 3.50
June 30, 2000............................................. 3.25
September 30, 2000........................................ 2.75
December 31, 2000......................................... 2.75
March 31, 2001............................................ 2.50
June 30, 2001............................................. 2.25
September 30, 2001........................................ 2.00
December 31, 2001......................................... 2.00
March 31, 2002............................................ 2.00
June 30, 2002............................................. 1.75
September 30, 2002........................................ 1.50
December 31, 2002......................................... 1.50
March 31, 2003............................................ 1.50
</TABLE>
Consolidated leverage ratio is the ratio of:
o Consolidated total debt
to
o Consolidated cash flow from operations.
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<PAGE>
Consolidated total debt includes:
o Money borrowed;
o Notes, bonds or debentures;
o Guarantee obligations; and
o Other obligations typically included in the definition of
indebtedness found in credit agreements, such as, capital lease
obligations and obligations under a letter of credit or similar
facility.
Consolidated cash flow from operations is consolidated net income for
accounting purposes, plus:
o Interest;
o Income taxes;
o Depreciation;
o Amortization;
o Other non-cash items; and
o Extraordinary losses or expenses.
For purposes of determining the ratio described above for the fiscal
quarters ending December 31, 1998, March 31, 1999 and June 30, 1999,
consolidated net income for the relevant period is deemed to equal consolidated
net income for such fiscal quarter multiplied by 4, 2 and 4/3, respectively.
MAINTENANCE OF CONSOLIDATED INTEREST COVERAGE RATIO
While the senior credit facility is outstanding, Harvard and its
subsidiaries will not directly or indirectly permit the consolidated interest
coverage ratio for any fiscal quarter to be less than the ratio set forth below
opposite that fiscal quarter:
<TABLE>
<CAPTION>
CONSOLIDATED
INTEREST
FISCAL QUARTER COVERAGE RATIO
- -------------- --------------
<S> <C>
December 31, 1998......................................... 2.25
March 31, 1999............................................ 2.25
June 30, 1999............................................. 2.25
September 30, 1999........................................ 2.25
December 31, 1999......................................... 2.50
March 31, 2000............................................ 2.75
June 30, 2000............................................. 3.00
September 30, 2000........................................ 3.50
December 31, 2000......................................... 3.50
March 31, 2001............................................ 3.50
June 30, 2001............................................. 3.75
September 30, 2001........................................ 4.00
December 31, 2001......................................... 4.00
March 31, 2002............................................ 4.00
June 30, 2002............................................. 4.00
September 30, 2002........................................ 4.00
December 31, 2002......................................... 4.00
March 31, 2003............................................ 4.00
</TABLE>
Consolidated interest coverage ratio is the ratio of:
o Consolidated cash flow from operations
to
o Consolidated interest expense, which includes all cash or accrued
interest expense with respect to the consolidated total debt.
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<PAGE>
MAINTENANCE OF CONSOLIDATED FIXED CHARGE COVERAGE RATIO
While the senior credit facility is outstanding, Harvard and its
subsidiaries will not directly or indirectly permit the consolidated fixed
charge coverage ratio for any fiscal quarter to be less than the ratio set forth
below opposite that fiscal quarter:
<TABLE>
<CAPTION>
CONSOLIDATED
FIXED CHARGE
FISCAL QUARTER COVERAGE RATIO
- -------------- --------------
<S> <C>
September 30, 1999........................................ 1.10
December 31, 1999......................................... 1.25
March 31, 2000............................................ 1.25
June 30, 2000............................................. 1.25
September 30, 2000........................................ 1.25
December 31, 2000......................................... 1.50
March 31, 2001............................................ 1.75
June 30, 2001............................................. 2.00
September 30, 2001........................................ 2.75
December 31, 2001......................................... 1.00
March 31, 2002............................................ 1.00
June 30, 2002............................................. 1.00
September 30, 2002........................................ 1.00
December 31, 2002......................................... 1.00
March 31, 2003............................................ 1.00
</TABLE>
Consolidated fixed charge coverage ratio is the ratio of:
o Consolidated cash flow from operations; plus
-- The net cash proceeds from selling the real and personal assets
of Harvard or its subsidiaries; minus
-- The cash amount actually paid by Harvard or its subsidiaries to
purchase, lease, repair and improvement the assets sold.
to
o Consolidated interest expense; plus
o Scheduled payments under the senior credit facility.
EVENTS OF DEFAULT
Events of default under the senior credit facility include, among other
things:
o the failure by Harvard to pay principal, interest or any other amount due
thereunder when due;
o the failure of Harvard or any of its subsidiaries to pay any principal,
interest or other amount due on other indebtedness, including capitalized
leases, in excess of an aggregate amount of $1,000,000, or the occurrence
of any other breach, default or event of default under such other
indebtedness that would cause or permit acceleration thereof in excess of
an aggregate amount of $1,000,000;
o a breach by Harvard of any covenant or agreement under the senior credit
facility, following expiration of any applicable grace period;
o the material inaccuracy of any representation or warranty made by Harvard
under the senior credit facility;
o judgments against Harvard in excess of $1,000,000;
o specified changes of control;
o specified ERISA events; and
o acts of bankruptcy, insolvency or dissolution.
Under the terms of the indenture with respect to the notes offered hereby, an
event of default under the senior credit facility will result in an event of
default under the indenture.
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<PAGE>
COLLATERAL
Under the senior credit facility, Harvard, the other borrowers under the
senior credit facility and the administrative agent enter into a collateral
agreement. The obligations of Harvard under the senior credit facility are
secured, subject to the terms of the loan collateral agreement by a first
priority security interest in substantially all the assets of Harvard and the
subsidiary guarantors and all proceeds thereof. See "Description of the
Notes--Collateral" and "Description of the Notes--Intercreditor Agreement."
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion addresses the material United States federal
income tax consequences to U.S. Holders, as defined below, of participating in
the exchange offer. Except where noted, it deals only with new notes issued
under the exchange offer and held as capital assets and does not deal with
special situations, such as those of dealers in securities or currencies,
traders in securities that elect to mark to market, financial institutions,
insurance companies, tax-exempt organizations or holders whose "functional
currency" is not the U.S. dollar or who hold the new notes as a hedge or part of
a straddle or conversion transaction. Furthermore, the discussion below is based
upon the provisions of the Internal Revenue Code, and U.S. Treasury Department
Regulations, existing rulings and judicial decisions as of the date hereof, and,
at any time and without prior notice, such authorities may be repealed, revoked
or modified so as to result in federal income tax consequences different from
those discussed below.
A U.S. Holder means a holder of a note that is a citizen or resident of the
United States, a corporation or partnership created or organized in or under the
laws of the United States or any political subdivision thereof, an estate the
income of which is subject to United States federal income taxation regardless
of its source, or a trust if a United States court can exercise primary
supervision over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust, or
any other person whose worldwide income or gain is otherwise subject to United
States federal income taxation on a net income basis.
The following summary does not address the United States federal income tax
consequences applicable to holders other than U.S. Holders.
U.S. Holders should consult their own tax advisors concerning the federal
income tax consequences with respect to an exchange of old notes for new notes
under the exchange offer and with respect to the ownership and disposition of
new notes as well as consequences arising under the laws of any other taxing
jurisdiction, including state, local or foreign jurisdictions.
THE EXCHANGE OFFER
The exchange of old notes for new notes under the exchange offer will be
treated as a continuation of the corresponding old notes because the terms of
the new notes are not materially different from the terms of the old notes
pursuant to Section 1001 of the Internal Revenue Code and the Treasury
Regulations thereunder. Accordingly, such exchange will not constitute a taxable
event to U.S. Holders and, therefore,
o no gain or loss will be realized by U.S. Holders upon receipt of a new
note;
o the holding period of the new note will include the holding period of the
old note exchanged therefor; and
o the adjusted tax basis of the new note will be the same as the adjusted
tax basis of the old note exchanged therefore immediately before the
exchange.
TAX CHARACTERIZATION OF THE NOTES
Harvard intends to treat the new notes as indebtedness for federal income
tax purposes. Such treatment is not binding on the Internal Revenue Service.
Accordingly, there can be no assurance that the Internal Revenue Service would
not challenge such treatment or that a court would not hold that the new notes
should be characterized, in whole or in part, as equity for federal income tax
purposes. The following discussion assumes that the new notes will be respected
as indebtedness of Harvard for federal income tax purposes.
69
<PAGE>
TAXATION OF INTEREST ON THE NOTES
A U.S. Holder will include in income, for each taxable year of such U.S.
Holder, the daily portion of the accrual of interest on the new notes under the
"noncontingent bond method" of the original issue discount regulations. Under
the noncontingent bond method, interest will accrue on the new notes based upon
the fixed interest and Harvard's determination of the projected amount of cash
flow participation interest over the term of the new notes based on the
"comparable yield" of the new notes irrespective of whether such projected
amount is actually paid. In order to determine the income of each U.S. Holder,
the U.S. Treasury Department Regulations require Harvard to determine, as of the
issue date, the comparable yield for the new notes. Because the exchange of old
notes for new notes is not a taxable exchange, the issue date of the new notes
is the same as the issue date of the old notes. The comparable yield for the new
notes is the yield at which Harvard would have issued a fixed rate debt
instrument with terms and conditions similar to those of the new notes. Harvard
is required to provide the comparable yield to owners and, solely for tax
purposes, is also required to provide to each U.S. Holder a projected payment
schedule, which is a hypothetical schedule for payments on the new notes. The
projected payment schedule must produce the comparable yield over the life of
the new notes. Harvard's comparable yield and projected payment schedule will be
available from the Corporate Finance Department of Harvard (Mail address: 3
Werner Way, Lebanon, New Jersey, 08833; via facsimile transmission
908-236-0071).
The comparable yield and projected payment schedule are used to determine
accruals of interest for tax purposes only and are not assurances by Harvard
with respect to the actual yield of, or payments to be made in respect of, a new
note. In general, Harvard's determination will be respected by the Internal
Revenue Service unless unreasonable. Further, the comparable yield and the
projected payment schedule do not necessarily represent Harvard's expectations
regarding such yield or the amount of payments with respect to the new notes,
which may be less than the projected payments.
For purposes of reporting the accrual of original issue discount on the new
notes, each U.S. Holder will be bound by Harvard's determination of the payment
schedule. However, if a U.S. Holder believes that the projected payment schedule
provided by Harvard is unreasonable, a U.S. Holder must set its own projected
payment schedule and explicitly disclose on the U.S. Holder's federal income tax
return the use of such schedule and the reason therefor.
Under the noncontingent bond method, if the cash flow participation
interest payable for any period differs from the amount projected to be paid as
of November 24, 1998, the amount of income includible by each U.S. Holder for
that period will be subject to a positive or negative adjustment, as
appropriate. Any net negative adjustment for the taxable year below zero will
constitute an ordinary loss to such U.S. Holder up to the amount of prior
interest accruals and any excess will be carried forward to offset future
interest accruals during subsequent periods with respect to the new notes. At
maturity, any remaining negative adjustment will give rise to an ordinary loss
to such U.S. Holder on redemption or retirement of the new note.
An issuance of pay-in-kind notes would not be considered an interest
payment made on the new notes at the time of such issuance and thus would result
in a negative adjustment to the amount of interest accrued by the U.S. Holder in
accordance with the projected payment schedule. The pay-in-kind notes would be
aggregated with, and would have the same issue date as, the new notes.
OPTIONAL REDEMPTION
Harvard has the option to redeem the new notes at any time prior to
September 1, 2001 at a redemption price equal to 100% of the principal amount
thereof plus the applicable prepayment premium, if any, plus, up to the amount
not included in the applicable prepayment premium, accrued and unpaid interest
and liquidated damages under the registration rights agreement, if any, and on
or after September 1, 2001 at the redemption price set forth herein plus accrued
and unpaid interest and applicable liquidation damages, if any. See "Description
of The Notes--Optional Redemption." Under the original issue discount
regulations, Harvard is presumed to exercise any option that minimizes the
yield-to-maturity of the new notes. Because the exercise of an option to redeem
will reduce the yield-to-maturity of the new notes, an option that minimizes the
yield to maturity will be presumed exercised for purposes of computing the
accrual of original issue discount on the new notes. If, contrary to such
presumption, Harvard does not exercise its option to redeem the new notes, then,
solely for purposes of computing subsequent accruals of original issue discount,
the new notes
70
<PAGE>
shall be treated as retired and reissued on the presumed redemption date,
resulting in a redetermination of the yield to maturity and original issue
discount accruals.
If Harvard exercises such rights to redeem the new notes, the tax treatment
of the redemption would be governed by the rules for dispositions generally. See
"Disposition of the Notes."
DISPOSITION OF THE NOTES
Generally, any sale or redemption of the new notes or pay-in-kind notes, if
any, will result in taxable gain or loss equal to the difference between the
amount of cash or other property received and the U.S. Holder's adjusted tax
basis in the new notes or pay-in-kind notes sold, redeemed or otherwise disposed
of. For purposes of determining gain or loss on the sale, redemption or other
disposition of a new note or pay-in-kind note, if any, a U.S. Holder's aggregate
adjusted tax basis in the new notes and any pay-in-kind notes will equal the
adjusted tax basis of the old notes, increased by the interest previously
accrued on the new notes, based upon Harvard's determination, as of the issue
date, of the projected payments, and decreased by the amount of any prior
payments of coupon interest and the projected amount of any prior payments of
cash flow participation interest. For purposes of computing adjustments to the
tax basis of the new notes, the projected payments of cash flow participation
interest on the new notes will be treated as actual payments on the new notes.
For purposes of calculating gain or loss on the redemption of any pay-in-kind
note, the U.S. Holder's adjusted tax basis in any such pay-in-kind note redeemed
will equal that proportion of the U.S. Holder's aggregate adjusted tax basis in
the new notes on the date of the redemption that the principal amount of the
redeemed pay-in-kind note bears to the aggregate amount of the principal amount
of the pay-in-kind notes and new notes held by the U.S. Holder. In general, any
gain upon a sale, redemption or other disposition of a new note or pay-in-kind
note, if any, will be treated as interest income, rather than capital gain, and
any loss, except with respect to any remaining negative adjustment as described
above under "Taxation of Interest on the Notes," will be treated as a capital
loss.
BACKUP WITHHOLDING
A U.S. Holder may be subject to backup withholding at a 31 percent rate
with respect to payments received with respect to the new notes. This
withholding generally applies only if the U.S. Holder
o fails to furnish his or her social security or other taxpayer
identification number ("TIN");
o furnishes an incorrect TIN;
o is notified by the IRS that he or she has failed to report payments of
interest or dividends and the IRS has notified Harvard that he or she is
subject to backup withholding; or
o fails, under specified circumstances, to provide a certified statement,
signed under penalty of perjury, that the TIN provided is his or her
correct number and that he or she is not subject to backup withholding.
Any amount withheld from a payment to a U.S. Holder under the backup
withholding rules is allowable as a credit against such U.S. Holder's federal
income tax liability, provided that the required information is furnished to the
IRS. Some U.S. Holders may not be subject to backup withholding. U.S. Holders
should consult their tax advisors as to their qualification for exemption from
backup withholding and the procedure for obtaining such an exemption.
PLAN OF DISTRIBUTION
Each holder desiring to participate in the exchange offer will be required
to represent, among other things, that (1) it is not an "affiliate", as defined
in Rule 405 of the Securities Act, of Harvard, (2) it is not engaged in, and
does not intend to engage in, and has no arrangement or understanding with any
person to participate in, a distribution of the new notes, and (3) it is
acquiring the new notes in the ordinary course of its business. A restricted
holder will not be able to participate in the exchange offer, and may only sell
its old notes under a registration statement containing the selling
securityholder information required by Item 507 of Regulation S-K of the
Securities Act, or under an exemption from the registration requirement of the
Securities Act.
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<PAGE>
Each participating broker-dealer who holds old notes that were acquired for
its own account as a result of market-making activities or other trading
activities, other than old notes acquired directly from Harvard, may exchange
such old notes under the exchange offer; however, such participating
broker-dealer may be deemed to be an "underwriter" within the meaning of the
Securities Act and must, therefore, deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of the new
notes received by the broker-dealer in the exchange offer, which prospectus
delivery requirement may be satisfied by the delivery by such broker-dealer of
the prospectus contained in the exchange offer registration statement.
Based upon interpretations by the staff of the SEC, Harvard believes that
new notes issued under the exchange offer to participating broker-dealers may be
offered for resale, resold, and otherwise transferred by a participating
broker-dealer upon compliance with the prospectus delivery requirements, but
without compliance with the registration requirements, of the Securities Act.
Harvard has agreed that for a period of 180 days following the date on which the
exchange offer registration statement is declared effective, they will make this
prospectus available to participating broker-dealers for use in connection with
any such resale. During such period of time, delivery of this prospectus, as it
may be amended or supplemented, will satisfy the prospectus delivery
requirements of a participating broker-dealer engaged in market making or other
trading activities.
Based upon interpretations by the staff of the SEC, Harvard believes that
new notes issued under the exchange offer may be offered for resale, resold and
otherwise transferred by a holder thereof, other than a participating
broker-dealer, without compliance with the registration and prospectus delivery
requirements of the Securities Act.
Harvard will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by participating broker-dealers for their own
account under the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the new notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
participating broker-dealer and/or the purchasers of any such new notes. Any
participating broker-dealer that resells new notes that were received by it for
its own account under the exchange offer and any broker or dealer that
participates in a distribution of such new notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of new notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The letter of transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a participating broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
Harvard has agreed to pay all expenses incidental to the exchange offer
other than commissions and concessions of any brokers or dealers and will
indemnify holders of the notes, including any broker-dealers, against specified
liabilities, including liabilities under the Securities Act, as set forth in the
registration rights agreement.
VALIDITY OF THE NOTES
The validity of the new notes will be passed upon for Harvard by
Sonnenschein Nath & Rosenthal, New York, New York.
EXPERTS
The audited consolidated financial statements of Harvard for the year ended
September 30, 1998 incorporated by reference herein, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said report. Reference is made to
said report, which includes an explanatory paragraph with respect to Harvard's
ability to continue as a going concern as discussed in Note 1 to the
consolidated financial statements.
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<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information required by the Securities Exchange Act of 1934, as amended, the
SEC. You may read and copy any document we file at the SEC's public reference
rooms located at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and at Seven World Trade Center, Suite 1300, New York, New York
10048. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Copies of such material can be obtained by mail from the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 at prescribed rates. Our filings with the SEC are also
available to the public on the SEC's Internet web site at http://www.sec.gov.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and information that we file with the SEC later
will automatically update and supersede this information. The following
documents filed by Harvard and any future filings made by us with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act prior to the
termination of the offering are incorporated by reference in this prospectus:
o Harvard's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998, including all subsequently filed amendments
(Commission File No. 0-21362);
o Harvard's Quarterly Report on Form 10-Q for the quarterly period ended
January 3, 1999, including all subsequently filed amendments (Commission
File No. 0-21362);
o Harvard's Quarterly Report on Form 10-Q for the quarterly period ending
March 31, 1999 (Commission File No. 0-21362);
o Harvard's Current Reports on Form 8-K filed on October 7, 1998,
October 30, 1998, December 3, 1998 and March 25, 1999 (Commission File
No. 0-21362).
Holders of securities of Harvard may request a copy of these filings, at no
cost, by writing or telephoning us at: Harvard Industries, Inc., 3 Werner Way,
Lebanon, NJ 08833, Attn: Phyllis Morais, Telephone: (908) 437-4157.
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<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION OR TO MAKE ANY
REPRESENTATION TO YOU THAT IS NOT CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED. YOU SHOULD NOT UNDER ANY CIRCUMSTANCES ASSUME THAT THE INFORMATION IN
THIS PROSPECTUS IS CORRECT ON ANY DATE AFTER THE DATE OF THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
About This Prospectus.......................... ii
Prospectus Summary............................. 1
Risk Factors................................... 7
Forward-Looking Statements..................... 17
Use Of Proceeds................................ 17
Pro Forma Condensed Consolidated Statement of
Operations for the Year Ended September 30,
1998......................................... 18
Capitalization................................. 19
Selected Historical Consolidated Financial And
Operating Data............................... 19
The Exchange Offer............................. 22
Description Of The Notes....................... 31
Description Of Indebtedness Under The Senior
Credit Facility.............................. 65
Material Federal Income Tax Consequences....... 69
Plan Of Distribution........................... 71
Validity Of The Notes.......................... 72
Experts........................................ 72
Where You Can Find More Information............ 73
Documents Incorporated By Reference............ 73
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$25,000,000
OFFER TO EXCHANGE 14 1/2% SENIOR
NOTES DUE 2003
THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933
FOR OUTSTANDING 14 1/2% SENIOR
NOTES DUE 2003
------------------------------
P R O S P E C T U S
DATED , 1999
------------------------------
HARVARD
INDUSTRIES, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Generally, Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL") permits a corporation to indemnify certain persons made a
party to an action, by reason of the fact that such 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 or enterprise. In the case of an action by or in the right of the
corporation, no indemnification may be made in respect of any matter as to which
such person was adjudged liable for negligence or misconduct in the performance
of such person's duty to the corporation unless the Delaware Court of Chancery
or the court in which such action was brought determines that despite the
adjudication of liability such person is fairly and reasonably entitled to
indemnity for proper expenses. To the extent such person has been successful in
the defense of any matter, such person shall be indemnified against expenses
actually and reasonably incurred by him.
Section 102(b)(7) of the DGCL enables a Delaware corporation to include a
provision in its certificate of incorporation limiting a director's liability to
the corporation or its stockholders for monetary damages for breaches of
fiduciary duty as a director. Harvard's Amended and Restated Certificate of
Incorporation and Bylaws that were adopted under the plan of reorganization
provide for indemnification of its officers and directors to the full extent
permitted under Delaware law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -----------
<S> <C> <C>
1 * -- Purchase Agreement by and among the Registrant and the Initial Purchasers.
2.1* -- Plan of Reorganization and related Disclosure Statement, filed with the U.S. Bankruptcy Court for
the District of Delaware on July 10, 1998 (incorporated by reference to Exhibits 99.1 and 99.2 to
the Registrant's Form 8-K filed with the Commission on July 24, 1998 (Commission File No.
001-01044)).
2.2* -- First Amended and Modified Consolidated Plan of Reorganization dated August 19, 1998, filed with
the U.S. Bankruptcy Court for the District of Delaware on August 25, 1998 (incorporated by
reference to Exhibit 2.1 to the Registrant's Form 8-K filed with the Commission on October 30, 1998
(Commission File No. 001-01044)).
3.1(a)* -- Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1(a) to
the Registrant's Form 10-K filed with the Commission on January 13, 1999 (Commission File
No. 0-21362)).
3.1(b)* -- Certificate of Merger of the Registrant (incorporated by reference to Exhibit 3.1(b) to the
Registrant's Form 10-K filed with the Commission on January 13, 1999 (Commission File
No. 0-21362)).
3.2* -- By-laws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Form 10-K
filed with the Commission on January 13, 1999 (Commission File No. 0-21362)).
4.1* -- Indenture (including the Form of 14 1/2% Senior Secured Note due September 1, 2003), dated as of
November 24, 1998 between the Registrant, the subsidiary guarantors and Norwest Minnesota Bank,
National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Registrant's Form
10-K filed with the Commission on January 13, 1999 (Commission File No. 0-21362)).
5.1* -- Opinion of Sonnenschein Nath & Rosenthal.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -----------
<S> <C> <C>
10.1* -- Settlement Agreement dated as of October 15, 1998, by and among the Registrant, certain of its
subsidiaries and the PBGC (incorporated by reference to Exhibit 10.1 to the Registrant's Form 10-K
filed with the Commission on January 13, 1999 (Commission File No. 0-21362)).
10.2* -- Registration Rights Agreement, dated as of November 23, 1998, by and among the Registrant and
Lehman Brothers Inc., as Initial Purchaser (incorporated by reference to Exhibit 10.3 to the
Registrant's Form 10-K filed with the Commission on January 13, 1999 (Commission File
No. 0-21362)).
10.3* -- Credit Agreement, dated as of November 24, 1998, between the Registrant, its subsidiaries, General
Electric Capital Corporation, as Administrative Agent and the lenders party thereto (incorporated by
reference to Exhibit 10.4 to the Registrant's Form 10-K filed with the Commission on January 13,
1999 (Commission File No. 0-21362)).
10.4* -- Loan Collateral Agreement, dated as of November 24, 1998, by the Registrant in favor of General
Electric Capital Corporation, as Administrative Agent (incorporated by reference to Exhibit 10.5 to
the Registrant's Form 10-K filed with the Commission on January 13, 1999 (Commission File
No. 0-21362)).
10.5* -- Collateral Agreement, dated as of November 24, 1998, by the Registrant in favor of Norwest Bank
Minnesota, National Association, as Collateral Agent (incorporated by reference to Exhibit 10.6 to
the Registrant's Form 10-K filed with the Commission on January 13, 1999 (Commission File No.
0-21362)).
10.6* -- Warrant Agreement, dated as of November 24, 1998, between the Registrant and State Street Bank and
Trust Company, as Warrant Agent (incorporated by reference to Exhibit 10.7 to the Registrant's Form
10-K filed with the Commission on January 13, 1999 (Commission File No. 0-21362)).
10.7* -- Harvard Industries, Inc. Nonqualified ERISA Excess Benefit Plan (incorporated by reference to
Exhibit 10.20 to the Registrant's Registration Statement on Form S-1 filed with the Commission on
August 24, 1995 (File No. 33-96376)).
10.8* -- Harvard Industries, Inc. Nonqualified Additional Credited Service Plan (incorporated by reference
to Exhibit 10.21 to the Registrant's Registration Statement on Form S-1 filed with the Commission
on August 24, 1995 (File No. 33-96376)).
10.9* -- Harvard Industries, Inc. 1998 Stock Incentive Plan (incorporated by reference to Exhibit 10.10 to
the Registrant's Form 10-K filed with the Commission on January 13, 1999 (File No. 0-21362)).
12.1* -- Ratio of Earnings to Fixed Charges.
16 * -- Letter re change in certifying accountant (incorporated by reference to Exhibit 16.1 to Harvard's
Current Report on Form 8-K/A filed with the Commission October 7, 1998 (Commission File No.
001-01044)).
21 * -- List of subsidiaries of Harvard (incorporated by reference to Exhibit 21 to the Registrant's
Form 10-K filed with the Commission on January 13, 1999 (Commission File No. 0-21362)).
23.1** -- Consent of Arthur Andersen LLP, Independent Accountants.
23.2** -- Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.3* -- Consent of Sonnenschein Nath & Rosenthal (included in their opinion filed as Exhibit 5.1).
23.4* -- Consent of Norman Levy Associates, Inc., independent appraisers.
23.5* -- Consent of Chanin Kirkland Messina LLC, independent financial professionals.
24 * -- Powers of Attorney (contained in the signature pages hereto).
25 * -- Statement on Form T-1 of Eligibility of Trustee.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -----------
<S> <C> <C>
99.1** -- Form of Letter of Transmittal.
99.2** -- Form of Notice of Guaranteed Delivery.
99.3** -- Form of Letter to Clients.
99.4** -- Form of Letter to Nominees.
</TABLE>
- ------------------
* Previously filed.
** Filed herewith.
(b) Financial Statement Schedules.
None.
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 20 above, 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 Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the option of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(c) To include any material information with respect to the Plan of
Distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
II-3
<PAGE>
Provided, however, that paragraphs (1)(a) and (1)(b) above do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the registrant pursuant to section 13 or section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of this Registration Statement through the date
of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, 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 LEBANON, STATE OF NEW JERSEY, ON JUNE 14, 1999.
HARVARD INDUSTRIES, INC.
By: /s/ ROGER G. POLLAZZI
----------------------------------
Roger G. Pollazzi
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROGER G. POLLAZZI* Chairman of the Board and Chief Executive June 14, 1999
- ------------------------------------------ Officer (Principal Executive Officer)
Roger G. Pollazzi
/s/ THEODORE W. VOGTMAN* Executive Vice President and Chief Financial June 14, 1999
- ------------------------------------------ Officer (Principal Financial Officer)
Theodore W. Vogtman
/s/ KEVIN L.B. PRICE Vice President, Controller and Treasurer June 14, 1999
- ------------------------------------------ (Principal Accounting Officer)
Kevin L.B. Price
/s/ JON R. BAUER* Director June 14, 1999
- ------------------------------------------
Jon R. Bauer
/s/ THOMAS R. COCHILL* Director June 14, 1999
- ------------------------------------------
Thomas R. Cochill
Director
- ------------------------------------------
Raymond Garfield, Jr.
/s/ DONALD P. HILTY* Director June 14, 1999
- ------------------------------------------
Donald P. Hilty
/s/ GEORGE A. POOLE* Director June 14, 1999
- ------------------------------------------
George A. Poole
/s/ JAMES P. SHANAHAN, JR.* Director June 14, 1999
- ------------------------------------------
James P. Shanahan, Jr.
/s/ RICHARD W. VIESSER* Director June 14, 1999
- ------------------------------------------
Richard W. Viesser
*By: /s/ D. CRAIG BOWMAN June 14, 1999
-------------------------------------
D. Craig Bowman
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, 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 LEBANON, STATE OF NEW JERSEY, ON JUNE 14, 1999.
DOEHLER-JARVIS, INC.,
a Subsidiary of Harvard Industries,
Inc., as Guarantor
By: /s/ ROGER G. POLLAZZI
----------------------------------
Roger G. Pollazzi
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROGER G. POLLAZZI President (Principal Executive Officer) June 14, 1999
- ------------------------------------------
Roger G. Pollazzi
/s/ KEVIN L.B. PRICE Treasurer June 14, 1999
- ------------------------------------------ (Principal Financial Officer)
Kevin L.B. Price
/s/ KEVIN L.B. PRICE Treasurer June 14, 1999
- ------------------------------------------ (Principal Accounting Officer)
Kevin L.B. Price
/s/ GERALD G. TIGHE Director June 14, 1999
- ------------------------------------------
Gerald G. Tighe
/s/ D. CRAIG BOWMAN Director June 14, 1999
- ------------------------------------------
D. Craig Bowman
</TABLE>
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, 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 LEBANON, STATE OF NEW JERSEY, ON JUNE 14, 1999.
HARVARD TRANSPORTATION CORPORATION,
a Subsidiary of Harvard Industries,
Inc., as Guarantor
By: /s/ ROGER G. POLLAZZI
-----------------------------------
Roger G. Pollazzi
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROGER G. POLLAZZI President (Principal Executive Officer) June 14, 1999
- ------------------------------------------
Roger G. Pollazzi
/s/ KEVIN L.B. PRICE Treasurer (Principal Financial Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ KEVIN L.B. PRICE Treasurer (Principal Accounting Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ GERALD G. TIGHE Director June 14, 1999
- ------------------------------------------
Gerald G. Tighe
/s/ D. CRAIG BOWMAN Director June 14, 1999
- ------------------------------------------
D. Craig Bowman
</TABLE>
II-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, 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 LEBANON, STATE OF NEW JERSEY, ON JUNE 14, 1999.
DOEHLER-JARVIS GREENEVILLE, INC.,
a Subsidary of Harvard Industries,
Inc., as Guarantor
By: /s/ ROGER G. POLLAZZI
-----------------------------------
Roger G. Pollazzi
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROGER G. POLLAZZI President (Principal Executive Officer) June 14, 1999
- ------------------------------------------
Roger G. Pollazzi
/s/ KEVIN L.B. PRICE Treasurer (Principal Financial Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ KEVIN L.B. PRICE Treasurer (Principal Accounting Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ GERALD G. TIGHE Director June 14, 1999
- ------------------------------------------
Gerald G. Tighe
/s/ D. CRAIG BOWMAN Director June 14, 1999
- ------------------------------------------
D. Craig Bowman
</TABLE>
II-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, 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 LEBANON, STATE OF NEW JERSEY, ON JUNE 14, 1999.
POTTSTOWN PRECISION CASTING, INC.,
a Subsidiary of Harvard Industries,
Inc., as Guarantor
By: /s/ ROGER G. POLLAZZI
-----------------------------------
Roger G. Pollazzi
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROGER G. POLLAZZI President (Principal Executive Officer) June 14, 1999
- ------------------------------------------
Roger G. Pollazzi
/s/ KEVIN L.B. PRICE Treasurer (Principal Financial Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ KEVIN L.B. PRICE Treasurer (Principal Accounting Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ GERALD G. TIGHE Director June 14, 1999
- ------------------------------------------
Gerald G. Tighe
/s/ D. CRAIG BOWMAN Director June 14, 1999
- ------------------------------------------
D. Craig Bowman
</TABLE>
II-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, 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 LEBANON, STATE OF NEW JERSEY, ON JUNE 14, 1999.
DOEHLER-JARVIS TECHNOLOGIES, INC.,
a Subsidiary of Harvard Industries,
Inc., as Guarantor
By: /s/ ROGER G. POLLAZZI
-----------------------------------
Roger G. Pollazzi
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROGER G. POLLAZZI President (Principal Executive Officer) June 14, 1999
- ------------------------------------------
Roger G. Pollazzi
/s/ KEVIN L.B. PRICE Treasurer (Principal Financial Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ KEVIN L.B. PRICE Treasurer (Principal Accounting Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ GERALD G. TIGHE Director June 14, 1999
- ------------------------------------------
Gerald G. Tighe
/s/ D. CRAIG BOWMAN Director June 14, 1999
- ------------------------------------------
D. Craig Bowman
</TABLE>
II-10
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, 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 LEBANON, STATE OF NEW JERSEY, ON JUNE 14, 1999.
DOEHLER-JARVIS TOLEDO, INC.,
a Subsidiary of Harvard Industries,
Inc., as Guarantor
By: /s/ ROGER G. POLLAZZI
-----------------------------------
Roger G. Pollazzi
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROGER G. POLLAZZI President (Principal Executive Officer) June 14, 1999
- ------------------------------------------
Roger G. Pollazzi
/s/ KEVIN L.B. PRICE Treasurer (Principal Financial Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ KEVIN L.B. PRICE Treasurer (Principal Accounting Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ GERALD G. TIGHE Director June 14, 1999
- ------------------------------------------
Gerald G. Tighe
/s/ D. CRAIG BOWMAN Director June 14, 1999
- ------------------------------------------
D. Craig Bowman
</TABLE>
II-11
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, 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 LEBANON, STATE OF NEW JERSEY, ON JUNE 14, 1999.
HARMAN AUTOMOTIVE, INC.,
a Subsidiary of Harvard Industries,
Inc., as Guarantor
By: /s/ ROGER G. POLLAZZI
-----------------------------------
Roger G. Pollazzi
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROGER G. POLLAZZI President (Principal Executive Officer) June 14, 1999
- ------------------------------------------
Roger G. Pollazzi
/s/ KEVIN L.B. PRICE Treasurer (Principal Financial Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ KEVIN L.B. PRICE Treasurer (Principal Accounting Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ GERALD G. TIGHE Director June 14, 1999
- ------------------------------------------
Gerald G. Tighe
/s/ D. CRAIG BOWMAN Director June 14, 1999
- ------------------------------------------
D. Craig Bowman
</TABLE>
II-12
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, 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 LEBANON, STATE OF NEW JERSEY, ON JUNE 14, 1999.
HAYES-ALBION CORPORATION,
a Subsidiary of Harvard Industries,
Inc., as Guarantor
By: /s/ ROGER G. POLLAZZI
-----------------------------------
Roger G. Pollazzi
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROGER G. POLLAZZI President (Principal Executive Officer) June 14, 1999
- ------------------------------------------
Roger G. Pollazzi
/s/ KEVIN L.B. PRICE Treasurer (Principal Financial Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ KEVIN L.B. PRICE Treasurer (Principal Accounting Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ GERALD G. TIGHE Director June 14, 1999
- ------------------------------------------
Gerald G. Tighe
/s/ D. CRAIG BOWMAN Director June 14, 1999
- ------------------------------------------
D. Craig Bowman
</TABLE>
II-13
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, 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 LEBANON, STATE OF NEW JERSEY, ON JUNE 14, 1999.
THE KINGSTON-WARREN CORPORATION,
a Subsidiary of Harvard Industries,
Inc., as Guarantor
By: /s/ ROGER G. POLLAZZI
-----------------------------------
Roger G. Pollazzi
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROGER G. POLLAZZI President (Principal Executive Officer) June 14, 1999
- ------------------------------------------
Roger G. Pollazzi
/s/ KEVIN L.B. PRICE Treasurer (Principal Financial Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ KEVIN L.B. PRICE Treasurer (Principal Accounting Officer) June 14, 1999
- ------------------------------------------
Kevin L.B. Price
/s/ GERALD G. TIGHE Director June 14, 1999
- ------------------------------------------
Gerald G. Tighe
/s/ D. CRAIG BOWMAN Director June 14, 1999
- ------------------------------------------
D. Craig Bowman
</TABLE>
II-14
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- --------- ----------- -----
<C> <C> <S> <C>
1 * -- Purchase Agreement by and among the Registrant and the Initial Purchasers.
2.1* -- Plan of Reorganization and related Disclosure Statement, filed with the U.S. Bankruptcy
Court for the District of Delaware on July 10, 1998 (incorporated by reference to
Exhibits 99.1 and 99.2 to the Registrant's Form 8-K filed with the Commission on
July 24, 1998 (Commission File No. 001-01044)).
2.2* -- First Amended and Modified Consolidated Plan of Reorganization dated August 19, 1998,
filed with the U.S. Bankruptcy Court for the District of Delaware on August 25, 1998
(incorporated by reference to Exhibit 2.1 to the Registrant's Form 8-K filed with the
Commission on October 30, 1998 (Commission File No. 001-01044)).
3.1(a)* -- Certificate of Incorporation of the Registrant (incorporated by reference to
Exhibit 3.1(a) to the Registrant's Form 10-K filed with the Commission on January 13,
1999 (Commission File No. 0-21362)).
3.1(b)* -- Certificate of Merger of the Registrant (incorporated by reference to Exhibit 3.1(b) to
the Registrant's Form 10-K filed with the Commission on January 13, 1999 (Commission File
No. 0-21362)).
3.2* -- By-laws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's
Form 10-K filed with the Commission on January 13, 1999 (Commission File No. 0-21362)).
4.1* -- Indenture (including the Form of 14 1/2% Senior Secured Note due September 1, 2003),
dated as of November 24, 1998 between the Registrant, the subsidiary guarantors and
Norwest Minnesota Bank, National Association, as Trustee (incorporated by reference to
Exhibit 4.2 to the Registrant's Form 10-K filed with the Commission on January 13, 1999
(Commission File No. 0-21362)).
5.1* -- Opinion of Sonnenschein Nath & Rosenthal.
10.1* -- Settlement Agreement dated as of October 15, 1998, by and among the Registrant, certain
of its subsidiaries and the PBGC (incorporated by reference to Exhibit 10.1 to the
Registrant's Form 10-K filed with the Commission on January 13, 1999 (Commission File No.
0-21362)).
10.2* -- Registration Rights Agreement, dated as of November 23, 1998, by and among the Registrant
and Lehman Brothers Inc., as Initial Purchaser (incorporated by reference to
Exhibit 10.3 to the Registrant's Form 10-K filed with the Commission on January 13, 1999
(Commission File No. 0-21362)).
10.3* -- Credit Agreement, dated as of November 24, 1998, between the Registrant, its
subsidiaries, General Electric Capital Corporation, as Administrative Agent and the
lenders party thereto(incorporated by reference to Exhibit 10.4 to the Registrant's Form
10-K filed with the Commission on January 13, 1999 (Commission File No. 0-21362)).
10.4* -- Loan Collateral Agreement, dated as of November 24, 1998, by the Registrant in favor of
General Electric Capital Corporation, as Administrative Agent (incorporated by reference
to Exhibit 10.5 to the Registrant's Form 10-K filed with the Commission on January 13,
1999 (Commission File No. 0-21362)).
10.5* -- Collateral Agreement, dated as of November 24, 1998, by the Registrant in favor of
Norwest Bank Minnesota, National Association, as Collateral Agent (incorporated by
reference to Exhibit 10.6 to the Registrant's Form 10-K filed with the Commission on
January 13, 1999 (Commission File No. 0-21362)).
10.6* -- Warrant Agreement, dated as of November 24, 1998, between the Registrant and State Street
Bank and Trust Company, as Warrant Agent (incorporated by reference to Exhibit 10.7 to
the Registrant's Form 10-K filed with the Commission on January 13, 1999 (Commission File
No. 0-21362)).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- --------- ----------- ----
<S> <C> <C> <C>
10.7* -- Harvard Industries, Inc. Nonqualified ERISA Excess Benefit Plan (incorporated by
reference to Exhibit 10.20 to the Registrant's Registration Statement on Form S-1 filed
with the Commission on August 24, 1995 (File No. 33-96376)).
10.8* -- Harvard Industries, Inc. Nonqualified Additional Credited Service Plan (incorporated by
reference to Exhibit 10.21 to the Registrant's Registration Statement on Form S-1 filed
with the Commission on August 24, 1995 (File No. 33-96376)).
10.9* -- Harvard Industries, Inc. 1998 Stock Incentive Plan (incorporated by reference to
Exhibit 10.10 to the Registrant's Form 10-K filed with the Commission on January 13, 1999
(File No. 0-21362)).
12.1* -- Ratio of Earnings to Fixed Charges.
16 * -- Letter re change in certifying accountant (incorporated by reference to Exhibit 16.1 to
Harvard's Current Report on Form 8-K/A filed with the Commission October 7, 1998
(Commission File No. 001-01044)).
21 * -- List of subsidiaries of Harvard (incorporated by reference to Exhibit 21 to the
Registrant's Form 10-K filed with the Commission on January 13, 1999 (Commission File
No. 0-21362)).
23.1** -- Consent of Arthur Andersen LLP, Independent Accountants.
23.2** -- Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.3* -- Consent of Sonnenschein Nath & Rosenthal (included in their opinion filed as
Exhibit 5.1).
23.4* -- Consent of Norman Levy Associates, Inc., independent appraisers.
23.5* -- Consent of Chanin Kirkland Messina LLC, independent financial professionals.
24 * -- Powers of Attorney (contained in the signature pages hereto).
25 * -- Statement on Form T-1 of Eligibility of Trustee.
99.1** -- Form of Letter of Transmittal.
99.2** -- Form of Notice of Guaranteed Delivery.
99.3** -- Form of Letter to Clients.
99.4** -- Form of Letter to Nominees.
</TABLE>
- ------------------
* Previously filed.
** Filed herewith.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 12, 1999
included in Harvard Industries, Inc.'s Form 10-K for the year ended
September 30, 1998 and to all references to our firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
-------------------------------------
Arthur Andersen LLP
Roseland, New Jersey
June 11, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Amendment No. 2 to Form S-4 of our report (which contains an
explanatory paragraph relating to the ability of Harvard Industries, Inc. to
continue as a going concern) dated November 14, 1997, except for Note 9 as to
which the date is December 29, 1997, relating to the financial statements which
appear in the Annual Report of Harvard Industries, Inc. on Amendment No. 2 to
Form 10-K/A, for the year ended September 30, 1998.
/s/ PRICEWATERHOUSECOOPERS LLP
--------------------------------------
PricewaterhouseCoopers LLP
11 Madison Avenue
New York, NY
June 11, 1999
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
HARVARD INDUSTRIES, INC.
OFFER TO EXCHANGE NEW 14 1/2% SENIOR SECURED NOTES DUE 2003
FOR ALL OUTSTANDING 14 1/2% SENIOR SECURED NOTES DUE 2003
PURSUANT TO THE PROSPECTUS
DATED JUNE , 1999
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999, (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
AS EXCHANGE AGENT FOR THE EXCHANGE OFFER
<TABLE>
<S> <C> <C>
By Registered or By Hand Delivery or
Certified Mail: Overnight Courier: In Person:
Norwest Bank Minnesota, Norwest Bank Minnesota, Norwest Bank Minnesota,
National Association National Association National Association
Corporate Trust Operations Corporate Trust Operations Northstar East Bldg.
P.O. Box 1517 Norwest Center 608 2nd Ave. S.
Minneapolis, MN 55480-1517 Sixth and Marquette 12th Floor
Minneapolis, MN 55479-0113 Corporate Trust Services
Minneapolis, MN 55479-0113
</TABLE>
By Facsimile (Eligible Institutions and Withdrawal Notices Only): (612) 667-4927
Confirm by Telephone: (612) 667-9764
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS BY ELIGIBLE INSTITUTIONS VIA FACSIMILE OTHER THAN
AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus, dated ,
1999 (the "Prospectus"), of Harvard Industries, Inc., a Delaware corporation
(the "Company"), and this Letter of Transmittal (the "Letter"), which together
constitute our offer (the "Exchange Offer") to exchange an aggregate principal
amount at maturity of up to $25,000,000 of our new 14 1/2% Senior Secured Notes
due 2003 (the "Registered Notes") for a like principal amount at maturity of our
issued and outstanding 14 1/2% Senior Secured Notes due 2003 (the "Old Notes").
For each Old Note accepted for exchange, you will receive a Registered Note
having a principal amount at maturity equal to that of the surrendered Old Note.
Holders whose Old Notes are accepted for exchange will receive accrued interest
thereon to, but not including, the date of issuance of such Registered Notes,
such interest to be payable with the first interest payment on the Registered
Notes. Interest on the Registered Notes will accrue from their respective dates
of issuance. Holders of Old Notes accepted for exchange will be deemed to have
waived the right to receive any other payments or interest on the Old Notes. We
reserve the right, at any time or from time to time, to extend the Exchange
Offer at our discretion, in which event the term "Expiration Date" shall mean
the latest time and date to which the Exchange Offer is extended. We shall
notify the holders of the Old Notes of any extension by means of a press release
or other public announcement prior to 9:00 A.M., New York City time, on the next
business day after the previously scheduled Expiration Date.
A holder of Old Notes must complete this Letter (except those holders
delivering an Agent's Message in lieu thereof) either if certificates are to be
forwarded herewith or if a tender of certificates for Old Notes, if available,
is to be made by book-entry transfer to the account maintained by Norwest Bank
Minnesota, National Association (the "Exchange Agent") at The Depository Trust
Company (the "Book-Entry Transfer Facility") pursuant to the procedures set
forth in "The Exchange Offer--Book-Entry Transfer" section of the Prospectus.
Holders of Old Notes whose certificates are not immediately available, or who
are unable to deliver their certificates or confirmation of the book-entry
tender of their Old Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility (a "Book-Entry Confirmation") and all other documents required
by this Letter to the Exchange Agent on or prior to the Expiration Date, must
tender their Old Notes according to the guaranteed delivery procedures set forth
in "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus. See Instruction 1. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
In lieu of delivering this Letter, an Agent's Message will constitute valid
delivery. The term "Agent's Message" means a message, transmitted by the
Book-Entry Transfer Facility and received by the Exchange Agent and forming a
part of a Book-Entry Confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgement from a participant tendering
Old Notes that are the subject of such Book-Entry Confirmation that such
participant has received and agrees to be bound by this Letter and that we may
enforce such agreement against such participant.
<PAGE>
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List below the Old Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount at
maturity of Old Notes should be listed on a separate signed schedule affixed
hereto.
<TABLE>
<CAPTION>
DESCRIPTION OF OLD NOTES 1 2 3
- -------------------------------------------------------------------------------------------------------------------
AGGREGATE
NAME(S) AND ADDRESS(ES) OF PRINCIPAL AMOUNT PRINCIPAL AMOUNT
REGISTERED HOLDER(S) (PLEASE CERTIFICATE AT MATURITY AT MATURITY
FILL IN, IF BLANK) NUMBER(S)* OF OLD NOTE(S) TENDERED**
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL
</TABLE>
* Need not be completed if Old Notes are being tendered by book-entry
transfer.
** Unless otherwise indicated in this column, a holder will be deemed
to have tendered ALL of the Old Notes represented by the Old Notes
indicated in column 2. See Instruction 2. Old Notes tendered hereby
must be in denominations of principal amount of $1,000 and any
integral multiple thereof. See Instruction 1.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ____________________________________________
Account Number ___________________________________________________________
Transaction Code Number __________________________________________________
/ / CHECK HERE IF TENDERED 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 Registered Holder(s) __________________________________________
Window Ticket No. (if any) _______________________________________________
Date of Execution of Notice of Guaranteed Delivery _______________________
Name of Institution which Guaranteed Delivery ____________________________
If delivered by Book-Entry Transfer, complete the following:
Account Number ___________________________________________________________
Transaction Code Number __________________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name _____________________________________________________________________
Address __________________________________________________________________
2
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
1. Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Company all right, title and
interest in and to such Old Notes as are being tendered hereby.
2. The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that 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 when the Old Notes are accepted by the Company.
The undersigned hereby further represents that: (i) any Registered Notes
acquired in exchange for Old Notes tendered hereby will have been acquired in
the ordinary course of business of the person receiving such Registered Notes,
whether or not such person is the undersigned, (ii) that neither the holder of
such Old Notes nor any such other person is engaging in or intends to engage in
a distribution of such Registered Notes, (iii) that neither the holder of such
Old Notes nor any such other person has an arrangement or understanding with any
person to participate in the distribution of such Registered Notes and
(iv) that neither the holder of such Old Notes nor any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act of 1933, as amended
(the "Securities Act"), of the Company.
3. The undersigned also acknowledges that the Exchange Offer is being made
in reliance on an interpretation by the staff of the Securities and Exchange
Commission (the "SEC") set forth in no-action letters issued to third parties,
that the Registered Notes issued in exchange for the Old Notes pursuant to the
Exchange Offer may be offered for resale, resold and otherwise transferred by
holders thereof (other than any such holder that is our "affiliate" 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 (i) such Registered Notes are acquired in the ordinary course of such
holders' business, (ii) such holders are not engaging in and do not intend to
engage in the distribution of such Registered Notes and (iii) such holders have
no arrangements or understandings with any person to participate in the
distribution of such Registered Notes. If the undersigned is not a
broker-dealer, the undersigned represents that it is not engaged in, and does
not intend to engage in, a distribution of Registered Notes. If the undersigned
is a broker-dealer that will receive Registered Notes for its own account in
exchange for Old Notes that were acquired as a result of market-making
activities or other trading activities, it acknowledges that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of such Registered Notes. However, by so acknowledging and by delivering
a prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
4. The undersigned may, if, and only if, it would not receive freely
tradeable Registered Notes in the Exchange Offer or is not eligible to
participate in the Exchange Offer, elect to have its Old Notes registered in the
shelf registration described in the Registration Rights Agreement, dated as of
November 23, 1998, by and among the Company, its domestic subsidiaries and
Lehman Brothers Inc., as Initial Purchaser (the "Registration Agreement"), in
the form filed as Exhibit 10.3 to the Company's Form 10-K filed with the SEC on
January 13, 1999, Commission File No. 0-21362. Capitalized terms used in this
paragraph 4 and not otherwise defined herein shall have the meanings given them
in the Registration Agreement. Such election may be made by checking the box
under "Special Registration Instructions" below. By making such election, the
undersigned agrees, as a holder of Old Notes participating in a Shelf
Registration, to comply with the Registration Agreement and to indemnify and
hold harmless each Initial Purchaser and each person, if any, who controls any
Initial Purchaser within the meaning of either Section 15 of the Securities Act
or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the Company, each director and officer of the Company and each
person, if any, who controls the Company within the meaning of either such
Section, from and against any losses, claims, damages and liabilities or any
actions in respect thereof, to which such Initial Purchaser or any controlling
person of such Initial Purchaser, and the Company or any of its directors,
officers or controlling persons may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus relating to a Shelf Registration, or arise out of or are based upon
any omission or alleged omission to state therein a material fact
3
<PAGE>
necessary to make the statements therein (in the case of the prospectus, in
light of the circumstances under which they were made) not misleading, but in
each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to us by or on behalf of the
undersigned specifically for inclusion therein; and shall reimburse us, as
incurred, for any legal or other expenses reasonably incurred by the Company or
any director, officer or controlling person thereof in connection with the
investigation or defending or preparing to defend against or appearing as a
third-party witness in connection with any loss, claim, damage, liability or
action in respect thereof. Any such indemnification shall be governed by the
terms and subject to the conditions set forth in the Registration Agreement,
including, without limitation, the provisions regarding notice, retention of
counsel, contribution and payment of expenses set forth therein. The above
summary of the indemnification provisions of the Registration Agreement is not
intended to be exhaustive and is qualified in its entirety by the Registration
Agreement.
5. The undersigned will, upon request, execute and deliver any additional
documents deemed by us to be necessary or desirable to complete the sale,
assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer--Withdrawal of Tender"
section of the Prospectus. See Instruction 9.
6. Unless otherwise indicated in the box entitled "Special Issuance
Instructions" below, please issue the Registered Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the Registered Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the box entitled
"Description of Old Notes."
4
<PAGE>
THE UNDERSIGNED ACKNOWLEDGES THAT THE EXCHANGE OFFER IS SUBJECT TO THE MORE
DETAILED TERMS SET FORTH IN THE PROSPECTUS AND, IN CASE OF ANY CONFLICT BETWEEN
THE TERMS OF THE PROSPECTUS AND THIS LETTER, THE PROSPECTUS SHALL PREVAIL.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
<TABLE>
<S> <C>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4) (SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY IF certificates for Old Notes To be completed ONLY IF certificates for Old Notes not
not exchanged and/or Registered Notes are to be issued in exchanged and/or Registered Notes are to be sent to
the name of someone other than the person or persons someone other than the person or persons whose
whose signature(s) appear(s) on this Letter below, or if signature(s) appear(s) on this Letter below or to such
Old Notes delivered by book-entry transfer which are not person or persons at an address other than shown in the
accepted for exchange are to be returned by credit to an box entitled "Description of Old Notes" on this Letter
account maintained at the Book-Entry Transfer Facility above.
other than the account indicated above.
Issue: / / Registered Notes and/or / / Old Notes to: Mail: / / Registered Notes and/or / / Old Notes to:
Name(s): Name(s):
--------------------------------------------- ---------------------------------------------------
(PLEASE TYPE OR PRINT) (PLEASE TYPE OR PRINT)
- ----------------------------------------------------- -----------------------------------------------------------
(PLEASE TYPE OR PRINT) (PLEASE TYPE OR PRINT)
Address: Address:
--------------------------------------------- ---------------------------------------------------
- ----------------------------------------------------- ---------------------------------------------------
(ZIP CODE) (ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
/ / Credit unexchanged Old Notes delivered by book-entry
transfer to the Book-Entry Transfer Facility account
set forth below:
----------------------------------------------------
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
</TABLE>
5
<PAGE>
SPECIAL REGISTRATION INSTRUCTIONS
(SEE PARAGRAPH 4 ABOVE)
To be completed ONLY IF (i) the undersigned satisfies the conditions set forth
in paragraph 4 above, (ii) the undersigned elects to register its Old Notes in
the shelf registration described in the Registration Agreement, and (iii) the
undersigned agrees to comply with the Registration Agreement and to indemnify
certain entities and individuals as set forth in paragraph 4 above.
/ / By checking this box the undersigned hereby (i) represents that it is
entitled to have its Old Notes registered in a shelf registration in accordance
with the Registration Agreement, (ii) elects to have its Old Notes registered
pursuant to the shelf registration described in the Registration Agreement, and
(iii) agrees to comply with the Registration Agreement and to indemnify certain
entities and individuals identified in, and to the extent provided in, paragraph
4 above.
- --------------------------------------------------------------------------------
IMPORTANT: THIS LETTER (OR AN AGENT'S MESSAGE IN LIEU THEREOF) OR A FACSIMILE
HEREOF (TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
<TABLE>
<S> <C>
x 1999
- ------------------------------------------------------------ ------------------
x 1999
- ------------------------------------------------------------ ------------------
x 1999
- ------------------------------------------------------------ ------------------
SIGNATURE(S) OF OWNER DATE
</TABLE>
Area Code and Telephone Number
-------------------------------------------------
If a holder is tendering any Old Notes, this Letter must be signed by the
registered holder(s) exactly as the name(s) appear(s) on the certificate(s) for
the Old Notes or, if tendered by a participant in the Book-Entry Transfer
Facility, exactly as such name appears on a security position listing as the
owner of the Old Notes, or by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted herewith. If signature is by
a trustee, executor, administrator, guardian, officer or other person acting in
a fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s):
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity:
-----------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Employer Identification or Social Security Number
-------------------------------
(PLEASE COMPLETE SUBSTITUTE
FORM W-9, IF APPLICABLE. SEE
"IMPORTANT TAX INFORMATION"
BELOW)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution:
-------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(TITLE)
- --------------------------------------------------------------------------------
(NAME AND FIRM)
6
<PAGE>
INSTRUCTIONS
1. Delivery of This Letter and Notes; Guaranteed Delivery
Procedures. Holders of Old Notes must complete this Letter (except those
holders delivering an Agent's Message in lieu thereof) either if certificates
are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for delivery by book-entry transfer set forth in "The Exchange
Offer--Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Old Notes, or Book-Entry Confirmation, as the case may be,
as well as a properly completed and duly executed Letter (or manually signed
facsimile thereof), with any required signature guarantees (unless an Agent's
Message is transmitted in lieu thereof), and any other documents required by
this Letter, must be received by the Exchange Agent at the address set forth
herein on or prior to the Expiration Date, or the tendering holder must comply
with the guaranteed delivery procedures set forth below. Old Notes tendered
hereby must be in denominations of principal amount at maturity of $1,000 or any
integral multiple thereof.
Noteholders whose certificates for Old Notes are not immediately available
or who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to
such procedures, (i) such tender must be made through an Eligible Institution
(as defined below); (ii) on or prior to 5:00 p.m., New York City time, on the
Expiration Date, the Exchange Agent must receive from such Eligible Institution
a properly completed and duly executed Letter (or a facsimile thereof or an
Agent's Message in lieu thereof) and Notice of Guaranteed Delivery (or an
Agent's Message with respect to guaranteed delivery in lieu thereof),
substantially in the form provided by us (by facsimile transmission (if
available to such holder), mail or hand delivery). The Notice of Guaranteed
Delivery must set forth the name and address of the holder of Old Notes and the
amount of Old Notes tendered, state that the tender is being made thereby and
guarantee that within three New York Stock Exchange ("NYSE") trading days after
the date of execution of the Notice of Guaranteed Delivery, the certificates for
all physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation (including by means of an Agent's Message), as the case may be,
together with this Letter (or a facsimile hereof or an Agent's Message in lieu
thereof) and any other documents required by this Letter will be deposited by
the Eligible Institution with the Exchange Agent; and (iii) the certificates for
all physically tendered Old Notes, in proper form for transfer, or Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter, must be received by the Exchange Agent within three NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF THIS LETTER, THE OLD NOTES AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDERS, BUT THE DELIVERY
WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE
AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIMES SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD
BE SENT TO THE COMPANY.
See "The Exchange Offer" section in the Prospectus.
2. Partial Tenders. If less than all of the Old Notes evidenced by a
submitted certificate are to be tendered, the tendering holder(s) should fill in
the aggregate principal amount at maturity of Old Notes to be tendered in the
box above entitled "Description of Old Notes--Principal Amount at Maturity
Tendered." A reissued certificate representing the balance of nontendered Old
Notes of a tendering holder who physically delivered Old Notes will be sent to
such tendering holder, unless otherwise provided in the appropriate box on this
Letter, promptly after the Expiration Date. All of the Old Notes delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
3. Signatures on This Letter; Bond Powers and Endorsements; Guarantee of
Signatures. If this Letter is signed by the registered holder of the Old Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
7
<PAGE>
If any tendered Old Notes are owned of record by two or more joint owners,
all such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the Old
Notes specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required. If, however, the Registered Notes are to be
issued, or any untendered Old Notes are to be reissued, to a person other than
the registered holder, then endorsements of any certificates transmitted hereby
or separate bond powers are required. Signatures on such certificate(s) or bond
powers must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificates must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) or bond powers must be
guaranteed by an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing. Unless we waive the condition, in such
an instance you must submit with this Letter evidence satisfactory to us of
their authority to so act.
Endorsements on certificates for Old Notes or signatures on bond powers
required by this Instruction 3 must be guaranteed by a financial institution
(including most banks, savings and loan associations and brokerage houses) that
is a participant in the Securities Transfer Agents Medallion Program, the New
York Stock Exchange Medallion Program or the Stock Exchanges Medallion Program
(each an "Eligible Institution" and collectively, "Eligible Institutions").
Signatures on the Letter need not be guaranteed by an Eligible Institution
if (A) the Old Notes are tendered (i) by a registered holder of Old Notes (which
term, for purposes of the Exchange Offer, includes any participant in the
Book-Entry Transfer Facility system whose name appears on a security position
listing as the holder of such Old Notes) who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on this
Letter, or (ii) for the account of an Eligible Institution and (B) the box
entitled "Special Registration Instructions" on this Letter has not been
completed.
4. Special Issuance and Delivery Instructions. Tendering holders of Old
Notes should indicate in the applicable box the name and address to which
Registered Notes issued pursuant to the Exchange Offer and/or substitute
certificates evidencing Old Notes not exchanged are to be issued or sent, if
different from the name or address of the person signing this Letter. In the
case of issuance in a different name, the employer identification or social
security number of the person named must also be indicated. Noteholders
tendering Old Notes by book-entry transfer may request that Old Notes not
exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such noteholder may designate hereon. If no such instructions are
given, such Old Notes not exchanged will be returned to the name and address of
the person signing this Letter.
5. Transfer Taxes. We will pay all transfer taxes, if any, applicable to
the transfer of Old Notes to us or our order pursuant to the Exchange Offer. If,
however, Registered Notes and/or substitute Old Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person other
than the registered holder of the Old Notes tendered hereby, or if tendered Old
Notes are registered in the name of any person other than the person signing
this Letter, the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering holder.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter.
6. Waiver of Conditions. We reserve the absolute right to waive
satisfaction of any or all conditions enumerated in the Prospectus.
8
<PAGE>
7. No Conditional Tenders. We will not accept any alternative,
conditional, irregular or contingent tenders. All tendering holders of Old
Notes, by execution of this Letter, shall waive any right to receive notice of
the acceptance of their Old Notes for exchange.
Although we intend to notify holders of defects or irregularities with
respect to tenders of Old Notes, neither the Company, the Exchange Agent nor any
other person shall incur any liability for failure to give any such notice.
8. Mutilated, Lost, Stolen or Destroyed Old Notes. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
9. Withdrawal of Tenders. Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth above prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the holder
in the same manner as the original signature on this Letter by which such Old
Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the trustee under the
Indenture pursuant to which the Old Notes were issued register the transfer of
such Old Notes into the name of the person withdrawing the tender, and
(iv) specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. Any Old Notes so properly withdrawn will
be deemed not to have been validly tendered for exchange for purposes of the
Exchange Offer. Any Old Notes which have been tendered for exchange but which
are not exchanged for any reason 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 the procedures described above at any time on or
prior to 5:00 p.m., New York City time, on the Expiration Date.
We will determine all questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of tendered Old Notes in
our sole discretion, and our determination will be final and binding on all
parties. We reserve the absolute right to reject any and all Old Notes not
properly tendered or any Old Notes our acceptance of which would, in the opinion
of our counsel, be unlawful. We also reserve the right to waive any defects,
irregularities, or conditions of tender as to particular Old Notes. Our
interpretation of the terms and conditions of the Exchange Offer (including the
instructions of this Letter) will be final and binding on all parties.
10. Requests for Assistance or Additional Copies. Questions relating to
the procedure for tendering, as well as requests for additional copies of the
Prospectus, this Letter and other related documents may be directed to the
Exchange Agent, at the address and telephone number indicated above.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under current federal income tax law to prevent backup withholding on any
Registered Notes delivered pursuant to the Exchange Offer and any payments made
in respect of the Registered Notes, a holder of Registered Notes generally is
required to provide us (as payor) with such holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 or otherwise to establish a
basis for exemption from backup withholding. If a holder of Registered Notes is
an individual, the TIN is such holder's social security number. If a holder
required to do so fails to provide us with the correct taxpayer identification
number, the holder may be subject to a $50 penalty imposed by the Internal
Revenue Service. Accordingly, each prospective holder of Registered Notes to be
issued pursuant to Special Issuance Instructions should complete the attached
Substitute Form W-9. The Substitute Form W-9 need not be completed if the box
entitled Special Issuance Instructions has not been completed.
Certain holders of Registered Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. Exempt prospective holders of Registered
Notes should indicate their exempt status on Substitute Form W-9. A foreign
individual may qualify as an exempt recipient by submitting to us, through the
Exchange Agent, a properly completed Internal Revenue Service Form W-8 (which
the Exchange Agent will provide upon request) signed under penalty of perjury,
attesting to the holder's exempt status. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, we are required to withhold 31% of any
payment made to the holder of Registered Notes 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 any Registered Notes delivered pursuant to
the Exchange Offer and any payments received in respect of the Registered Notes,
each prospective holder of Registered Notes to be issued pursuant to Special
Issuance Instructions should provide us, through the Exchange Agent, with
either: (i) such prospective holder's correct TIN by completing the form below,
certifying that the TIN provided on Substitute Form W-9 is correct (or that such
prospective holder is awaiting a TIN) and that (A) such prospective holder has
not been notified by the Internal Revenue Service that he or she is subject to
backup withholding as a result of a failure to report all interest or dividends
or (B) the Internal Revenue Service has notified such prospective holder that he
or she is no longer subject to backup withholding; or (ii) an adequate basis for
exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The prospective holder of Registered Notes to be issued pursuant to Special
Issuance Instructions is required to give the Exchange Agent the TIN (e.g.,
social security number or employer identification number) of the prospective
record owner of the Registered Notes. If the Registered Notes will be held in
more than one name or are not held 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 regarding which number to report.
10
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
14 1/2% SENIOR SECURED NOTES DUE 2003
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
HARVARD INDUSTRIES, INC.
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer relating to the tender of 14 1/2% Senior Secured Notes due 2003
(the "Old Notes") of Harvard Industries, Inc. (the "Company") made pursuant to
the Prospectus, dated June, 1999 (the "Prospectus"), if certificates for Old
Notes of the Company are not immediately available or if the procedure for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach Norwest Bank Minnesota, National
Association (the "Exchange Agent") prior to 5:00 P.M., New York City time, on
, 1999 (the "Expiration Date"). Such form may be delivered or transmitted
by facsimile transmission (if available to such holder), mail or hand delivery
to the Exchange Agent as set forth below. In addition, in order to utilize the
guaranteed delivery procedure to tender Old Notes pursuant to the Exchange
Offer, the Exchange Agent must receive from a financial institution (including
most banks, savings and loan associations and brokerage houses) that is a
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion
Program prior to 5:00 P.M., New York City time, on the Expiration Date, a
completed, signed and dated Letter of Transmittal relating to the Old Notes (or
facsimile thereof or an Agent's Message (as defined in the Letter of Transmittal
accompanying the Prospectus) in lieu thereof).
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
AS EXCHANGE AGENT FOR THE EXCHANGE OFFER
<TABLE>
<S> <C> <C>
By Registered or By Hand Delivery or
Certified Mail: Overnight Courier: In Person:
Norwest Bank Minnesota, Norwest Bank Minnesota, Norwest Bank Minnesota,
National Association National Association National Association
Corporate Trust Operations Corporate Trust Operations Northstar East Bldg.
P.O. Box 1517 Norwest Center 608 2nd Ave. S.
Minneapolis, MN 55480-1517 Sixth and Marquette 12th Floor
Minneapolis, MN 55479-0113 Corporate Trust Services
Minneapolis, MN 55479-0113
</TABLE>
By Facsimile (Eligible Institutions and Withdrawal Notices Only): (612) 667-4927
Confirm by Telephone: (612) 667-9764
------------------------
DELIVERY OF THIS NOTICE TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF THIS NOTICE VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Harvard Industries, Inc., a Delaware
corporation (the "Company"), in accordance with the Company's offer, upon the
terms and subject to the conditions set forth in the Prospectus dated ,
1999 (the "Prospectus"), and in the accompanying Letter of Transmittal, receipt
of which is hereby acknowledged, $ in aggregate principal amount
of Old Notes pursuant to the guaranteed delivery procedures described in the
Prospectus.
Name(s) of Record Holder(s)
----------------------------------------------------
(Please Type or Print)
Address
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Area Code & Telephone No.
---------------------------
Certificate Number(s) for Old Notes (if available)
------------------------------
Total Principal Amount Represented by Certificate(s): $
------------------------
- -------------------------------------------------------------------------------
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE
DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED
HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS
AND ASSIGNS OF THE UNDERSIGNED.
- -------------------------------------------------------------------------------
PLEASE SIGN HERE
X
----------------------------------------------- -----------------------
X
----------------------------------------------- -----------------------
Signature(s) of Holder(s) Date
Must be signed by the holder(s) of Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement 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 set
forth his or her full title below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
<TABLE>
<CAPTION>
<S> <C>
Name(s):
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
Capacity:
----------------------------------------------------------------
Address(es):
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
/ / The Depository Trust Company
(Check if Old Notes will be tendered by book-entry transfer)
Account Number
---------------------------
THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the undersigned will deliver to the Exchange Agent the certificates
representing the Old Notes being tendered hereby, in proper form for transfer,
or confirmation of book-entry transfer of such Old Notes into the Exchange
Agent's account at The Depository Trust Company, in proper form for transfer,
together with the Letter of Transmittal (or a facsimile thereof or an Agent's
Message in lieu thereof) and any other documents required by the Letter of
Transmittal within three New York Stock Exchange trading days after the date of
execution hereof.
</TABLE>
<TABLE>
<S> <C>
- ------------------------------------- ----------------------------------------
Name of Firm Authorized Signature
- ------------------------------------- ----------------------------------------
Address Title
Name:
- ------------------------------------- -------------------------------
Zip Code (Please Type or Print)
Area Code and Tel. No. Dated:
--------------- ------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES OF OLD NOTES WITH THIS FORM. CERTIFICATES OF OLD
NOTES SHOULD BE SENT ONLY WITH A COPY OF THE PREVIOUSLY EXECUTED LETTER OF
TRANSMITTAL.
3
<PAGE>
EXHIBIT 99.3
HARVARD INDUSTRIES, INC.
OFFER TO EXCHANGE NEW 14 1/2% SENIOR SECURED NOTES DUE 2003
FOR ALL OUTSTANDING 14 1/2% SENIOR SECURED NOTES DUE 2003
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE ,
1999, (THE "EXPIRATION DATE"), TENDERS MAY BE WITHDRAWN PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
June , 1999
To Our Clients:
Enclosed for your consideration are the Prospectus dated June , 1999 (the
"Prospectus") and the related Letter of Transmittal (which together with the
Prospectus constitute the "Exchange Offer") in connection with the offer by
Harvard Industries, Inc., a Delaware corporation (the "Company"), to exchange
new 14 1/2% Senior Secured Notes due 2003 (the "Registered Notes") for all
outstanding 14 1/2% Senior Secured Notes due 2003 (the "Old Notes"), upon the
terms and subject to the conditions set forth in the Exchange Offer.
This material relating to the Exchange Offer is being forwarded to you as
the beneficial owner of Old Notes carried by us in your account or benefit but
not registered in your name. A tender of any Old Notes may only be made by us as
the registered Holder and pursuant to your instructions. Therefore, the Company
urges beneficial owners of Old Notes registered in the name of a broker, dealer,
commercial bank, trust company or other nominee to contact such registered
Holder promptly if they wish to tender Old Notes pursuant to the Exchange Offer.
Accordingly, we request instructions as to whether you wish us to exchange
any or all of the Old Notes held by us for your account upon the terms and
subject to the conditions of the Exchange Offer. We urge you to read carefully
the Exchange Offer, the Letter of Transmittal, and the other materials provided
herewith before instructing us to tender your Old Notes. The accompanying Letter
of Transmittal is furnished to you for your information only and may not be used
by you to exchange the Old Notes held by us for your account.
Your attention is directed to the following:
1. The Registered Notes will be exchanged for the Old Notes at the
rate of $1,000 principal amount of Registered Notes for each $1,000
principal amount of Old Notes. Coupon interest accrues from November 24,
1998 at the rate of 14 1/2% per annum on the principal amount and will be
payable semi-annually in arrears on each March 1 and September 1, beginning
on March 1, 1999. In addition to coupon interest, cash flow participation
interest is paid semi-annually. The form and terms of the Registered Notes
are identical in all material respects to the form and terms of the Old
Notes, except that (i) the offering of the Registered Notes has been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), (ii) the Registered Notes will not be subject to transfer
restrictions and (iii) certain provisions relating to an increase in the
stated interest rate on the Old Notes provided for under certain
circumstances will be eliminated.
2. Based on interpretations by the Securities and Exchange Commission
set forth in no-action letters issued to third parties, we believe that the
notes issued in the Exchange Offer may be offered for resale, resold and
otherwise transferred by you without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that
(i) you are not an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act, (ii) you are not a "broker" or "dealer"
registered under the Securities Exchange Act of 1934, as amended,
(iii) you have no arrangement or understanding with any person to
participate in the distribution of such Registered Notes and (iv) the
Registered Notes are acquired in the ordinary course of your business.
3. The Exchange Offer is for all outstanding notes and is not subject
to any minimum amount of Old Notes being tendered for exchange. Old Notes
tendered hereby must be in denominations of principal amount at maturity of
$1,000 or any integral multiple thereof.
4. The exchange of notes will not be a taxable event for United States
federal income tax purposes. You will not recognize any taxable gain or
loss as a result of the exchange.
5. The Exchange Offer may be withdrawn at any time prior to
5:00 p.m., New York City time, on June , 1999.
6. Any transfer taxes applicable to the exchange of the Old Notes
pursuant to the Exchange Offer will be paid by the Company, except as
otherwise provided in the Prospectus.
If you wish to have us tender any or all of your Old Notes, please so
instruct us by completing, executing and returning to us the instruction form
that appears on the reverse. If you authorize a tender of your Old Notes, the
entire principal amount of Old Notes held for your account will be tendered
unless otherwise specified on the instruction form. YOUR INSTRUCTIONS SHOULD BE
FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF BY
THE EXPIRATION DATE.
The Exchange Offer is not being made to, nor will tenders be accepted from
or on behalf of, holders of the Old Notes in any jurisdiction in which the
making of the Exchange Offer or acceptance thereof would not be in compliance
with the laws of such jurisdiction or would otherwise not be in compliance with
any provision of any applicable security law.
<PAGE>
INSTRUCTIONS FROM BENEFICIAL OWNER TO REGISTERED HOLDER WITH RESPECT TO
HARVARD INDUSTRIES, INC.
OFFER TO EXCHANGE NEW 14 1/2% SENIOR SECURED NOTES DUE 2003
FOR ALL OUTSTANDING 14 1/2% SENIOR SECURED NOTES DUE 2003
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer (the Prospectus
dated June , 1999 together with the Letter of Transmittal constitutes the
"Exchange Offer").
This will instruct you to tender the principal amount of Old Notes
indicated below held by you for the account or benefit of the undersigned, upon
the terms and subject to the conditions set forth in the Exchange Offer dated
June , 1999.
The undersigned represents that (i) the 14 1/2% Senior Secured Notes due
2003 (the "Registered Notes") to be acquired pursuant to the Exchange Offer in
exchange for the Old Notes designated below are being obtained in the ordinary
course of business of the person receiving such Registered Notes, (ii) neither
the undersigned nor any other person receiving such Registered Notes is
participating, intends to participate, or has any arrangement or understanding
with any person to participate, in the distribution of such Registered Notes,
and (iii) it is not an "affiliate," as defined under Rule 405 of the Securities
Act of 1933 (the "Securities Act"), of the Company or, if it is an affiliate,
that it will comply with the registration and prospectus delivery requirements
of the Securities Act to the extent applicable.
If the undersigned is a "broker" or "dealer" registered under the
Securities Exchange Act of 1934 that acquired Old Notes for its own account
pursuant to its market-making or other trading activities (other than Old Notes
acquired directly from the Company), the undersigned understands and
acknowledges that it may be deemed to be an "underwriter" within the meaning of
the Securities Act and, therefore, must deliver a prospectus relating to the
Registered Notes in connection with any resales by it of Registered Notes
acquired for its own account in the Exchange Offer. Notwithstanding the
foregoing, the undersigned does not thereby admit that it is an "underwriter"
within the meaning of the Securities Act.
YOU ARE HEREBY INSTRUCTED TO TENDER ALL OLD NOTES HELD FOR THE ACCOUNT OF
THE UNDERSIGNED UNLESS OTHERWISE INDICATED BELOW.
TENDER OLD NOTES IN THE AGGREGATE PRINCIPAL AMOUNT OF $________________
(Tendered Notes must be in denominations of principal amount at maturity of
$1,000 or multiples of $1,000.)
PLEASE SIGN HERE:
Signature(s):
-----------------------------------------------------------------
Name(s):
----------------------------------------------------------------------
(Please Print)
Address:
----------------------------------------------------------------------
Zip Code:
----------------------------------------------------------------------
Area Code and Telephone No.:
--------------------------------------------------
Tax Identification or Social Security No.:
------------------------------------
My Account Number With You:
---------------------------------------------------
Date:
-------------------------------------------------------------------------
<PAGE>
EXHIBIT 99.4
HARVARD INDUSTRIES, INC.
OFFER TO EXCHANGE NEW 14 1/2% SENIOR SECURED NOTES DUE 2003
FOR ALL OUTSTANDING 14 1/2% SENIOR SECURED NOTES DUE 2003
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999, (THE "EXPIRATION DATE"), TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON
THE EXPIRATION DATE.
June , 1999
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
Enclosed for your consideration are the Prospectus dated June , 1999 (the
"Prospectus") and the related Letter of Transmittal (which together with the
Prospectus constitute the "Exchange Offer") in connection with the offer by
Harvard Industries, Inc., a Delaware corporation (the "Company"), to exchange
new 14 1/2% Senior Secured Notes due 2003 (the "Registered Notes") for all
outstanding 14 1/2% Senior Secured Notes due 2003 (the "Old Notes"), upon the
terms and subject to the conditions set forth in the Exchange Offer.
Capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Prospectus dated June , 1999.
For your information and for forwarding to your clients for whom you hold
Old Notes registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. The Prospectus dated June , 1999;
2. A Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 of the Internal Revenue
Service;
3. A printed form of letter which may be sent to your clients for whose
accounts you hold Old Notes registered in your name or in the name of
your nominee, with space provided for obtaining such clients'
instructions with regard to the Exchange Offer;
4. A form of Notice of Guaranteed Delivery; and
5. Return envelope addressed to Bankers Trust Company, the Depository.
DTC Participants will be able to execute tenders through the DTC Automated
Tender Offer Program.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE TO OBTAIN THEIR
INSTRUCTIONS.
Any inquiries you may have with respect to the Exchange Offer may be
addressed to, and additional copies of the enclosed materials may be obtained
from NORWEST Bank Minnesota, National Association, as Exchange Agent for the
Exchange Offer, at the following telephone number: (612) 667-9764.
Very truly yours,
HARVARD INDUSTRIES, INC.
3 Werner Way
Lebanon, New Jersey 08833
(908) 437-4100
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU AS
THE AGENT OF THE COMPANY, THE EXCHANGE AGENT OR ANY OTHER PERSON OR AUTHORIZE
YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF
ANY OF THEM IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
