<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 23, 1994
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
GREAT DANE HOLDINGS INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3715 54-0698116
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification No.)
incorporation or
reorganization)
</TABLE>
2016 NORTH PITCHER STREET
KALAMAZOO, MICHIGAN 49007
(616) 343-6121
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
DAVID R. MARKIN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GREAT DANE HOLDINGS INC.
2016 NORTH PITCHER STREET
KALAMAZOO, MICHIGAN 49007
(616) 343-6121
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------
THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
Paulette Kendler, Esq. Valerie Ford Jacob, Esq.
Hutton Ingram Yuzek Gainen Carroll & Fried, Frank, Harris, Shriver & Jacobson
Bertolotti One New York Plaza
250 Park Avenue New York, New York 10004
New York, New York 10177 (212) 820-8000
(212) 907-9650
</TABLE>
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
--------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
--------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
OFFERING PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO PRICE PER AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED (1) SHARE (2) OFFERING PRICE (2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par value $.01
per share................................ 6,555,000 shares $15.00 $98,325,000 $33,906
<FN>
(1) Includes 855,000 shares which the Underwriters have the right to purchase to
cover over-allotments.
(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
GREAT DANE HOLDINGS INC.
FORM S-1 CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM AND HEADING LOCATION IN PROSPECTUS
- ------------------------------------------------------------- --------------------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus....................................... Inside Front Cover and Outside Back Cover Pages
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges........................ Prospectus Summary; Risk Factors; Selected Consolidated
Financial Data
4. Use of Proceeds................................... Prospectus Summary; Use of Proceeds; Capitalization
5. Determination of Offering Price................... Risk Factors; Underwriting
6. Dilution.......................................... Risk Factors; Dilution
7. Selling Security Holders.......................... Not Applicable
8. Plan of Distribution.............................. Outside Front Cover Page; Underwriting
9. Description of Securities to be Registered........ Description of Capital Stock
10. Interests of Named Experts and Counsel............ Not Applicable
11. Information with Respect to the Registrant........ Outside Front Cover Page; Prospectus Summary; Risk
Factors; Dilution; Shares Eligible for Future Sale;
Selected Consolidated Financial Data; Management's
Discussion and Analysis of Financial Condition and
Results of Operations; Business; Management; Ownership
of Common Stock; Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities... Not Applicable
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION
NOVEMBER 23, 1994
5,700,000 SHARES
GREAT DANE HOLDINGS INC.
COMMON STOCK
-----------
All of the shares of common stock, $.01 par value per share, offered hereby
(the "Common Stock") are being sold by Great Dane Holdings Inc. ("Holdings" or
the "Company"). Prior to this offering, there has been no public market for the
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $13.00 and $15.00 per share. See "Underwriting"
for the factors to be considered in determining the initial public offering
price. The Company has made application for the Common Stock to be quoted on the
Nasdaq Stock Market (National Market) under the symbol "DANE."
--------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS."
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT APPROVED
OR DISAPPROVED THIS OFFERING NOR HAS THE COMMISSIONER PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS
TO DISCOUNTS AND TO
PUBLIC COMMISSIONS COMPANY(1)
<S> <C> <C> <C>
Per Share................................. $ $ $
Total(2).................................. $ $ $
<FN>
(1) Before deducting offering expenses payable by the Company estimated at
$ .
(2) The Company has granted the Underwriters a 30-day option to purchase up to
855,000 additional shares of Common Stock solely to cover over-allotments,
if any. To the extent that the option is exercised, the Underwriters will
offer the additional shares to the public at the Price to Public shown
above. If the option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."
</TABLE>
--------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about
, 1994.
ALEX. BROWN & SONS SMITH BARNEY INC.
INCORPORATED
The date of this Prospectus is , 1994.
<PAGE>
[INSIDE FRONT COVER]
Photos to be provided.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements and an opinion thereon expressed by
independent auditors and with quarterly reports for the first three quarters of
each fiscal year containing unaudited financial information.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN
THIS PROSPECTUS. EXCEPT AS OTHERWISE INDICATED, INFORMATION CONTAINED IN THIS
PROSPECTUS GIVES EFFECT TO (I) THE REINCORPORATION OF HOLDINGS (FORMERLY
INTERNATIONAL CONTROLS CORP.) IN DELAWARE IN OCTOBER 1994 AND (II) A 16,800 FOR
1 STOCK SPLIT OF HOLDINGS' COMMON STOCK (THE "COMMON STOCK") WHICH WILL OCCUR
PRIOR TO COMMENCEMENT OF THIS OFFERING. UNLESS THE CONTEXT OTHERWISE REQUIRES,
(A) REFERENCES IN THIS PROSPECTUS TO THE COMPANY ARE TO GREAT DANE HOLDINGS INC.
(AND ITS PREDECESSOR, INTERNATIONAL CONTROLS CORP.) AND ITS CONSOLIDATED
SUBSIDIARIES (WHICH FOR THIS PURPOSE INCLUDES A PARTNERSHIP WHICH IS CONTROLLED
BY HOLDINGS) AND (B) REFERENCES IN THIS PROSPECTUS TO HOLDINGS ARE TO GREAT DANE
HOLDINGS INC. (AND ITS PREDECESSOR, INTERNATIONAL CONTROLS CORP.). UNLESS
OTHERWISE SPECIFIED, THE INFORMATION SET FORTH IN THIS PROSPECTUS ASSUMES NO
EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION (THE "OVER-ALLOTMENT
OPTION").
THE COMPANY
OVERVIEW
Through Great Dane Trailers, Inc. ("Great Dane"), the Company is the largest
manufacturer of truck trailers and intermodal containers and chassis in North
America. In addition, through Checker Motors Corporation ("Motors"), the Company
is one of the leading independent manufacturers of sheet metal stampings for
automotive components and subassemblies for sale to North American original
equipment manufacturers ("OEMs"). For the year ended December 31, 1993 and the
nine months ended September 30, 1994, these two principal lines of business
accounted for approximately 92% and 93% of the Company's revenues and 92% and
94% of the Company's total segment operating profit (segment gross profit less
selling, general and administrative expenses). The Company's other operations
consist of its vehicular operations, primarily its Yellow Cab Company division
("Yellow Cab"), which is currently the largest owner of taxicabs and provider of
taxi-related services in Chicago, Illinois and its insurance operations,
American Country Insurance Company ("Country"), which underwrites property and
casualty insurance.
The Company's objective is to expand its transportation related
manufacturing businesses, Great Dane and Motors, through internal growth and
strategic acquisitions. The Company will also focus on reducing its aggregate
indebtedness and believes that Yellow Cab and Country provide a consistent
source of cash flow for debt repayment.
TRAILER MANUFACTURING
Great Dane designs, manufactures and distributes a full line of truck
trailers (including dry freight vans, refrigerated trailers ("reefers") and
platform trailers) and intermodal containers and chassis. In 1993, Great Dane
was the largest manufacturer of truck trailers and chassis in the United States
with an aggregate market share of 12.9%, including a leading 37.9% share of the
higher-margin reefer market. Great Dane is also a leading manufacturer in the
growing intermodal container and chassis market with a 27.3% market share in
1993.
In 1991, Great Dane assembled a new senior management team and initiated a
strategic plan designed to improve its competitive position by (i) reducing
operating costs; (ii) increasing manufacturing efficiencies and flexibility;
(iii) developing new products; and (iv) expanding its large order customer base.
Accordingly, Great Dane reduced overhead, reconfigured plants to increase
capacity, re-designed assembly lines to improve efficiencies, re-engineered
certain products to reduce material and manufacturing costs, initiated new
product development programs and began to develop relationships with large order
customers including J.B. Hunt Transport ("J.B. Hunt") and Xtra Corporation. From
1991 to 1993, Great Dane's revenue increased from $400.2 million to $711.9
million and segment operating profit increased from $7.1 million to $32.4
million. In addition, Great Dane's operating profit margin increased from 1.8%
in 1991 to 6.9% for the nine-month period ended September 30, 1994.
3
<PAGE>
Great Dane believes that these initiatives combined with its strong brand
name and reputation for manufacturing high quality products have positioned it
for continued growth. The key elements of its growth strategy are as follows:
- PRODUCT INNOVATION. Great Dane's engineering and flexible
manufacturing expertise enable it to produce higher-margin, custom-designed
products rapidly and efficiently while incorporating distinctive features
through computer aided design technologies. Recent product innovations marketed
by Great Dane include its proprietary, lightweight Thermacube van and reefer,
and unique intermodal containers and chassis which initiated Great Dane's entry
into the growing intermodal market. New products planned for 1995 include a
proprietary, ultra-lightweight flatbed trailer and a new reefer product which
incorporates a unique floor design.
- INCREASE MARKET SHARE WITH LARGE ORDER FLEET CUSTOMERS. Great Dane is
actively seeking to increase its sales to large order fleet customers which
account for approximately 43% of total U.S. van trailer purchases. The Company
believes that these customers are the fastest growing segment of the industry
and estimates that its share of fleet orders approximates 10%. The balance of
the U.S. van trailer market consists of small and medium sized customers
(approximately 30%) and leasing companies (approximately 27%) where Great Dane
estimates it has a 27% and 17% market share, respectively. In order to increase
its market share with large order fleet customers, Great Dane has adapted
certain of its assembly lines to produce both large standardized and small
customized orders. Great Dane is in the process of acquiring the property and
buildings for a 500,000 square foot manufacturing facility which will be
equipped during 1995 with two high speed, more cost efficient assembly lines
dedicated to high volume, standard specification fleet orders.
- STRONG NATIONAL DISTRIBUTION NETWORK. The Company believes that Great
Dane's distribution network, which consists of 17 Company-owned branches and 51
independent dealers, is the largest marketing organization in the North American
trailer industry. This network provides Great Dane with a competitive advantage
in marketing its new and used trailer products and providing higher-margin
aftermarket parts and services. Great Dane believes that its parts and services
business will provide earnings growth in the coming years due to the increasing
size of the Great Dane and U.S. trailer fleets.
- INTERMODAL TRANSPORTATION. In 1992, Great Dane entered the intermodal
transportation market by developing, in conjunction with a leading truckload
carrier, a unique line of intermodal containers and matching ultra-lightweight
chassis. These containers and chassis enable its customer to utilize double
stack rail intermodal service to haul freight loads of similar size and weight
to those it carries with conventional over-the-road trailers. Great Dane's
strategy is to utilize its engineering expertise to design intermodal products
that meet the specific requirements of its customers. Great Dane has also
improved its market responsiveness by adapting certain assembly lines to produce
both trailers and containers.
AUTOMOTIVE PRODUCTS OPERATIONS
Through South Charleston Stamping & Manufacturing Company ("SCSM") and its
Kalamazoo, Michigan facility ("CMC Kalamazoo"), Motors develops, designs,
engineers and manufactures a broad range of sheet metal automotive components
and subassemblies, including tailgates, fenders, doors, roofs and hoods for sale
to North American OEMs. The majority of Motors' revenues are derived from
complex, value-added products, primarily assemblies containing multiple stamped
parts and various welded or fastened components.
The automotive supplier industry is experiencing consolidation as OEMs are
increasingly requiring suppliers to meet more stringent quality standards and to
possess certain full-service capabilities including design, engineering and
project management support. Motors' principal objective is to capitalize on this
trend through both internal growth and strategic acquisitions. The key elements
of this strategy are as follows:
- HIGH GROWTH LIGHT TRUCK/SPORTS UTILITY FOCUS. Motors focuses on
supplying components for light trucks, minivans and sports utility vehicles due
to their high growth rate and long model lives. From
4
<PAGE>
1983 to 1993, light trucks/sport utility vehicles were the fastest growing
segment of the automotive market with a 7.3% compound annual growth rate. Motors
currently supplies parts on the following light truck/sport utility and minivan
vehicles: Suburban, Blazer, S-10 Blazer, Crew Cab, M Van (Astro and Safari),
full-size CK Truck and CK Sport Side. Motors has also been awarded an eight-year
contract by Mercedes-Benz to produce the majority of the stamping components for
its new sports utility vehicle.
- FULL-SERVICE CAPABILITIES. Motors provides a full complement of
services, including design, engineering and manufacturing, which enables it to
play an integral role in the development and execution of product programs for
its customers. Motors works with its customers throughout the product
development process and, in some cases, locates employees on site at its
customers' facilities in order to design, engineer and manufacture the highest
quality products at the lowest possible cost. Motors believes that this close
coordination with its customers allows it to identify business opportunities and
react to customer needs in the early stages of vehicle design and, therefore,
maintain and increase its volume with its customers.
- HIGH QUALITY PRODUCTS. The Company believes SCSM is one of the premier
stamping facilities in the U.S. This is exemplified by SCSM's receipt of
numerous quality awards including the General Motors Mark of Excellence and the
General Motors QSP (quality, service, price) award for being General Motors'
1993 worldwide Supplier of the Year for major metal stampings. SCSM has also
been qualified to produce components which comply with the ISO 9000
international standard. The Company believes that these awards are a critical
factor in securing additional business from OEMs.
- EXPANDING CUSTOMER BASE. Motors has developed strong relationships
with its customers based on its long history of supplying high quality products
and its full-service capabilities. Motors' objectives are to increase volume
with its existing customers and develop relationships with new customers. In the
last twelve months, Motors has expanded its business with existing customers
including General Motors Corporation ("GM"), Freightliner Corp., Saturn
Corporation and Ford Motor Co. Motors has also secured business with two new
customers, Mercedes-Benz and Toyota.
- FOCUS ON HIGHER-MARGIN/VALUE-ADDED PRODUCTS. Motors strives to compete
in markets where it can achieve greater profitability by providing complex,
value-added products, primarily assemblies containing multiple stamped parts and
various welded or fastened components. Unlike many of its competitors, SCSM
presently has the equipment to supply complete assemblies including large
stampings and related assembly parts. As an example, Motors currently supplies
the sliding door, which is composed of several stampings and fasteners, for the
GM Astro and Safari Vans. The majority of Motors' revenues are derived from such
assemblies.
OTHER OPERATIONS
Yellow Cab is the largest taxicab fleet owner in the City of Chicago
("Chicago") and, as of September 30, 1994, owned approximately 2,370 or 44% of
the 5,400 taxicab licenses ("licenses"or "medallions") available in Chicago.
Yellow Cab's primary business is the leasing of its medallions and vehicles to
independent taxi operators. The Company also provides a variety of other
services to taxi drivers and non-affiliated medallion holders, including
insurance coverage through Country and repair and maintenance services.
Country underwrites property and casualty insurance, including taxicab
insurance, workers' compensation and other commercial and personal lines. During
1993, 67% of Country's total premium revenue was attributable to non-affiliated
property/casualty lines, primarily workers' compensation, commercial automobile
and commercial multiple peril. The remainder of Country's premium revenues was
attributable to affiliated taxi liability and collision insurance in the State
of Illinois and workers' compensation insurance in the States of Illinois and
Michigan. Country is currently rated "A" by A.M. Best.
Holdings was reincorporated in Delaware in 1994. Holdings currently
maintains its principal executive offices at Checker Motors Co., L.P.'s
("Checker L.P.", an affiliate of Motors) facility at 2016 North Pitcher Street,
Kalamazoo, Michigan 49007 and its phone number is (616) 343-6121.
5
<PAGE>
RISK FACTORS
The Common Stock offered hereby involves a high degree of risk. See "Risk
Factors."
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company........................... 5,700,000 shares
Common Stock to be outstanding after the Offering............. 22,500,000 shares
Use of Proceeds............................................... To redeem a portion of the
Company's 12 3/4% Senior
Subordinated Debentures due
2001 (the "12 3/4%
Debentures")
Proposed NASDAQ Stock Market (National Market) Symbol......... DANE
</TABLE>
6
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The summary consolidated financial information set forth below is derived
from the consolidated financial statements of the Company for the years ended
December 31, 1989, 1990, 1991, 1992 and 1993, which have been audited by Ernst &
Young LLP, independent auditors, and from the unaudited consolidated financial
statements of the Company for the nine-month periods ended September 30, 1993
and 1994. The summary consolidated financial information provided for the
nine-month periods reflects all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of such data. The results
of interim periods may not be indicative of results for the full year. The
following summary information should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------------ ------------------------
1989 1990 1991 1992 1993 1993 1994
---------- ---------- ---------- ------------ ---------- ---------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Trailer Manufacturing............ $ 575,793 $ 491,532 $ 400,196 $ 536,336 $ 711,862 $ 514,087 $ 631,113
Automotive Products.............. 99,886 133,401 84,401 112,631 127,925 95,182 115,965
Other Operations................. 62,708 68,278 70,669 67,766 69,539 51,726 58,903
---------- ---------- ---------- ------------ ---------- ---------- ------------
Total Revenues..................... $ 738,387 $ 693,211 $ 555,266 $ 716,733 $ 909,326 $ 660,995 $ 805,981
---------- ---------- ---------- ------------ ---------- ---------- ------------
---------- ---------- ---------- ------------ ---------- ---------- ------------
Segment Operating Profit (Loss):
(1)
Trailer Manufacturing............ $ 26,508 $ 13,109(2) $ 7,059 $ 17,590 $ 32,381 $ 21,699 $ 43,717
Automotive Products.............. 10,561 9,669 (4,237) 11,622 15,306 12,037 16,008
Other Operations (3)............. 9,247 8,771 4,267 4,170 4,304 2,560 3,687
---------- ---------- ---------- ------------ ---------- ---------- ------------
Total Segment Operating Profit..... 46,316 31,549 7,089 33,382 51,991 36,296 63,412
Corporate Expenses................. (7,457) (8,115) (4,398) (4,396 ) (4,646) (3,198) (7,503 )(4)
Interest Expense................... (57,879) (61,596) (47,425) (42,726 ) (41,614) (31,400) (30,414 )
Interest Income.................... 15,494 14,696 11,634 8,895 7,396 5,652 5,214
Other Income (Expense)............. 4,704 (941) (1,078) (2,023 ) 3,494 (26) 779
Special Charge (5)................. -- -- -- -- (7,500) (7,500) --
---------- ---------- ---------- ------------ ---------- ---------- ------------
Income (Loss) Before Minority
Equity, Income Taxes,
Extraordinary Items and Accounting
Changes........................... 1,178 (24,407) (34,178) (6,868 ) 9,121 (176) 31,488
Minority Equity.................... (2,424) (2,296) 1,931 -- -- -- (420 )
Income Tax Benefit (Expense)....... (610) 6,429 5,241 (687 ) (5,757) 246 (13,981 )
---------- ---------- ---------- ------------ ---------- ---------- ------------
Income (Loss) Before Extraordinary
Items and Accounting Changes...... (1,856) (20,274) (27,006) (7,555 ) 3,364 70 17,087
Extraordinary Items (6)............ 4,799 27,749 31,188 -- -- -- --
Accounting Changes (7)............. -- -- -- -- (46,626) (46,626) --
---------- ---------- ---------- ------------ ---------- ---------- ------------
Net Income (Loss).................. $ 2,943 $ 7,475 $ 4,182 $ (7,555 ) $ (43,262) $ (46,556) $ 17,087
---------- ---------- ---------- ------------ ---------- ---------- ------------
---------- ---------- ---------- ------------ ---------- ---------- ------------
Income (Loss) Per Share (8):
Before Extraordinary Items and
Accounting Changes.............. $ (0.11) $ (1.21) $ (1.61) $ (.45 ) $ .20 $ .0 $ 1.02
Net Income (Loss) Per Share...... $ .18 $ .45 $ .25 $ (.45 ) $ (2.58) $ (2.78) $ 1.02
<CAPTION>
SEPTEMBER 30, 1994
------------------------
AS
ACTUAL ADJUSTED(9)
---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total Assets..................................................................................... $ 531,120 $ 527,003
Total Debt....................................................................................... 281,730 215,234
Shareholders' Deficit............................................................................ (134,084) (67,702 )
<FN>
- ------------------
(1) Segment operating profit (loss) is segment gross profit (loss) less
segment selling, general and administrative expenses.
(2) After deducting $7,500 of plant restructuring costs.
(FOOTNOTES CONTINUED ON THE NEXT PAGE)
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
(3) Segment operating profit (loss) for other operations does not include the
insurance operations' portfolio interest income.
(4) Corporate expenses for the nine months ended September 30, 1994 includes
$3.5 million of expenses related to the Company's postponed debt
refinancing. See "Management's Discussion and Analysis of Financial
Condition and Results of Operation."
(5) Represents cost to the Company of the settlement of certain litigation
with the Boeing Company. See "Business -- Legal Proceedings -- Boeing
Litigation" and Note H to Notes to Consolidated Financial Statements --
December 31, 1993.
(6) Extraordinary items in all years relate to the gains on the repurchase of
indebtedness. See Note L to Notes to Consolidated Financial Statements --
December 31, 1993.
(7) The accounting changes represent the cumulative effect of changes in
accounting principles as a result of the adoption, as of January 1, 1993,
of the provisions of Statement of Financial Accounting Standards ("SFAS")
No. 106, "Employers Accounting for Postretirement Benefits Other Than
Pensions," and SFAS No. 109, "Accounting for Income Taxes." See Notes I
and K to Notes to Consolidated Financial Statements -- December 31, 1993.
(8) The per share information is computed by dividing the respective income
(loss) by the weighted average number of common shares and common share
equivalents outstanding (16,800,000 for all periods, after giving effect
to the 16,800 to 1 stock split to be effected prior to the commencement of
this Offering).
(9) Adjusted to reflect the sale of the 5,700,000 shares of Common Stock
offered hereby by the Company (at an assumed initial public offering price
of $14 per share) and the application of the estimated net proceeds as
described in "Use of Proceeds."
</TABLE>
8
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus.
CYCLICAL BUSINESS. The truck trailer industry is dependent on the trucking
industry in general and the automotive parts industry is dependent on the
automotive industry. Poor economic conditions in either industry could have a
material adverse effect on the Company. In addition to dependence on general
economic conditions, sales of new truck trailers have historically been subject
to cyclical variations based on a five to seven-year replacement cycle. The poor
economic conditions in the United States in 1990 and 1991 had an adverse effect
on demand for the Company's products. Although sales have rebounded, there can
be no assurance that such growth will continue.
PRIOR LOSSES AND SUBSTANTIAL LEVERAGE. The Company incurred losses before
extraordinary items and accounting changes of approximately $1.9 million, $20.3
million, $27.0 million and $7.6 million in 1989, 1990, 1991 and 1992,
respectively. Although the Company had income before extraordinary items and
accounting changes for the year ending December 31, 1993 and the first nine
months of 1994, there can be no assurance that the Company will not sustain
losses in the future. See "Management's Discussion and Analysis of Financial
Condition and the Results of Operations."
The Company currently is and, following the completion of this Offering,
will continue to be substantially leveraged. After giving effect to this
Offering, the Company's consolidated indebtedness would have been $215.2 million
at September 30, 1994. See "Use of Proceeds," "Capitalization," and "Selected
Consolidated Financial Data."
The degree to which the Company is leveraged could have important
consequences to holders of the Common Stock, including, but not limited to, the
following: (i) the Company's ability to obtain additional financing for working
capital, capital expenditures, acquisitions, general corporate purposes,
refinancing of indebtedness or other purposes may be impaired, thereby limiting
its ability to grow; (ii) a substantial portion of the Company's cash flow from
operations must be dedicated to the payment of the principal of and interest on
its indebtedness, thereby reducing the funds available to the Company for its
operations; (iii) the Company is more highly leveraged than certain of its
competitors, which may place the Company at a competitive disadvantage; (iv)
certain of the Company's borrowings are at variable rates of interest, which
could result in higher interest expense in the event of increases in interest
rates; and (v) the Company's high degree of leverage may make it more vulnerable
to economic downturns and may limit its ability to withstand competitive
pressures.
COMPETITION. The Company's primary businesses, truck trailer manufacturing
and automotive products manufacturing, are highly competitive. The Company
competes with other truck trailer manufacturers and automotive stamping
companies of varying sizes (including the in-house capabilities of certain
automotive manufacturers), some of which have greater financial resources than
the Company. In addition, barriers to entry in the truck trailer manufacturing
industry are low and, therefore, it is possible that additional competitors
could enter the market at any time. Great Dane is, and believes that several of
its competitors are, in the process of adding manufacturing capacity, which may
have an adverse effect on order backlog and pricing throughout the industry.
Although Great Dane is presently the largest manufacturer in the truck trailer
industry, there can be no assurance that it will be able to maintain or increase
its market share.
RELIANCE ON MAJOR CUSTOMERS. The Company's automotive products operations
rely heavily on sales to GM. For the year ended December 31, 1993, sales to GM
accounted for approximately 95% of the automotive products operations' revenues
and approximately 13% of the Company's total revenues. The automotive products
industry has experienced increased pricing pressure from OEMs which are taking
aggressive measures to reduce their operating costs, including significant price
reductions from suppliers. Although opportunities for new business may arise for
Motors as a result of GM's pressure on other suppliers, future earnings of this
segment of the Company's business may be materially adversely affected by the
price reductions required or requested by GM, by decisions by GM to utilize its
own facilities to
9
<PAGE>
manufacture these products or by any further work stoppages at GM plants.
Although GM provides 13 week forecasts of its purchasing requirements, changes
in its production may result in changes to these requirements. In addition,
although Motors is attempting to diversify its customer base, there can be no
assurance that Motors will be able to reduce its reliance on GM in the
foreseeable future.
Great Dane entered the intermodal container manufacturing business in
reliance on a large order from J.B. Hunt. There can be no assurance that Great
Dane will be able to attract other substantial customers for these products. For
the year ended December 31, 1993 and the nine months ended September 30, 1994,
J.B. Hunt accounted for approximately 13% and 11% of Great Dane's revenues,
respectively.
GOVERNMENT REGULATION OF TRUCK TRAILERS. The federal and state governments
regulate certain safety features incorporated in the design of truck trailers.
Changes or anticipation of changes in these regulations can have a material
impact on the cost of manufacturing truck trailers and on the purchasing
policies of Great Dane's customers. These factors may adversely affect the
financial condition of the Company.
ENVIRONMENTAL MATTERS. The Company's operations are subject to numerous
federal, state and local laws and regulations pertaining to the discharge of
materials into the environment. The Company has taken steps related to such
matters in order to minimize the risks to the environment from potentially
harmful aspects of its operations. From time to time, the Company has incurred
expenses to improve its facilities in accordance with applicable laws and may be
required to do so again in the future. Certain of Great Dane's manufacturing
processes formerly involved the emission of chlorofluorocarbons, but Great Dane
has changed those processes to comply with new regulations.
The Company also remains obligated to indemnify purchasers of certain of its
prior subsidiaries and purchasers of properties sold by prior subsidiaries for
environmental contamination, if any, of properties owned by such subsidiaries.
The Company's expenditures related to the foregoing environmental matters and
indemnification obligations have not had, and the Company does not currently
anticipate that such expenditures will have, a material adverse effect on the
Company's financial condition, although there can be no assurance that this will
remain the case.
IMPACT OF CITY REGULATION AND EXPIRATION OF ANNUAL LIMIT ON NEW MEDALLION
ISSUANCE. Chicago regulates Yellow Cab's operations through maintenance, lease
rate, insurance and inspection requirements, as well as through taxes, license
fees and other means. In 1993, Chicago gave the Commissioner of Consumer
Services broad powers to set maximum lease rates, which, in certain instances,
have been set at lower rates than those currently charged by Yellow Cab.
Although Yellow Cab has filed a petition for higher rates than those set by the
Commissioner and is allowed to continue charging its current rates pending
action on its petition, there can be no assurance that it will be successful or
that in the future it will be able to pass through any increased costs by lease
rate increases or other means.
The agreement between Yellow Cab and Chicago, pursuant to which increases in
the total number of outstanding medallions in Chicago are limited to a maximum
of 100 annually, expires on December 31, 1997. There can be no assurance as to
how many medallions Chicago will issue after the expiration of the agreement,
nor as to the effect, if any, on the Company, of such issuance, including the
effect on medallion values. Although Yellow Cab has sold medallions during the
past year at selling prices of approximately $38,000 per medallion, there can be
no assurance that such values will continue to prevail in the market, especially
after December 31, 1997. See "Business -- Other Operations -- Vehicular -- The
Medallions" and "-- Regulatory Issues."
CONTROL OF THE COMPANY. Upon consummation of the Offering, the four current
stockholders of Holdings will own 74.7% of the Common Stock (71.9% if the
Over-Allotment Option is exercised in full). Therefore, these stockholders,
acting together, effectively will have control of the Company and will have
sufficient voting power to determine the outcome of any corporate transaction or
other matter requiring stockholder approval, including, among other things, the
election of directors. See "Ownership of Common Stock."
10
<PAGE>
NO PRIOR PUBLIC MARKET; DETERMINATION OF OFFERING PRICE. Prior to this
Offering, there has been no public market for the Common Stock. Holdings has
applied to have the Common Stock approved for quotation and trading on the
Nasdaq Stock Market (National Market), but there can be no assurance that the
application will be accepted or, if it is accepted, that an active trading
market will develop or be sustained after this Offering or that the market price
for the Common Stock will not decline below the initial public offering price.
The initial public offering price of the Common Stock will be determined solely
by negotiations between the Company and the Underwriters and may not bear any
relationship to the market price for the Common Stock following this Offering.
See "Underwriting" for a discussion of factors to be considered in determining
the initial public offering price.
DILUTION. Purchasers of the Common Stock offered hereby will experience an
immediate and substantial dilution of $19.59 in net tangible book value per
share of Common Stock from the initial public offering price.
SHARES ELIGIBLE FOR FUTURE SALE. Currently, all of the outstanding capital
stock of the Company is owned by four persons. Upon completion of this Offering,
22,500,000 shares of Common Stock will be issued and outstanding, 16,800,000 of
which will be owned by these four persons and eligible for immediate sale. The
Company has also adopted a stock option plan for key employees and directors
(the "1994 Option Plan"), subject to stockholder approval and approval of the
Compensation Committee of the Board of Directors (the "Compensation Committee").
No shares have, to date, been granted under the 1994 Option Plan. No prediction
can be made as to the effect, if any, that future sales of shares of Common
Stock, or the availability of shares of Common Stock for future sales, will have
on the market price of the Common Stock prevailing from time to time. Sales of
substantial amounts of Common Stock (including shares issued upon the exercise
of stock options to be granted under the 1994 Option Plan), or the perception
that such sales could occur, could adversely affect prevailing market prices for
the Common Stock. See "Shares Eligible for Future Sale." The Company and its
four current stockholders have agreed not to offer, sell, contract to sell, or
otherwise dispose of any shares of Common Stock, for a period of [180] days
after the closing of the Offering, other than shares acquired in the Offering,
without the prior written consent of the Underwriters and the Company. After
expiration of that time period, shares may be sold pursuant to an effective
registration statement in compliance with the Securities Act of 1933, as amended
(the "Securities Act"), or an applicable exemption from the registration
requirements thereunder.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
5,700,000 shares of Common Stock offered hereby are estimated to be
approximately $72.0 million, assuming an initial public offering price of $14.00
per share, and after deducting an estimated $7.8 million in offering expenses
and underwriting discounts and commissions payable by the Company estimated to
be incurred in connection with the Offering. The Company intends to use all of
the net proceeds plus Company cash to redeem approximately $72.0 million
principal amount (plus premium and accrued interest) of the 12 3/4% Debentures,
which will be sufficient to satisfy all remaining sinking fund payments. The
Company intends, immediately upon consummation of the Offering, to issue a
notice of redemption with respect thereto. The funds required for the redemption
will be held in escrow until the requisite 30-day notice period has expired
(during which time interest will continue to accrue) and payment can be made.
Interest on the 12 3/4% Debentures for such 30-day period is expected to be
approximately $0.5 million, net of estimated interest earnings from the escrow
account.
The Company is currently engaged in discussions with its bank lenders
regarding a refinancing of its bank debt, including increasing the banks'
commitments under revolving credit facilities to meet working capital and other
requirements. If commitments for the refinancing are received, and the Company
has excess availability under these facilities, the Company currently expects
that it will use a portion of such excess availability (a) to purchase the
minority interest in Checker L.P. for $37.0 million (see "Business -- Legal
Proceedings -- Executive Life Litigation") and (b) to redeem all or a portion of
the $30.0 million principal amount of senior notes held by the current
stockholders of Holdings.
11
<PAGE>
DIVIDEND POLICY
The Company intends to retain any future earnings to provide funds for the
operation and expansion of its business and does not anticipate paying any cash
dividends in the foreseeable future. As a holding company, the ability of
Holdings to pay dividends is dependent upon the receipt of dividends or other
payments from its subsidiaries. The payment of dividends by Holdings is also
subject to certain restrictions under the indenture pursuant to which the
12 3/4% Debentures were issued. At December 31, 1993, the Company was prohibited
from paying a dividend. Subject to such restrictions, any determination to pay
dividends in the future will be at the discretion of Holdings' Board of
Directors and will be dependent upon the Company's results of operations,
financial condition, contractual restrictions, and other facts deemed relevant
at that time by Holdings' Board of Directors.
12
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
Holdings and its subsidiaries as of September 30, 1994, and as adjusted to give
effect to the sale by Holdings of the 5,700,000 shares of Common Stock offered
hereby (assuming a public offering price of $14.00 per share and after deduction
of underwriting commissions and discounts and the estimated expenses of the
Offering) and the application of the estimated net proceeds as described in "Use
of Proceeds." The table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's Consolidated Financial Statements and Notes thereto appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1994
-----------------------------
HISTORICAL AS ADJUSTED
------------ ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Debt (including current maturities):
Subsidiary Debt............................................................... $ 74,823 $ 74,823
Shareholders' Notes........................................................... 30,000 30,000
12 3/4% Senior Subordinated Debentures (net of unamortized discount).......... 121,946 55,450
14 1/2% Subordinated Discount Debentures (net of unamortized discount)........ 54,961 54,961
------------ ---------------
Total Debt.................................................................. 281,730 215,234
Minority Interest............................................................... 39,839 39,839
Shareholders' Deficit:
Common Stock, par value $0.01................................................. 168 225
Additional paid-in capital.................................................... 14,832 86,775
Retained earnings deficit..................................................... (19,130) (24,748)(1)
Notes receivable from shareholders............................................ (625) (625)
Amounts paid in excess of Motors' net assets.................................. (127,748) (127,748)
Unrealized depreciation on Insurance Subsidiary's investments in certain debt
and equity securities........................................................ (1,581) (1,581)
------------ ---------------
Total Shareholders' Deficit................................................. (134,084) (67,702)
------------ ---------------
Total Capitalization...................................................... $ 187,485 $ 187,371
------------ ---------------
------------ ---------------
<FN>
- --------------
(1) The increase in retained earnings deficit results from an extraordinary
charge to earnings from:
</TABLE>
<TABLE>
<S> <C>
(a) Write off of debt discount on repurchased 12 3/4% Debentures.......... $ (5,505)
(b) Premium paid on repurchase of 12 3/4% Debentures...................... (1,526)
(c) Write off of unamortized debt issue costs; and........................ (1,048)
(d) Tax effect of above adjustments....................................... 2,461
---------
Increase in historical retained earnings deficit........................... $ (5,618)
---------
---------
</TABLE>
13
<PAGE>
DILUTION
The deficit in net tangible book value of the Company at September 30, 1994
was ($193.3) million or ($11.51) per share of Common Stock. The deficit in net
tangible book value represents the excess of the Company's total liabilities
over its total tangible assets, divided by the number of outstanding shares of
Common Stock. After giving effect to the sale of the 5,700,000 shares of Common
Stock being offered hereby (assuming a public offering price of $14.00 per share
and after deduction of the underwriting discounts and commissions and estimated
expenses of the Offering) and the application of the estimated net proceeds
therefrom, the pro forma deficit in net tangible book value at September 30,
1994 would have been $(125.9) million or $(5.59) per share. This represents an
immediate decrease of $5.92 in the deficit in net tangible book value per share
to the current stockholders and immediate dilution of $19.59 per share to
persons purchasing the shares offered hereby. The following table illustrates
the per share dilution with respect to a new investor's purchase of a share of
Common Stock at September 30, 1994.
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................. $ 14.00
Deficit in net tangible book value per share before the
Offering...................................................... $ (11.51)
Decrease per share in the deficit in net tangible book value
attributable to new investors................................. $ 5.92
Pro forma deficit in net tangible book value per share after the
Offering........................................................ (5.59)
Dilution per share to new investors.............................. $ 19.59
</TABLE>
14
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents selected consolidated financial data derived
from the consolidated financial statements of Great Dane Holdings Inc. and
subsidiaries for the five years ended December 31, 1993, which have been audited
by Ernst & Young LLP, independent auditors. The selected consolidated financial
data for the nine-month periods ended September 30, 1993 and 1994, were derived
from the unaudited consolidated financial statements of the Company, which
reflect all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of such data. The operating results for the
nine months ended September 30, 1994, are not necessarily indicative of the
operating results for the full year. The following financial data should be read
in conjunction with the Consolidated Financial Statements and Notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------- ----------------------
1989 1990 1991 1992 1993 1993 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................... $ 738,387 $ 693,211 $ 555,266 $ 716,733 $ 909,326 $ 660,995 $ 805,981
Cost of Revenues....................... 624,138 584,680 480,543 610,870 778,805 566,759 680,672
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross Profit........................... 114,249 108,531 74,723 105,863 130,521 94,236 125,309
Selling, General and Administrative
Expense............................... 75,390 77,597 72,032 76,877 83,176 61,138 69,400(1)
Plant Restructuring Costs.............. -- 7,500 -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from Operations................. 38,859 23,434 2,691 28,986 47,345 33,098 55,909
Interest Expense....................... (57,879) (61,596) (47,425) (42,726) (41,614) (31,400) (30,414)
Interest Income........................ 15,494 14,696 11,634 8,895 7,396 5,652 5,214
Other Income (Expense)................. 4,704 (941) (1,078) (2,023) 3,494 (26) 779
Special Charge (2)..................... -- -- -- -- (7,500) (7,500) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (Loss) Before Minority Equity,
Income Taxes, Extraordinary Items and
Accounting Changes.................... 1,178 (24,407) (34,178) (6,868) 9,121 (176) 31,488
Minority Equity........................ (2,424) (2,296) 1,931 -- -- 0 (420)
Income Tax Benefit (Expense)........... (610) 6,429 5,241 (687) (5,757) 246 (13,981)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (Loss) Before Extraordinary
Items and Accounting Changes.......... (1,856) (20,274) (27,006) (7,555) 3,364 70 17,087
Extraordinary Items (3)................ 4,799 27,749 31,188 -- -- -- --
Accounting Changes (4)................. -- -- -- -- (46,626) (46,626) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Income (Loss)...................... $ 2,943 $ 7,475 $ 4,182 $ (7,555) $ (43,262) $ (46,556) $ 17,087
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (Loss) Per Share (5):
Before extraordinary items and
accounting changes.................. $ (0.11) $ (1.21) $ (1.61) $ (.45) $ .20 $ 0 $ 1.02
Net income (loss) per share.......... $ .18 $ .45 $ .25 $ (.45) $ (2.58) $ (2.78) $ 1.02
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------- ----------------------
1989 1990 1991 1992 1993 1993 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total Assets........................... 536,084 537,677 481,305 493,763 517,336 500,639 531,120
Total Debt............................. 405,167 376,692 316,324 310,368 296,273 305,006 281,730
Shareholders' Deficit.................. (111,799) (104,745) (98,374) (106,296) (149,517) (152,611) (134,084)
<FN>
- ------------------
(1) Selling, general and administrative expenses for the nine months ended
September 30, 1994 includes $3.5 million of expenses related to the
Company's postponed debt refinancing. See "Management's Discussion and
Analysis of Financial Condition and Results of Operation."
(2) Represents cost to the Company of the settlement of certain litigation with
the Boeing Company. See "Business -- Legal Proceedings -- Boeing Litigation"
and Note H to Notes to Consolidated Financial Statements -- December 31,
1993.
(3) Extraordinary items in all years relate to the gains on the repurchase of
indebtedness. See Note L to Notes to Consolidated Financial Statements --
December 31, 1993.
(4) The accounting changes represent the cumulative effect of changes in
accounting principles as a result of the adoption, as of January 1, 1993, of
the provisions of Statement of Financial Accounting Standards ("SFAS") No.
106, "Employers Accounting for Postretirement Benefits Other Than Pensions,"
and SFAS No. 109, "Accounting for Income Taxes." See Notes I and K to Notes
to Consolidated Financial Statements -- December 31, 1993.
(5) The per share information is computed by dividing the respective income
(loss) by the weighted average number of common shares and common share
equivalents outstanding (16,800,000 for all periods, after giving effect to
the 16,800 to 1 stock split to be effected prior to the commencement of this
Offering).
</TABLE>
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
In January 1989, Holdings purchased all of the outstanding common stock of
Motors, the general partner of Checker L.P., for a purchase price of $138.8
million (the "Checker Acquisition"). Immediately thereafter, four of the five
former shareholders of Motors purchased, through Checker Holding Corp. ("CHC"),
all of the outstanding common stock of Holdings for $45 million. CHC was created
solely for the purpose of acquiring the stock of Holdings and was subsequently
merged into Holdings. CHC was capitalized with an equity contribution of $15
million and loans aggregating $30 million from the former Motors shareholders.
The Reverse Acquisition has been accounted for as if Motors had acquired
Holdings, since there has been no significant change in control of Motors.
Under generally accepted accounting principles for reverse acquisitions, the
net assets of Motors acquired in the Checker Acquisition could not be revalued
to estimated fair market value. Accordingly, the $127.7 million excess of the
amount paid over the historical book value of Motors' net assets has been
accounted for as a separate component reducing shareholders' equity and is not
subject to amortization.
In August 1989, Motors acquired all of the outstanding common stock of SCSM
for a purchase price of $19.9 million (including expenses of $0.3 million) in
cash for SCSM's stock and $4.0 million in cash for a noncompete agreement. The
acquisition was funded with proceeds from a new bank loan. In connection with
the acquisition, Motors also assumed, and Checker L.P. guaranteed, $12.7 million
of the seller's obligation to the State of West Virginia. In addition, both
Motors and Checker L.P. guaranteed loans aggregating $5.6 million made by the
State of West Virginia and Volkswagen of America, Inc. to SCSM.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1994, COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1993:
Revenues increased $145.0 million during the nine months ended September 30,
1994, as compared to the same period of 1993. The higher revenues are
principally attributed to higher trailer manufacturing revenues ($117.0
million), primarily associated with a higher volume of sales within the segment.
Automotive products revenues increased $20.8 million during the nine months
ended September 30, 1994, as compared to the same period in 1993. General
increases in volumes to accommodate automotive customers' demands and additional
jobs were the principal reasons for the revenue increases.
The Company's operating profit increased $22.8 million in the 1994 period
compared to the 1993 period. This increase is attributed to an increase of
trailer manufacturing operating profits ($22.0 million) which is principally due
to improved margins and higher volume of sales and an increase of automotive
products operating profits ($4.0 million), which was principally due to higher
volumes of sales. These increases in operating profits were offset by higher
corporate costs due to a postponed refinancing ($3.5 million) and other
increases in corporate costs.
During the nine months ended September 30, 1993, the Company recorded a $7.5
million pre-tax special charge relating to the Boeing litigation. No similar
charge was incurred in 1994.
During the nine months ended September 30, 1994, a $0.4 million charge was
recorded to reflect minority equity in SCSM.
Income tax expense is higher for financial statement purposes than would be
computed if the statutory rate were used because of state income taxes as well
as the impact of the reporting of certain income and expense items in the
financial statements which are not taxable or deductible for income tax
purposes.
Net income was $17.1 million for the nine months ended September 30, 1994,
as compared to a $46.6 million net loss for the prior period. The improvement in
net income is attributed to the reasons mentioned above, as well as a one-time
charge ($46.6 million) incurred for the implementation of Statements of
Financial Accounting Standards ("SFAS") Nos. 106 and 109 which was recorded in
the first quarter of 1993.
16
<PAGE>
1993 COMPARED TO 1992:
During 1993, revenues increased $192.6 million and gross profit increased
$24.7 million as compared to 1992. The trailer segment and the automotive
segment operations benefitted from increased demand for their products. Trailer
segment revenues increased by $175.5 million as compared to 1992, primarily due
to the sale of containers and chassis which were introduced in late 1992 and
sold principally to one customer, and a higher volume of truck trailer sales.
Automotive segment revenues increased $15.3 million as compared to 1992.
Increased production of the General Motors Blazer and Suburban models and Crew
Cab products and other general increases in volumes to accommodate automotive
customers' demands are the principal reasons for the increase. Vehicular segment
revenues increased $1.5 million in 1993 as compared to 1992. The increase was
attributed to lease rate increases obtained in 1993 to cover certain vehicular
segment cost increases. The revenue increase was somewhat offset by the impact
of tendering medallions to Chicago.
The factors impacting sales, as discussed previously, had the effect of
increasing the Company's 1993 operating profit (gross profit less selling,
general and administrative expenses) by $18.4 million as compared to 1992.
Trailer segment operating profit increased by $14.8 million as compared to 1992.
This increase is principally due to higher volumes, partly offset by higher
selling, general and administrative expenses ("S G & A"). Higher volumes were
also the principal reason for an increase of $3.7 million of automotive segment
operating profits as compared to 1992.
S G & A expenses were $6.3 million higher in 1993 as compared to 1992, but
as a percentage of sales, S G & A expense is 1.6 percentage points lower in 1993
as compared to 1992.
Other expenses decreased $5.5 million in 1993 as compared to 1992. The
decrease in expenses resulted primarily from $1.4 million in income from the
settlement of a dispute in 1993 and $2.8 million in income from sales of taxi
medallions in 1993.
On February 8, 1989, the Boeing Company ("Boeing") filed a lawsuit naming
Holdings, together with three prior subsidiaries of Holdings, as defendants in
Case No. CV89-199MA, United States District Court for the District of Oregon. In
that lawsuit, Boeing sought damages and declaratory relief for past and future
costs resulting from alleged groundwater contamination at a location in Gresham,
Oregon, where the three prior subsidiaries of Holdings, formerly conducted
business operations. On December 22, 1993, Holdings entered into a settlement
with Boeing, settling all claims asserted by Boeing in the lawsuit. Pursuant to
the settlement terms, Holdings will pay Boeing $12.5 million over the course of
five years, $5.0 million of which has been committed by certain insurance
carriers in the form of cash or irrevocable letters of credit. Accordingly,
Holdings recorded a $7.5 million special charge during 1993 to provide for the
cost associated with this legal proceeding. In accordance with the settlement
agreement, the claims against Holdings and the three former subsidiaries have
been dismissed and Boeing has released and indemnified Holdings with respect to
certain claims.
Net loss was $43.3 million for the year ended December 31, 1993, as compared
to a $7.6 million net loss for the year ended December 31, 1992. The
fluctuations in net loss between the years are attributed to the reasons
discussed above, as well as the one-time charge ($46.6 million) incurred for the
implementation of SFAS Nos. 106 and 109 which was recorded in 1993.
1992 COMPARED TO 1991:
During 1992, revenues increased $161.5 million and gross profit increased
$31.1 million as compared to 1991. The trailer and the automotive segment
operations were positively impacted by increased demand for their products.
Trailer segment revenues increased by $136.1 million as compared to 1991,
primarily resulting from a higher volume of truck trailer sales. Automotive
segment revenues increased $28.2 million as compared to 1991. Increased
production of GM's Blazer and Suburban models and Crew Cab products for the 1993
model year and other general increases in volumes to accommodate automotive
customers' demands were partly offset by a $6.1 million decrease in revenues
associated with the coordination of tooling programs for GM. Vehicular segment
revenues decreased $2.9 million as compared to 1991. The decrease in revenues is
principally attributed to a continuing downturn in taxicab
17
<PAGE>
leasing in Chicago, as well as a decrease in the number of cabs available for
lease from Yellow Cab as a result of the settlement agreement reached with
Chicago in 1988. The negative trend to revenue changes for this segment could
continue if the economic environment does not improve and if the segment is not
successful in continuing to develop new sources of revenue as the settlement
agreement requires the tendering of 100 additional licenses to Chicago in each
of the next five years.
The factors impacting sales, as discussed previously, had the effect of
increasing the Company's 1992 operating profit by $26.3 million as compared to
1991. Trailer segment operating profit increased by $10.5 million as compared to
1991. This increase is principally due to higher volumes, partly offset by
higher S G & A. Higher volumes were also the principal reason for an increase of
$15.9 million of automotive segment operating profits as compared to 1991.
Automotive segment S G & A expenses were only slightly higher in 1992 as
compared to 1991. Vehicular segment operating profits decreased $1.4 million in
1992 compared to 1991 due to lower revenues. While efforts were made to reduce
vehicular segment operating costs through the combination of the Company's then
existing two taxicab operations in late 1991, the decrease in revenues
previously discussed was not fully offset by decreased operating and sales,
general and administrative costs.
S G & A expenses were $4.8 million higher in 1992 as compared to 1991, but
as a percentage of sales, S G & A expense is 2.2 percentage points lower in 1992
as compared to 1991.
Other expenses increased $0.9 million in 1992 as compared to 1991. Higher
gains realized on investment transactions during 1992 compared to 1991 were
offset by lower gains on sale of assets in 1992 as compared to 1991.
Interest expense was $4.7 million lower in 1992 than in 1991. The decrease
can be attributed to lower interest rates during 1992 compared to 1991 as well
as lower levels of debt outstanding during 1992 compared to 1991.
Net loss was $7.6 million for the year ended December 31, 1992, as compared
to net income of $4.2 million for the year ended December 31, 1991. The
fluctuations in net income between the years are attributed to the reasons
discussed above, as well as the fact that the Company recorded a $31.2 million
extraordinary gain in 1991 relating to the repurchase of debentures.
There is no minority equity expense in 1992 because Executive Life Insurance
Company ("ELIC") was placed into conservatorship in 1991 and as a result, its
interest in Checker L.P. and rights under the Partnership Agreement became
limited to the right to receive the balance of its capital account on April 11,
1991. See "Business -- Legal Proceedings -- Executive Life Litigation."
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Available cash and cash equivalents, cash flow generated from operations
($66.9 million, $12.4 million, $37.8 million, $25.2 million and $30.7 million
for the years ended December 31, 1989, 1990, 1991, 1992 and 1993, respectively
and $22.3 million for the nine months ended September 30, 1994), proceeds from
borrowings and proceeds from the disposal of assets have provided sufficient
liquidity and capital resources for the Company to conduct its operations.
With the settlement of the Boeing litigation and an agreement to settle the
ELIC litigation, the ability of the Company to achieve a successful refinancing
was enhanced. See "Business -- Legal Proceedings -- Executive Life Litigation."
Accordingly, the Company filed a Registration Statement on Form S-1 with the
Securities and Exchange Commission in connection with an overall refinancing of
the Company's outstanding indebtedness. On August 10, 1994, the Company
announced that, due to market conditions, it was postponing the proposed
refinancing and would not complete the transaction on the terms described in its
registration statement. Because this refinancing was not completed, certain
costs, which totaled approximately $3.5 million (pre-tax), have been charged to
income in the quarter ending September 30, 1994.
Great Dane's debt agreement with certain banks matures in March 1995.
Accordingly, this debt is classified as a current liability at September 30,
1994. Refinancing is anticipated to be accomplished prior to maturity and,
accordingly, it is not anticipated that working capital will be adversely
affected.
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<PAGE>
Purchases of property, plant and equipment have averaged approximately $18.0
million per year over the past three years and have been funded principally by
cash flow generated from operations as well as proceeds from disposals of
assets. Purchases of property, plant and equipment for 1994 and 1995 are
anticipated to be approximately $21.4 million and 45.3 million, respectively,
and are expected to be funded principally by cash flow generated from operations
and borrowings. The increase in the anticipated capital expenditures for 1995 is
principally due to (i) the proposed addition of a new manufacturing facility for
Great Dane (See "Business -- Trailer Manufacturing Operations -- Manufacturing
and Operations") and (ii) the expansion required by new business in the
automotive segment.
During the fourth quarter of 1993, Holdings entered into a settlement of the
Boeing litigation ($12.5 million over five years). See "Business -- Legal
Proceedings -- Boeing Litigation." Of the $7.3 million balance remaining to be
paid as of September 30, 1994, approximately $2.5 million will come from
insurance recoveries and the balance from cash currently on hand and cash flow
generated from operations.
GM, a major customer of the Company's automotive products segment, is
resorting to many measures, including obtaining significant price reductions
from its suppliers, in an effort to reduce its operating costs. Management of
the Company's automotive products segment maintains ongoing discussions with GM
concerning future pricing of parts presently being manufactured. Automotive
products segment management believes that it has adequately provided in its
near-term financial plans for any price reductions which may result from its
current discussions with GM. However, price reductions in excess of those
anticipated could have a material adverse effect on the automotive products
operations.
ACCOUNTING STANDARDS
Effective January 1, 1994, the Company adopted the provision of SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities." In
accordance with this statement, prior period financial statements have not been
restated to reflect the change in accounting principle. The opening balance of
shareholders' deficit was decreased by $1.4 million (net of $0.8 million in
deferred income taxes) to reflect the net unrealized holding gains on securities
classified as available-for-sale previously carried at amortized cost or lower
of cost or market.
Effective January 1, 1993, the Company adopted the provisions of SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
The impact of adopting SFAS No. 106 was a charge to net income of $29.7 million
(net of taxes of $16.5 million) which was recorded as a cumulative effect
adjustment in the quarter ended March 31, 1993.
The Company also adopted the provisions of SFAS No. 109, "Accounting for
Income Taxes," effective January 1, 1993. The impact of adopting SFAS No. 109
was a charge to net income of $16.9 million which was recorded as a cumulative
effect adjustment in the quarter ended March 31, 1993.
During the quarter ended March 31, 1993, the Company adopted the provisions
of SFAS No. 113, "Accounting and Reporting for Reinsurance of Short Duration and
Long Duration Contracts." Because of the type of insurance contracts Country
provides, the adoption of this statement had no impact on earnings; however, it
requires the disaggregation of various balance sheet accounts. For financial
reporting purposes, the 1992 balance sheet and statement of cash flows have been
restated as if SFAS No. 113 were adopted as of the beginning of the earliest
period presented.
Although the adoption of SFAS Nos. 106, 109, 113 and 115 has collectively
had a significant effect on the Company's financial position, it has not
adversely affected liquidity and capital resources.
IMPACT OF INFLATION
Recently, due to competitive market conditions, the Company has been unable
to factor all cost increases into selling prices for its products and services.
The Company does not believe, however, that the impact of inflation affects the
Company any more than it affects the Company's competitors.
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<PAGE>
BUSINESS
GENERAL
Through Great Dane, the Company is the largest manufacturer of truck
trailers and intermodal containers and chassis in North America. In addition,
through Motors, the Company is one of the leading independent manufacturers of
sheet metal stampings for automotive components and subassemblies for sale to
North American OEMs. For the year ended December 31, 1993 and the nine months
ended September 30, 1994, these two principal lines of business accounted for
approximately 92% and 93% of the Company's revenues and 92% and 94% of the
Company's total segment operating profit. The Company's other operations consist
of its vehicular operations, primarily Yellow Cab, which is currently the
largest owner of taxicabs and provider of taxi-related services in Chicago,
Illinois and its insurance operations, Country, which underwrites property and
casualty insurance.
The Company's objective is to expand its transportation related
manufacturing businesses, Great Dane and Motors, through internal growth and
strategic acquisitions. The Company will also focus on reducing its aggregate
indebtedness and believes that Yellow Cab and Country provide a consistent
source of cash flow for debt repayment.
TRAILER MANUFACTURING OPERATIONS
OVERVIEW
Great Dane designs, manufactures and distributes a full line of truck
trailers (including dry freight vans, refrigerated trailers and platform
trailers) and intermodal containers and chassis. In 1993, Great Dane was the
largest manufacturer of truck trailers and chassis in the United States with an
aggregate market share of 12.9%, including a leading 37.9% share of the
higher-margin reefer market. Great Dane is also a leading manufacturer in the
growing intermodal container and chassis market with a 27.3% market share in
1993. For the year ended December 31, 1993 and the nine months ended September
30 ,1994, Great Dane generated approximately 78% and 78% of the Company's
revenues and 62% and 69% of the Company's total segment operating profit.
INDUSTRY OVERVIEW
The new truck trailer industry, with annual revenues of approximately $3.1
billion, is cyclical and competitive and closely tied to overall economic
conditions as well as to regulatory changes. In addition, new truck trailers
have traditionally had a five to seven-year replacement cycle. In 1990 and 1991,
the industry experienced a severe downturn due to the recession in the United
States. The industry recovered in 1992 and 1993 due in large part to the general
improvement in the U.S. economy, the replacement of a large number of truck
trailers sold in the mid-1980's and, to a lesser extent, new regulations in
certain states permitting longer truck lengths.
The national truck trailer market is highly fragmented, with approximately
180 companies operating in the truck trailer manufacturing industry. In 1993,
the two largest companies, Great Dane and Wabash National Corporation, accounted
for approximately 24% of the market and the ten largest companies accounted for
approximately 65% of sales. The basis of competition in the truck trailer
industry is product quality and durability, price, flexibility in design and
engineering, warranties, service and relationships. Due in large part to the
quality of its products and its strong distribution system, the Company believes
that Great Dane has built sustainable competitive advantages in each of these
important areas.
Recently, the transportation industry began shifting toward intermodal
containers and chassis. Since 1988, intermodal container traffic has grown by a
compounded annual growth rate of approximately 10%. "Intermodal" refers to the
transition from one mode of transportation to another and, as used in this
Prospectus, refers to the transition from rail to road. "Intermodal containers,"
as used in this Prospectus, refers to containers which are designed to travel
principally on rail, and which, when removed from the rail car, can be placed on
a chassis for transportation by truck to and from a rail yard.
20
<PAGE>
BUSINESS STRATEGIES
In 1991, Great Dane assembled a new senior management team and initiated a
strategic plan designed to improve its competitive position by (i) reducing
operating costs; (ii) increasing manufacturing efficiencies and flexibility;
(iii) developing new products; and (iv) expanding its large order customer base.
Accordingly, Great Dane reduced overhead, reconfigured plants to increase
capacity, re-designed assembly lines to improve efficiencies, re-engineered
certain products to reduce material and manufacturing costs, initiated new
product development programs and began to develop relationships with large order
customers, including J.B. Hunt and Xtra Corporation. From 1991 to 1993, Great
Dane's revenue increased from $400.2 million to $711.9 million and segment
operating profit increased from $7.1 million to $32.4 million. In addition,
Great Dane's operating profit margin increased from 1.8% in 1991 to 6.9% for the
nine-month period ended September 30, 1994.
Great Dane believes that these initiatives combined with its strong brand
name and reputation for manufacturing high quality products have positioned it
for continued growth. The key elements of its growth strategy are as follows:
- PRODUCT INNOVATION. Great Dane emphasizes the production of
custom-designed and proprietary products which generally produce higher
margins than standard products. Great Dane's engineering and flexible
manufacturing expertise enable it to produce custom-designed products
rapidly and efficiently while incorporating distinctive features through
computer aided design technologies. Recent product innovations marketed by
Great Dane include its proprietary, lightweight Thermacube van and reefer
which utilize a high density foam technology that yields superior cargo
space, strength, and thermal properties, and unique intermodal containers
and chassis which initiated Great Dane's entry into the growing intermodal
market. New products planned for 1995 include a proprietary,
ultra-lightweight flatbed trailer which utilizes a new technology that
minimizes its aluminum content, and a new reefer product which
incorporates a unique floor design that offers superior thermal
efficiencies, longevity and cargo space.
- INCREASE MARKET SHARE WITH LARGE ORDER FLEET CUSTOMERS. Great Dane is
actively seeking to increase its sales to large order fleet customers
which account for approximately 43% of total U.S. van trailer purchases.
The Company believes that these customers are the fastest growing segment
of the industry and estimates that its share of fleet orders approximates
10%. The balance of the U.S. van trailer market consists of small and
medium sized customers (approximately 30%) and leasing companies
(approximately 27%) where Great Dane estimates it has a 27% and 17% market
share, respectively. In order to increase its market share with large
order fleet customers, Great Dane has adapted certain of its assembly
lines to produce both large standardized and small customized orders.
Great Dane is in the process of acquiring the property and buildings for a
500,000 square foot manufacturing facility which will be equipped during
1995 with two high speed, more cost efficient assembly lines dedicated to
high volume, standard specification fleet orders. This new manufacturing
facility will be located near the existing Brazil, Indiana plant and Great
Dane expects to utilize its Brazil, Indiana management team to help
contain overhead expenses.
- STRONG NATIONAL DISTRIBUTION NETWORK. The Company believes that Great
Dane's distribution network, which consists of 17 Company-owned branches
and 51 independent dealers, is the largest marketing organization in the
North American trailer industry. This network provides Great Dane with a
competitive advantage in marketing its new and used trailer products and
providing higher-margin aftermarket parts and services. Great Dane
believes that its parts and services business will provide earnings growth
in the coming years due to the increasing size of the Great Dane and U.S.
trailer fleets.
- INTERMODAL TRANSPORTATION. In 1992, Great Dane entered the intermodal
transportation market by developing, in conjunction with a leading
truckload carrier, a unique line of intermodal containers and matching
ultra-lightweight chassis. These containers and chassis enable its
customers to utilize double stack rail intermodal service to haul freight
loads of similar size and weight to
21
<PAGE>
those it carries with conventional over-the-road trailers. The Company
believes that intermodal transportation will continue to provide growth
opportunities as carriers expand their intermodal activities. Great Dane's
strategy is to utilize its engineering expertise to design intermodal
products that meet the specific requirements of its customers. Great Dane
has also improved its market responsiveness by adapting certain assembly
lines to produce both trailers and containers.
PRODUCTS
GENERAL. Great Dane's principal products include vans, reefers, platform
trailers and intermodal containers and chassis. During 1992 and 1993, the sale
of these products accounted for 80% and 82% of Great Dane's revenues,
respectively. Great Dane's trailers and intermodal containers are manufactured
in sizes ranging from 28 to 57 feet. Great Dane offers 11 versions of its
various trailers and sells virtually all of these versions on a regular basis.
In addition to this standard line of products, its flexible assembly operations
enable Great Dane to customize products for its customers at premium prices.
Set forth below is a description of Great Dane's share of the market for its
principal products during 1993. All figures are based on estimated shipments.
<TABLE>
<CAPTION>
GREAT DANE INDUSTRY GREAT DANE
PRODUCT TYPE UNIT SALES UNIT SALES SHARE
- ---------------------------------------------------------------- ----------- ----------- ---------------
<S> <C> <C> <C>
Vans............................................................ 14,132 120,600 11.7%
Reefers......................................................... 8,034 21,200 37.9%
Platform Trailers............................................... 1,767 16,100 11.0%
Intermodal Containers and Chassis............................... 10,301 37,700 27.3%
</TABLE>
VANS. Vans are used primarily for the transportation of dry freight. Great
Dane believes that it offers the greatest variety of vans in the industry with
four primary styles: sheet and post, aluminum plate, ThermaCube and Fiberglass
Reinforced Plastic Plywood. Great Dane sells vans primarily to for-hire
truckload carriers, private carriers and leasing companies.
Great Dane's highest volume van product is the sheet and post van. These
trailers haul general non-refrigerated freight. Great Dane's models offer custom
design features in order to improve their appearance, durability and resale
value when compared to certain competitors' models.
Great Dane's aluminum plate vans were developed in late 1991. These vans,
considered to be a premium product, utilize thicker and more durable sidewalls
than sheet and post vans and offer significantly more interior space since they
are constructed without interior liners.
Great Dane's ThermaCube van was developed and brought to market in late
1990. The ThermaCube van currently uses a technology licensed to Great Dane by
Graaff KG ("Graaff"), a German limited partnership. The ThermaCube process
involves injecting high density foam between two thin skins of aluminum or other
suitable material and bonding them into a single panel. ThermaCube vans are
lightweight and offer superior width, space, strength and thermal properties.
Since it has completed the maximum royalty payment under its agreement with
Graaff, Great Dane's current and future usage of this technology for trailers is
royalty free.
Fiberglass Reinforced Plastic Plywood vans account for a small percentage of
Great Dane's van sales. They offer increased inside width but are 300 pounds
heavier than sheet and post vans. These vans are very durable and therefore are
used predominantly in large metropolitan areas.
REEFERS. Great Dane's reefers are specialized products that command premium
pricing. The Company believes that it is the largest supplier of reefers in the
industry (with a 37.9% share in 1993) and the only company to offer more than
one type of reefer. Great Dane currently sells three types of reefers: Classic
(either aluminum or stainless steel), Superseal and ThermaCube. The
refrigeration cooling units are not manufactured by Great Dane.
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<PAGE>
The Classic reefer, essentially a sheet and post reefer, is particularly
suitable for the food distribution market because it has been engineered to
accept numerous structural modifications such as side doors and
multi-temperature refrigeration compartments. Classic reefers are sold primarily
to private carriers and truck leasing companies.
The Superseal reefer is Great Dane's lightweight, lower-priced model. This
product offers fewer options than the Classic reefer but is most popular with
for-hire carriers. Since its purchase by Great Dane in 1988, its market share
has steadily increased due to product improvements and the use of Great Dane's
national distribution network.
Great Dane believes that its proprietary ThermaCube reefer is the most
efficient and technologically advanced reefer in the industry. It offers large
cubic capacity and inside width, side wall strength and superior thermal
properties. It is currently the flagship of two of the largest reefer carriers
in the U.S. and it is gaining popularity among medium-sized carriers.
PLATFORM TRAILERS. Platform trailers are flatbeds or open deck trailers.
Great Dane offers a full line of platform trailers, consisting of drop frame,
extendible, curtainside and straight frame trailers. Drop frame flatbeds are
designed for heavy duty hauling where low deck heights are required. Extendible
flatbeds are used for self-supporting loads (e.g., pre-stressed concrete).
Curtainside flatbeds are used where side loading and cover is required. The
primary customers for Great Dane's platform trailers are for-hire material
haulers, which would include steel haulers, pre-stressed concrete carriers and
builders. Great Dane is developing and testing a new line of ultra-lightweight
flatbeds intended to increase substantially its market share.
INTERMODAL CONTAINERS AND CHASSIS. In conjunction with the growth of
intermodal container transportation, Great Dane's engineers developed a
specialized container (which can be double stacked during rail transport) and
chassis that allow a trucking company to haul containerized loads which are
similar in size and weight to those carried on conventional over the road
trailers. These containers use either aluminum plate or the ThermaCube
technology, which is Great Dane's composite wall construction, to offer greater
inside width, higher cubic capacity and greater strength than can be obtained by
conventional sheet and post construction. Further, these containers are 500 to
1,000 pounds lighter and the chassis are 1,000 to 1,500 pounds lighter than
products now in use with similar carrying capacities. The Company believes that
it is one of the two largest U.S. manufacturers of intermodal containers and
chassis and the only domestic producer of reefer containers. Great Dane is
expecting to produce, for J.B. Hunt and others, a total of approximately 4,100
intermodal containers and a total of 5,000 chassis in 1994.
SERVICES
GENERAL. Great Dane's business includes aftermarket parts and accessories
sales, used trailer sales and retail services (including repair and maintenance)
which enable it to be a full-service provider. The parts and service operations
have historically been a stable source of higher margin business.
AFTERMARKET PARTS AND ACCESSORIES SALES. Sales of replacement parts and
accessories are an important source of higher margin revenues for Great Dane,
and provide a value-added service which attracts and maintains Great Dane's
customer base. Parts and accessories are marketed through 51 full-line dealers,
19 parts-only dealers and 17 Great Dane-owned branch operations. Dealers and
branches sell parts either over-the-counter or through their respective retail
services.
USED TRAILERS. To be competitive in the sale of new trailers, it is often
necessary to accept used trailers in trade. Great Dane's larger retail branches
employ individuals who are responsible for trade-in appraisals and selling used
trailers. Great Dane believes that its nationwide distribution system provides
it with superior used trailer marketing capabilities.
RETAIL SERVICES. Great Dane owns and operates 17 full-service retail
branches, which provide repair and maintenance services. These retail branches
also provide warranty support to Great Dane's customers.
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The chart below sets forth the percentage of Great Dane's total sales and
gross profit represented by each product or service category.
<TABLE>
<CAPTION>
% OF % OF
SALES GROSS PROFITS
-------------------- --------------------
PRODUCT OR SERVICE CATEGORY 1992 1993 1992 1993
- ------------------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
New Truck Trailers and Containers and Chassis............................ 79.6 82.5 59.4 63.5
Parts Sales.............................................................. 11.1 9.3 25.5 23.0
Used Trailers............................................................ 6.6 6.0 3.9 3.7
Retail Services.......................................................... 2.7 2.2 11.2 9.8
</TABLE>
BACKLOG
At September 30, 1994, Great Dane's backlog totalled $551.5 million and
consisted of approximately $458.2 million of trailer orders and $93.3 million of
container and chassis orders, of which Great Dane expects approximately $372.4
million to remain unfilled on December 31, 1994. At December 31, 1993, Great
Dane's backlog totalled $365 million and consisted of approximately $295 million
of trailer orders and approximately $70 million of container and chassis orders,
while at December 31, 1992, the backlog totalled $255 million and consisted of
approximately $134 million of trailer orders and approximately $121 million of
container and chassis orders. Great Dane's backlog of truck trailer orders was
approximately $70 million at December 31, 1991.
MARKETING, DISTRIBUTION AND SALES
Great Dane believes it has the largest marketing organization in the United
States trailer industry. Sales and comprehensive support service functions are
implemented through 17 Company-owned branches (accounting for 51% of unit sales
excluding J.B. Hunt), 51 independent dealers throughout the United States,
Canada and Mexico (accounting for 49% of unit sales excluding J.B. Hunt), and 19
parts-only dealers. Great Dane's nationwide distribution system enables it to
reach a diversified customer base consisting of: for-hire carriers (such as J.B.
Hunt, Direct Transit, KLLM and Landair), private carriers (such as Pepsico,
Burger King, Publix, Winn Dixie and Food Lion) and leasing companies (such as
Ryder, Penske, Rollins, XTRA and Ruan). Except for J.B. Hunt, no customer
accounted for more than 5% of total revenues in 1993. With the exception of a
small percentage of used trailer sales and sales to J.B. Hunt, all sales are
made through Great Dane's distribution system.
Great Dane's sales force includes approximately 126 sales representatives in
dealerships and 43 sales representatives in its branches. The Company's sales
force is given incentives to meet revenue and/or profitability targets.
Under an agreement with Associates Corporation of North America
("Associates"), Great Dane has agreed to refer to Associates, until the last
quarter of 1996, those of Great Dane's customers who request financing and Great
Dane has guaranteed 50% of Associates' losses (to a potential maximum of $1.25
million each year) if a trailer is repossessed. Great Dane has not experienced
any material losses under this agreement.
Great Dane provides five year warranties to its customers and estimates its
warranty costs are only 0.8% of its sale price.
MANUFACTURING AND OPERATIONS
MANUFACTURING. Great Dane has four manufacturing facilities, located in
Savannah, Georgia; Memphis, Tennessee; Wayne, Nebraska; and Brazil, Indiana and
has entered into a contract, subject to certain conditions, to acquire property
and buildings for an additional manufacturing facility in Terre Haute, Indiana.
Certain of Great Dane's manufacturing operations include flexible assembly lines
that allow Great Dane to customize its products in a cost-efficient manner.
Great Dane exercises strict quality control by screening suppliers and
conducting inspections throughout the production process. Great Dane is
currently implementing a total quality management program that endorses employee
involvement, empowerment and continuous cost improvement.
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<PAGE>
RESEARCH AND DEVELOPMENT. Great Dane currently employs a corporate
engineering department with 36 employees, which is higher than the industry
average. Great Dane makes extensive use of computer-aided design ("CAD")
technology to support production engineering. Great Dane's use of CAD technology
accelerates the development of product innovations and manufacturing
efficiencies. Great Dane's new products must meet strict quality and durability
standards and must pass strenuous road test procedures. Great Dane believes that
it is the only trailer manufacturer with on-site road simulation testing
capability.
Great Dane has developed a new proprietary floor for its ThermaCube and
certain Classic reefers which will eliminate wood components, thereby increasing
the life of the floor, increasing the capacity of the reefer, simplifying the
manufacturing process and reducing the cost to manufacture the reefer. The
warranty on the new floor will be seven years. Great Dane is also developing and
testing a new line of ultra-lightweight flatbeds intended to increase its market
share.
SUPPLIES AND RAW MATERIALS. Purchased materials represent approximately 80%
of direct cost of goods sold and are purchased on a centralized basis in order
to achieve economies of scale. Great Dane purchases a variety of raw materials
and sub-assemblies from various vendors with short-term contracts. Aluminum,
wood, tires and steel account for a significant portion of materials costs.
Great Dane has not experienced major shortages in these materials, but prices
may fluctuate. However, Great Dane attempts to minimize purchased material price
fluctuations by utilizing just-in-time inventory systems, thereby coordinating
the purchase of certain materials with customer orders.
ENVIRONMENTAL. Certain of Great Dane's manufacturing processes involve the
emission of chlorofluorocarbons, but Great Dane has changed those processes to
comply with new regulations and does not believe that this change will have a
material adverse effect on its operations. The manufacturing process generates
nominal volumes of waste materials, which are disposed of in accordance with
applicable regulations.
Great Dane is involved in a small number of environmental matters.
Management believes that the expenses associated with Great Dane's involvement
are not material in the aggregate.
PATENTS, LICENSES AND TRADEMARKS
The Company believes its "Great Dane" trademark, which identifies all of its
products, to be of value and to contribute significantly to the wide acceptance
of its products.
AUTOMOTIVE PRODUCTS OPERATIONS
OVERVIEW
Through South Charleston Stamping & Manufacturing Company and its Kalamazoo,
Michigan facility, Motors develops, designs, engineers and manufactures a broad
range of sheet metal automotive components and subassemblies, including
tailgates, fenders, doors, roofs and hoods for sale to North American OEMs. The
majority of Motors' revenues are derived from complex, value-added products,
primarily assemblies containing multiple stamped parts and various welded or
fastened components. For the year ended December 31, 1993 and the nine months
ended September 30, 1994, these operations generated approximately 14% and 14%
of the Company's revenues and 29% and 25% of the Company's total segment
operating profit.
INDUSTRY OVERVIEW
The North American automotive parts industry is composed of two distinct
sectors, the original equipment market and the automotive aftermarket.
Substantially all of Motors' sales are to the original equipment market.
Industry factors which affect the automotive segment's current and future
competitiveness, growth and performance include, among others, trends in the
automotive market and policies of OEMs with respect to suppliers.
The overall market for new cars and light trucks in the United States and
Canada is large and cyclical, with a trend line annual growth of 2.3% from 1983
to 1993. While the trend line demand for cars has remained relatively flat over
this period, demand for minivan, sports utility vehicles and light trucks has
25
<PAGE>
grown at a compound annual growth rate of 7.3% over this period. The Company
believes it is well positioned as a supplier of sheet metal components and
subassemblies to the OEMs in this high-growth market segment.
Because of ever-increasing global competition, OEMs are continually
upgrading their supplier policies. The criteria for selection include not only
cost, quality and responsiveness, but also certain full-service capabilities
including design, engineering and project management support. OEMs have
developed rigorous programs for evaluating and rating suppliers. Suppliers that
obtain superior ratings are considered for sourcing new business; those that do
not may continue their existing contracts but normally do not receive additional
business. These criteria can best be satisfied by full-service suppliers with
sufficient size and financial resources to meet such demands. For full-service
suppliers such as Motors, the new environment provides an opportunity to grow by
obtaining business previously provided by other suppliers and by acquiring
suppliers that further enhance product, manufacturing and service capabilities.
BUSINESS STRATEGY
The automotive supplier industry is experiencing consolidation as OEMs are
increasingly requiring suppliers to meet more stringent quality standards and to
possess certain full-service capabilities including design, engineering and
project management support. Motors' principal objective is to capitalize on this
trend through both internal growth and strategic acquisitions. The key elements
of this strategy are as follows:
- HIGH GROWTH LIGHT TRUCK/SPORTS UTILITY FOCUS. Motors focuses on supplying
components for light trucks, minivans and sports utility vehicles due to their
high growth rate and long model lives. From 1983 to 1993, light trucks/sport
utility vehicles were the fastest growing segment of the automotive market with
a 7.3% compound annual growth rate. Motors currently supplies parts on the
following light truck/ sport utility and minivan vehicles: Suburban, Blazer,
S-10 Blazer, Crew Cab, M Van (Astro and Safari), full-size CK Truck and CK Sport
Side. Motors has also been awarded an eight-year contract by Mercedes-Benz to
produce the majority of the stamping components for its new sports utility
vehicle.
- FULL-SERVICE CAPABILITIES. Motors provides a full complement of services,
including design, engineering and manufacturing, which enables it to play an
integral role in the development and execution of product programs for its
customers. Motors works with its customers throughout the product development
process and, in some cases, locates employees on site at its customers'
facilities in order to design, engineer and manufacture the highest quality
products at the lowest possible cost. Motors believes that this close
coordination with its customers allows it to identify business opportunities and
react to customer needs in the early stages of vehicle design and, therefore,
maintain and increase its volume with its customers.
- HIGH QUALITY PRODUCTS. The Company believes SCSM is one of the premier
stamping facilities in the U.S. This is exemplified by SCSM's receipt of
numerous quality awards including the GM Mark of Excellence and the GM QSP
(quality, service, price) award for being GM's 1993 worldwide Supplier of the
Year for major metal stampings. SCSM has also been qualified to produce
components which comply with the ISO 9000 international standard. The Company
believes that these awards are a critical factor in securing additional business
from OEMs.
- EXPANDING CUSTOMER BASE. Motors has developed strong relationships with
its customers based on its long history of supplying high quality products and
its full-service capabilities. Motors' objectives are to increase volume with
its existing customers and develop relationships with new customers. In the last
twelve months, Motors has expanded its business with existing customers
including GM, Freightliner Corp., Saturn Corporation and Ford Motor Co. Motors
has also secured business with two new customers, Mercedes-Benz and Toyota.
- FOCUS ON HIGHER-MARGIN/VALUE-ADDED PRODUCTS. Motors strives to compete in
markets where it can achieve greater profitability by providing complex,
value-added products, primarily assemblies containing multiple stamped parts and
various welded or fastened components. Unlike many of its
26
<PAGE>
competitors, SCSM presently has the equipment to supply complete assemblies
including large stampings and related assembly parts. As an example, Motors
currently supplies the sliding door, which is composed of several stampings and
fasteners, on the GM Astro and Safari Vans. The majority of Motors' revenues are
derived from such assemblies.
MANUFACTURING
Unlike certain of its smaller competitors, SCSM has the equipment and
versatility to produce a wide variety of automotive stamping products, carrying
out substantially all phases of a project under one roof. SCSM produces
approximately 150 products at its over 900,000 square foot modernized facility.
Its principal products include tailgate and liftgate assemblies, door
assemblies, hood assemblies, fender assemblies, wheelhouses, pillars, back
panels, floor panels, deck lids, body side panels, roof outer panels and related
parts. SCSM currently processes 9,000 tons of steel per month for 400 part
numbers and currently ships between 45,000 and 50,000 pieces per day to its
customers from 780 dies. Volume fluctuations at SCSM are managed by use of
overtime and temporary manpower. Management is pursuing new long-term
commitments to utilize SCSM's available capacity.
The major portion of tooling design, build and prototype for SCSM is
performed by selected suppliers under close supervision. Die maintenance and
engineering changes are completed in SCSM's own 60,000 square foot die room
which houses approximately 60 tool and die makers. The tool room handles all die
maintenance and engineering changes in-house, including all serious die trouble
such as major breaks.
CMC Kalamazoo also fabricates and assembles automotive products for those
jobs whose end product must be delivered in the surrounding Midwest region,
since transportation is a growing cost in this industry.
MARKETING AND CUSTOMERS
The automotive segment focuses on the higher-growth light truck, sports
utility vehicle and van segments of the market and currently supplies products
primarily for GM. At the present time, Motors is supplying parts on the
following GM vehicles, among others: Suburban, Blazer, S-10 Blazer, Crew Cab, M
Van (Astro and Safari), full-size G Van, CK Truck, CK Sport Side, C Car and H
Car. The Company has been advised that GM plans to begin production of a
four-door version of the full-size Blazer. SCSM has supplied the roof module and
other parts for the two-door model for the past three years and will be GM's
supplier of the roof module for the four-door version. The automotive segment
also supplies parts for GM's services organization.
Motors is also currently supplying parts to Freightliner Corp. (Class 6 and
7 Truck), Saturn Corporation (sedan and coupe), Ford Motor Co. (Cougar and
Thunderbird) and Toyota (Camry). In addition, the automotive segment signed a
contract in March 1994 with Mercedes-Benz to produce the majority of the
stamping parts for its new sports utility vehicle for which production is
expected to begin in 1996. Mercedes-Benz is providing the funding necessary for
the tooling to produce these parts. Although the Company expects these new
customers to help expand Motors' business, they are not expected to reduce
significantly Motors' substantial reliance on GM.
Shipments of customer orders from both SCSM and CMC Kalamazoo are made on a
daily or weekly basis as required by the customer. GM provides an estimated
13-week shipping forecast which is used for material and fabrication planning
purposes. Nevertheless, changes in production by the customer may be reflected
in increases or decreases of these forecasts.
CMC Kalamazoo and SCSM are committed to customer satisfaction by producing
parts and providing the necessary support systems to assure conformity to
customer requirements. As evidence of success in these areas, SCSM has been
awarded GM's "Mark of Excellence" Award, and the GM Q.S.P. (quality, service,
price) award for being GM's worldwide Supplier of the Year 1993 for major sheet
metal stampings. In addition, SCSM has been awarded ISO 9000 Certification by
the International Standards Organization (ISO 9002).
27
<PAGE>
OTHER OPERATIONS
VEHICULAR
OVERVIEW
For the year ended December 31, 1993 and the nine months ended September 30,
1994, the vehicular operations generated approximately 5% and 4% of the
Company's revenues and 12% and 8% of the Company's total segment operating
profit, respectively. Yellow Cab is the largest taxicab fleet owner in Chicago
and as of September 30, 1994, owned approximately 2,370 or 44% of the
approximately 5,400 medallions available in Chicago. Yellow Cab's primary
business is the leasing of its medallions and vehicles to independent taxi
operators through two programs: the owner-operator program and the daily lease
program. The Company also provides a variety of other services to taxi drivers
and non-affiliated medallion holders, including insurance coverage through
Country and repair and maintenance services through its Chicago AutoWerks
division ("Chicago AutoWerks").
THE OWNER-OPERATOR AND DAILY LEASE PROGRAMS
Pursuant to Yellow Cab's owner-operator program, an independent,
non-employee taxi operator leases from Yellow Cab a license and vehicle, with an
option to purchase the vehicle beginning at the end of the second year. During
the lease term (generally five years), Yellow Cab receives a weekly lease
payment for the vehicle as well as a weekly fee to cover the use of Yellow Cab's
license and other services provided by Yellow Cab and its affiliates, including
use of its colors and tradename, liability insurance coverage, radio dispatch,
repair and maintenance. Most operators also purchase the required collision
insurance from Country. See "Business -- Other Operations -- Insurance." As of
September 30, 1994, approximately 67% of the Company's medallions were leased
under the owner-operator program. The daily lease program, which allows drivers
to lease a medallion and a vehicle for 12 hours, 24 hours, or for a weekend, has
been used largely as a source and training operation for new owner-operators.
MAINTENANCE, REPAIR AND PARTS SALES
Chicago AutoWerks provides preventive and other maintenance services,
primarily to Yellow Cab and non-affiliated taxi drivers, and also, as a licensed
full-line auto repair shop, to the public. Chicago AutoWerks maintains a body
shop at which major repairs can be made. As an authorized Chevrolet and Ford
warrantor, Chicago AutoWerks also repairs those manufacturers' vehicles that are
under warranty and invoices the manufacturers directly.
Chicago AutoWerks serves the dispatching needs of Yellow Cab and
non-affiliated drivers, maintains the radios in their taxicabs and supplies the
emergency radio services they require. Chicago AutoWerks also sells automotive
parts.
THE MEDALLIONS
As of September 30, 1994, Yellow Cab owned approximately 2,370 of the
approximately 5,400 medallions available in Chicago. In order to retain these
licenses, the Company must comply with the regulations of Chapter 9-112 of the
Municipal Code of Chicago (governing public passenger vehicles), including the
payment of annual taxicab license fees, currently $500 per vehicle.
Pursuant to a 1988 agreement with Chicago to settle various lawsuits, Yellow
Cab is required to relinquish to Chicago and not renew 100 taxicab licenses on
January 1 of each year through 1997 (the "Agreement"). In addition, the
Agreement limits to 100 per year the number of new licenses that Chicago may add
to the total outstanding through 1997, bringing the total number of available
licenses to a maximum of 5,700 on December 31, 1997. At the required surrender
rate, assuming no additional medallions are sold by Yellow Cab, Yellow Cab would
hold approximately 2,070 medallions after January 1, 1997, or approximately 36%
of the maximum number of medallions to be outstanding on that date. There is
currently no limit, however, on the number of medallions Chicago may issue after
December 31, 1997. Under the Agreement, no person other than Motors and its
affiliated companies can own more than 25% of the licenses in Chicago.
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<PAGE>
The scheduled decline in the number of licenses allowed to be held by Yellow
Cab pursuant to the Agreement has had, and will continue to have, a negative
effect on the revenue-generating capability of the taxi leasing operations.
Although Yellow Cab has been able to offset these declines to some extent
through increases in the average lease rates charged to its customers, in
December 1993, Chicago passed an ordinance which gives the Commissioner of
Consumer Services broad powers to set maximum lease rates. See "-- Regulatory
Issues." The Company has also sought to increase its vehicular operations'
revenues by offering ancillary services to the increasing number of unaffiliated
taxi drivers through Chicago AutoWerks. At the same time, as the number of
medallions held by Yellow Cab declines, Yellow Cab will require fewer new
vehicles to support its taxi leasing operations and, consequently, decreased
capital spending.
The Agreement has also had the effect of allowing the Company to sell
licenses in the open market for the first time since 1982. In 1993 and the first
three quarters of 1994, the Company sold 73 and 4 medallions, respectively, at
an average price of $38,000 each, a historical high. There can be no assurance
that such values will continue to prevail in the market, especially after
December 31, 1997. Although the value of Yellow Cab's fleet of vehicles is
reflected on the Company's balance sheet, the significant value of its
medallions is not.
LIABILITY INSURANCE
Yellow Cab currently maintains liability insurance coverage for losses of up
to $350,000 per occurrence as well as an "excess layer" of coverage for losses
over $600,000 and up to $29,000,000. The initial $350,000 layer of insurance is
issued by Country. See "Business -- Other Operations -- Insurance." During
several periods in the past, Yellow Cab did not maintain the level of coverage
that Yellow Cab currently maintains. As a result, there were, as of September
30, 1994, six outstanding claims against Yellow Cab for which it is not fully
covered by third-party insurance. As of that date, Yellow Cab maintained balance
sheet reserves totalling approximately $1,650,000 for these claims. Management
believes that these reserves will be sufficient to cover its outstanding claims.
REGULATORY ISSUES
Yellow Cab's operations are regulated extensively by the Department of
Consumer Services of Chicago which regulates Chicago taxicab operations with
regard to certain matters including, among others, vehicle maintenance,
insurance and inspections. The City Council of Chicago has authority for setting
taxicab rates of fare. Effective December 1, 1993, lessors had the right to
increase, until May 1, 1994, the rates paid by lessee drivers by not more than
2.8% of the lease rate in effect on December 1, 1993. After May 1, 1994, lessors
may not charge more than the rates prescribed by the Commissioner (which, in
certain categories, are less than the rates currently charged by Yellow Cab)
without the consent of the City of Chicago. The rates in effect on May 1, 1994,
including the 2.8% increase, may remain in effect pending a petition and appeal
for a higher rate. Yellow Cab increased its rates by the maximum allowed 2.8%
prior to May 1, 1994 and has filed, in a timely manner, a petition to increase
its rates still further. Yellow Cab intends to pursue that proposal to final
hearing.
INSURANCE
For the year ended December 31, 1993 and the nine months ended September 30,
1994, Country generated approximately 3% and 3% of the Company's revenues and an
aggregate of $3.9 million of pre-tax income (comprising approximately $2.0
million of segment operating loss and approximately $5.9 million of portfolio
interest income) and $3.0 million of pre-tax income (comprising approximately
$1.1 million of segment operating loss and $4.1 million of portfolio interest
income). Country is currently rated "A" by A.M. Best.
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<PAGE>
The taxicab liability coverage which Country writes carries a $350,000 limit
of liability for each occurrence. In addition, Country makes collision insurance
available to licensees and owner-operators at premium rates which are comparable
to the rates charged by competitors for equivalent coverage. Country also writes
full lines of commercial and personal property and casualty insurance for risks
located in Chicago and the surrounding metropolitan area. With the exception of
a specialty public transportation program, which program policies are reinsured
for amounts above $350,000, all non-affiliate policies are reinsured for amounts
above $150,000.
Country is domiciled in the State of Illinois and is a licensed carrier in
Michigan as well as being admitted as an excess and surplus lines carrier in 33
other states. Country has commenced expansion of its business in Southern
Illinois by contracting with established agencies in Peoria, Decatur and
Champaign, Illinois and intends to emphasize personal lines of insurance, such
as homeowners and commercial multiple peril and automobile liability and
physical damage. Country is also applying for licenses in other states, such as
Wisconsin, Indiana and Iowa. To the best of management's knowledge, Country is
in compliance with all applicable statutory requirements and regulations.
INFORMATION CONCERNING BUSINESS SEGMENTS
Certain financial data with respect to the Company's business segments
appear in Note N of Notes to Consolidated Financial Statements -- December 31,
1993 and are incorporated herein by reference.
EMPLOYEES AND LABOR RELATIONS
As of September 30, 1994, the Company had a total of approximately 5,500
employees. The table below details the number of persons employed as of that
date in each of the Company's business segments:
<TABLE>
<CAPTION>
ADMINISTRATIVE
HOURLY AND EXECUTIVE
--------- -----------------
<S> <C> <C>
Trailer Manufacturing Operations........................................... 3,496 576
Automotive Products Operations............................................. 878 152
Other Operations........................................................... 229 172
</TABLE>
Approximately 325 employees in the Company's trailer manufacturing
operations, 309 in the Company's automotive products operations, and 58 in the
Company's vehicular operations are covered by collective bargaining agreements.
During 1993, Checker L.P. entered into a new contract with the Allied Industrial
Workers of America, AFL-CIO, Local 682 in Kalamazoo, Michigan, currently known
as Local Union No. 7682 of The United Paperworkers International Union, AFL-CIO,
which expires in May 1996. Checker L.P. is party to a contract with D.U.O.C.
Local 777, a division of National Production Workers of Chicago and Vicinity,
Local 777, which expires in November 1995. During 1993, Great Dane Trailers
Tennessee, Inc., a subsidiary of Great Dane, negotiated a new contract (expiring
in January 1996) with Talbot Lodge No. 61 of the International Association of
Machinists and Aerospace Workers. In general, the Company believes its
relationship with its employees to be satisfactory. Although there have been
attempts to unionize various of the Company's divisions in the past few years,
including SCSM and the Great Dane plant in Brazil, Indiana, such attempts have,
to date, been unsuccessful.
PROPERTIES
Holdings currently maintains its principal executive offices at Checker
L.P.'s facility in Kalamazoo, Michigan.
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<PAGE>
The location and general description of the principal properties owned or
leased by the Company are as follows:
<TABLE>
<CAPTION>
OWNED OR LEASED;
AREA/FACILITY IF LEASED,
LOCATION TYPE OF FACILITY SQUARE FOOTAGE EXPIRATION YEAR
- -------------------------------- ------------------------------- -------------------------- ------------------
<S> <C> <C> <C>
TRAILER MANUFACTURING
OPERATIONS:
Savannah, Georgia............... Manufacturing Plant and Office 61 acres/471,000 sq. ft. Owned
Brazil, Indiana................. Manufacturing Plant and Office 80 acres/564,000 sq. ft. Owned
Memphis, Tennessee.............. Manufacturing Plant 8 acres/107,000 sq. ft. Leased; 2003
3.5 acres/13,000 sq. ft. Owned
Wayne, Nebraska................. Manufacturing Plant and Office 35 acres/197,000 sq. ft. Owned
14 Locations in 10 States....... Sales and Service Branches 98 acres/303,000 sq. ft. Owned
17 Locations in 12 States....... Sales and Service Branches 35 acres/228,000 sq. ft. Leased; 1994 to
2015
AUTOMOTIVE PRODUCTS
OPERATIONS:
Kalamazoo, Michigan............. Manufacturing Plant and Office 71 acres/750,000 sq. ft. Owned
South Charleston,
West Virginia.................. Manufacturing Plant and Office 922,000 sq. ft. Leased; 2028
OTHER OPERATIONS:
VEHICULAR
Chicago, Illinois
(13 Locations)................. Garages, Parking Lots and 735,000 sq. ft. 11 Owned; 2 Leased
Offices
INSURANCE
Chicago, Illinois
(3 Locations).................. Offices/Storage Facility 33,000 sq. ft. Leased; 1995 to
2002
</TABLE>
The principal facilities owned by the Company are considered by the Company
to be well maintained, in good condition and suitable for their intended use.
LEGAL PROCEEDINGS
EXECUTIVE LIFE LITIGATION
By order of the Superior Court of Los Angeles County (the "California
Court") on April 11, 1991, Case No. B5-006-912 (the "California Order"), the
California State Insurance Commissioner was appointed Conservator for Executive
Life Insurance Company ("ELIC"), a limited partner in Checker L.P. By letter
dated May 20, 1991, Motors and Checker L.P. advised ELIC and the Conservator
that the appointment of the Conservator pursuant to the California Order
constituted an "Event of Default" under the Partnership Agreement, and that,
therefore, ELIC's rights under the Partnership Agreement and interest in Checker
L.P. were altered. More specifically, Motors and Checker L.P. asserted that
ELIC's rights, as of April 11, 1991, were limited to the right to receive a
payout of its capital account, calculated as of that date, in quarterly
installments over approximately a 23-year period. On June 28, 1991, the
Conservator notified Motors and Checker L.P. that he did not accept the position
set forth in the May 20 letter and that,
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<PAGE>
in his view, ELIC's status as a limited partner had not been altered. In this
litigation, each of Motors, Checker L.P. and the Conservator had been seeking,
among other things, a declaration of its rights under the Partnership Agreement.
Motors, Checker L.P. and the Conservator have agreed to settle the litigation.
On May 26, 1994, the California Court approved a settlement of this
litigation. Pursuant to the settlement, the Company may redeem ELIC's interest
in Checker L.P. for $37.0 million (the "Minority Interest Redemption"). In
addition, under certain circumstances, if all or substantially all of the assets
of Checker L.P. are sold within five years of the consummation of the Minority
Interest Redemption, ELIC may be entitled to receive a payment equal to the
positive difference between (x) the distribution ELIC would have received upon
liquidation of Checker L.P. as a result of such transaction, calculated in
accordance with the provisions of the Partnership Agreement as if it had
continued to hold its partnership interest, and (y) the future value of $37.0
million calculated at 15% per annum from the date of the Minority Interest
Redemption to the date of such transaction. If the Minority Interest Redemption
has not been consummated prior to January 21, 1995, then, among other things,
ELIC will be readmitted to Checker L.P. as a limited partner.
BOEING LITIGATION
On February 8, 1989, the Boeing Company ("Boeing") filed a lawsuit naming
Holdings, together with three prior subsidiaries of Holdings, as defendants in
Case No. CV89-119MA, United States District Court for the District of Oregon. In
that lawsuit, Boeing sought damages and declaratory relief for past and future
costs resulting from alleged groundwater contamination at a location in Gresham,
Oregon, where the three prior subsidiaries of Holdings formerly conducted
business operations. On December 22, 1993, Holdings entered into a settlement
with Boeing, settling all claims asserted by Boeing in the lawsuit. Pursuant to
the settlement terms, Holdings will pay Boeing $12.5 million over the course of
five years, at least $5 million of which has been committed by certain insurance
companies in the form of cash or irrevocable letters of credit. The Company
established a reserve of $7.5 million in 1993 in connection with this matter. Of
the $7.3 million balance remaining to be paid as of September 30, 1994,
approximately $2.5 million will come from insurance recoveries and the balance
from cash currently on hand and cash flow generated from operations. In
accordance with the settlement agreement, Boeing's claims against Holdings and
the three former subsidiaries have been dismissed and Boeing has released and
indemnified Holdings with respect to certain claims.
CERTAIN ENVIRONMENTAL MATTERS
Within the past five years, Great Dane and Motors have entered into certain
consent decrees with federal and state governments relating to the cleanup of
waste materials. The aggregate obligations of Great Dane and Motors pursuant to
these consent decrees are not material.
In May 1988, Holdings sold all of the stock of its subsidiaries, Datron
Systems, Inc. and All American Industries, Inc., and in connection therewith
agreed to indemnify the purchaser for, among other things, certain potential
environmental liabilities. The purchaser asserted various claims for
indemnification and had commenced litigation in Connecticut with respect to
alleged contamination at a manufacturing facility owned by a former second-tier
subsidiary. The court denied one of the purchaser's claims and dismissed another
with prejudice. The balance of the claims for reimbursement of monitoring and
clean up costs were dismissed without prejudice. Holdings and the purchaser have
resolved their relative responsibilities for all claims for cleanup and
monitoring costs at the facility through April 1993 and Holdings paid $350,000
in complete payment of all bills submitted for work completed prior to that
time. Holdings and the purchaser are continuing to discuss their relative
responsibilities for monitoring costs after that time. Holdings does not believe
that its obligations will be material. The purchaser has also put Holdings on
notice of certain other alleged environmental and other matters for which it
intends to seek indemnification as costs are incurred. Holdings does not believe
that its obligations, if any, to pay these claims will be material.
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<PAGE>
Yellow Cab owns eleven parcels of real estate, all situated in Chicago. Some
of these sites have previously been used for the storage and servicing of
taxicabs and some of the sites continue to be so used. These sites, therefore,
involve gasoline and oil underground storage tanks which may create a hazardous
waste product if the tanks on any parcel now leak or have in the past leaked.
Yellow Cab has registered in accordance with law all of its underground
tanks with the Office of the State Fire Marshall for the State of Illinois and
has secured site assessments from environmental engineers and consultants
concerning the nature and extent of any hazardous discharge. Under the Illinois
Underground Storage Tank Fund Law, virtually all clean-up costs associated with
leaking tanks are covered by a guaranty fund, which is administered by the
Illinois Environmental Protection Agency and reimburses these costs except for
the first $10,000 per site. Even assuming reimbursement is denied or unavailable
from this guaranty fund, the Company believes that the liability for clean-up
expenses on sites which have not already been cleaned up will not be material.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth the name, age and principal position of each
of the executive officers and directors of the Company as of September 30, 1994:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------------- --- ------------------------------------------------------
<S> <C> <C>
David R. Markin.............................. 63 President, Chief Executive Officer and Director of
Holdings
Allan R. Tessler............................. 57 Chairman of the Board of Holdings
Martin L. Solomon............................ 57 Vice Chairman and Secretary of Holdings
Wilmer J. Thomas, Jr......................... 67 Vice Chairman of Holdings
Jay H. Harris................................ 58 Executive Vice President and Chief Operating Officer
of Holdings
Marlan R. Smith.............................. 50 Treasurer of Holdings
Kevin J. Hanley.............................. 39 Controller of Holdings
Willard R. Hildebrand........................ 55 President and Chief Executive Officer of Great Dane
Larry D. Temple.............................. 47 Group Vice President of Motors
John T. Wise................................. 48 President of SCSM
Jeffrey M. Feldman........................... 43 President of Yellow Cab
</TABLE>
BIOGRAPHICAL INFORMATION
David R. Markin, President and Chief Executive Officer of Holdings since
January 11, 1989, has been President and Chief Executive Officer of Motors since
1970. Mr. Markin serves on the Boards of Directors of Jackpot Enterprises, Inc.,
an operator of gaming machines, Enhance Financial Services Group Inc., a
reinsurance company, and Data Broadcasting Corporation, a provider of market
data services to the investment community.
Allan R. Tessler, Chairman of the Board of Holdings since January 11, 1989,
is also Chairman of the Boards of Directors of International Financial Group,
Inc., a merchant banking firm ("IFG"), Enhance Financial Services Group Inc., a
reinsurance company, Allis-Chalmers Corporation, a manufacturer of miscellaneous
fabricated textile products ("Allis-Chalmers"), and Jackpot Enterprises, Inc.,
an operator of gaming machines, and has been Chief Executive Officer of IFG
since 1987 and of Allis-Chalmers since 1994. Mr. Tessler serves on the Board of
Directors of The Limited, Inc., a manufacturer and retailer of apparel. From
December 1991 through September 1993, Mr. Tessler was Chairman of the Board and
Chief Executive Officer of Ameriscribe Corporation, a national provider of
facilities management services. Mr. Tessler is also an attorney and from 1976
through 1988, he was a member of the Executive Committee of the law firm of Shea
& Gould; from 1989 through March 1, 1993, he was of counsel to that firm.
Beginning in 1990, Mr. Tessler and another person were retained by
Infotechnology, Inc. and Financial News Network Inc. as a restructuring team and
to serve as Co-Chief Executive Officers during the
33
<PAGE>
restructuring of those companies. As part of the plan implemented by the
restructuring team, those companies were placed in bankruptcy, from which they
emerged in 1992 as Data Broadcasting Corporation, a provider of market data
services to the investment community. Mr. Tessler continues to serve as
Co-Chairman of the Board and Co-Chief Executive Officer of the restructured
company.
Martin L. Solomon, Vice Chairman and Secretary of Holdings since January 11,
1989, is a private investor. Mr. Solomon was employed as a securities and
portfolio analyst at Steinhardt Partners, an investment firm, from 1985 through
1987. From 1988 through September 1990, he was the Managing Partner and Director
at Value Equity Associates I, Limited Partnership, an investment firm. Mr.
Solomon serves on the Board of Directors of Xtra Corporation, a truck leasing
company.
Wilmer J. Thomas, Jr., Vice Chairman of Holdings since January 11, 1989, is
a private investor. Mr. Thomas served as Treasurer of Holdings from January 1989
to January 1994. Mr. Thomas serves on the Boards of Directors of Moore Medical
Corp., a pharmaceutical and surgical supply company and Oak Hills Sportswear
Corp., a clothing company.
Jay H. Harris has been Executive Vice President and Chief Operating Officer
of Holdings for more than the past five years and a Vice President of Motors
since May 1991. Mr. Harris was a director of Holdings from 1978 until January
11, 1989.
Marlan R. Smith has been Treasurer of Holdings since January 1994 and Vice
President and Treasurer of Motors since March 1988. Prior to being elected
Treasurer of Holdings, he served as Assistant Treasurer since January 1989.
Kevin J. Hanley has been Controller of Holdings since January 1994 and
Secretary and Controller of Motors since December 1989. For more than five years
prior thereto, Mr. Hanley served as a senior manager with Ernst & Young LLP.
Willard R. Hildebrand was elected as President and Chief Executive Officer
of Great Dane effective January 1, 1992. Mr. Hildebrand had served as President
and Chief Operating Officer of Fiatallis North America, Inc., a manufacturer of
heavy construction and agricultural equipment, for more than five years prior
thereto.
Larry D. Temple has been Group Vice President of Motors since September
1989. Mr. Temple served as Vice President of Manufacturing from 1988 to 1989
and, prior thereto, as Assistant Vice President of Manufacturing.
John T. Wise has been President of SCSM for the past two years. He was Vice
President -- General Manager from 1989 to 1992, and prior thereto served as
Plant Manager.
Jeffrey M. Feldman has been President of Yellow Cab since 1983 and Vice
President of Motors since January 1988.
BOARD OF DIRECTORS; COMMITTEES
All directors of Holdings hold office until the next annual meeting of
stockholders of Holdings or until their successors are duly elected and
qualified. Officers are elected annually by the Board of Directors of Holdings
and hold office until their successors are duly elected and qualified.
Holdings has undertaken to add three independent directors to its Board of
Directors within days after . In connection with this undertaking,
the Board plans to increase the number of directors from four to seven,
effective upon the consummation of this Offering. The Board of Directors has
created an Audit Committee and a Compensation Committee. Following appointment
of the independent directors, a majority of the Audit Committee will be composed
of independent directors and will be charged with reviewing the Company's annual
audit and meeting with the Company's independent auditors to review the
Company's internal controls and financial management practices. If the 1994
Option Plan is approved by both the Compensation Committee and the stockholders
of Holdings, the Compensation Committee, which will also be composed exclusively
of the independent directors, will administer the 1994 Option Plan. See "--
Compensation Pursuant to Plans."
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<PAGE>
The directors did not receive any fees for their services as directors in
1993. See "-- Certain Transactions." Upon consummation of the Offering, each of
Holdings' directors will receive an annual director's fee of $30,000, plus
reimbursement of expenses incurred in attending meetings.
CERTAIN TRANSACTIONS
The Company has had no separate compensation committee or other committee
providing equivalent functions. Each of Messrs. Markin, Solomon, Tessler and
Thomas is an executive officer of Holdings and participates, as a director, in
the deliberations concerning executive officer compensation. During 1993, Mr.
Markin served on the compensation committee of Enhance Financial Services Group
Inc. and Data Broadcasting Corporation and Mr. Tessler served as an executive
officer of each of these companies.
As of December 31, 1993, Country holds $0.9 million principal amount of
Enhance Financial Services Group Inc., 7% Notes due December 1, 1996, of which
company Mr. Markin is a director.
During 1993, 1992 and 1991, the Company used, on a month-to-month basis, an
airplane owned by a corporation of which Mr. Tessler is the sole shareholder.
The Company paid $60,000 per month for such use.
Each of Messrs. Markin, Solomon, Tessler and Thomas provides consulting
services to Yellow Cab and each receives for such services (commencing in
January 1988) $10,000 per month. Messrs. Solomon, Tessler and Thomas also
provide consulting services (a) to Motors for which they each receive monthly
fees of $5,000 (commencing in January 1988) and (b) to Country for which they
each received monthly fees of approximately $18,300 in each of 1993, 1992 and
1991. Mr. Markin serves as a consultant to Chicago AutoWerks, a division of
Checker L.P., for which he receives monthly fees of approximately $1,200
(commencing in January 1988), and to Country, for which he receives monthly fees
of approximately $4,600. Upon consummation of the Offering, these fees will be
reduced to a fee of $50,000 per year for each of Messrs. Markin, Solomon,
Tessler and Thomas.
During 1991, 1992, and until March 1, 1993, Mr. Tessler was of counsel to
Shea & Gould, a law firm retained by the Company for certain matters.
Frances Tessler, the wife of Allan R. Tessler, is employed by Smith Barney
Inc. as a financial consultant. Smith Barney Inc. is one of the Underwriters for
the Offering and also executes trades for Country's investment portfolio. During
1993 and 1992, Mrs. Tessler received for her investment advisory services to the
Company approximately $78,000 and $69,000, respectively, of the commissions paid
by the Company to Smith Barney Inc. for such services.
On September 24, 1992, American Country Financial Services Corp. ("AFSC"), a
subsidiary of Country, purchased from The Mid City National Bank of Chicago the
promissory note dated July 30, 1992, made by King Cars, Inc. ("King Cars") in
the principal amount of $381,500 plus accrued interest in the amount of $3,560.
The note, which has been renewed several times, had outstanding principal and
accrued interest as of September 30, 1994 of approximately $430,000 and matures
in December 1994. King Cars is owned by Messrs. Markin, Solomon, Tessler, Thomas
and Feldman. King Cars is a party to an agreement dated December 15, 1992, with
Yellow Cab pursuant to which Yellow Cab purchases from King Cars display frames
for installation in its taxicabs and King Cars furnishes Yellow Cab advertising
copy for insertion into the frames. King Cars receives such advertising copy as
an agent in Chicago for an unrelated company which is in the business of selling
and arranging for local and national advertising. Of the revenues generated from
such advertising, 30% will be retained by King Cars and the balance will be
delivered to Yellow Cab until such time as Yellow Cab has recovered costs
advanced by it for the installation of advertising frames in 500 of its taxicabs
(approximately $78,000). The terms to Yellow Cab are the same or more favorable
than those offered by King Cars to unrelated third parties.
Each of Messrs. Markin, Solomon, Tessler and Thomas received from Holdings
interest payments of $704,795 in 1993, $733,356 in 1992 and $897,637 in 1991
pursuant to the terms of the senior notes held by them (See Note G of the Notes
to Consolidated Financial Statements -- December 31, 1993).
Jeffrey M. Feldman is the nephew of David R. Markin.
35
<PAGE>
COMPENSATION
The following table sets forth the 1993 annual compensation for the Chief
Executive Officer of Holdings and the five highest paid executive officers of
Holdings whose total annual salary and bonus exceeded $100,000, as well as the
total compensation paid to each individual for the two previous fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION
- -------------------------------------------- --------- ------------- ----------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
David R. Markin, ........................... 1993 $ 1,230,000 $ 250,000 $ 246,519(1) $ 2,249(4)
President, Chief Executive Officer and 1992 1,230,000 150,000 239,594(1) 2,182(4)
Director of Holdings 1991 1,230,000 0 258,072(1) 915(4)
Jay H. Harris, ............................. 1993 350,000 250,000 0 2,249(4)
Executive Vice President and Chief 1992 326,016 125,000 0 2,182(4)
Operating Officer of Holdings 1991 302,032 50,000 0 915(4)
1993 210,000 150,000 85,008(2) 2,249(4)
Jeffrey M. Feldman, ........................ 1992 186,667 150,000 77,755(2) 2,182(4)
President of Yellow Cab 1991 138,906 150,000 53,328(2) 659(4)
1993 0 0 400,000(3) 0
Martin L. Solomon, ......................... 1992 0 0 400,000(3) 0
Vice Chairman and Secretary of Holdings 1991 0 0 405,000(3) 0
1993 0 0 400,000(3) 0
Allan R. Tessler, .......................... 1992 0 0 400,000(3) 0
Chairman of the Board of Holdings 1991 0 0 405,000(3) 0
1993 0 0 400,000(3) 0
Wilmer J. Thomas, Jr., ..................... 1992 0 0 400,000(3) 0
Vice Chairman of Holdings 1991 0 0 405,000(3) 0
<FN>
- --------------
(1) Other compensation for Mr. Markin includes:
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Consulting Fees.................................................. $ 190,000 $ 190,000 $ 195,000
Life Insurance................................................... 41,027 37,023 40,527
Automobile....................................................... 8,125 5,100 15,400
Club dues........................................................ 7,367 7,471 7,145
----------- ----------- -----------
$ 246,519 $ 239,594 $ 258,072
----------- ----------- -----------
----------- ----------- -----------
<FN>
(2) Other compensation for Mr. Feldman includes:
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Consulting Fees...................................................... $ 57,000 $ 57,000 $ 40,000
Life Insurance....................................................... 11,253 10,739 7,861
Automobile........................................................... 1,748 1,537 1,481
Club dues............................................................ 15,007 8,479 3,986
--------- --------- ---------
$ 85,008 $ 77,755 $ 53,328
--------- --------- ---------
--------- --------- ---------
<FN>
(3) Consulting fees. Effective upon consummation of this Offering, consulting
fees paid to each of Messrs. Markin, Solomon, Tessler and Thomas will be
reduced to a fee of $50,000 per year. See "-- Certain Transactions".
(4) Matching contributions under a 401(k) plan.
</TABLE>
36
<PAGE>
EMPLOYMENT AGREEMENTS
Checker L.P., as the assignee of Motors, is party to an Amended and Restated
Employment Agreement dated as of November 1, 1985, as further amended, with
David R. Markin pursuant to which Mr. Markin is to serve as President, Chief
Executive Officer and Chief Operating Officer of Checker L.P. until April 30,
1996, subject to extension (the "Termination Date"), at a minimum salary of
$600,000 per annum, together with the payment of certain insurance premiums, the
value of which have been included in the Summary Compensation Table above. The
beneficiaries of these insurance policies are designated by Mr. Markin. Mr.
Markin continues to be eligible to participate in profit sharing, pension or
other bonus plans of Checker L.P. Pursuant to the Amended and Restated
Employment Agreement, in the event of Mr. Markin's death, Checker L.P. shall pay
Mr. Markin's estate the compensation which would otherwise be payable to him for
the period ending on the last day of the month in which death occurs. In
addition, Checker L.P. shall pay to Mr. Markin's beneficiaries deferred
compensation from the date of his death through the Termination Date in an
annual amount equal to one-third of his base salary at the date of his death. In
the event of termination of the Amended and Restated Employment Agreement for
any reason other than cause, disability or death, Mr. Markin shall continue to
serve as a consultant to Checker L.P. for a period of five years, for which he
shall receive additional compensation in the amount of $50,000 per annum.
Checker L.P. has agreed to indemnify Mr. Markin from certain liabilities arising
out of his service to Checker L.P., except for liabilities resulting from his
gross negligence or willful misconduct. Effective January 1, 1994, Mr. Markin
and Holdings memorialized in writing their agreement, pursuant to which Mr.
Markin has also been compensated by Holdings since January 11, 1989, on
substantially the same terms as are set forth above.
Holdings entered into an employment agreement as of July 1, 1992, with Jay
H. Harris pursuant to which Mr. Harris serves as Executive Vice President and
Chief Operating Officer of Holdings until June 30, 1995, subject to extension or
earlier termination, at a minimum salary of $350,000 per annum, an incentive
bonus to be determined by the Board of Directors, and such other fringe benefits
and plans as are available to other executives of Holdings. Upon the happening
of certain events, including a change in control (as defined therein) of
Holdings or retirement after June 30, 1994, Mr. Harris is entitled to
compensation in an amount equal to the greater of (a) five percent of the
increase in the Company's retained earnings, subject to certain adjustments,
during the period commencing on March 31, 1992, and ending on the last day of
the month preceding the event which triggers the payment (the "Termination
Payment") and (b) 2.99 times his then base salary. If Mr. Harris were to die or
become disabled, he or his estate would receive the greater of (a) one year's
base compensation or (b) the Termination Payment. Payments in either case would
be made over a period of time, the length of which would be dependent on the
amount due to Mr. Harris. Mr. Harris has agreed to serve as a consultant to the
Company during the first year after termination for no compensation beyond his
expenses incurred in connection with rendering such services. Holdings has
agreed to indemnify Mr. Harris for certain liabilities to the full extent
allowed by law. Motors has guaranteed Holdings' obligations. Mr. Harris' current
annual salary is $500,000.
Checker L.P. is party to an Amended and Restated Employment Agreement dated
as of June 1, 1992, with Jeffrey Feldman pursuant to which Mr. Feldman serves as
President of the vehicular operations segment until February 1, 1996, subject to
extension (the "Termination Date"), at a minimum salary of $200,000 per annum,
together with the payment of certain insurance premiums, the value of which have
been included in the Summary Compensation Table above. The beneficiaries of
these insurance policies are designated by Mr. Feldman. Mr. Feldman is eligible
to participate in profit sharing, pension or other bonus plans implemented by
the vehicular operations segment. Pursuant to the Amended and Restated
Employment Agreement, in the event of Mr. Feldman's death, Checker L.P. shall
pay Mr. Feldman's estate the amount of compensation which would otherwise be
payable to him for the period ending on the last day of the month in which death
occurs. In addition, Checker L.P. shall pay to Mr. Feldman's estate deferred
compensation from the date of his death to the Termination Date in an annual
amount equal to one-third of his base salary at the date of his death. In the
event of the termination of the Amended and Restated Employment for any reason
other than cause, disability or death, Mr. Feldman shall continue to
37
<PAGE>
serve as a consultant to Checker L.P. for a period of five years (if terminated
by Mr. Feldman) or seven years (if terminated by Checker L.P.), for which he
shall receive compensation in the amount of $75,000 per annum. Checker L.P. has
agreed to indemnify Mr. Feldman from certain liabilities, except for those
resulting from his gross negligence or willful misconduct.
Great Dane is party to a letter agreement with Willard R. Hildebrand
pursuant to which Mr. Hildebrand serves as President and Chief Executive Officer
of Great Dane at a starting base salary of $15,833.33 per month ($190,000
annualized), plus incentive compensation and certain other benefits. In the
event of a change of control of Great Dane, prior to November 4, 1994 and the
subsequent termination of his agreement, Mr. Hildebrand would be entitled to
payment of up to three years of his salary less amounts received as of the date
of termination, but in no event less than six months' salary. Mr. Hildebrand's
current annual salary is $300,000.
COMPENSATION PURSUANT TO PLANS
GREAT DANE PENSION AND EXCESS BENEFIT PLANS
Great Dane has in effect a defined benefit employee pension plan entitled
Retirement Plan For Great Dane Trailers, Inc. (the "Retirement Plan") covering
substantially all of its employees. Pension benefits are subject to limitations
imposed by the Internal Revenue Code of 1986, as amended (the "Code") and the
Employee Retirement Income Security Act of 1974, as amended, with respect to the
annual amount of benefits provided by employer contributions. Effective January
1, 1994, Great Dane adopted the Supplemental Retirement Income Plan (the "Great
Dane Excess Benefit Plan") for officers of Holdings who are participants in the
Checker Motors Pension Plan and officers of Great Dane, in each case whose
annual compensation exceeds $150,000. The Great Dane Excess Benefit Plan
provides benefits which cannot be provided under the Retirement Plan because of
the $150,000 compensation limit under the Code. Considered compensation under
the Great Dane Excess Benefit Plan is limited to $235,840 (adjusted for
inflation) per year. The benefits under the Great Dane Excess Benefit Plan are
not funded and will be paid from Great Dane's general assets.
Effective as of July 1, 1988, the assets and the liabilities attributable to
active and former employees under the Amended and Restated International
Controls Corp. Pension Plan as of June 30, 1988 were transferred to the
Retirement Plan and Holdings adopted the Retirement Plan for the benefit of its
employees. With respect to benefits accruing after June 30, 1984, to a
participant who was a participant under the Amended and Restated International
Controls Corp. Pension Plan as of June 30, 1988, the following table shows the
estimated annual benefits payable upon retirement at age 65 under the plan to
specified average annual compensation and years of benefit service
classifications. The following amounts would be reduced by a Social Security
offset:
<TABLE>
<CAPTION>
YEARS OF BENEFIT SERVICE
-----------------------------------------------------------
AVERAGE ANNUAL COMPENSATION 1 5 10 15 20
- ---------------------------------------------------- --------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$100,000............................................ $ 2,000 $ 10,000 $ 20,000 $ 30,000 $ 40,000
150,000............................................ 3,000 15,000 30,000 45,000 60,000
200,000............................................ 4,000 20,000 40,000 60,000 80,000
250,000............................................ 5,000 25,000 50,000 75,000 100,000
300,000............................................ 5,000 25,000 60,000 90,000 115,641*
400,000............................................ 5,000 25,000 80,000 115,641* 115,641*
500,000............................................ 5,000 25,000 100,000 115,641* 115,641*
<FN>
- --------------
*Maximum permitted in 1993
</TABLE>
Mr. Harris has an aggregate of 24 years of benefit service under the
Retirement Plan (8 years) and the Amended and Restated International Controls
Corp. Pension Plan (16 years) and will receive benefits of approximately $74,000
per year at age 65.
38
<PAGE>
CHECKER L.P. PENSION AND EXCESS BENEFIT PLANS
Checker L.P. maintains a defined benefit employee pension plan entitled
Checker Motors Pension Plan (the "Pension Plan") covering substantially all of
its non-union employees, and, effective January 1, 1992, the employees of
Holdings.
Checker L.P. also maintains the Checker Motors Co., L.P. Excess Benefit
Retirement Plan (the "Checker L.P. Excess Benefit Plan"). An employee of Checker
L.P. will become a participant in the Checker L.P. Excess Benefit Plan if the
benefits which would be payable under the Pension Plan are not fully provided
thereunder because of the annual maximum benefit limitations of Section 415 of
the Code. The amount that the participant is entitled to receive under the
Checker L.P. Excess Benefit Plan is an amount equal to the amount that would
have been payable under the Pension Plan if Section 415 did not apply, minus the
amount that is actually payable under the Pension Plan. At the present time,
David R. Markin and Jeffrey M. Feldman are the only individuals named above who
would receive benefits under the Checker L.P. Excess Benefit Plan. Considered
compensation under the Checker L.P. Excess Benefit Plan is limited to $300,000.
The benefits under the Checker L.P. Excess Benefit Plan are not funded and will
be paid from Checker L.P.'s general assets.
Set forth below are the estimated annual benefits for participants in the
Pension Plan (including benefits payable under the Checker L.P. Excess Benefit
Plan) who have been employed by Checker L.P. and its predecessors for the
indicated number of years prior to retirement, assuming retirement at age 65 in
1993:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS FOR YEARS OF SERVICE INDICATED
-----------------------------------------------------------
AVERAGE COMPENSATION (AS DEFINED IN PLAN) 20 30 40 45
- --------------------------------------------------- --------- ----------- ----------- -----------
10
---------
<S> <C> <C> <C> <C> <C>
$100,000........................................... $ 13,950 $ 28,756 $ 47,024 $ 66,159 $ 75,870
150,000........................................... 21,450 46,256 74,524 103,659 118,370
200,000........................................... 28,950 63,756 102,024 141,159 160,870
250,000........................................... 36,450 81,256 129,524 178,659 203,370
300,000........................................... 43,950 98,756 157,024 216,159 245,870
400,000........................................... 43,950 98,756 157,024 216,159 245,870
500,000........................................... 43,950 98,756 157,024 216,159 245,870
</TABLE>
The above benefit projections were prepared on the assumption that the
participant made participant contributions to the Pension Plan for all years in
which he was eligible to contribute, and that Social Security covered
compensation is $1,750. The benefit projection would be reduced by a Social
Security offset.
For those executive officers named above, the following are credited years
of service under the Pension and Excess Benefit Plans and 1993 salary covered by
the Pension Plan:
<TABLE>
<CAPTION>
CREDITED YEARS OF EXPECTED CREDITED YEARS OF 1993 SALARY COVERED
SERVICE SERVICE AT 65 BY PENSION PLAN
------------------- ----------------------------- --------------------
<S> <C> <C> <C>
David R. Markin................................. 39 41 $ 235,840
Jay H. Harris................................... 2 10 235,840
Jeffrey M. Feldman.............................. 15 37 235,840
</TABLE>
SALARY CONTINUATION PLAN
Motors entered into Stated Benefit Salary Continuation Agreements (the
"Agreements") with certain officers and employees (the "Salary Plan") pursuant
to which such participants will receive benefits upon attaining age 65 (or their
beneficiaries will receive benefits upon their death prior to or within 120
months after such executives or employees attain age 65). Motors' obligations
pursuant to the Salary Plan were assumed by Checker L.P. in 1986.
39
<PAGE>
For those executive officers named above, the following table sets forth the
benefits payable pursuant to the Salary Plan:
<TABLE>
<CAPTION>
ANNUAL SURVIVOR
BENEFIT PAYABLE TOTAL
ANNUAL BENEFIT TOTAL BENEFIT UPON DEATH PRIOR SURVIVORSHIP
PAYABLE UPON PAYABLE OVER TO ATTAINING AGE BENEFIT PAYABLE
ATTAINING AGE 65 TEN YEARS 65 OVER THREE YEARS
---------------- -------------- ---------------- -----------------
<S> <C> <C> <C> <C>
David R. Markin......................... $ 240,000 $ 2,400,000 $ 368,000 $ 1,104,000
Jeffrey M. Feldman...................... 19,950 199,500 79,800 239,400
</TABLE>
1994 OPTION PLAN
On November 16, 1994, the Board of Directors adopted the 1994 Option Plan,
subject to approval by the Compensation Committee (the composition of which
committee is described below) and by the stockholders at the first annual
meeting of stockholders after the consummation of this Offering. The 1994 Option
Plan provides for the granting of incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") to
employees of the Company and for the granting of nonstatutory stock options and
stock appreciation rights ("Rights") to employees, consultants, non-employee
directors and other persons providing goods or services to the Company. Under
the 1994 Option Plan, a total of 1,680,000 shares of Common Stock have been
reserved for issuance. The maximum number of shares of Common Stock with respect
to which options or Rights may be granted during the life of the 1994 Option
Plan to any employee cannot exceed 400,000. There are no options or Rights
currently outstanding under the 1994 Option Plan. Any options granted will be
subject to the approvals described above.
The 1994 Option Plan will be administered by the Compensation Committee
which, when constituted, will consist of persons who are "disinterested persons"
within the meaning of Rule 16(b) promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). The Compensation Committee will have
the power, subject to the terms of the 1994 Option Plan, to determine the
recipients and terms of any options or Rights granted, including the exercise
price, number of shares subject to the option or Rights and the exercisability
thereof. Options and Rights granted under the 1994 Option Plan may not be
transferred except by will or the laws of descent and distribution and, during
the lifetime of the optionee, may be exercised only by such optionee or such
optionee's guardian or legal representative. If an optionee's employment or
other relationship with the Company terminates for any reason, the employee's
options and Rights shall immediately terminate, except that: (i) upon
termination of employment due to disability or retirement, an optionee may
generally exercise options or Rights that have not expired on such date for a
period of two years after the date of termination of employment; and (ii) upon
termination of employment as a result of death, or in the event of the
employee's death within the periods described in (i), above, an optionee's legal
representative may generally exercise options or Rights that have not expired on
such date for a period of 12 months after the date of death. Options granted to
non-employee directors, consultants and other persons providing goods and
services to the Company will be subject to such terms as the Compensation
Committee shall determine.
The exercise price of all incentive stock options granted under the 1994
Option Plan must be at least equal to the fair market value of the shares of
Common Stock subject to the option on the date the option is granted. The
exercise price of all nonstatutory stock options granted under the 1994 Option
Plan is to be determined by the Compensation Committee but cannot be less than
the minimum required to comply with any applicable law, rule or regulation. The
term of options granted under the 1994 Option Plan may not exceed 10 years.
Notwithstanding the above, incentive stock options granted to an employee that
owns more than 10% of the voting power of all classes of stock of the Company
must have an exercise price at least equal to 110% of the fair market value of
the stock subject to the option on the date the option is granted and must have
a term that does not exceed five years. Options may be exercised either in cash
or with Common Stock having a fair market value equal to the exercise price of
the option on the date the option is exercised.
40
<PAGE>
Each option and Right granted under the 1994 Option Plan is exercisable in
whole or in part at any time, or from time to time, as determined by the
Compensation Committee, provided that the election to exercise an option or a
Right is made in accordance with applicable federal and state laws and
regulations, and, unless the optionee dies or becomes disabled, the option or
Right cannot be exercised during the first six months of the option period. An
option is vested and becomes immediately exercisable if: any person within the
meaning of Sections 13(d) and 14(d) of the Exchange Act, other than the Company
or the current stockholders of the Company, becomes the beneficial owner, within
the meaning of Rule 13d-3 of the Exchange Act, of 40% or more of the Company's
outstanding voting securities, unless such ownership has been approved by the
Board of Directors of the Company; the first day on which shares of Common Stock
are purchased pursuant to a tender offer or exchange offer, unless the offer is
made by the Company or approved by its Board of Directors; the stockholders of
the Company have approved an agreement to merge or consolidate with or into
another corporation (and the Company is not the survivor of the merger or
consolidation), or an agreement to sell or otherwise dispose of all or
substantially all of the Company's assets (which includes a plan of
liquidation), unless the Board of Directors has resolved that options do not
automatically vest; or during any period of two consecutive years, individuals
who at the beginning of the period constituted a majority of the Board of
Directors cease to constitute a majority thereof, unless the election or the
nomination for the election by the Company's stockholders of each new director
was approved by a vote of at least a majority of the directors then still in
office who were directors at the beginning of the period. In addition, the
Compensation Committee has the authority at any time or from time to time to
accelerate the vesting of any individual option and to permit any option not yet
exercisable to become immediately exercisable.
Unless terminated sooner, the 1994 Option Plan will terminate 10 years from
the Effective Date. The Board of Directors has authority to amend or terminate
the 1994 Option Plan, provided no such action may impair the rights of the
holder of any outstanding option or Rights.
No Right can be exercised by an optionee unless the Company has been subject
to the reporting requirements of Section 12 of the Exchange Act for at least one
year prior to the date of exercise and has filed all reports and statements
required to be filed during that period, and the Company on a regular basis
releases for publication quarterly and annual summary statements of sales and
earnings. No Common Stock can be delivered by the Company pursuant to the
exercise of an option or a Right until qualified for delivery under applicable
securities laws and regulations, as determined by the Compensation Committee,
until the Common Stock is listed on each securities exchange on which the Common
Stock may then be listed, and until the exercise price of the option is received
by the Company either in cash or in Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Management -- Certain Transactions."
OWNERSHIP OF COMMON STOCK
The following table sets forth information, immediately prior to and
immediately after completion of the Offering, regarding the beneficial ownership
of the Common Stock of Holdings.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
OF COMMON STOCK PRIOR OF COMMON STOCK AFTER
TO OFFERING OFFERING
--------------------- ---------------------
NUMBER OF NUMBER OF
NAME SHARES PERCENT SHARES PERCENT
- ------------------------------ ---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
David R. Markin............... 5,460,000 32.5 5,460,000 24.3
Martin L. Solomon............. 3,780,000 22.5 3,780,000 16.8
Allan R. Tessler.............. 3,780,000 22.5 3,780,000 16.8
Wilmer J. Thomas, Jr.......... 3,780,000 22.5 3,780,000 16.8
---------- --------- ---------- ---
16,800,000 100.0 16,800,000 74.7
---------- --------- ---------- ---
---------- --------- ---------- ---
</TABLE>
41
<PAGE>
The address of each of these stockholders is c/o Great Dane Holdings Inc.,
2016 North Pitcher Street, Kalamazoo, Michigan 49007.
DESCRIPTION OF CAPITAL STOCK
Upon completion of the Offering, the authorized capital stock of Holdings
will consist of 50,000,000 shares of Common Stock, par value $.01 per share, and
5,000,000 shares of Preferred Stock, par value $1.00 per share. There will be
22,500,000 shares of Common Stock outstanding (23,355,000 if the Over-Allotment
Option is exercised in full).
PREFERRED STOCK
As of October 19, 1994, the date of Holdings' reincorporation in Delaware,
Holdings was not authorized to issue shares of Preferred Stock. Prior to
commencement of the Offering, Holdings' Certificate of Incorporation will be
amended to authorize the issuance of up to 5,000,000 shares of Preferred Stock.
Although Holdings has no present plans to issue such shares, Holdings'
Certificate of Incorporation will provide that Holdings may issue shares of
Preferred Stock in one or more series. The Board of Directors will be authorized
to establish from time to time the number of shares to be included in any such
series, to fix or alter the rights, preferences and privileges of the shares of
each wholly unissued series and any restrictions thereon, and to increase or
decrease the number of shares of any such series without any further vote or
action by the stockholders of Holdings. The Board of Directors may authorize and
issue Preferred Stock with voting or conversion rights that could adversely
affect the voting power or other rights of the holders of Common Stock. In
addition, the issuance of Preferred Stock could have the effect of delaying,
deferring or preventing a change in control of Holdings.
COMMON STOCK
As of October 19, 1994, the date of Holdings' reincorporation in Delaware,
there were 1,000 shares of Common Stock, par value $1.00 per share, outstanding.
Prior to commencement of the Offering, Holdings' Certificate of Incorporation
will be amended to authorize the issuance of up to 50,000,000 shares of Common
Stock, par value $.01 per share, and the shares currently outstanding will be
split 16,800 for 1 and converted into 16,800,000 shares of Common Stock, par
value $.01 per share. Upon completion of the Offering, the holders of
outstanding shares of Common Stock are entitled to receive dividends out of
assets legally available therefor at such times and in such amounts as the Board
of Directors may, from time to time, determine. Holdings has not paid cash
dividends on its capital stock in recent years and does not intend to pay cash
dividends on the Common Stock in the foreseeable future. See "Dividend Policy."
Each stockholder is entitled to one vote for each share of Common Stock held by
such stockholder. Holdings' Certificate of Incorporation does not provide for
cumulative voting. The Common Stock is not entitled to preemptive rights and is
not subject to redemption. Upon liquidation, dissolution or winding up of
Holdings, the assets legally available for distribution to stockholders are
distributable ratably among the holders of the Common Stock outstanding at that
time after payment of liquidation preferences, if any, on any outstanding
Preferred Stock. Each outstanding share of Common Stock is fully paid and
non-assessable and the shares of Common Stock to be issued on completion of the
Offering will be fully paid and non-assessable.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION
INDEMNIFICATION. The Certificate of Incorporation provides that directors
and officers of the Company will be indemnified by the Company to the full
extent then permitted by Delaware law, against all expenses and liabilities
incurred in connection with service for or on behalf of the Company. The
Certificate of Incorporation also provides that the right of directors and
officers to indemnification is not exclusive of any other right now possessed or
hereafter acquired under any statute, agreement or otherwise. The Company has
also entered into indemnification agreements with its directors and its
executive officers. There is no pending litigation or proceeding involving a
director, officer, employee or other agent of the Company as to which
indemnification is being sought, and the Company is not aware of any pending or
threatened litigation that may result in claims for indemnification by a
director, officer, employee or other agent.
42
<PAGE>
LIMITATION OF LIABILITY. In addition, the Certificate of Incorporation
provides that directors of the Company will not be personally liable for
monetary damages to the Company or its stockholders for certain breaches of
their fiduciary duty as directors, unless they violated their duty of loyalty to
the Company or its stockholders, acted in bad faith, authorized illegal
dividends or redemptions or derived an improper personal benefit from their
action as directors. This provision would have no effect on the availability of
equitable remedies or non-monetary relief, such as an injunction or rescission
for breach of the duty of care. In addition, the provision applies only to
claims against a director arising out of his role as a director and not in any
other capacity (such as an officer or employee of the Company). Further,
liability of a director for violations of the federal securities laws will not
be limited by this provision. Directors will, however, no longer be liable for
monetary damages arising from decisions involving violations of the duty of care
which could be deemed grossly negligent.
STATUTORY BUSINESS COMBINATION PROVISION
Holdings is subject to the provisions of Section 203 of the Delaware General
Corporation Law ("Section 203"). Section 203 provides, with certain exceptions,
that a Delaware corporation may not engage in any of a broad range of business
combinations with a person or affiliate, or associate of such person, who is an
"interested stockholder" for a period of three years from the date that such
person became an interested stockholder unless: (i) the transaction resulting in
a person becoming an interested stockholder, or the business combination, is
approved by the board of directors of the corporation before the person become
an interested stockholder; (ii) the interested stockholder acquired 85% or more
of the outstanding voting stock of the corporation in the same transaction that
makes it an interested stockholder (excluding shares owned by persons who are
both officers and directors of the corporation, and shares held by certain
employee stock ownership plans); or (iii) on or after the date the person
becomes an interested stockholder, the business combination is approved by the
board of directors and by the holders of at least 66 2/3% of the corporation's
outstanding voting stock, excluding shares owned by the interested stockholder,
at an annual or special meeting. Under Section 203, an "interested stockholder"
is defined as any person that is (i) the owner of 15% or more of the outstanding
voting stock of the corporation or (ii) an affiliate or associate of the
corporation and was the owner of 15% or more of the outstanding voting stock of
the corporation at any time within the three year period immediately prior to
the date on which it is sought to be determined whether such person is an
interested stockholder.
A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws by action or
its stockholders to exempt itself from coverage, provided that such bylaws or
charter amendment may not become effective until 12 months after the date it is
adopted. Holdings has not adopted such an amendment to its Certificate of
Incorporation or Bylaws.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Company's Common Stock is American
Stock Transfer & Trust Company, New York, New York.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this Offering, there has been no public market for the Common
Stock. Sales of a substantial number of shares in the public market could
adversely affect the market price of the Common Stock and may make it more
difficult for the Company to sell equity securities in the future at a time and
price which it deems appropriate.
Upon completion of this Offering, Holdings will have 22,500,000 shares of
Common Stock outstanding (23,355,000 if the Over-Allotment Option is exercised),
and an additional 1,680,000 shares subject to options which may be granted under
the 1994 Option Plan. Of these shares of Common Stock, the 5,700,000 shares of
Common Stock offered hereby will be freely transferable without restriction or
further registration under the Securities Act of 1933, as amended (the
"Securities Act"), except that any shares purchased by affiliates of the Company
will be subject to the limitations of Rule 144 under the Securities Act. The
remaining 16,800,000 shares of Common Stock and the 1,680,000 shares of Common
Stock issuable upon exercise of options available for grant under the 1994
Option Plan will be "restricted
43
<PAGE>
securities" within the meaning of Rule 144 and will be eligible for sale in the
public market immediately after the consummation of the Offering in reliance on,
and subject to the resale limitations of, Rule 144. Restricted shares may also
be sold in reliance on Rule 144A, which allows sales to certain institutional
investors.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including a person who may be deemed to be an
"affiliate" of Holdings as that term is defined under the Securities Act, is
entitled to sell, within any three-month period, a number of restricted shares
as to which at least two years have elapsed from the later of the acquisition of
such shares from Holdings or an affiliate of Holdings in an amount that does not
exceed the greater of (i) one percent of the then outstanding shares of Common
Stock (225,000 shares based upon 22,500,000 shares to be outstanding immediately
after this Offering), or (ii) if the Common Stock is quoted on the Nasdaq Stock
Market (National Market) or a stock exchange, the average weekly trading volume
of the Common Stock during the four calendar weeks preceding such sale. Sales
under Rule 144 are also subject to certain requirements as to the manner of
sale, notice, and the availability of current public information about the
Company. However, a person who is not deemed to have been an affiliate of
Holdings during the 90 days preceding a sale by such person and who has
beneficially owned shares as to which at least three years have elapsed from the
later of the acquisition of such shares from Holdings or an affiliate of
Holdings is entitled to sell them without regard to the volume, manner of sale,
or notice requirements of Rule 144.
In addition, the Company intends to register all shares which underly
options granted under the 1994 Option Plan and such shares will, therefore,
subject to certain restrictions relating to control persons, be freely
tradeable. Holdings and its four current stockholders holding an aggregate of
approximately 16,800,000 shares of Common Stock following the Offering have
agreed not to offer, sell, or otherwise dispose of any shares upon completion of
this Offering for a period of [180] days from the date of this Prospectus,
without the prior written consent of the Underwriters. See "Underwriting."
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representatives,
Alex. Brown & Sons Incorporated and Smith Barney Inc., have severally agreed to
purchase from Holdings the following respective number of shares of Common Stock
at the public offering price less the underwriting discounts and commissions set
forth on the cover page of this Prospectus:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- --------------------------------------------------------------------------------- -----------
<S> <C>
Alex. Brown & Sons Incorporated..................................................
Smith Barney Inc.................................................................
-----------
Total........................................................................ 5,700,000
-----------
-----------
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all shares of the Common Stock offered hereby if any of such shares are
purchased.
Holdings has been advised by the Representatives of the Underwriters that
the Underwriters propose to offer the shares of Common Stock to the public at
the public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $. per share.
The Underwriters may allow, and such dealers may reallow, a concession not in
excess of $. per share to certain other dealers. After commencement of the
initial public offering, the offering price and other selling terms may be
changed by the Representatives of the Underwriters.
44
<PAGE>
Holdings has granted to the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to 855,000
additional shares of Common Stock at the initial public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the same
percentage thereof that the number of shares of Common Stock to be purchased by
it shown in the above table bears to 855,000 and Holdings will be obligated,
pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of Common Stock offered hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 5,700,000 shares are being offered.
Smith Barney Inc. executes trades for Country's investment portfolio for
which it receives customary compensation.
Holdings has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
The Company, its executive officers and its directors have agreed not to
offer, sell or otherwise dispose of any shares of Common Stock for a period of
[180] days after the date of this Prospectus without the prior written consent
of the Representative of the Underwriters.
Prior to the Offering, there has been no public market for the Common Stock.
Consequently, the initial price to the public for the Common Stock will be
determined through negotiations between the Company and the Representatives of
the Underwriters. Among the factors to be considered in such negotiations will
be prevailing market conditions, the results of operations of the Company in
recent periods, the market capitalizations and stages of development of other
companies which the Company and the Representatives of the Underwriters believe
to be comparable to the Company, estimates of the business potential of the
Company, the present state of the Company's development and other factors deemed
relevant.
LEGAL MATTERS
The validity of the Common Stock offered hereby and certain legal matters
will be passed upon for the Company by Hutton Ingram Yuzek Gainen Carroll &
Bertolotti, New York, New York. Certain legal matters in connection with the
Offering will be passed upon for the Underwriters by Fried, Frank, Harris,
Shriver & Jacobson (a partnership including professional corporations), New
York, New York.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1993
and 1992, and for each of the three years in the period ended December 31, 1993,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
appearing elsewhere herein and in the Registration Statement, and are included
in reliance upon such reports given upon the authority of such firm as experts
in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (together with all amendments
and exhibits thereto, the "Registration Statement") under the Securities Act,
with respect to the Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document are not necessarily complete; with respect
to each such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matters involved, and each such statement shall be deemed
qualified in its entirety by this reference.
45
<PAGE>
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder, and in accordance therewith files reports,
proxy statements (if required) and other information with the Commission. Such
reports, proxy statements and other information, including the Registration
Statement, may be inspected and copied (at prescribed rates) at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549 and at the Commission's Regional Offices
located at Suite 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New
York 10048. The Company's 12 3/4% Debentures and Subordinated Discount
Debentures due January 1, 2006 are listed on the American Stock Exchange.
Reports, proxy statements, and other information can also be inspected at the
office of the American Stock Exchange, 86 Trinity Place, New York, New York
10006-1881.
46
<PAGE>
INDEX TO FINANCIAL STATEMENTS
The following consolidated financial statements are submitted herewith:
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Index To Financial Statements Covered By Report Of Independent Auditors
Report of Independent Auditors........................................................................... F-2
Consolidated Balance Sheets as of December 31, 1992 and 1993............................................. F-3
Consolidated Statements of Shareholders' Deficit for the Years Ended December 31, 1991, 1992 and 1993.... F-4
Consolidated Statements of Operations for the Years Ended December 31, 1991, 1992
and 1993............................................................................................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1991, 1992
and 1993............................................................................................... F-6
Notes to Consolidated Financial Statements -- December 31, 1993.......................................... F-7
Index to Financial Statements (Unaudited):
Consolidated Balance Sheets at December 31, 1993 and September 30, 1994.................................. F-25
Consolidated Statements of Operations for the Three Months Ended September 30, 1993, and September 30,
1994................................................................................................... F-26
Consolidated Statements of Operations for the Nine Months Ended September 30, 1993, and September 30,
1994................................................................................................... F-27
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1993, and September 30,
1994................................................................................................... F-28
Notes to Consolidated Financial Statements -- September 30, 1994......................................... F-29
</TABLE>
F-1
<PAGE>
The following report is in the form that will be signed upon the completion of
the 16,800 to 1 stock split as described in Note Q to the consolidated financial
statements.
ERNST & YOUNG LLP
Kalamazoo, Michigan
November 16, 1994
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Great Dane Holdings Inc.
We have audited the accompanying consolidated balance sheets of Great Dane
Holdings Inc. (formerly International Controls Corp.) and subsidiaries as of
December 31, 1993 and 1992, and the related consolidated statements of
operations, shareholders' deficit and cash flows for each of the three years in
the period ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Great Dane Holdings Inc. and subsidiaries at December 31, 1993 and 1992, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles.
As discussed in Notes I and K to the consolidated financial statements, the
Company changed its methods of accounting for postretirement benefits other than
pensions and income taxes in the year ended December 31, 1993.
Kalamazoo, Michigan
March 1, 1994, except for Note Q as to
which the date is November 16, 1994
F-2
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1992 1993
--------- ---------
<S> <C> <C>
Cash and cash equivalents................................................... $ 42,199 $ 40,078
Accounts receivable, less allowance for doubtful accounts of $623 (1992)
and $748 (1993) (Note G)................................................... 64,115 75,701
Current portion of finance lease receivables................................ 2,352 764
Inventories (Notes D and G)................................................. 71,861 94,112
Other current assets........................................................ 8,897 11,059
--------- ---------
TOTAL CURRENT ASSETS.................................................... 189,424 221,714
Property, plant and equipment, net (Notes E, G and H)....................... 119,492 122,355
Insurance Subsidiary's investments (Note F)................................. 84,616 90,838
Noncurrent finance lease receivables (Notes C and H)........................ 2,863 575
Insurance Subsidiary's reinsurance receivable............................... 17,366 11,378
Cost in excess of net assets acquired, net of accumulated amortization
of $5,002 (1992) and $6,252 (1993)......................................... 44,993 43,743
Trademark, net of accumulated amortization of $1,400 (1992) and $1,750
(1993)..................................................................... 12,046 11,696
Other assets................................................................ 22,963 15,037
--------- ---------
TOTAL ASSETS............................................................ $ 493,763 $ 517,336
--------- ---------
--------- ---------
</TABLE>
LIABILITIES AND SHAREHOLDERS' DEFICIT
<TABLE>
<S> <C> <C>
Accounts payable............................................................ $ 56,684 $ 77,876
Notes payable (Note G)...................................................... 5,000 5,000
Income taxes payable (Note K)............................................... 6,739 7,726
Accrued compensation........................................................ 13,729 15,838
Accrued interest............................................................ 11,596 11,746
Other accrued liabilities................................................... 28,833 38,071
Current portion of long-term debt........................................... 15,752 14,321
--------- ---------
TOTAL CURRENT LIABILITIES............................................... 138,333 170,578
Long-term debt, excluding current portion (Note G):
Shareholders.............................................................. 30,000 30,000
Other..................................................................... 259,616 246,952
--------- ---------
289,616 276,952
Insurance Subsidiary's unpaid losses and loss adjustment expenses........... 75,780 71,179
Unearned insurance premiums................................................. 10,463 9,547
Deferred income taxes....................................................... 11,187 9,803
Postretirement benefits other than pensions (Note I)........................ -- 49,609
Other noncurrent liabilities................................................ 33,654 39,053
Minority interest (Notes H and J)........................................... 41,026 40,132
--------- ---------
TOTAL LIABILITIES....................................................... 600,059 666,853
Shareholders' deficit (Notes A, F, G and Q):
Common stock, par value $.01:
Authorized 50,000,000 shares
Outstanding 16,800,000 shares........................................... 168 168
Additional paid-in capital................................................ 14,832 14,832
Retained earnings (deficit)............................................... 7,045 (36,217)
Unrealized appreciation on Insurance Subsidiary's investments in equity
securities............................................................... 32 73
Notes receivable from shareholders........................................ (625) (625)
Amount paid in excess of Checker's net assets............................. (127,748) (127,748)
--------- ---------
TOTAL SHAREHOLDERS' DEFICIT............................................. (106,296) (149,517)
Commitments and contingencies (Note H)......................................
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT............................. $ 493,763 $ 517,336
--------- ---------
--------- ---------
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION AMOUNT PAID
(DEPRECIATION) NOTES IN EXCESS OF
ADDITIONAL ON INVESTMENTS RECEIVABLE CHECKER'S
COMMON PAID-IN RETAINED IN EQUITY FROM NET ASSETS
STOCK CAPITAL EARNINGS SECURITIES SHAREHOLDERS (NOTE A)
----------- ----------- ---------- --------------- ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1991.......... $ 168 $ 14,832 $ 10,418 $ (1,790) $ (625) $ (127,748)
Unrealized appreciation on investment
in equity securities................ -- -- -- 2,189 -- --
Net income........................... -- -- 4,182 -- -- --
----- ----------- ---------- ------- ------ ------------
BALANCES AT DECEMBER 31, 1991........ 168 14,832 14,600 399 (625) (127,748)
Unrealized depreciation on investment
in equity securities................ -- -- -- (367) -- --
Net loss............................. -- -- (7,555) -- -- --
----- ----------- ---------- ------- ------ ------------
BALANCES AT DECEMBER 31, 1992........ 168 14,832 7,045 32 (625) (127,748)
Unrealized appreciation on investment
in equity securities................ -- -- -- 41 -- --
Net loss............................. -- -- (43,262) -- -- --
----- ----------- ---------- ------- ------ ------------
BALANCES AT DECEMBER 31, 1993........ $ 168 $ 14,832 $ (36,217) $ 73 $ (625) $ (127,748)
----- ----------- ---------- ------- ------ ------------
----- ----------- ---------- ------- ------ ------------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1991 1992 1993
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Trailer manufacturing and distribution................................ $ 400,196 $ 536,336 $ 711,862
Automotive products manufacturing..................................... 84,401 112,631 127,925
Vehicular operations including rental income of $39,946 (1991);
$37,382 (1992); and $38,360 (1993)................................... 43,527 40,580 42,103
Insurance premiums earned............................................. 27,142 27,186 27,436
------------ ------------ ------------
555,266 716,733 909,326
COST OF REVENUES:
Cost of sales......................................................... (428,949) (561,546) (728,471)
Cost of vehicular operations.......................................... (30,801) (30,120) (30,916)
Cost of insurance operations.......................................... (20,793) (19,204) (19,418)
------------ ------------ ------------
(480,543) (610,870) (778,805)
------------ ------------ ------------
GROSS PROFIT............................................................ 74,723 105,863 130,521
Operating expenses:
Selling, general and administrative expense........................... (72,032) (76,877) (83,176)
Interest expense........................................................ (47,425) (42,726) (41,614)
Interest income......................................................... 11,634 8,895 7,396
Other income (expense), net............................................. (1,078) (2,023) 3,494
Special charge -- Note H................................................ -- -- (7,500)
------------ ------------ ------------
INCOME (LOSS) BEFORE MINORITY EQUITY, INCOME TAXES, EXTRAORDINARY ITEMS
AND ACCOUNTING CHANGES................................................. (34,178) (6,868) 9,121
Minority equity (Note J)................................................ 1,931 -- --
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES, EXTRAORDINARY ITEMS AND ACCOUNTING
CHANGES................................................................ (32,247) (6,868) 9,121
Income tax benefit (expense) (Note K)................................... 5,241 (687) (5,757)
------------ ------------ ------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS AND ACCOUNTING CHANGES......... (27,006) (7,555) 3,364
Extraordinary items (Note L)............................................ 31,188 -- --
------------ ------------ ------------
INCOME (LOSS) BEFORE ACCOUNTING CHANGES................................. 4,182 (7,555) 3,364
Accounting changes (Notes I and K)...................................... -- -- (46,626)
------------ ------------ ------------
Net income (loss)....................................................... $ 4,182 $ (7,555) $ (43,262)
------------ ------------ ------------
------------ ------------ ------------
Weighted average number of shares used in per share computations (Note
Q)..................................................................... 16,800 16,800 16,800
------------ ------------ ------------
------------ ------------ ------------
INCOME (LOSS) PER SHARE (Note Q):
Income (loss) before extraordinary items and accounting changes....... $ (1.61) $ (.45) $ .20
Extraordinary items (Note L).......................................... 1.86 -- --
Accounting changes (Notes I and K).................................... -- -- (2.78)
------------ ------------ ------------
NET INCOME (LOSS) PER SHARE......................................... $ .25 $ (.45) $ (2.58)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1991 1992 1993
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................................... $ 4,182 $ (7,555) $ (43,262)
Adjustment to reconcile net income (loss) to net cash provided by
operating activities:
Accounting changes...................................................... -- -- 46,626
Extraordinary items..................................................... (31,188) -- --
Depreciation and amortization........................................... 20,931 21,054 23,295
Deferred income tax expense (benefit)................................... 3,288 (4,311) (8,512)
Amortization of cost in excess of net assets acquired................... 1,250 1,250 1,250
Amortization of debt discount........................................... 1,045 1,181 1,372
Net loss on sale of property, plant and equipment....................... 275 217 207
Investment losses (gains)............................................... 1,646 (690) (1,079)
Decrease in minority equity............................................. (1,992) -- --
Other noncash charges................................................... 3,980 6,386 7,562
Changes in operating assets and liabilities:
Accounts receivable................................................... 7,647 (12,788) (11,970)
Finance lease receivables............................................. 7,213 5,131 4,408
Inventories........................................................... (784) (7,820) (22,251)
Insurance Subsidiary's reinsurance receivable......................... 11,731 (5,634) 5,988
Unbilled tooling charges.............................................. 35,181 -- --
Other assets.......................................................... 536 -- (5,309)
Accounts payable...................................................... (1,129) 8,281 21,193
Income taxes.......................................................... (17,398) 4,489 824
Unpaid losses and loss adjustment expenses............................ 2,204 5,046 (4,601)
Unearned insurance premiums........................................... (347) 4,673 (917)
Postretirement benefits other than pension............................ -- -- 4,497
Other liabilities..................................................... (10,460) 6,288 11,359
---------- ---------- ----------
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES.............................. 37,811 25,198 30,680
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment................................ (16,457) (17,549) (20,006)
Proceeds from disposal of property, plant and equipment and other
productive assets........................................................ 2,685 2,783 2,599
Purchase of investments................................................... (19,228) (32,190) (64,052)
Proceeds from sale of investments......................................... 18,732 31,617 65,019
---------- ---------- ----------
NET CASH FLOW USED IN INVESTING ACTIVITIES.................................. (14,268) (15,339) (16,440)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings.................................................. 20,530 32,090 2,500
Repayments of borrowings.................................................. (43,610) (39,772) (17,967)
Return of limited partner's capital....................................... (821) (1,035) (894)
---------- ---------- ----------
NET CASH FLOW USED IN FINANCING ACTIVITIES.................................. (23,901) (8,717) (16,361)
---------- ---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............................ (358) 1,142 (2,121)
Beginning cash and cash equivalents......................................... 41,415 41,057 42,199
---------- ---------- ----------
ENDING CASH AND CASH EQUIVALENTS............................................ $ 41,057 $ 42,199 $ 40,078
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
NOTE A -- ORGANIZATION
The Company has two operating subsidiaries, Great Dane Trailers, Inc.
("Great Dane") and Checker Motors Corporation ("Checker"). During 1989, the
Company purchased all of the common stock of Checker, the general partner of
Checker Motors Co., L.P. (the "Partnership"), a Delaware limited partnership
(the "Checker acquisition").
Immediately after the Checker acquisition, substantially all of Checker's
former shareholders purchased, through Checker Holding Corp. ("Holding"), all of
the outstanding common stock of the Company (the "Holding buyout"). Holding was
created solely for the purpose of acquiring the stock of the Company and was
subsequently merged into the Company. The Holding buyout has been accounted for
as if Checker acquired the Company (a "reverse acquisition"), since there was no
significant change in control of Checker.
Under generally accepted accounting principles for reverse acquisitions, the
net assets of Checker acquired in the Checker acquisition cannot be revalued to
estimated fair value. Accordingly, the $127.7 million excess of the amount paid
over the historical book value of Checker's net assets has been accounted for as
a separate component reducing shareholders' equity and is not subject to
amortization. The fair value of Checker's net assets, as estimated by
management, is significantly greater than historical book value, but no
appraisal of fair value is available.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of Great Dane Holdings Inc. (formerly International Controls Corp.)
and its subsidiaries, including a wholly-owned trailer leasing company, other
greater than 50% owned companies, the Partnership and the Partnership's
wholly-owned subsidiaries, including American Country Insurance Company
("Insurance Subsidiary"). All significant intercompany accounts and transactions
have been eliminated.
CASH EQUIVALENTS: The Company considers all highly liquid investments,
other than Insurance Subsidiary investments, with a maturity of three months or
less when purchased to be cash equivalents.
INVENTORIES: Inventories are stated at the lower of cost or market. The
cost of inventories is determined principally on the last-in, first-out ("LIFO")
method.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at
cost. Depreciation is provided based on the assets' estimated useful lives,
principally by the straight-line method.
Estimated depreciable lives are as follows:
<TABLE>
<S> <C>
Buildings...................................................... 10-40 years
Transportation equipment....................................... 2-6 years
Machinery, equipment, furniture and fixtures................... 3-12 years
</TABLE>
INTANGIBLE ASSETS: Intangible assets, principally cost in excess of net
assets acquired, noncompete agreements and a trademark, are being amortized on
the straight-line basis over periods of 4 to 40 years.
MINORITY INTEREST: Minority interest represents the limited partner's
allocable share of the Partnership's net assets (see Notes H and J) and the
limited partner's allocable share of net assets of South Charleston Stamping &
Manufacturing Company ("SCSM").
REVENUE RECOGNITION: Revenues from sales of trailers that are manufactured
in response to customers' orders are recorded when such products are completed
and invoiced. Finance income is recognized as other income over the term of the
finance leases by applying the simple interest method to scheduled monthly
collections. Rental income from vehicle leases is recognized as earned. Vehicles
are generally
F-7
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
leased on a daily or weekly basis to unaffiliated operators. Insurance
Subsidiary premiums are recognized as income ratably over the period covered by
the policies. Unearned premium reserves are calculated on the monthly pro-rata
basis. Realized gains and losses on investments are determined on a specific
identification basis and are included in the determination of net income.
DEBT ISSUE EXPENSE: Expenses incurred in connection with the issuance of
debt are capitalized and amortized as interest expense over the life of the
debt.
LOSSES AND LOSS ADJUSTMENT EXPENSES: The Insurance Subsidiary's liability
for unpaid losses and loss adjustment expenses represents an estimate of the
ultimate net costs of all losses which are unpaid at the balance sheet dates,
and is determined using case-basis evaluations and statistical analysis. These
estimates are continually reviewed and any adjustments which become necessary
are included in current operations. Since the liability is based on estimates,
the ultimate settlement of losses and the related loss adjustment expenses may
vary from the amounts included in the consolidated financial statements.
INSURANCE SUBSIDIARY REINSURANCE: During 1993, the Company adopted the
provisions of SFAS No. 113, "Accounting and Reporting for Reinsurance of Short
Duration and Long Duration Contracts" ("SFAS No. 113"). Because of the type of
insurance contracts the Company's Insurance Subsidiary provides, the adoption of
this statement had no impact on earnings; however, it requires the
disaggregation of various balance sheet accounts. For financial reporting
purposes, the 1992 balance sheet and the 1991 and 1992 statements of cash flows
have been restated as if this statement were adopted as of the beginning of the
earliest period presented.
RECLASSIFICATION: Certain 1991 and 1992 amounts have been reclassified to
conform to the 1993 presentation.
NOTE C -- TRAILER LEASING OPERATIONS
Great Dane, through a wholly-owned leasing subsidiary, leases trailers under
operating and sales-type leases ("finance lease receivables"). The following is
a summary of the components of the subsidiary's net investment in finance lease
receivables (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1992 1993
--------- ---------
<S> <C> <C>
Minimum lease payments receivable............................................... $ 6,563 $ 1,678
Less: Unearned income........................................................... (669) (180)
Allowance for doubtful accounts............................................. (679) (159)
--------- ---------
5,215 1,339
Less amounts reflected as current............................................... (2,352) (764)
--------- ---------
Noncurrent portion.............................................................. $ 2,863 $ 575
--------- ---------
--------- ---------
</TABLE>
Minimum lease payments are receivable as follows: $1.0 million in 1994, $0.3
million in 1995 and $0.4 million in 1996.
Trailers subject to operating leases are included in transportation
equipment in the accompanying consolidated balance sheets. The cost and
accumulated depreciation of such trailers were $1.5 million and $0.6 million,
respectively, at December 31, 1992, and $0.5 million and $0.2 million,
respectively, at December 31, 1993.
F-8
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE D -- INVENTORIES
Inventories are summarized below (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1992 1993
--------- ---------
<S> <C> <C>
Raw materials................................................................. $ 44,005 $ 53,105
Work-in-process............................................................... 8,803 10,956
Finished goods................................................................ 19,053 30,051
--------- ---------
$ 71,861 $ 94,112
--------- ---------
--------- ---------
</TABLE>
Inventories would not differ materially if the first-in, first-out costing
method were used for inventories costed by the LIFO method.
NOTE E -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are summarized below (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1992 1993
----------- -----------
<S> <C> <C>
Land and buildings......................................................... $ 46,131 $ 54,167
Transportation equipment................................................... 37,392 32,830
Machinery, equipment, furniture and fixtures............................... 106,261 125,067
----------- -----------
189,784 212,064
Less accumulated depreciation and amortization............................. (70,292) (89,709)
----------- -----------
$ 119,492 $ 122,355
----------- -----------
----------- -----------
</TABLE>
NOTE F -- INVESTMENTS
Insurance Subsidiary investments, which are generally reserved for Insurance
Subsidiary operations, are as follows (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1992 1993
--------- ---------
<S> <C> <C>
Fixed maturities (bonds and notes) -- at cost, adjusted for amortization of
premium or discount and other than temporary declines in market value........ $ 75,950 $ 77,229
Equity securities (common and non-redeemable preferred stocks) -- at current
market value (cost $8,634 in 1992 and $13,536 in 1993 )...................... 8,666 13,609
--------- ---------
$ 84,616 $ 90,838
--------- ---------
--------- ---------
</TABLE>
F-9
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE F -- INVESTMENTS (CONTINUED)
The amortized cost, gross unrealized gains and losses and estimated market
values of fixed-maturity investments held by the Insurance Subsidiary as of
December 31, 1993, are as follows (dollars in thousands):
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
------- ------ ---- -------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies........... $7,276 $ 283 $-- $7,559
Obligations of states and political
subdivisions................................... 21,984 561 -- 22,545
Mortgage-backed securities...................... 2,873 156 -- 3,029
Corporate and other debt securities............. 45,096 3,119 103 48,112
------- ------ ---- -------
$77,229 $4,119 $103 $81,245
------- ------ ---- -------
------- ------ ---- -------
</TABLE>
The amortized cost and estimated market value of fixed-maturity investments
at December 31, 1993, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED MARKET
COST VALUE
-------- --------
<S> <C> <C>
Due in one year or less.................................................... $11,998 $12,209
Due after one year through five years...................................... 24,918 25,880
Due after five years through ten years..................................... 21,989 23,313
Due after ten years........................................................ 15,451 16,814
-------- --------
74,356 78,216
Mortgage-backed securities................................................. 2,873 3,029
-------- --------
$77,229 $81,245
-------- --------
-------- --------
</TABLE>
Proceeds from sales of fixed-maturity investments were $21.7 million for
1992 and $57.2 million for 1993. Gross gains of $0.6 million and no gross losses
were realized during 1992 and gross gains of $1.2 million and gross losses of
$0.2 million were realized during 1993.
Bonds with an amortized cost of $2.2 million at December 31, 1993, were on
deposit to meet certain regulatory requirements.
F-10
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE F -- INVESTMENTS (CONTINUED)
Realized gains (losses) for 1991, 1992 and 1993, including other than
temporary declines in market value and unrealized appreciation (depreciation) on
fixed maturities and equity security investments of the Insurance Subsidiary,
are summarized as follows (dollars in thousands):
<TABLE>
<CAPTION>
FIXED EQUITY
MATURITIES SECURITIES TOTAL
----------- ----------- ---------
<S> <C> <C> <C>
1991
Realized losses.................................................. $ (897) $ (730) $ (1,627)
Unrealized appreciation.......................................... -- 1,847 1,847
----------- ----------- ---------
$ (897) $ 1,117 $ 220
----------- ----------- ---------
----------- ----------- ---------
1992
Realized gains................................................... $ 34 $ 656 $ 690
Unrealized depreciation.......................................... -- (367 ) (367)
----------- ----------- ---------
$ 34 $ 289 $ 323
----------- ----------- ---------
----------- ----------- ---------
1993
Realized gains................................................... $ 983 $ 95 $ 1,078
Unrealized appreciation.......................................... -- 41 41
----------- ----------- ---------
$ 983 $ 136 $ 1,119
----------- ----------- ---------
----------- ----------- ---------
</TABLE>
NOTE G -- BORROWINGS
Long-term debt is summarized below (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1992 1993
----------- -----------
<S> <C> <C>
12 3/4% Senior Subordinated Debentures less debt discount of $12,330 in
1992 and $11,124 in 1993.................................................. $ 119,710 $ 120,916
14 1/2% Subordinated Discount Debentures less debt discount of $6,697 in
1992 and $6,531 in 1993................................................... 54,650 54,816
Notes payable to shareholders.............................................. 30,000 30,000
Great Dane term loan payable............................................... 26,167 21,511
Great Dane Revolving credit line........................................... 17,620 17,132
Partnership term loan payable.............................................. 28,500 22,500
Equipment term loan........................................................ 7,300 5,500
Economic Development term loan............................................. 11,389 10,909
Installment notes.......................................................... 5,079 979
Other debt................................................................. 4,953 7,010
----------- -----------
305,368 291,273
Less current portion....................................................... (15,752) (14,321)
----------- -----------
$ 289,616 $ 276,952
----------- -----------
----------- -----------
</TABLE>
Interest on the $132 million face value of 12 3/4% Senior Subordinated
Debentures is payable semiannually at the stated rate. The recorded debt
discount is being amortized as interest expense over the expected life of the
debentures using an imputed interest rate of approximately 15% compounded
semiannually. Under the terms of the debentures, the Company's payment of
dividends is limited to, among other things, 50% of consolidated net income
subsequent to June 30, 1986, plus $12 million. At
F-11
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE G -- BORROWINGS (CONTINUED)
December 31, 1993, the Company was restricted from paying a dividend. The
debentures are redeemable at the option of the Company in whole or in part at a
decreasing premium. The debentures are subject to redemptions through a sinking
fund whereby the Company is required to make five annual sinking fund payments
of $18 million commencing August 1, 1996, with the final payment due August 1,
2001.
Interest on the $61 million face value of 14 1/2% Subordinated Discount
Debentures is payable semiannually at the stated rate. The recorded debt
discount is being amortized as interest expense over the expected life of the
debentures using an imputed interest rate of approximately 16.7% compounded
semiannually. The 14 1/2% debentures are subject to redemption through a sinking
fund whereby the Company is required to redeem, at their face value, on January
1 in each of the years 1997 through 2005, 7 1/2% of the principal amount of the
debentures outstanding on January 1, 1997. The balance of debentures are due
January 1, 2006. The debentures are callable any time at their face value and
are subordinated to all present or future indebtedness of the Company not
expressly subordinated to, or on a parity with, the debentures.
The notes payable to shareholders are due September 30, 1997, or upon the
earlier payment in full of obligations under both the 1992 Partnership Loan and
Guaranty Agreement and the 1990 Great Dane loan and security agreement and bear
interest payable quarterly in arrears at an annual rate equal to the prime rate
of a New York bank (5.5% at December 31, 1993) plus 3 1/2%.
In March 1990, Great Dane entered into a five year loan and security
agreement ("Agreement") with certain banks. The Agreement made available to
Great Dane a $33 million five-year term loan and a $47 million revolving credit
line. In 1993, the maximum revolving credit line was increased to $65 million.
The amount available under the revolving credit line is based upon the amount of
Great Dane's eligible trade accounts receivable and inventory as defined in the
Agreement. The additional amount available under the revolving credit line under
the borrowing base terms of the Agreement totaled $32.3 million at December 31,
1993. The term loan is payable in equal monthly installments of $0.34 million
plus interest at the bank's prime interest rate (6% at December 31, 1993) plus
1 1/2%, with the balance due in March 1995. The revolving credit line is due in
1995 and requires interest payments at the bank's prime rate (6% at December 31,
1993) plus 1 1/2%.
All borrowings under the Agreement are fully secured by substantially all of
the Great Dane assets not pledged elsewhere. The Agreement requires Great Dane
to, among other things, comply with certain financial covenants, and limits
additional loans to the Company, limits additions to and sales of Great Dane's
fixed assets and limits additional Great Dane borrowings. Under the most
restrictive covenant, no additional transfers of funds to the Company are
available until after December 31, 1993.
During 1992, the Partnership entered into a Loan and Guaranty Agreement with
a bank pursuant to which the bank provided a $30 million term loan to the
Partnership. The term loan requires twenty quarterly principal payments of $1.5
million, plus interest at the bank's prime rate (6% at December 31, 1993) plus
1 1/4%, which payments commenced December 31, 1992. The term loan is secured by
substantially all of the Partnership's assets, excluding the stock of the
Insurance Subsidiary. The term loan agreement, which is guaranteed by Checker,
requires Checker to, among other things, comply with certain financial covenants
and limits additional loans to Checker.
The equipment term loan requires quarterly payments of $0.5 million plus
interest at the bank's prime rate (6% at December 31, 1993) plus 1 1/4%. The
obligation is secured by certain machinery and equipment with a net carrying
amount of $6.5 million at December 31, 1993.
F-12
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE G -- BORROWINGS (CONTINUED)
In connection with the Partnership term loan and the equipment term loan,
Checker is required to comply with certain financial covenants.
The economic development term loan, which is guaranteed by Checker, is
payable by SCSM to the West Virginia Economic Development Authority, and
requires monthly payments of $0.1 million, including interest at 5% with the
unpaid balance due 2008. The interest rate will be adjusted in April 1998 and
2003, so as to remain equal to 75% of the base rate, as defined, plus 1/2%. The
loan is secured by certain machinery and equipment with a net carrying amount of
$25.1 million at December 31, 1993.
The installment notes are secured by the Company's finance lease receivables
and by the Company's rights under certain operating leases. The notes bear
interest at various fixed rates averaging approximately 10.9% and are payable in
varying monthly installments through 1995.
Maturities of long-term debt for the four years subsequent to 1994 are as
follows: $44.4 million in 1995, $9.1 million in 1996, $54.1 million in 1997 and
$19.6 million in 1998.
Interest paid totaled $43.3 million in 1991, $42.4 million in 1992 and $39.8
million in 1993.
SCSM has a line of credit with a bank totaling $7.5 million at December 31,
1993. Borrowing under the line ($5.0 million at December 31, 1993) bears
interest at the bank's prime rate (6% at December 31, 1993) plus 1%.
The Partnership has a $5.0 million line of credit with a bank. Borrowings
under the line ($0 at December 31, 1993) bear interest at the bank's prime rate
(6% at December 31, 1993) plus 1%.
NOTE H -- COMMITMENTS AND CONTINGENCIES
On February 8, 1989, the Boeing Company ("Boeing") filed a lawsuit naming
the Company, together with three prior subsidiaries of the Company, as
defendants in Case No. CV89-119MA, United States District Court for the District
of Oregon. In that lawsuit, Boeing sought damages and declaratory relief for
past and future costs resulting from alleged groundwater contamination at a
location in Gresham, Oregon, where the three prior subsidiaries of the Company
formerly conducted business operations. On December 22, 1993, the Company
entered into a settlement with Boeing, settling all claims asserted by Boeing in
the lawsuit. Pursuant to the settlement terms, the Company will pay Boeing $12.5
million over the course of five years, $5 million of which has been committed by
certain insurance companies in the form of cash or irrevocable letters of
credit. Accordingly, no further adjustment is necessary to the $7.5 million
special charge which was recorded in the quarter ended June 30, 1993, to provide
for the cost associated with this legal proceeding. In accordance with the
settlement agreement, Boeing will move to dismiss its claims against the Company
and the three former subsidiaries and will release and indemnify the Company
with respect to certain claims.
On March 4, 1992, Checker received notice that the Insurance Commissioner of
the State of California, as Conservator and Rehabilitator of ELIC, a limited
partner of the Partnership, had filed an Amendment to the Application for Order
of Conservation filed in Superior Court of the State of California for the
County of Los Angeles. The amendment seeks to add to the Order, dated April 11,
1991, Checker, the Partnership and Checker Holding Corp. III, a limited partner
of the Partnership. The amendment alleges that the action by Checker invoking
provisions of the Partnership Agreement that alter ELIC's rights in the
Partnership upon the occurrence of certain events is improper and constitutes an
impermissible forfeiture of ELIC's interest in the Partnership and a breach of
fiduciary duty to ELIC. The amend-ment seeks (a) a declaration of the rights of
the parties in the Partnership and (b) damages in an unspecified amount. The
Partnership believes that it has meritorious defenses to the claims of ELIC. The
Partnership has been in litigation on these issues for almost three years with
each party seeking, among
F-13
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE H -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
other things, a declaration of its rights under the Partnership Agreement. The
Company has offered to redeem ELIC's minority interest in the Partnership and
SCSM for $32 million. If ELIC's rights under the Partnership Agreement had not
been altered, net income for 1991, 1992 and 1993 would have been reported at
$3.3 million, $0.7 million and $0.6 million less, respectively, than the amounts
reported (see Note J).
In 1988, Great Dane entered into an operating agreement with the purchaser
of a previously wholly-owned finance company ("Finance"). Under the terms of the
agreement, the purchaser is given the opportunity to finance certain sales of
Great Dane. The 1988 operating agreement requires that Great Dane, among other
things, (i) not finance the sale of its products for the first eight years and
(ii) maintain a minimum net worth as defined in the agreement. In addition,
under this operating agreement, Great Dane is liable to the purchaser for 50% of
losses incurred in connection with the realization of certain new receivables
financed by the purchaser subsequent to the sale of Finance subject to certain
maximums. Failure to comply with these requirements of the agreement would
result in Great Dane having to repay the purchaser varying amounts reducing to
$5 million during the year ending September 8, 1996. At December 31, 1993, Great
Dane was in compliance with the provisions of the operating agreement.
In addition, the Company's installment notes are payable to Finance. At
December 31, 1993, the Company was directly liable for the installment notes and
has guaranteed the realization of receivables of approximately $4.8 million in
connection with the sale of Finance and is partially responsible for the
realization of new receivables of approximately $121.3 million financed by the
purchaser under the operating agreement subject to certain maximums. In addition
to Great Dane's guarantee, these receivables are also collateralized by a
security interest in the respective trailers originally sold by Great Dane. A
loss reserve of $3.1 million, for potential losses that may be incurred on the
ultimate realization of these receivables, is included in other accrued
liabilities in the December 31, 1993, consolidated balance sheet.
To secure certain obligations, the Company and its subsidiaries had
outstanding letters of credit aggregating approximately $9.3 million at December
31, 1992, and $3.4 million at December 31, 1993, which letters of credit were
fully secured by cash deposits included in other assets in the consolidated
balance sheets. In addition, Great Dane has standby letters of credit
aggregating approximately $7.5 million outstanding at December 31, 1993.
The Company and its subsidiaries lease real estate and equipment. Certain
leases are renewable and provide for monthly rentals, real estate taxes and
other operating expenses. The Company believes that, in the normal course of
business, leases that expire will be renewed or replaced by other leases. Rental
expense under operating leases was approximately $3.6 million in 1991, $3.8
million in 1992 and $4.8 million in 1993. Minimum rental obligations for all
noncancelable operating leases at December 31, 1993 are as follows: $2.9 million
in 1994, $2.7 million in 1995, $2.6 million in 1996, $2.5 million in 1997, $2.4
million in 1998 and $16.5 million thereafter.
Management believes that none of the above legal actions, guarantees or
commitments will have a material adverse effect on the Company's consolidated
financial position.
NOTE I -- RETIREMENT PLANS
The Company and its subsidiaries have defined benefit pension plans
applicable to substantially all employees. The contributions to these plans are
based on computations by independent actuarial consultants. The Company's
general funding policy is to contribute amounts required to maintain funding
standards in accordance with the Employee Retirement Income Security Act.
Employees' benefits are based on years of service and the employees' final
average earnings, as defined by the plans.
F-14
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE I -- RETIREMENT PLANS (CONTINUED)
Net periodic pension cost includes the following components (dollars in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1991 1992 1993
--------- --------- ---------
<S> <C> <C> <C>
Service cost -- benefits earned (normal cost)......................... $ 1,527 $ 1,473 $ 1,752
Interest on projected benefit obligation.............................. 3,404 3,565 3,972
Return on investments................................................. (2,761) (2,718) (2,867)
Net amortization and deferral......................................... 322 129 328
Curtailment loss...................................................... 456 -- --
--------- --------- ---------
Net periodic pension cost charged to expense.......................... $ 2,948 $ 2,449 $ 3,185
--------- --------- ---------
--------- --------- ---------
</TABLE>
During 1991, as a result of the effect of the continued economic recession
on the automotive industry, the number of active pension plan participants in
one of the subsidiaries' defined benefit plans was substantially reduced during
1991, resulting in a $0.5 million curtailment loss.
Gains and losses and prior service cost are amortized over periods ranging
from seven to fifteen years. Other assumptions used in the calculation of the
actuarial present value of the projected benefit obligation were as follows:
<TABLE>
<CAPTION>
1991 AND 1992 1993
--------------- -------------
<S> <C> <C>
Discount rate........................................................ 8 1/4% 7 1/2%
Rate of increase in compensation levels.............................. 4% - 5% 4% - 4 1/4%
Long-term rate of return on assets................................... 5% - 9 1/2% 5% - 9 1/2%
</TABLE>
The following table sets forth the plans' funded status and amounts
recognized in the Company's consolidated balance sheets (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1992 1993
---------- ----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligations................................................ $ 37,181 $ 41,846
---------- ----------
---------- ----------
Accumulated benefit obligation............................................ $ 39,503 $ 44,731
---------- ----------
---------- ----------
Plan assets (principally guaranteed investment contracts with insurance
companies)................................................................. $ 33,191 $ 37,174
Projected benefit obligation................................................ 46,771 54,568
---------- ----------
Projected benefit obligation in excess of plan assets....................... (13,580) (17,394)
Unrecognized prior service cost............................................. 963 1,115
Unrecognized net loss....................................................... 1,046 6,177
Minimum liability........................................................... (1,722) (1,450)
Unrecognized net obligation at transition................................... 2,048 1,819
---------- ----------
Pension liability recognized in the balance sheets.......................... (11,245) (9,733)
Less Noncurrent liability................................................... 6,857 6,442
---------- ----------
Current pension liability................................................... $ (4,388) $ (3,291)
---------- ----------
---------- ----------
</TABLE>
Relative positions and undertakings in multiemployer pension plans covering
certain of the Partnership's employees are not presently determinable.
F-15
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE I -- RETIREMENT PLANS (CONTINUED)
Expense related to defined contribution plans, which is based on a
stipulated contribution for hours worked or employee contributions, approximated
$0.4 million in 1991, $0.5 million in 1992 and $0.7 million in 1993.
The Company and its subsidiaries provide postretirement health care and life
insurance benefits to eligible retired employees. The Company's policy is to
fund the cost of medical benefits as paid. Prior to 1993, the Company recognized
expense in the year the benefits were provided. The amount charged to expense
for these benefits was approximately $2.0 million in 1991 and $2.5 million in
1992. Effective January 1, 1993, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." This statement
requires the accrual of the cost of providing postretirement benefits, including
medical and life insurance coverage, during the active service period of the
employee. The Company recorded a charge of $29.7 million (net of taxes of $16.5
million), or $1.78 per share, during 1993 to reflect the cumulative effect of
this change in accounting principle.
The following table sets forth the plan's funded status reconciled with
amounts recognized in the Company's consolidated balance sheet at December 31,
1993 (in thousands):
<TABLE>
<S> <C>
Accumulated postretirement obligation:
Retirees............................................................... $ (34,040)
Fully eligible active plan participants................................ (4,319)
Other active plan participants......................................... (11,218)
---------
(49,577)
Unrecognized net loss.................................................. 1,119
Unrecognized prior service cost........................................ (3,432)
---------
Accrued postretirement benefit liability recorded in balance sheet..... (51,890)
Less Noncurrent portion................................................ 49,609
---------
Current portion of postretirement benefit liability.................... $ (2,281)
---------
---------
</TABLE>
Net periodic postretirement benefit cost for the year ended December 31,
1993, includes the following components (in thousands):
<TABLE>
<S> <C>
Service cost............................................................... $ 634
Interest cost.............................................................. 3,888
---------
$ 4,522
---------
---------
</TABLE>
The health care cost trend rate ranges from 13.6% down to 5.0% over the next
14 years and remains level thereafter. The health care cost trend rate
assumption has a significant effect on the amounts reported. For example,
increasing the assumed health care cost trend rates by one percentage point in
each year would increase the accumulated postretirement benefit obligation as of
December 31, 1993, by $4.0 million. The weighted-average discount rate used in
determining the accumulated postretirement benefit obligation was 7.5% at
December 31, 1993.
The effect of adopting SFAS No. 106 decreased 1993 pre-tax income by $2.0
million as compared to 1992.
NOTE J -- MINORITY EQUITY
On April 11, 1991, ELIC was placed in conservatorship. In accordance with
the provisions of the Partnership Agreement, the Partnership continues, but
ELIC's interest in the Partnership and rights under the Partnership Agreement
are limited to the right to receive the balance of its capital account as
calculated
F-16
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE J -- MINORITY EQUITY (CONTINUED)
and on the terms set forth in the Partnership Agreement. For financial reporting
purposes, partnership earnings had previously been allocated to ELIC's capital
account based on book income and the minority equity amount was calculated
accordingly (the "GAAP Capital Account Amount"). The Partnership Agreement,
however, provides for allocations of the partnership earnings to ELIC's capital
account on a basis that differs from book income and calculation of the minority
equity amount thereunder is to be made accordingly (the "Partnership Agreement
Capital Account Amount"). Because the provisions of the Partnership Agreement
require that ELIC's capital account be fixed and calculated as of April 11,
1991, minority equity for the year ended December 31, 1991, includes a $2.3
million credit representing the adjustment of ELIC's capital account from the
GAAP Capital Account Amount as of April 11, 1991, to the Partnership Agreement
Capital Account Amount as of the same date (the "Final Capital Account"). The
Final Capital Account, which totaled $40.1 million at December 31, 1993, is
being paid out in level quarterly installments of $0.9 million, including
interest at 7% per annum, through the year 2013.
NOTE K -- INCOME TAXES
Effective January 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standard No. 109, "Accounting for Income Taxes." As
permitted under the new rules, prior years financial statements have not been
restated. The Company recorded a charge of $16.9 million, or $1.00 per share,
during 1993 to reflect the cumulative effect of this change in accounting
principle. Application of FAS 109 decreased 1993 pre-tax income by approximately
$1.5 million primarily because of FAS 109's requirement to record assets
acquired in prior business combinations at pre-tax amounts. Deferred income
taxes reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities and assets
as of December 31, 1993 are as follows (dollars in thousands):
<TABLE>
<S> <C>
Deferred tax liabilities:
Property, plant and equipment........................................... $ 31,646
Finance lease receivables............................................... 517
Debenture discount...................................................... 4,647
Intangible assets....................................................... 5,249
Inventory............................................................... 3,624
Other................................................................... 645
---------
46,328
Deferred tax assets:
Other postretirement benefits........................................... 18,961
Pension................................................................. 3,377
Reserves................................................................ 10,986
Bad debt reserve........................................................ 1,601
Other................................................................... 5,555
---------
40,480
Valuation allowance....................................................... (1,000)
---------
39,480
---------
Net Deferred Tax Liabilities.............................................. $ 6,848
---------
---------
</TABLE>
F-17
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE K -- INCOME TAXES (CONTINUED)
The components of income tax benefit (expense) before extraordinary items
are as follows (dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
LIABILITY
DEFERRED METHOD METHOD
-------------------- ----------
1991 1992 1993
--------- --------- ----------
<S> <C> <C> <C>
Current taxes:
Federal............................................................ $ 9,261 $ (3,296) $ (10,244)
State.............................................................. (732) (1,702) (4,025)
--------- --------- ----------
8,529 (4,998) (14,269)
Deferred taxes..................................................... (3,288) 4,311 8,512
--------- --------- ----------
Income tax benefit (expense)....................................... $ 5,241 $ (687) $ (5,757)
--------- --------- ----------
--------- --------- ----------
</TABLE>
The components of the deferred tax benefit (expense) are as follows (dollars
in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1991 1992
--------- ---------
<S> <C> <C>
Tax depreciation less than (in excess of) book depreciation..................... $ (2,215) $ 1,742
Finance leases.................................................................. (17) (37)
Deferred compensation........................................................... (4) (1)
Inventory reserves.............................................................. 15 505
Financing costs................................................................. (22) (75)
Warranty reserves............................................................... 17 22
Other reserves.................................................................. (660) 602
Partnership allocation.......................................................... 1,485 1,469
Alternative minimum tax......................................................... (2,223) --
Other........................................................................... 336 84
--------- ---------
Deferred tax benefit (expense).................................................. $ (3,288) $ 4,311
--------- ---------
--------- ---------
</TABLE>
Income tax benefit (expense) differs from the amount computed by applying
the statutory federal income tax rate to income (loss) before income taxes and
extraordinary items. The reasons for these differences are as follows (dollars
in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
LIABILITY
DEFERRED METHOD METHOD
-------------------- ---------
1991 1992 1993
--------- --------- ---------
<S> <C> <C> <C>
Computed expected tax benefit (expense)............................... $ 10,964 $ 2,335 $ (3,192)
(Increase) decrease in taxes resulting from:
State income taxes, net of federal income tax benefit............... (483) (1,123) (2,616)
Appraisal depreciation.............................................. (1,033) (1,024) --
Amortization of goodwill and other items............................ (530) (530) (643)
Nontaxable Partnership income....................................... 1,400 574 446
Increase in tax accruals............................................ (4,527) (319) --
Other............................................................... (550) (600) 248
--------- --------- ---------
Actual tax benefit (expense).......................................... $ 5,241 $ (687) $ (5,757)
--------- --------- ---------
--------- --------- ---------
</TABLE>
Income taxes paid totaled $8.6 million in 1991, $3.9 million in 1992 and
$13.4 million in 1993.
F-18
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE L -- EXTRAORDINARY ITEMS
During 1991, the Company repurchased $66.2 million face value ($58.7 million
net carrying value) of the 14 1/2% Subordinated Discount Debentures at an
average cost of 36% of face value. Additionally, the Company repurchased $7.6
million face value ($6.8 million net carrying value) of the 12 3/4% Senior
Subordinated Debentures at an average cost of 40% of face value. The resulting
gain of $23.2 million on these repurchases, net of taxes of $14.8 million, has
been classified as an extraordinary item. Upon the completion of the
Corporation's 1990 federal income tax return, management elected to treat
certain extraordinary gains under an alternative election available under the
Internal Revenue Code, which resulted in these gains, on which deferred income
taxes had been provided in prior periods, not being subject to tax. This change
in estimate had the effect of increasing the extraordinary gain and net income
by $8 million in the year ended December 31, 1991 resulting in a total gain of
$31.2 million.
NOTE M -- RELATED PARTY TRANSACTIONS
An officer of Checker is the owner of a taxicab association established in
1988 in the City of Chicago to which both Company affiliated and independent
taxi drivers may belong for a fee, and through which the members may obtain
automobile liability insurance from the Insurance Subsidiary and other
maintenance and rental services. The association purchases services from various
Checker operations and reimburses the operations for certain management, general
and administrative costs. Amounts received from the association totaled $2.6
million in 1991, $3.3 million in 1992 and $4.4 million in 1993. At December 31,
1993, Checker has guaranteed certain of the association's obligations totaling
$0.7 million.
The Company leases an airplane owned by a corporation of which a director is
the sole shareholder. Lease expenses totaled $0.7 million each year in 1991,
1992 and 1993.
Each of the Company's directors provides consulting services. Annual
expenses incurred relating to these consulting services totaled $1.4 million
each year in 1991, 1992 and 1993.
NOTE N -- INDUSTRY SEGMENT INFORMATION
The Company operates in four principal segments:
TRAILER MANUFACTURING SEGMENT -- Manufacturing and distribution of
highway truck trailers.
AUTOMOTIVE PRODUCTS SEGMENT -- Manufacturing metal stampings and
assemblies and coordination of related tooling production for motor vehicle
manufacturers.
VEHICULAR OPERATIONS SEGMENT -- Leasing taxicabs.
INSURANCE OPERATIONS SEGMENT -- Providing property and casualty
insurance coverage to the Partnership and to outside parties.
Trailer Manufacturing segment sales to J. B. Hunt totaled approximately $1.2
million in 1991, $50.0 million in 1992 and $92.3 million in 1993.
Automotive product net sales to General Motors Corporation totaled
approximately $80.3 million in 1991, $109.1 million in 1992 and $121.5 million
in 1993 (includes accounts receivable and unbilled tooling charges of $5.7
million, $8.9 million and $8.9 million at December 31, 1991, 1992 and 1993,
respectively).
F-19
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE N -- INDUSTRY SEGMENT INFORMATION (CONTINUED)
Industry segment data is summarized as follows (dollars in thousands):
<TABLE>
<CAPTION>
TRAILER AUTOMOTIVE VEHICULAR INSURANCE
MANUFACTURING PRODUCTS OPERATIONS OPERATIONS ELIMINATIONS CONSOLIDATED
--------- ------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1991
Revenues:
Outside customers............. $400,196 $84,401 $43,527 $27,142 $ -- $555,266
Intersegment sales............ -- 5 3,635 12,735 (16,375) --
--------- ------- ------- ------- -------- ---------
$400,196 $84,406 $47,162 $39,877 $(16,375) $555,266
--------- ------- ------- ------- -------- ---------
--------- ------- ------- ------- -------- ---------
Operating profit (loss)......... $ 7,059 $(4,237) $7,139 $(2,872) $ 7,089
Corporate expenses.............. (4,398)
Interest income:
Segment....................... 2,255 6,917 9,172
Corporate..................... 2,462
Interest expense:
Segment....................... (8,061) (8,061)
Corporate..................... (39,364)
Other expenses, net............. (1,078)
Minority equity................. 1,931
---------
Loss before income taxes and
extraordinary items............ $(32,247)
---------
---------
Identifiable assets............. $227,551 $67,258 $28,357 $112,016 $435,182
Partnership assets.............. 31,531
Corporate assets................ 14,592
---------
Total assets at December 31,
1991........................... $481,305
---------
---------
Depreciation and amortization:
Segment....................... $ 5,910 $4,237 $10,369 $ 367 $ 20,883
Other......................... 48
Capital expenditures............ 3,208 1,190 10,181 1,878 16,457
</TABLE>
F-20
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE N -- INDUSTRY SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
TRAILER AUTOMOTIVE VEHICULAR INSURANCE
MANUFACTURING PRODUCTS OPERATIONS OPERATIONS ELIMINATIONS CONSOLIDATED
--------- ------- ------- ------- -------- ---------
1992
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Outside customers............. $536,336 $112,631 $40,580 $27,186 $ -- $716,733
Intersegment sales............ -- 1 4,043 13,161 (17,205) --
--------- ------- ------- ------- -------- ---------
$536,336 $112,632 $44,623 $40,347 $(17,205) $716,733
--------- ------- ------- ------- -------- ---------
--------- ------- ------- ------- -------- ---------
Operating profit (loss)......... $ 17,590 $11,622 $5,727 $(1,557) $ 33,382
Corporate expenses.............. (4,396)
Interest income:
Segment....................... 1,168 6,321 7,489
Corporate..................... 1,406
Interest expense:
Segment....................... (5,852) (5,852)
Corporate..................... (36,874)
Other expenses, net............. (2,023)
---------
Loss before income taxes and
extraordinary items............ $ (6,868)
---------
Identifiable assets............. $230,465 $66,561 $25,516 $117,960 $440,502
Partnership assets.............. 38,712
Corporate assets................ 14,549
---------
Total assets at December 31,
1992........................... $493,763
---------
---------
Depreciation and amortization:
Segment....................... $ 6,303 $4,148 $10,099 $ 462 $ 21,012
Other......................... 42
Capital expenditures............ 4,996 1,889 10,412 252 17,549
</TABLE>
F-21
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE N -- INDUSTRY SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
TRAILER AUTOMOTIVE VEHICULAR INSURANCE
MANUFACTURING PRODUCTS OPERATIONS OPERATIONS ELIMINATIONS CONSOLIDATED
--------- ------- ------- ------- -------- ---------
1993
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Outside customers............. $711,862 $127,925 $42,103 $27,436 $ -- $909,326
Intersegment sales............ -- -- 4,346 13,400 (17,746) --
--------- ------- ------- ------- -------- ---------
$711,862 $127,925 $46,449 $40,836 $(17,746) $909,326
--------- ------- ------- ------- -------- ---------
--------- ------- ------- ------- -------- ---------
Operating profit (loss)......... $ 32,381 $15,306 $6,251 $(1,947) $ -- $ 51,991
Corporate expense............... (4,646)
Interest income:
Segment....................... 428 5,877 6,305
Corporate..................... 1,091
Interest expense:
Segment....................... (4,811) (4,811)
Corporate..................... (36,803)
Special charge.................. (7,500)
Other income, net............... 3,494
---------
Income before income taxes and
extraordinary items............ $ 9,121
---------
---------
Identifiable assets............. $259,837 $67,937 $20,493 $116,692 $464,959
Partnership assets.............. 37,701
Corporate assets................ 14,676
---------
Total assets at December 31,
1993........................... $517,336
---------
---------
Depreciation and amortization... $ 8,280 $4,991 $9,530 $ 494 $ 23,295
Capital expenditures............ 7,265 4,728 7,913 100 20,006
</TABLE>
Intersegment sales are accounted for at prices comparable to normal unaffiliated
customer sales. Corporate and Partnership assets consist of short-term
investments, savings deposits and certain other assets. Insurance Operations
identifiable assets for 1991 and 1992 have been restated to reflect the adoption
of SFAS No. 113.
NOTE O -- FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating
the fair value of financial instruments:
CASH AND CASH EQUIVALENTS: The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.
FINANCE LEASE RECEIVABLES: The fair values of the Company's finance lease
receivables are estimated using discounted cash flow analyses based on current
market rates for similar types of financing.
INDEBTEDNESS: The carrying amounts of the Company's notes payable to
shareholders, Great Dane term loan payable, Great Dane revolving credit line,
Partnership term loan payable, equipment term
F-22
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE O -- FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
loan, economic development term loan and line of credit approximate their fair
value. The fair values of the Company's 12 3/4% Senior Subordinated Debentures
and 14 1/2% Subordinated Discount Debentures are based on quoted market prices.
The fair values of the Company's other indebtedness is estimated using
discounted cash flow analyses based on current market rates.
The carrying amounts and fair values of the Company's finance lease
receivables and indebtedness at December 31, 1993, are as follows (dollars in
thousands):
<TABLE>
<CAPTION>
CARRYING AMOUNT FAIR VALUE
----------------- -----------
<S> <C> <C>
Finance lease receivables............................................ $ 1,339 $ 1,339
Long-term debt and notes payable..................................... $ 296,273 $ 300,940
</TABLE>
NOTE P -- SELECTED QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
1992 QUARTER ENDED 1993 QUARTER ENDED
---------------------------------------------- ---------------------------------------------
SEPTEMBER DECEMBER SEPTEMBER DECEMBER
MARCH 31 JUNE 30 30 31 MARCH 31 JUNE 30 30 31
--------- -------- --------- --------- --------- -------- --------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues........... $166,079 $185,070 $177,453 $188,131 $204,933 $225,407 $230,655 $248,331
Gross profit....... 24,437 27,551 26,115 27,760 29,302 33,808 31,126 36,285
Income (loss)
before accounting
changes........... (2,885) 105 (4,307) (468) (744) 1,350 (536) 3,294
Accounting
changes........... -- -- -- -- (46,626) -- -- --
Net income
(loss)............ (2,885) 105 (4,307) (468) (47,370) 1,350 (536) 3,294
Income (loss) per
share:
Income (loss)
before
accounting
changes......... $ (.17) $ .01 $ (.26) $ (.03) $ (.04) $ 0.8 $ (.03) $ .19
Accounting
changes......... -- -- -- -- (2.78) -- -- --
Net income
(loss).......... $ (.17) $ .01 $ (.26) $ (.03) $ (2.82) $ .08 $ (.03) $ .19
</TABLE>
NOTE Q -- SUBSEQUENT EVENT
On October 19, 1994, International Controls Corp. ("ICC") changed its name
and its jurisdiction of incorporation through a merger into its wholly-owned
subsidiary, Great Dane Holdings Inc. (the "Company"), a Delaware corporation.
Each of the outstanding shares of common stock of ICC was converted into a pro
rata portion of 1,000 shares of common stock, $1 par value per share, of the
Company. As a result of the above, the Company has 3,000 shares of $1 par value
common stock authorized and 1,000 shares issued and outstanding. On November 16,
1994, the Company's Board of Directors approved a resolution, subject to
shareholder approval, to be effective prior to the consummation of an initial
public offering, increasing the number of authorized shares of common stock to
50 million, reducing the par value to $0.01 per share and splitting the shares
16,800 for 1. This resolution also authorized, subject to shareholder approval,
5 million shares of $1 par value preferred stock. All share and per share data
and affected amounts have been adjusted to reflect these changes as though they
had occurred at the beginning of the earliest period presented.
F-23
<PAGE>
UNAUDITED FINANCIAL STATEMENTS
F-24
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
DECEMBER 31, SEPTEMBER 30,
1993 1994
-------------- --------------
<S> <C> <C>
Cash and cash equivalents...................................................... $ 40,078 $ 33,771
Accounts receivable, less allowance for doubtful accounts of
$748 (1993) and $1,328 (1994)................................................. 75,701 100,180
Inventories.................................................................... 94,112 100,669
Other current assets........................................................... 11,823 12,240
-------------- --------------
TOTAL CURRENT ASSETS....................................................... 221,714 246,860
Property, plant and equipment, net............................................. 122,355 118,274
Insurance Subsidiary's investments............................................. 90,838 89,302
Insurance Subsidiary's reinsurance receivable.................................. 11,378 8,202
Cost in excess of net assets acquired, net of accumulated amortization of
$6,252 (1993) and $7,189 (1994)............................................... 43,743 42,806
Trademark, net of accumulated amortization of
$1,750 (1993) and $2,013 (1994)............................................... 11,696 11,433
Other assets................................................................... 15,612 14,243
-------------- --------------
TOTAL ASSETS..................................................................... $ 517,336 $ 531,120
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable............................................................... $ 77,876 $ 83,708
Notes payable.................................................................. 5,000 5,000
Income taxes payable........................................................... 7,726 9,686
Accrued compensation........................................................... 15,838 19,480
Accrued interest............................................................... 11,746 6,224
Other accrued liabilities...................................................... 38,071 45,977
Current portion of long-term debt.............................................. 14,321 40,612
-------------- --------------
TOTAL CURRENT LIABILITIES.................................................. 170,578 210,687
Long-term debt, excluding current portion:
Shareholders................................................................. 30,000 30,000
Other........................................................................ 246,952 206,118
-------------- --------------
276,952 236,118
Insurance Subsidiary's unpaid losses and loss adjustment expenses.............. 71,179 69,677
Unearned insurance premiums.................................................... 9,547 13,796
Deferred income taxes.......................................................... 9,803 2,796
Postretirement benefits other than pensions.................................... 49,609 50,703
Other noncurrent liabilities................................................... 39,053 41,588
Minority interest.............................................................. 40,132 39,839
-------------- --------------
TOTAL LIABILITIES.......................................................... 666,853 665,204
Shareholders' deficit -- Note A:
Common stock, par value $.01:
Authorized 50,000,000 shares
Outstanding 16,800,000 shares.............................................. 168 168
Additional paid-in capital................................................... 14,832 14,832
Retained-earnings deficit.................................................... (36,217) (19,130)
Unrealized appreciation (depreciation) on Insurance Subsidiary's investments
in certain debt and equity securities -- Note F............................. 73 (1,581)
Notes receivable from shareholders........................................... (625) (625)
Amount paid in excess of Checker's net assets................................ (127,748) (127,748)
-------------- --------------
TOTAL SHAREHOLDERS' DEFICIT................................................ (149,517) (134,084)
-------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT...................................... $ 517,336 $ 531,120
-------------- --------------
-------------- --------------
</TABLE>
See notes to consolidated financial statements.
F-25
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1993 1994
-------------- --------------
<S> <C> <C>
Revenues...................................................................... $ 230,655 $ 256,679
Cost of revenues.............................................................. (199,529) (217,184)
-------------- --------------
GROSS PROFIT.................................................................. 31,126 39,495
Selling, general and administrative expense................................... (20,826) (26,683)
Interest expense.............................................................. (10,395) (10,221)
Interest income............................................................... 1,775 1,813
Other income (expense), net................................................... (340) 13
-------------- --------------
INCOME BEFORE MINORITY EQUITY AND INCOME TAXES................................ 1,340 4,417
Minority equity............................................................... -- (217)
-------------- --------------
INCOME BEFORE INCOME TAXES.................................................... 1,340 4,200
Income tax expense............................................................ (1,876) (1,890)
-------------- --------------
NET INCOME (LOSS)............................................................. $ (536) $ 2,310
-------------- --------------
-------------- --------------
Weighted average number of shares used in per share computations -- Note A.... 16,800 16,800
-------------- --------------
-------------- --------------
NET INCOME (LOSS) PER SHARE -- NOTE A......................................... $ (.03) $ .14
-------------- --------------
-------------- --------------
</TABLE>
See notes to consolidated financial statements.
F-26
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
1993 1994
----------- -----------
<S> <C> <C>
Revenues............................................................................. $ 660,995 $ 805,981
Cost of revenues..................................................................... (566,759) (680,672)
----------- -----------
GROSS PROFIT......................................................................... 94,236 125,309
Selling, general and administrative expense.......................................... (61,138) (69,400)
Interest expense..................................................................... (31,400) (30,414)
Interest income...................................................................... 5,652 5,214
Other income (expense), net.......................................................... (26) 779
Special charge -- Note G............................................................. (7,500) --
----------- -----------
INCOME (LOSS) BEFORE MINORITY EQUITY, INCOME TAXES AND ACCOUNTING CHANGE............. (176) 31,488
Minority equity...................................................................... -- (420)
----------- -----------
Income (loss) before income taxes and accounting changes............................. (176) 31,068
Income tax benefit (expense)......................................................... 246 (13,981)
----------- -----------
INCOME BEFORE ACCOUNTING CHANGES..................................................... 70 17,087
Accounting changes, net of income taxes.............................................. (46,626) --
----------- -----------
NET INCOME (LOSS).................................................................... $ (46,556) $ 17,087
----------- -----------
----------- -----------
Weighted average number of shares used in per share computations -- Note A........... 16,800 16,800
----------- -----------
----------- -----------
Income (loss) per share -- Note A:
Before accounting changes.......................................................... $ 0 $ 1.02
Accounting changes................................................................. (2.78) --
----------- -----------
NET INCOME (LOSS) PER SHARE.......................................................... $ (2.78) $ 1.02
----------- -----------
----------- -----------
</TABLE>
See notes to consolidated financial statements.
F-27
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1993 1994
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................................................... $ (46,556) $ 17,087
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Accounting changes................................................................ 46,626 --
Depreciation and amortization..................................................... 17,192 16,962
Deferred income tax benefit....................................................... (8,717) (6,381)
Amortization of cost in excess of net assets acquired............................. 937 937
Amortization of debt discount..................................................... 1,010 1,175
Net (gain) loss on sale of property, plant and equipment.......................... 82 (483)
Investment gains.................................................................. (317) (265)
Other noncash charges............................................................. 5,491 7,606
Changes in operating assets and liabilities:
Accounts receivable............................................................. (21,203) (25,124)
Finance lease receivables....................................................... 3,482 1,484
Inventories..................................................................... (10,574) (6,557)
Insurance Subsidiary's reinsurance receivable................................... 7,117 3,176
Other assets.................................................................... (653) (2,096)
Accounts payable................................................................ 9,882 5,832
Income taxes.................................................................... (846) 3,060
Unpaid losses and loss adjustment expenses...................................... (5,387) (1,502)
Unearned insurance premiums..................................................... (289) 4,249
Postretirement benefits other than pensions..................................... -- 1,094
Other liabilities............................................................... 9,918 2,012
---------- ----------
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES........................................ 7,195 22,266
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment.......................................... $ (16,862) $ (13,891)
Proceeds from disposal of property, plant and equipment and other productive
assets............................................................................. 2,434 1,493
Purchase of investments available for sale.......................................... -- (7,420)
Purchases of investments held to maturity........................................... (44,820) (90,176)
Proceeds from sale of investments available for sale................................ -- 2,383
Proceeds from maturity or redemption of investments held to maturity................ 48,614 95,060
Other............................................................................... 121 409
---------- ----------
NET CASH FLOW USED IN INVESTING ACTIVITIES............................................ (10,513) (12,142)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings............................................................ 6,963 --
Repayments of borrowings............................................................ (13,335) (15,718)
Return of limited partner's capital................................................. (665) (713)
---------- ----------
NET CASH FLOW USED IN FINANCING ACTIVITIES............................................ (7,037) (16,431)
---------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS................................................. (10,355) (6,307)
Beginning cash and cash equivalents................................................... 42,199 40,078
---------- ----------
ENDING CASH AND CASH EQUIVALENTS...................................................... $ 31,844 $ 33,771
---------- ----------
---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-28
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(UNAUDITED)
NOTE A -- SUBSEQUENT EVENT
On October 19, 1994, International Controls Corp. ("ICC") changed its name
and its jurisdiction of incorporation through a merger into its wholly-owned
subsidiary, Great Dane Holdings Inc. (the "Company"), a Delaware corporation.
Each of the outstanding shares of common stock of ICC was converted into a pro
rata portion of 1,000 shares of common stock, $1 par value per share, of the
Company. As a result of the above, the Company has 3,000 shares of $1 par value
common stock authorized and 1,000 shares issued and outstanding. On November 16,
1994, the Company's Board of Directors approved a resolution, subject to
shareholder approval, to be effective prior to the consummation of an initial
public offering, increasing the number of authorized shares of common stock to
50 million, reducing the par value to $0.01 per share and splitting the shares
16,800 for 1. This resolution also authorized, subject to shareholder approval,
5 million shares of $1 par value preferred stock. All share and per share data
and affected amounts have been adjusted to reflect these changes as though they
had occurred at the beginning of the earliest period presented.
NOTE B -- BASIS OF PRESENTATION
The accompanying consolidated financial statements of the Company have been
prepared in accordance with generally accepted accounting principles for interim
financial information, the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In Management's opinion, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine months ended September 30, 1994,
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1994. For further information, refer to the audited
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1993.
NOTE C -- PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Great Dane
Holdings Inc. and its subsidiaries, including Checker Motors Co., L.P. (the
"Partnership") and the Partnership's wholly-owned subsidiaries, including
American Country Insurance Company ("Insurance Subsidiary" or "Country").
NOTE D -- INVENTORIES
Inventories are summarized below (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1993 1994
-------------- --------------
<S> <C> <C>
Raw materials and supplies................................ $ 53,105 $ 60,898
Work-in-process........................................... 10,956 20,779
Finished goods............................................ 30,051 18,992
-------------- --------------
$ 94,112 $ 100,669
-------------- --------------
-------------- --------------
</TABLE>
NOTE E -- INCOME TAXES
The Company's estimated effective tax rate differs from the statutory rate
because of state income taxes as well as the impact of the reporting of certain
income and expense items in the financial statements which are not taxable or
deductible for income tax purposes. The values of assets and liabilities
acquired in a transaction accounted for as a purchase are recorded at estimated
fair values which result in an increase in the net asset value over the tax
basis for such net assets.
F-29
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(UNAUDITED)
NOTE F -- ACCOUNTING CHANGES
Effective January 1, 1994, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." In accordance with this statement,
prior period financial statements have not been restated to reflect the change
in accounting principle. The opening balance of total shareholders' deficit was
decreased by $1.4 million (net of $0.8 million in deferred income taxes) to
reflect the net unrealized holding gains on securities classified as
available-for-sale previously carried at amortized cost or lower of cost or
market.
Effective January 1, 1994, the Company adopted the provisions of SFAS No.
112, "Employers' Accounting for Postemployment Benefits." The adoption of this
SFAS did not affect net income. In accordance with this Statement, prior period
financial statements have not been restated to reflect the change in accounting
principle.
Effective January 1, 1993, the Company adopted the provisions of SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
The Company recorded a charge of $29.7 million (net of taxes of $16.5 million),
or $1.78 per share, during the quarter ended March 31, 1993 to reflect the
cumulative effect of this change in accounting principle.
Effective January 1, 1993, the Company adopted the provisions of SFAS No.
109, "Accounting for Income Taxes." The Company recorded a charge of $16.9
million, or $1.00 per share, during the quarter ended March 31, 1993, to reflect
the cumulative effect of this change in accounting principle.
Effective January 1, 1993, the Company adopted the provisions of SFAS No.
113, "Accounting and Reporting for Reinsurance of Short Duration and Long
Duration Contracts". Because of the type of insurance contracts the Company's
Insurance Subsidiary provides, the adoption of this statement had no impact on
earnings; however, it requires the disaggregation of various balance sheet
accounts.
NOTE G -- CONTINGENCIES
On February 8, 1989, the Boeing Company ("Boeing") filed a lawsuit naming
the Company, together with three prior subsidiaries of the Company, as
defendants in Case No. CV89-119MA, United States District Court for the District
of Oregon. In that lawsuit, Boeing sought damages and declaratory relief for
past and future costs resulting from alleged groundwater contamination at a
location in Gresham, Oregon, where the three prior subsidiaries of the Company
formerly conducted business operations. On December 22, 1993, the Company
entered into a settlement with Boeing, settling all claims asserted by Boeing in
the lawsuit. Pursuant to the settlement terms, the Company will pay Boeing $12.5
million over the course of five years, at least $5 million of which has been
committed by certain insurance companies in the form of cash or irrevocable
letters of credit. In accordance with the settlement agreement, Boeing's claims
against the Company and the three former subsidiaries have been dismissed with
prejudice and Boeing has released and indemnified the Company with respect to
certain claims. The Company recorded a $7.5 million pre-tax special charge in
connection with this matter.
On March 4, 1992, Checker received notice that the Insurance Commissioner of
the State of California, as Conservator and Rehabilitator of Executive Life
Insurance Company of California ("ELIC"), a limited partner of the Partnership,
had filed an Amendment to the Application for Order of Conservation filed in
Superior Court of the State of California for the County of Los Angeles (the
"Court"). The amendment seeks to add to the Order, dated April 11, 1991,
Checker, the Partnership and Checker Holding Corp. III ("Holding III"), a
limited partner of the Partnership. The amendment alleges that the action by
Checker invoking provisions of the Partnership Agreement that alter ELIC's
rights in the Partnership upon the occurrence of certain events is improper and
constitutes an impermissible forfeiture of ELIC's interest in the Partnership
and a breach of fiduciary duty to ELIC. The amendment seeks (a) a declaration of
the rights of the parties in the Partnership and (b) damages in an unspecified
amount. The Partnership believes that it has meritorious defenses to the claims
of ELIC. On April 15, 1994, the
F-30
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(UNAUDITED)
NOTE G -- CONTINGENCIES (CONTINUED)
Company and the Conservator entered into a letter agreement pursuant to which
the Company agreed to purchase ELIC's interest in the Partnership for $37
million. The letter agreement has been approved by the Court. If the purchase
has not been consummated prior to January 21, 1995, ELIC will be readmitted as a
partner. If ELIC was readmitted as a partner, minority interest would have been
approximately $3.0 million higher as of September 30, 1994, as a result of a
corresponding charge to minority equity in the income statement.
F-31
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 9
Use of Proceeds................................ 11
Dividend Policy................................ 12
Capitalization................................. 13
Dilution....................................... 14
Selected Consolidated Financial Data........... 15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 16
Business....................................... 20
Management..................................... 33
Certain Relationships and Related
Transactions.................................. 41
Ownership of Common Stock...................... 41
Description of Capital Stock................... 42
Shares Eligible for Future Sale................ 43
Underwriting................................... 44
Legal Matters.................................. 45
Experts........................................ 45
Available Information.......................... 45
Index to Financial Statements.................. F-1
</TABLE>
5,700,000 SHARES
GREAT DANE
HOLDINGS INC.
COMMON STOCK
-------------
PROSPECTUS
-------------
ALEX. BROWN & SONS
INCORPORATED
SMITH BARNEY INC.
, 1994
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Fee................................................. $ 33,906
NASD Filing Fee.................................................. 10,333
Listing Fees..................................................... 50,000
Legal Fees and Expenses..........................................
Blue Sky Fees and Expenses.......................................
Accounting Fees and Expenses.....................................
Printing and Engraving Expenses..................................
Transfer Agent and Registrar Fees................................
Miscellaneous....................................................
---------
Total........................................................ $
---------
---------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") and Article
EIGHTH of the Certificate of Incorporation of Holdings provide for
indemnification of the directors and officers of the Registrant in a variety of
circumstances which may include liabilities under the Securities Act of 1933, as
amended (the "Act").
Article EIGHTH of the Certificate of Incorporation of Holdings provides:
EIGHTH. Any person who was or is a party or is threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (whether or not by or in the right of the
Corporation) by reason of the fact that he is or was a director, officer,
incorporator, employee, or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, incorporator,
employee, partner, trustee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise (including an employee benefit
plan), shall be entitled to be indemnified by the Corporation to the full
extent then permitted by law against expenses (including counsel fees and
disbursements), judgments, fines (including excise taxes assessed on a
person with respect to an employee benefit plan), and amounts paid in
settlement incurred by him in connection with such action, suit, or
proceeding. Such right of indemnification shall inure whether or not the
claim asserted is based on matters which antedate the adoption of this
Article EIGHTH. Such right of indemnification shall continue as to a person
who has ceased to be a director, officer, incorporator, employee, partner,
trustee, or agent and shall inure to the benefit of the heirs and personal
representatives of such a person. The indemnification provided by this
Article EIGHTH shall not be deemed exclusive of any other rights which may
be provided now or in the future under any provision currently in effect or
hereafter adopted of the By-laws, by any agreement, by vote of stockholders,
by resolution of disinterested directors, by provision of law, or otherwise.
The general effect of the provisions in the Holdings' Certificate of
Incorporation and the DGCL is to provide that Holdings shall indemnify its
directors and officers against all liabilities and expenses actually and
reasonably incurred in connection with the defense or settlement of any judicial
or administrative proceedings in which they have become involved by reason of
their status as corporate directors or officers, if they acted in good faith and
in the reasonable belief that their conduct was neither unlawful (in the case of
criminal proceedings) nor inconsistent with the best interests of Holdings. With
respect to legal proceedings by or in the right of Holdings in which a director
or officer is adjudged liable for improper performance of his duty to Holdings
or another enterprise which such person served in a similar capacity at the
request of Holdings, indemnification is limited by such provisions to that
amount which is permitted by the court.
II-1
<PAGE>
In addition, the Company and/or its subsidiaries have entered into
employment agreements with David R. Markin, Jay H. Harris, Willard R. Hillebrand
and Jeffrey Feldman which require the Company to indemnify Messrs. Markin,
Harris and Feldman against certain liabilities that may arise by reason of their
status or service as directors or officers of, or consultants to, the Company or
its subsidiaries (other than liabilities arising from gross negligence or
willful misconduct) to the full extent permitted by law. Holdings has also
entered into indemnification agreements with its officers and directors.
[Reference is made to Section of the Underwriting Agreement, a copy of
which is filed as Exhibit 1.1 hereto, which provides for indemnification of the
directors and officers of the Registrant who sign the Registration tatement by
the Underwriters against certain liabilities, including those arising under the
Securities Act, in certain circumstances.]
ITEM 15. RECENT ISSUANCES OF UNREGISTERED SECURITIES.
In October 1994 International Controls Corp., a Florida corporation
("International Controls") merged with and into the Registrant, its wholly-owned
subsidiary for the purpose of reincorporating in Delaware. Each share of common
stock held by the four shareholders of International Controls was cancelled and
converted into the right to receive a pro rata portion of the 1,000 shares of
Common Stock of the Registrant then outstanding. Prior to consummation of this
offering, each share of Common Stock of the Registrant will be split 16,800 for
1, resulting in 16,800,000 shares outstanding prior to the Offering.
The issuances referenced were not sales of securities, but if characterized
as sales, would be entitled to the exemption from registration set forth in
Section 4(2) of the Securities Act relating to sales not involving a public
offering.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.*
3.1 Certificate of Incorporation of Holdings.**
3.2 By-Laws of Holdings.**
4.1 Form of Indenture between International Controls Corp. ("International Controls") and First
Fidelity Bank, National Association ("First Fidelity"), New Jersey, as Trustee relating the
12 3/4% Senior Subordinated Debentures due August 1, 2001 of International Controls (incorporated
herein by reference to Exhibit 4.1 to Registration Statement No. 33-7212 filed with the Securities
and Exchange Commission on July 15, 1986).
4.2 First Supplemental Indenture relating to the 12 3/4% Senior Subordinated Debentures due August 1,
2001 of International Controls dated as of October 19, 1994 among International Controls, the
Registrant and First Fidelity.**
4.3 Form of Indenture between International Controls and Midlantic National Bank ("Midlantic"), as
Trustee, relating to the 14 1/2% Subordinated Discount Debentures due January 1, 2006 of
International Controls (incorporated herein by reference to Exhibit 4.1 to Registration Statement
No. 33-1788 filed with the Securities and Exchange Commission on November 26, 1985).
4.4 First Supplemental Indenture relating to the 14 1/2% Subordinated Discount Debentures due January
1, 2006 of International Controls, dated October 19, 1994 among International Controls, the
Registrant and Midlantic.**
4.5 Form of Common Stock Certificate.*
4.6 Great Dane Holdings Inc. 1994 Stock Option Plan.**
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------
<C> <S>
4.7 Agreement to furnish additional documents upon request by the Securities and Exchange Commission
(incorporated herein by reference to Exhibit 4.3 to International Controls' Annual Report on Form
10-K for the year ended December 31, 1989 (the "1989 10-K")).
5.1 Opinion of Hutton Ingram Yuzek Gainen Carroll & Bertolotti regarding the legality of the securities
being registered.*
10.1 Amended and Restated Agreement of Limited Partnership of Checker L.P. (incorporated herein by
reference to Exhibit 10.17 to the 1989 10-K).
10.2 Amendment, dated July 28, 1989, to Amended and Restated Agreement of Limited Partnership of Checker
L.P. (incorporated herein by reference to Exhibit 19.1 to International Controls' Annual Report on
Form 10-K for the year ended December 31, 1991 (the "1991 10-K")).
10.3 Amendment, dated June 25, 1991, to Amended and Restated Agreement of Limited Partnership of Checker
L.P. (incorporated herein by reference to Exhibit 19.2 to the 1991 10-K).
10.4 Amended and Restated Employment Agreement, dated as of November 1, 1985, between Checker L.P. (as
successor to Motors) and David R. Markin ("Markin Employment Agreement") (incorporated herein by
reference to Exhibit 10.18 to the 1989 10-K).
10.5 Amendment, dated as of March 4, 1992, to Markin Employment Agreement (incorporated herein by
reference to Exhibit 10.3 to the 1991 10-K).
10.6 Extension, dated July 12, 1993, of Markin Employment Agreement (incorporated herein by reference to
Exhibit 10.6 of International Controls' Annual Report on Form 10-K for the year ended December 31,
1993 (the "1993 10-K")).
10.7 Amended and Restated Employment Agreement, dated as of June 1, 1992, between Checker L.P. and
Jeffrey Feldman (incorporated herein by reference to Exhibit 28.2 of International Controls'
Quarterly Report on Form 10-Q for the quarter ended June 30, 1992 (the "June 1992 10-Q").
10.8 Stated Benefit Salary Continuation Agreement (incorporated herein by reference to Exhibit 10.21 to
the 1989 10-K).
10.9 Employment Agreement, dated as of July 1, 1992, between International Controls and Jay H. Harris
(incorporated herein by reference to Exhibit 28.1 to the June 1992 10-Q) (the "Harris Employment
Agreement").
10.10 Amendment, dated April 6, 1994, to Harris Employment Agreement.**
10.11 Loan and Guaranty Agreement, dated September 17, 1992, by and among Checker L.P., Motors, SCSM and
NBD Bank, N.A. (the "Loan Agreement") (incorporated herein by reference to Exhibit 28.1 to
International Controls' Quarterly Report on Form 10-Q for the quarter ended September 30, 1992
(the "September 1992 10-Q")).
10.12 First Amendment, dated as of November 1, 1993, to the Loan Agreement.**
10.13 Credit and Guaranty Agreement, dated as of August 1, 1989, by and among SCSM, Motors, Checker L.P.
and NBD Bank, N.A. (the "Credit Agreement") (incorporated herein by reference to Exhibit 10.10 to
the 1992 10-K).
10.14 First Amendment, dated as of June 1, 1990, to the Credit Agreement (incorporated herein by
reference to Exhibit 10.11 of the 1992 10-K).
10.15 Second Amendment, dated as of January 2, 1991, to the Credit Agreement (incorporated herein by
reference to Exhibit 10.12 of the 1992 10-K).
10.16 Third Amendment, dated as of November 1, 1993, to the Credit Agreement.**
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------
<C> <S>
10.17 Supplemental Agreement, dated as of April 20, 1992, among SCSM, Motors, Checker L.P. and NBD Bank,
N.A. (incorporated herein by reference to Exhibit 10.13 of the 1992 10-K).
10.18 Second Supplemental Agreement, dated as of September 17, 1992, among SCSM, Motors, Checker L.P. and
NBD Bank, N.A. (incorporated herein by reference to Exhibit 28.2 of the June 1991 10-Q).
10.19 Lease, dated December 1, 1988, between SCSM and Park Corporation (incorporated herein by reference
to Exhibit 10.25 to the 1989 10-K).
10.20 Loan and Security Agreement dated as of March 21, 1990, by and among Great Dane, Great Dane
Trailers Nebraska, Inc., Great Dane Trailers Tennessee, Inc., Great Dane Los Angeles, Inc.,
certain lending institutions and Security Pacific Business Credit Inc., as Agent (the "Security
Pacific Agreement") (incorporated herein by reference to Exhibit 10.26 to the 1989 10-K).
10.21 First Amendment, dated as of March 30, 1990, to the Security Pacific Agreement (incorporated herein
by reference to Exhibit 19.3 to the 1991 10-K).
10.22 Second Amendment, dated as of April 30, 1990, to the Security Pacific Agreement (incorporated
herein by reference to Exhibit 19.4 to the 1991 10-K).
10.23 Third Amendment, dated as of August 14, 1990, to the Security Pacific Agreement (incorporated
herein by reference to Exhibit 19.5 to the 1991 10-K).
10.24 Fourth Amendment, dated as of February 28, 1991, to the Security Pacific Agreement (incorporated
herein by reference to Exhibit 19.6 to the 1991 10-K).
10.25 Waiver and Fifth Amendment, dated as of September 3, 1991, to the Security Pacific Agreement
(incorporated herein by reference to Exhibit 19.7 to the 1991 10-K).
10.26 Waiver, Consent and Sixth Amendment, dated April 30, 1992, to the Security Pacific Agreement
(incorporated herein by reference to Exhibit 28 to International Controls' Quarterly Report on
Form 10-Q for the quarter ended March 31, 1992).
10.27 Seventh Amendment, dated as of July 10, 1992, to the Security Pacific Agreement (incorporated
herein by reference to the June 1992 10-Q).
10.28 Eighth Amendment, dated as of February 19, 1993, to the Security Pacific Agreement (incorporated
herein by reference to Exhibit 10.24 of the 1992 10-K).
10.29 Waiver, Consent and Ninth Amendment, dated March 26, 1993, to the Security Pacific Agreement
(incorporated herein by reference to Exhibit 10.29 of the 1992 10-K).
10.30 Tenth Amendment, dated as of November 29, 1993, to the Security Pacific Agreement.**
10.31 Eleventh Amendment, dated as of March 11, 1994, to the Security Pacific Agreement (incorporated
herein by reference to Exhibit 10.1 to International Controls' Quarterly Report on Form 10-Q for
the quarter ended March 31, 1994).
10.32 Assumption Agreement dated as of August 1, 1989, by and between Motors and the West Virginia
Economic Development Authority (incorporated herein by reference to Exhibit 10.12 to International
Controls' Annual Report on Form 10-K for the year ended December 31, 1990).
10.33 Agreement, dated as of September 1, 1991, between Checker L.P. and Jerry E. Feldman (incorporated
herein by reference to Exhibit 10.12 to the 1991 10-K).
10.34 Form of Checker Motors Corporation Excess Benefit Retirement Plan, effective January 1, 1983
(incorporated herein by reference to Exhibit 19.9 to the 1991 10-K).
10.35 Amended and Restated License Agreement, dated December 30, 1992, between Motors and Checker Taxi
Association, Inc. (incorporated herein by reference to Exhibit 10.28 of the 1992 10-K).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------
<C> <S>
10.36 Employment Agreement, dated as of January 1, 1994, between Holdings and David R. Markin.**
10.37 Employment Agreement, dated as of November 4, 1991, between Great Dane and Willard R. Hildebrand.**
10.38 Settlement Agreement, dated as of June 21, 1994, among John Garamendi, as Insurance Commissioner of
the State of California, Base Assets Trust, Checker L.P., Motors, Checker Holding Corp. III and
Holdings.**
10.39 Form of Indemnification Agreement.**
10.40 Sale, Installation and Technical Assistance Agreement, dated November 14, 1983, between Graaff KG
and Great Dane Trailers, Inc.**
10.41 Form of Great Dane Trailers, Inc. Supplemental Retirement Income Plan, effective January 1, 1994.**
10.42 [Intentionally Left Blank]
10.43 Amended and Restated Operating Agreement, dated as of August 31, 1988, between Associates
Commercial Corporation (as successor to Great Dane Finance Company) and Great Dane Trailers, Inc.
(the "Associates Agreement").**
10.44 Amendment, dated February 7, 1994, to the Associates Agreement.**
10.45 Amendment, dated May 18, 1994, to the Associates Agreement.**
21.1 Subsidiaries of Registrant.**
23.1 Consent of Ernst & Young LLP.**
23.2 Consent of Hutton Ingram Yuzek Gainen Carroll & Bertolotti -- see Exhibit 5.1.
24.1 Power of Attorney (appears on signature page of this Registration Statement).
27.1 Financial Data Schedule.**
28.1 Schedule P of Annual Statements provided by Country to Illinois Regulatory Authorities
(incorporated herein by reference to Exhibit 28.1 of Registrant's Registration of Securities of
Successor Issues on Form 8-B filed with the Commission on October 24, 1994).
<FN>
- --------------
* To be filed by amendment
** Filed herewith
</TABLE>
(b) Financial Statement Schedules
The following financial statement schedules are filed as part of the
Registration Statement:
<TABLE>
<C> <C> <S> <C>
Report of Independent Auditors -- Great Dane Holdings Inc...................................... S-2
Schedule I -- Marketable Securities -- Other Investments............................ S-3
Schedule II -- Amounts Receivable from Related Parties and Underwriters, Promoters
and Employees Other Than Related Parties.............................. S-6
Schedule III -- Condensed Financial Information of Registrant......................... S-7
Schedule IV -- Indebtedness of and to Related Parties -- Not Current................. S-10
Schedule -- Valuation and Qualifying Accounts.....................................
VIII S-11
Schedule IX -- Short-Term Borrowings................................................. S-12
Schedule X -- Supplemental Income Statement Information............................. S-13
Schedule XIV -- Supplemental Information Concerning Property-Casualty Insurance
Operations............................................................ S-14
</TABLE>
II-5
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
(b) (1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus 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-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, on November 17, 1994.
GREAT DANE HOLDINGS INC.
By: ________/s/_DAVID R. MARKIN_______
David R. Markin,
President and Chief Executive
Officer
Executed in City of New York,
State of New York
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints each of the other persons whose signature appears
below and Jay H. Harris and each of them, with the power to act without the
others, as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
GREAT DANE HOLDINGS INC.:
<TABLE>
<C> <S> <C>
/s/ALLAN R. TESSLER Chairman of the Board November 17, 1994
Allan R. Tessler
/s/DAVID R. MARKIN President, Chief Executive November 17, 1994
David R. Markin Officer and Director
(Principal Executive
Officer)
/s/MARLAN R. SMITH Treasurer (Principal November 17, 1994
Marlan R. Smith Financial and Accounting
Officer)
/s/MARTIN L. SOLOMON Vice Chairman of the Board November 17, 1994
Martin L. Solomon and Secretary
/s/WILMER J. THOMAS, JR. Vice Chairman of the Board November 17, 1994
Wilmer J. Thomas, Jr.
</TABLE>
II-7
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES
COVERED BY REPORTS OF INDEPENDENT AUDITORS
<TABLE>
<C> <C> <S> <C>
Report of Independent Auditors -- Great Dane Holdings Inc...................................... S-2
Schedule I -- Marketable Securities -- Other Investments........................... S-3
Schedule II -- Amounts Receivable from Related Parties and Underwriters, Promoters
and Employees Other Than Related Parties............................. S-6
Schedule III -- Condensed Financial Information of Registrant........................ S-7
Schedule IV -- Indebtedness of and to Related Parties -- Not Current................ S-10
Schedule VIII -- Valuation and Qualifying Accounts.................................... S-11
Schedule IX -- Short-Term Borrowings................................................ S-12
Schedule X -- Supplementary Income Statement Information........................... S-13
Schedule XIV -- Supplemental Information Concerning Property -- Casualty Insurance
Operations........................................................... S-14
</TABLE>
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore, have been omitted.
S-1
<PAGE>
The following report is in the form that will be signed upon the completion of
the 16,800 to 1 stock split as described in Note Q to the consolidated financial
statements.
ERNST & YOUNG LLP
Kalamazoo, Michigan
November 16, 1994
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Great Dane Holdings Inc.
We have audited the consolidated financial statements of Great Dane Holdings
Inc. (formerly International Controls Corp.) and subsidiaries as of December 31,
1993 and 1992, and for each of the three years in the period ended December 31,
1993, and have issued our report thereon dated March 1, 1994, except for Note Q
as to which the date is November 16, 1994 (included elsewhere in this
Registration Statement). Our audits also included the financial statement
schedules listed in Item 16(b) of this Registration Statement. These schedules
are the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
Kalamazoo, Michigan
March 1, 1994, except for Note Q as to
which the date is November 16, 1994
S-2
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
SCHEDULE I -- MARKETABLE SECURITIES -- OTHER INVESTMENTS
DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- ------------------------------------------------ ----------------- ----------- ----------- ----------------
AMOUNT AT WHICH
EACH PORTFOLIO
OF EQUITY
NUMBER OF SECURITY
SHARES OR MARKET ISSUES AND EACH
UNITS -- VALUE OF OTHER SECURITY
PRINCIPAL EACH ISSUE ISSUE CARRIED IN
AMOUNT OF COST OF AT BALANCE THE BALANCE
NAME OF ISSUER AND TITLE OF EACH ISSUE BONDS AND NOTES EACH ISSUE SHEET DATE SHEET
- ------------------------------------------------ ----------------- ----------- ----------- ----------------
<S> <C> <C> <C> <C>
FIXED MATURITIES:
U. S. Government obligations.................. $ 7,320 $ 7,267 $ 7,559 $ 7,276
Obligations of various state and territorial
possessions.................................. 1,920 1,911 1,959 1,920
Obligations of political subdivisions of
states....................................... 10,745 10,748 11,064 10,760
Special revenue obligations of political
subdivisions of states....................... 9,290 9,313 9,522 9,304
Public utility obligations:
American Telephone & Telegraph.............. 850 835 907 837
Bell South Telecom, Inc..................... 1,000 1,004 1,050 1,003
Chesapeake & Potomac Telephone &
Telegraph.................................. 532 450 543 455
Citizen Utilities........................... 500 499 550 499
Consolidated Edison......................... 550 547 563 548
Illinois Bell Telephone Company............. 300 287 306 288
National Rural Utilities.................... 400 403 400 400
New England Telephone & Telegraph........... 400 419 404 419
New York Telephone Company.................. 400 382 412 383
Northern Telecom, Ltd....................... 350 357 340 356
Oklahoma Gas & Electric..................... 525 514 560 519
Pacific Bell................................ 500 491 500 492
Pacific Gas & Electric...................... 700 696 728 696
Potomac Electric Power Company.............. 350 343 396 345
Southwestern Bell Telephone Company......... 550 550 528 550
Miscellaneous other public utility
obligations................................ 2,036 1,931 2,128 1,956
----------- ----------- --------
Total public utility obligations.............. $ 9,708 $ 10,315 $ 9,746
Industrial and miscellaneous corporate
obligations:
Anheuser Busch Company, Inc................. 350 366 403 363
Associates Corporation of North America..... 755 770 762 759
Banc One Corporation........................ 340 343 412 342
Bank America Corporation.................... 850 881 917 878
Bankers Trust of New York................... 500 496 531 497
B. P. America............................... 550 566 629 562
Cargill Inc................................. 300 302 366 301
Chevron Capital USA, Inc.................... 350 339 382 344
Citicorp.................................... 400 400 405 400
</TABLE>
S-3
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
SCHEDULE I -- MARKETABLE SECURITIES -- OTHER INVESTMENTS -- CONTINUED
DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- ------------------------------------------------ ----------------- ----------- ----------- ----------------
AMOUNT AT WHICH
EACH PORTFOLIO
OF EQUITY
NUMBER OF SECURITY
SHARES OR MARKET ISSUES AND EACH
UNITS -- VALUE OF OTHER SECURITY
PRINCIPAL EACH ISSUE ISSUE CARRIED IN
AMOUNT OF COST OF AT BALANCE THE BALANCE
NAME OF ISSUER AND TITLE OF EACH ISSUE BONDS AND NOTES EACH ISSUE SHEET DATE SHEET
- ------------------------------------------------ ----------------- ----------- ----------- ----------------
<S> <C> <C> <C> <C>
FIXED MATURITIES -- Continued
Industrial and miscellaneous corporate
obligations -- Continued:
Coca Cola Enterprises....................... $ 500 $ 497 $ 523 $ 498
Comerica Bank -- Detroit.................... 500 500 509 500
Commercial Credit Group, Inc................ 450 442 466 449
Corestate Capital Corp...................... 300 298 303 298
Dow Capital Corporation..................... 350 350 357 350
Dow Chemical Company........................ 400 399 480 399
E. I. DuPont DeNemours & Company............ 700 658 751 666
Eastman Kodak Company....................... 450 451 494 451
Enhance Financial Services.................. 900 900 900 900
European Investment Bank.................... 300 303 303 303
Ford Motor Credit Corporation............... 750 749 779 751
Gannett Inc. Notes.......................... 500 500 490 500
General Electric Capital Corporation........ 1,350 1,454 1,395 1,350
General Electric Credit Corp................ 500 500 500 500
General Motors Acceptance Corporation....... 500 496 575 497
General Motors Corporation.................. 300 300 306 300
H. J. Heinz Company......................... 500 499 510 499
Hertz Corporation........................... 300 300 315 300
IBM Credit Corporation...................... 300 304 301 304
IBM Corporation............................. 500 496 525 497
ICI Wilmington, Inc......................... 300 309 321 306
ITT Financial Corporation................... 400 404 416 400
J. P. Morgan & Co........................... 700 721 770 712
The Limited Corporation..................... 650 652 748 652
Marathon Oil Company........................ 600 602 606 600
Matsushita Electric Inc., Ltd............... 400 400 424 400
MBIA Inc.................................... 450 443 495 443
Merrill Lynch & Co.......................... 300 296 309 299
Motorola, Inc............................... 300 300 357 300
Natwest Capital Corporation................. 300 320 363 318
Pepsico, Inc................................ 950 944 1,034 945
Phillip Morris & Co., Inc................... 1,450 1,450 1,548 1,450
Pitney Bowes Credit Corporation............. 377 379 420 373
Ralston Purina Company...................... 500 501 540 500
Republic National Bank, New York............ 500 499 505 499
Salomon, Inc................................ 500 502 554 501
Seagram, Joseph E., & Sons.................. 750 768 815 757
Sears Roebuck & Co.......................... 500 530 500 500
</TABLE>
S-4
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
SCHEDULE I -- MARKETABLE SECURITIES -- OTHER INVESTMENTS -- CONTINUED
DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- ------------------------------------------------ ----------------- ----------- ----------- ----------------
AMOUNT AT WHICH
EACH PORTFOLIO
OF EQUITY
NUMBER OF SECURITY
SHARES OR MARKET ISSUES AND EACH
UNITS -- VALUE OF OTHER SECURITY
PRINCIPAL EACH ISSUE ISSUE CARRIED IN
AMOUNT OF COST OF AT BALANCE THE BALANCE
NAME OF ISSUER AND TITLE OF EACH ISSUE BONDS AND NOTES EACH ISSUE SHEET DATE SHEET
- ------------------------------------------------ ----------------- ----------- ----------- ----------------
<S> <C> <C> <C> <C>
FIXED MATURITIES -- Continued
Industrial and miscellaneous corporate
obligations -- Continued:
Shearson Lehman Bros. Bldgs. Inc.............. $ 350 $ 350 $ 350 $ 350
Suntrust Bank, Inc............................ 300 304 309 301
Texaco Capital, Inc........................... 450 451 495 450
The Funding Corporation....................... 400 409 424 403
United States Banknote Corp................... 300 300 300 300
United Technologies........................... 300 304 327 302
USX Corporation............................... 400 405 372 405
Wal Mart Stores, Inc.......................... 1,150 1,154 1,250 1,155
Witco Corporation............................. 500 489 575 489
Xerox Credit Corporation...................... 439 422 469 427
Miscellaneous other industrial and
miscellaneous corporate obligations.......... 8,913 9,068 9,641 8,928
----------- ----------- --------
TOTAL INDUSTRIAL AND MISCELLANEOUS CORPORATE
OBLIGATIONS.................................... 38,535 40,826 38,223
----------- ----------- --------
TOTAL FIXED MATURITIES.......................... $ 77,482 $ 81,245 $ 77,229
EQUITY SECURITIES:
Banks, trusts and insurance companies
preferred stock.............................. 85,000 shares $ 2,136 $ 2,221 $ 2,221
Public utilities preferred stock.............. 45,340 shares 1,545 1,637 1,637
Industrial and miscellaneous preferred
stock........................................ 127,314 shares 3,559 3,601 3,601
Public utilities common stock................. 534,400 shares 1,401 1,536 1,536
Banks, Trusts and Insurance Companies Common
Stocks....................................... 24,547 shares 599 537 537
Industrial and miscellaneous common stock..... 133,951 shares 4,296 4,077 4,077
----------- ----------- --------
TOTAL EQUITY SECURITIES......................... 13,536 13,609 13,609
----------- ----------- --------
TOTAL INVESTMENTS............................... $ 91,018 $ 94,853 $ 90,838
----------- ----------- --------
----------- ----------- --------
</TABLE>
S-5
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- --------------------------------------- ----------- ----------- -------------------------------- ----------------------------
DEDUCTIONS BALANCE AT END OF PERIOD
--------------------------------
BALANCE AT (1) (2) ----------------------------
BEGINNING AMOUNTS AMOUNTS WRITTEN (1) (2)
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED OFF CURRENT NOT CURRENT
- --------------------------------------- ----------- ----------- --------------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1991
David R. Markin (1).................. $ 124 $ 0 $ 0 $ 0 $ 0 $ 124
Allan R. Tessler (1)................. 167 0 0 0 0 167
Wilmer J. Thomas, Jr. (1)............ 167 0 0 0 0 167
Martin L. Solomon (1)................ 167 0 0 0 0 167
-- --
----------- ----- ----- -----
$ 625 $ 0 $ 0 $ 0 $ 0 $ 625
-- --
-- --
----------- ----- ----- -----
----------- ----- ----- -----
YEAR ENDED DECEMBER 31, 1992
David R. Markin (1).................. $ 124 $ 0 $ 0 $ 0 $ 0 $ 124
Allan R. Tessler (1)................. 167 0 0 0 0 167
Wilmer J. Thomas, Jr. (1)............ 167 0 0 0 0 167
Martin L. Solomon (1)................ 167 0 0 0 0 167
King Cars, Inc. (2).................. 0 398 0 0 398 0
-- --
----------- ----- ----- -----
$ 625 $ 398 $ 0 $ 0 $ 398 $ 625
-- --
-- --
----------- ----- ----- -----
----------- ----- ----- -----
YEAR ENDED DECEMBER 31, 1993
David R. Markin (1).................. $ 124 $ 0 $ 0 $ 0 $ 0 $ 124
Allan R. Tessler (1)................. 167 0 0 0 0 167
Wilmer J. Thomas, Jr. (1)............ 167 0 0 0 0 167
Martin L. Solomon (1)................ 167 0 0 0 0 167
King Cars, Inc. (2).................. 398 24 0 0 422 0
-- --
----------- ----- ----- -----
$ 1,023 $ 24 $ 0 $ 0 $ 422 $ 625
-- --
-- --
----------- ----- ----- -----
----------- ----- ----- -----
<FN>
- --------------
(1) Obligation is non-interest bearing demand obligation.
(2) Obligation is a promissory note due on December 31, 1994, bearing a 6.5%
interest rate.
</TABLE>
S-6
<PAGE>
GREAT DANE HOLDINGS INC.
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1992 1993
------------ ------------
<S> <C> <C>
Assets:
Cash and cash equivalents........................................................ $ 4,930 $ 1,468
Accounts receivable.............................................................. 107 566
Other current assets............................................................. 3,734 4,345
------------ ------------
Total Current Assets........................................................... 8,771 6,379
Intercompany accounts with subsidiaries.......................................... 9,657 --
Investments in subsidiaries...................................................... 110,308 91,388
Other assets..................................................................... 12,430 16,331
------------ ------------
Total Assets....................................................................... $ 141,166 $ 114,098
------------ ------------
------------ ------------
Liabilities and Shareholders' Deficit:
Accounts payable................................................................. $ 143 $ 34
Income taxes payable (recoverable)............................................... 8,442 (1,702)
Accrued compensation............................................................. 256 256
Accrued interest................................................................. 11,467 11,468
Other accrued liabilities........................................................ 3,340 9,565
------------ ------------
Total Current Liabilities...................................................... 23,648 19,621
Long-term debt................................................................... 204,360 205,732
Other noncurrent liabilities..................................................... 19,486 31,713
Intercompany accounts with subsidiaries.......................................... -- 6,622
Shareholders' deficit:
Common stock................................................................... 168 168
Paid-in capital................................................................ 14,832 14,832
Retained earnings (deficit).................................................... 7,045 (36,217)
Amount paid in excess of Checker's net assets.................................. (127,748) (127,748)
Notes receivable from shareholders............................................. (625) (625)
------------ ------------
Total Shareholders' Deficit.................................................... (106,328) (149,590)
------------ ------------
Total Liabilities and Shareholders' Deficit........................................ $ 141,166 $ 114,098
------------ ------------
------------ ------------
</TABLE>
S-7
<PAGE>
GREAT DANE HOLDINGS INC.
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT -- CONTINUED
CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1991 1992 1993
---------- ---------- ----------
<S> <C> <C> <C>
Selling, general and administrative expenses................................ $ (4,398) $ (4,396) $ (4,646)
Interest expense............................................................ (32,018) (30,138) (30,216)
Equity in earnings of subsidiaries.......................................... 166 14,959 29,376
Other income (expense)...................................................... 857 (99) 211
Special charge.............................................................. -- -- (7,500)
Intercompany income:
Corporate charges......................................................... 1,008 1,008 1,008
Interest.................................................................. 394 305 --
---------- ---------- ----------
Loss before income taxes, extraordinary items and
accounting changes......................................................... (33,991) (18,361) (11,767)
Income tax benefit.......................................................... 6,985 10,806 15,131
---------- ---------- ----------
Income (loss) before extraordinary items and accounting changes............. (27,006) (7,555) 3,364
Extraordinary items, net of income taxes.................................... 31,188 -- --
---------- ---------- ----------
Income (loss) before accounting changes..................................... 4,182 (7,555) 3,364
Accounting changes.......................................................... -- -- (46,626)
---------- ---------- ----------
Net Income (Loss)........................................................... $ 4,182 $ (7,555) $ (43,262)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
S-8
<PAGE>
GREAT DANE HOLDINGS INC.
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT -- CONTINUED
CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1991 1992 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net cash flow used in operating activities.................................. $ (25,202) $ (20,973) $ (47,640)
Cash flows from investing activities:
Other..................................................................... (1,456) (334) 5,900
---------- ---------- ----------
Net cash flow provided by (used in) investing activities.................... (1,456) (334) 5,900
Cash flows from financing activities:
Repayments of debt........................................................ (27,187) -- --
Advances from subsidiaries................................................ 52,630 21,284 38,278
---------- ---------- ----------
Net cash flow provided by financing activities.............................. 25,443 21,284 38,278
---------- ---------- ----------
Decrease in cash and cash equivalents....................................... (1,215) (23) (3,462)
Beginning cash and cash equivalents......................................... 6,168 4,953 4,930
---------- ---------- ----------
Ending cash and cash equivalents............................................ $ 4,953 $ 4,930 $ 1,468
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The Registrant's subsidiaries declared dividends totaling $13.1 million in 1991,
$120.9 million in 1992 and $22 million in 1993. These dividends were declared to
offset certain intercompany account balances at the respective dates.
S-9
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
SCHEDULE IV -- INDEBTEDNESS OF AND TO RELATED PARTIES -- NOT CURRENT
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F COL. G COL. H COL. I
- ------------------------------ ---------- --------- ---------- ------- ---------- --------- ---------- -------
-- INDEBTEDNESS OF -- -- INDEBTEDNESS TO --
------------------------------------------ ------------------------------------------
BALANCE AT BALANCE BALANCE AT BALANCE
NAME OF PERSON BEGINNING ADDITIONS DEDUCTIONS AT END BEGINNING ADDITIONS DEDUCTIONS AT END
- ------------------------------ ---------- --------- ---------- ------- ---------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1991
David R. Markin............. $ -- $ -- $ -- $ -- $ 7,500 $ -- $ -- $ 7,500
Martin L. Solomon........... -- -- -- -- 7,500 -- -- 7,500
Allan R. Tessler............ -- -- -- -- 7,500 -- -- 7,500
Wilmer J. Thomas, Jr........ -- -- -- -- 7,500 -- -- 7,500
---------- --------- ---------- ------- ---------- --------- ---------- -------
$ -- $ -- $ -- $ -- $ 30,000 $ -- $ -- $30,000
---------- --------- ---------- ------- ---------- --------- ---------- -------
---------- --------- ---------- ------- ---------- --------- ---------- -------
YEAR ENDED DECEMBER 31, 1992
David R. Markin............. $ -- $ -- $ -- $ -- $ 7,500 $ -- $ -- $ 7,500
Martin L. Solomon........... -- -- -- -- 7,500 -- -- 7,500
Allan R. Tessler............ -- -- -- -- 7,500 -- -- 7,500
Wilmer J. Thomas, Jr........ -- -- -- -- 7,500 -- -- 7,500
---------- --------- ---------- ------- ---------- --------- ---------- -------
$ -- $ -- $ -- $ -- $ 30,000 $ -- $ -- $30,000
---------- --------- ---------- ------- ---------- --------- ---------- -------
---------- --------- ---------- ------- ---------- --------- ---------- -------
YEAR ENDED DECEMBER 31, 1993
David R. Markin............. $ -- $ -- $ -- $ -- $ 7,500 $ -- $ -- $ 7,500
Martin L. Solomon........... -- -- -- -- 7,500 -- -- 7,500
Allan R. Tessler............ -- -- -- -- 7,500 -- -- 7,500
Wilmer J. Thomas, Jr........ -- -- -- -- 7,500 -- -- 7,500
---------- --------- ---------- ------- ---------- --------- ---------- -------
$ -- $ -- $ -- $ -- $ 30,000 $ -- $ -- $30,000
---------- --------- ---------- ------- ---------- --------- ---------- -------
---------- --------- ---------- ------- ---------- --------- ---------- -------
</TABLE>
NOTE:The above amounts relate to amounts loaned to the Company to complete the
Holding buyout as described in Note A of the notes to consolidated
financial statements.
S-10
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- -------------------------------------------- ----------- --------------------------- -------------- -----------
ADDITIONS CHARGED TO:
BALANCE AT --------------------------- BALANCE AT
BEGINNING COST AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS(1) PERIOD
- -------------------------------------------- ----------- -------------- ----------- -------------- -----------
YEAR ENDED DECEMBER 31, 1991:
<S> <C> <C> <C> <C> <C>
Deducted from assets:
Allowance for doubtful accounts --
trade.................................. $ 808 $ 210 $ -- $ (412 ) $ 606
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
Allowance for doubtful accounts --
finance lease receivables.............. $ 842 $ (7 ) $ 292 $ (183 ) $ 944
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
Contract & warranty reserves.............. $ 10,796 $ 1,274 $ -- $ (3,807 ) $ 8,263
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
Workers' compensation..................... $ 242 $ 836 $ -- $ (813 ) $ 265
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
Claims.................................... $ 2,500 $ 1,047 $ -- $ (830 ) $ 2,717
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
YEAR ENDED DECEMBER 31, 1992:
Deducted from assets:
Allowance for doubtful accounts --
trade.................................. $ 606 $ 183 $ -- $ (166 ) $ 623
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
Allowance for doubtful accounts --
finance lease receivables.............. $ 944 $ 52 $ -- $ (317 ) $ 679
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
Contract & warranty reserves.............. $ 8,263 $ 3,564 $ -- $ (3,452 ) $ 8,375
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
Workers' compensation..................... $ 265 $ 4,584 $ -- $ (3,008 ) $ 1,841
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
Claims.................................... $ 2,717 $ 783 $ -- $ (168 ) $ 3,332
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
YEAR ENDED DECEMBER 31, 1993:
Deducted from assets:
Allowance for doubtful accounts --
trade.................................. $ 623 $ 234 $ -- $ (109 ) $ 748
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
Allowance for doubtful accounts --
finance lease receivables.............. $ 679 $ 52 $ -- $ (572 ) $ 159
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
Contract & warranty reserves.............. $ 8,375 $ 5,439 $ -- $ (3,429 ) $ 10,385
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
Workers' compensation..................... $ 1,841 $ 1,200 $ -- $ (1,927 ) $ 1,114
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
Claims.................................... $ 3,332 $ 1,103 $ -- $ (1,106 ) $ 3,329
----------- ------- ----- -------------- -----------
----------- ------- ----- -------------- -----------
<FN>
- --------------
(1) Reclassification to other reserves and utilization of reserves.
</TABLE>
S-11
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
SCHEDULE IX -- SHORT-TERM BORROWINGS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
- ------------------------------------------ ----------- --------------- ----------- ----------- ------------
WEIGHTED
MAXIMUM AVERAGE AVERAGE
AMOUNT AMOUNT INTEREST
BALANCE AT WEIGHTED OUTSTANDING OUTSTANDING RATE DURING
CATEGORY OF AGGREGATE SHORT-TERM END OF AVERAGE DURING THE DURING THE THE
BORROWINGS PERIOD INTEREST RATE PERIOD PERIOD(1) PERIOD(2)
- ------------------------------------------ ----------- --------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
BANK BORROWINGS:
Year ended December 31, 1991............ $ 4,000 7.00% $ 4,000 $ 2,053 8.38%
Year ended December 31, 1992............ 5,000 7.00% 5,000 4,350 6.71%
Year ended December 31, 1993............ 5,000 7.25% 5,000 4,998 7.25%
<FN>
- --------------
(1) Amount of loan divided by number of days in year, times the number of days
outstanding during the year.
(2) Total interest expense during the period divided by the average amount
outstanding during the period.
</TABLE>
S-12
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
SCHEDULE X -- SUPPLEMENTAL INCOME STATEMENT INFORMATION
(dollars in thousands)
<TABLE>
<CAPTION>
COLUMN B
-------------------------------------------------------------
Charged to Continuing Operations' Cost and Expenses
-------------------------------------------------------------
COLUMN A December 31, 1991 December 31, 1992 December 31, 1993
- ------------------------------------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C>
Maintenance and repairs.......................... $ 9,543 $ 9,646 $ 15,663
------- ------- --------
Depreciation and amortization of intangible
assets, pre-operating costs and similar
deferrals (1)................................... $ -- $ -- $ --
------- ------- --------
Taxes other than payroll and income taxes (1).... $ -- $ -- $ --
------- ------- --------
Royalties (1).................................... $ -- $ -- $ --
------- ------- --------
Advertising costs (1)............................ $ -- $ -- $ --
------- ------- --------
<FN>
- --------------
(1) Amounts for these expenses are not presented as such amounts are less than
1% of total revenues in the year indicated.
</TABLE>
S-13
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
SCHEDULE XIV -- SUPPLEMENTAL INFORMATION CONCERNING PROPERTY -- CASUALTY
INSURANCE OPERATIONS
(dollars in thousands)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F COL. G
- ------------------------------ ------------ -------------- -------------- -------------- -------------- -----------------
Reserves for
Unpaid
Deferred Claims Discount,
Policy and Claim if any,
Affiliation with Acquisition Adjustment Deducted in Unearned Earned Net Investment
Registrant Costs Expense(1) Column C Premiums(2) Premiums(3) Income
- ------------------------------ ------------ -------------- -------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
WHOLLY-OWNED INSURANCE SUBSIDIARY:
Year Ended:
December 31, 1991........... $ 2,073 $ 64,952 $ -- $ 11,619 $ 39,877 $ 7,061
------------ -------------- ------- -------------- -------------- -------
------------ -------------- ------- -------------- -------------- -------
December 31, 1992........... $ 1,832 $ 75,780 $ -- $ 10,463 $ 40,347 $ 8,227
------------ -------------- ------- -------------- -------------- -------
------------ -------------- ------- -------------- -------------- -------
December 31, 1993........... $ 1,893 $ 71,179 $ -- $ 9,547 $ 40,836 $ 7,838
------------ -------------- ------- -------------- -------------- -------
------------ -------------- ------- -------------- -------------- -------
<CAPTION>
COL. A COL. H COL. I COL. J COL. K
- ------------------------------ ------------------- --------------- ------------- -----------
Claims and Claim
Adjustment Expenses
Incurred Related
to: Amortization Paid
------------------- or Deferred Claims
(1) (2) Policy and Claim
Affiliation with Current Prior Acquisition Adjustment Premium
Registrant Year Years Costs Expenses Written
- ------------------------------ -------- --------- --------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
WHOLLY-OWNED INSURANCE SUBSIDI
Year Ended:
December 31, 1991........... $ 31,852 $ 1,676 $ (341) $ 26,208 $ 39,530
-------- --------- ------ ------------- -----------
-------- --------- ------ ------------- -----------
December 31, 1992........... $ 30,322 $ 2,043 $ (241) $ 27,319 $ 39,238
-------- --------- ------ ------------- -----------
-------- --------- ------ ------------- -----------
December 31, 1993........... $ 33,193 $ (454) $ 61 $ 30,832 $ 40,732
-------- --------- ------ ------------- -----------
-------- --------- ------ ------------- -----------
<FN>
- ----------------
(1) Includes reinsurance recoverable on unpaid claims and claims adjustment
expense of $8,106, $13,888 and $7,380 in 1991, 1992 and 1993, respectively,
in connection with the restatement of the balance sheet loss reserve amounts
as reported in accordance with SFAS No. 113.
(2) Includes net ceded premiums of $333, $286 and $(526) in 1991, 1992 and 1993,
respectively, in connection with the restatement of the balance sheet
unearned premium amounts as reported in accordance with SFAS No. 113.
(3) Includes premiums earned of $12,735, $13,161 and $13,400 in 1991, 1992 and
1993, respectively, in connection with coverage provided to other entities
in the consolidated group which have been eliminated in consolidation.
</TABLE>
S-14
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- --------- -------------------------------------------------------------------------------------------- -----
<C> <S> <C>
1.1 Form of Underwriting Agreement.*
3.1 Certificate of Incorporation of Holdings.**
3.2 By-Laws of Holdings.**
4.1 Form of Indenture between International Controls Corp. ("International Controls") and First
Fidelity Bank, National Association ("First Fidelity"), New Jersey, as Trustee relating the
12 3/4% Senior Subordinated Debentures due August 1, 2001 of International Controls
(incorporated herein by reference to Exhibit 4.1 to Registration Statement No. 33-7212
filed with the Securities and Exchange Commission on July 15, 1986).
4.2 First Supplemental Indenture relating to the 12 3/4% Senior Subordinated Debentures due
August 1, 2001 of International Controls dated as of October 19, 1994 among International
Controls, the Registrant and First Fidelity.**
4.3 Form of Indenture between International Controls and Midlantic National Bank ("Midlantic"),
as Trustee, relating to the 14 1/2% Subordinated Discount Debentures due January 1, 2006 of
International Controls (incorporated herein by reference to Exhibit 4.1 to Registration
Statement No. 33-1788 filed with the Securities and Exchange Commission on November 26,
1985).
4.4 First Supplemental Indenture relating to the 14 1/2% Subordinated Discount Debentures due
January 1, 2006 of International Controls, dated October 19, 1994 among International
Controls, the Registrant and Midlantic.**
4.5 Form of Common Stock Certificate.*
4.6 Great Dane Holdings Inc. 1994 Stock Option Plan.**
4.7 Agreement to furnish additional documents upon request by the Securities and Exchange
Commission (incorporated herein by reference to Exhibit 4.3 to International Controls'
Annual Report on Form 10-K for the year ended December 31, 1989 (the "1989 10-K")).
5.1 Opinion of Hutton Ingram Yuzek Gainen Carroll & Bertolotti regarding the legality of the
securities being registered.*
10.1 Amended and Restated Agreement of Limited Partnership of Checker L.P. (incorporated herein
by reference to Exhibit 10.17 to the 1989 10-K).
10.2 Amendment, dated July 28, 1989, to Amended and Restated Agreement of Limited Partnership of
Checker L.P. (incorporated herein by reference to Exhibit 19.1 to International Controls'
Annual Report on Form 10-K for the year ended December 31, 1991 (the "1991 10-K")).
10.3 Amendment, dated June 25, 1991, to Amended and Restated Agreement of Limited Partnership of
Checker L.P. (incorporated herein by reference to Exhibit 19.2 to the 1991 10-K).
10.4 Amended and Restated Employment Agreement, dated as of November 1, 1985, between Checker
L.P. (as successor to Motors) and David R. Markin ("Markin Employment Agreement")
(incorporated herein by reference to Exhibit 10.18 to the 1989 10-K).
10.5 Amendment, dated as of March 4, 1992, to Markin Employment Agreement (incorporated herein by
reference to Exhibit 10.3 to the 1991 10-K).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- --------- -------------------------------------------------------------------------------------------- -----
<C> <S> <C>
10.6 Extension, dated July 12, 1993, of Markin Employment Agreement (incorporated herein by
reference to Exhibit 10.6 of International Controls' Annual Report on Form 10-K for the
year ended December 31, 1993 (the "1993 10-K")).
10.7 Amended and Restated Employment Agreement, dated as of June 1, 1992, between Checker L.P.
and Jeffrey Feldman (incorporated herein by reference to Exhibit 28.2 of International
Controls' Quarterly Report on Form 10-Q for the quarter ended June 30, 1992 (the "June 1992
10-Q").
10.8 Stated Benefit Salary Continuation Agreement (incorporated herein by reference to Exhibit
10.21 to the 1989 10-K).
10.9 Employment Agreement, dated as of July 1, 1992, between International Controls and Jay H.
Harris (incorporated herein by reference to Exhibit 28.1 to the June 1992 10-Q) (the
"Harris Employment Agreement").
10.10 Amendment, dated April 6, 1994, to Harris Employment Agreement.**
10.11 Loan and Guaranty Agreement, dated September 17, 1992, by and among Checker L.P., Motors,
SCSM and NBD Bank, N.A. (the "Loan Agreement") (incorporated herein by reference to Exhibit
28.1 to International Controls' Quarterly Report on Form 10-Q for the quarter ended
September 30, 1992 (the "September 1992 10-Q")).
10.12 First Amendment, dated as of November 1, 1993, to the Loan Agreement.**
10.13 Credit and Guaranty Agreement, dated as of August 1, 1989, by and among SCSM, Motors,
Checker L.P. and NBD Bank, N.A. (the "Credit Agreement") (incorporated herein by reference
to Exhibit 10.10 to the 1992 10-K).
10.14 First Amendment, dated as of June 1, 1990, to the Credit Agreement (incorporated herein by
reference to Exhibit 10.11 of the 1992 10-K).
10.15 Second Amendment, dated as of January 2, 1991, to the Credit Agreement (incorporated herein
by reference to Exhibit 10.12 of the 1992 10-K).
10.16 Third Amendment, dated as of November 1, 1993, to the Credit Agreement.**
10.17 Supplemental Agreement, dated as of April 20, 1992, among SCSM, Motors, Checker L.P. and NBD
Bank, N.A. (incorporated herein by reference to Exhibit 10.13 of the 1992 10-K).
10.18 Second Supplemental Agreement, dated as of September 17, 1992, among SCSM, Motors, Checker
L.P. and NBD Bank, N.A. (incorporated herein by reference to Exhibit 28.2 of the June 1991
10-Q).
10.19 Lease, dated December 1, 1988, between SCSM and Park Corporation (incorporated herein by
reference to Exhibit 10.25 to the 1989 10-K).
10.20 Loan and Security Agreement dated as of March 21, 1990, by and among Great Dane, Great Dane
Trailers Nebraska, Inc., Great Dane Trailers Tennessee, Inc., Great Dane Los Angeles, Inc.,
certain lending institutions and Security Pacific Business Credit Inc., as Agent (the
"Security Pacific Agreement") (incorporated herein by reference to Exhibit 10.26 to the
1989 10-K).
10.21 First Amendment, dated as of March 30, 1990, to the Security Pacific Agreement (incorporated
herein by reference to Exhibit 19.3 to the 1991 10-K).
10.22 Second Amendment, dated as of April 30, 1990, to the Security Pacific Agreement
(incorporated herein by reference to Exhibit 19.4 to the 1991 10-K).
10.23 Third Amendment, dated as of August 14, 1990, to the Security Pacific Agreement
(incorporated herein by reference to Exhibit 19.5 to the 1991 10-K).
10.24 Fourth Amendment, dated as of February 28, 1991, to the Security Pacific Agreement
(incorporated herein by reference to Exhibit 19.6 to the 1991 10-K).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- --------- -------------------------------------------------------------------------------------------- -----
<C> <S> <C>
10.25 Waiver and Fifth Amendment, dated as of September 3, 1991, to the Security Pacific Agreement
(incorporated herein by reference to Exhibit 19.7 to the 1991 10-K).
10.26 Waiver, Consent and Sixth Amendment, dated April 30, 1992, to the Security Pacific Agreement
(incorporated herein by reference to Exhibit 28 to International Controls' Quarterly Report
on Form 10-Q for the quarter ended March 31, 1992).
10.27 Seventh Amendment, dated as of July 10, 1992, to the Security Pacific Agreement
(incorporated herein by reference to the June 1992 10-Q).
10.28 Eighth Amendment, dated as of February 19, 1993, to the Security Pacific Agreement
(incorporated herein by reference to Exhibit 10.24 of the 1992 10-K).
10.29 Waiver, Consent and Ninth Amendment, dated March 26, 1993, to the Security Pacific Agreement
(incorporated herein by reference to Exhibit 10.29 of the 1992 10-K).
10.30 Tenth Amendment, dated as of November 29, 1993, to the Security Pacific Agreement.**
10.31 Eleventh Amendment, dated as of March 11, 1994, to the Security Pacific Agreement
(incorporated herein by reference to Exhibit 10.1 to International Controls' Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994).
10.32 Assumption Agreement dated as of August 1, 1989, by and between Motors and the West Virginia
Economic Development Authority (incorporated herein by reference to Exhibit 10.12 to
International Controls' Annual Report on Form 10-K for the year ended December 31, 1990).
10.33 Agreement, dated as of September 1, 1991, between Checker L.P. and Jerry E. Feldman
(incorporated herein by reference to Exhibit 10.12 to the 1991 10-K).
10.34 Form of Checker Motors Corporation Excess Benefit Retirement Plan, effective January 1, 1983
(incorporated herein by reference to Exhibit 19.9 to the 1991 10-K).
10.35 Amended and Restated License Agreement, dated December 30, 1992, between Motors and Checker
Taxi Association, Inc. (incorporated herein by reference to Exhibit 10.28 of the 1992
10-K).
10.36 Employment Agreement, dated as of January 1, 1994, between Holdings and David R. Markin.**
10.37 Employment Agreement, dated as of November 4, 1991, between Great Dane and Willard R.
Hildebrand.**
10.38 Settlement Agreement, dated as of June 21, 1994, among John Garamendi, as Insurance
Commissioner of the State of California, Base Assets Trust, Checker L.P., Motors, Checker
Holding Corp. III and Holdings.**
10.39 Form of Indemnification Agreement.**
10.40 Sale, Installation and Technical Assistance Agreement, dated November 14, 1983, between
Graaff KG and Great Dane Trailers, Inc.**
10.41 Form of Great Dane Trailers, Inc. Supplemental Retirement Income Plan, effective January 1,
1994.**
10.42 [Intentionally Left Blank]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- --------- -------------------------------------------------------------------------------------------- -----
<C> <S> <C>
10.43 Amended and Restated Operating Agreement, dated as of August 31, 1988, between Associates
Commercial Corporation (as successor to Great Dane Finance Company) and Great Dane
Trailers, Inc. (the "Associates Agreement").**
10.44 Amendment, dated February 7, 1994, to the Associates Agreement.**
10.45 Amendment, dated May 18, 1994, to the Associates Agreement.**
21.1 Subsidiaries of Registrant.**
23.1 Consent of Ernst & Young LLP.**
23.2 Consent of Hutton Ingram Yuzek Gainen Carroll & Bertolotti -- see Exhibit 5.1.
24.1 Power of Attorney (appears on signature page of this Registration Statement).
27.1 Financial Data Schedule.**
28.1 Schedule P of Annual Statements provided by Country to Illinois Regulatory Authorities
(incorporated herein by reference to Exhibit 28.1 of Registrant's Registration of
Securities of Successor Issues on Form 8-B filed with the Commission on October 24, 1994).
<FN>
- --------------
* To be filed by amendment
** Filed herewith
</TABLE>
<PAGE>
CERTIFICATE OF INCORPORATION
OF
GREAT DANE HOLDINGS INC.
under
The Delaware General Corporation Law
<PAGE>
CERTIFICATE OF INCORPORATION
OF
GREAT DANE HOLDINGS INC.
FIRST. The name of the Corporation is GREAT DANE HOLDINGS INC.
SECOND. The address of the Corporation's registered office in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at such address is The Corporation
Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General Corpora-
tion Law of the State of Delaware.
FOURTH. The aggregate number of shares which the Corporation shall
have authority to issue is 3,000 shares of common stock, par value $1.00 per
share.
FIFTH. The name and mailing address of the incorporator is Warren
E. Friss, c/o Hutton Ingram Yuzek Gainen Carroll & Bertolotti, 250 Park Avenue,
6th Floor, New York, New York 10177.
SIXTH. Election of directors need not be by written ballot.
SEVENTH. The Board of Directors is authorized to adopt, amend, or
repeal By-Laws of the Corporation except as and to the extent provided in the
By-Laws.
EIGHTH. Any person who was or is a party or is threatened to be made
a party to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (whether or not by or
in the right of the Corporation) by reason of the fact that he is or was a
director, officer, incorporator, employee, or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, incorpora-
tor, employee, partner, trustee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise (including an employee benefit plan),
shall be entitled to be indemnified by the Corporation to the full extent then
permitted by law against expenses (including counsel fees and disbursements),
judgments, fines (including excise taxes assessed on a person with respect to an
employee benefit plan), and amounts
<PAGE>
paid in settlement incurred by him in connection with such action, suit, or
proceeding. Such right of indemnification shall inure whether or not the claim
asserted is based on matters which antedate the adoption of this Article EIGHTH.
Such right of indemnification shall continue as to a person who has ceased to be
a director, officer, incorporator, employee, partner, trustee, or agent and
shall inure to the benefit of the heirs and personal representatives of such a
person. The indemnification provided by this Article EIGHTH shall not be deemed
exclusive of any other rights which may be provided now or in the future under
any provision currently in effect or hereafter adopted of the By-Laws, by any
agreement, by vote of stockholders, by resolution of disinterested directors, by
provision of law, or otherwise.
NINTH. No director of the Corporation shall be liable to the Corpora-
tion or any of its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that this provision does not eliminate the liabili-
ty of the director (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of Title 8 of the Delaware Code, or (iv) for any transaction from
which the director derived an improper personal benefit. For purposes of the
prior sentence, the term "damages" shall, to the extent permitted by law,
include, without limitation, any judgment, fine, amount paid in settlement,
penalty, punitive damages, excise or other tax assessed with respect to an
employee benefit plan, or expense of any nature (including, without limitation,
counsel fees and disbursements). Each person who serves as a director of the
Corporation while this Article NINTH is in effect shall be deemed to be doing so
in reliance on the provisions of this Article NINTH, and neither the amendment
or repeal of this Article NINTH, nor the adoption of any provision of this
Certificate of Incorporation inconsistent with this Article NINTH, shall apply
to or have any effect on the liability or alleged liability of any director or
the Corporation for, arising out of, based upon, or in connection with any acts
or omissions of such director occurring prior to such amendment, repeal, or
adoption of an inconsistent provision. The provisions of this Article NINTH are
cumulative and shall be in addition to and independent of any and all other
limitations on or eliminations of the liabilities of directors of the Corpora-
tion, as such, whether such limitations or eliminations arise under or are
created by any law, rule, regulation, by-law, agreement, vote of shareholders or
disinterested directors, or otherwise.
-2-
<PAGE>
IN WITNESS WHEREOF, I have made, signed, and sealed this Certificate
of Incorporation this 12th day of September, 1994.
/s/ Warren Friss (L.S.)
----------------------------------
Warren E. Friss, Incorporator
-3-
<PAGE>
BY-LAWS
of
GREAT DANE HOLDINGS INC.
As adopted September 21, 1994
<PAGE>
------------------------------
GREAT DANE HOLDINGS INC.
A Delaware Corporation
BY-LAWS
------------------------------
ARTICLE I
STOCKHOLDERS
Section 1.1 ANNUAL MEETING.
An annual meeting of stockholders for the purpose of electing
directors and of transacting such other business as may come before it shall be
held each year in the City of New York, State of New York at such date and time
as may be specified by the Board of Directors or at such other place as may be
specified in the notice of the meeting.
Section 1.2 SPECIAL MEETINGS.
Special meetings of stockholders for any purpose or purposes may be
held at any time upon call of the Chairman of the Board, if any, the President,
the Secretary, or a majority of the Board of Directors, at such time and place
either within or without the State of Delaware as may be stated in the notice.
A special meeting of stockholders shall be called by the President or the
Secretary upon the written request, stating the time, place, and the purpose or
purposes of the meeting, of stockholders who together own of record 20% of the
outstanding stock of all classes entitled to vote at such meeting.
<PAGE>
Section 1.3 NOTICE OF MEETINGS.
Written notice of stockholders meetings, stating the place, date, and
hour thereof, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be given by the Chairman of the Board, if
any, the President, any Vice President, the Secretary, or an Assistant
Secretary, to each stockholder entitled to vote thereat at least ten days but
not more than sixty days before the date of the meeting, unless a different
period is prescribed by law.
Section 1.4 QUORUM.
Except as otherwise provided by law or in the Certificate of
Incorporation or these By-Laws, at any meeting of stockholders, the holders of a
majority of the outstanding shares of each class of stock entitled to vote at
the meeting shall be present or represented by proxy in order to constitute a
quorum for the transaction of any business. In the absence of a quorum, a
majority in interest of the stockholders present or the chairman of the meeting
may adjourn the meeting from time to time in the manner provided in Section 1.5
of these By-Laws until a quorum shall attend.
Section 1.5 ADJOURNMENT.
Any meeting of stockholders, annual or special, may adjourn from time
to time to reconvene at the same or some other place, and notice need not be
given of any such adjourned meeting if the time and place thereof are announced
at the meeting at which the adjournment is taken. At the adjourned meeting, the
Corporation may transact any business which might have been transacted at
-2-
<PAGE>
the original meeting. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 1.6 ORGANIZATION.
The Chairman of the Board, if any, or in his absence the President, or
in their absence any Vice Chairman, shall call to order meetings of stockholders
and shall act as chairman of such meetings. The Board of Directors or, if the
Board fails to act, the stockholders may appoint any stockholder, director, or
officer of the Corporation to act as chairman of any meeting in the absence of
the Chairman of the Board, the President, and all Vice Chairmen. The Secretary
of the Corporation shall act as secretary of all meetings of stockholders, but,
in the absence of the Secretary, an Assistant Secretary or any other person
appointed by the chairman of the meeting shall act as secretary of the meeting.
Section 1.7 VOTING.
Except as otherwise provided by law or in the Certificate of
Incorporation or these By-Laws and except for the election of directors, at any
meeting duly called and held at which a quorum is present, a majority of the
votes cast at such meeting upon a given question by the holders of outstanding
shares of stock of all classes of stock of the Corporation entitled to vote
thereon who are present in person or by proxy shall decide such question. At
any meeting duly called and held for the election of directors at
-3-
<PAGE>
which a quorum is present, directors shall be elected by a plurality of the
votes cast by the holders (acting as such) of shares of stock of the Corporation
entitled to elect such directors. Unless otherwise provided in the Certificate
of Incorporation, every stockholder shall be entitled at each meeting and upon
each proposal presented at such meeting to one vote for each share of voting
stock recorded in his name on the books of the Corporation on the record date
or, if no such record date was fixed, on the day of meeting. At any meeting of
stockholders or any adjournment thereof, any stockholder of record having the
right and entitled to vote thereat may be represented and vote by a proxy
appointed by an instrument in writing. No proxy shall be valid after eleven
months from the date of its execution, unless otherwise provided in the proxy.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 NUMBER AND TERM OF OFFICE.
The business, property and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors. The number of directors
which shall constitute the entire Board of Directors shall be not less than
three nor more than fifteen directors, as shall be determined from time to time
by resolution of the Board of Directors. To be qualified as a director, a
person shall be a citizen of the United States. Directors shall be elected at
the annual meeting of stockholders, to hold office until the next annual
stockholders' meeting and until their successors
-4-
<PAGE>
shall be elected and shall qualify, subject, however, to prior death,
resignation, retirement, disqualification, or removal from office.
Section 2.2 CHAIRMAN OF THE BOARD.
The directors may elect one of their members to be Chairman of the
Board of Directors. The Chairman shall be subject to the control of and may be
removed by the Board of Directors. He shall perform such duties as may from
time to time be assigned to him by the Board.
Section 2.3 MEETINGS.
Meetings of the Board of Directors, regular or special, may be held
within or without the State of Delaware. The annual meeting of the Board of
Directors, for the election of officers and the transaction of such other
business as may come before the meeting, shall be held without notice at the
same place as, and immediately following, the annual meeting of the
stockholders.
Regular meetings of the Board of Directors may be held without notice
at such time and place as shall from time to time be determined by the Board.
Special meetings of the Board of Directors shall be held at such time and place
as shall be designated in the notice of the meeting whenever called by the
Chairman of the Board, if any, the President, or by the President or Secretary
on the written request of two directors.
Section 2.4 NOTICE OF SPECIAL MEETINGS.
The Secretary, or in his absence any other officer of the Corporation,
shall give each director written notice of the time
-5-
<PAGE>
and place of holding of special meetings of the Board of Directors at least two
days before the meeting, or telephonic notice of special meetings at least six
hours before such meetings. Unless otherwise stated in the notice thereof, any
and all business may be transacted at any meeting without specification of such
business in the notice.
Section 2.5 QUORUM AND ORGANIZATION OF MEETINGS.
A majority (or, in the event of an even number of directors, one-half
of such number) of the Board of Directors as constituted from time to time shall
constitute a quorum for the transaction of business, but, if at any meeting of
the Board of Directors (whether or not adjourned from a previous meeting) there
shall be less than a quorum present, a majority of those present may adjourn the
meeting to another time and place, and the meeting may be held as adjourned
without further notice or waiver. Except as otherwise provided by law or in the
Certificate of Incorporation or these By-Laws, a majority of the directors
present at any meeting at which a quorum is present may decide any question
brought before such meeting. Meetings shall be presided over by the Chairman of
the Board, if any, or in his absence by the President, or in the absence of both
by any Vice Chairman or such other person as the directors may select. The
Secretary of the Corporation shall act as secretary of the meeting, but in his
absence any Assistant Secretary or any person appointed by the chairman of the
meeting shall act as secretary of the meeting.
-6-
<PAGE>
Section 2.6 COMMITTEES.
The Board of Directors may, by resolution passed by a majority of the
whole Board, designate one or more committees, including, without limitation, an
executive committee, each committee to consist of one or more of the directors
of the Corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member of
a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business, property, and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have power or authority
in reference to amending the Certificate of Incorporation of the Corporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the Board
of Directors pursuant to authority expressly granted to the Board of Directors
by the Corporation's Certificate of Incorporation, fix any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the Corporation, or the
-7-
<PAGE>
conversion into, or the exchange of such shares for, shares of any other class
or classes or any other series of the same or any other class or classes of
stock of the Corporation), adopting an agreement of merger or consolidation
under Section 251 or 252 of the General Corporation Law of the State of
Delaware, recommending to the stockholders the sale, lease, or exchange of all
or substantially all of the Corporation's property and assets, recommending to
the stockholders a dissolution of the Corporation or a revocation of
dissolution, or amending these By-Laws; and, unless the resolution expressly so
provided, no such committee shall have the power or authority to declare a
dividend, to authorize the issuance of stock, or to adopt a certificate of
ownership and merger pursuant to Section 253 of the General Corporation Law of
the State of Delaware. Each committee which may be established by the Board of
Directors pursuant to these By-Laws may fix its own rules and procedures. Notice
of meetings of committees, other than of regular meetings provided for by the
rules, shall be given to committee members. All action taken by committees
shall be recorded in minutes of the meetings.
Section 2.7 ACTION WITHOUT MEETING.
Nothing contained in these By-Laws shall be deemed to restrict the
power of members of the Board of Directors or any committee designated by the
Board to take any action required or permitted to be taken by them without a
meeting.
-8-
<PAGE>
Section 2.8 TELEPHONE MEETINGS.
Nothing contained in these By-Laws shall be deemed to restrict the
power of members of the Board of Directors, or any committee designated by the
Board, to participate in a meeting of the Board, or committee, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other.
Section 2.9 ATTENDANCE AT MEETING CONSTITUTES WAIVER.
Attendance of a director or of a member of a committee at a meeting
shall constitute a waiver of notice of such meeting except where a director or
member attends as meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 2.10 COMPENSATION OF DIRECTORS.
The directors may be paid their expenses, if any, of attendance of
each meeting of the Board of Directors and may be paid a fixed sum for
attendance at each meeting of the Board of Directors or a stated salary as
directors. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of committees of the Board may be allowed similar compensation for attending
committee meetings.
Section 2.11 PURPOSE OF MEETINGS OF THE BOARD OF DIRECTORS.
Neither the business to be transacted at nor the purpose of any
regular or special meeting of the Board of Directors or any
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<PAGE>
meeting of any committee need be specified in the notice or waiver of notice of
such meeting.
ARTICLE III
OFFICERS
Section 3.1 OFFICERS.
The officers of the Corporation shall be a Chairman of the Board,
President, one or more Vice Chairmen, one or more Vice Presidents, a Treasurer,
and a Secretary, each of whom shall be elected by the Board of Directors. The
Board of Directors may elect or appoint such other officers (including an
Executive Vice President, Chief Operating Officer, Controller and one or more
Assistant Treasurers and Assistant Secretaries) as it may deem necessary or
desirable. Each officer shall hold office for such term as may be prescribed by
the Board of Directors from time to time. Any person may hold at one time two
or more offices.
Section 3.2 POWERS AND DUTIES.
The Chairman of the Board, if any, or, in his absence, the President,
shall preside at all meetings of the stockholders and of the Board of Directors.
The President shall be the chief executive officer of the Corporation. In the
absence of the President, a Vice President appointed by the President or, if the
President fails to make such appointment, by the Board, shall perform all the
duties of the President. The officers and agents of the Corporation shall each
have such powers and authority and shall perform such duties in the management
of the business, property, and affairs of the Corporation as generally pertain
to
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<PAGE>
their respective offices, as well as such powers and authorities and such duties
as from time to time may be prescribed by the Board of Directors. The salaries
of the officers of the Corporation shall be fixed by the Board of Directors.
ARTICLE IV
RESIGNATIONS, REMOVALS, AND VACANCIES
Section 4.1 RESIGNATIONS.
Any director or officer of the Corporation, or any member of any
committee, may resign at any time by giving written notice to the Board of
Directors, the President, or the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein or, if the time be
not specified therein, then upon receipt thereof. The acceptance of such
resignation shall not be necessary to make it effective.
Section 4.2 REMOVALS.
The Board of Directors, by a vote of not less than a majority of the
entire Board, at any meeting thereof, or by written consent, at any time, may,
to the extent permitted by law, remove with or without cause from office or
terminate the employment of any officer or member of any committee and may, with
or without cause, disband any committee. Any directors or the entire Board of
Directors may be removed, with or without cause, by the holders of a majority of
the shares entitled at the time to vote at an election of directors.
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<PAGE>
Section 4.3 VACANCIES.
Any vacancy in the office of any director or officer through death,
resignation, removal, disqualification, or other cause, and any additional
directorship resulting from an increase in the number of directors, may be
filled at any time by a majority of the directors then in office (even though
less than a quorum remains) or, in the case of any vacancy in the office of any
director, by the stockholders, and, subject to the provisions of this Article
IV, the person so chosen shall hold office until his successor shall have been
elected and qualified; or, if the person so chosen is a director elected to fill
a vacancy, he shall (subject to the provisions of this Article IV) hold office
for the unexpired term of his predecessor.
ARTICLE V
CAPITAL STOCK
Section 5.1 STOCK CERTIFICATES.
The certificates for shares of the capital stock of the Corporation
shall be in such form as shall be prescribed by law and approved, from time to
time, by the Board of Directors.
Section 5.2 TRANSFER OF SHARES.
Shares of the capital stock of the Corporation may be transferred on
the books of the Corporation only by the holder of such shares or by his duly
authorized attorney, upon the surrender to the Corporation or its transfer agent
of the certificate representing such stock properly endorsed.
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<PAGE>
Section 5.3 FIXING RECORD DATE.
In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion, or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which, unless
otherwise provided by law, shall not be more than sixty nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action.
Section 5.4 LOST CERTIFICATES.
The Board of Directors or any transfer agent of the Corporation may
direct a new certificate or certificates representing stock of the Corporation
to be issued in place of any certificate or certificates theretofore issued by
the Corporation, alleged to have been lost, stolen, or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate to be
lost, stolen, or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors (or any transfer agent of the Corporation
authorized to do so by a resolution of the Board of Directors) may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen, or destroyed certificate or certificates, or his
legal representative, to give the Corporation a bond in such sum as the Board of
Directors (or any transfer agent so authorized) shall
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<PAGE>
direct to indemnify the Corporation against any claim that may be made against
the Corporation with respect to the certificate alleged to have been lost,
stolen, or destroyed or the issuance of such new certificates, and such
requirement may be general or confined to specific instances.
Section 5.5 REGULATIONS.
The Board of Directors shall have power and authority to make all such
rules and regulations as it may deem expedient concerning the issue, transfer,
registration, cancellation, and replacement of certificates representing stock
of the Corporation.
ARTICLE VI
MISCELLANEOUS
Section 6.1 CORPORATE SEAL.
The corporate seal shall have inscribed thereon the name of the
Corporation and shall be in such form as may be approved from time to time by
the Board of Directors, the year of its organization, and the words "Corporate
Seal" and "Delaware".
Section 6.2 FISCAL YEAR.
The fiscal year of the Corporation shall begin on the first day of
January in each year and terminate on the 31st day of December in each
succeeding year.
Section 6.3 NOTICES AND WAIVERS THEREOF.
Whenever any notice whatever is required by law, the Certificate of
Incorporation, or these By-Laws to be given to any stockholder, director, or
officer, such notice, except as otherwise
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<PAGE>
provided by law, may be given personally, or by mail, or, in the case of
directors or officers, by telegram, cable, radiogram, or telecopy, addressed to
such address as appears on the books of the Corporation. Any notice given by
telegram, cable, radiogram, or telecopy shall be deemed to have been given when
it shall have been delivered for transmission and any notice given by mail shall
be deemed to have been given when it shall have been deposited in the United
States mail with postage thereon prepaid. Notice to directors may also be given
by telephone as specified herein.
Whenever any notice is required to be given by law, the Certificate of
Incorporation, or these By-Laws, a written waiver thereof, signed by the person
entitled to such notice, whether before or after the meeting or the time stated
therein, shall be deemed equivalent in all respects to such notice to the full
extent permitted by law.
Section 6.4 STOCK OF OTHER CORPORATIONS OR OTHER INTERESTS.
Unless otherwise ordered by the Board of Directors,the President, the
Secretary, and such attorneys or agents of the Corporation as may be from time
to time authorized by the Board of Directors or the President, shall have full
power and authority on behalf of this Corporation to attend and to act and vote
in person or by proxy at any meeting of the holders of securities of any
corporation or other entity in which this corporation may own or hold shares or
other securities, and at such meetings shall possess and may exercise all the
rights and powers incident to the ownership of such shares or other securities
which this Corporation, as
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<PAGE>
the owner or holder thereof, might have possessed and exercised if present. The
President, the Secretary, or such attorneys or agents, may also execute and
deliver on behalf of this Corporation powers of attorney, proxies, consents,
waivers, and other instruments relating to the shares or securities owned or
held by this Corporation.
ARTICLE VII
AMENDMENTS
The holders of shares entitled at the time to vote for the election of
directors shall have power to adopt, amend, or repeal the By-Laws of the
Corporation by vote of not less than a majority of such shares, and except as
otherwise provided by law, the Board of Directors shall have power equal in all
respects to that of the stockholders to adopt, amend, or repeal the By-Laws by
vote of not less than a majority of the entire Board. However, any By-Law
adopted by the Board may be amended or repealed by vote of the holders of a
majority of the shares entitled at the time to vote for the election of
directors.
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<PAGE>
INTERNATIONAL CONTROLS CORP.,
GREAT DANE HOLDINGS INC.
AND
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
As Trustee
--------------
First Supplemental Indenture
Dated as of October 19, 1994
--------------
Supplementing the Indenture
Dated as of August 1, 1986
between
INTERNATIONAL CONTROLS CORP.
AND
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
As Trustee
12 3/4% Senior Subordinated Debentures due 2001
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of October 19, 1994, among
International Controls Corp., a Florida corporation ("ICC"), Great Dane Holdings
Inc., a Delaware corporation ("Holdings") and First Fidelity Bank, National
Association, a national banking corporation (the "Trustee").
WHEREAS, ICC and the Trustee are parties to an Indenture dated as of
August 1, 1986 (the "Indenture") pursuant to which ICC issued its 12 3/4% Senior
Subordinated Debentures due 2001 (the "Debentures"); and
WHEREAS, pursuant to an Agreement of Merger, dated September 21, 1994
(the "Agreement of Merger") and a Certificate of Ownership and Merger filed with
the Secretary of State of Delaware on October 19, 1994, ICC was merged with and
into Holdings, its wholly-owned subsidiary, with Holdings being the surviving
corporation, and Holdings became vested with all of the property, rights,
obligations and liabilities of ICC including, without limitation, the
Debentures; and
WHEREAS, ICC, Holdings and the Trustee are entering into this
Supplemental Indenture as required by Section 12 of the Indenture.
NOW, THEREFORE:
ARTICLE ONE
SECTION 1.01. Holdings hereby assumes the due and punctual payment of
the principal of, premium, if any, and interest on all the Debentures and the
due and punctual performance and observance of all of the covenants and
conditions of the Indenture
<PAGE>
required to be performed by ICC and all of the covenants, agreements and
obligations of ICC under the Debentures and the Indenture (agreeing to be liable
for all of the indebtedness represented by the Debentures).
SECTION 1.02. Holdings shall be deemed to be the successor
corporation to ICC under the Indenture, as amended and supplemented, and each
reference to "International Controls Corp." and the "Company", as amended and
supplemented, shall mean and be a reference to Holdings.
ARTICLE TWO
SECTION 2.01. The laws of the State of New York applicable to
contracts made and to be performed wholly within the State shall govern this
First Supplemental Indenture.
SECTION 2.02. The parties may sign any number of copies of this First
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
SECTION 2.03. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed thereto in the Indenture.
SECTION 2.04. Except as specifically amended and supplemented by this
First Supplemental Indenture, the Indenture shall remain in full force and
effect and is hereby ratified and confirmed.
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<PAGE>
SECTION 2.05. The Trustee is not responsible for any of the recitals
contained herein.
INTERNATIONAL CONTROLS CORP.
ATTEST: By: /s/ David R. Markin
--------------------------------
David R. Markin
Paulette Kendler President
- ----------------------------
Title: Assistant Secretary
GREAT DANE HOLDINGS INC.
ATTEST: By: /s/ David R. Markin
--------------------------------
David R. Markin
Paulette Kendler President
- ----------------------------
Title: Assistant Secretary
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
ATTEST: By: /s/ Donald Quilles
--------------------------------
Name: Donald Quilles
Title: Assistant Vice President
/s/ Diane Dowdell
- ----------------------------
Title: Corporate Trust Officer
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<PAGE>
INTERNATIONAL CONTROLS CORP.,
GREAT DANE HOLDINGS INC.
AND
MIDLANTIC BANK, NATIONAL ASSOCIATION
As Trustee
--------------
First Supplemental Indenture
Dated October 17, 1994
To be effective on the Effective Date, as defined herein
--------------
Supplementing the Indenture
Dated as of December 27, 1985
between
INTERNATIONAL CONTROLS CORP.
AND
MIDLANTIC BANK, NATIONAL ASSOCIATION
As Trustee
Subordinated Discount Debentures due January 1, 2006
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated October 17, 1994, to be effective
on the Effective Date, as defined herein among International Controls Corp., a
Florida corporation ("ICC"), Great Dane Holdings Inc., a Delaware corporation
("Holdings") and Midlantic Bank, National Association, a national banking
association (the "Trustee").
WHEREAS, ICC and the Trustee are parties to an Indenture dated as of
December 27, 1985 (the "Indenture") pursuant to which ICC issued its Subordinat-
ed Discount Debentures due January 1, 2006 (the "Debentures"); and
WHEREAS, pursuant to an Agreement and Plan of Merger, dated September
21, 1994 (the "Agreement of Merger") and a Certificate of Ownership and Merger
to be filed with the Secretary of State of Delaware, ICC will merge with and
into Holdings, its wholly-owned subsidiary, with Holdings being the surviving
corporation (the "Merger"), and Holdings will become vested with all of the
property, rights, obligations and liabilities of ICC including, without limita-
tion, the Debentures all effective as of the Effective Date; and
WHEREAS, ICC, Holdings and the Trustee will enter into this Supplemen-
tal Indenture as required by Section Eight of the Indenture.
NOW, THEREFORE:
ARTICLE ONE
SECTION 1.01. As of the Effective Date, Holdings hereby assumes the
due and punctual payment of the principal of, premium, if any, and interest on
all the Debentures and the due and punctual
<PAGE>
performance and observance of all the covenants and conditions of the Indenture
required to be performed by ICC and all of the covenants, agreements and
obligations of ICC under the Debentures and the Indenture (agreeing to be liable
for all of the indebtedness represented by the Debentures).
SECTION 1.02. As of the Effective Date, Holdings shall be deemed to
be the successor corporation to ICC under the Indenture, as amended and supple-
mented, and each reference to "International Controls Corp." and the "Company",
as amended and supplemented, shall mean and be a reference to Holdings.
ARTICLE TWO
SECTION 2.01. This First Supplemental Indenture shall become of full
force and effect and accordingly modify the Indenture only upon the
satisfaction of all of the conditions set forth in the Indenture and upon the
effectiveness of the Merger in the States of Delaware and Florida within 30
days of the execution of this First Supplemental Indenture. Such date when the
First Supplemental Indenture becomes effective shall be deemed the "Effective
Date."
SECTION 2.02. The laws of the State of New York applicable to
contracts made and to be performed wholly within the State shall govern this
First Supplemental Indenture.
SECTION 2.03. The parties may sign any number of copies of this First
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
SECTION 2.04. This First Supplemental Indenture may be executed in
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the
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<PAGE>
same document.
SECTION 2.05. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed thereto in the Indenture.
SECTION 2.06. Except as specifically amended and supplemented by this
First Supplemental Indenture, the Indenture shall remain in full force and
effect and is hereby ratified and confirmed.
SECTION 2.07. The Trustee is not responsible for any of the recital
contained herein.
INTERNATIONAL CONTROLS CORP.
ATTEST: By: /s/ David R. Markin
---------------------------------
David R. Markin
/s/ Paulette Kendler President
- ----------------------------
Title: Assistant Secretary
GREAT DANE HOLDINGS INC.
ATTEST: By: /s/ David R. Markin
---------------------------------
David R. Markin
/s/ Paulette Kendler President
- ----------------------------
Title: Assistant Secretary
MIDLANTIC BANK, NATIONAL ASSOCIATION
ATTEST: By: /s/ Frank J. Manupelli
---------------------------------
Name: Frank J. Manupelli
Title: Assistant Vice President
Frank J. Mercurio
- ----------------------------
Title: Trust Officer
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<PAGE>
EXHIBIT 4.6
GREAT DANE HOLDINGS INC.
1994 STOCK OPTION PLAN
1. PURPOSE
The purpose of this Stock Option Plan (the "Plan") is to encourage and
enable key employees (which term, as used herein, shall include officers), and
directors, of Great Dane Holdings Inc. or a parent or subsidiary thereof
(collectively, unless the context otherwise requires, the "Corporation"),
consultants, and advisors to the Corporation, and other persons or entities
providing goods or services to the Corporation to acquire a proprietary interest
in the Corporation through the ownership of common stock of the Corporation. As
used herein, the term "parent" or "subsidiary" shall mean any present or future
corporation which is or would be a "parent corporation" or "subsidiary
corporation" of the Corporation determined in a manner consistent with the
requirements of Section 424 of the Internal Revenue Code of 1986, as amended
(the "Code"). Such directors, consultants, advisors, and other persons or
entities providing goods or services to the Corporation and entitled to receive
options hereunder are hereinafter collectively referred to as the "Associates".
Such ownership will provide such employees and Associates with a more direct
stake in the future welfare of the Corporation and encourage them to remain
employed by or associated with the Corporation. It is also expected that the
Plan will encourage qualified persons to seek and accept employment or
association with the Corporation.
2. ADMINISTRATION
(a) The Plan shall be administered by a Stock Option Committee (the
"Committee"), consisting of persons who are "disinterested persons" within the
meaning of Rule 16(b) promulgated under the Securities Exchange Act of 1934, as
amended from time to time.
(b) A majority of the members of the Committee shall constitute a
quorum, and the action of a majority of the members of the Committee present at
a meeting at which a quorum is present, as well as actions taken pursuant to the
unanimous written consent of all of the members of the Committee without holding
a meeting, shall be deemed to be actions of the Committee. All actions of the
Committee and all interpretations and decisions made by the Committee with
respect to any question arising under the Plan shall be final and conclusive and
shall be binding upon the Corporation and all other interested parties.
<PAGE>
(c) Subject to the terms and conditions of the Plan and such
limitations as the Board of Directors may from time to time impose, the
Committee shall be responsible for the overall management and administration of
the Plan and shall have such authority as shall be necessary or appropriate in
order to carry out its responsibilities, including, without limitation, the
authority to (i) interpret and construe the Plan and to determine the terms of
all options granted pursuant to the Plan, but subject to the provisions of the
Plan, including, but not limited to, the persons to whom, and the time or times
at which, grants shall be made, the number of options to be included in the
grants, the number of options which shall be treated as incentive stock options
(in the case of options granted to employees) as described in Section 422 of the
Code, the number of options which do not qualify as incentive stock options
("non-qualified options"), whether an option will be granted together with a
stock appreciation right and the terms and conditions thereof; (ii) to adopt
rules and regulations and to prescribe forms for the operation and
administration of the Plan; and (iii) to take any other action not inconsistent
with the provisions of the Plan that it may deem necessary or appropriate.
3. ELIGIBILITY AND PARTICIPATION
Key employees are eligible to receive incentive stock options and key
employees and Associates are eligible to receive non-qualified options and stock
appreciation rights. Each option and stock appreciation right shall be granted,
and the number of shares and stock appreciation rights subject thereto shall be
determined by the Committee.
4. STOCK APPRECIATION RIGHTS
(a) An employee or Associate who has been granted options pursuant to
the Plan may at the same time that the options are granted, also be granted
stock appreciation rights relating to some or all of the shares subject to such
options. Any such stock appreciation right shall be evidenced by a written
agreement which shall (i) identify the option to which the stock appreciation
right relates; (ii) specify the number of shares covered by the stock
appreciation right; (iii) specify the exercise price at which the stock
appreciation right may be exercised; and (iv) contain such other terms and
conditions not inconsistent with the Plan as the Committee may, in its
discretion, prescribe.
(b) Upon exercise of a stock appreciation right, the Company shall
pay to the employee or Associate an amount equal to the difference between (i)
the fair market value of the shares to which the stock appreciation right
relates on the date of exercise, over (ii) the exercise price of such stock
appreciation right. Payment may, in the Committee's discretion, be made in cash
(including check, bank draft or money order), in shares of
<PAGE>
common stock of the Corporation equivalent in value to the excess of such fair
market value over such exercise price, or in a combination of cash and shares of
common stock of the Corporation which, together, are equivalent in value to the
excess of such fair market value over such exercise price.
5. SHARES SUBJECT TO THE PLAN
(a) Options and stock appreciation rights shall be evidenced by
written agreements which shall, among other things (i) designate the option as
either an incentive stock option or a non-qualified stock option, (ii) specify
the number of shares covered by the option; (iii) specify the exercise price,
determined in accordance with paragraph 8 hereof, for the shares subject to the
option; (iv) specify the option period determined in accordance with paragraph 7
hereof; (v) set forth specifically or incorporate by reference the applicable
provisions of the Plan; and (vi) contain such other terms and conditions not
inconsistent with the Plan as the Committee may, in its discretion, prescribe.
(b) The stock to be offered and delivered under the Plan, whether
pursuant to the exercise of an option or a stock appreciation right, shall be
shares of the Corporation's authorized common stock and may be unissued shares
or reacquired shares, as the Committee may from time to time determine. Subject
to adjustment as provided in paragraph 14 hereof, the aggregate number of shares
to be delivered under the Plan shall not exceed 1,600,000 shares. If an option
expires or terminates for any reason during the term of the Plan prior to the
exercise thereof in full, the shares subject to but not delivered under such
option shall be available for options thereafter granted. The shares under a
related option which is surrendered upon the exercise of a stock appreciation
right shall be charged against the aggregate number of shares available which
may be delivered under the Plan. The maximum number of shares of common stock
with respect to which options or rights may be granted during the life of the
Plan to any employee shall not exceed 400,000.
6. INCENTIVE STOCK OPTIONS
(a) An option designated by the Committee as an "incentive stock
option" is intended to qualify as an "incentive stock option" within the meaning
of Section 422 of the Code. An incentive stock option shall only be granted to
a key employee of the Corporation.
(b) No incentive stock option shall provide any person with a right
to purchase shares to the extent that such right first becomes exercisable
during a prescribed calendar year and the sum of (i) the fair market value
(determined as of the date of grant) of the shares subject to such incentive
stock option which first becomes available for purchase during such calendar
year, plus (ii) the fair market value (determined as of the date of grant) of
all shares subject to incentive stock options previously granted to such person
which first become available for purchase
<PAGE>
during such calendar year, exceeds $100,000.
(c) Without the prior written consent of the Committee, no person
shall dispose of shares acquired pursuant to the exercise of an incentive stock
option until after the later of (i) the second anniversary of the date on which
the incentive stock option was granted, or (ii) the first anniversary of the
date on which the shares were acquired pursuant to the exercise of such option;
provided, however, that a transfer to a trustee, receiver, or other fiduciary in
any insolvency proceeding, as described in Section 422(c)(3) of the Code, shall
not be deemed to be such a disposition. The optionee shall make appropriate
arrangements with the Corporation for any taxes which the Corporation is
obligated to collect in connection with any such disposition, including any
federal, state or local withholding taxes.
7. TERM OF OPTION PERIOD
The term during which options or stock appreciation rights may be
granted under the Plan shall expire on [date which is 10 years from the date of
this Plan]. Options and stock appreciation rights shall expire not later than
the tenth anniversary (the fifth anniversary in the case of incentive stock
options granted to a person who owns (within the meaning of Section 424(d) of
the Code) more than 10 percent of the total combined voting power of all classes
of stock of the Corporation at the time such option is granted) of the date the
option or stock appreciation right is granted.
8. OPTION PRICE
The price at which shares may be purchased upon exercise of a
particular option shall be such price as may be fixed by the Committee but in no
event less than the minimum required in order to comply with any applicable law,
rule or regulation and, in the case of incentive stock options, shall not be
less than 100 percent, or in the case of incentive stock options granted to an
optionee who is a 10 percent stockholder (within the meaning of paragraph 7
hereof), shall not be less than 110 percent, of the fair market value (as
defined in paragraph 9) of such shares on the date such option is granted.
9. STOCK AS FORM OF EXERCISE PAYMENT
An employee or Associate who owns shares of the Corporation's common
stock may elect to use such shares, with the value thereof to be determined as
the fair market value of such shares on the day prior to the date of exercise of
the option, to pay all or part of the option price required by reason of the
exercise of an option. As used herein, fair market value shall be deemed to be
the closing price on such day of the Corporation's common stock (if the
Corporation's common stock is then traded on
<PAGE>
a national securities exchange or in the NASDAQ National Market System) or, if
not so traded, the average of the closing bid and asked prices thereof on such
day. The optionee shall make appropriate arrangements with the Corporation for
any taxes which the Corporation is obligated to collect in connection with the
exercise of such option, including federal, state or local withholding taxes.
10. EXERCISE OF OPTIONS AND RIGHTS
(a) Each option and stock appreciation right granted shall be
exercisable in whole or in part at any time, or from time to time, during the
option period as the Committee may determine; provided that the election to
exercise an option or stock appreciation right shall be made in accordance with
applicable federal and state laws and regulations; and provided, further, that
neither a stock appreciation right, the exercise of which would result in a cash
payment, nor any related option shall be exercisable during the first six months
of the option period, except that, subject to the written agreements covering
the stock appreciation right and related option, this six-month limitation shall
not apply if the employee or Associate to whom such stock appreciation right and
related option have been granted dies or becomes disabled prior to the
expiration of the six-month period. No stock appreciation right can be
exercised by an employee or Associate unless (i) the Corporation has been
subject to the reporting requirements of Section 12 of the Securities Exchange
Act of 1934 for at least one year prior to the date of such exercise and has
filed all reports and statements required to be filed pursuant to that section
during that period and (ii) the corporation on a regular basis does release for
publication quarterly and annual summary statements of sales and earnings.
(b) No option may at any time be exercised with respect to a
fractional share. If shares are issued pursuant to the exercise of a stock
appreciation right, no fractional shares shall be issued; payment shall be made
in cash for any such fractional shares.
(c) No shares shall be delivered pursuant to the exercise of any
option or stock appreciation right, in whole or in part, until qualified for
delivery under such securities laws and regulations as may be deemed by the
Committee to be applicable thereto, until such shares are listed on each
securities exchange on which the Corporation's common stock may then be listed,
and until, in the case of the exercise of an option, payment in full of the
option price is received by the Corporation in cash or common stock of the
Corporation as provided in paragraph 9. Unless prior to the exercise of the
option the shares of the Corporation's common stock issuable upon such exercise
have been registered with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, the notice of exercise shall be
<PAGE>
accompanied by a representation or agreement of the individual exercising the
option to the Corporation to the effect that such shares are being acquired for
investment and not with a view to the resale or distribution thereof or such
other documentation as may be required by the Corporation unless in the opinion
of counsel to the Corporation such representation, agreement, or documentation
is not necessary to comply with said Act. No holder of an option or stock
appreciation right, or such holder's legal representative, legatee, or
distributes shall be or be deemed to be a holder of any shares subject to such
option or stock appreciation right unless and until a certificate or
certificates therefor is issued in his name.
11. ACCELERATION OF VESTING
(a) An option shall automatically be vested and immediately
exercisable in full upon the occurrence of any of the following events:
(i) Any person within the meaning of Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, other than the Corporation, has
become the beneficial owner, within the meaning of Rule 13d-3 under
such Act, of 40% percent or more of the combined voting power of the
Corporation's then outstanding voting securities, unless such
ownership by such person has been approved by the Board of Directors
immediately prior to the acquisition of such securities by such
person;
(ii) The first day on which shares of the Corporation's common
stock are purchased pursuant to a tender offer or exchange offer,
unless such offer is made by the Corporation or unless such officer
has been approved or not opposed by the Board of Directors;
(iii) The stockholders of the Corporation have approved an
agreement to merge or consolidate with or into another corporation
(and the Corporation is not the survivor of such merger or
consolidation) or an agreement to sell or otherwise dispose of all or
substantially all of the Corporation's assets (including a plan of
liquidation), unless the Board of Directors has resolved that options
shall not automatically vest; or
(iv) During any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of
the corporation cease for any reason to constitute at least a majority
thereof, unless the election or the nomination for the election by the
Corporation's stockholders of each new director was approved by a vote
of at least a majority
<PAGE>
of the directors then still in office who were directors at the
beginning of the period.
(b) Other than upon the occurrence of any of the events described in
paragraph 11(a), the Committee shall have the authority at any time or from time
to time to accelerate the vesting of any individual option and to permit any
stock option not theretofore exercisable to become immediately exercisable.
12. TRANSFER OF OPTIONS AND RIGHTS
Options and stock appreciation rights granted under the Plan may not
be transferred except by will or the laws of descent and distribution and,
during the lifetime of the employee or Associate to whom granted, may be
exercised only by such employee or Associate or by such employee's or
Associate's guardian or legal representative.
13. DEATH, RETIREMENT, AND TERMINATION OF EMPLOYMENT
(a) An incentive stock option or non-qualified stock option, which
has not theretofore expired, shall terminate at the time of the death of the
employee to whom granted or of the termination for any reason of the employee's
employment with the Corporation, and no shares may thereafter be delivered
pursuant to such option, except that, subject to the condition that no option
may be exercised later than the tenth anniversary of the date the option was
granted:
(i) upon the termination of the employment of any such employee
due to disability or retirement, the employee may, within a period of
up to two years after the date of such termination, purchase some or
all of the shares covered by the employee's nonqualified stock options
which was exercisable immediately prior to such termination;
(ii) upon the termination of the employment of any such employee
due to disability or retirement, the employee may, within three months
after the date of such termination (12 months in the case of
disability) purchase some or all of the shares covered by the
employee's incentive stock option which was exercisable immediately
prior to such termination; shares not purchased within three months
(12 months in the case of disability) after the date of termination
due to disability or retirement under such incentive stock option may
be purchased within two years after the date of such termination but
no longer will be incentive stock option stock; and
(iii) upon the death of any employee while in the
<PAGE>
active service of the Corporation or of any such disabled or retired
employee within the above-referenced periods, the person or persons to
whom the employee's rights under the option are transferred by will or
the laws of descent and distribution may, within 12 months after the
date of the employee's death, purchase some or all of the shares
covered by such employee's option which was exercisable on the date of
his death.
The Committee may, if it determines that to do so would be in the
Corporation's best interests, provide in a specific case or cases for the
exercise of options which would otherwise terminate upon termination of
employment with the Corporation for any reason, upon such terms and conditions
as the Committee determines to be appropriate. Nothing in the Plan or in any
option agreement shall confer any right to continue in the employ of the
Corporation or interfere in any way with the right of the Corporation to
terminate the employment of a recipient at any time.
In the case of a recipient on an approved leave of absence, the
Committee may, if it determines that to do so would be in the best interests of
the Corporation, provide in a specific case for continuation of options during
such leave of absence, such continuation to be on such terms and conditions as
the Committee determines to be appropriate. Leaves of absence for such period
and purposes conforming to the personnel policy of the Corporation as may be
approved by the Committee shall not be deemed terminations or interruptions of
employment.
For purposes of this paragraph 13, disability shall have the meaning
provided in Section 22(e)(3) of the Code and "retirement" shall mean retirement
pursuant to a pension or
retirement plan adopted by the Corporation or at the normal retirement date
prescribed from time to time by the Corporation.
(b) If an employee to whom a stock appreciation right has been
granted ceases employment with the Corporation for any reason, including death
and retirement, such stock appreciation right may be exercisable at the
discretion of the Committee but only to the extent and upon the conditions that
its related option is exercisable under subparagraph (a) of this paragraph.
(c) Options granted to Associates shall be subject to such terms and
provisions as the Committee shall determine in the event of the death,
retirement, or disability of an Associate or the termination of an Associate's
association with the Corporation.
<PAGE>
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
(a) If the Corporation's outstanding common stock is hereafter
changed by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination, or exchange of shares or the
like, or dividends payable in shares of the Corporation's common stock, an
appropriate adjustment shall be made by the Board of Directors upon
recommendation of the Committee in the aggregate number of shares available
under the Plan and in the number of shares and price per share subject to
outstanding options. All adjustments made pursuant to this paragraph to the
terms or conditions of an incentive stock option shall be subject to the
requirements of Section 424 of the Code.
(b) Any adjustment in the number of shares shall apply
proportionately to only the unexercised portion of any option granted hereunder.
If fractions of a share would result from any such adjustment, the adjustment
shall be revised to the next higher whole number of shares.
15. TERMINATION, MODIFICATION, AND AMENDMENT
The Plan shall terminate 10 years from the earlier of the date of its
adoption by the Board of Directors or the date on which the Plan is approved by
the stockholders of the Corporation and no option shall be granted after
termination of the Plan.
The Plan may from time to time be terminated, modified, or amended by
the affirmative vote of the holders of a majority of the outstanding shares of
the Corporation entitled to vote thereon.
The Board of Directors may at any time terminate the Plan or from time
to time make such modifications or amendments of the Plan as it may deem
advisable including, without limitation, modifications to reflect changes in
applicable law; provided, however, that the Board of Directors shall not (i)
modify or amend the Plan in any way that would disqualify any option issued
pursuant to the Plan as an incentive stock option as defined in Section 422 of
the Code or (ii) without approval by the affirmative vote of the holders of a
majority of the outstanding shares of the Corporation entitled to vote thereon,
increase (except as provided by paragraph 14) the maximum number of shares as to
which options may be granted under the Plan.
No termination, modification, or amendment of the Plan, may, without
the consent of the individual to whom the option or stock appreciation right
shall have been previously granted, adversely affect the rights conferred by
such option or stock appreciation right.
<PAGE>
16. EFFECTIVE DATE
The Plan shall become effective upon the adoption by the Board of
Directors, subject to the approval by the affirmative vote of the holders of a
majority of the outstanding shares of the Corporation present, in person, or by
proxy, at a stockholders meeting duly held within one year following adoption of
the Plan by the Board of Directors. All options granted prior to the date of
such stockholder approval shall be subject to such approval.
<PAGE>
International Controls Corp.
2016 North Pitcher Street
Kalamazoo, Michigan 49007
April 6, 1994
Mr. Jay H. Harris
550 South Ocean Boulevard
Apt. 2203
Boca Raton, Florida 33432
Re: Employment Agreement, Effective as of
July 1, 1992 (the "Employment Agreement"),
between International Controls Corp.
and Jay H. Harris
------------------------------------------
Dear Jay:
This will confirm our waiver of the requirement, set forth in
Section 1.1 of the Employment Agreement, that notice of termination of the
Employment Agreement must be given 60 days prior to the end of the then current
Term (as defined in the Employment Agreement). We agree that such notice may be
given by either party at any time and the Agreement will terminate 60 days after
the receipt of such notice. This waiver shall not constitute a waiver of any
other rights of either party under the Employment Agreement and, except as
modified by this waiver, the provisions of the Employment Agreement remain in
full force and effect.
If the foregoing is consistent with your understanding, please so
indicate by signing below.
Very truly yours,
International Controls Corp.
By: s/s David R. Markin
----------------------------
Name: David R. Markin
Title: President
AGREED AND ACKNOWLEDGED:
/s/ Jay Harris
- -------------------------
Jay H. Harris
<PAGE>
EXHIBIT 10.12
FIRST AMENDMENT TO LOAN AND GUARANTY
AGREEMENT, CONFIRMATION OF SECURITY
AGREEMENT AND CONFIRMATION OF GUARANTY
THIS FIRST AMENDMENT TO LOAN AND GUARANTY AGREEMENT, CONFIRMATION OF
SECURITY AGREEMENT AND CONFIRMATION OF GUARANTY, dated as of November 1, 1993
(this "Amendment"), is among CHECKER MOTORS CO., L.P., a Delaware limited
partnership (the "Company"), CHECKER MOTORS CORPORATION, a New Jersey
corporation ("CMC"), SOUTH CHARLESTON STAMPING & MANUFACTURING COMPANY, a West
Virginia corporation ("SCSM", and CMC and SCSM may each be referred to herein as
a "Guarantor" or collectively as the "Guarantors"), and NBD BANK, N.A., a
national banking association formerly named National Bank of Detroit (the
"Bank").
RECITALS
A. The Company, the Guarantors and the Bank have entered into a Loan
and Guaranty Agreement, dated as of September 17, 1992 (the "Loan Agreement"),
pursuant to which the Bank provided to the Company a $30,000,000 term loan and
the Guarantors guaranteed the indebtedness of the Company.
B. The Company, the Guarantors and the Bank now desire that the Loan
Agreement be amended to provide for an additional uncommitted line of credit in
the amount of $5,000,000 payable by the Company and guaranteed by the
Guarantors.
C. The Company and the Bank further desire to confirm the
effectiveness of the Security Agreement and all other agreements and documents
executed in connection with the Loan Agreement and the Guarantors further desire
to confirm their obligations under the Guaranty and the collateral granted by
them and all other agreements and documents executed in connection with the Loan
Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO LOAN AGREEMENT
Effective upon the date that the conditions precedent set forth in
Section 3 hereof are satisfied, which date shall be determined by the Bank in
its reasonable discretion (the "Amendment Date"), the Loan Agreement is hereby
amended as follows:
<PAGE>
1.1 The recital paragraph on the first page is deleted and the
following is substituted in place thereof:
WHEREAS, the Company desires to obtain a term loan in the aggregate
principal amount of $30,000,000 in order to refund existing
indebtedness owed by CMC and SCSM to the Bank and for other
partnership purposes allowed hereunder and the Company desires to
obtain an uncommitted line of credit in aggregate amount not to exceed
$5,000,000 for working capital purposes, the Guarantors, in
consideration of $10.00 and other valuable consideration, the amount
and sufficiency of which is hereby acknowledged, are willing to
guaranty such term loan and line of credit, and the Bank is willing to
make a term loan and provide such a line of credit on the terms and
conditions herein set forth;
1.2 The definition of "FLOATING RATE" contained in Section 1.1 is
deleted and the following is substituted in place thereof:
"FLOATING RATE" shall mean the per annum rate equal to the sum of
(a)(i) with respect to Line of Credit Loans, one percent (1%) per
annum (ii) with respect to the Term Loan, one and one quarter
percent (1-1/4%) per annum plus (b) the Prime Rate in effect from
time to time; such Floating Rate shall change simultaneously with
any change in such Prime Rate.
1.3 The definition of "LOAN" shall be deleted and the following is
substituted in the place thereof:
"LOAN" shall mean any Line of Credit Loan or the Term Loan, and
"Loans" shall mean all Line of Credit Loans and the Term Loan.
1.4 The definition of "NOTES" contained in Section 1.1. is deleted
and the following is substituted in the place thereof:
"NOTES" shall mean the Term Note and the Line of Credit Note, and
each shall be a "Note".
1.5 The following definitions are inserted in Section 1.1 in
appropriate alphabetical order:
"EXPIRY DATE" shall mean the earlier of (a) November 30, 1994, or
(b) the date on which the Line of Credit Note is accelerated
under Section 7.2(a).
"FIRST AMENDMENT" shall mean the First Amendment to Loan and
Guaranty Agreement, Confirmation of Security
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<PAGE>
Agreement and Confirmation of Guaranty, dated as of November 1,
1993, among the Company, the Guarantors and the Bank.
"FIRST AMENDMENT DATE" shall mean the Amendment Date, as defined
in Section 1 of the First Amendment.
"LINE OF CREDIT LOANS" shall mean the borrowings under Section
2.1A evidenced by the Line of Credit Note and made pursuant to
Section 2.1A.
"LINE OF CREDIT NOTE" shall mean any promissory note of the
Company evidencing the Line of Credit Loans, substantially in the
form annexed hereto as Exhibit A-1, as amended or modified from
time to time and together with any promissory note or notes
issued in exchange or replacement therefor.
"TERM LOAN" shall mean the borrowing under Section 2.2 evidenced
by the Term Note and made pursuant to Section 2.1. Such Loan
shall be denominated as a Floating Rate Loan.
"TERM NOTE" shall mean the promissory note of the Company
evidencing the Term Loan, in substantially the form annexed
hereto as Exhibit A, as amended or modified from time to time and
together with any promissory note or notes issued in exchange or
replacement therefor.
1.6 A new Section 2.1A is hereby added after existing Section 2.1 to
read as follows:
2.1A LINE OF CREDIT. The Bank agrees, subject to the terms and
conditions of this Agreement, to extend a line of credit to the
Company from time to time from the First Amendment Date through
the Expiry Date, in such amounts as the Company shall from time
to time request, not to exceed $5,000,000 in aggregate principal
amount at any time outstanding. Notwithstanding any provisions
of this Agreement or any other agreements, it is understood and
agreed that (a) the Bank shall at no time be obligated to make
any Line of Credit Loan, despite compliance with any express
conditions precedent thereto, and (b) the aggregate outstanding
principal amount of all loans by the Bank to the Company and the
Guarantors, whether under this Agreement or any other agreement,
shall not exceed $45,000,000.
1.7 A new Section 2.2A is hereby added after existing Section 2.2 to
read as follows:
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<PAGE>
2.2A DISBURSEMENT OF LINE OF CREDIT LOANS. All Line of Credit
Loans shall be made as Floating Rate Loans, the proceeds of which
shall be made available to the Company by depositing the proceeds
thereof, in immediately available funds, in an account maintained
and designated by the Company at the Bank.
(b) All Line of Credit Loans made under this Section 2.2A shall
be evidenced by the Line of Credit Note, and shall be due and
payable and bear interest as provided in Article III. The Bank
is hereby authorized by the Company to record on the schedule
attached to the Line of Credit Note, or in its books and records,
the date and amount of each Line of Credit Loan, the amount of
each payment or prepayment of principal thereon, and the other
information provided for on such schedule, which schedule or
books and records, as the case may be, shall constitute prima
facie evidence of the information so recorded, PROVIDED, HOWEVER,
that failure of the Bank to record, or any error in recording,
any such information shall not relieve the Company of its
obligation to repay the outstanding principal amount of the Line
of Credit Loans, all accrued interest thereon and other amounts
payable with respect thereto in accordance with the terms of the
Line of Credit Note and this Agreement.
1.8 A new Section 2.7 is hereby added after Section 2.6 to read as
follows:
2.7 LINE OF CREDIT FEE. The Company further agrees to pay to the
Bank a fee during the period from the First Amendment Date to but
excluding the Expiry Date at a rate equal to three-eighths of one
percent (3/8 of 1%) per annum of the daily average of the
difference between $5,000,000 and the Line of Credit Loans,
payable quarterly in arrears on the last Business Day of each
March, June, September and December, commencing on such Business
Day in December, 1993, and on the Expiry Date.
1.9 A new Section 3.1(d) is hereby added after Section 3.1(c) to read
as follows:
(d) The Company shall pay to the Bank the outstanding principal
amount of the Line of Credit Loans on the Expiry Date.
1.10 Reference in the introductory paragraph to Section 5.2 to
"Maturity Date" shall be deleted and "later of the Maturity Date or the Expiry
Date" should be substituted in place thereof.
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<PAGE>
1.11 Section 5.2(b) is hereby deleted and the following is substituted
in place thereof:
(b) CONSOLIDATED TANGIBLE NET WORTH. Permit or suffer
Consolidated Tangible Net Worth of CMC to be less than
$45,000,000 at any time from the Effective Date to and including
December 30, 1995, provided that such minimum required amount
shall increase by $1,000,000 on December 31, 1995 and on each
December 31st thereafter.
1.12 Section 5.2(d) is amended by deleting reference therein to "3.50
to 1.0" and substituting "4.0 to 1.0" in place thereof.
1.13 Section 5.2(g) is amended by deleting the period at the end of clause
(ii) thereof and substituting "; and" in place thereof and adding the following
new clause (iii) to the the end of Section 5.2(g):
(iii) Notwithstanding anything contained in this Agreement to the
contrary, and in accordance with the letter from the Bank dated
September 21, 1993, the proceeds of the sale of not more than 100
taxi medallions may be paid to ICC (which payments are in
addition to those allowed under Section 5.2(i) hereof and are not
subject to any other covenants of this Agreement) to be used
solely to settle litigation with Boeing.
1.14 Section 5.2(i) is hereby deleted and the following is substituted
in place thereof:
(i) PAYMENTS TO ICC. Other than the payment to ICC permitted
by Section 5.2(g)(iii), any payments or transfers of any kind,
directly or indirectly from the Company, any of the Guarantors or
any Subsidiary of the Company or any Guarantor to ICC shall not
exceed in the aggregate, (i) for 1992, the lesser of (x)
$26,000,000 or (y) $21,000,000 plus the Maximum Contingent
Amount; (ii) for 1993, the sum of $25,000,000 plus the difference
between the Maximum Contingent Amount and all Contingent Payments
made in 1992; and (iii) for 1994 and each year thereafter, the
sum of $20,000,000 plus the difference between the Maximum
Contingent Amount and all Contingent Payments made in prior
years, plus, for 1994, the lesser of $5,000,000 or the amount, if
any, by which payments to ICC permitted under this Section 5.2(i)
for 1993 were less than $25,000,000 and plus, for all years after
1994, the lesser of $5,000,000 or the amount, if any, by which
payments to ICC permitted under this Section 5.2(i) for the
immediately previous year were less than $20,000,000. As used
herein, "Maximum Contingent Amount" shall mean the lesser of (i)
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<PAGE>
$5,000,000 or (ii) the actual tax payments and other liabilities
paid to the Internal Revenue Service arising from the settlement
of tax audits of federal tax returns of ICC for years prior to
1992 plus payments with respect to certain contingent liabilities
set forth on Schedule 5.2(i) (payments described in this clause
(ii) are defined as the "Contingent Payments"). Notwithstanding
any provision of this Agreement, (i) the Company shall not be
restricted from making additional distributions to its partners
out of funds legally available therefor, and (ii) the Guarantors
shall not be restricted from paying dividends out of a pool
smaller than one equal to one hundred percent of the amount
legally available under the corporate law of its state of
incorporation for such payments or distributions. Prior to any
such additional distribution or payment, the Company shall make a
prepayment to the Bank in an amount equal to one-half of the then
outstanding balance of the Loans, which prepayment shall be
applied to installments of principal of the Loans in the inverse
order of their maturities. The Company agrees that the amount of
payments allowed under this Section 5.2(i) will be adjusted
downward if ICC restructures its debt to the extent allowed under
such restructuring.
1.15 Section 7.1(k) is hereby deleted and the following is substituted
in place thereof:
(k) The occurrence of any Event of Default under the Credit and
Guaranty Agreement, dated as of August 1, 1989, as amended or
modified from time to time (the "SCSM Credit Agreement"), among
SCSM, as the borrower, the Company and CMC, as guarantors, and
the Bank.
1.16 Each reference in Sections 2.1, 2.2 and 2.3 to "a Loan" or "the
Loan" shall be deleted and "the Term Loan" shall be substituted in each place
thereof and each reference in Sections 2.2 and 2.3(e) to "Note" shall be deleted
and "Term Note" shall be substituted in place thereof.
1.17 Each reference in Section 2.4 (except as set forth in Section
1.18) and the first reference in Section 3.1(b) to "the Loan" shall be deleted
and "any Loan" shall be substituted in each place thereof.
1.18 Each reference in the last paragraph of Section 2.4 and in
Section 3.2 to "the Loan" shall be deleted and "each Loan" shall be substituted
in each place thereof.
1.19 Each reference in Section 3.1(a) and 3.1(c) to "Loan" shall be
deleted and "Term Loan" shall be substituted in each thereof.
-6-
<PAGE>
1.20 Each reference in Sections 3.4, 3.5, Article IV, Section 5.2(i),
Article VI, Section 7.2 and Article VIII to "Loan" shall be deleted and "Loans"
shall be substituted in each place thereof.
1.21 Each reference in Article IV, Article V, Article VI, Section 7.2
and Article VIII to "Note" shall be deleted and "Notes" shall be substituted in
each place thereof.
1.22 The form of Line of Credit Note annexed hereto as Exhibit A-1 is
hereby added to the Credit Agreement as Exhibit A-1.
1.23 Any schedules attached hereto are substituted for the
corresponding schedules attached to the Credit Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES
Each of the Company and each Guarantor represents and warrants that:
2.1 It has all requisite power and authority, corporate or otherwise,
to execute and deliver this Amendment and to engage in the transactions
contemplated by the Loan Agreement, as amended by this Amendment (the "Amended
Loan Agreement"), and to perform its obligations under the Amended Loan
Agreement and the Line of Credit Note to which it is a party. The execution and
delivery by it of this Amendment and the Line of Credit Note to which it is a
party, and the performance by it of the Amended Loan Agreement and the Line of
Credit Note to which it is a party have been duly authorized by all necessary
action, corporate or otherwise, and do not and will not (a) require any consent
or approval of its stockholders, if any, (b) violate any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to it or of its Articles of
Incorporation, By-Laws or Partnership Agreement, as applicable, or (c) result in
a breach or constitute a default under any indenture or loan or credit agreement
or other agreement, lease or instrument to which it is a party or by which it or
its properties may be bound or affected.
2.2 No authorization, consent, approval, license, exemption of or
filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary to the valid execution or delivery by it of this Amendment or the Line
of Credit Note to which it is a party, or the performance by it of the Amended
Loan Agreement or the Line of Credit Note to which it is a party.
2.3 The Amended Loan Agreement and the Line of Credit Note to which
it is a party constitute its legal, valid and binding obligations enforceable
against it in accordance with their terms.
2.4 After giving effect to the amendments contained in this
Amendment, its representations and warranties contained in Article IV of the
Loan Agreement, Section 2 of the Security Agreement and in Article IV the SCSM
Credit are true on and as of the date hereof with the same force and effect as
if made on and as of the date hereof.
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<PAGE>
2.5 After giving the effect to the amendments contained in this
Amendment, there is no Event of Default or event or condition which may become
an Event of Default with notice or lapse of time, or both, as of the date
hereof.
2.6 CMC represents and warrants that, other than the capital stock of
SCSM and Checker Holding Corp. III and its partnership interest in the Company,
the only assets owned by it are those described in the Security Agreement, that
the Bank has a lien and security interest in all such assets of CMC described in
the Security Agreement, such liens and security interests are of a first
priority other than as described in Schedule 2.6 hereto and CMC will promptly
notify the Bank if it acquires any other assets and execute such further
agreements and other documents to grant a first priority lien and security
interest thereon as requested by the Bank.
SECTION 3. CONDITION PRECEDENT
3.1 CONDITIONS OF EFFECTIVENESS. This Amendment shall not become
effective until the Company and the Guarantors furnish to the Bank the following
documents and complete the following matters, each in form and substance
satisfactory to the Bank:
(a) Certified copies of such corporate and partnership documents of
the Company and each Guarantor, including those evidencing necessary corporate
action with respect to this Agreement, the Line of Credit Note and any other
documents executed in connection herewith as the Bank may request.
(b) The Line of Credit Note duly executed on behalf of each Borrower.
(c) Payment of facility fee to the Bank in amount of $50,000.
(d) The favorable written opinion of counsel for the Company and the
Guarantors, in form and substance satisfactory to the Bank and its counsel.
(e) Such other documents and agreements requested by the Bank,
including without limitation a solvency certificate.
SECTION 4. MISCELLANEOUS
4.1 All references to the Loan Agreement or the Note in the Security
Agreement, any Note, any certificate or instrument or any other document, shall
hereafter be deemed references to the Loan Agreement as amended hereby and to
the Notes as defined in the Loan Agreement after giving effect to this
Amendment, respectively.
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<PAGE>
4.2 Capitalized terms used but not defined herein shall have the
respective meanings ascribed to them in the Loan Agreement or the Security
Agreement, as the case may be.
4.3 This Amendment may be executed upon any number of counterparts
with the same effect as if the signatures thereto were upon the same instrument.
4.4 The Company agrees to pay the reasonable fees and expenses of
Dickinson, Wright, Moon, Van Dusen & Freeman, counsel for the Bank, in
connection with the preparation of this Amendment, the Line of Credit Note and
related documents and the consummation of the transactions contemplated hereby.
4.5 The Company and each Guarantor hereby ratify and confirm the Loan
Agreement, the Notes, the Security Agreement and all other agreements and
documents executed at any time pursuant to the Loan Agreement (all the foregoing
referred to collectively as the "Loan Documents") and agree that each shall
remain in full force and effect and acknowledge that they have no defense,
offset or counterclaim with respect thereto. Each Borrower agrees that all
collateral granted by it, including without limitation pursuant to the Security
Agreement, are cross collateralized and secure all present and future
indebtedness, obligations and liabilities of the Company and each Guarantor now
or hereafter owing to the Bank, including without limitation pursuant to the
Line of Credit Note, the Term Note and the SCSM Credit Agreement. The
Guarantors acknowledge and confirm that they jointly and severally and
unconditionally guarantee all present and future indebtedness, obligations and
liabilities of the Company to the Bank, including without limitation those
pursuant to the Line of Credit Note and the Term Note, and each Guarantor
further acknowledges and confirms that any collateral granted by either
Guarantor, including without limitation any collateral granted pursuant to the
SCSM Credit Agreement and the security agreement and other documents executed
pursuant thereto, (the "SCSM Loan Documents"), are cross collateralized and
secure all present and future indebtedness, obligations and liabilities of the
Company and each Guarantor now or hereafter owing to the Bank, including without
limitation pursuant to the Line of Credit Note and the Term Note, the Loan
Agreement and the SCSM Credit Agreement. The Company and each Guarantor
represent and warrant that the Bank has a first priority (subject only to such
Liens permitted by Section 5.2(e) of the Loan Agreement), perfected and
enforceable lien and security interest on all collateral described in the Loan
Documents and in the SCSM Loan Documents.
4.6 Each Guarantor and the Company represent and warrant that they
are aware of no claims or causes of action by the Company or any Guarantor
against the Bank. Notwithstanding this representation and as further
consideration for the agreements and understandings herein, each Guarantor and
the Company, individually and jointly and severally, for themselves and for
their respective heirs, successors and assigns, hereby release the Bank and its
officers, directors, employees, agents, attorneys, affiliates, subsidiaries,
successors and assigns from any liability, claim, right or cause of action which
now exists or hereafter arises, whether known or unknown, arising from or in any
way related to facts in existence as of the date hereof.
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<PAGE>
4.7 This Amendment constitutes the entire understanding of the
parties with respect to the subject matter hereof and may only be modified or
amended in a writing signed by all parties hereto. Each party hereto
acknowledges that it has been given an opportunity to consult with counsel and
after such consultation or opportunity, knowingly, voluntarily and without
duress enter into this Agreement and each party hereto acknowledges that they
have carefully and completely read all of the terms and provisions hereof.
4.8 This Amendment shall be governed by and construed in accordance
with the laws of the State of Michigan applicable to contracts made and to be
performed entirely within such State without giving effect to choice of law
principles of such State.
WITNESS the due execution hereof, effective as of the 1st day of
November, 1993, which shall be the Effective Date of this Amendment.
CHECKER MOTORS CORPORATION
By: /s/ Jay Harris
-----------------------------------
Its: Vice President
-----------------------------
CHECKER MOTORS CO., L.P.
By: CHECKERS MOTORS CORPORATION,
general partner
By: /s/ Jay Harris
----------------------------------
Its: Vice President
-----------------------------
SOUTH CHARLESTON STAMPING &
MANUFACTURING COMPANY
By: /s/ Marlan R. Smith
----------------------------------
Its: Assistant Treasurer
-----------------------------
NBD BANK, N.A.
By: /s/ Randy Balluff
----------------------------------
Its: Vice President
-----------------------------
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<PAGE>
EXHIBIT A-1
LINE OF CREDIT NOTE
$5,000,000 November 1, 1993
Detroit, Michigan
FOR VALUE RECEIVED, the undersigned, CHECKER MOTORS CO., L.P., a
Delaware limited partnership (the "Company"), hereby unconditionally promises to
pay to the order of NBD BANK, N.A., a national banking association (the "Bank"),
at the principal banking office of the Bank in lawful money of the United States
of America and in immediately available funds, the principal sum of Five Million
Dollars ($5,000,000), or such lesser amount as is noted on the schedule attached
hereto, on the Expiry Date; and to pay interest on the unpaid principal balance
hereof from time to time outstanding, in like money and funds, for the period
from the date hereof until the Loans evidenced hereby shall be paid in full, at
the rates per annum and on the dates provided in the Loan Agreement referred to
below.
The Bank is hereby authorized by the Company to note on the schedule
attached to this Line of Credit Note the date and amount of each Loan, the
amount of each payment or prepayment of principal thereon and other information
provided for on such schedule, which schedule shall constitute prima facie
evidence of the information so noted, PROVIDED that any failure by the Bank to
make any such notation shall not relieve the Company of its obligation to repay
the outstanding principal amount of this Line of Credit Note, all accrued
interest hereon and any amount payable with respect hereto in accordance with
the terms of this Line of Credit Note and the Loan Agreement.
The Company and each endorser or guarantor hereof waives presentment,
protest, diligence, notice of dishonor, demand, and any other formality in
connection with this Line of Credit Note. Should the indebtedness evidenced by
this Line of Credit Note or any part thereof be collected in any proceeding or
be placed in the hands of attorneys for collection, the Company agrees to pay,
in addition to the principal and interest due and payable hereon, all costs of
collecting this Line of Credit Note, including attorneys' fees and expenses.
This Line of Credit Note evidences one or more Loans made under a Loan
and Guaranty Agreement, dated as of September 17, 1992 among the Company, South
Charleston Stamping & Manufacturing Company, a West Virginia corporation,
Checker Motors Corporation, a New Jersey corporation, and the Bank, as amended
or modified through the date hereof and as further amended or modified from time
to time (the "Loan Agreement"), to which reference is hereby made for a
statement of the circumstances under which this Line of Credit Note is subject
to prepayment and under which its due date applicable in the absence of demand
may be accelerated and for a description of the collateral and security securing
<PAGE>
payment hereof. Capitalized terms used but not defined in this Line of Credit
Note shall have the respective meanings assigned to them in the Loan Agreement.
CHECKER MOTORS CO., L.P.
By: CHECKER MOTORS CORPORATION,
its general partner
By:
----------------------------------
Its:
-----------------------------
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<PAGE>
Schedule to Line of Credit Note, dated
November 1, 1993, made by Checker Motors Co., L.P.
in favor of NBD Bank, N.A.
Principal Principal Principal
Date Loan Amount of Interest Amount Paid Balance Notation
Made Loan Rate or Pre-paid Outstanding Made by
- --------- --------- -------- ----------- ----------- --------
<PAGE>
EXHIBIT 10.16
THIRD AMENDMENT TO CREDIT AND GUARANTY
AGREEMENT, CONFIRMATION OF SECURITY
AGREEMENT AND CONFIRMATION OF GUARANTY
THIS THIRD AMENDMENT TO CREDIT AND GUARANTY AGREEMENT,
CONFIRMATION OF SECURITY AGREEMENT AND CONFIRMATION OF GUARANTY, dated as of
November 1, 1993 (this "Amendment"), is among SOUTH CHARLESTON STAMPING &
MANUFACTURING COMPANY, a West Virginia corporation (the "Company"), CHECKER
MOTORS CORPORATION, a New Jersey corporation (the "Corporate Guarantor"), and
CHECKER MOTORS CO., L.P., a Delaware limited partnership (the "Partnership
Guarantor" and, together with the Corporate Guarantor, the "Guarantors"), and
NBD BANK, N.A., a national banking association formerly named National Bank of
Detroit (the "Bank").
RECITALS
A. The Company, the Guarantors and the Bank have entered into a
Credit and Guaranty Agreement, dated as of August 1, 1989, as amended by that
certain First Amendment to Credit Agreement (the "First Amendment") dated as of
June 1, 1990, that certain Second Amendment to Credit and Guarantee Agreement,
Confirmation of Security Agreement, and Confirmation of Guaranty (the "Second
Amendment") dated as of January 2, 1991, and as modified by a Supplemental
Agreement dated as of April 20, 1992 (the "First Supplemental Agreement") and a
Second Supplemental Agreement (the "Second Supplemental Agreement") dated as of
September 17, 1992 (the "Credit Agreement"), pursuant to which (a) the Bank
provided to the Company (i) a revolving credit facility in an aggregate
principal amount outstanding at any one time not to exceed $9,500,000, which
credit facility was converted to a term loan on July 31, 1990 and (ii) a line of
credit in an aggregate principal amount outstanding at any one time not to
exceed the lesser of (1) the Borrowing Base and (2) $5,000,000, payable on
demand, and (b) the Guarantors guaranteed the indebtedness of the Company under
such revolving credit facility and such line of credit.
B. The Company, the Guarantors and the Bank now desire that the
Credit Agreement be amended to provide for (a) the continuation and increase of
such line of credit from the Bank to the Company to an aggregate principal
amount outstanding at any one time not to exceed the lesser of (i) the Borrowing
Base and (ii) $7,500,000, and expiring on November 30, 1994, to support the
sales growth of the Company, and (b) an additional five year secured term loan
in aggregate principal amount of $2,500,000 to purchase certain equipment.
C. The Company and the Bank further desire to confirm the
effectiveness of the Security Agreement and all other agreements and documents,
and the Guarantors further desire to confirm their obligations under the
Guaranty and the collateral granted by them and all other agreements and
documents.
<PAGE>
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT
Effective upon the date that the conditions precedent set forth
in Section 5 hereof are satisfied, which date shall be determined by the Bank in
its reasonable discretion (the "Amendment Date"), the Credit Agreement is hereby
amended as follows:
1.1 The first two recital paragraphs on the first page are
deleted and the following is substituted in place thereof:
WHEREAS, the Company desires (a) to obtain a revolving
credit facility in aggregate principal amount not to exceed
$9,500,000 in order to provide funds for the purchase and
installation of five stamping presses, and its other
corporate purposes, which credit facility shall be
convertible into a term loan, (b) for the Bank to grant a
line of credit to the Company in an aggregate principal
amount outstanding any one time not to exceed $7,500,000 for
working capital purposes, and (c) to obtain a term loan in
the amount of $2,500,000 for the purpose of purchasing a
used Danly press; and
WHEREAS, the Guarantors are willing to guarantee the
indebtedness of the Company under such revolving credit
facility and the term loan to which it converts, such line
of credit and such term loan, and the Bank is willing to
provide such a revolving credit facility, line of credit and
term loan on the terms and the conditions herein set forth.
1.2 The definition of "BORROWING BASE" contained in Section 1.1
is deleted and the following is substituted in place thereof:
"BORROWING BASE" shall mean, as of any date, an amount equal
to the sum of (a) 80% of the value of Eligible Accounts
Receivable, plus (b) the lesser of (i) 50% of the value of
Eligible Inventory or (ii) $1,000,000.
1.3 The definition of "EXPIRY DATE FOR LINE OF CREDIT" contained
in Section 1.1 is deleted and the following is substituted in place thereof:
"EXPIRY DATE FOR LINE OF CREDIT"
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<PAGE>
1.4 The definition of "FLOATING RATE" contained in Section 1.1
is deleted and the following is substituted in place thereof:
"FLOATING RATE" shall mean the per annum rate equal to the
sum of (a)(i) with respect to Line of Credit Loans, one
percent (1%) per annum (ii) with respect to the Term Loan
and the $2,500,000 Term Loan, one and one quarter percent
(1-1/4%) per annum plus (b) the Prime Rate in effect from
time to time; such Floating Rate shall change simultaneously
with any change in such Prime Rate.
1.5 The definition of "LOAN" shall be deleted and the following
is substituted in the place thereof:
" LOAN" shall mean any Revolving Credit Loan, the Term Loan,
any Line of Credit Loan or the $2,500,000 Term Loan, and
"Loans" shall mean all the Revolving Credit Loans, the Term
Loan, all Line of Credit Loans and the $2,500,000 Term Loan.
1.6 The definition of "NOTES" contained in Section 1.1. is
deleted and the following is substituted in the place thereof:
"NOTES" shall mean the Revolving Credit Note, the Term Note,
the Line of Credit Note and the $2,500,000 Term Note, and
each shall be a "Note".
1.7 The following definitions are inserted in Section 1.1 in
appropriate alphabetical order:
"EBIT" means, as of the last day of any fiscal quarter,
Net Income PLUS all amounts deducted in determining
such Net Income on account of (a) Interest Expense and
(b) taxes, all as determined for the Company in
accordance with generally accepted accounting
principles.
"ELIGIBLE INVENTORY" shall mean, as of any date, that
inventory owned by the Company that constitutes raw
materials or finished goods in which the Company has
granted to the Bank a first-priority perfected security
interest pursuant to the Security Agreement, valued at
the lower of cost or market on a FIFO basis, but shall
not include any such inventory (a) that does not
constitute raw materials or finished goods readily
salable or usable in the business of the Company (b)
that is located outside the United States (which shall
be not deemed to include any territories of the United
States), (c) that is subject to, or any accounts or
other proceeds resulting from the sale or other
disposition thereof could be subject to, any Lien
-3-
<PAGE>
(except those in favor of the Bank under the Security
Agreement), including any sale on approval or sale or
return transaction or any consignment, (d) that is not
in the possession of the Company or if such inventory
is covered by documents of title, instruments or
chattel paper and the Company is not the owner and
holder of all such documents, instruments and chattel
paper, free of any Lien (except those in favor of the
Bank under the Security Agreement), (e) that is held
for lease or is the subject of any lease, (f) that is
subject to any trademark, trade name or licensing
arrangement, or any law, rule or regulation, that could
limit or impair the ability of the Bank to promptly
exercise all rights of the Bank under the Security
Agreement, (g) if such inventory is located on premises
not owned by the Company and the landlord or other
owner of such premises shall not have waived its
distraint, lien and similar rights with respect to such
inventory and shall not have agreed to permit the bank
to enter such premises pursuant to a wavier and
agreement to such person in favor of and in form and
substance acceptable to the Bank (h) with respect to
which any insurance proceeds are not payable to the
Bank as a loss payee or are payable to any loss payee
other than the bank or the Company, and (i) that for
any other reason is at any time reasonably deemed by
the Bank to be ineligible.
"INTEREST EXPENSE" means, as of the last day of any
fiscal quarter of the Company, total interest and
related expense of the Company with respect to all
outstanding Indebtedness of the Company (including,
without limitation, the interest component of any
payments in respect to any capital lease) accrued or
capitalized (whether or not actually paid during the
relative period) plus the amount payable (or minus the
net amount receivable) under any interest rate hedging,
cap or similar agreement or arrangement (whether or not
actually paid or received during the relevant period)
for the fiscal quarter then ending and the three
immediately preceding fiscal quarters of the Company,
determined for the Company in accordance with generally
accepted accounting principles, except as modified by
this definition.
"NET INCOME" means, as of the last day of any fiscal
quarter of the Company, the net income (or loss) of the
Company for fiscal quarter then ending and the three
immediately preceding fiscal quarters of the Company,
taken as a single accounting period, determined in
accordance with generally accepted accounting
principles; MINUS to the extent included in determining
-4-
<PAGE>
such Net Income, without duplication: (a) the proceeds
of any insurance policy, (b) gains (or PLUS losses)
from the sale, exchange, transfer or other disposition
of property or assets not in the ordinary course of
business of the Company and related tax effects in
accordance with generally accepted accounting
principles, and (c) any extraordinary or non-recurring
gains of the Company, or other gains recognized by the
Company outside of the normal operations of the
Company, and related tax effects, in accordance with
generally accepted accounting principles.
"THIRD AMENDMENT" shall mean the Third Amendment to
Credit and Guaranty Agreement, Confirmation of Security
Agreement and Confirmation of Guaranty, dated as of
November 1, 1993, among the Company, the Guarantors and
NBD Bank, N.A., a national banking association,
formerly named National Bank of Detroit.
"THIRD AMENDMENT DATE" shall mean the Amendment Date,
as defined in Section 1 of the Third Amendment.
"TERM LOANS" shall mean the Term Loan and the
$2,500,000 Term Loan.
"$2,500,000 TERM LOAN" shall mean the borrowing under
Section 2.2A evidenced by the $2,500,000 Term Note and
made pursuant to Section 2.2A.
"$2,500,000 TERM NOTE" shall mean any promissory note
of the Company evidencing the $2,500,000 Term Loan,
substantially in the form annexed hereto as Exhibit B-
1, as amended or modified from time to time and
together with any promissory note or notes issued in
exchange or replacement therefor.
1.8 The words "SECOND AMENDMENT DATE" contained in Section 2.2
are deleted and the words "THIRD AMENDMENT DATE" are substituted in place
thereof, and the amount "$5,000,000" contained in Section 2.2 is deleted and the
amount "$7,500,000" is substituted in place thereof.
1.9 A new Section 2.2A is hereby added after existing Section
2.2 to read as follows:
2.2A $2,500,000 TERM LOAN. The Bank agrees, subject to
terms and conditions of this Agreement, to make a
single term loan to the Company on or within three days
after the Third Amendment Date in the amount of
$2,500,000.
1.10 Section 2.4(b) is deleted in its entirety and the following
new Section 2.4(b) is substituted in place thereof:
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<PAGE>
(b) The Company further agrees to pay to the Bank a fee
during the period from the Third Amendment Date to but
excluding the Expiry Date for Line of Credit at a rate equal
to three-eighths of one percent (3/8 of 1%) per annum of the
daily average of the difference between $7,500,000 and the
Line of Credit Loans, payable quarterly in arrears on the
last Business Day of each January, April, July and October,
commencing on such Business Day in January, 1994, and on the
Expiry Date for Line of Credit.
1.11 A new Section 2.6A is hereby added after existing Section
2.6 to read as follows:
2.6A DISBURSEMENT OF $2,500,000 TERM LOAN. (a) The
$2,500,000 Term Loan shall bear interest at the applicable
Floating Rate, and the proceeds thereof shall be made
available to the Company, subject to the terms and
conditions of this Agreement, by depositing the proceeds
thereof, in immediately available funds, in an account
maintained and designated by the Company at the Bank.
(b) The $2,500,000 Term Loan under this Section 2.6A shall
be evidenced by the $2,500,000 Term Note, and shall be due
and payable and bear interest as provided in Article III.
The Bank is hereby authorized by the Company to record on
the scheduled attached to the $2,500,000 Term Note, or on
its books and records, the amount of $2,500,000 Term Loan,
the amount of each payment or prepayment of principal
thereon, and the other information provided for on such
schedule, which schedule or books and records, as the case
may be, shall constitute prima facie evidence of the
information so recorded, PROVIDED, HOWEVER, that the failure
of the Bank to record, or any error in recording, any such
information shall not relieve the Company of its obligation
to repay the outstanding principal amount of the $2,500,000
Term Loan, all accrued interest thereon and other amounts
payable with respect thereto in accordance with the terms of
the $2,500,000 Term Note of this Agreement.
1.12 Sections 2.9, 2.10 and 2.11 are each deleted.
1.13 Section 3.1(c) is deleted in its entirety and the following
new Section 3.1(c) is substituted in place thereof:
(c) Unless earlier payment is required under this
Agreement, the Company shall pay to the Bank the
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<PAGE>
outstanding principal amount of the Line of Credit Loans on
the Expiry Date for Line of Credit.
1.14 Clauses (i) and (ii) of Section 3.1(d) and Sections 3.6(a)
and 3.8 are hereby deleted.
1.15 Section 3.2 is hereby deleted and the following is
substituted in place thereof:
INTEREST PAYMENTS. The Company shall pay interest to
the Bank on the unpaid principal amount of any portion
of the Loans, for the period commencing on the date
such Loan is made until such Loan is paid in full, on
each Interest Payment Date and at maturity (whether at
stated maturity, by acceleration or otherwise), and
thereafter on demand, at the Floating Rate.
Notwithstanding the foregoing, the Company shall pay
interest on demand at the Overdue Rate on the
outstanding principal amount of the Loans and any other
amount payable by the Company hereunder (other than
interest) which is not paid in full when due (whether
at stated maturity, by acceleration or otherwise) for
the period commencing on the due date thereof until the
same is paid in full.
1.16 A new Section 3.1(g) is hereby added after Section 3.1(f) to
read as follows:
(g) Unless earlier payment is required under this
Agreement, the Company shall pay to the Bank the outstanding
principal amount of the $2,500,000 Term Loan in twenty
equal, consecutive quarterly principal installments each in
the amount of $125,000 and payable on the last Business Day
of each January, April, July and October, commencing with
the last Business Day in January, 1994, and until the last
Business Day of October, 1998, when the entire outstanding
principal amount of the $2,500,000 Term Loan shall be due
and payable.
1.17 Reference in Section 3.1(e) to "Term Loan" shall be deleted
and "Term Loans" shall be substituted in place thereof.
1.18 A new Section 5.1(c) (which new Section describes a new
covenant which is an addition to all other existing covenants) is hereby added
after existing Section 5.1(b) to read as follows:
(c) EBIT TO INTEREST EXPENSE. The Company will not permit
or suffer the ratio of EBIT to Interest Expense to be less
than 2.0 to 1.0 as of the last day of any fiscal quarter of
the Company.
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<PAGE>
1.19 Section 7.1(i) is modified by adding the phrase "or
International Controls Corp. ("ICC")" after each place the word "Guarantors"
appears in Section 7.1(i).
1.20 A new Section 7.1(l) is hereby added after existing Sections
7.1(k) to read as follows:
(l) ICC or any of its shareholders shall fail to perform or
observe any term, covenant or agreement contained in the
side letters delivered pursuant to Section 2.3(k) of the
Loan and Guaranty Agreement dated as of September 17, 1992
by and among the Partnership Guarantor, as borrower, and the
Corporate Guarantor and the Company, as guarantors.
1.21 The form of Line of Credit Note annexed hereto as Exhibit C
(the "New Line of Credit Note") is substituted for the form of Demand Note
annexed to the Credit Agreement as Exhibit C.
1.22 The form of $2,500,000 Term Note annexed hereto as Exhibit
B-1 is hereby added to the Credit Agreement as Exhibit B-1.
1.23 Any schedules attached hereto are substituted for the
corresponding schedules attached to the Credit Agreement.
1.24 All references to the Demand Note contained in the Credit
Agreement of in any other agreement or document shall be deemed references to
the Line of Credit Note and any promissory note or notes issued in exchange or
replacement therefor.
SECTION 4. REPRESENTATIONS AND WARRANTIES
Each of the Company and each Guarantor represents and warrants
that:
4.1 It has all requisite power and authority, corporate,
partnership or otherwise, to execute and deliver this Amendment and to engage in
the transactions contemplated by the Credit Agreement, as amended by this
Amendment (the "Amended Credit Agreement"), and to perform its obligations under
the Amended Credit Agreement and the New Line of Credit Note and $2,500,000 Term
Note to which it is a party. The execution and delivery by it of this Amendment
and the New Line of Credit Note and $2,500,000 Term Note to which it is a party,
and the performance by it of the Amended Credit Agreement and the New Line of
Credit Note and $2,500,000 Term Note to which it is a party have been duly
authorized by all necessary action, corporate or otherwise, and do not and will
not (a) require any consent or approval of its stockholders, if any, (b) violate
any provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to it or
of its Articles of Incorporation, By-Laws or Partnership Agreement, as
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<PAGE>
applicable, or (c) result in a breach or constitute a default under any
indenture or loan or credit agreement or other agreement, lease or instrument to
which it is a party or by which it or its properties may be bound or affected.
4.2 No authorization, consent, approval, license, exemption of
or filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary to the valid execution or delivery by it of this Amendment or the New
Line of Credit Note or $2,500,000 Term Note to which it is a party, or the
performance by it of the Amended Credit Agreement or the New Line of Credit Note
or $2,500,000 Term Note to which it is a party.
4.3 The Amended Credit Agreement and the New Line of Credit Note
and $2,500,000 Term Note to which it is a party constitute its legal, valid and
binding obligations enforceable against it in accordance with their terms.
4.4 After giving effect to the amendments contained in this
Amendment, its representations and warranties contained in Article IV of the
Credit Agreement, Section 2 of the Security Agreement and in the Loan and
Guaranty Agreement, dated as of September 17, 1992 by and among the Partnership
Guarantor, as borrower, and the Corporate Guarantor and the Company, as
guarantors (the "Partnership Guarantor Loan Agreement") are true on and as of
the date hereof with the same force and effect as if made on and as of the date
hereof.
4.5 After giving the effect to the amendments contained in this
Amendment, there is no Event of Default or event or condition which may become
an Event of Default with notice or lapse of time, or both, as of the date
hereof.
4.6 The Company has purchased the Danly press for approximately
$2,620,000, free and clear of all Liens other than in favor of the Bank and
other than subordinated liens to the State of West Virginia and Volkswagon,
subordinated in form and substance satisfactory to the Bank.
SECTION 5. CONDITION PRECEDENT
5.1 CONDITIONS OF EFFECTIVENESS. This Amendment shall not
become effective until the Company and the Guarantors furnish to the Bank the
following documents and complete the following matters, each in form and
substance satisfactory to the Bank:
(a) Certified copies of such corporate and partnership documents
of the Company and each Guarantor, including those evidencing necessary
corporate action with respect to this Agreement, the New Line of Credit Note and
the $2,500,000 Term Note as the Bank may request.
(b) The New Line of Credit Note and the $2,500,000 Term Note,
each duly executed on behalf of the Company.
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<PAGE>
(c) Payment of facility fee to the Bank in amount of $50,000.
(d) The favorable written opinion of counsel for the Company and
the Guarantors, in form and substance satisfactory to the Bank and its counsel.
(e) The Company shall execute and deliver such documents with
respect to the Danly press purchased by the Company, including all appraisals
and all documents, if any, required to perfect the lien and security interest of
the Bank therein, as requested by the Bank.
(f) The Company shall have delivered such subordination
agreements and other documentation in form and substance satisfactory to the
Bank showing that the Bank has a first priority lien and security interest on
the Danly press and that the Liens of the State of West Virginia and Volkswagon
are subordinated to the Bank's Liens in form and substance satisfactory to the
Bank.
(g) Such other documents and agreements requested by the Bank,
including without limitation a solvency certificate.
SECTION 6. MISCELLANEOUS
6.1 All references to the Credit Agreement or the Notes in the
Security Agreement, any Note, any certificate or instrument or any other
document, shall hereafter be deemed references to the Credit Agreement as
amended hereby and to the Notes as defined in the Credit Agreement after giving
effect to this Amendment, respectively.
6.2 Capitalized terms used but not defined herein shall have the
respective meanings ascribed to them in the Credit Agreement or the Security
Agreement, as the case may be.
6.3 This Amendment may be executed upon any number of
counterparts with the same effect as if the signatures thereto were upon the
same instrument.
6.4 The Company agrees to pay the reasonable fees and expenses
of Dickinson, Wright, Moon, Van Dusen & Freeman, counsel for the Bank, in
connection with the preparation of this Amendment, the New Line of Credit Note,
the $2,500,000 Term Note and related documents and the consummation of the
transactions contemplated hereby.
6.5 The Company and each Guarantor hereby ratify and confirm the
Credit Agreement, the Notes, the Security Agreement, the First Amendment the
Second Amendment, the First Supplemental Agreement, the Second Supplemental
Agreement and all other agreements and documents executed at any time pursuant
to the Credit Agreement (all the foregoing referred to collectively as the "Loan
Documents") and agree that each shall remain in full force and effect and
acknowledge that they have no defense, offset or counterclaim with respect
thereto. The Company agrees that all collateral granted by it, including
without limitation pursuant to the Security Agreement, are cross collateralized
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<PAGE>
and secure all present and future indebtedness, obligations and liabilities of
the Company and each Guarantor now or hereafter owing to the Bank, including
without limitation pursuant to the New Line of Credit Note, the Term Note, the
$2,500,000 Term Note and the Partnership Guarantor Loan Agreement. The
Guarantors acknowledge and confirm that they jointly and severally and
unconditionally guarantee all present and future indebtedness, obligations and
liabilities of the Company, including without limitation those pursuant to the
New Line of Credit Note, the Term Note and $2,500,000 Term Note, and each
Guarantor further acknowledges and confirms that any collateral granted by
either Guarantor, including without limitation any collateral granted pursuant
to the Partnership Guarantor Loan Agreement and the security agreement and other
documents executed pursuant thereto, (the "Partnership Loan Documents"), are
cross collateralized and secure all present and future indebtedness, obligations
and liabilities of the Company and each Guarantor now or hereafter owing to the
Bank, including without limitation pursuant to the New Line of Credit Note, the
Term Note, the $2,500,000 Term Note, the Credit Agreement and the Partnership
Guarantor Loan Agreement. The Company and each Guarantor represent and warrant
that the Bank has a first priority, perfected and enforceable lien and security
interest on all collateral described in the Loan Documents and in the
Partnership Loan Documents, subject only to such liens as are permitted under
Section 5.2(e) of the Partnership Guarantor Loan Agreement. Without limiting
the foregoing, the Company agrees that the Security Agreement is amended by
adding the phrase "and/or any of the Guarantors" after the word "Company" in
each place it appears in the first paragraph of Section 1 of the Security
Agreement.
6.6 Notwithstanding any provisions of the Credit Agreement or
any other agreement, it is understood and agreed that (a) the Bank shall at no
time be obligated to make any Line of Credit Loan, despite compliance with any
express conditions precedent thereto, and the Bank shall be privileged at any
time to make demand for payment of the New Line of Credit Note and all amounts
owing thereunder, despite the fact that there may not then exist an Event of
Default, and (b) the aggregate outstanding principal amount of all Loans by the
Bank to the Company and the Guarantors, whether under the Credit Agreement or
any other agreement, shall not exceed $45,000,000.
6.7 Each Guarantor and the Company represent and warrant that
they are aware of no claims or causes of action by the Company or any Guarantor
against the Bank. Notwithstanding this representation and as further
consideration for the agreements and understandings herein, each Guarantor and
the Company, individually and jointly and severally, for themselves and for
their respective heirs, successors and assigns, hereby release the Bank and
their officers, directors, employees, agents, attorneys, affiliates,
subsidiaries, successors and assigns from any liability, claim, right or cause
of action which now exists or hereafter arises, whether known or unknown,
arising from or in any way related to facts in existence as of the date hereof.
6.8 This Amendment constitutes the entire understanding of the
parties with respect to the subject matter hereof and may only be modified or
amended in writing signed by all parties hereto. Each party hereto acknowledges
that they have been given an opportunity to consult with counsel and after such
-11-
<PAGE>
consultation or opportunity, knowingly, voluntarily and without duress enter
into this Agreement and each party hereto acknowledges that they have carefully
and completely read all of the terms and provisions hereof.
6.9 This Amendment shall be governed by and construed in
accordance with the laws of the State of Michigan applicable to contracts made
and to be performed entirely within such State without giving effect to choice
of law principles of such State.
6.10 Notwithstanding anything contained in this Amendment or any
Loan Document to the contrary, is acknowledged and agreed that any
unenforceability of the guaranty by the Partnership Guarantor of the $2,500,000
Term Loan or the increase in the Line of Credit Loans implemented by this
Amendment shall not be an Event of Default, provided that it is acknowledged and
agreed by all parties that any such unenforceability shall not terminate,
impair, or otherwise affect in any manner any of the existing guaranty
obligations or other obligations of the Partnership Guarantor or any of the
obligations of the Company or the Corporate Guarantor.
WITNESS the due execution hereof, effective as of the 1st day of
November, 1993, which shall be the Effective Date of this Amendment.
SOUTH CHARLESTON STAMPING &
MANUFACTURING COMPANY
By: /s/ Marlan R. Smith
--------------------------------------
Its: Assistant Treasurer
--------------------------------
CHECKER MOTORS CORPORATION
By: /s/ Jay Harris
--------------------------------------
Its: Vice President
--------------------------------
CHECKER MOTORS CO., L.P.
By: CHECKERS MOTORS CORPORATION,
general partner
By: /s/ Jay Harris
--------------------------------------
Its: Vice President
--------------------------------
-12-
<PAGE>
NBD BANK, N.A.
By: /s/ Randy Balluff
--------------------------------------
Its: Vice President
--------------------------------
-13-
<PAGE>
EXHIBIT B-1
$2,500,000 TERM NOTE
$2,500,000 November 1, 1993
Detroit, Michigan
FOR VALUE RECEIVED, the undersigned, SOUTH CHARLESTON STAMPING &
MANUFACTURING COMPANY a West Virginia corporation (the "Company"), hereby
unconditionally promises to pay to the order of NBD Bank, N.A. (formerly known
as National Bank of Detroit), a national banking association (the "Bank"), at
the principal banking office of the Bank in lawful money of the United States of
America and in immediately available funds, the principal sum of Two Million
Five Hundred Thousand Dollars ($2,500,000), in twenty equal consecutive
quarterly installments of $125,000 each, payable on the last day of each
January, April, July and October, commencing on January 31, 1994 and continuing
until October 31, 1998, when all principal shall be due and payable; and to pay
interest on the unpaid principal balance hereof from time to time outstanding,
in like money and funds, for the period from the date hereof until such Loan
shall be paid in full, at the rates per annum and on the dates provided in the
Credit Agreement referred to below.
The Bank is hereby authorized by the Company to note on the schedule
attached to this Note the date of the Loan, the interest rate, the amount of
each payment or prepayment of principal thereon and the other information
provided for on such schedule, which schedule shall constitute prima facie
evidence of the information so noted, PROVIDED that any failure by the Bank to
make any such notation shall not relieve the Company of its obligation to repay
the outstanding principal amount of this Note, all accrued interest hereon and
any amount payable with respect hereto in accordance with the terms of this Note
and the Credit Agreement.
The Company and each endorser or guarantor hereof waives demand,
presentment, protest, diligence, notice of dishonor and any other formality in
connection with this Note. Should the indebtedness evidenced by this Note or
any part thereof be collected in any proceeding or be placed in the hands of
attorneys for collection, the Company agrees to pay, in addition to the
principal and interest due and payable hereon, all costs of collecting this
Note, including attorneys' fees and expenses.
This Note evidences the $2,500,000 Term Loan made under a Credit and
Guaranty Agreement, dated as of August 1, 1989 as amended or modified through
the date hereof and as further amended or modified from time to time (the
"Credit Agreement"), by and among the Company, Checker Motors Corporation,
Checker Motors Co., L.P. and the Bank, to which reference is hereby made for a
statement of the circumstances under which this Note is subject to prepayment
and under which its due date may be accelerated and for a description of the
<PAGE>
collateral and security securing payment hereof. Capitalized terms used but not
defined in this Note shall have the respective meanings assigned to them in the
Credit Agreement.
SOUTH CHARLESTON STAMPING & MANUFACTURING COMPANY
By:
----------------------------------------------
Its:
----------------------------------------
-2-
<PAGE>
Schedule to $2,500,000 Term Note, dated
November 1, 1993, made by
South Charleston Stamping & Manufacturing Company
in favor of NBD Bank, N.A.
Principal
Principal Amount Principal
Date Loan Amount of Interest Paid, or Balance Notation
Made Loan Rate Prepaid Outstanding Made by
- --------- --------- -------- --------- ----------- --------
-3-
<PAGE>
EXHIBIT C
LINE OF CREDIT NOTE
$7,500,000 November 1, 1993
Detroit, Michigan
FOR VALUE RECEIVED, the undersigned, SOUTH CHARLESTON STAMPING &
MANUFACTURING COMPANY, a West Virginia corporation (the "Company"), hereby
unconditionally promises to pay to the order of NBD BANK, N.A., a national bank-
ing association (the "Bank"), at the principal banking office of the Bank in
lawful money of the United States of America and in immediately available funds,
the principal sum of Seven Million Five Hundred Thousand Dollars ($7,500,000),
or such lesser amount as is noted on the schedule attached hereto, on the Expiry
Date for Line of Credit; and to pay interest on the unpaid principal balance
hereof from time to time outstanding, in like money and funds, for the period
from the date hereof until the Loans evidenced hereby shall be paid in full, at
the rates per annum and on the dates provided in the Credit Agreement referred
to below.
The Bank is hereby authorized by the Company to note on the schedule
attached to this Note the date and amount of each Loan, the amount of each
payment or prepayment of principal thereon and other information provided for on
such schedule, which schedule shall constitute prima facie evidence of the
information so noted, PROVIDED that any failure by the Bank to make any such
notation shall not relieve the Company of its obligation to repay the outstand-
ing principal amount of this Note, all accrued interest hereon and any amount
payable with respect hereto in accordance with the terms of this Note and the
Credit Agreement.
The Company and each endorser or guarantor hereof waives presentment,
protest, diligence, notice of dishonor and, with respect to any principal and
interest due hereon and outstanding on the Expiry Date for Line of Credit,
demand, and any other formality in connection with this Note. Should the
indebtedness evidenced by this Note or any part thereof be collected in any
proceeding or be placed in the hands of attorneys for collection, the Company
agrees to pay, in addition to the principal and interest due and payable hereon,
all costs of collecting this Note, including attorneys' fees and expenses.
This Note evidences one or more Loans made under a Credit and Guaranty
Agreement, dated as of August 1, 1989, by and among the Company, Checker Motors
Corporation, a New Jersey corporation, Checker Motors Co., L.P., a Delaware
limited partnership, and the Bank, as amended or modified through the date
hereof and as further amended or modified from time to time (the "Credit
Agreement"), to which reference is hereby made for a statement of the
circumstances under which this Note is subject to prepayment and under which its
<PAGE>
due date applicable in the absence of demand may be accelerated and for a
description of the collateral and security securing payment hereof. Capitalized
terms used but not defined in this Note shall have the respective meanings
assigned to them in the Credit Agreement. This Note is issued in exchange and
replacement for a Demand Note dated January 2, 1991 in the face amount of
$5,000,000 (the "Previous Note"), and evidences the same indebtedness and other
liabilities evidenced by the Previous Note and shall not be deemed a novation or
to have satisfied the Previous Note, and shall be secured in the same priority
by, among other collateral, the collateral securing the Previous Note.
SOUTH CHARLESTON STAMPING & MANUFACTURING COMPANY
By:
---------------------------------------------
Its:
---------------------------------------
-2-
<PAGE>
Schedule to Line of Credit Note, dated
November 1, 1993, made by South Charleston Stamping & Manufacturing Company
in favor of NBD Bank, N.A.
Principal Principal Principal
Date Loan Amount of Interest Amount Paid Balance Notation
Made Loan Rate or Pre-paid Outstanding Made by
- --------- --------- -------- ----------- ----------- --------
<PAGE>
TENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Tenth Amendment to Loan and Security Agreement, dated
as of November 29, 1993 ("Tenth Amendment"), amends in certain
respects the terms of a certain Loan and Security Agreement,
dated as of March 21, 1990, by and between and among Great Dane
Trailers, Inc., a Georgia corporation, Great Dane Trailers
Nebraska, Inc., a Nebraska corporation and Great Dane Trailers
Tennessee, Inc., a Tennessee corporation (each of the foregoing
individually, a "Borrower" and collectively, "Borrower") the
Lenders from time to time parties thereto, and Security Pacific
Business Credit Inc., a Delaware corporation, as agent ("Agent"),
(the Loan and Security Agreement, as amended, modified, and
supplemented prior to the date hereof being hereinafter referred
to as "Loan Agreement").
WITNESSETH
WHEREAS, Great Dane Trailers Indiana, Inc., an Indiana
corporation was merged into Great Dane Trailers, Inc. on April 3,
1990;
WHEREAS, Great Dane Trailers, Inc. has acquired and now owns
all of the issued and outstanding voting stock of Great Dane Los
Angeles, Inc. ("GDTLA") and desires that GDTLA become a co-
borrower under the Loan Agreement;
WHEREAS, Borrowers have requested that the Lenders agree to
amend the provisions of the Loan Agreement to provide for an
increase in the Term Loan Commitment and to permit a portion of
the Revolving Credit Commitment to be used for banker's
acceptances, and to amend the Loan Agreement in certain respects;
WHEREAS, the Lenders are willing to make such amendments on
the condition that certain other amendments be made to the Loan
Agreement, and otherwise on the terms and conditions herein set
forth.
NOW, THEREFORE, in consideration of the mutual conditions
and agreements set forth in this Tenth Amendment, and for good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, each of Borrower, GDTLA, the Agent, and
the Lenders hereby agrees as follows.
SECTION 1. DEFINED TERMS. For purposes of this Tenth
Amendment, "AMENDMENT DOCUMENTS" means all documents executed by
the parties to this Tenth Amendment in connection with the
execution of this Tenth Amendment, including all agreements,
certificates, instruments, amendments, and other related
documents.
-1-
<PAGE>
Terms capitalized herein and not otherwise defined herein shall
have the respective meanings ascribed to them in the Loan
Agreement.
SECTION 2. AMENDMENT OF SECTION 1.1
2.1 Section 1.1 of the Loan Agreement is amended by adding
the following definitions:
"'BORROWERS' means, collectively, Great Dane Trailers,
Inc., a Georgia corporation; Great Dane Trailers
Nebraska, Inc., a Nebraska corporation; Great Dane
Trailers Tennessee, Inc., a Tennessee corporation; and
Great Dane Los Angeles, Inc., a Georgia corporation,
and `BORROWER' means each of the foregoing,
individually.
'CAPITAL EXPENDITURE LOAN COMMITMENT' means, with
respect to each Lender, the amount set forth beside
such Lender's name under the heading Capital
Expenditure Loan Commitment on the signature pages of
this Agreement or, after an assignment pursuant to
SECTION 14.3, shown for such Lender in the Register,
and 'Capital Expenditure Loan Commitments' shall,
collectively, mean the aggregate amount of the Capital
Expenditure Loan Commitments of all the Lenders, the
maximum amount of which shall not exceed $2,800,000.
'CAPITAL EXPENDITURE TERM NOTE' has the meaning
specified in Section 2.5.
'CAPITAL EXPENDITURE TERM LOAN' has the meaning
specified in Section 2.5.
'GDTLA' means Great Dane Los Angeles, Inc., a Georgia
corporation.
'QUALIFIED CAPITAL EXPENDITURE' means the lesser of (i)
the amount of the Lenders' advance under the Capital
Expenditure Loan Commitment and (ii) a Capital
Expenditure, less taxes, freight, and capitalized
interest attributable thereto and such other exclusions
as Lenders may reasonably consider not to comprise
Capital Expenditures, made for the purpose of acquiring
and installing two new presses to be used in the
manufacture of truck trailers, containers, and related
products, one press to be installed at GDTN's Premises
located in Wayne, Nebraska, and the second to be
installed at GDT's Premises located in Brazil,
Indiana."
2.2 The definition of Adjusted Net Earnings from Operations
set forth in Section 1.1 of the Loan Agreement is amended by
-2-
<PAGE>
deleting at the end of the definition the words "determined in
accordance with GAAP; and (h) LIFO reserve changes." and
inserting in lieu thereof the following "determined in accordance
with GAAP; (h) LIFO reserve changes; and (i) the $27,128,000
effect of the accounting change in 1993."
2.3 The definition of "L/C SUBFACILITY" set forth in
Section 1.1 of the Loan Agreement is amended by deleting such
definition and inserting in lieu thereof the following:
"`L/C SUBFACILITY' means that portion of the Aggregate
Maximum Revolver Amount available for the issuance of
Letters of Credit, other than banker's acceptances, in
an aggregate amount not to exceed $20,000,000, and for
the issuance of banker's acceptances in an aggregate
amount not to exceed $10,000,000."
2.4 The definition of "LETTER OF CREDIT" set forth in
Section 1.1 of the Loan Agreement is amended by deleting such
definition and inserting in lieu thereof the following:
"'LETTER OF CREDIT' means a standby letter of credit, a
merchandise letter of credit, and a banker's acceptance
issued in connection with a letter of credit issued or
caused to be issued for the account of a Borrower
pursuant to Article 3."
2.5 The definition of "BORROWER PLEDGE AGREEMENT" set forth
in Section 1.1 of the Loan Agreement is amended by deleting such
definition and inserting in lieu thereof the following:
"'BORROWER PLEDGE AGREEMENT' means the Pledge
Agreement dated as of the Closing Date, in form and
substance satisfactory to the Lenders, executed and
delivered by GDT, pursuant to which (i) all of the
issued and outstanding capital stock of GDTLA, GDTN,
and GDTT shall be pledged to the Agent for the benefit
of the Secured Creditors as additional security for the
Obligations, and (ii) certain promissory notes payable
to GDT shall be pledged to the Agent for the benefit of
the Secured Creditors as additional security for the
Obligations."
2.6 The definitions of "COMMITMENT" and "COMMITMENTS" set
forth in Section 1.1 of the Loan Agreement are amended by
deleting such definitions and inserting in lieu thereof the
following:
"`COMMITMENT' means, at any time with respect to a
Lender, such Lender's Term Loan Commitment, Revolving
Credit Commitment, and Capital Expenditure Loan
Commitment and `COMMITMENTS' means, collectively, the
-3-
<PAGE>
Term Loan Commitments, Capital Expenditure Loan
Commitments, and Revolving Credit Commitments of all of
the Lenders, the maximum amount of which shall not
exceed $90,400,000."
2.7 The definition of "LOAN" set forth in Section 1.1 of
the Loan Agreement is amended by deleting such definition and
inserting in lieu thereof the following:
"`LOAN' means a Term Loan, a Revolving Loan (including
an SP Revolving Loan), or the Capital Expenditure Term
Loan."
2.8 The definition of "MAXIMUM REVOLVER AMOUNT" set forth
in Section 1.1 of the Loan Agreement is amended by deleting part
(a)(ii)(C)(1) of such definition and inserting in lieu thereof
the following:
"(1) $30,000,000 or (w) if such Borrower is GDT,
$25,000,000, or (x) if such Borrower is GDTN,
$3,000,000, or (y) if such Borrower is GDTT,
$2,000,000, or (z) if such Borrower is GDTLA,
$2,000,000 or"
2.9 Section 2 of the Loan Agreement is amended by the
addition of a new paragraph number 2.5, which shall read in its
entirety as follows:
"2.5 CAPITAL EXPENDITURE TERM LOANS.
(a) AMOUNT OF CAPITAL EXPENDITURE TERM LOANS.
Upon the request of GDTN relating to the press to be
installed in Wayne, Nebraska, and of GDT relating to
the press to be installed in Brazil, Indiana, , each
Lender severally agrees to make available to GDT and
GDTN from time to time capital expenditure advances in
an amount equal to such Lender's Pro Rata Share of
$2,800,000 or such lesser amount requested (the
`CAPITAL EXPENDITURE TERM LOAN') for the purpose of
funding Qualified Capital Expenditures in accordance
with the procedures specified in this section. Funds
paid to the Lenders in repayment of a Capital
Expenditure Term Loan, when repaid or prepaid, whether
by voluntary or mandatory prepayment or otherwise, may
not be reborrowed. Each capital expenditures advance
shall only be against Qualified Capital Expenditures
and shall be in a minimum amount of $100,000. Each
capital expenditure advance shall not exceed, when
added to all amounts previously advanced under the
Capital Expenditure Term Loan, an amount equal to the
lesser of:
-4-
<PAGE>
(i) $2,800,000; or
(ii) an amount equal to the actual, out-of-
pocket cost of Qualified Capital Expenditures.
(b) NOTICE OF BORROWING. (i) When GDT and GDTN
desire to borrow under Section 2.5, GDT and GDTN, as
appropriate, shall deliver to Agent a Notice of
Borrowing signed by an authorized officer of GDT or
GDTN no later than 11:00 a.m. (New York time) at least
one (1) Business Day in advance of each capital
expenditure advance. The Notice of Borrowing shall (1)
be in writing and shall be submitted, together with a
schedule and copies of invoices for such purchases and
any other documents required by Agent to support the
request, (2) specify the requested funding date of the
capital expenditure advance, and (3) shall specify the
amount of the requested capital expenditure advance.
(ii) Any Notice of Borrowing made pursuant to
this Section 2.5(b) shall be irrevocable.
(c) MAKING OF CAPITAL EXPENDITURE ADVANCES.
Promptly after receipt of a Notice of Borrowing under
Section 2.5(b), the Agent shall notify each Lender by
telex, telecopy, telegram, telephone, or other similar
means of transmission, of the proposed Borrowing. Each
Lender shall make the amount of such Lender's capital
expenditure advance available to the Agent as the Agent
may designate, not later than 12:00 noon (New York
time) on the capital expenditure advance funding date.
After Agent's receipt of the proceeds of such loan,
upon satisfaction of the applicable conditions
precedent set forth in Article 11, the Agent shall make
the proceeds of such loan available to GDT or GDTN by
transferring same day funds equal to the proceeds of
all such loans received by the Agent to an account of
GDT and GDTN designated in writing by GDT or GDTN or as
they shall otherwise instruct in writing.
(d) CAPITAL EXPENDITURE TERM NOTES. GDT and GDTN
shall execute and deliver to the Agent for the benefit
of each Lender, prior to the first capital expenditure
advance, promissory notes (the `Capital Expenditure
Term Notes') substantially in the form attached hereto
as Exhibit 2.5, to evidence such Lender's Capital
Expenditure Term Loan, in an original principal amount
equal to such Lender's Pro Rata Share of the $2,800,000
and with other appropriate insertions. Advances under
the Capital Expenditure Term Loan (the `capital
expenditure advance(s)') will be separately noted on
and evidenced
-5-
<PAGE>
by, repayable in accordance with, and subject to the
terms, conditions, and limitations of, the Capital
Expenditure Term Notes. Each of the Capital
Expenditure Term Notes delivered to the Agent for the
benefit of each Lender shall be dated as of the date on
or prior to the first advance thereunder, and each
advance thereunder shall be payable in 36 equal monthly
installments of principal, with the first such
installment being due and payable on the first day of
the first month immediately following the month in
which the advance is made, and all other payments
thereof shall be due and payable on the first day of
each month thereafter; provided, however, the entire
unpaid balance of the Capital Expenditure Term Loan, if
not sooner due and payable by reason of the provisions
of this Agreement, shall be due and payable in full on
March 21, 1995. Each such installment shall be payable
to the Agent for the account of such Lender.
(e) NOTATION AND ENDORSEMENT. The Agent
shall record in the Register the principal amount of
the Capital Expenditure Term Loan owing to each Lender
from time to time. In addition, each Lender is
authorized, to note the date and amount of each such
payment or prepayment of principal of such Lender's
Capital Expenditure Term Loan in its books and records,
such books and records constituting rebuttably
presumptive evidence of the accuracy of the information
contained therein. Prior to the transfer to a Capital
Expenditure Term Note, the Lender shall indorse on the
note the outstanding principal balance of the Capital
Expenditure Term Loan evidenced thereby. Failure of
such Lender to make such notation or endorsement shall
not affect the obligations of the Borrower under such
Capital Expenditure Term Note or any of the other Loan
Documents."
2.10 The Loan Agreement is amended by the attachment of an
Exhibit 2.5 which shall read in accordance with such exhibit
attached hereto and incorporated herein.
2.11 Subsection 3.2(b) of the Loan Agreement is amended by
deleting such subsection and inserting in lieu thereof the
following:
"(b) (i) which has a term of longer than one
(1) calendar year or an expiration date after the
Business Day prior to the Termination Date, or (ii)
with respect to banker's acceptance which has a payment
date of more than 180 days from the date of its
issuance or which has a payment date which is after the
Business Day prior to the Termination Date, or (iii)
with respect to
-6-
<PAGE>
a merchandise letter of credit which has a tenor of not
more than 180 days from the date of its issuance."
2.12 Subsection 4.1 (a) of the Loan Agreement is amended by
deleting such subsection and inserting in lieu thereof the
following:
"4.1 INTEREST. (a) The Borrowers agree, jointly
and severally, to pay the Lenders interest on the
unpaid principal balance of the Revolving Loans, the
Term Loans, and the Capital Expenditure Term Loans at a
fluctuating per annum rate equal to one and one-half
percent (1.5%) PLUS the Reference Rate. Each change in
the Reference Rate shall be reflected in the foregoing
interest rate as of the effective date of such change.
Interest charges shall be computed on the basis of a
year of 360 days and actual days elapsed and will be
payable to the Lenders, in the case of Revolving Loans,
monthly in arrears on the first day of each month
hereafter, in the case of Term Loans, monthly in
arrears on the first day of each month after the Term
Funding, in the case of Capital Expenditures Term
Loans, monthly in arrears on the first day of each
month after the initial funding of the Capital
Expenditures Term Loan, and, in each case, as otherwise
provided herein."
2.13 AMENDMENT OF SECTION 4.4. The Letter of Credit Fees
imposed under Section 4.4 of the Loan Agreement shall apply to
all Letters of Credit, other than banker's acceptances.
2.14 AMENDMENT OF ARTICLE 4. Article 4 of the Loan
Agreement is amended by the addition of a new section, Section
4.4A, which shall read in its entirety as follows:
"4.4A ACCEPTANCE FEES. In connection with the
establishment of the subfacility for banker's
acceptances, the Borrowers jointly and severally agree
to pay to the Agent monthly, for the ratable benefit of
the Lenders, for each banker's acceptance, a fee
("Acceptance Fee"), equal to (a) two and one-half
percent (2.50 %) per annum of the undrawn face amount
of each banker's acceptance created pursuant to this
Agreement and all associated charges incurred by
Lenders in connection therewith. All Acceptance Fees
which have accrued in each month shall be charged to
the Loan at the end of each month. The Acceptance Fee
shall be computed on the basis of a 360-day year for
the actual number of days elapsed."
-7-
<PAGE>
2.15 AMENDMENT OF SECTION 4.7. Section 4.7 of the Loan
Agreement is amended by deleting such section and inserting in
lieu thereof the following:
"4.7 FEES NOT INTEREST; FULLY EARNED. All fees
are for compensation for services and are not, and
shall not be deemed to be, interest or a charge for the
use of money. The fees provided for in Sections 4.3,
4.4, 4.4A, and 4.5 shall be fully earned when due and
payable, and no such fee shall be refundable or
rebatable by reason of any prepayment, acceleration
upon an Event of Default or any other circumstance."
2.16 AMENDMENT OF SECTION 8.2(D). Section 8.2(d) is amended
by inserting the words "or his designee" following the words
'chief financial officer."
2.17 AMENDMENT OF ARTICLE 10. Article 10 of the Loan
Agreement is amended by the addition of a new Section, number
10.7A, which shall read in its entirety as follows:
"10.7A. ENVIRONMENTAL QUESTIONNAIRE AND TESTING.
By no later than December 31, 1993, the Borrowers shall
deliver to the Agent a completed environmental
questionnaire and disclosure statement (which shall be
on a form provided by the Agent) for each of the
Premises."
2.18 AMENDMENT OF SUBSECTION 10.15A(G)(I)(C). Part
10.15A(g)(i)(C) of the Loan Agreement is amended by deleting such
part and inserting in lieu thereof the following:
"(C) the aggregate amount of (1) all Intercompany
Loans made during Fiscal Year 1993, is less than or
equal to the following amounts on or after the
following dates:
<TABLE>
<CAPTION>
Aggregate Amount of Intercompany
Loans in Fiscal Year 1993 Dates in 1993
------------------------- -------------
<S> <C>
$ 1,000,000 January 1
$ 2,000,000 February 1
$ 4,000,000 March 1
$ 5,000,000 May 1
$ 6,000,000 June 1
$ 7,000,000 July 1
$ 8,000,000 August 1
$ 9,000,000 September 1
$10,000,000 October 1
$11,000,000 November 1
$16,000,000 December 1"
</TABLE>
-8-
<PAGE>
2.19 The negative number (500) as shown as the "Required
Minimum Cumulative Amount" for December, 1993, and Year 1993, in
Exhibit B to the Eighth Amendment to Loan and Security Agreement,
is amended by deleting such number and inserting in lieu thereof
the number zero.
2.20 AMENDMENT OF SECTION 10.12. Section 10.12(d) is
amended by deleting such subsection and inserting in lieu thereof
the following:
"(d) Guaranties by GDT of the trade accounts
payable of its Subsidiaries and its dealers; PROVIDED,
HOWEVER, that the aggregate liability of GDT under all
such guaranties permitted by this clause (d) shall not
exceed $500,000 at any one time outstanding."
2.21 AMENDMENT OF SECTION 10.22. Qualified Capital
Expenditures shall not be considered Capital Expenditures for
purposes of Section 10.22 of the Loan Agreement, and shall be
excluded from the "purchase of fixed assets" amount listed on the
statement of cash flows included as part of Exhibit B attached to
the Eighth Amendment to Loan and Security Agreement dated March
21, 1990, which is utilized to compute the amount of Intercompany
Loans; provided, however, payments of principal and interest in
connection with such Qualified Capital Expenditures shall be
included.
2.22 AMENDMENT OF SECTION 10.26. Section 10.26 of the Loan
Agreement is amended by deleting such section and inserting in
lieu thereof the following:
"10.26 CURRENT RATIO. The Borrowers will not permit
the ratio of (a) Current Assets less cash to (b)
Current Liabilities less (i) current maturities of
long-term Debt and (ii) federal income taxes payable,
to be less than (a) 1.50 to 1.00 at the end of any
fiscal quarter, ending with the fiscal quarter ending
on June 30, 1993, and (b) 1.40 to 1.00 at the end of
any fiscal quarter thereafter."
2.23 AMENDMENT OF SECTION 10.27. Section 10.27 of the Loan
Agreement is amended by deleting the amounts "97,000,000,"
"98,000,000," "99,000,000," "100,000,000," and "101,000,000" and
inserting in lieu thereof the amounts "69,872,000," "70,872,000,"
"71,872,000," "72,872,000," and "73,872,000," respectively.
2.24 AMENDMENT OF SIGNATURE PAGES. The signature page of
the Loan Agreement is amended by inserting next to each Lender
the following:
-9-
<PAGE>
<TABLE>
<CAPTION>
Capital Expenditure
Lender Loan Commitment
------ ---------------
<S> <C>
Security Pacific
Business Credit Inc. $1,363,600
Sanwa Business
Credit Corporation $ 420,000
NationsBank of
Georgia, N. A. $1,016,400
</TABLE>
SECTION 3.
3.1 CONDITIONS TO EFFECTIVENESS. This Tenth Amendment
shall be effective as of the date first written above upon
satisfaction of the following conditions precedent in a manner
satisfactory to the Agent:
(a) In connection with the increase in the Commitments
and the creation of a banker's acceptance subfacility and to
compensate the Lenders for costs and expenses (other than
expenses for which the Borrowers will otherwise reimburse the
Agent or the Lenders), the Agent shall have received a fee of
$75,000 for the benefit of the Lenders;
(b) The Agent shall have received counterparts of this
Tenth Amendment executed by the Borrowers and the Lenders;
(c) The Agent shall have received First Amendment to
Pledge Agreement executed by GDT;
(d) The Agent shall have received a borrowing
resolution from GDTLA in form and content satisfactory to the
Agent;
(e) The Agent shall have received a certificate dated
as of the date hereof and signed by the president or a vice
president and the treasurer or comptroller of each of the
Borrowers certifying that the representations and warranties
contained in the Loan Agreement are true and correct as of the
date hereof and that no Default or Event of Default has occurred
and is continuing as of the date hereof, or would result from
giving effect to this Tenth Amendment;
(f) The Agent shall have received an opinion of
Hunter, Maclean, Exley & Dunn, P.C., counsel to the Borrowers
(including GDTLA) in form and substance satisfactory to counsel
for the Agent;
-10-
<PAGE>
(g) All proceedings taken in connection with the
execution of this Tenth Amendment and all documents and papers
related thereto shall be satisfactory to the Lenders; and
(h) The Agent shall have received UCC-1 financing
statements, in proper form, for filing with the California
Secretary of State and with the Clerk of Chatham County, Georgia,
executed by GDTLA as the debtor, and referencing the Agent, on
behalf of the Lenders, as the secured party.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Borrowers
(as herein defined) hereby each represent and warrant to the
Lenders and the Agent that (i) the execution, delivery, and
performance of this Tenth Amendment by each of the Borrowers are
within their respective corporate powers, and have been duly
authorized by all necessary corporate action, (ii) no consent,
approval, authori-zation of, or declaration or filing with, any
Public Authority, and no consent of any other Person, is required
in connection with the execution, delivery and performance of
this Tenth Amendment and the Amendment Documents, (iii) this
Tenth Amendment and the Amendment Documents have been duly
executed by each of the Borrowers and constitute the legal,
valid, and binding obligation of such of the Borrower,
enforceable against them in accordance with their terms, (v) the
execution, delivery, and performance by each of the Borrowers of
this Tenth Amendment and the Amendment Documents does not and
will not conflict with, or constitute a violation or breach of,
constitute a default under, or result in the creation or
imposition of any Lien upon the property of any Borrower or any
of its Subsidiaries by reason of the terms of (a) any contract,
mortgage, Lien, lease, agreement, indenture, or instrument to
which such Borrower or such Subsidiary is a party or which is
binding upon it, (b) any Requirement of Law applicable to such
Borrower or such Subsidiary, or (c) the Certificate of Articles
of Incorporation or By-Laws of such Borrower or such Subsidiary.
GDTLA hereby accepts, adopts, and agrees to be bound by all of
the terms and conditions of the Loan Agreement. All Obligations
of GDTLA, GDT, GDTN, and GDTT under the Loan Agreement are joint
and several.
Borrower agrees to pay on demand all costs and expenses
reasonably incurred by Agent in connection with the preparation,
negotiation, and execution of this Tenth Amendment and the other
documents executed pursuant thereto and any and all subsequent
amendments, modifications, and supplements hereto or thereto,
including, without limitation, the costs and fees of Agent's
legal counsel and the allocated cost of staff counsel.
SECTION 6. REFERENCE TO AND EFFECT ON LOAN DOCUMENTS.
6.1 On and after the date hereof, each reference in the
Loan Agreement to "this Agreement", "hereunder", "hereof",
"herein", or
-11-
<PAGE>
words of like import, and each reference in the other Loan
Documents to the Loan Agreement, shall mean and be a reference to
the Loan Agreement as amended hereby.
6.2 Except as expressly amended above, all of the terms of
the Loan Agreement shall remain unchanged and in full force and
effect.
6.3 The execution, delivery, and effectiveness of this
Tenth Amendment shall not operate as a waiver of any right,
power, or remedy of any Lender or the Agent under the Loan
Agreement or any of the other Loan Documents, nor constitute a
waiver of any provision of the Loan Agreement or any of the other
Loan Documents.
SECTION 7. EXECUTION IN COUNTERPARTS. This Tenth Amendment
may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed and delivered shall constitute one and the same
instrument.
SECTION 8. GOVERNING LAW. This Tenth Amendment shall be
governed by, shall be construed under, and enforced in accordance
with the laws of the state of New York.
-12-
<PAGE>
SECTION 9. HEADINGS. Section headings in this Tenth
Amendment are included for convenience of reference only and
shall not constitute a part of this Tenth Amendment or be given
any substantive effect.
IN WITNESS WHEREOF, the parties have executed this Tenth
Amendment as of the date first written above.
"BORROWERS"
Great Dane Trailers, Inc., Great Dane Trailer Nebraska,
a Georgia corporation Inc., a Nebraska corporation
by /s/ Thomas W. Horan by /s/ Thomas W. Horan
------------------------------ -----------------------
Thomas W. Horan, Thomas W. Horan,
Chief Financial Officer Chief Financial Officer
Great Dane Trailers Great Dane Los Angeles,, Inc.,
Tennessee, Inc., a Tennessee a Georgia corporation
corporation
by /s/ Thomas W. Horan by /s/ Thomas W. Horan
------------------------------ -----------------------
Thomas W. Horan, Thomas W. Horan,
Chief Financial Officer Chief Financial Officer
"LENDERS"
Security Pacific Business Credit NationsBank of Georgia, N.A.
Inc., a Delaware corporation
by /s/ Ira Mermelstein by /s/ Robert B. H. Moore
------------------------------ -----------------------
Ira Mermelstein, Robert B. H. Moore,
Vice President Senior Vice President
Sanwa Business Credit Corporation
by /s/ John J. McKenna
------------------------------
John J. McKenna, Vice President
"AGENT"
Security Pacific Business Credit
Inc., a Delaware corporation
by /s/ Ira Mermelstein
------------------------------
Ira Mermelstein, Vice President
-13-
<PAGE>
EXHIBIT 2.5 TO TENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
CAPITAL EXPENDITURE TERM NOTE
$_____________________ ______________, 19___
FOR VALUE RECEIVED, Great Dane Trailers, Inc., a Georgia
corporation; and Great Dane Trailers Nebraska, Inc., a Nebraska
corporation (individually and collectively "the Borrower"),
HEREBY JOINTLY AND SEVERALLY UNCONDITIONALLY PROMISE TO PAY to
the order of ___________________, a ____________ corporation
("the Lender"), the principal sum of _________________
($________________), or so much as may be advanced and
outstanding hereunder, together with interest on the unpaid
principal balance hereof at the rate provided below from the date
such principal is advanced until payment in full thereof.
Unless otherwise required to be paid sooner pursuant to the
provisions of Section or 13.1 of the Loan Agreement, the
principal amount of each capital expenditure advance evidenced by
this Note shall be payable in consecutive monthly installments
each in an amount equal to one thirty-sixth (1/36th) of each
advance, commencing on the first day of the first calendar month
following the date of such advance and continuing on the first
day of each successive calendar month thereafter, provided,
however, the entire, unpaid balance of the Capital Expenditure
Term Loan, if not sooner paid, shall be due and payable in full
on March 21, 1995. Accrued interest on the aggregate unpaid
balance of all capital expenditure advances hereunder shall be
due and payable monthly on the first day of each calendar month
commencing on the first day of the month following the date of
the first capital expenditure advance, and continuing on the
first day of each month thereafter, and at maturity. All past
due interest shall bear interest from the date due and payable at
the rate of interest herein specified.
This Capital Expenditure Term Note ("Note") is issued
pursuant to, and is entitled to the benefits of a certain Loan
and Security Agreement (the Loan and Security Agreement, as
amended, modified, and supplemented prior to the date hereof
being hereinafter referred to as "Loan Agreement"), dated as of
March 21, 1990, by and between the Borrower, Great Dane Trailers
Los Angeles, Inc., Great Dane Trailers Tennessee, Inc., the
financial institutions named therein as lenders (collectively
"the Lenders"), and Security Pacific Business Credit Inc., as
agent for the Lenders (in such capacity, the "Agent").
The unpaid principal amount hereof from time to time
outstanding shall bear interest from the date hereof (calculated
on the basis of a year of 360 days and the actual days elapsed)
at a fluctuating per annum rate ("Annual Rate") equal to the
Reference
-1-
<PAGE>
Rate, PLUS one and one-half percent (1.5%); PROVIDED, HOWEVER,
that if any Default or Event of Default occurs, Lenders may elect
to charge interest under this Note at the Default Rate. Any
change in the Annual Rate shall become effective immediately,
without notice or demand of any kind, upon the announcement of
any change in the Reference Rate.
All payments of principal and interest in respect of this
Note shall be made to the Agent at such account and place in New
York, New York, as the Agent may from time to time designate in
writing to Borrower or at such other location as the Agent may
from time to time designate in writing to Borrower, in lawful
currency of the United States in same day funds.
This Note may be repaid at the option of Borrower as
provided in Section 5.4 of the Loan Agreement and must be prepaid
as provided in Section 5.5 of the Loan Agreement.
If less than the full amount of principal and accrued
interest is prepaid, the amount paid shall be applied first to
any applicable prepayment premium and then in the following order
of priority: (a) first on all accrued, unpaid interest herein,
and (b) second on principal installments hereunder, including the
final payment, in the inverse order of their maturity.
Upon the occurrence of any one or more of certain Events of
Default, the unpaid balance of the principal amount of this Note
may become, and upon the occurrence and continuance of any one or
more of certain other Events of Default, such unpaid balance may
be declared to be, due and payable in the manner, upon the
conditions, and with the effect provided in the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
No reference herein to the Loan Agreement and no provision
of this Note, the Loan Agreement or any of the other Loan
Documents shall alter or impair the obligation of Borrower, which
is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and
in the currency herein prescribed.
Borrower promises to pay all costs and expenses, including
reasonable attorneys' fees and disbursements, incurred in the
collection and enforcement of this Note or any appeal of a
judgment rendered thereon, all in accordance with the provisions
of the Loan Agreement. Borrower hereby waives diligence,
presentment, protest, demand, and notice of every kind except as
required pursuant to the
-2-
<PAGE>
Loan Agreement and waives, to the fullest extent permitted by
law, the right to plead any statute of limitations as a defense
to any demands hereunder.
IN WITNESS WHEREOF, Borrower has caused this Note to be
executed and delivered by its duly authorized officer, as of the
day and year and at the place first above written.
"BORROWER"
Great Dane Trailers, Inc., Great Dane Trailer Nebraska,
a Georgia corporation Inc., a Nebraska corporation
by by
------------------------------ -----------------------
Thomas W. Horan, Thomas W. Horan,
Chief Financial Officer Chief Financial Officer
-3-
<PAGE>
Draw Schedule Attached to Capital Expenditure Term Note, dated
____________, 19___, of Borrower Payable to the Order of Security
Pacific Business Credit Inc.
- -----------------------------------------------------------------
LOAN AND PRINCIPAL BALANCES
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Loan Balance Undisbursed
Available Amount of Principal Notation
Date for Advance Advances Made Balance Made by
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
</TABLE>
-1-
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of January 1, 1994
between INTERNATIONAL CONTROLS CORP., a New Jersey corporation, having its
principal place of business at 2016 North Pitcher Street, Kalamazoo, Michigan
49007 ("ICC") and DAVID R. MARKIN, residing at 70 Blossom Way, Palm Beach,
Florida 33480 ("Markin").
W I T N E S S E T H:
WHEREAS, Markin is now and has been employed by ICC as President and
Chief Executive Officer since January 11, 1989; and
WHEREAS, ICC wishes to continue to employ Markin as President and
Chief Executive Officer of ICC and Markin is willing to continue his employment
by ICC in such capacities;
WHEREAS, it is desirable to set forth in writing all of the terms and
conditions of said Employment Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. ICC agrees to employ Markin, and Markin agrees to be employed by
ICC, as President and Chief Executive Officer by ICC, for a term which commenced
on January 11, 1989 and expires on March 31, 1996 (the "Termination Date"). On
April 1, 1994 and on the first day of each month thereafter, the Termination
Date
<PAGE>
shall be automatically extended for an additional month until either party gives
the other notice of its or his desire to terminate the Employment Agreement as
of the Termination Date then in effect.
2. Markin shall serve ICC as President and Chief Executive Officer,
and Markin shall have the right to perform the duties of his employment
hereunder and to have his office and headquarters in Michigan or Florida, at his
option, all subject to the reasonable direction of the Board of Directors of
ICC.
3. During the term of this Agreement, Markin shall receive as cash
compensation (exclusive of any profit sharing or pension or other fringe benefit
to which he now may be entitled or which he may receive) the amount of $600,000
per annum. Markin shall be eligible to receive any future profit sharing or
pension or other bonus compensation approved by the Board of Directors of ICC
and implemented by ICC. When deemed appropriate by the Board of Directors of
ICC, the Board shall review Markin's rate of compensation and fringe benefits
taking into account, without limiting the generality of the review, any
increases in the cost of living, compensation paid by competing companies
comparable to ICC to executives of similar rank and the results of operations of
ICC during the preceding years.
4. Markin's employment under this Agreement shall terminate upon his
death or disability and may be terminated for
2
<PAGE>
cause, in any one of which events Markin shall have no further rights and ICC
shall have no further obligations under this Agreement, except as set forth in
Paragraphs 5 and 14 herein. For purposes of this Paragraph 4, the term "cause"
shall mean gross misconduct or dishonesty and the term "disability" shall mean a
physical or mental condition which, in the reasonable opinion of the Board of
Directors of ICC, shall have prevented Markin from performing his customary
duties at his customary standard for a period of at least six consecutive months
and which can reasonably be expected to continue indefinitely.
5. The death of Markin shall forthwith terminate this Agreement. In
such event, ICC shall pay the Estate of Markin the compensation which would
otherwise be payable to Markin for the period ending on the last day of the
month in which death occurs. In addition, ICC shall pay deferred compensation
from the date of Markin's death through the Termination Date in an annual amount
equal to one-third of Markin's base salary at the date of his death. Such
deferred compensation shall be payable in bi-monthly installments on the 15th
and last day of each month and in accordance with the terms of the Last Will and
Testament of David R. Markin, or if no such Last Will and Testament exists upon
the death of Markin, to the Estate of Markin.
6. Markin shall be entitled to a paid vacation of six weeks per year
and to accountable allowances, charges and reimbursements like those now
prevailing at ICC to cover
3
<PAGE>
entertainment, travel and other expenses incurred in connection with the
business of ICC.
7. Markin shall devote his best efforts and substantially all his
business time to his employment hereunder. During the term of his employment
pursuant to this Agreement, Markin shall not become an officer, director or
employee or act in an advisory or other capacity for any individual, firm, or
corporation or other person not affiliated with ICC which is engaged in any
business which is being conducted in the same geographic area and which is the
same or substantially similar to the business then being conducted by ICC or any
of its divisions, subsidiaries or affiliated companies, or have any interest as
owner, partner, stockholder or other proprietary interest in such business, but
this provision shall not prohibit Markin from purchasing in the public market
not more then 5% of the outstanding stock or other class of securities of any
such corporation if such stock or other securities are listed on a national
securities exchange or are regularly quoted in the over-the-counter market.
8. Neither this Agreement nor the rights of Markin hereunder shall
be assignable or otherwise transferable by Markin except as expressly provided
herein, without the prior written consent of ICC, and any purported assignment
or other transfer by Markin of this Agreement or such rights, whether
voluntarily or involuntarily, except as expressly provided herein, shall not
4
<PAGE>
vest in the purported assignee or transferee any interest or right herein
whatsoever and any such purported assignment shall be void.
9. Neither this Agreement nor any provision hereof can be changed,
modified, amended, discharged, terminated or waived orally or by any course or
purported course of dealing, but only by an agreement signed by ICC and Markin.
No such agreement in writing shall extend to or affect any provision of this
Agreement not expressly changed, modified, amended, discharged, terminated or
waived or impair any right consequent on such a provision. The waiver or
failure to enforce any provision of this Agreement shall not be deemed to be a
waiver or acquiescence in any other breach thereof.
10. Every notice relating to or required by this Agreement shall be
in writing and shall be given in person or by registered mail return receipt
requested. All notices to ICC and Marking shall be addressed to their
respective addresses shown in this Agreement. Either party may designate a
different address to which notices shall be addressed by giving the other party
due notice hereunder of such different address. Any notice given by ICC to
Markin at his last designated address shall be effective to bind any other
person who may acquire rights hereunder.
5
<PAGE>
11. This Agreement shall be governed by and construed in accordance
with the laws of the State of Florida without giving effect to conflict of laws.
12. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in Florida
before three arbitrators in accordance with the Rules of the American
Arbitration Association, and judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereto.
13. The covenants, agreements, representation and warranties
contained in or made pursuant to this Agreement shall survive Markin's
termination of employment.
14. In the event that this Agreement is terminated by either ICC or
Markin for any reason (including without limitation, retirement by Markin) other
than "cause" or "disability", as defined in Paragraph 4 hereinabove, or death,
then Markin shall continue to service as a consultant to ICC for a period of
five years from the date of such termination and ICC shall pay to Markin $50,000
per annum for such services as may be reasonably requested plus actual traveling
and other expenses incurred by him in performing such services. In performing
such services, Marking may be required to devote the equivalent of up to one day
per week to the business of ICC and shall not be
6
<PAGE>
required to render such services except at the offices of ICC in Michigan or
Florida. Markin may terminate this arrangement at any time upon 60 days notice
to ICC.
To the extent permitted by law, ICC shall indemnify and hold Markin
harmless from and against all expenses (including attorneys' fees), liabilities,
damages and amounts paid in settlement incurred by him in any threatened,
pending or completed action, suit or proceeding to which he becomes a party by
reason of any status, service, action or failure to act on his part in his
capacity as consultant hereunder or otherwise on behalf of ICC, except if such
expense, liability, damage or amount results directly from Markin's gross
negligence or willful misconduct.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
INTERNATIONAL CONTROLS CORP.
By /s/ Allan Tessler
--------------------------
Name: Allan Tessler
Title: Chairman of the Board
/s/ David R. Markin
---------------------------
David R. Markin
7
<PAGE>
EXHIBIT 10.37
GREAT DANE TRAILERS, INC.
Lathrop Avenue
P.O. Box 67
Savannah, Georgia 31402-0067
(912) 232-4471
November 4, 1991
Mr. Willard R. Hildebrand
5606 R.F.D.
Long Grove, Illinois 60047
RE: Employment Agreement
Great Dane Trailers, Inc.
Dear Mr. Hildebrand:
Great Dane Trailers, Inc., of Savannah, Georgia, offers you the position of
President and Chief Executive Officer of Great Dane Trailers, subject to the
terms and conditions previously discussed and summarized below:
POSITION: The position offered is President and Chief Executive Officer
reporting to the Executive Vice President and Chief Operating Officer of
International Controls Corp., the parent company. The position is fully
accountable for the operations of Great Dane and its subsidiaries.
SALARY: The starting base salary is $190,000 per year or $15,833.33 per month
payable in increments that are consistent with Great Dane's pay policy. Salary
reviews are to be conducted annually on January 1 of each year. Adjustments are
based on performance and in recognition of Company results and general economic
conditions.
INCENTIVE COMPENSATION: This position participates in an incentive compensation
program with a target award of 50% of the base salary or as adjusted to the
current Great Dane bonus plan.
AUTOMOBILE: An appropriate company automobile will be furnished in accordance
with Company policy including all operating, maintenance and insurance expense.
CLUB: Company policy includes the payment of $5,000 toward the initiation fee
and all club dues. While this policy seems reasonable, it is agreed that once
initiation fees in the area are reviewed, there may be justification for further
consideration.
ANNUAL PHYSICAL: An annual executive physical is provided.
<PAGE>
Mr. Willard R. Hildebrand
November 4, 1991
Page 2
VACATION: A vacation period of two weeks for the first year accelerated to the
maximum allowable by Company policy thereafter is provided.
FRINGE BENEFITS: All standard Company fringe benefits are applicable. This
will include the understanding that the effective date of insurance coverage
will be on the starting date or some other arrangement to assure that there will
be no period without coverage during the transition period between two company
plans.
RELOCATION: It is expected that efforts will be maximized to effect a rapid
sale of the Long Grove, Illinois, residence to assure that relocation is
completed in the shortest possible time and in the best interest of the Company.
Relocation financial assistance will include the following:
a) Temporary lodging and meals for you for a period not to exceed six
months from your start date.
b) Commutation costs to Long Grove approximately every two weeks until
your relocation is completed.
c) Two trips to Savannah for your spouse for house-hunting purposes.
d) Temporary living expenses for your spouse and/or family while
household goods are being relocated.
e) Real estate commissions, closing costs, etc., associated with the sale
of your residence in Long Grove.
f) A special housing allowance equal to one month's base salary upon
completion of your move to the Savannah area.
g) All relocation costs will be grossed-up for income tax purposes.
SEVERANCE:
a) In the event that the Company chooses to terminate you at anytime
during the first twelve months of your employment, you will be
entitled to severance pay equal to six months salary.
b) In the event that a sale of the Company (of at least 51% or a change
in control of the Company occurs during the first thirty-six months of
your employment, if, within 90 days after such occurrence, either
party to this agreement
<PAGE>
Mr. Willard R. Hildebrand
November 4, 1991
Page 3
chooses to terminate this arrangement, you will be compensated for
three years salary minus the amount of salary that you have received
to that date, but in no event less than six-months pay.
It is understood that your start date will be November 4, 1991. This agreement
supersedes the agreement dated October 14, 1991 between International Controls
Corp. and Willard R. Hildebrand.
The signatures shown below attest to the agreement and acceptance of the parties
concerned.
Very truly yours,
/s/ Thomas W. Horan
----------------------
Thomas W. Horan
Senior Vice President,
Finance
Agreed to this 4th day of November, 1991
/s/ Willard R. Hidebrand
------------------------
Willard R. Hildebrand
<PAGE>
SETTLEMENT AGREEMENT
--------------------
THIS SETTLEMENT AGREEMENT (this "Agreement") is entered into as of
June 21, 1994 among JOHN GARAMENDI, as Insurance Commissioner of the State of
California, solely in his capacity as conservator, rehabilitator and liquidator
(the "Rehabilitator") of Executive Life Insurance Company ("ELIC"), and the BASE
ASSETS TRUST (the "Trust"), on the one hand, and CHECKER MOTORS CO., L.P., a
Delaware limited partnership (the "Partnership"), CHECKER MOTORS CORPORATION, a
New Jersey corporation and the general partner of the Partnership ("Motors"),
CHECKER HOLDING CORP. III, a Delaware corporation ("Holding"), and INTERNATIONAL
CONTROLS CORP., a Florida corporation ("ICC"; the Partnership, Motors, Holding
and ICC being hereinafter referred to as the "Checker Entities", jointly, and
"Checker Entity", separately), on the other hand.
RECITALS
--------
WHEREAS, by order of the Superior Court for the County of Los Angeles
County (the "Court") on April 11, 1991, the Rehabilitator was appointed
conservator of ELIC; and
WHEREAS, the Checker Entities and ELIC are parties to an Amended and
Restated Partnership Agreement dated the 5th day of March, 1986, as amended on
July 28, 1989 and purportedly on June 25, 1991 (the "Partnership Agreement");
and
<PAGE>
WHEREAS, the Checker Entities have filed a claim with the Insurance
Commissioner in Michigan, as ancillary receiver of ELIC (the "Ancillary
Receiver"); and
WHEREAS, the Rehabilitator has filed a lawsuit against the Checker
Entities in the Court, in Case No. BS 006912 in which, among other things, the
Rehabilitator has challenged the enforceability of the purported June 25, 1991
amendment to the Partnership Agreement and the claim filed with the purported
Ancillary Receiver (the "Lawsuit"); and
WHEREAS, certain disputes have arisen as to the relative rights of
certain of the Checker Entities, on the one hand, and the Rehabilitator, ELIC
and the Trust, on the other hand, in the Partnership, certain of which disputes
are being litigated in the Court; and
WHEREAS, the Checker Entities, the Rehabilitator, ELIC and the Trust
desire to end the litigation and settle their disputes on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and of other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Checker Entities and the Rehabilitator and
the Trust hereby agree as follows:
-2-
<PAGE>
ARTICLE I
DEFINITIONS
-----------
1.1 DEFINITIONS. Capitalized terms used herein without definition
shall have the meanings ascribed thereto in the Partnership Agreement.
ARTICLE II
SALE OF INTERESTS
-----------------
2.1 INTERESTS TO BE SOLD. Subject to the terms and conditions of
this Agreement, at the closing of the transactions contemplated by this
Agreement (the "Closing"), the Rehabilitator and the Trust shall sell, assign,
transfer and deliver to Motors or another Checker Entity designated by Motors,
and Motors or such designee shall purchase from the Rehabilitator and the Trust,
the entire interest of the Rehabilitator, ELIC and the Trust in the Partnership
(including, without limitation, the Limited Partner's Capital Account, the
Excess Capital Account and their interest, if any, in the assets, the earnings
and the Profits of the Partnership, in each case past, present or future) (the
"Interest"), which shall be delivered by the Rehabilitator, ELIC and the Trust
free and clear of any liens, claims, charges or encumbrances of any nature
whatsoever, for a purchase price of $37,000,000 (the "Purchase Price").
2.2 CLOSING. The Closing will take place on the date (the "Closing
Date") immediately following, and, unless waived by the Checker Entities, is
expressly conditioned on, the
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closing of and receipt of the cash proceeds of (i) the sale by ICC of
$140,000,000 principal amount of its Senior Secured Notes due 2002 and of
125,000 Units, each Unit consisting of $1,000 of ICC's Senior Subordinated Notes
due 2004 and a warrant to purchase 4.25 shares of ICC's common stock (the
"Offerings") and (ii) the initial borrowing by ICC and its subsidiaries pursuant
to a loan agreement between ICC and NBD Bank, N.A., as Agent for certain lenders
(the "Borrowing"), providing for a term loan in the amount of $50,000,000 and a
revolving credit loan in the amount of $95,000,000. At the Closing:
(a) the Checker Entities shall deliver to the Trust the
Purchase Price by wire transfer of funds;
(b) the Rehabilitator and the Trust shall deliver to Motors an
Assignment of Partnership Interest (the "Assignment") in the form attached
hereto as Exhibit A;
(c) the Checker Entities and the Rehabilitator shall execute
the Stipulation of Dismissal (the "Stipulation") in the form attached hereto as
Exhibit B, which shall be filed promptly by the Rehabilitator;
(d) the Checker Entities shall execute and deliver to the
Rehabilitator the Withdrawal of Claim (the "Withdrawal of Claim") in the form
attached hereto as Exhibit C (which shall be filed by the Rehabilitator
immediately following the filing of the Stipulation) and, regardless of whether
such Withdrawal of Claim is filed, shall agree to take no further action to
pursue such claim; and
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(e) the Checker Entities, on the one hand, and the
Rehabilitator and the Trust, on the other hand, shall each execute and deliver
to the other a Release in the form attached hereto as Exhibit D or E, as
appropriate.
2.3 FURTHER COVENANTS AND ASSURANCES. (a) After the Closing, the
Rehabilitator, the Trust and the Checker Entities shall from time to time
execute and deliver such other instruments and documents and take such other
actions as each may reasonably request to evidence and consummate the
transactions contemplated by this Agreement.
(b) At any time after the Closing, Motors may transfer all of
the assets, business and operations of the Partnership, as substantially
constituted on the date of this Agreement and as those assets or proceeds of
those assets may be constituted following replacement, retirement or
substitution in the ordinary course of business ("Partnership Assets"), to
Motors and/or one or more corporations or partnerships entirely owned and
controlled by Motors and/or its wholly-owned subsidiaries ("Partnership
Successors"); provided that such corporation(s) or partnership(s) (i) (if other
than Motors) are established solely for the purpose of owning and operating the
Partnership Assets and carrying on the Partnership business, (ii) shall not,
until the expiration of five years from the Closing Date, acquire or carry on
any business or operations of a type not currently being carried on by the
Partnership, (iii) shall maintain books and records reasonably necessary or
appropriate to enable Motors to perform its obligations under this Paragraph
2.3, and (iv) (if
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other than Motors) shall assume all obligations of Motors hereunder.
(c) Until the expiration of five years from the Closing Date
(i) without the prior written consent of the Trust, neither any of the Checker
Entities, any Motors designee that acquires all or any portion of the Interest
under this Agreement, nor any Partnership Successor or other transferee of
Partnership Assets (other than transferees in the ordinary course of business)
shall enter into, become a party to, or become liable in respect of, any
contract, agreement or undertaking with any Affiliate except in the ordinary
course of business and on terms not less favorable to such person than those
which could be obtained if such contract, agreement or undertaking were an arm's
length transaction with a person other than an Affiliate. (The foregoing,
however, shall not apply to such contracts, agreements and undertakings set
forth in Schedule I hereto, which are in effect on the date of this Agreement);
and (ii) the Checker Entities shall, and any Partnership Successor shall be
required to covenant and agree to, operate the businesses of the Partnership in
good faith and exercising reasonable business judgment.
For purposes of this clause (c), the term "Affiliate" shall
mean (A) any person controlling, controlled by or under common control with any
other person, where "control" (including "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities or other-
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wise; or (B) any person having beneficial ownership of 5% or more of any of the
Checker Entities, any Motors designee that acquires the Interest under this
Agreement, or any Partnership Successor.
(d) (i) If a Triggering Event (as defined below) occurs
within five years of the Closing Date, Motors, at its own cost, shall promptly
calculate, in accordance with the provisions of and as if the Partnership had
continued operating under the Partnership Agreement (the "Calculation"), the
capital accounts of Motors and ELIC (A) without giving effect to dispositions of
assets contemplated by Section 2.3(b) of this Agreement, (B) as if the
Partnership had continued in accordance with the Partnership Agreement and ELIC
had remained the sole participating Limited Partner in good standing as a
Limited Partner at all relevant times (without regard to any alleged defaults
with respect thereto) and Motors the sole General Partner from the date of
inception of the Partnership until the date of the Triggering Event and,
consistent therewith, by including any and all allocations of Net Income and Net
Loss that would have been allocated to ELIC as a Limited Partner, pursuant to
the Partnership Agreement, from the inception of the Partnership to the date of
the Triggering Event, which allocations shall be added to or subtracted from
ELIC's Capital Account, as appropriate and without duplication; (C) without
increasing or decreasing ELIC's Capital Account or any distributions as a result
of the addition or withdrawal of any Partners with respect to the Partnership;
and (D) without reduction of ELIC's Capital Account for the Purchase Price. The
Rehabilitator and the Trust shall
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then be entitled to a payment from the Checker Entities, each being jointly and
severally liable therefor, in addition to the payment of the Purchase Price
received on the Closing Date, equal to the positive difference between (x) the
amount of ELIC's Capital Account (as calculated under the terms of this
Agreement) on the date of the Triggering Event and (y) the future value of the
Purchase Price, calculated at 15% per annum from the Closing Date to the date of
the Triggering Event. All payments hereunder shall be made in cash only and
shall be payable to the Trust. If the consideration received by the Checker
Entities upon the consummation of a Triggering Event includes property or
securities other than cash, such property or securities shall be valued in good
faith by the board of directors of Motors at their fair market value for
purposes of determining the amount to which the Trust is entitled.
(ii) Motors or the Partnership Successor, as the case may
be, shall deliver the Calculation to the Rehabilitator and the Trust, together
with a report (the "Report") of the independent accountants of the Partnership
confirming that the Calculation complies with the provisions of the Partnership
Agreement as in effect on the date hereof, with such modification thereto as are
set forth in clause (i) above. In the event that the Rehabilitator or the Trust
notifies Motors in writing, within 30 days of its receipt of the Calculation and
the Report, that it does not agree with the Calculation, then the Rehabilitator
and/or the Trust may select an independent accountant to review the Calculation.
ICC and Motors agree to co-operate fully with
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<PAGE>
the Trust's and the Rehabilitator's independent accountant by, among other
things, making available to such independent accountant all documents, including
books, records, financial statements and workpapers relating to the Triggering
Event, the Calculation, all assumptions used in making the Calculation and the
financial condition of the Partnership (or its successor) from the Closing Date
to the date of the Triggering Event. In the event that the Trust's and the Re-
habilitator's independent accountant's calculation of the amount due to ELIC
differs from the amount included in the Calculation by more than five percent
and the parties cannot resolve the difference within twenty-one days, then the
parties agree to resolve the dispute in the following manner. The respective
independent accountants for the Checker Entities and the Rehabilitator/Trust
shall appoint a mutually acceptable independent accountant ("Umpire"), who shall
have forty-five days to resolve the dispute, and whose decision shall be final,
binding and not appealable to any court or other forum. If the respective
independent accountants for the Checker Entities and Rehabilitator/Trust,
however, are unable to agree upon the selection of an Umpire, then the New York
office of the largest firm of independent auditors which does not provide
services to any of the parties to this Agreement shall serve as the Umpire. If
the Umpire is retained pursuant to this section, its cost shall be borne by the
party whose independent accountant was not within ten percent of the Umpire's
calculation. If both parties were within ten percent of the Umpire's calcu-
lation, then each side will bear half of the Umpire's costs. Nothing con-
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tained in the foregoing shall be deemed to prevent the Checker Entities from
consummating the Triggering Event, and the acceptance by the Trust of any
payment upon consummation of a Triggering Event shall not be deemed a waiver of
its right to challenge the Calculation in the manner set forth herein.
(e) A "Triggering Event" shall refer to any or all of the
following:
(i) at any time prior to the transfer of the Partnership
Assets from the Partnership to one or more Partnership Successors pursuant to
Section 2.3(b) hereof, upon (A) a sale or other transfer of all or substantially
all of the Partnership Assets, whether in a single sale or transfer or as a
result of more than one sale or transfer that results in the aggregate in the
sale or transfer of all or substantially all of the Partnership Assets, or (B)
any transfer by ICC of any immediate or mediate ownership of any Partner,
directly or indirectly, whether as a result of a change of ownership or control,
merger, consolidation, reorganization or other change of corporate form, sale of
all or substantially all of the assets of such Partner or any other disposition
with respect to such Partner, provided that a Triggering Event shall not occur
upon any such transfer under (B) above if such transfer would have been per-
mitted by Section 8.2 of the Partnership Agreement or otherwise under the
Partnership Agreement and if the transferee expressly agrees in writing to be
bound by the terms and conditions of this Agreement; or
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(ii) at any time upon or after the transfer of the
Partnership Assets from the Partnership to one or more Partnership Successors,
upon (A) a sale of all or substantially all of the Partnership Assets by any
Partnership Successor, any of the Checker Entities or any wholly-owned
subsidiary thereof, whether in a single sale or transfer or as a result of more
than one sale or transfer that results in the aggregate in a sale or transfer of
all or substantially all of the Partnership Assets; or (B) any transfer of the
immediate or mediate ownership of any Partnership Successor, any of the Checker
Entities or any wholly-owned subsidiary thereof, directly or indirectly, whether
as a result of a change of ownership or control, merger, consolidation,
reorganization or other change of corporate form, that removes from ICC's direct
or indirect ownership all or substantially all of the Partnership Assets.
Notwithstanding the foregoing, neither the sale to the public of the securities
of ICC, any Checker Entity, or any Partnership Successor nor the sale or other
transfer by any shareholder of ICC of shares of ICC stock shall constitute a
Triggering Event.
(f) If the Closing shall not have occurred on or before
September 30, 1994, then, after such date, the Rehabilitator and the Trust shall
have the right to sell the Interest or any part thereof to any person on such
terms and conditions as the Rehabilitator and the Trust may deem appropriate in
accordance with the provisions hereof. The Rehabilitator and the Trust shall
deliver written notice to Motors not less than forty-five days prior to the
closing of the
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proposed sale describing the terms and conditions thereof ("Notice of Third
Party Sale"). Motors shall have the right, by notifying the Rehabilitator and
the Trust in writing within fifteen days from the date of the Notice of Third
Party Sale, to purchase the Interest, or portion so offered, on the same terms
and conditions set forth in the Notice of Third Party Sale ("Election Notice"),
and shall thereby be contractually bound to purchase the Interest, or portion
thereof proposed to be sold, on those terms and conditions. If Motors does not
deliver the Election Notice to the Rehabilitator and the Trust or if Motors
otherwise fails to close the transactions under the Election Notice within
thirty days from the date of the Election Notice, notwithstanding anything in
this Agreement or in the Partnership Agreement to the contrary, the
Rehabilitator and the Trust shall have the right to dispose of the Interest, or
portion thereof proposed to be sold, substantially on the terms and conditions
set forth in the Notice of Third Party Sale. If for any reason any proposed
sale shall not be completed, this Agreement (including this Section) shall
continue to remain in full force and effect between the parties hereto.
(g) Notwithstanding any transfer of Partnership Assets or any
transfer of the assets, ownership or control of Motors, any Motors designee that
acquires the Interest under this Agreement, or any Partnership Successor, ICC
shall remain jointly and severally obligated under this Agreement with Motors,
any Motors designee that acquires the Interest under this Agreement,
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any Partnership Successor, or any of their respective successors or assigns.
(h) The Checker Entities agree that until the Closing Date
they shall continue to make quarterly payments in the same amount as have been
made since June 1991, which payments shall not reduce the Purchase Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
-----------------------------
OF THE CHECKER ENTITIES
-----------------------
Each of the Checker Entities hereby represents and warrants to the
Rehabilitator and the Trust as follows:
3.1 AUTHORITY. Such Checker Entity has the corporate or
partnership power and authority to execute and deliver this Agreement and
perform its obligations hereunder.
3.2 BINDING EFFECT. This Agreement has been duly and validly
authorized, executed and delivered by such Checker Entity and constitutes the
legal, valid and binding obligation of such Checker Entity, enforceable against
such Checker Entity in accordance with its terms. Neither the execution and
delivery of this Agreement by such Checker Entity, nor the consummation by it of
the transactions contemplated hereby, nor compliance by it with any of the
provisions hereof will (i) conflict with or result in a breach of any provision
of such entity's Certificate of Incorporation or Bylaws or the Partnership
Agreement, (ii) conflict with or result in the breach of any term, condition or
provision of, or constitute a default under, upon the giving of
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notice or the termination, cancellation or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon any property or
assets of such Checker Entity pursuant to, or otherwise require the consent of
any Person under, any agreement or obligation to which such Checker Entity is a
party or by which any of its properties or assets may be bound, or (iii) violate
or conflict with (or require any filing, notification, report, approval or other
similar matter under) any laws applicable to such Checker Entity or any of its
properties or assets.
3.3 NO CONTRAVENTION OF OFFERINGS OR BORROWING. The execution,
delivery and performance by Motors of this Agreement shall not conflict with or
result in a default under, with the passage of time, the giving of notice, or
both, any material agreement, indenture, instrument or other document pertaining
to the Offerings, or the Borrowing to which any of the Checker Entities is a
party or by which any of their properties are bound.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
THE REHABILITATOR AND THE TRUST
-------------------------------
4.1 The Rehabilitator hereby represents and warrants to the
Checker Entities as follows:
4.1.1 AUTHORITY. The Rehabilitator has full power and
authority to execute and deliver this Agreement and perform his obligations
hereunder.
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<PAGE>
4.1.2 BINDING EFFECT. This Agreement has been duly and
validly authorized by any and all parties whose authorization is required by the
laws of the State of California and by the Court, and has been duly executed and
delivered by the Rehabilitator and constitutes the legal, valid and binding
obligation of the Rehabilitator and ELIC enforceable against the Rehabilitator
and ELIC in accordance with its terms. Neither the execution and delivery of
this Agreement by the Rehabilitator, nor the consummation by the Rehabilitator
of the transactions contemplated hereby, nor compliance by the Rehabilitator
with any of the provisions hereof will (i) conflict with or result in the breach
of any term, condition or provision of, or constitute a default under, upon the
giving of notice or the lapse of time or otherwise, give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or assets of ELIC
pursuant to, or otherwise require the consent of any Person under, any agreement
or obligation to which the Rehabilitator or ELIC is a party or by which any of
ELIC's properties or assets may be bound, or (ii) violate or conflict with (or
require any filing, notification, report, approval (including, without limi-
tation, Court consent or approval) or other similar matter under) any laws
applicable to the Rehabilitator or ELIC or any of ELIC's properties or assets.
4.2 The Trust hereby represents and warrants to the Checker
Entities as follows:
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4.2.1 AUTHORITY. The Trust has full power and authority to
execute and deliver this Agreement and perform its obligations hereunder.
4.2.2 BINDING EFFECT. This Agreement has been duly and
validly authorized, executed and delivered by the Trust and constitutes the
legal, valid and binding obligation of the Trust enforceable against the Trust
in accordance with its terms. Neither the execution and delivery of this
Agreement by the Trust, nor the consummation by the Trust of the transactions
contemplated hereby, nor compliance by the Trust with any of the provisions
hereof will (i) conflict with or result in the breach of any term, condition or
provision of, or constitute a default under, upon the giving of notice or the
lapse of time or otherwise, give rise to any right of termination, cancellation
or acceleration with respect to, or result in the creation of any lien, charge
or encumbrance upon any property or assets of the Trust pursuant to, or
otherwise require the consent of any Person under, any agreement or obligation
to which the Trust is a party or by which any of the Trust's properties or
assets may be bound, or (ii) violate or conflict with (or require any filing,
notification, report, approval (including, without limitation, Court consent or
approval) or other similar matter under) any laws applicable to the Trust or any
of the Trust's properties or assets.
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ARTICLE V
CONDITIONS TO THE OBLIGATIONS
-----------------------------
OF THE CHECKER ENTITIES
-----------------------
The obligation of the Checker Entities to consummate the transactions
contemplated by this Agreement is subject to the satisfaction or waiver on or
before the day of the Closing (the "Closing Date") of each of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Rehabilitator and the Trust contained herein shall be true and
accurate in all material respects at and as of the date when made and at and as
of the Closing Date as though such representations and warranties were made at
and as of such date.
5.2 PERFORMANCE. The Rehabilitator and the Trust shall have per-
formed and complied with all agreements, obligations and conditions required by
this Agreement to be performed or complied with by them on or prior to the
Closing Date.
5.3 CERTIFICATES. The Rehabilitator and the Trust shall have fur-
nished the Checker Entities with such certificates to evidence compliance with
the conditions set forth in this Article V as may be reasonably requested by the
Checker Entities.
5.4 OPINION OF COUNSEL. The Rehabilitator and the Trust shall have
furnished the Checker Entities with an opinion of counsel in form reasonably
acceptable to the Checker Entities covering the matters set forth on Exhibits F-
1 and F-2, respectively, annexed hereto.
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5.5 DELIVERIES COMPLETE. The Rehabilitator and the Trust shall
have delivered the Assignment and the Stipulation.
5.6 TRANSFER TAXES. The Rehabilitator and the Trust shall have
provided the Checker Entities with evidence satisfac-tory to them of the payment
of, or the non-liability of the Checker Entities for, any transfer, stamp or
other similar taxes payable in connection with the transfer of the Interest
pursuant to this Agreement.
5.7 CLOSING OF THE OFFERINGS. ICC shall have received the proceeds
of the Offering and the Borrowing.
5.8 RELEASE. The Rehabilitator and the Trust shall have executed
and delivered a Release in the form annexed hereto as Exhibit D.
If the Rehabilitator has transferred the Interest to the Trust prior to the
Closing Date, then the Checker Entities shall be deemed to have waived all of
the foregoing conditions (to the extent they apply to the Rehabilitator) except
for the delivery of the Stipulation and the Release.
ARTICLE VI
CONDITIONS TO THE REHABILITATOR'S
---------------------------------
AND THE TRUST'S OBLIGATIONS
----------------------------
The obligation of the Rehabilitator and the Trust to consummate the
transactions contemplated by this Agreement is subject to the satisfaction or
waiver on or before the Closing Date of each of the following conditions:
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<PAGE>
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Checker Entities contained herein shall be true and accurate
in all material respects at and as of the date when made and at and as of the
Closing Date as though such representations and warranties were made at and as
of such date.
6.2 PERFORMANCE. The Checker Entities shall have performed and
complied with all agreements, obligations and conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.
6.3 CERTIFICATES. The Checker Entities shall have furnished the
Rehabilitator and the Trust with such certificates of its authorized
representative to evidence compliance with the conditions set forth in this
Article VI as may be reasonably requested by the Rehabilitator.
6.4 OPINION OF COUNSEL. The Checker Entities shall have furnished
the Rehabilitator and the Trust with an opinion of counsel in form reasonably
satisfactory to the Rehabilitator and the Trust covering the matters set forth
in Exhibit G annexed hereto.
6.5 DELIVERIES COMPLETE. The Checker Entities shall have delivered
the Purchase price, the Stipulation and the Withdrawal of Claim.
6.6 RELEASE. Each of the Checker Entities shall have delivered a
Release in the form annexed hereto as Exhibit E.
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If the Rehabilitator has transferred the Interest to the Trust prior to the
Closing Date, then the Rehabilitator shall be deemed to have waived all of the
foregoing conditions except those included in Sections 6.5 and 6.6.
ARTICLE VII
EFFECT OF FAILURE OF CONDI-
---------------------------
TIONS TO OCCUR OR BE WAIVED
---------------------------
If the Closing shall not have occurred within seven months of the
execution of this Agreement, then the Rehabilitator, ELIC and the Trust, on the
one hand, and/or the Checker Entities, on the other hand, shall be entitled to
terminate this Agreement by giving notice to the other ("Notice Party") so long
as the Notice Party has not caused through any act within its control the
Agreement not to close. Upon termination of this Agreement, (a) this Agreement
shall be null and void except for the provisions of Section 2.3(f) and this
Article VII; (b) the Interest, if not previously assigned to the Trust, shall be
assigned to the Trust and the Trust shall be admitted to the Partnership as a
Limited Partner and shall be treated as a non-defaulting Partner from the date
of the Partnership's formation through the date of its admission pursuant to
this Article VII and thereafter in accordance with the terms of the Partnership
Agreement as in effect on the date hereof, and, accordingly, the Capital Account
of the Limited Partner shall be restated to an amount equal to the Capital
Account the Limited Partner would have had if it had not been
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treated as a defaulting Partner for any period; PROVIDED, HOWEVER, that (i) the
Limited Partner's Capital Account shall be reduced (without duplication with
respect to the foregoing) for the principal component of the distributions by
the Partnership to the Limited Partner as a defaulting Partner and pursuant to
Section 2.3(h) of this Agreement; and (ii) the Limited Partner shall have no
right to distributions in excess of those received by it either as a Partner
(including as a defaulting Partner) or pursuant to the terms of this Agreement;
(c) the Stipulation and the Withdrawal of Claim shall be delivered and filed as
set forth in Paragraphs 2.2(c) and (d) and the Releases in the forms attached
hereto as Exhibits D and E shall be delivered; (d) the Trust and Motors shall
amend the Partnership Agreement, to be effective with respect to all
distributions after December 31, 1993, to provide that notwithstanding anything
in Section 4.5 thereof to the contrary, distributions to the General Partner may
reduce the General Partner's Capital Account below zero and the General Partner
shall not be required to repay any such excess distribution pursuant to Section
4.6; PROVIDED, HOWEVER, that the Checker Entities shall jointly and severally
guaranty the obligations of the General Partner pursuant to Section 2.1.3 of the
Partnership Agreement in an amount equal to the cash distributions to the
General Partner after December 31, 1993 pursuant to Section 4.4.6 of the
Partnership Agreement, PROVIDED THAT, for purposes of determining the amount
owed under the guaranty only, the positive balance in the General Partner's
Capital Account shall be increased, or the negative balance in
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the General Partner's Capital Account shall be reduced, by the difference
between the value of the Partnership's medallions on the date hereof (which,
based on the good faith determination of ICC, are valued at $38,000 per
medallion) and the value of such medallions (including all amounts received from
sales or other transfers of medallions after the date hereof) on the date the
Partnership is terminated.
ARTICLE VII
MISCELLANEOUS
-------------
8.1 WAIVERS AND AMENDMENTS. This Agreement may not be amended or
terminated except upon the written consent of all parties. By an instrument in
writing, a party may waive compliance by the other party with any term or
provision of this Agreement that such other party was or is obligated to comply
with or perform; PROVIDED, HOWEVER, that such waiver shall not operate as a
waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, or power hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, or power provided
herein or by law or in equity. The waiver by any party of the time for
performance of any act or condition hereunder does not constitute a waiver of
the act or condition itself.
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8.2 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California as such laws
are applied to agreements between California residents entered into and to be
performed entirely within California.
8.3 ASSIGNMENT; SUCCESSORS AND ASSIGNS. Each party agrees that it
will not assign, sell, transfer, delegate, or otherwise dispose of, whether
voluntarily or involuntarily, or by operation of law, any right or obligation
under this Agreement except as specifically permitted hereunder. Any purported
assignment, transfer, or delegation in violation of this paragraph shall be null
and void. Subject to the foregoing limits on assignment and delegation, this
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns.
8.4 ENTIRE AGREEMENT. The parties intend that the terms of this
Agreement (including the Exhibits hereto) shall be the final expression of their
agreement with respect to the subject matter hereof and may not be contradicted
by evidence of any prior contemporaneous agreement. The parties further intend
that this Agreement shall constitute the complete and exclusive statement of
their terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding involving this Agreement.
8.5 SEVERABILITY OF THIS AGREEMENT. If any provision of this
Agreement, or the application hereof to any person, place or circumstance, shall
be held by a court of competent
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jurisdiction to be invalid, unenforceable or void, the remainder of this
Agreement and such provisions as applied to other persons, places and
circumstances shall remain in full force and effect only if, after excluding the
portion deemed to be unenforceable, the remaining terms shall provide for the
consummation of the transactions contemplated hereby in substantially the same
manner as originally set forth at the later of the date this Agreement was
executed or last amended.
8.6 GENDER; NUMBER. Whenever the context of this Agreement
requires, the masculine gender shall include the feminine or neuter, and the
singular number shall include the plural.
8.7 CAPTIONS. The section and other headings used in this
Agreement are for reference purposes only and shall not constitute a part hereof
or affect the meaning or interpretation of this Agreement.
8.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which taken
together shall constitute one and the same instrument.
8.9 EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated, each party shall pay all expenses incurred by it or
on its behalf in connection with the Agreement and the transactions contemplated
hereby.
8.10 NOTICES. Any notice or communication required or permitted
hereunder shall be sufficiently given if in writing and (i) delivered in person
or by overnight delivery or courier service, (ii) sent by facsimile, or (iii)
deposited in the United
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States mail, by certified mail postage prepaid and return receipt requested
(provided that any notice given pursuant to clause (ii) is also confirmed by the
means described in clause (i) or (iii)), as follows:
To the Rehabilitator:
To the Trust:
To the Checker Entities: Checker Motors Corporation
2016 North Pitcher Street
Kalamazoo, Michigan 49007
Attn: David R. Markin
President
Tel. (616) 343-6121
Fax. (616) 343-1660
with a copy to: Hutton Ingram Yuzek Gainen
Carroll & Bertolotti
250 Park Avenue
New York, New York 10177
Attn: Paulette Kendler
Tel. (212) 907-9650
Fax. (212) 907-9682
Such notice or other communication shall be deemed given when so delivered
personally, or sent by facsimile transaction, or, if sent by overnight delivery
or courier service, the business day after being sent from within the United
States, or if mailed, four days after the date of deposit in the United States
mails.
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<PAGE>
8.11 RECOVERY OF COSTS AND ATTORNEYS' FEES.
(a) Except as provided in Paragraph 2.3(d)(ii), any disputes
arising out of or relating to this Agreement, any document or instrument
delivered pursuant to, in connection with, or simultaneously with this
Agreement, or any breach of this Agreement or any such document or instrument
shall be settled by arbitration to be held in Los Angeles, California, in
accordance with the rules then in effect of the American Arbitration Association
or any successor thereto. The arbitrator ("Arbitrator") shall be a party
mutually acceptable to the Checker Entities, the Rehabilitator and the Trust;
PROVIDED, HOWEVER, that if they cannot agree on an arbitrator, the Regional
Director of the American Arbitration Association shall choose the Arbitrator.
The Arbitrator may grant injunctions or other relief in such dispute or
controversy. The decision of the Arbitrator shall be final, conclusive, and
binding on the parties to the arbitration. Judgment may be entered on the
Arbitrator's decision in any court having jurisdiction.
(b) Any prevailing party or parties described in Section
8.11(a) above shall be entitled to reasonable attorneys' fees and any other
costs incurred in enforcing, or on appeal from, a judgment entered with respect
to any arbitration described in Section 8.11(a), separately from and in addition
to any other amount included in such judgment. This Section 8.11 shall be
severable from the other provisions of this Agreement and shall survive and not
be merged into any such judgment.
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<PAGE>
8.12 THIRD PARTIES. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any Person other than the parties hereto and their
successors or assigns, any rights or remedies under or by reason of this
Agreement.
8.13 SECTION 1654 INTERPRETATION. This Agreement has been
negotiated at arm's length and between persons sophisticated and knowledgeable
in the matters dealt with in this Agreement. Each party has been represented by
experienced and knowledgeable legal counsel. Accordingly, any rule of law
(including California Civil Code Section 1654) or legal decision that would
require interpretation of any ambiguities in this Agreement against the party
that has drafted it is not applicable and is waived. The provisions of this
Agreement shall be interpreted in a reasonable manner to effect the purpose of
the parties and this Agreement.
8.14 AVAILABILITY OF EQUITABLE REMEDIES. Since a breach of the
provisions of this Agreement could not adequately be compensated by money
damages, any party shall be entitled, either before or after the Closing, in
addition to any other right or remedy available to him, to an injunction granted
by the Arbitrator restraining such breach or a threatened breach and to specific
performance of any such provision of this Agreement, and in either case no bond
or other security shall be required in connection therewith, and the parties
hereby consent to this issuance of such injunction and to the ordering of
specific performance.
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<PAGE>
8.15 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
CHECKER MOTORS CO., L.P.
By: Checker Motors Corporation
General Partner
By: /s/ David R. Markin
------------------------------
Name: David R. Markin
Title: President
CHECKER MOTORS CORPORATION
By: /s/ David R. Markin
------------------------------
Name: David R. Markin
Title: President
CHECKER HOLDING CORP. III
By: /s/ David R. Markin
------------------------------
Name: David R. Markin
Title: President
INTERNATIONAL CONTROLS CORP.
By: /s/ David R. Markin
------------------------------
Name: David R. Markin
Title: President
/s/ Richard Baum for John Garamendi
- -----------------------------------
JOHN GARAMENDI, in his capacity as
Rehabilitator, but not Individually
BASE ASSETS TRUST
By: /s/ Richard Baum
--------------------------------
Trustee Richard Baum
By: /s/ Thomas Arnold
--------------------------------
Trustee Thomas Arnold
By: /s/ Anthony Buonoguro
--------------------------------
Trustee Anthony Buonoguro
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<PAGE>
SCHEDULE I
AFFILIATE TRANSACTIONS
As of December 31, 1993, American Country Insurance Company holds $0.9
million principal amount of Enhance Financial Services Group Inc., 7% Notes due
December 1, 1996, of which company Mr. Markin and Mr. Tessler are directors.
Each of Messrs. Markin, Solomon, Tessler and Thomas provides
consulting services to Yellow Cab Company and each receives for such services
(commencing in January 1988) $10,000 per month. Messrs. Solomon, Tessler and
Thomas also provide consulting services (a) to Motors for which they each
receive monthly fees of $5,000 (commencing in January 1988) and (b) to Country
for which they each receive monthly fees of approximately $18,300. Mr. Markin
serves as a consultant to Chicago AutoWerks, a division of Checker L.P., for
which he receives monthly fees of approximately $1,200 (commencing in January
1988), and to Country, for which he receives monthly fees of approximately
$4,600.
Frances Tessler, the wife of Allan R. Tessler, is employed by Smith
Barney Shearson which executes trades for Country's investment portfolio. During
1993 and 1992, Mrs. Tessler received for her services approximately $78,000 and
$69,000, respectively, of the commissions paid to Smith Barney Shearson.
On September 24, 1992, American Country Financial Services Corp.
("AFSC"), a subsidiary of Country, purchased from The Mid City National Bank of
Chicago the promissory note dated July 30, 1992, made by King Cars, Inc. ("King
Cars") in the principal amount of $381,500 plus accrued interest in the amount
of $3,560. The note, which has been renewed several times, has a current
principal amount outstanding of $407,691 and matures in December 1994. King
Cars is owned by Messrs. Markin, Tessler, Solomon, Thomas and Feldman. King
Cars is a party to an agreement dated December 15, 1992, with Yellow Cab
pursuant to which Yellow Cab purchases from King Cars display frames for
installation in its taxicabs and King Cars furnishes Yellow Cab advertising copy
for insertion into the frames. King Cars receives such advertising copy as an
agent in Chicago for an unrelated company which is in the business of selling
and arranging for local and national advertising. Of the revenues generated
from such advertising, 30% will be retained by King Cars and the balance will be
delivered to Yellow Cab until such time as Yellow Cab has recovered costs
advanced by it for the installation of advertising frames in 500 of its taxicabs
(approximately $78,000). The terms to Yellow Cab are the same or more favorable
than those offered by King Cars to unrelated third parties.
I-1
<PAGE>
Employment Agreements
Checker L.P., as the assignee of Motors, is party to an Amended and
Restated Employment Agreement dated as of November 1, 1985, as further amended,
with David R. Markin pursuant to which Mr. Markin is to serve as President,
Chief Executive Officer and Chief Operating Officer of Checker L.P. until April
30, 1996, subject to extension (the "Termination Date"), at a minimum salary of
$600,000 per annum, together with the payment of certain insurance premiums. The
beneficiaries of these insurance policies are designated by Mr. Markin. Mr.
Markin continues to be eligible to participate in profit sharing, pension or
other bonus plans of Checker L.P. Pursuant to the Amended and Restated
Employment Agreement, in the event of Mr. Markin's death, Checker L.P. shall pay
Mr. Markin's estate the compensation which would otherwise be payable to him for
the period ending on the last day of the month in which death occurs. In
addition, Checker L.P. shall pay to Mr. Markin's beneficiaries deferred
compensation from the date of his death through the Termination Date in an
annual amount equal to one-third of his base salary at the date of his death. In
the event of termination of the Amended and Restated Employment Agreement for
any reason other than cause, disability or death, Mr. Markin shall continue to
serve as a consultant to Checker L.P. for a period of five years, for which he
shall receive additional compensation in the amount of $50,000 per annum.
Checker L.P. has agreed to indemnify Mr. Markin from certain liabilities arising
out of his service to Checker L.P., except for liabilities resulting from his
gross negligence or willful misconduct.
Checker L.P. is party to an Amended and Restated Employment Agreement
dated as of June 1, 1992, with Jeffrey Feldman pursuant to which Mr. Feldman
serves as President of the vehicular operations segment until February 1, 1996
subject to extension (the "Termination Date"), at a minimum salary of $200,000
per annum, together with the payment of certain insurance premiums. The
beneficiaries of these insurance policies are designated by Mr. Feldman. Mr.
Feldman is eligible to participate in profit sharing, pension or other bonus
plans implemented by the vehicular operations segment. Pursuant to the Amended
and Restated Employment Agreement, in the event of Mr. Feldman's death, Checker
L.P. shall pay Mr. Feldman's estate the amount of compensation which would
otherwise be payable to him for the period ending on the last day of the month
in which death occurs. In addition, Checker L.P. shall pay to Mr. Feldman's
estate deferred compensation form the date of his death to the Termination Date
in an annual amount equal to one-third of his base salary at the date of his
death. In the event of the termination of the Amended and Restated Employment
for any reason other than cause, disability or death, Mr. Feldman shall continue
to serve as a consultant to Checker L.P. for a period of five years (if termi-
nated by Mr. Feldman) or seven years (if terminated by Checker L.P.), for which
he shall receive compensation in the amount of
I-2
<PAGE>
$75,000 per annum. Checker L.P. has agreed to indemnify Mr. Feldman from
certain liabilities, except for those resulting from his gross negligence or
willful misconduct.
Jeffrey M. Feldman is the nephew of David R. Markin.
Motors has guaranteed certain of Checker Taxi Association's
obligations. The outstanding principal balance of these obligations was
approximately $0.7 million, as of December 31, 1993.
American Country Insurance Company holds mortgages on certain of
Checker L.P.'s property, securing loans in the amount of approximately $3
million.
I-3
<PAGE>
EXHIBIT A
TRANSFER AND ASSIGNMENT
AGREEMENT, made as of the day of , 1994 by and among
JOHN GARAMENDI, as Insurance Commissioner of the State of California, solely in
his capacity as conservator, rehabilitator and liquidator of Executive Life
Insurance Company, and the BASE ASSETS TRUST (collectively, the "Assignor"), and
CHECKER MOTORS CORPORATION, a New Jersey corporation (the "Assignee")
W I T N E S S E T H:
WHEREAS, Executive Life Insurance Company ("ELIC") is an alleged
Defaulting Limited Partner of Checker Motors Co., L.P., a Delaware limited
partnership (the "Partnership"), pursuant to the Amended and Restated Agreement
of Limited Partnership of the Partnership, dated the 5th day of March, 1986, as
amended on July 28, 1989 and purportedly on June 25, 1991 (the "Partnership
Agreement"; all capitalized terms used herein are used with the meanings
ascribed to them in the Partnership Agreement unless specifically provided
otherwise herein); and
WHEREAS, the Assignor desires to transfer its and ELIC's entire
interest in the Partnership (including, without
A-1
<PAGE>
limitation, the Capital Account, the Excess Capital Account, and any interest it
or ELIC may have in the assets, the earnings and the Profits of the Partnership,
in each case past, present or future, the "Interest") to the Assignee.
NOW, THEREFORE, the parties hereto hereby agree as follows:
In consideration of the payment to the Assignor of Ten Dollars
($10.00) and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Assignor hereby transfers and assigns to the
Assignee, as of the date hereof, all of its and ELIC's right, title and interest
in and to the Partnership, including the right to receive any distributions to
which the Assignor may be entitled under the terms of the Partnership Agreement
and a proportionate allocation of items of income, gain, deduction, loss and
credit, except as provided in Sections 2.3(d) and (e) of the Settlement
Agreement dated as of May __, 1994 among the Assignor and the Assignee,
International Controls Corp., Checker Motors Co., L.P. and Checker Holding Corp.
III. The Assignee hereby assumes all of the liabilities, if any, of the
Assignor pursuant to the Partnership Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
-----------------------------------
JOHN GARAMENDI, in his capacity as
Rehabilitator, but not individually
A-2
<PAGE>
BASE ASSETS TRUST
By:
------------------------------
Trustee:
By:
------------------------------
Trustee:
By:
------------------------------
Trustee:
CHECKER MOTORS CORPORATION
By:
----------------------------
Name:
Title:
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<PAGE>
EXHIBIT B
STIPULATION OF DISMISSAL
[To Be Completed]
B-1
<PAGE>
EXHIBIT C
WITHDRAWAL OF CLAIM
[To be in form satisfactory
to the Rehabilitator]
C-1
<PAGE>
EXHIBIT D
RELEASE
THIS RELEASE (this "Release") is made ________, 1994, between JOHN
GARAMENDI, solely in his capacity as conservator, rehabilitator and liquidator
(the "Rehabilitator") of Executive Life Insurance Company, and the Base Asset
Trust (the "Trust"), on the one hand, and each of CHECKER MOTORS CO., L.P., a
Delaware limited partnership (the "Partnership"), CHECKER MOTORS CORPORATION, a
New Jersey corporation and the general partner of the Partnership ("Motors"),
CHECKER HOLDING CORP. III, a Delaware corporation, and INTERNATIONAL CONTROLS
CORP. ("ICC"; the Partnership, Motors, Holding and ICC being hereinafter
referred to as the "Checker Entities"), on the other hand.
RECITALS
A. The Settlement Agreement, dated as of __________, 1994, among the
Checker Entities and the Rehabilitator and the Trust (the "Settlement
Agreement"; all capitalized terms not defined herein being used with the
meanings ascribed thereto in the Settlement Agreement) provides, among other
things, for the purchase by the Motors or its designee of the Interest.
B. This Release is being delivered by the Rehabilitator
simultaneously with the payment by the Checker Entities directly to the Trust of
the Purchase Price.
Accordingly, the parties hereto agree as follows:
1. RELEASE OF RELEASED PARTIES BY REHABILITATOR AND TRUST. In con-
sideration of receipt of the Interest, the
D-1
<PAGE>
Rehabilitator and the Trust hereby release and forever discharge each of the
Checker Entities and each of their partners, officers, directors, shareholders
and employees, their advisors, attorneys, agents, predecessors in interest,
assignors, successors and assigns, and the partners, officers, directors,
shareholders and employees of each of the foregoing (all such released parties
hereinafter are collectively referred to as the "Released Parties") of and from
(i) any and all liabilities and obligations under the Partnership Agreement,
including, without limitation, any liability for any breach of a representation,
warranty or covenant contained in the Partnership Agreement, and (ii) any and
all claims and causes of action of any and every character, known or unknown,
anticipated or unanticipated, contingent or matured, which the Rehabilitator or
the Trust may have or claim to have against any of the Released Parties, arising
from or related to the Partnership Agreement and the management of the
Partnership (including but not limited to any claims that were raised or could
have been raised in the Lawsuit); provided, however, that no claims, rights or
obligations arising under the Settlement Agreement are released hereby.
2. FULL AND COMPLETE RELEASE; ALL CLAIMS COVERED. This Release is
intended to be and is a full and complete release by the Rehabilitator and the
Trust of the Released Parties regarding the subject matter of the release set
forth in Paragraph 1 hereof and is intended by the Rehabilitator and the Trust
to cover all claims of all types, whether arising under common law or under the
statutes or regulations of (a) the States
D-2
<PAGE>
of California, New York, Delaware, Michigan, or any county, city or government
agency thereof, or (b) other states or similar jurisdictions of the United
States, or any county, city or government agency thereof; provided, however,
that no claims, rights or obligations arising under the Settlement agreement are
released hereby. The Rehabilitator and the Trust acknowledge and agree that
this Release is to be construed as the broadest possible type of release
regarding the subject matter of the release set forth in Paragraph 1 hereof,
releasing any and all claims, including, without limitation, antitrust,
contract, copyright, fiduciary duty, fraud, regulatory, royalty, securities,
usury, statutory, tort, trespass and any other claims.
3. COVENANT NOT TO SUE. In consideration for the transactions
contemplated by the Settlement Agreement, the Rehabilitator and the Trust, to
the extent that they held, hold or may hold any claims or causes of action that
are being released hereunder pursuant to this Release, hereby covenant with each
of the Released Parties not to sue, assert any claim against, or otherwise seek
any recovery from the Released Parties, whether for contract, fraud, tort or
otherwise.
4. AUTHORITY AND LEGAL COMPETENCE OF REHABILITATOR AND TRUST AND
LACK OF ASSIGNMENT OF CLAIMS. As part of the consideration for the transactions
contemplated by the Settlement Agreement, each of the Rehabilitator and the
Trust expressly severally represents and warrants to the Released Parties that
they are respectively legally competent and have the authority to give this
Release and that no assignment, pledge, sale, transfer,
D-3
<PAGE>
or other disposition of any right, title, interest, in or to any claim against
the Released Parties has been made.
5. KNOWLEDGE AND UNDERSTANDING. EACH OF THE REHABILITATOR AND THE
TRUST SEVERALLY REPRESENTS AND AGREES THAT IT HAS CAREFULLY READ AND FULLY
UNDERSTANDS ALL OF THE PROVISIONS OF THIS RELEASE, THAT IT IS REPRESENTED HEREIN
BY COUNSEL OF ITS CHOICE AND HAS FULLY DISCUSSED THIS RELEASE WITH SUCH COUNSEL,
AND THAT IT IS ENTERING INTO THIS RELEASE VOLUNTARILY, WHOLLY UPON ITS OWN
VOLITION, JUDGMENT, BELIEF AND KNOWLEDGE, AND WITHOUT ANY DURESS OR UNDUE
INFLUENCE ON THE PART OF OR ON BEHALF OF ANY PARTY.
6. WAIVER OF CALIFORNIA CIVIL CODE S. 1542. THE REHABILITATOR AND
THE TRUST HEREBY WAIVE AS AGAINST EACH RELEASED PARTY ALL RIGHTS UNDER
CALIFORNIA CIVIL CODE S. 1542 AS TO THE SUBJECT MATTER OF THE RELEASE SET FORTH
IN PARAGRAPH 1 HEREOF, WHICH PROVIDES THAT:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY
HIM,MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
THE REHABILITATOR AND THE TRUST ACKNOWLEDGE THAT THE HAVE BEEN FULLY INFORMED BY
THEIR COUNSEL CONCERNING THE EFFECT AND IMPORT OF THIS WAIVER OF RIGHTS UNDER
CALIFORNIA CIVIL CODE S. 1542.
7. RESERVATION OF RIGHTS. Notwithstanding anything to the contrary
in the Settlement Agreement or this Release, nothing therein or herein shall be
construed to waive or otherwise affect the rights of the Rehabilitator, ELIC,
and the Trust, if any, to proceed and/or recover against any person or
D-4
<PAGE>
entity relating to any matter not the subject of the terms of paragraph 1 of
this Release, including, but not limited to, transactions or claims involving or
against South Charleston Stamping & Manufacturing Company.
8. MODIFICATIONS, AMENDMENTS OR WAIVERS. Provisions of this Release
may be modified, amended or waived only by a written document specifically
identifying this Release and signed by each Checker Entity and the Rehabilitator
and the Trust.
9. SUCCESSORS AND ASSIGNS. This Release shall be binding on, and
shall inure to the benefit of, the Rehabilitator and the Trust and the Released
Parties, respectively, and their respective legal representatives, successors,
heirs and assigns.
10. GOVERNING LAW. This Release shall be governed by, and construed
in accordance with, the internal laws of the State of California without taking
into account provisions regarding choice of law.
11. SEVERABILITY. If any provision of this Release, or the
application hereof to any person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Release and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth at the later of the date
this Release was executed or last amended.
D-5
<PAGE>
12. ENTIRE AGREEMENT. This Release, the Settlement Agreement and the
exhibits thereto contains the entire agreement and understanding of the parties
hereto concerning the subject matter hereof, and supersedes and replaces any
prior negotiations, understandings and agreements of any kind, written or oral.
Each of the Rehabilitator and the Trust acknowledges that no other party, nor
any agent or attorney of any other party, has made any promise, representation
or warranty whatsoever, express or implied, not contained herein, concerning the
subject matter hereof, to induce such party to execute this Release, and
acknowledges that it has not executed this Release in reliance upon any such
promise, representation or warranty not contained herein.
13. COUNTERPARTS. This Release may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Release to be
executed on the date first written above.
---------------------------------
JOHN GARAMENDI, in his capacity
as Rehabilitator, but not
individually
BASE ASSETS TRUST
By:
-----------------------------
Trustee
By:
-----------------------------
Trustee
By:
-----------------------------
Trustee
D-6
<PAGE>
ACCEPTED:
CHECKER MOTORS CO., L.P.
By: Checker Motors Corporation
General Partner
By:
------------------------------
Name:
Title:
CHECKER MOTORS CORPORATION
By:
------------------------------
Name:
Title:
CHECKER HOLDING CORP. III
By:
------------------------------
Name:
Title:
INTERNATIONAL CONTROLS CORP.
By:
------------------------------
Name:
Title:
D-7
<PAGE>
EXHIBIT E
RELEASE
THIS GENERAL RELEASE (this "Release") is made ________, 1994, between
each of INTERNATIONAL CONTROLS CORP., a Florida corporation ("ICC") CHECKER
MOTORS CO., L.P., a Delaware limited partnership (the "Partnership"), CHECKER
MOTORS CORPORATION, a New Jersey corporation and the general partner of the
Partnership ("Motors"), and CHECKER HOLDING CORP. III, a Delaware corporation
("Holding"); ICC, the Partnership, Motors and Holding being hereinafter referred
to as the "Checker Entities"), on the one hand, and JOHN GARAMENDI, solely in
his capacity as conservator, rehabilitator and liquidator (the "Rehabilitator")
of Executive Life Insurance Company, and the BASE ASSETS TRUST (the "Trust"), on
the other hand.
RECITALS
A. The Settlement Agreement dated as of __________, 1994, among
the Checker Entities and the Rehabilitator and the Trust (the "Settlement
Agreement"; all capitalized terms not defined herein being used with the
meanings ascribed thereto in the Settlement Agreement) provides, among other
things, for the purchase by the Checker Entities of the Interest.
B. This General Release is being delivered by the Checker Entities
simultaneously with the assignment of the Interest by the Rehabilitator and the
Trust to the Checker Entities.
E-1
<PAGE>
Accordingly, the parties hereto agree as follows:
1. RELEASE OF RELEASED PARTIES BY THE CHECKER ENTITIES. In con-
sideration of receipt of the Interest, each of the Checker Entities hereby
releases and forever discharges the Rehabilitator and the Trust each of their
trustees, advisors, attorneys, agents, predecessors in interest, assignors,
successors and assigns, and the officers, directors, shareholders and employees
of each of the foregoing (all such released parties hereinafter are collectively
referred to as the "Released Parties") of and from (i) any and all liabilities
and obligations under the Partnership Agreement, including, without limitation,
any liability for any breach of a representation, warranty or covenant contained
in the Partnership Agreement, and (ii) any and all claims and causes of action
of any and every character, known or unknown, anticipated or unanticipated,
contingent or matured, which any of the Checker Entities may have or claim to
have against any of the Released Parties, arising from or related to the Part-
nership Agreement and the management of the Partnership (including but not
limited to any claims that were raised or could have been raised in the
Lawsuit); provided, however, that no claims, rights or obligations arising under
the Settlement Agreement are released hereby.
2. FULL, COMPLETE AND RELEASE; ALL CLAIMS COVERED. This Release
is intended to be and is a full and complete release by the Checker Entities of
the Released Parties regarding the subject matter of the release set forth in
Paragraph 1 hereof and is intended by the Checker Entities to cover all claims
of all
E-2
<PAGE>
types, whether arising under common law or under the statutes or regulations of
(a) the States of California, New York, Delaware, Michigan, or any county, city
or government agency thereof, or (b) other states or similar jurisdictions of
the United States, or any county, city or government agency thereof; provided,
however, that no claims, rights or obligations arising under the Settlement
Agreement are released hereby. The Checker Entities acknowledge and agree that
this Release is to be construed as the broadest possible type of release
regarding the subject matter of the release set forth in Paragraph 1 hereof
releasing any and all claims, including, without limitation, antitrust,
contract, copyright, fiduciary duty, fraud, regulatory, royalty, securities,
usury, statutory, tort, trespass and any other claims.
3. COVENANT NOT TO Sue. In consideration for the transactions
contemplated by the Settlement Agreement, the Checker Entities, to the extent
that any of the Checker Entities held, holds or may hold any claims or causes of
action that are being released hereunder pursuant to this Release, hereby
covenant with each of the Released Parties not to sue, assert any claim against,
or otherwise seek any recovery from the Released Parties, whether for contract,
fraud, tort or otherwise.
4. AUTHORITY OF CHECKER ENTITIES AND LACK OF ASSIGNMENT OF CLAIMS.
As part of the consideration for the transactions contemplated by the Settlement
Agreement, each of the Checker Entities expressly represents and warrants to the
Released Parties that such Checker Entity has the authority to give this Release
and that no assignment, pledge, sale, transfer,
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<PAGE>
or other disposition of any right, title, interest, in or to any claim of such
Checker Entity against the Released Parties has been made.
5. KNOWLEDGE AND UNDERSTANDING. EACH CHECKER ENTITY REPRESENTS
AND AGREES THAT SUCH CHECKER ENTITY HAS CAREFULLY READ AND FULLY UNDERSTANDS ALL
OF THE PROVISIONS OF THIS RELEASE, THAT SUCH CHECKER ENTITY IS REPRESENTED
HEREIN BY COUNSEL OF SUCH CHECKER ENTITY'S CHOICE AND HAS FULLY DISCUSSED THIS
RELEASE WITH SUCH COUNSEL, AND THAT SUCH CHECKER ENTITY IS ENTERING INTO THIS
RELEASE VOLUNTARILY, WHOLLY UPON SUCH CHECKER ENTITY'S OWN VOLITION, JUDGMENT,
BELIEF AND KNOWLEDGE, AND WITHOUT ANY DURESS OR UNDUE INFLUENCE ON THE PART OF
OR ON BEHALF OF ANY PARTY.
6. WAIVER OF CALIFORNIA CIVIL CODE S. 1542. EACH CHECKER ENTITY
HEREBY WAIVES AS AGAINST EACH RELEASED PARTY ALL RIGHTS UNDER CALIFORNIA CIVIL
CODE S. 1542 AS TO THE SUBJECT MATTER OF THE RELEASE SET FORTH IN PARAGRAPH 1
HEREOF, WHICH PROVIDES THAT:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY
HIM,MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
EACH CHECKER ENTITY ACKNOWLEDGES THAT SUCH CHECKER ENTITY HAS BEEN FULLY IN-
FORMED BY SUCH CHECKER ENTITY'S OWN COUNSEL CONCERNING THE EFFECT AND IMPORT OF
THIS WAIVER OF RIGHTS UNDER CALIFORNIA CIVIL CODE S. 1542.
E-4
<PAGE>
7. RESERVATION OF RIGHTS.
Notwithstanding anything to the contrary in the Settlement Agreement
or this Release, nothing therein or herein shall be construed to waive or
otherwise affect the rights of the Checker Entities, if any, to proceed and/or
recover against any person or entity relating to any matter not the subject to
the terms of paragraph 1 of this Release, including, but not limited to
transactions involving South Charleston Stamping & Manufacturing Company.
8. MODIFICATIONS, AMENDMENTS OR WAIVERS. Provisions of this
Release may be modified, amended or waived only by a written document
specifically identifying this Release and signed by each Checker Entity, the
Rehabilitator and the Trust.
9. SUCCESSORS AND ASSIGNS. This Release shall be binding on, and
shall inure to the benefit of, the Checker Entities and the Released Parties,
respectively, and their respective legal representatives, successors, heirs and
assigns.
10. GOVERNING LAW. This Release shall be governed by, and
construed in accordance with, the internal laws of the State of California
without taking into account provisions regarding choice of law.
11. SEVERABILITY. If any provision of this Release, or the
application hereof to any person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Release and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect only if, after
excluding
E-5
<PAGE>
the portion deemed to be unenforceable, the remaining terms shall provide for
the consummation of the transactions contemplated hereby in substantially the
same manner as originally set forth at the later of the date this Release was
executed or last amended.
12. ENTIRE AGREEMENT. This Release and the Settlement Agreement
and related documents contains the entire agreement and understanding of the
parties hereto concerning the subject matter hereof, and supersedes and replaces
any prior negotiations, understandings and agreements of any kind, written or
oral. Each Checker Entity acknowledges that no other party, nor any agent or
attorney of any other party, has made any promise, representation or warranty
whatsoever, express or implied, not contained herein, concerning the subject
matter hereof, to induce such party to execute this Release, and acknowledges
that such Checker Entity has not executed this Release in reliance upon any such
promise, representation or warranty not contained herein.
13. COUNTERPARTS. This Release may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
E-6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Release to be
executed on the date first written above.
- -----------------------------------
JOHN GARAMENDI, in his capacity as
Rehabilitator, but not individually
BASE ASSETS TRUST
By:
-------------------------------
Trustee
By:
-------------------------------
Trustee
By:
-------------------------------
Trustee
CHECKER MOTORS CO., L.P.
By: Checker Motors Corporation
General Partner
By:
------------------------------
Name:
Title:
CHECKER MOTORS CORPORATION
By:
------------------------------
Name:
Title:
CHECKER HOLDING CORP. III
By:
------------------------------
Name:
Title:
INTERNATIONAL CONTROLS CORP.
By:
------------------------------
Name:
Title:
E-7
<PAGE>
EXHIBIT F-1
OPINION OF COUNSEL TO THE
REHABILITATOR
14. The Rehabilitator has all requisite power and authority to execute, deliver
and perform his obligations under the Agreement (defined to include
Exhibits).
15. The execution, delivery and performance of the Agreement and the compliance
by the Rehabilitator with all of the provisions thereof and the
consummation of the transactions contemplated thereby will not require any
consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body or, if so required,
all such consents, approvals, authorizations and orders have been obtained
and are in full force and effect, and will not conflict with or constitute
a breach of any of the terms or provisions of, or a default under, any
material agreement to which the Rehabilitator is a party or by which any of
ELIC's properties is bound or violate or conflict with any law,
administrative regulation or ruling or court decree applicable to the
Rehabilitator or ELIC or any of ELIC's properties.
16. The Agreement has been duly authorized, executed and delivered by the
Rehabilitator and constitutes the legal, valid and binding obligation of
the Rehabilitator, enforceable against the Rehabilitator and ELIC in
accordance with its terms, except (a) as the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (b) that the availability of equitable remedies may be
limited by equitable principles of general applicability. To the best of
such counsel's knowledge, there are no legal or governmental proceedings
which question the power and authority of the Rehabilitator to deliver and
perform their obligations under the Agreement.
17. To the best knowledge of such counsel, there are no security interests,
charges, claims, liens, encumbrances or adverse interests of any kind on
the Interest and no actions, warrants or other rights to purchase,
agreement or other obligations to sell any portion of the Interest or any
portion of a claim against the Checker Entities are outstanding.
F-1-1
<PAGE>
EXHIBIT F-2
OPINION OF COUNSEL TO THE
TRUST
1. The Trust has all requisite power and authority to execute, deliver and
perform its obligations under the Agreement (defined to include Exhibits).
2. The execution, delivery and performance of the Agreement and the compliance
by the Trust with all of the provisions thereof and the consummation of the
transactions contemplated thereby will not require any consent, approval,
authorization or other order of any court or governmental body or, if so
required, all such consents, approvals, authorizations and orders have been
obtained and are in full force and effect, and will not conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, any material agreement to which the Trust is a party or by which any
of the Trust's properties is bound.
3. The Agreement has been duly authorized, executed and delivered by the Trust
and constitutes the legal, valid and binding obligation of the Trust,
enforceable against the Trust in accordance with its terms, except (a) as
the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (b) that the
availability of equitable remedies may be limited by equitable principles
of general applicability. To the best of such counsel's knowledge, there
are no legal or governmental proceedings which question the power and au-
thority of the Trust to deliver and perform its obligations under the
Agreement.
4. To the best knowledge of such counsel, there are no security interests,
charges, claims, liens, encumbrances or adverse interests of any kind on
the Interest and no actions, warrants or other rights to purchase,
agreement or other obligations to sell any portion of the Interest or any
portion of a claim against the Checker Entities are outstanding.
F-2-1
<PAGE>
EXHIBIT G
OPINION OF COUNSEL TO THE CHECKER ENTITIES
1. Each of the Checker Entities has all requisite power and authority to
execute, deliver and perform his obligations under the Agreement (defined
to include Exhibits).
2. The execution, delivery and performance of the Agreement and the compliance
by the Checker Entities with all of the provisions thereof and the
consummation of the transactions contemplated thereby will not require any
consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body or, if so required,
all such consents, approvals, authorizations and orders have been obtained
and are in full force and effect and will not conflict with or constitute a
breach of any of the terms or provisions of, or a default under, any
material agreement to which any of the Checker Entities is a party or by
which any of any of their properties is bound or violate or conflict with
any law, administrative regulation or ruling or court decree applicable to
the Checker Entities or any of their properties.
3. The Agreement has been duly authorized, executed and delivered by each of
the Checker Entities and constitutes the legal, valid and binding
obligation of the Checker Entities, enforceable against the Checker
Entities in accordance with its terms, except (a) as the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (b) that the availability of equitable
remedies may be limited by equitable principles of general applicability.
To the best of counsel's knowledge, there are no legal or governmental
proceedings which question the power and authority of the Checker Entities
to deliver and perform their obligations under the Agreement.
G-1
<PAGE>
EXHIBIT 10.39
INDEMNIFICATION AGREEMENT
[Date]
[Name]
[Address]
Dear
In consideration of your continued service as an officer or director
of Great Dane Holdings Inc. (the "Company"), the Company shall to the extent
provided herein indemnify you and hold you harmless from and against any and all
"Losses" (as defined below) which you may incur by reason of your election or
service as a director, officer, employee, agent, fiduciary or representative of
the Company or any "Related Entity" (as defined below) to the fullest extent
permitted by law.
1. (a) "Losses" mean all liabilities, "Costs and Expenses" (as
defined below), amounts of judgments, fines, penalties or excise taxes (or other
amounts assessed, surcharged or levied under the Employee Retirement Income
Security Act of 1974, as amended) and amounts paid in settlement of or incurred
in defense of any settlement in connection with any threatened, pending or
completed claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative, and whether brought by or in the right of the
Company or otherwise, and appeals in which you may become involved, as a party
or otherwise, by reason of acts or omissions in your capacity as and while
serving as a director, officer, employee, agent, fiduciary or representative of
the Company or any Related Entity.
(b) A "Related Entity" means any corporation, partnership,
joint venture, trust or other entity or enterprise in which the Company is in
any way interested, or in or as to which you are serving at the Company's
request or on its behalf, as a director, officer, employee, agent, fiduciary or
representative including, but not limited to, any employee benefit plan or any
corporation of which the Company or any Related Entity is, directly or
indirectly, a stockholder or creditor.
(c) "Costs and Expenses" means all reasonable costs and
expenses incurred by you in investigating, defending or appealing any
threatened, pending or completed claim, action, suit or proceeding including,
without limitation, counsel fees and disbursements.
2. Costs and Expenses shall be paid promptly by the
<PAGE>
Company as they are incurred or shall be advanced on your behalf as may be
appropriate against delivery of invoices therefor (whether or not it may
ultimately be determined that you are entitled to be indemnified by the Company
on account thereof); provided, however, that if it shall ultimately be
determined by final decision of a court of competent jurisdiction that you are
not entitled to be indemnified on account of any costs or expenses for which you
have theretofore received payment or reimbursement, you shall promptly repay
such amount to the Company.
3. The Company shall indemnify you and hold you harmless from and
against any and all Losses which you may incur if you are a party to or
threatened to be made a party to or otherwise involved in any proceeding or
action (other than a proceeding or action by or in the right of the Company to
procure a judgment in its favor), unless it is determined that you did not act
in good faith and in a manner reasonably believed by you to be in, or not
opposed to, the best interest of the Company and, in the case of a criminal
proceeding or action, in addition, that you had reasonable cause to believe that
your conduct was unlawful.
4. The Company shall indemnify you and hold you harmless from and
against any and all Losses which you may incur if you are a party to or
threatened to be made a party to any proceeding or action by or in the right of
the Company to procure a judgment in its favor, unless it is determined that you
did not act in good faith and in a manner reasonably believed by you to be in,
or not opposed to, the best interest of the Company, except that no
indemnification for Losses shall be made under this Paragraph 4 in respect of
any claim, issue or matter as to which you shall have been adjudged to be liable
to the Company, unless and only to the extent that any court in which such
action or proceeding was brought shall determine upon application that, despite
the adjudication of liability, but in view of all the circumstances of the
matter, you are fairly and reasonably entitled to indemnity for such expenses as
such court shall deem proper.
5. Anything hereinabove to the contrary notwithstanding, "Losses"
shall not include, and you shall not be entitled to indemnification under this
agreement on account of (i) amounts payable by you to the Company or any Related
Entity in satisfaction of any judgment or settlement in the Company's or such
Related Entity's favor, or any amount payable on account of profits realized by
you in the purchase or sale of securities of the Company or any Related Entity
within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as
amended, or similar provisions of state law; (ii) Losses in connection with
which it is otherwise determined that you are not entitled to indemnification as
a matter of law or public policy; or (iii) Losses to the extent you are
indemnified by the Company otherwise than pursuant to this agreement, including
any Losses for which payment is made to you under an insurance policy.
-2-
<PAGE>
6. Termination of any action, suit or proceeding by judgment,
order, settlement or conviction, upon a plea of nolo contendere or its
equivalent will not, of itself, create any presumption that you did not act in
good faith and in a manner which you reasonably believed to be in or not opposed
to the best interest of the Company or a Related Entity and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that your
conduct was unlawful. The determination that you are not entitled to be
indemnified for Losses hereunder by reason of the provisions of Paragraphs 3 or
4 or clause (ii) of Paragraph 5 may be made either by the Company's Board of
Directors (by majority vote of disinterested directors or directors who are not
parties to or the subject of the same or any similar claim, action, suit or
proceeding), by independent legal counsel (who may be the outside counsel
regularly employed by the Company) or by the stockholders of the Company, as the
Company's Board of Directors shall determine.
7. The right to indemnification or advances of Costs and Expenses
as provided in this agreement shall be enforceable by you in any court of
competent jurisdiction. The burden of proving that indemnification is not
appropriate shall be on the Company. Neither the failure of the Company
(including its Board of Directors or independent legal counsel) to have made a
determination prior to the commencement of such action that indemnification is
proper in the circumstances because you have met the applicable standard of
conduct, nor an actual determination by the Company (including its Board of
Directors or independent legal counsel) that you have not met such applicable
standard of conduct shall be a defense to the action or create a presumption
that you have not met the applicable standard of conduct. Costs and expenses,
including counsel fees, reasonably incurred by you in connection with
successfully establishing your right to indemnification, in whole or in part, in
any such action shall also be indemnified by the Company.
8. You agree to give prompt notice to the Company of any claim
with respect to which you seek indemnification and, unless a conflict of
interest shall exist between you and the Company with respect to such claim, you
will permit the Company to assume the defense of such claim with counsel of its
choice. Regardless of whether such defense is assumed by the Company, the
Company will not be subject to any liability for any settlement made without its
consent. The Company will not consent to entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to you a release from all liability with respect to
such claim or litigation. If the Company is not entitled to, or does not elect
to, assume the defense of a claim, the Company will not be obligated to pay the
fees and expenses of more than one counsel for you and any other directors or
officers of the Company who are indemnified pursuant to similar indemnity
agreements with respect
-3-
<PAGE>
to such claim, unless a conflict of interest shall exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which event the Company will be obligated to pay the fees and expenses
of an additional counsel for each indemnified party or group of indemnified
parties with whom a conflict of interest exists.
9. The Company's obligation to indemnify you under this agreement
is in addition to any other rights to which you may otherwise be entitled by
operation of law, vote of the Company's stockholders or directors or otherwise
and will be available to you whether or not the claim asserted against you is
based upon matters which occurred before the date of this agreement.
10. The obligation of the Company to indemnify you with respect to
Losses which you may incur by reason of your service as a director, officer,
employee, agent, fiduciary or representative of the Company or a Related Entity,
as provided under this agreement, shall survive the termination of your service
in such capacities and shall inure to the benefit of your heirs, executors and
administrators.
11. The Company agrees that, so long as you shall serve as a
director, officer, employee, agent, fiduciary or representative of the Company
or any Related Entity and thereafter so long as you shall be subject to any
possible claim or threatened, pending or completed action or proceeding by
reason of your service as a director, officer, employee, agent, fiduciary or
representative of the Company or any Related Entity, the Company shall use
reasonable efforts to purchase and maintain in effect for your benefit valid,
binding and enforceable policies of directors and officers liability insurance
("D & O Insurance"), covering Losses, it being understood that the Company shall
not be required to maintain D & O Insurance in effect if such insurance is not
reasonably available or if, in the reasonable business judgment of the directors
of the Company, either (i) the premium cost for such insurance is substantially
disproportionate to the amount of coverage or (ii) the coverage provided by such
insurance is so limited by exclusions that there is insufficient benefit from
such insurance.
12. If you are entitled under this agreement or otherwise to
indemnification by the Company for some or a portion of the Losses actually and
reasonably incurred by you but not, however, for the total amount thereof, the
Company shall nevertheless indemnify you for the portion of the Losses to which
you are entitled.
13. It is the intention of the parties to this agreement to
provide for indemnification in all cases and under all circumstances where to do
so would not violate applicable law (and notwithstanding any limitations
permitted, but not required by
-4-
<PAGE>
statute) and the terms and provisions of this agreement shall be interpreted and
construed consistent with that intention. Nevertheless, if any provision of
this agreement or any indemnification made under this agreement shall for any
reason be determined by any court of competent jurisdiction to be invalid,
unlawful or unenforceable under current or future laws, such provision shall be
fully severable and the remaining provisions of this agreement shall not
otherwise be affected thereby, but will remain in full force and effect and, to
the fullest extent possible, shall be construed so as to give effect to the
intent manifested by the provision held invalid, illegal or unenforceable.
14. No amendment, modification, termination or cancellation of
this agreement shall be effective unless in writing signed by both the Company
and you.
Your signature below will evidence your agreement and acceptance
with respect to the foregoing.
Very truly yours,
GREAT DANE HOLDINGS INC.
By:____________________________
AGREED TO AND ACCEPTED:
- ------------------------
- 5 -
<PAGE>
EXHIBIT 10.40
SALE, INSTALLATION AND TECHNICAL ASSISTANCE AGREEMENT
Agreement, made this 14th day of November, 1983, by and between
Graaff KG, a German limited partnership with offices at Heinrich Nagel Strasse
1, 3210 Elze, Federal Republic of Germany (herein, "Graaff"), and Great Dane
Trailers, Inc., a Georgia corporation with offices at Lathrop Avenue, Savannah,
Georgia, jointly and severally with Great Dane Trailers Indiana, Inc., an
Indiana corporation with offices in Brazil, Indiana (collectively herein, "Great
Dane").
WHEREAS, Graaff has available to it certain confidential and
proprietary information regarding processes and equipment for the manufacture of
foam core panels useful in the construction of truck trailer bodies; and
WHEREAS, Great Dane desires to have Graaff provide equipment in the
United States for the production of such foam core panels for such use, and to
design an appropriate lay-out of Great Dane's plant for the installation thereof
and to assist in the installation thereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
1. DEFINITION OF TERMS
The following terms when used throughout this Agreement shall
have the meaning ascribed herein unless such meaning is clearly precluded by the
context in which the term is used.
<PAGE>
1.1 ACCEPTANCE: shall mean successful completion of the
Start-Up as set forth in Section 2.6.
1.2 AFFILIATE: shall mean any business entity
controlling, controlled by or under common control with another entity, control
being a right to vote more than 50% of the votes or interests in each entity.
1.3 CONFIDENTIAL INFORMATION: shall mean confidential and
proprietary information, ideas, concepts and know-how related to economic and
commercial matters, as well as technical information of any type, relating to
the design, manufacture, maintenance or use of the Equipment and/or the Licensed
Product.
1.4 SCHEDULE: shall mean the timetable established in
Exhibit 1.4 attached hereto for the various actions to be taken by Graaff and
Great Dane.
1.5 EQUIPMENT: shall mean the various materials,
supplies, hardware, components and facilities to be delivered by Graaff
hereunder, which Equipment shall be substantially similar to that presently used
for the production of foam-core panels at the Elze facilities of Graaff, a
partial list of which is attached hereto as Exhibit 1.5.
1.6 FACILITY: shall mean the Plant, including the
Installed Equipment and the Supply Requirements.
1.7 FACILITY SPECIFICATIONS: shall mean all information
required to design, and construct the Plant and to procure or where necessary to
construct the Supply Requirements and to install, operate and maintain the
Facility so as to
2
<PAGE>
produce Licensed Product in conformity with the Product Specifications and the
Performance Specifications.
1.8 SUPPLY REQUIREMENTS: shall mean various utilities
(including without limitation gas, air, electricity, waste treatment and/or
removal); tools; mechanical, electrical or other required sub-systems; testing
devices; cranes, forklifts and other similar equipment; molds; and supplies of
raw materials, and other items, as are all necessary to permit the Installed
Equipment to operate in the Plant and which are to be supplied by Great Dane.
Exhibit 1.8 hereto sets forth those Supply Requirements presently known to
Graaff; the parties acknowledge that this will be supplemented and completed
pursuant to Section 2.1 hereof.
1.9 IMPROVEMENT: shall mean any invention, patent or
Confidential Information relating to the Equipment or the Licensed Product
developed or reduced to practice from the date hereof until the end of the Term.
1.10 INSTALLATION: shall mean the process of assembling,
mounting and installing the Equipment in accordance with the Plant Designs.
1.11 JOB SITE: shall mean the location of the
Plant at Brazil, Indiana.
1.12 LICENSED PRODUCT: shall mean foam core panels for use
in the production of truck trailers.
3
<PAGE>
1.13 PERFORMANCE SPECIFICATIONS: shall mean those
specifications for the operation of the Facility as set forth in Exhibit 1.13
hereto.
1.14 PLANT: shall mean the building provided at the Job
Site, together with all necessary fixtures, fittings, utilities and Supply
Requirements.
1.15 PLANT DESIGNS: shall mean layouts, blue prints and
other designs of the Plant showing INTER ALIA where Equipment is to be
installed as well as where Great Dane will install all supporting elements.
1.16 PRICE: shall mean the amounts set forth in Section 5
hereof.
1.17 PRODUCT SPECIFICATIONS: shall mean those standards
and specifications which the Licensed Product shall meet when produced in the
Facility during and after Start-Up, as set forth in Exhibit 1.17 attached
hereto.
1.18 START-UP: shall mean a period of thirty (30) days of
testing by Graaff of the Facility to demonstrate that the Facility produces
Licensed Product in accordance with the Product and Performance Specifications.
1.19 TECHNICAL ASSISTANCE: shall mean the services of
engineers or other specialist personnel to be provided by Graaff.
1.20 TERM: shall mean the five-year period beginning at
Acceptance (notwithstanding that this Agreement shall
4
<PAGE>
have become valid and binding as of the execution and delivery hereof).
1.21 TERRITORY: shall mean the United States and its
possessions, Puerto Rico, Canada and Mexico.
2. DESIGNS, EQUIPMENT AND SPECIFICATIONS.
2.1 (a) As soon as possible after the execution hereof,
Great Dane will provide Graaff with all information reasonably available to
Great Dane regarding available utilities; environmental, pollution and health
and safety regulations; temperature and humidity conditions at the Job Site; and
such other information as Graaff may reasonably request in order to conform the
Equipment to the Job Site, to commence work on the preliminary Plant Designs,
and to install the Equipment in the Plant.
(b) As soon as possible after the execution hereof,
Graaff will provide Great Dane with all information (including but not limited
to Confidential Information) reasonably available to Graaff, so as to enable
Great Dane to (i) meet its obligations under Section 2.1(a) above; and (ii)
determine the suitability of the Equipment for producing Licensed Product
in the Facility.
(c) Great Dane and Graaff will continue to co-operate
and exchange data, plans, drawings and the like so as to enable the parties to
agree to the following matters: (i) a final Plant Design; (ii) final Supply
Requirements; (iii) modification of the Equipment (or provision of additional
equipment or facilities by Great Dane) to meet environmental, pollution, safety
5
<PAGE>
and other like standards applicable to the Equipment and its operation at the
Job Site. The Supply Requirements shall also specify when the various elements
thereof shall be required and available. In the event that (i) any Equipment
requires any change or modification to meet environmental, pollution, safety or
other standards applicable to the operation of the Equipment at the Job Site, or
(ii) in the event Great Dane shall request modifications in the Equipment other
than those required to produce Licensed Product in accordance with the Product
and Performance Specifications (provided that Graaff is capable of making such
requested other modifications), Graaff agrees to provide such modified
Equipment. In the event that the cost of providing such modified Equipment
pursuant to (i) above is greater than the cost of providing Equipment which
meets similar standards applicable in the Federal Republic of Germany, and in
any event in regard to changes pursuant to (ii) above, Graaff will notify Great
Dane of its reasonable expectations of any increases in cost, and the increase
in cost, shall be added to the Price, and paid pursuant to Section 5.4 hereof.
(d) The parties expect the above procedures this to be
completed in accordance with the Schedule; to the extent delay, justified
pursuant hereto, is experienced, the Schedule will be adjusted accordingly.
Graaff shall provide Great Dane with, and both Great Dane and Graaff will
initial copies of, final Plant Designs and final Supply Requirements when both
parties are satisfied with them and one (1) copy so initialled
6
<PAGE>
will be attached hereto. Great Dane will cause final and complete architectural
(mechanical, electrical, structural and so forth) blueprints to be developed
from the final Plant Designs. Graaff reserves the right to review and approve
such blueprints before Great Dane accepts the same.
2.2 Graaff agrees, at no additional cost to Great Dane and
as part of the Price to provide Great Dane with (i) Technical Assistance, and
(ii) all material Facility Specifications in the possession or control of Graaff
no later than three (3) months after the execution hereof.
2.3 Great Dane agrees that it will cause the Supply
Requirements to be available in the manner agreed at such time as the parties
shall have scheduled, and shall have the Plant constructed, ready for
Installation, in accordance with the Plant Designs and the Schedule.
2.4 Graaff agrees it will purchase or construct (as the case
may be) and deliver Equipment, and be primarily responsible for the Installation
of the Equipment, all in accordance with the Plant Designs and the Schedule.
For such purposes, Great Dane agrees to place at the disposal of Graaff at the
Job Site such personnel, independent contractors, tools and such other
assistance as Graaff may reasonably require, at the risk and expense of Great
Dane, but subject to the supervision of Graaff for the actual process of
Installation and Start-Up.
2.5 Immediately prior to the commencement of Start-Up,
Graaff shall certify to Great Dane that the final Supply
7
<PAGE>
Requirements have been fulfilled by Great Dane and that the Plant provided by
Great Dane is in conformity with the final Plant Designs. In the event this
shall not be the case, Great Dane shall at its expense make such corrections to
the Plant or obtain such Supply Requirements in order that the same shall be
complete in accordance with the final initialled Supply Requirements and/or
Plant Designs, and until such has occurred, Graaff shall not be under any
obligation to complete the Installation or commence Start-Up (as the case may
be). Graaff covenants and agrees that the final Supply Requirements as
specified by Graaff shall be reasonably available in the world marketplace.
2.6 Graaff agrees that it will provide Great Dane, in
accordance with the terms and conditions hereof, with the Equipment, Technical
Assistance and information and know-how (including Confidential Information) so
that subsequent to the certification set forth in Section 2.5 hereof, the
Facility will be capable of producing Licensed Product in accordance with the
Product and Performance Specifications. In the event that Graaff shall not be
able for any reason to complete the Installation (other than for reasons
consistent with Great Dane's failure to perform hereunder, or for conditions set
forth in Section 14 hereof), Graaff agrees it will make available to Great Dane,
at Great Dane's election, all information and know-how concerning the Equipment
and the Installation necessary and sufficient to permit Great Dane to complete
the Installation itself, including without limitation information necessary and
sufficient to purchase or
8
<PAGE>
manufacture the Equipment, as the case may be. Such information shall be deemed
Confidential Information hereunder, and, shall be used strictly for the purposes
of completing the Installation at the Plant.
2.7 Upon completion of Installation, the parties
will cause the Equipment as installed to undergo Start-Up. If such Start-Up is
successfully completed in accordance herewith, both parties shall execute a
document so stating. If this StartUp shall not be successfully completed,
Graaff will at its expense undertake such action and procedures to permit a
second Start-Up to commence within eight (8) weeks of the scheduled date of
completion of the initial Start-Up. For the purposes hereof, Start-Up shall be
deemed successfully completed at such time during the Start-Up period when
Graaff, either with personnel of Great Dane, or if in Graaff's opinion, such
personnel have not been fully or satisfactorily trained, with Graaff's Technical
Assistance, is able to cause the Facility to produce Licensed Product, in
accordance with the Product and Performance Specifications. Graaff may keep
such samples of Licensed Product for testing and quality control purposes as it
shall require.
2.8 Great Dane warrants and represents to Graaff that the
test programs "Drive-3" and "Space DRV", a true, accurate and complete disk of
which programs (as well as all associated operational testing parameters and
test results) has been delivered to Graaff as of the execution hereof, are the
dynamic test programs which Great Dane used in testing 2.5" thick side
9
<PAGE>
walls in truck trailer (No. IS-DSO 82001) which Great Dane found to be
acceptable. In conjunction with Exhibit 1.17 (B), hereto, Great Dane covenants
that in any testing of Licensed Product for conformity with the Product
Specifications, such testing will be carried out on equivalent panels, with the
same test program, under the same test conditions, using the same test
equipment, on an equivalent truck trailer. Graaff may observe such testing and,
if it requests, Great Dane will utilize the above-mentioned program disk
delivered to Graaff. Graaff may, in the event of any failure of the Licensed
Product to meet the Product Specifications, cause further equivalent panels to
be produced in its Elze facilities and may itself produce equivalent Licensed
Product at the Facility, which Great Dane will incorporate into a further truck
trailer and run the same testing again. If the Licensed Product produced at the
Facility then meets the Product Specifications, Great Dane shall have no claim
for non-conformity in respect of the immediately prior test. In any case,
Great Dane covenants and agrees that it will produce a truck trailer and cause
the Licensed Product to undergo testing as above foreseen during the Start-Up
period immediately (or as soon as under the circumstances may at all be
possible) after Graaff shall have caused the facility to produce the appropriate
Licensed Product therefor. In the event that Graaff shall have timely produced
or caused to be timely produced Licensed Product which meets the Product and
Performance Specifications, for the production of such truck trailer and
testing of the Licensed
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Product, but such production and testing shall extend beyond the Start-Up period
(or second Start-Up period, as the case may be) as scheduled, then the Start-Up
period shall be deemed extended for the time needed for such trailer production
and testing. The Schedule (and any other actions or remedies which pursuant to
this Agreement would commence after or as of Acceptance) shall be appropriately
modified and extended, provided that the Licensed Product shall have met
Product and Performance Specifications.
3. TECHNICAL ASSISTANCE AND TRAINING.
3.1 As part of the Price, Graaff agrees, at its expense, to
train three (3) employees of Great Dane at its facilities in Elze, Federal
Republic of Germany, including training in the construction, operation,
maintenance and repair of the Equipment which training shall not exceed a term
of five (5) working weeks. Graaff will inform Great Dane regarding the
qualifications and abilities which Graaff believes will be necessary in order
that the training will proceed effectively and on schedule. Such training shall
be completed prior to the date on which the Equipment shall be shipped EX
WORKS. Great Dane agrees to make such employees available in a timely manner
and shall bear the costs of transportation, meals and lodging while such
employees are in training. Graaff reserves the right, in its reasonable
discretion, to reject any such trainees as unsuitable, and if so, Great Dane
will provide substitute trainees. Additional training of these or other
employees of Great Dane may be requested by Great Dane, but will be at a cost of
DM 250 per
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training day or part thereof for up to three (3) Great Dane employees. Graaff
cannot train more than three (3) such persons during any one training period.
Graaff covenants that it will provide sufficient training in such five (5) week
period to permit the trained employees to operate and maintain the Equipment.
3.2 From the date hereof until completion of the Term, upon
reasonable notice from Great Dane, Graaff will make available to Great Dane such
of its employees as Great Dane may reasonably request for Technical Assistance,
whether on or off the Job Site, for up to thirty (30) man-days per contract
year.
3.3 Each of Graaff and Great Dane shall maintain appropriate
medical insurance on behalf of their respective employees while on the premises
of the other and shall be responsible and indemnify the other party for any and
all claims for costs of medical treatment for such employees, as claimed against
the other party by any doctor or medical facility, provided that any sickness or
injury to such employee is not based on the negligence or wilful fault of the
other party or its employees.
3.4 Subject to any limitations on damages herein contained,
each of Graaff and Great Dane agree to indemnify and hold the other harmless
from any claims, damages, judgments, fees and expenses resulting from injury or
damage to persons employed by or property of the indemnified party, caused by
any Agent hereinafter defined) of the indemnifying party while at or on the
premises of the indemnified party.
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4. DELIVERY OF EQUIPMENT.
The Equipment shall be delivered, at Great Dane's option to be
exercised in writing at least ninety (90) days prior to the scheduled shipment
of the Equipment, E.O.T. at nearest terminal to Elze works (per 1980 Incoterms)
to such carrier as Great Dane shall have timely requested, or if none shall have
been requested, by such reasonable commercial carrier as Graaff shall select, in
which case (a) title and risk of loss shall pass to Great Dane on delivery to
the carrier or the terminal as the case may be, and (b) Great Dane shall be
responsible for (i) all transportation of the Equipment to the Job Site; (ii)
export and import clearances; (iii) customs duties and similar charges; and (iv)
for insurance against damage in an amount equal to the full replacement value of
the goods. Such policy shall name Graaff as an additional named insured in
respect of its obligations herein to deliver the Installation. In the
alternative, Great Dane may timely elect to have delivery made, and title and
risk of loss pass, at the Job Site, in which case all additional costs as
outlined above and incurred by Graaff shall be deemed to be additional elements
of the Price, payable immediately upon Graaff's presentation of an invoice for
such costs with reasonable supporting documentation. Graaff shall use such
packing as may be usual and customary for such shipment the cost of which is
included in the Price.
5. PRICE, PAYMENT AND DAMAGES.
5.1 The Price for Graaff's performance hereunder,
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including provision of the Equipment and training pursuant to Section 3.2
hereof, will be Four Million Eight Hundred Ninety Five Thousand German Marks
(DM4,895,000), plus Three Hundred Twenty Thousand German Marks (DM320,000), plus
or minus 10%, for two (2) foaming machines, plus Thirty Five Thousand German
Marks (DM35,000) for a one-year supply of major spare parts.
5.2 For provision of any Technical Assistance away from the
Elze facilities, Great Dane agrees to pay Graaff an amount of DM750 per man-day
or partial man-day until December 31, 1984, and thereafter a PER DIEM
supplement based on any increased labor costs of Graaff, for each consultant.
In addition, if such Technical Assistance shall be rendered at other than the
Elze facilities, Great Dane will provide round trip economy class air fare,
meals and lodging for all employees of Graaff or its Affiliates providing such
services.
5.3 Payment of the Price shall occur as follows:
(i) upon the execution hereof, forty percent (40%) of the Price (being for the
purposes hereof, DM 2,100,000) in good and immediately available funds in hand
or wire transferred to an account designated by Graaff; (ii) thirty percent
(30%) of the Purchase Price upon delivery of the Equipment to the carrier EX
WORKS (whether or not Great Dane has elected delivery EX WORKS) provided
that the same shall not be due earlier than fourteen (14) months after Starting
Date per Exhibit 1.4; and (iii) the remaining thirty percent (30%) of the
Purchase Price, payable thirty (30) days after Acceptance, provided that the
same shall
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not be due earlier than nineteen (19) months after Starting Date (per Exhibit
1.4) plus thirty (30) days. Payment for Technical Assistance or additional
training shall be made thirty (30) days after Graaff's monthly invoice in
respect of the same.
5.4 In the event of any change or modification to the
Equipment resulting in any increased costs pursuant to Section 2.1(c), Great
Dane shall pay Graaff for such increased costs as follows: forty percent (40%)
of such amount shall be paid by Great Dane to Graaff upon execution of any
change order or similar document reflecting such change (which Great Dane agrees
to provide Graaff); thirty percent (30%) shall be paid at the time the Equipment
incorporating such change shall be shipped; and thirty percent (30%) thirty (30)
days after Acceptance, all as provided in Section 5.3.
5.5 In the event that Acceptance shall be delayed for more
than eight (8) months after the Plant and Supply Requirements shall be ready for
Installation (but no sooner than fourteen (14) months after the date hereof),
the parties acknowledge that Great Dane will suffer damages which are not
subject to quantification. As a result, Graaff agrees it will pay Great Dane
liquidated damages (and not a penalty) of One Thousand Dollars per working day
(Monday-Friday) of such delay, not in any case however to exceed ten percent
(10%) of the Price, which Great Dane at its option may set off against the final
installment payment of the Price. Such liquidated damages will start to accrue
as of the end of such eight-month period and shall terminate either as above or
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at the date that the Facility operates to produce Licensed Product in accordance
with the Product and Performance Specifications. In the event that the
obligations of Graaff hereunder are not performed, and Great Dane recovers a
judgment for damages against Graaff, Great Dane agrees that any such liquidated
damages paid shall be set-off against such judgment.
5.6 In the event of any non-payment of monies due from one
party to another pursuant to this Agreement, any amount payable shall,
commencing ten (10) days after due date, accrue interest at two percent (2%)
above the prime rate of interest publicly announced by the German Bundesbank
(Federal Reserve Bank), Frankfurt am Main, on the due date thereof, until paid.
In the event such interest rate shall be in excess of the maximum legally
permissible rate of interest, then such amount payable shall accrue interest at
such maximum legally permissible rate.
6. LICENSE TO CONFIDENTIAL INFORMATION.
6.1 Graaff hereby grants Great Dane the right and license
prior to, during and, without limitation, after the Term hereof to utilize the
Confidential Information, for (i) construction and operation of the Facility for
production of the Licensed Product in the Territory, (ii) production of the
Licensed Product in the Territory, and (iii) use and sale of the Licensed
Product in truck trailers throughout the world, except in the territory of East
and West Europe. After the Term, provided Great Dane has performed its royalty
obligations hereunder, such license shall be non-cancellable.
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6.2 Graaff agrees that the licenses granted in
Section 6.1 are exclusive in the Territory, and as a result,
Graaff will not either itself or via any Affiliate, enter into production, use
or sale of the Licensed Product in the Territory, nor license any others to do
so, and to the extent Graaff shall determine to be legally permissible, will not
permit any other licensees to cause or permit sales of Licensed Product in the
Territory. Graaff further agrees that the license granted in Section 6.1(iii)
above, with respect to use and sales outside the Territory shall be exclusive in
any area of the world (other than East and West Europe) where Graaff shall not
have at any time heretofore or hereafter entered into a license agreement with a
third party for use and sale of the Licensed Product. If such a license is
proposed to be entered into, Graaff agrees to give Great Dane prior notice
thereof. If such third-party license for such area shall be non-exclusive, then
the license discussed herein shall be automatically deemed to have become
non-exclusive for such area upon execution of such other license. In the event
that such license shall be exclusive, then Great Dane shall be entitled to honor
outstanding orders in effect at the time of notice from Graaff, but thereafter
Great Dane agrees to withdraw from the area covered by such third-party license
and such area shall be, upon execution of such license, automatically deemed
withdrawn from the scope of Section 6.1(iii). To the extent Graaff shall
determine to be legally permissible, it shall not
permit such licensee(s) to export out of the territories covered
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by their licenses into the territories otherwise granted hereby
to Great Dane. In no event shall Great Dane be entitled to
compensation in any manner for the reduction of the territory covered by the
scope of Section 6.1(iii).
6.3 The provisions of Section 6.1 and 6.2 above, as well as
Great Dane's area of permitted manufacture, are limited strictly to truck
trailers, and no other fields of use, unless with Graaff's prior express
consent.
6.4 The rights granted under this license to Great Dane are
restricted to the single planned Facility at the Job Site, to be operated by
Great Dane. In the event that Great Dane shall desire to move the Equipment to
a new site in the Territory, it shall obtain Graaff's prior authorization, which
shall not be unreasonably withheld. In the event Great Dane shall desire to
establish a second (or further) Facility, for itself or for any Affiliate, in
the Territory, it agrees to purchase all Equipment from Graaff, provided that
Graaff's prices shall not exceed the Price herein as may be increased or
decreased by the change, from the date hereof to the date of Great Dane's order
for such Facility, in the Price Index Number 22.7 (Index for Industrial
Products, Subindex for Products of the Capital Goods Industry), published by the
West German Federal Bureau of Statistics, and in such case, Graaff agrees to
sell the same to Great Dane. If Graaff's price shall be greater than the Price
herein as so changed, Great Dane shall be free to purchase the Equipment
elsewhere. In either case, the license herein shall extend to the
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construction (by Great Dane or on its behalf) and operation of such second or
subsequent Facility on a royalty-free basis,
provided that if Great Dane has not paid the Maximum Royalty hereunder,
royalties shall be payable on such second or subsequent Facility in the same
manner as provided herein, until such Maximum Royalty shall in the aggregate
have been reached. In the event that Great Dane shall wish to sell the Facility
or any division of Great Dane operating the Facility, this Agreement may be
assigned to any purchaser, provided (i) the purchaser shall in advance agree to
protect Graaff's Confidential Information as herein set forth, pursuant to a
written agreement specifically recognizing Graaff's interests in the
Confidential Information; (ii) such purchaser shall not be a competitor of
Graaff or its Affiliates; and (iii) Great Dane shall remain primarily obligated
and liable to Graaff pursuant hereto for any amounts of money then outstanding.
6.6 From the date hereof until the end of the Term hereof, in
addition to the Confidential Information, Graaff shall make reasonably available
to Great Dane such other information as is necessary for operation and
maintenance of the Plant, including raw materials specifications, specifications
for manufacturing or procurement of any special tools and specifications for any
necessary subsystems not a part of the Equipment.
7. SECRECY AND CONFIDENTIALITY.
7.1 Graaff represents that Graaff's Confidential
Information is a valuable trade secret of Graaff, is generally
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not known in the industry, and constitutes a valuable asset of Graaff which
would be without value if disclosed in an unauthorized or non-restricted manner.
7.2 The parties agree that each will take and maintain all
precautions to ensure that their respective directors, partners, officers,
employees, shareholders, representatives, licensees and agents (generally,
"Agents") shall only be permitted such access to Confidential Information of the
other as such Agent(s) shall need to know for the design, construction,
operation and maintenance of the Facility and Equipment and that any person
being given such access shall be permitted to use the same solely for
construction, operation and maintenance or repair of the Facility and Equipment
and that any person being given such access shall be permitted to use the same
solely for construction, operation, maintenance or repair of the Facility
consistent with the provisions of this Agreement.
7.3 Great Dane and Graaff shall not, and shall take and
maintain all precautions that its Agents shall not at any time, directly or
indirectly, with respect to Confidential Information of the other, (a) divulge
or disclose any Confidential Information disclosed to the other at any time
hereafter to any third-party, unless the disclosing party shall have been
informed thereof in advance and has given the other party its approval thereto,
which shall only be granted if such disclosure (i) is for the specific purposes
hereof and (ii) the party to whom such disclosure is proposed to be made
executes a writing evidencing to
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the satisfaction of the disclosing party its acknowledgement of the other
party's rights and remedies in respect of the Confidential Information, or (b)
use (or permit the same by any Agent or third party) the Confidential
Information in a manner inconsistent with this Agreement.
7.4 Each party hereto agrees to keep documents containing
Confidential Information, both their own and that of the other party, and any
copies thereof, as secure and in the same manner as it maintains its own most
confidential documents. In the event that an Agent of Great Dane shall have
access to Confidential Information and shall leave the employ or control of
Great Dane, Great Dane shall not be liable for any disclosure by such Agent.
However, Great Dane agrees that in respect of any such Agent of supervisory
level or more senior, (a) if reasonably possible, Great Dane shall obtain a
written statement from such Agent that such Agent will not disclose or use the
Confidential Information in any manner; (b) if reasonably possible, discover the
next employer or principal for such Agent and give due written notice of
continuing restrictive proprietary rights and obligations of such Agent in
regard to the Confidential Information to such employer or principal; and (c)
assign and transfer to Graaff any and all rights Great Dane may have to seek
non-disclosure or other remedies or damages against such Agent.
7.5 At such time as any document containing Confidential
Information shall no longer be needed by or useful to Great Dane, Great Dane,
agrees at its own expense if it shall
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desire to remove the same from its procedures and protection for confidential
documents and at its election, (i) to assume the cost and responsibility of
returning all of the same to Graaff or (ii) to destroy the same and certify the
fact of such destruction to Graaff.
7.6 A party shall only be relieved of the obligations of this
Section 7 with respect to any Confidential Information which (i) falls or has
fallen into the public domain through no fault of such party; (ii) was in the
possession or control of such party at or prior to the time of disclosure; or
(iii) a party shall hereinafter receive from any third-party not in violation of
any obligations of secrecy to the other party; or (iv) is required to be
disclosed by a party by law or legal process. In the event of any disclosure
required by law or legal process, a party shall give the other immediate notice
of such requirement and shall afford the other an opportunity to resist the
same, as may be legally permitted, prior to such disclosure.
7.7 The parties acknowledge that in the event of any breach
or threatened breach of this Section 7, the remedies available at law may be
inadequate and that a party shall as a result have the right to seek against the
other, or Agents of the other, immediate injunctive relief or such other
equitable relief as may be deemed appropriate to protect its Confidential
Information.
8. IMPROVEMENTS.
8.1 The parties agree that they will give prompt
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notice to the other of any Improvement, shall give the other party an
opportunity to inspect and test such Improvement, shall deliver to the other any
blueprints, diagrams or other description of the Improvement for purposes of
adopting the same, and will provide Technical Assistance and training to the
other as may be needed (if given by Great Dane, compensation shall be equivalent
to that which Graaff would receive in the reverse circumstances), all in
accordance with the provisions of this Agreement.
8.2 In the event that any Improvement shall constitute
Confidential Information, the provisions of Section 7, MUTATIS MUTANDIS,
shall apply.
8.3 Each party agrees to, and hereby does, grant to the
other a royalty-free, non-exclusive license during and after the Term hereof
without limitation as to time to utilize any Improvement. Any such license
being granted shall be deemed to incorporate and be subject to the limitations
set forth in this Agreement with respect to the use of Confidential
Such license, if to Graaff, shall include a right of disclosure (under
appropriate contractual agreement) and sublicense to any third-party who shall
reciprocate and permit Graaff by agreement to grant rights to Great Dane to its
improvements under the terms hereof.
8.4 The grant of license pursuant to Section 8.3 is subject
to any further limitations (including non-disclosure) imposed by any third party
from which the disclosing party obtained knowledge or information concerning the
Improvement,
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except if such third party is at that time an Affiliate of the disclosing party.
8.5 The disclosing party may, with respect to any patentable
Improvement, further limit disclosure as and for so long as it shall deem
necessary to permit it to obtain patent protection.
9. ROYALTIES.
9.1 In addition to the Price, Great Dane agrees to pay
Graaff royalties in respect of the license herein granted on the basis of two
and one-quarter German Marks (DM 2.25) per square meter of Licensed Product
produced and sold by Great Dane during each year of the Term. Great Dane shall
not be obligated to pay in excess of Two Hundred Eighty One Thousand Two Hundred
Fifty German Marks (DM 281,250) in annual royalties; Great Dane's total royalty
obligations for the licenses granted herein shall in the aggregate be One
Million Four Hundred Six Thousand Two Hundred Fifty German Marks (DM 1,406,250)
and herein, "Maximum Royalty"). Strictly for the purposes of royalty
calculation, the first quarter after Acceptance shall be the period of time from
Acceptance to the end of the next following calendar quarter, and any reference
to a year of the Term hereunder shall mean a year commencing on the first day of
such next following calendar quarter or any anniversary thereof.
9.2 Royalties shall accrue as of the issuance of an invoice
by Great Dane for sale of truck trailers incorporating the Licensed Product (or
by an Affiliate thereof, as the case may
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be), without regard to payment, collection or refund. Such royalty shall be
calculated on a quarter-annual basis, commencing with the first quarter year
after Acceptance, and shall be payable within thirty (30) days after the end of
each quarter. An accounting of royalties due and of Licensed Product produced
and invoiced by Great Dane (and its Affiliates, if applicable) shall be signed
as true and accurate by a duly authorized officer of Great Dane and shall be
delivered to Graaff together with payment.
9.3 In the event that the Maximum Royalty shall not have
been paid during the Term hereof, Great Dane shall continue to make and account
for regular royalty payments for a further period of two (2) years until the
Maximum Royalty shall be paid, except that during such time no annual limitation
on royalties shall be applicable.
9.4 Upon Great Dane's payment of the Maximum Royalty or at
the end of two years after the Term, as the case may be, Great Dane's
obligations to pay royalties shall cease (except in the event Great Dane has not
paid the Maximum Royalty, then Great Dane shall continue to may royalties for
any subsequent facility pursuant to Section 6.4 hereof until the payments in the
aggregate are equal to the Maximum Royalty), and this Agreement shall then be
deemed to constitute a fully paid-up, non-cancellable license, subject to no
further license payments.
9.5 In the event of any breach hereof by Great Dane, in
addition to any damages recoverable by Graaff, any amount
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of the royalties then accrued and unpaid shall accelerate and become due and
payable immediately.
10. MOST FAVORED LICENSEE.
In the event that Graaff or any Affiliate of Graaff
shall grant a license for Confidential Information for Licensed Product for use
in truck trailers, at a royalty rate lower then that charged Great Dane herein,
or terms and conditions of royalty payments more favorable than those applicable
to Great Dane, Graaff agrees to notify Great Dane thereof, and at Great Dane's
request, will provide Great Dane with such more favorable rates or terms and
conditions, effective as of the date on which such other license shall be
granted and effective.
11. RECORD KEEPING AND INSPECTION.
11.1 Great Dane agrees to keep accurate books and records of
Licensed Product sales in a separate account, concerning amounts of Licensed
Product produced and to whom sold, including all invoice details. In the event
of sales by Affiliates not previously reported as sales by Great Dane, Great
Dane agrees to procure copies of the books and records of such Affiliate(s))
with respect to the same, certified to Graaff as true and accurate by a duly
authorized officer thereof, and further to procure for Graaff those other rights
of inspection as herein set forth.
11.2 The quarterly royalty accounting statement of Great
Dane shall be certified as true and accurate by a duly authorized officer of
Great Dane.
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11.3 Upon reasonable notice, Great Dane shall, during normal
business hours, afford authorized representatives of Graaff access to its books
and records respecting royalties obligations hereunder, including inspection and
copying thereof. In the event such data are computerized, Great Dane shall
explain the software programs and means of input, output and access, including
codes and passwords then in effect.
11.4 Such access shall not be required to be granted more
than twice in a year, except that additional access shall be granted in the
event of a breach hereof claimed by Graaff.
12. TRADEMARKS.
12.1 In the event that Graaff shall adopt or utilize any
trademark or service mark in respect of the production processes licensed
herein, Graaff agrees that Great Dane may, at its option utilize such mark(s) in
such manner as Graaff may reasonably direct. Upon the complete termination
hereof, Great Dane agrees that it will cease all use of any of such mark(s)
immediately.
12.2 In the event that Great Dane shall decide to adopt or
utilize any trademark or service mark in respect of the products or the
processes licensed herein, it acknowledges and agrees that no such mark shall in
any way refer to the Graaff foam core technology.
13. WARRANTIES.
13.1 Graaff warrants to Great Dane as follows:
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(a) Graaff has the full and complete right and
authority to grant the license herein contained and perform as herein
covenanted.
(b) The Equipment shall be free from defects in
materials and workmanship under normal use and service in accordance with the
manufacturers' ratings and specifications. This shall not be deemed to include
the foam machines, for which Graaff shall transfer to Great Dane any
manufacturer's warranty and Great Dane agrees to look to the manufacturer
thereof for remedies under warranty. Moreover, the Facility, after Installation
of the Equipment by Graaff in accordance with Section 2.5 hereof, and if (i)
Great Dane operates and maintains the same in accordance with Graaff's
directions and within any tolerances and parameters therein specified, (ii)
Great Dane regularly and properly replaces any wearing parts, and (iii) the foam
machine(s) shall be properly working, will be capable of producing the Licensed
Product in accordance with the Product and Performance Specifications.
(c) Neither the Equipment nor the Confidential
Information is subject to patents or industrial or intellectual property rights
of any third parties, or if so, all necessary consents necessary hereto have
been duly obtained. As of the date hereof, Graaff has not received notice of
any claim of infringement by any third party in respect of any such rights.
13.2 These warranties shall expire one (1) year from the
date of Acceptance, or in the event that any delay shall
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have occurred for any reason in the construction of the Plant, a maximum of
twenty (20) months from the date on which the Plant was scheduled to be complete
and ready for Installation. No warranty claim made after such date shall be
effective or valid.
13.3 In the event of any breach of the above warranties, (i)
Graaff agrees at its own cost and expense to replace or repair (at Graaff's
option) any defective Equipment, or, (ii) if the Facility shall not produce the
Licensed Product in accordance with the Product and Performance Specifications
and the same was caused directly by Graaff's faulty Facility Specifica-tions, or
Graaff's faulty final Plant Designs, or Graaff's faulty designation of final
Supply Requirements, or Graaff's faulty workmanship during Installation, or
Graaff's faulty design or manufacture of the Equipment, Graaff agrees at its own
cost and expense to promptly correct any such defect. Great Dane shall give
prompt notice of any defect and/or claim under warranty. Any defective parts
replaced shall become the property of Graaff. In the event that Graaff shall
fail to undertake and fulfill its warranty obligations hereunder within a
reasonably prompt period after notice of any failure thereof, the limitations of
this Section 13.3 shall, to the extent of such failure, not preclude the
recovery of monetary damages by Great Dane, subject to the other terms and
conditions hereof.
13.4 In the event of a claim of a breach of Section 13.1(c),
Graaff shall indemnify and hold Great Dane harmless from any such claims,
including reasonable attorneys fees and
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costs (being always subject to Sections 13.6 and 15.2 hereof), provided that (i)
Great Dane shall permit Graaff (and its attorneys) at the cost of Graaff to
participate therein, and (ii) Graaff shall have the right to approve or reject
any proposed settlement thereof, approval of which shall not be unreasonably
withheld. In the event of a final judgment of infringement, Graaff may, in its
sole election, either secure for Great Dane the right to continue to use the
Equipment, or reasonably modify the Equipment (including performance thereof, as
the case may be) so that it shall become non-infringing, provided that the
Equipment so modified produces Licensed Product in accordance with the Product
and Performance Specifications.
13.5 THE WARRANTIES HEREIN GIVEN SHALL BE IN LIEU OF ALL OTHER
WARRANTIES, AND THE WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR USE,
WHETHER EXPRESS OR IMPLIED, ARE EXCLUDED EXCEPT AS HEREIN PROVIDED.
13.6 It is expressly understood that neither Graff nor Great
Dane shall be liable for special or consequential damages, including loss of
profits, resulting from any breach whatsoever of this Agreement.
13.7 Great Dane shall have the option, with the prior
consent of and at the expense of Graaff, to undertake warranty repairs. In the
event that Great Dane agrees to undertake any warranty repair, however, and such
warranty repair is not performed in accordance with Graaff's directions with
regard thereto, the warranties with respect to the Equipment so affected
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shall immediately become void and unenforceable. After the warranty period
expires, Graaff will still, at Great Dane's expense, agree to service and repair
the Equipment (except the foam machines), at a price in accordance with Section
5.2 hereof for labor costs and in no event in excess of thirty (30) man-days a
year.
14. DELAY; FORCE MAJEURE.
14.1 The parties acknowledge the timing of delivery and
performance as set forth in Section 2 and the Schedule. Any delay of one party
in its performance which is reasonably a precondition to further performance by
the other party shall serve to excuse such other party's performance for a
period equal to such delay.
14.2 Neither of the parties hereto shall be responsible for
or liable to the other for any damage, delay or loss of any kind (including
liquidated damages), directly or indirectly, resulting from fire, flood,
explosion, riot, rebellion, revolution, war, labor trouble (whether or not due
to the fault of any party hereto), requirements or acts of any government or
subdivisions thereof, failure or delay of suppliers or transport, or any other
cause beyond the reasonable control of the party. The occurrence and the
termination of such force majeure shall be promptly communicated to the other
party.
15. BREACH AND REMEDY
15.1 Except as to the unauthorized disclosure of any
Confidential Information or any other material breach hereof,
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a party claiming breach hereof shall give the other party notice of the claimed
breach, and the other party shall have sixty (60) days in which to effect a
cure, or if not curable within such 60 days, to have commenced a cure thereof
and to have prosecuted the same in good faith and as rapidly as possible.
15.2 Notwithstanding anything else stated in this Agreement, in
no case shall the liability of one party to the other for any damages (including
liquidated damages for delay), for breach or breaches of this Agreement exceed
an amount equal to the aggregate of the Price and of royalties paid and/or
accrued as at the date of notice of breach. In the event that a damage award in
favor of Great Dane should otherwise exceed such amount, any excess shall be
payable only by set off against any future royalties payable (or as the case may
be in the event of excess damages payable by Great Dane to Graaff, the excess
shall be paid when and to the extent future royalties accrue).
15.3 In the event that one party shall be in breach of its
obligations under this Agreement, then the other party shall be relieved of its
obligations hereunder until the breach shall have been cured. For such
purposes, a breach shall be deemed cured by specific remedial performance or
payment of damages within the provisions of this Agreement. In the event of
such a breach by Graaff which shall not be so cured, then Great Dane shall be
relieved of its obligations hereunder, but shall nevertheless retain the
licenses granted to it pursuant to this Agreement in respect of the Facility.
Notwithstanding any ter-
32
<PAGE>
mination or rescission hereof by reason of a breach, the provisions of Section 7
hereof shall continue in existence and remain binding on the parties.
16. MISCELLANEOUS.
16.1 This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of Indiana, without
consideration of the doctrine of RENVOI.
16.2 In the event that any portion hereof shall be deemed
void or unenforceable, the remainder shall remain unaffected thereby unless the
same shall effect material changes in the expected mutual performance of the
parties.
16.3 The relationship between the parties is that of
vendor-vendee and of independent contractor, and not of agency. Neither party
is the legal representative of the other or has the authority or right to assume
or undertake any obligation or make any representation on behalf of the other,
except to the limited and specific extent permitted herein.
16.4 This Agreement constitutes the entire agreement between
the parties, supersedes all prior understandings between the parties (oral or
written), and may not be amended except in a writing executed by both parties.
16.5 This Agreement may not be assigned or transferred in
part or in whole by Great Dane without the prior written consent of Graaff
(except as provided above in Section 6.4), nor shall Graaff assign or transfer
this Agreement in whole
33
<PAGE>
or in part, except as to a right to receive the Price or royalties hereunder.
16.6 The failure of a party hereto to require the performance
of any term of this Agreement or waiver by a party of any breach under this
Agreement shall not prevent a subsequent enforcement of such term nor be deemed
waiver of any subsequent breach. No remedy available to either party is
intended to be exclusive of any other remedy and the exercise of any one remedy
shall not preclude the exercise of any other remedy (except with respect to
liquidated damages as set forth herein).
16.7 The captions set forth herein are for convenience of
reference only and shall not be considered as part hereof or in any way to limit
or amplify the terms and provisions hereof.
16.8 Any notice required or permitted to be given hereunder
shall be in writing and shall be deemed to have been given after the same has
been mailed by registered or certified airmail, to the respective addresses
appearing on the first page of this instrument, or to such other addresses as
the parties may from time to time designate in writing.
16.9 Graaff KG agrees to cause Mr. Wolfgang Graaff to undergo
any tests and execute any documents which may be required in order that Great
Dane may take life insurance on the life of Mr. Graaff, at the cost of Great
Dane. Graaff does not warrant in any way that Mr. Graaff is insurable or that
Great Dane will obtain any such policy.
34
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this (Signature
page follows on page 36]
35
<PAGE>
Agreement on the day and year first above written.
GREAT DANE TRAILERS, INC. GRAAFF KG
By:_______________________ By:______________________
Name:_____________________ Name:____________________
Title:____________________ Title:___________________
GREAT DANE TRAILERS INDIANA, INC.
By:_______________________
Name:_____________________
Title:____________________
36
<PAGE>
EXHIBIT 1.4
SCHEDULE
The following schedule shall commence as of the date of
complete signing of the Agreement ("Starting Date"):
1. One Month from Starting Date:
Great Dane will provide Graaff with information
regarding size of building, average temperature (as well
as highest and lowest temperatures during the year);
highest and lowest humidity during the year; pollution,
environmental, safety and other similar regulations; and
general material flow plans and general desired layout
of the Plant (subject to agreement on the final Plant
Designs).
2. 2 months from Starting Date:
completion of actions contemplated in Sections
2.1(a)-(c) of the Agreement, including definition by
Graaff of Supply Requirements generally pursuant to
Exhibit 1.8 (subject to agreement on the final Supply
Requirements).
3. 3 months from Starting Date:
initialling of final Plant Designs and of final Supply
Requirements.
37
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4. 6 months from Starting Date:
Delivery of blueprints, etc. by Great Dane to Graff.
5. 14 months from Starting Date:
completion of the Plant by GREAT DANE, ready for
Installation.
6. 14 months from Starting Date:
delivery of Equipment EX WORKS Elze.
7. 15 months from Starting Date:
assumed transportation (arrival at Brazil)
8. 18 months from Starting Date:
complete assembly of Plant and completion of
Installation; commencement of Start-Up period.
9. 19 months from Starting Date:
completion of Start-Up period, subject to Section 2.6 of
the Agreement.
10. 21 months from Starting Date:
completion of repair or correction if first Start-Up
unsuccessful; commencement of second Start-Up.
38
<PAGE>
11. 22 months from Starting Date:
completion of second Start-Up period.
39
<PAGE>
EXHIBIT 1.5
List of Equipment to be
DELIVERED BY GRAAFF
The list of Equipment represents the exact actual production equipment
of GRAAFF KG in Germany, except for the fact that different dimensions and sizes
are given to provide for the Product Specifications hereinafter. Therefore, all
equipment can be directly defined by direct comparison. The various items to be
delivered by GRAAFF will include at least the following:
- 2 foaming machines and controls
- 2 presses (15m x 3.4 x 0.3m), including central vacuum equipment
consisting of 4 ventilators of 4.2 KW and of 8 ventilators of
1.2 KW. Hydraulic system includes pump and four functions for
lifting and fixing of panels and three hydraulic cylinders to
lift the press;
- 1 combined control station for both presses with a monitoring
system to control all main functions of the presses, foaming
machines and other important data;
- 1 heating equipment per press, including pumps, piping and
temperature control;
40
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- 8 air cushion tables of 7.Om length and approximately 3.4m
width, including ventilator system of 4 units of about 5 KW
per table
- 3 gravity roller conveyors for sides, floor and roof
assembly and production, with electric motor;
- 4 vacuum crane frames of approximately 13m length and
I.5m width;
- tanks (2 for Isocyanate, 2 for Polyol) of 20,000
liters each, including piping for filling and
material transport; 2 pumps for exact measuring of
volume and distribution; tanks, including
temperature scale, filling scale and various valves
and slide valves and safety devices;
- 1 mixing unit with piping and tank for activator. 2
BOSCH precision pumps, including motor, one mixing
chamber with motor. Unit includes central
exhauster, sliding valves and electric control
unit;
- 1 working platform between presses, including hinged cantilevered
runway, cranes and rails to hold
41
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mixing heads of foaming machine, including computer control; 2
platforms to install foaming machines;
- 1 filling station for Freon gas, excluding tank;
- 1 safety chamber for activator mixing including exhaust-system,
electric barrel pump and control system;
- laboratory equipment
- 1 scale up to 200kg
- 1 scale up to 10kg
- 1 laboratory scale
- 1 electric mixer
- testing equipment
- safety devices
- tools for the repair of machines
- 1 front wall holding press inc. closing mechanism
42
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- 2 door wing holding presses including closing mechanism.
- all major spare parts for one year's operations.
43
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EXHIBIT 1.8
PRELIMINARY SUPPLY REQUIREMENTS
A. UTILITIES:
Utilities required shall include, without limitation:
- electricity 440 Volt /60 Hz
- compressed air in dried condition, 10 bar pressure
- water through 1/2" pipe at 5 bar pressure
- installation of required heating capacity for the building
- heating capacity of the presses of approx. 100 kcal/h
B. EQUIPMENT FOR PRODUCTION
The following Equipment, without limitation, will be supplied by GREAT
DANE at its cost, according to GRAAFF specifications:
- molds for panels and floor
- transportation and handling equipment, except for 4 vacuum
crane frames
- 2 to 4 cranes (at Great Dane's option) of 5 ton capacity
44
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- freon and methyl chloride tanks
C. MATERIALS
Purchase by Great Dane, at its expense, of all materials req-uired as
specified by Graaff, including without limitation:
- Freon gas
- inhibitors
- methyl chloride, nitrogen and other materials to be specified
by GRAAFF.
- Isocyanate and polyol system as specified by Graaff and
available from BAYER, Leverkusen, and/or MOBAY, Pittsburgh, a
subsidiary company of BAYER Germany, or directly through BAYER
Germany.
- PE film and other sealing materials
- skins and linings for panels
D. EQUIPMENT FOR INSTALLATION.
In addition to skilled personnel, machines, tools and cranes Graaff may
require and which Great Dane will supply at its cost during Installation,
Great Dane will have to provide a heavy duty crane of 20 tons lifting
capacity for about one week, and fork lift trucks should be made available
if necessary and requested by GRAAFF.
45
<PAGE>
EXHIBIT 1.13
PERFORMANCE SPECIFICATIONS
During and after Acceptance, the Facility shall produce Licensed
Products in accordance with the Product Specifications, as follows: during two
(2) eight (8)-hour shifts per day, for five (5) continuous work days, (i) 16
side walls of 3 sizes and 2 different thicknesses and densities (6 possible
combinations) plus (ii) 8 roofs of 3 sizes and of 2 different thicknesses and
densities (6 possible combinations), plus (iii) 8 floors of 3 sizes and of 2
different thicknesses and densities (6 Possible combinations), in such sequence
and manner as would be reasonable for commercial production. Graaff will cause
these performance requirements to be met, provided that Great Dane shall have
all linings and skins properly premanufactured, preselected, and ready for
foaming, all properly set up in the pre-production storage area, and Great Dane
shall properly transport the foamed panels to further proper storage areas after
foaming. Such performance will be achieved with the use of seven (7) persons
per shift, being one 3-person work team per each press and one foreman, all of
whom shall have been appropriately trained in the operation and maintenance of
the Facility.
46
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EXHIBIT 1.17
PRODUCT SPECIFICATIONS
A. The Facility will produce the following Licensed Products, with no more
than a 20% excess foam loading factor:
1. SIDE WALLS
DIMENSIONS: (a) 560" (14.22m) maximum length
324" ( 8.23m) minimum length
(b) 115" ( 2.92m) maximum width
97" ( 2.46m) minimum width
INCREMENTS: 6" = 152.4mm length
1" = 25.4mm width
THICKNESS and DENSITY:
1.5" (38.lmm) 80kg/m(3)
2.0" (50.8mm) 65kg/m(3)
2.5" (63.5mm) 65kg/m(3)
3.0" (76.2mm) 60kg/m(3)
47
<PAGE>
2. Roof
DIMENSIONS: 569" (14.45m) maximum length
324" ( 8.23m) minimum length
102" ( 2.59m) maximum width
90" ( 2.29m) minimum width
INCREMENTS: 6" = 152.4mm length
1" = 25.4mm width
THICKNESS and DENSITY
2.5" (63.5mm) 65kg/m(3)
3.0" (76.2mm) 60kg/m(3)
4.0" (101.6mm) 55kg/m(3)
3. FLOOR
DIMENSIONS 569" (14.45m) maximum length
324" ( 8.23m) minimum length
102" ( 2.59m) maximum width
90" ( 2.29m) minimum width
INCREMENTS 6" = 152.4mm length
1" = 25.4mm width
THICKNESS and DENSITY
2.0" (63.5mm) 80kg/m(3)
3.0" (76.2mm) 80kg/m(3)
48
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Graaff has heretofore delivered certain 2.5" thick side wall panels,
manufactured in accordance with Graaff drawings PR 8034.2.00 and PR 8034.1.00,
which were previously incorporated by Great Dane into a truck trailer having
vehicle identification number IS-DSO 82001, which was satisfactorily subjected
to dynamic testing by Great Dane with its simulator test programs, "Drive-3" and
"Space DRV". All 2.5" thick side walls, when produced at the Facility in
accordance with specifications in such Graaff drawings and incorporated into a
truck trailer having specifications identical to those of IS-DSO 82001, in tests
run on the same test equipment operating under the same conditions and pursuant
to the same test programs, shall be at least equal in performance
characteristics to those tested by Great Dane heretofore in IS-DSO 82001.
49
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SUPPLEMENTAL RETIREMENT INCOME PLAN
FOR GREAT DANE TRAILERS, INC.
The Supplemental Retirement Income Plan for Great Dane Trailers, Inc. (the
"Plan") is adopted effective January 1, 1994. The Plan is established and
maintained by GREAT DANE TRAILERS, INC. ("Great Dane") solely for the purpose of
providing benefits in excess of the limitations on benefits imposed by Section
415 of the Internal Revenue Code or the limitations on compensation imposed by
Section 401(a)(17) of the Internal Revenue Code for certain of its officers who
participate in the Retirement Plan for Great Dane Trailers, Inc. and for certain
officers of Great Dane Holdings, Inc. who participate in the Retirement Plan for
Checker Motors, L.P.
Accordingly, Great Dane hereby adopts the Plan pursuant to the terms and
provisions set forth below:
ARTICLE I
DEFINITIONS
Wherever used herein the following terms shall have the meanings
hereinafter set forth:
1.1 "Beneficiary" means the individual or individuals designated by a
Participant as such under the Qualified Plan or the Checker Motors Plan, as
applicable.
1.2 "Board" means the Board of Directors of Great Dane.
1.3 "Checker Motors Plan" means the Checker Motors Pension Plan
established by Checker Motors, L.P., and each predecessor, successor or
replacement employees' retirement plan.
<PAGE>
1.4 "Checker Plan Beneficiary Benefit" means the aggregate benefit payable
to the Surviving Spouse or a Beneficiary of a Participant pursuant to the
Checker Motors Plan and all annuities purchased for the Participant under the
Checker Motors Plan (whether or not terminated) in the event of the death of the
Participant at any time.
1.5 "Checker Plan Retirement Benefit" means the aggregate benefit payable
to a Participant pursuant to the Checker Motors Plan and all annuities purchased
for the Participant under the Checker Motors Plan (whether or not terminated) by
reason of his termination of employment with Great Dane or Great Dane Holdings
for any reason other than death.
1.6 "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any regulations relating thereto.
1.7 "Great Dane" means Great Dane Trailers, Inc., a Georgia corporation,
or, to the extent provided in Section 7.9 below, any successor corporation or
other entity resulting from a merger or consolidation into or with Great Dane
Trailers, Inc. or a transfer or sale of substantially all of the assets of Great
Dane Trailers, Inc.
1.8 "Great Dane Holdings" means Great Dane Holdings, Inc., a Florida
corporation, or any successor corporation or other entity resulting from a
merger or consolidation into or with Great Dane Holdings, Inc. or a transfer or
sale of substantially all of the assets of Great Dane Holdings, Inc..
1.9 "Participant" means an individual (a) to whom or with respect to whom
a benefit is payable under the Plan, (b) who
2.
<PAGE>
receives compensation from Great Dane or Great Dane Holdings in excess of
$150,000 for any calendar year beginning after January 1, 1994 and (c) who is
either (i) an officer of Great Dane and a participant in the Qualified Plan, or
(ii) an officer of Great Dane Holdings and a participant in the Checker Motors
Plan.
1.10 "Plan" means this Supplemental Retirement Income Plan for Great Dane
Trailers, Inc.
1.11 "Qualified Plan" means the Retirement Plan for Great Dane Trailers,
Inc., identified as Company Plan Number 005, and each predecessor, successor or
replacement employees' retirement plan.
1.12 "Qualified Plan Beneficiary Benefit" means the aggregate benefit
payable to the Surviving Spouse or a Beneficiary of a Participant pursuant to
the Qualified Plan and all annuities purchased for the Participant under the
Qualified Plan (whether or not terminated) in the event of the death of the
Participant at any time.
1.13 "Qualified Plan Retirement Benefit" means the aggregate benefit
payable to a Participant pursuant to the Qualified Plan and all annuities
purchased for the Participant under the Qualified Plan (whether or not
terminated) by reason of his termination of employment with Great Dane or Great
Dane Holdings for any reason other than death.
1.14 "Retirement Date" means the Retirement Date selected by a Participant
pursuant to the terms of the Qualified Plan or the Checker Motors Plan, as
applicable.
3.
<PAGE>
1.15. "Supplemental Beneficiary Benefit" means the benefit payable to a
Surviving Spouse or a Beneficiary pursuant to the Plan.
1.16 "Supplemental Retirement Benefit" means the benefit payable to a
Participant pursuant to the Plan by reason of his termination of employment with
Great Dane or Great Dane Holdings for any reason other than death.
1.17 "Surviving Spouse" means a person who is married to a Participant at
the date of his death and for a least one year prior thereto.
ARTICLE II
ELIGIBILITY
An officer of Great Dane who is eligible to receive a Qualified Plan
Retirement Benefit, or an officer of Great Dane Holdings who is eligible to
receive a Checker Plan Retirement Benefit, the amount of either of which is
reduced by reason of the application of the limitations on benefits imposed by
Code Section 415 or the limitations on compensation imposed by Code Section
401(a)(17), both as in effect on the effective date of the Plan, and who
receives compensation from Great Dane or Great Dane Holdings in excess of
$150,000 for any calendar year beginning after January 1, 1994, shall be
eligible to receive a Supplemental Retirement Benefit. Either a Surviving
Spouse or a Beneficiary eligible to receive a benefit under the Qualified Plan
or the Checker Plan, as applicable, shall be eligible to receive a Supplemental
Beneficiary Benefit.
4.
<PAGE>
ARTICLE III
SUPPLEMENTAL RETIREMENT BENEFIT
3.1. AMOUNT. The Supplemental Retirement Benefit payable to an eligible
Participant in the form of a straight life annuity over the lifetime of the
Participant only, commencing on his Retirement Date (taking into account any
adjustment under the terms of the Qualified Plan for early or late retirement,
as applicable), shall be a monthly amount equal to the difference between (a)
and (b) below:
(a) the monthly amount of the Qualified Plan Retirement Benefit to
which the Participant would have been entitled under the Qualified Plan if:
(i) such Benefit were computed with regard to the limitations on benefits
imposed by application of Code Section 415 and the limitations on
compensation imposed by application of Code Section 401(a)(17) as those
Sections were in effect on December 31, 1993 (the "Limitation Amounts"),
adjusted annually as described below, and (ii) such Benefit were computed
with regard to the total years of employment of the Participant with Great
Dane after January 1, 1994 PLUS years in which the Participant was a
participant in the Checker Motors Plan after January 1, 1994;
LESS
(b) the monthly amount of the Qualified Plan Retirement Benefit to
which the Participant would have been entitled under the Qualified Plan if:
(i) such Benefit were computed with regard to the limitations on benefits
imposed
5.
<PAGE>
by application of Code Section 415 and the limitations on compensation
imposed by application of Code Section 401(a)(17) as those Sections were in
effect after January 1, 1994, and (ii) such Benefit were computed with
regard to the total years of employment of the Participant with Great Dane
after January 1, 1994 PLUS years in which the Participant was a participant
in the Checker Motors Plan after January 1, 1994.
The amounts described in (a) and (b) shall be computed as of the date of
termination of employment of the Participant with Great Dane and/or Great Dane
Holdings in the form of a straight life annuity payable over the lifetime of the
Participant only commencing on his Retirement Date (taking into account any
adjustment under the terms of the Qualified Plan for early or late retirement,
as applicable). The Limitation Amounts shall be annually adjusted by a
percentage equal to the higher of the percentage adjustment made by the
Secretary of the Treasury under either Code Section 402(g)(5) or Code Section
415(d)(1)(A) (such adjustments published by the Internal Revenue Service
annually in January).
3.2. FORM AND TIME OF COMMENCEMENT OF BENEFIT. The Supplemental Retirement
Benefit payable to a Participant shall be paid in the same form in which the
Qualified Plan Retirement Benefit is payable to the Participant, and shall
commence on the same date as payment of the Qualified Plan Retirement Benefit or
Checker Plan Retirement Benefit, as applicable, to the Participant commences.
The Participant's election under the
6.
<PAGE>
Qualified Plan (with the valid consent of his Surviving Spouse where required
under such Plan) with respect to the form of payment of his Qualified Plan
Retirement Benefit shall also be applicable to the payment of his Supplemental
Retirement Benefit. If a Participant is not covered by the Qualified Plan, the
Participant shall elect one of the forms of benefit offered under the Qualified
Plan (with the valid consent of his Surviving Spouse where required under the
Qualified Plan) as of the date of commencement as the form of payment for his
Supplemental Retirement Benefit.
3.3. ACTUARIAL EQUIVALENT. A Supplemental Retirement Benefit which is
payable in any form other than a straight life annuity over the lifetime of the
Participant shall be the actuarial equivalent of the Supplemental Retirement
Benefit set forth in Section 3.1 above as determined by the same actuarial
adjustments as those specified in the Qualified Plan with respect to
determination of the amount of the Qualified Plan Retirement Benefit on the date
for commencement of payment hereunder.
ARTICLE IV
SUPPLEMENTAL BENEFICIARY BENEFIT
4.1. AMOUNT. If a Participant dies under circumstances in which a
Qualified Plan Beneficiary Benefit or a Checker Plan Beneficiary Benefit is
payable to his Surviving Spouse or a Beneficiary, then a Supplemental
Beneficiary Benefit is payable to his Surviving Spouse or Beneficiary, as the
case may be, as
7.
<PAGE>
hereinafter provided. The monthly amount of the Supplemental Beneficiary
Benefit payable to a Surviving Spouse or Beneficiary shall be equal to the
difference between (a) and (b) below:
(a) the monthly amount of Qualified Plan Beneficiary Benefit to which
the Surviving Spouse or Beneficiary would have been entitled under the
Qualified Plan if: (i) such Benefit were computed by giving effect to the
limitations on benefits imposed by application of Code Section 415 and the
limitations on compensation imposed by application of Code Section
401(a)(17) as those Sections were in effect on December 31, 1993, adjusted
annually as described in Section 3.1 above, and (ii) such Benefit were
computed with regard to the total years of employment of the Participant
with Great Dane after January 1, 1994 PLUS years in which the Participant
was a participant in the Checker Motors Plan after January 1, 1994;
LESS
(b) the monthly amount of Qualified Plan Beneficiary Benefit to which
the Surviving Spouse or Beneficiary would have been entitled under the
Qualified Plan if: (i) such Benefit were computed by giving effect to the
limitations on benefits imposed by application of Code Section 415 and the
limitations on compensation imposed by application of Code Section
401(a)(17) as those Sections were in effect after January 1, 1994, and (ii)
such Benefit were computed with regard to the total years of employment of
the Participant with Great Dane after January 1, 1994 PLUS
8.
<PAGE>
years in which the Participant was a participant in the Checker Motors Plan
after January 1, 1994.
4.2. FORM AND COMMENCEMENT OF BENEFIT. A Supplemental Beneficiary Benefit
shall be payable in the same form as the Qualified Plan Beneficiary Benefit
payable under the Qualified Plan, commencing on the date for commencement of
payment of the Qualified Plan Beneficiary Benefit or Checker Plan Beneficiary
Benefit, as applicable, to the Surviving Spouse or Beneficiary and terminating
on the date of the last payment of the Qualified Plan Beneficiary Benefit or
Checker Plan Beneficiary Benefit, as applicable, made before the Surviving
Spouse's or Beneficiary's death.
ARTICLE V
ADMINISTRATION OF THE PLAN
5.1. ADMINISTRATION BY GREAT DANE. Great Dane shall be responsible for the
general operation and administration of the Plan and for carrying out the
provisions thereof.
5.2. GENERAL POWERS OF ADMINISTRATION. All provisions set forth in the
Qualified Plan with respect to the administrative powers and duties of Great
Dane, expenses of administration, and procedures for filing claims shall also be
applicable with respect to the Plan. Great Dane shall be entitled to rely
conclusively upon all tables, valuations, certificates, opinions and reports
furnished by any actuary, accountant, controller, counsel or other person
employed or engaged by Great Dane with respect to the Plan.
9.
<PAGE>
ARTICLE VI
AMENDMENT OR TERMINATION
6.1. AMENDMENT OR TERMINATION. Great Dane intends the Plan to be permanent
but reserves the right to amend or terminate the Plan when, in the sole opinion
of Great Dane, such amendment or termination is advisable. Any such amendment
or termination shall be made pursuant to a resolution of the Board and shall be
effective as of the date of such resolution.
6.2. EFFECT OF AMENDMENT OR TERMINATION. No amendment or termination of
the Plan shall directly or indirectly deprive any current or former Participant
or Surviving Spouse or Beneficiary of all or any portion of any Supplemental
Retirement Benefit or Supplemental Beneficiary Benefit payment which has
commenced prior to the effective date of such amendment or termination or which
would be payable if the Participant terminated employment for any reason,
including death, on such effective date.
ARTICLE VII
GENERAL PROVISIONS
7.1. FUNDING. The Plan at all times shall be entirely unfunded, and no
provision shall at any time be made with respect to segregating any assets of
Great Dane for payment of any benefits hereunder. No Participant, Surviving
Spouse, Beneficiary or any other person shall have any interest in any
particular assets of Great Dane by reason of the right to receive a benefit
under the Plan, and any such Participant, Surviving Spouse, Beneficiary or other
person shall have only
10.
<PAGE>
the rights of a general unsecured creditor of Great Dane with respect to any
rights under the Plan.
7.2. GENERAL CONDITIONS. Except as otherwise expressly provided herein,
all terms and conditions of the Qualified Plan applicable to a Qualified Plan
Retirement Benefit or a Qualified Plan Beneficiary Benefit shall also be
applicable to a Supplemental Retirement Benefit or a Supplemental Beneficiary
Benefit payable hereunder. Any Qualified Plan Retirement Benefit or Qualified
Plan Beneficiary Benefit, or any other benefit payable under the Qualified Plan
or the Checker Motors Plan, shall be paid solely in accordance with the terms
and conditions of the Qualified Plan or the Checker Motors Plan, as applicable,
and nothing in this Plan shall operate or be construed in any way to modify,
amend or affect the terms and provisions of the Qualified Plan or the Checker
Motors Plan.
7.3. NO GUARANTY OF BENEFITS. Nothing contained in the Plan shall
constitute a guaranty by Great Dane or any other entity or person that the
assets of Great Dane will be sufficient to pay any benefit hereunder.
7.4. NO ENLARGEMENT OF EMPLOYEE RIGHTS. No Participant or Surviving Spouse
or Beneficiary shall have any right to a benefit under the Plan except in
accordance with the terms of the Plan. Establishment of the Plan shall not be
construed to give any Participant the right to be retained in the service of
Great Dane.
7.5. SPENDTHRIFT PROVISION. No interest of any person or entity in, or
right to receive a benefit under, the Plan shall
11.
<PAGE>
be subject in any manner to sale, transfer, assignment, pledge, attachment,
garnishment, or other alienation or encumbrance of any kind; nor may such
interest or right to receive a benefit be taken, either voluntarily or
involuntarily, for the satisfaction of the debts of, or other obligations or
claims against, such person or entity, including claims for alimony, support,
separate maintenance and claims in bankruptcy proceedings.
7.6. APPLICABLE LAW. The Plan shall be construed and administered under
the laws of the State of Georgia.
7.7. SMALL BENEFITS. If the actuarial value of any Supplemental Retirement
Benefit or Supplemental Beneficiary Benefit is equal to or less than $3,500,
Great Dane may pay the actuarial value of such Benefit to the Participant or the
Participant's Surviving Spouse or Beneficiary, as applicable, in a single lump
sum in lieu of any further benefit payments hereunder.
7.8. INCAPACITY OF RECIPIENT. If any person entitled to a benefit payment
under the Plan is deemed by Great Dane to be incapable of personally receiving
and giving a valid receipt for such payment, then, unless and until claim
therefor shall have been made by a duly appointed guardian or other legal
representative of such person, Great Dane may provide for such payment or any
part thereof to be made to any other person or institution then contributing
toward or providing for the care and maintenance of such person. Any such
payment shall be a payment for the account of such person and a complete
discharge of any liability of Great Dane and the Plan therefor.
12.
<PAGE>
7.9. CORPORATE SUCCESSORS. The Plan shall not be automatically terminated
by a transfer or sale of assets of Great Dane or by the merger or consolidation
of Great Dane into or with any other corporation or other entity, but the Plan
shall be continued after such sale, merger or consolidation only if and to the
extent that the transferee, purchaser or successor entity agrees to continue the
Plan. In the event that the Plan is not continued by the transferee, purchaser
or successor entity, then the Plan shall terminate subject to the provisions of
Section 6.2.
7.10. UNCLAIMED BENEFIT. Each Participant shall keep Great Dane informed
of his current address and the current address of his spouse. Great Dane shall
not be obligated to search for the whereabouts of any person. If the location
of a Participant is not made known to Great Dane within three (3) years after
the date on which payment of the Participant's Supplemental Retirement Benefit
may first be made, payment may be made as though the Participant had died at the
end of the three-year period. If, within one additional year after such three-
year period has elapsed, or, within three years after the actual death of a
Participant, whichever is earlier, Great Dane is unable to locate any Surviving
Spouse or Beneficiary of the Participant, then Great Dane shall have no further
obligation to pay any benefit hereunder to such Participant or to such
Participant's Surviving Spouse or Beneficiary or to any other person, and such
benefit shall be irrevocably forfeited.
13.
<PAGE>
7.11. LIMITATIONS ON LIABILITY. Notwithstanding any of the preceding
provisions of the Plan, neither Great Dane nor any individual acting as an
employee or agent of Great Dane shall be liable to any Participant, former
Participant, Surviving Spouse, Beneficiary or any other person for any claim,
loss, liability or expense incurred in connection with the Plan.
7.12 GENDER; NUMBER. Words in the masculine gender shall include the
feminine gender as appropriate, and the singular shall include the plural, and
vice versa, unless qualified by the context.
7.13 CAPTIONS AND HEADINGS. Any headings used herein are included for
convenience of reference only and are not to be construed so as to alter the
terms hereof.
IN WITNESS WHEREOF, the undersigned duly elected and authorized officers of
Great Dane have hereunto set their hands and affixed its seal as of the ____ day
of ______________, 1994, at the direction of the Board of Directors of Great
Dane.
GREAT DANE TRAILERS, INC.
By:_______________________________
President
[SEAL]
Attest:___________________________
Secretary
Signed, sealed and delivered
in the presence of:
____________________________
Witness
____________________________
Notary Public
14.
<PAGE>
EXHIBIT 10.43
Amended and Restated Operating Agreement
between
GREAT DANE FINANCE COMPANY
and
GREAT DANE TRAILERS, INC.
dated as of August 31, 1988.
<PAGE>
AMENDED AND RESTATED OPERATING AGREEMENT
Agreement dated as of August 31, 1988 between Great Dane Trailers,
Inc., ("Great Dane") a Georgia corporation and Great Dane Finance Company (the
"Company"), a Delaware corporation.
WHEREAS, pursuant to that certain letter agreement dated as of March
1, 1977 (referred to hereafter as the "Prior Agreement"), the Company has
purchased retail installment contracts, promissory notes, security agreements
and other forms of chattel paper from Great Dane or any Affiliate, as such term
is defined in the Stock Purchase Agreement dated as of August 15, 1988 between
Great Dane and Associates Corporation of North America (the "Stock Purchase
Agreement"), and
WHEREAS, the Company and Great Dane desire to provide for both (i)
the purchase of chattel paper by the Company from Great Dane or any Affiliate
thereof which sells trailers and semi-trailers manufactured and/or distributed
by Great Dane (Great Dane together with all of such Affiliates are referred to
collectively hereafter as "Affiliate Dealers"), and (ii) the extension of
wholesale financing by the Company to independent, franchised sellers of
trailers and semi-trailers manufactured and/or distributed by Great Dane
(referred to collectively hereafter as "Independent Dealers") (Affiliate Dealers
and Independent Dealers shall be referred to collectively hereafter as
"Dealers") on and
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after the Closing Date, as defined in the Stock Purchase Agreement, (the
"Effective Date"), and
WHEREAS, Great Dane and the Company mutually desire to amend and
restate the Prior Agreement in its entirety.
NOW, THEREFORE, in consideration of the mutual covenants of the
parties, it is mutually agreed by and between the parties hereto as follows:
ARTICLE I
WHOLESALE FINANCING FOR INDEPENDENT DEALERS
Section 1.1. AVAILABILITY OF WHOLESALE FINANCING. Subject to the
terms and conditions of this Agreement, the Company shall directly or indirectly
provide wholesale financing to Eligible Independent Dealers, as defined in
Section 1.2, in order to enable such Eligible Independent Dealers to acquire an
inventory of new trailers and semi-trailers manufactured and/or distributed by
Great Dane (referred to individually and collectively hereafter, as appropriate,
as "Inventory").
Section 1.2. ELIGIBLE INDEPENDENT DEALERS. Great Dane shall
identify in writing those Independent Dealers which are eligible for wholesale
financing accommodations by the Company hereunder. From time to time, Great
Dane may also give the Company either written or telephonic notice that one or
more of such Independent Dealers are no longer eligible for any subsequent
wholesale financing accommodations hereunder; provided however, such notice
shall not affect Great Dane's obligations under this
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Agreement with respect to any outstanding Advance, as defined in Section 1.4, or
commitment by the Company to make an Advance on behalf of such Independent
Dealer. The Company shall determine the acceptability of any such Independent
Dealer, the limitations of the wholesale financing the Company may extend to any
such Independent Dealer and the form and content of all documentation the
Company will require to evidence and secure the obligations incurred by any
Independent Dealer to the Company. Upon receipt from an acceptable Independent
Dealer of documentation acceptable to the Company, the Company may in its sole
discretion offer to extend wholesale financing to such Independent Dealer in
such dollar amounts as are from time to time agreed upon by the Independent
Dealer and the Company. All Independent Dealers which are identified in writing
by Great Dane and approved by the Company for wholesale financing under this
Article I shall become eligible to receive wholesale financing accommodations
from the Company hereunder and are referred to hereafter as "Eligible
Independent Dealers." The Company shall give Great Dane either written or
telephonic notice if an Eligible Independent Dealer is no longer approved by the
Company hereunder. Upon receipt of such notice by Great Dane, the Company shall
have no obligation under this Article I to make any further Advances or
commitments to make such Advances on behalf of such Independent Dealer.
Section 1.3. ELIGIBLE INVENTORY. The wholesale financing
extended by the Company subject to this Agreement shall be used by Eligible
Independent Dealers to acquire and maintain
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<PAGE>
Inventory which Eligible Independent Dealers may purchase from either Great Dane
or, with the consent of Great Dane, any Dealers.
Section 1.4. ADVANCES. Subject to the following conditions, the
Company may issue a commitment to advance funds to Great Dane on behalf of an
Eligible Independent Dealer in payment of the purchase price for an item of
Inventory immediately prior to the production of such Inventory. Provided that
all of the following conditions are satisfied, the Company shall advance such
funds to Great Dane on behalf of an Eligible Independent Dealer one (1) Business
Day, as hereinafter defined, after receipt by the Company of the related invoice
(referred to hereafter individually as an "Advance," collectively as "Advances"
and as the "Advance Date"): (a) the Company shall receive written notification
from Great Dane that the production of the related item of Inventory has been
completed and that such item of Inventory is available for shipment by Great
Dane to the related Eligible Independent Dealer, (b) the Company shall receive a
copy of Great Dane's invoice to the Eligible Independent Dealer for such item of
Inventory which shall include the serial number and amount due and owing to
Great Dane from such Eligible Independent Dealer in payment of the purchase
price for such item of Inventory, and (c) the related invoice shall be dated not
more than fifteen (15) days prior to the date of receipt of same by the
For purposes of this Agreement, "Business Day" means any day that is not a
Saturday, Sunday or other day in which banking institutions in Chicago, Illinois
generally are authorized or required by law or executive order to
5
<PAGE>
close. The date upon which the Company issues its commitment to advance funds
in payment of the purchase price for an item of Inventory shall be referred to
hereafter as the "Commitment Date" for such item of Inventory. Each Advance
shall be made by means of wire transfer or, at the option of the Company,
through a depository transfer check or electronic funds transfer credit to an
account established by Great Dane. Unless otherwise advised by the Company,
Great Dane will mail the related statement or certificate of origin and a copy
of the invoice to the branch office of the Company or its Affiliate designated
by the Company and the original invoice to the related Eligible Independent
Dealer. Each Eligible Independent Dealer shall execute such schedules,
financing statements, security agreements and other documentation as may be
required by the Company to evidence and secure each Advance. Each Advance may
not exceed Great Dane's invoice price for the related item of Inventory (or any
supplemental invoice price proviDed that any price increase included therein
arises in the normal course of Great Dane's business and does not exceed three
percent (3%) of Great Dane's original invoice price for the related item of
Inventory) excluding freight and/or other transportation costs. Any discount or
rebate of the purchase price which Great Dane may issue to an Eligible
Independent Dealer regarding the purchase price of an item of Inventory against
which the Company has made an Advance shall, with the concurrence of such
Independent Dealer, be remitted to the Company and applied to the related
Advance. If after the Commitment Date the related Independent Dealer ceases to
6
<PAGE>
be an Eligible Independent Dealer or becomes in default under any obligations
with the Company, then Great Dane shall upon the request of the Company (i)
suspend shipment of the related items of Inventory if such shipment has not yet
begun, (ii) use its best efforts to stop shipment in transit and notify the
Company of the location of such Inventory if such shipment had been initiated
but not completed, or (iii) use any lawful rights and remedies available to
Great Dane to reclaim such Inventory from such Eligible Independent Dealer and
the Company shall indemnify Great Dane for any resulting reasonable reclamation
expenses. In the event the Company declines to make an Advance with respect to
a particular item(s) of Inventory and Great Dane, with the consent of the
Company, elects to loan the related Eligible Independent Dealer the funds
required to enable such Independent Dealer to acquire such item(s) of Inventory,
then, with respect to only such specific item(s) of Inventory in which the
Company declined to make an Advance, the Company shall agree to subordinate any
security interest it may have in such item(s) of Inventory to the security, if
any, acquired by Great Dane in such item(s) of Inventory.
Section 1.5. WHOLESALE CHARGES. The Company's charges to an
Eligible Independent Dealer for extending wholesale financing shall be in such
amount as the Company and the Eligible Independent Dealer may from time to time
agree upon and such charges shall be billed to and payable by the Eligible
Independent Dealer on a monthly basis. The Company may, from time to time,
increase or decrease the wholesale charges to any Eligible Independent Dealer
7
<PAGE>
and such increase or decrease shall not affect the liability of Great Dane under
this Agreement.
Section 1.6. TERM. Any Advance by the Company hereunder shall be
scheduled to be repaid by the related Eligible Independent Dealer not more than
three hundred sixty (360) days following the related Advance Date. An amount
equal to at least ten percent (10%) of the original Advance shall be payable by
the Eligible Independent Dealer not more than one hundred eighty (180) days
following the related Advance Date. In the event an Eligible Independent Dealer
does not pay the Company all or any portion of an Advance as such amount shall
become due, such failure shall not be deemed a default under this Agreement by
the Company and will not affect Great Dane's liability hereunder.
Section 1.7. GREAT DANE PURCHASE OBLIGATION. (a) In the event an
Eligible Independent Dealer fails to pay the Company any Advance as and when due
or otherwise defaults under any wholesale financing agreement with the Company,
the Company may take such action as the Company deems necessary and advisable to
collect such indebtedness, including but not limited to the retaking or
repossessing of any or all of such Eligible Independent Dealer's Inventory or
the institution of appropriate legal action. Following such retaking or
repossession, the Company shall take such actions as the Company deems necessary
and advisable to foreclose upon and sell such Inventory free and clear of the
Eligible Independent Dealer's interest therein. If the Company becomes the
purchaser of such Inventory following the foreclosure
8
<PAGE>
sale or if the Company otherwise becomes the owner of such Inventory, the
Company shall so advise Great Dane and transport such Inventory to a location
which Great Dane shall reasonably designate in writing to the Company and Great
Dane shall indemnify the Company for the resulting transportation expenses, if
any, arising after the first one hundred (100) miles of such transportation.
(b) Following delivery of the Inventory to the location designated
by Great Dane, Great Dane shall purchase such new Inventory (or portion thereof
which is new) which has not been damaged from the Company for an amount equal to
Great Dane's original invoice price together with any increases therein
reflected on any supplemental invoices for such item of Inventory (which amount
shall be referred to hereafter as the "Inventory Repurchase Price"); provided
that such sale by the Company to Great Dane will convey title to such Inventory
free and clear of all claims, liens or encumbrances of any party claiming by,
through or under the Company or the related Eligible Independent Dealer. For
the purposes of this Section 1.7(b), Inventory may be placed in service by Great
Dane during the delivery to the related Eligible Independent Dealer or to such
other location designated by such Eligible Independent Dealer and such Inventory
shall be deemed to be new Inventory hereunder.
(c) Following Great Dane's payment to the Company of the Inventory
Repurchase Price, the Company shall deliver the appropriate bill of sale to
Great Dane at the existing location of
9
<PAGE>
such Inventory. The sale of any Inventory to Great Dane by the Company shall be
on an "AS IS - WHERE IS" BASIS WITHOUT REPRESENTATIONS OR WARRANTIES OF ANY
KIND, EXPRESS OR IMPLIED, AS TO QUALITY, WORKMANSHIP, DESIGN, MERCHANTABILITY,
SUITABILITY, OR FITNESS OF THE INVENTORY FOR A PARTICULAR PURPOSE OR ANY PURPOSE
OR ANY OTHER WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OF ANY KIND. Great
Dane acknowledges that any deficiency due from the Eligible Independent Dealer
and/or surplus due to the Eligible Independent Dealer shall be computed in
accordance with applicable state and federal laws, regulations and decisions and
that any such surplus shall be payable in accordance therewith.
Section 1.8. DELAYED DELIVERY OF INVENTORY. Notwithstanding
anything to the contrary included in this Agreement, if any Inventory sold by
Great Dane to an Eligible Independent Dealer is not delivered to such Eligible
Independent Dealer's premises or such other location acceptable to the Company
which has been designated by such Eligible Independent Dealer on or before
forty-five (45) days after the related invoice date (except with respect to
those Eligible Independent Dealers located in California, Washington and Oregon;
in which case such delivery period shall be extended by ten (10) additional
days), then Great Dane shall, immediately upon demand by the Company, pay the
Company an amount equal to (i) the related outstanding Advance together with any
accrued and unpaid interest thereon, and (ii) all other amounts which are due
and owing to the Company under the related security agreement with the Eligible
Independent Dealer regarding
10
<PAGE>
such item of Inventory. Great Dane's liability under this Section 1.8 shall be
unconditional and the Company shall not be required to take possession of,
foreclose upon or tender delivery to Great Dane of the related item of
Inventory. The Company rights under this Section 1.8 shall be in addition to
any other rights of the Company under this Agreement, provided however, the
Company may elect to extend the aforementioned delivery periods in lieu of the
immediate exercise of the Company's rights hereunder.
ARTICLE II
RETAIL FINANCING FOR INDEPENDENT DEALERS AND AFFILIATE DEALERS
Section 2.1. AVAILABILITY OF RETAIL FINANCING. The Company,
directly or indirectly, may provide financing to persons and entities in the
United States desiring to purchase, lease or otherwise acquire from any Dealer
new or used trailers, semi-trailers and related equipment manufactured and/or
distributed by Great Dane (hereinafter referred to singularly and collectively
as the "Great Dane Customers" and the "Property," respectively) pursuant to
secured loans, installment sale contracts, sales-type leases which include
either nominal purchase options or no meaningful residual value in the Property
at the expiration of the lease term (referred to hereafter as "Sales Lease") or
other financing devices entered into between such Dealer and the Great Dane
Customer (referred to collectively hereafter as the "Contracts") in accordance
with this Agreement. Great Dane shall cause each Affiliate Dealer to fully
perform in a timely manner
11
<PAGE>
each and every duty or obligation attributable to such Affiliate Dealer under
this Agreement. Great Dane may also delegate to any Affiliate Dealer the
authority to perform any of Great Dane's obligations and duties hereunder,
provided however, such delegation shall not release Great Dane from any of Great
Dane's obligations and duties hereunder. Each Affiliate Dealer shall also
execute documentation acceptable to the Company which further evidences the
duties and obligations of such Affiliate Dealer hereunder.
Section 2.2. ELIGIBLE DEALERS. Great Dane shall identify in
writing those independent Dealers which are eligible for retail financing
accommodations by the Company hereunder. All Affiliate Dealers shall be deemed
eligible for retail financing accommodations by the Company hereunder and such
financing shall be without recourse to such Affiliate Dealer with respect to the
financial ability of the Great Dane Customer to pay except in those cases in
which Great Dane is performing hereunder as an Affiliate Dealer; in which case
Great Dane's obligations under this Agreement with respect to any related
Contract and the Property subject thereto shall continue in full force and
effect. The Company shall determine (i) the acceptability of any Independent
Dealer, (ii) the limitations of the financing it will extend to each Independent
Dealer, (iii) the form and content of all documentation the Company will require
to evidence and secure the obligations incurred by any Dealer which shall
include but not be limited to the retail financing agreement between such
Independent Dealer and the Company, an example of which is attached hereto as
Exhibit A
12
<PAGE>
("Retail Financing Agreement"), as may be amended from time to time, (iv) the
form and content of the Contract and any notes, guaranties and all other
documents (herein, together with the Contract, called "Documents") which
evidence and secure the obligations of the Great Dane Customer under each
Contract, and (v) the form and content of the Independent Dealer's assignments,
endorsements and warranties regarding the sale and transfer of the Documents to
the Company. The Company may, in its sole discretion, offer to extend retail
financing to Independent Dealers in such dollar amounts as are from time to time
agreed upon by such Independent Dealers and the Company. The Company shall give
written or telephonic notice to Great Dane if an Independent Dealer is no longer
approved by the Company hereunder. The purchase of Documents from any Dealer by
the Company shall be at such rate of discount as the Company and the Dealer may
from time to time agree upon and shall be referred to hereafter as the "Company
Rate."
Section 2.3. AFFILIATE DEALER TRANSACTIONS. The Company shall
approve or reject the credit on any transaction originating from an Affiliate
Dealer (i) within five (5) Business Days after the Company has received all the
credit and other information and details concerning the transaction deemed
necessary by the Company to render a decision either approving or rejecting such
transaction (hereinafter referred to singularly and collectively as the
"Contract Information"), if, after giving effect to such proposed transaction,
the aggregate outstanding amount owing to the Company and its Affiliates by the
Great Dane Customer who will be a party
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<PAGE>
to such transaction and its Affiliates is equal to or less than $3,750,000, and
(ii) within ten (10) Business Days after the Company has received the Contract
Information if, after giving effect to such proposed transaction, the aggregate
amount owing to the Company and its Affiliates by such Great Dane Customer and
its Affiliates is more than $3,750,000. The failure of the Company to accept or
reject the credit on a transaction within the time period described above shall
be deemed a rejection of such transaction for purposes of this Agreement. If
the Company approves the credit on any transaction and the process of
negotiating the terms of Financing, as defined in the Stock Purchase Agreement,
is successfully concluded, then such approval shall constitute a commitment to
purchase the related Documents for the transaction within three (3) Business
Days after the respective Affiliate Dealer tenders to the Company such Documents
if (i) the Documents for such transaction are in the form specified by, and in
substance satisfactory to, the Company and (ii) the Documents are submitted to
the Company for purchase within ninety (90) days of the date of such approval or
within such other time period as is designated in such approval.
Section 2.4. DOCUMENT PURCHASE FROM AFFILIATE DEALERS. (a)
Affiliate Dealers shall sell to the Company and the Company shall purchase from
such Affiliate Dealers each Contract between such Affiliate Dealers and a Great
Dane Customer which the Company elects to purchase pursuant to Section 2.3.
Unless the parties agree to the contrary, the purchase price of each Contract
shall be
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<PAGE>
an amount equal to the Principal Balance, as defined herein, less the cost of
any insurance included within the Contract unless Great Dane with the approval
of the Company pays the insurer such amount; in which case the purchase price
for the Contract shall include such amount. The purchase of the Documents shall
occur upon delivery to the Company of duly executed Documents for such
transaction together with instruments of assignment and transfer ("Assignment")
thereof duly executed by the respective Affiliate Dealer. Pursuant to the
Assignment, such Affiliate Dealer shall sell, transfer and assign to the Company
all of such Affiliate Dealer's right, title and interest in and to such
Documents, all amounts due or to become due under the Documents, the Property in
which such Affiliate Dealer has been granted a security interest and all of such
Affiliate Dealer's rights and remedies under or in connection with the
Documents. In addition, with regard to Property owned by such Affiliate Dealer
which is subject to a Sales Lease, such Assignment shall also provide for either
(i) the pledge, grant and/or assignment, as appropriate, by such Affiliate
Dealer to the Company of a security interest in such Property to secure the
performance by the Great Dane Customers of all their obligations under the
related Contract, or (ii) the sale and assignment by such Affiliate Dealer to
the Company of all of such Affiliate Dealer's right, title and interest in such
Property. The aforementioned Assignment will not constitute an assignment of
such Affiliate Dealer's obligations as seller or lessor under any
15
<PAGE>
Contract or under any purchase order executed in conjunction with any Contract.
Upon the acceptance by the Company of the Documents and Assignment
for a transaction, the Company shall pay the respective Affiliate Dealer or its
designee the purchase price of the related Contract.
Section 2.5. CONTRACT DEFINITIONS. The terms set forth below
shall be defined herein as follows:
(i) "Down Payment" shall mean the total amount of all cash and
property (at the value stated in the Contract) taken as partial consideration
for the sale of the Property.
(ii) "Principal Balance" for any Property shall mean the Unpaid
Cash Price, as defined herein, of such Property plus insurance and other charges
not included in the Cash Selling Price which are included in the related
Contract attributable to such Property excluding the related Finance Charges, as
defined herein.
(iii) "Unpaid Time Balance" with respect to any Contract at any
time shall mean the Principal Balance for any Property plus the related Finance
Charges and any other amounts owing under such Contract less all payments made
thereunder other than the Down Payment.
(iv) "Cash Selling Price" shall mean the full cash price that the
Great Dane Customer agreed to pay the Dealer for any Property including sales
taxes, license fees, title fees and registration fees, but excluding insurance
costs and the Finance Charges.
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(v) "Finance Charges" shall mean the amount charged the Great Dane
Customers by the Dealer for the privilege of purchasing Property on a time sale
basis.
(vi) "Unpaid Cash Price" for any Property shall mean the Cash
Selling Price of such Property less the related Down Payment.
(vii) "Net Unpaid Time Balance" shall mean the remaining Unpaid
Time Balance under any Contract (which shall not include any interest, late
charge or fee assessed against the Great Dane Customer under a Contract arising
from such Great Dane Customer's default in the payment of any installment
thereunder when due; provided however, such amount shall include the continued
accrual of interest after such default at the same rate of Finance Charges
included in such Contract prior to any default) less the unearned portion of the
Finance Charges, if any, calculated pursuant to the Rule of 78's or the
actuarial method; whichever method provides the greater rebate of unearned
Finance Charges, or as otherwise required by law as of the date of determination
or, if a foreclosure sale has occurred, immediately prior to such foreclosure
sale, and less the unearned portion, if any, of any insurance premium included
in such Contract.
(viii) "Independent Dealer's Property Cost" shall mean the sum of
Great Dane's invoice price for such Property, including freight or other
transportation charges, plus any Federal Excise Tax, plus the cost of locally
installed equipment not to exceed thirty percent (30%) of Great Dane's invoice
price for the related Property (except in the case of refrigeration equipment;
in which
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<PAGE>
case the cost therefor may not exceed the actual price paid by the Great Dane
Customer therefor plus any installation expenses), plus the cost of any
insurance referred to in Section 2.6(v) of this Agreement if such expense is
included in the Principal Balance under the Contract.
Section 2.6. CONTRACT ELIGIBILITY. (a) All Contracts
purchased by the Company from any Affiliate Dealer shall be subject to this
Agreement.
(b) Those Contracts purchased by the Company from an Independent
Dealer which meet the following requirements together with those direct loans
described in Section 2.7 shall also be subject to this Agreement:
(i) The Contract shall represent the installment sale at
retail of new Property together with all equipment attached thereto, of any
model year which has not been titled and which was sold by Great Dane to the
respective Independent Dealer.
(ii) The Great Dane Customer shall have made a Down Payment
of not less than ten percent (10%) of the Cash Selling Price.
(iii) The Unpaid Time Balance under the Contract shall be
payable over a term not to exceed seventy-two (72) months.
(iv) The portion of the purchase price paid to the
Independent Dealer in cash by the Company at the time of purchase of the
Contract will not exceed one hundred and five percent (105%) of the Independent
Dealer's Property Cost.
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<PAGE>
(v) The Property subject to a Contract on the date thereof
shall be insured for not less than the actual cash value thereof covering fire,
theft, and collision with a deductible amount of not more than two thousand five
hundred dollars ($2,500.00).
(vi) The Contract if acquired by the Company will not cause
the aggregate outstanding Unpaid Time Balances due to the Company under any
existing Contracts held by the Company with the respective Great Dane Customer
to exceed $500,000.00.
With the prior approval of Great Dane, Contracts which do not meet one or more
of the requirements set forth above shall also be subject to this Agreement.
Section 2.7. DIRECT LOAN ELIGIBILITY. Notwithstanding any terms
to the contrary in this Agreement, for all purposes hereunder except Section
2.8, any direct loan agreement (whether in the form of a security agreement,
chattel mortgage or other lien instrument) which the Company may enter into with
a Great Dane Customer to enable such Great Dane Customer to acquire new Property
from a Dealer which reserves a security interest or lien in such Property shall
be deemed to be a Contract which the Company purchased from such Dealer under
this Agreement and shall be subject to and eligible hereunder provided that:
(i) The direct loan shall satisfy, as appropriate, the eligibility
requirements set forth in Sections 2.6(i) and (v) of this Agreement, and
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(ii) On the date of the purchase of the Property by the Great Dane
Customer, the seller of such Property is either an Independent Dealer or an
Affiliate Dealer, and
(iii) The original principal balance of the direct loan shall not be
greater than ninety percent (90%) of the Cash Selling Price of the Property and
the term of such direct loan shall not exceed seventy-two (72) months.
(iv) If the seller of the Property is an Independent Dealer, the
original principal balance of the direct loan shall not exceed one hundred and
five percent (105%) of the Independent Dealer's Property Cost.
Any direct loan which satisfies the conditions set forth in Section
2.7 of this Agreement shall be referred to hereafter as a "Direct Loan." The
obligor under each Direct Loan shall be deemed to be a Great Dane Customer as
defined in this Agreement. With regard to any Direct Loan, any reference to the
Principal Balance, the Finance Charges and Unpaid Time Balance in this Agreement
shall be deemed to be a respective reference to the principal balance, interest
charges and the sum thereof included in the Direct Loan. Notwithstanding the
terms set forth in the first sentence of Section 2.8 of this Agreement, the
Company and the respective Independent Dealer shall agree upon the amount, if
any, which the Company may credit from the interest charges collected under any
Direct Loan and apply to the reserve account established for such Independent
Dealer.
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Section 2.8. INDEPENDENT DEALER RESERVE ACCOUNT. The difference,
if any, between the Finance Charges included in a Contract and the finance
charges arising from the Company Rate may be retained by the Company in a
reserve account established for each Independent Dealer or paid directly to such
Independent Dealer. The Company may release such retained amounts to an
Independent Dealer from time to time as the Company in its sole discretion deems
advisable. Notwithstanding the foregoing, the Company may charge amounts
against such reserve account or cancel portions of the reserve account in
accordance with the Company's agreement with each Independent Dealer.
Section 2.9. DOCUMENT REPRESENTATIONS AND WARRANTIES OF GREAT
DANE. With respect to any Document purchased by the Company under this
Agreement from any Affiliate Dealer, Great Dane represents and warrants that:
the Document will be genuine, in all respects what it purports to be and, except
to the extent of any impairment caused by the acts or omissions of the Company
or its Affiliates, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency or other similar laws affecting creditor's rights generally and the
Contract will constitute the entire agreement between the Affiliate Dealer and
the Great Dane Customer thereunder relating to the Property covered thereby; all
signatures, names, addresses, amounts and other statements and facts contained
in each Document will be true and correct as of the date the Company purchases
such Document; if the Contract evidences
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a sale, the Property will have been sold to the Great Dane Customer in a bona
fide time sale transaction and the respective Affiliate Dealer will have held
all appropriate licenses to enter into such sale and to assign the resulting
Contract to the Company; if the Contract evidences a lease, it will represent a
valid and lawful deferred payment obligation of a lessee except to the extent of
any impairment caused by the acts or omissions of the Company or its Affiliates,
and will constitute the only lease or rental agreement relating to the Property,
and Great Dane and the respective Affiliate Dealer will not have given any party
any purchase or renewal options in or to the Contract or the Property except as
stated in the Contract; the Great Dane Customer will have paid the Down Payment,
advance rentals or deposit in cash or as otherwise stated in the Contract and no
part thereof will have been loaned directly or indirectly by Great Dane or any
Affiliate Dealer; no rentals or other monies due under the Contract will have
been prepaid and no deposit will have been paid by the Great Dane Customer
thereunder except as stated in the Contract; the Property will have been
delivered in satisfactory condition to the Great Dane Customers and will have
been accepted by the Great Dane Customers; all parties to the Documents will
have the capacity to contract and none of such parties will have been a minor at
the time of the execution thereof; at the time of purchase of any Contract by
the Company from an Affiliate Dealer hereunder, the Great Dane Customers will
not then be in default under such Contract; Great Dane will have caused the
appropriate Affiliate
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Dealer to take such actions to be taken as are specified in instructions issued
from time to time by the Company to Great Dane to ensure that the security
interest, lien or reservation of title evidenced by the Documents and/or granted
to the Company by an Affiliate Dealer thereunder will be perfected, valid,
first, prior to all others and effective against all persons; each Affiliate
Dealer will have the full title and right to sell and assign the Documents and
such assignment will convey the Documents to the Company free and clear of all
liens, encumbrances and other interest of any kind; the Documents are and will
continue to be free from defenses, counterclaims and set-offs except those which
may arise from the acts or omissions, if any, of the Company or its Affiliates;
the Company shall have been designated as loss payee under such insurance
policies as the Company may reasonably require from time to time; after the date
of the assignment of the Documents, Great Dane together with the Affiliate
Dealers shall have no authority and will not without the prior written consent
of the Company accept collections, repossess, substitute or consent to the
return of the Property or modify the terms of the Documents. The Company shall
be relying upon the aforementioned representations and warranties with regard to
each Contract purchased hereunder and the knowledge of the Company of any breach
of such representations and warranties at the time of its purchase of any
Documents or thereafter shall not impair or constitute any waiver of any of such
representations and warranties or of Great Dane's obligations with respect to
such Documents. The Company
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shall use its best efforts to notify Great Dane of any breach of any of the
foregoing representations and warranties but shall not be obligated to cure or
remedy any defects in the Documents. If any of the preceding representations
and warranties are untrue in any material respect and cause a Loss, as
hereinafter defined, to arise, then Great Dane shall immediately upon demand by
the Company repurchase the related Documents from the Company for a amount equal
to the Net Unpaid Time Balance thereunder, plus any expenses of collection,
repossession, transportation, storage and reasonable attorneys' fees and court
costs incurred by the Company in enforcing such Documents and such amount shall
be referred to hereafter as the "Document Repurchase Price." Any sale of
Documents by the Company to Great Dane under this Section 2.9 shall be without
recourse or warranty of any kind except that such assignment will convey the
Documents free and clear of any rights of persons claiming by, through or under
the Company. Any amount paid by Great Dane to the Company upon the repurchase
by Great Dane of any Documents pursuant to this Section 2.9 shall not constitute
a Repossession Loss as defined in Section 2.14. For the purposes of this
Agreement a "Loss" shall mean any losses, damages, liabilities, claims, demands,
deficiencies, judgments, assessments, penalties, settlement costs and expenses
of any nature whatsoever (including reasonable attorneys' fees and court costs)
arising from the breach of any of the preceding representations or warranties
provided the Company has sought to enforce the related Documents against the
Great Dane Customer in the appropriate trial court and
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obtained any form of determination, ruling or decision from such trial court
with respect to the Company's complaint to enforce the related Contract which
may include, without limitation, a dismissal of the proceeding instituted by the
Company. Great Dane shall indemnify the Company for all related court costs and
reasonable attorneys' fees incurred by the Company. Notwithstanding anything to
the contrary contained in this Section 2.9, any of the representations and
warranties contained in this Section 2.9 shall be deemed not to have been
breached if such representations and warranties shall be untrue as a result of
(i) the form of any Document being defective if the form is supplied or prepared
by the Company for use in the jurisdiction in which used, (ii) the Finance
Charges included in a Contract are in violation of applicable law but only if
the Company Rate quoted by the Company in the applicable jurisdiction at such
time is also in violation of such applicable law, or (iii) any action or
omission by the Company or its Affiliates or any action or omission by Great
Dane or the respective Affiliate Dealer which is taken at the written direction
or, in the case of only directions by the Company or its Affiliates with respect
to insurance coverage for the Property, telephonic direction of the Company or
its Affiliates. Except with respect to the representations and warranties
included in the Affiliate Dealer Agreement between the Company and each
Affiliate Dealer, an example of which is attached as Exhibit B hereto, the
representations and warranties set forth in this Section 2.9 shall supersede any
representations and warranties contained in any assignments of
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Documents purchased by the Company from any Affiliate Dealer under this
Agreement and any representations and warranties of Great Dane or the respective
Affiliate Dealer included in such assignments shall be of no force and effect.
Any assignment of Documents by an Affiliate Dealer to the Company shall be
subject to this Agreement unless the Company, Great Dane and such Affiliate
Dealer otherwise agree. Any representation, warranty, obligation and/or
liability of any party (other than Great Dane or an Affiliate Dealer) under the
Documents shall be assigned to and enforceable by the Company even though Great
Dane or an Affiliate Dealer has not made a similar representation or warranty or
incurred a similar obligation or liability to the Company.
Section 2.10. ACCOUNT MANAGEMENT. (a) Each Affiliate Dealer
shall notify the Great Dane Customers under all Contracts assigned to the
Company by such Affiliate Dealer on or after the Effective Date to make all
future payments directly to the Company at such address as the Company shall
specify. With the exception of monies received by Great Dane or an Affiliate
Dealer from the Great Dane Customers which are received by Great Dane or an
Affiliate Dealer prior to the assignment to the Company of the Documents and
(including the Down Payment) which have been applied as a reduction of the
Unpaid Time Balance due under the related Contract, all monies and other forms
of payment received by Great Dane or an Affiliate Dealer from any Great Dane
Customer or other obligor under the Documents assigned to the Company shall be
held by Great Dane or such Affiliate Dealer in trust for the Company.
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If any such payment is in the form of a check, money order or other instrument
made payable to Great Dane or an Affiliate Dealer, then Great Dane or such
Affiliate Dealer shall immediately endorse and/or assign such instrument to the
Company and any such payment, regardless of form, shall be promptly, without
demand, forwarded to the Company.
(b) The Company may collect monies due under the Documents and
otherwise enforce such Documents in accordance with the reasonable business
judgment of the Company, without notice to Great Dane or any Affiliate Dealer
and without affecting Great Dane's obligations under this Agreement, provided
that unless a Default (as defined in Section 4.2) by Great Dane shall have
occurred and be continuing:
(i) The Company shall obtain Great Dane's prior consent for
the extension of the term of any Contract if (1) the term of such Contract has
already been extended by three (3) months or, (2) as a result of any proposed
extension, the term of such Contract will be extended by more than three (3)
months;
(ii) The Company shall obtain Great Dane's prior consent for
any extension of the term of a Contract or refinance of a Contract if at such
time the Contract is three (3) or more monthly installments past due; and
(iii) The Company shall obtain Great Dane's prior consent for
any transfer, with the approval of the Company, of a Contract from the Great
Dane Customer to another party, and
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(iv) The Company shall, with respect to only those Contracts
with a remaining Unpaid Time Balance in excess of $25,000 obtain Great Dane's
prior consent before releasing (1) any security interest in the Property prior
to the payment in full of the related Great Dane Customer's obligations
thereunder, or (2) any guarantor of the obligations of a Great Dane Customer
prior to the payment in full of the related Great Dane Customer's obligations
thereunder. With respect to any Contract with a remaining Unpaid Time Balance
equal to or less than $25,000 the Company shall use its best efforts to obtain
the prior consent of Great Dane for the actions described in subsections (1) and
(2) of the preceding sentence.
The Company shall also notify Great Dane of any written extension,
reschedule or other modification to any Contract which does not require the
prior consent of Great Dane as set forth in Section 2.10(b) (i), (ii), (iii) and
(iv) above. The requirements to obtain Great Dane's consent as set forth in
Section 2.10(b)(i), (ii), (iii) and (iv) above shall not apply to any extension,
refinancing, transfer of obligation, release of Property or guarantor, or
substitution of collateral resulting from any law, ruling, regulation, court
order, automatic stay in a bankruptcy proceeding or action of any governmental
agency. If Great Dane does not respond to a request by the Company for Great
Dane's consent to any action described in Section 2.10(b)(i), (ii), (iii), or
(iv) above within two (2) Business Days of such request, then Great Dane shall
be deemed to have given the Company the
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appropriate consent. If the Company takes any action described in Section
2.10(b) (i), (ii), (iii), or (iv) above without the prior consent of Great Dane,
then Great Dane shall continue to be liable hereunder with respect to such
Contract except to the extent of any diminution in value of such Contract which
may arise from such action by the Company.
(c) Great Dane and the Affiliate Dealers shall make appropriate
entries upon their books and records which reflect the sale to the Company of
such Documents as may be purchased by the Company and, upon ten (10) days' prior
notice to Great Dane, the Company may examine such related books and records at
any time during regular business hours. If Great Dane or the respective
Affiliate Dealer retains an interest of any kind in the Property, or to the
extent that any court deems Great Dane or the respective Affiliate Dealer to
have an interest of any kind therein, Great Dane and the respective Affiliate
Dealer shall grant to the Company a security interest in such Property to secure
all obligations of the Great Dane Customers under the related Documents. Great
Dane and the Affiliate Dealers, upon the reasonable request of the Company,
shall execute such other documents as the Company may reasonably require to
evidence and/or give notice of the rights of the Company in and to the Documents
and/or the Property, which shall include but not be limited to the execution of
security agreements and financing statements which describe Great Dane and the
Affiliate Dealers, as appropriate, as a debtor and describe the Property as
collateral and are senior to any other financing
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statements executed by Great Dane and the Affiliate Dealers as debtors with
respect to such Property.
Section 2.11. GREAT DANE CUSTOMER DEFAULT. In the event a Great
Dane Customer defaults in the performance of its obligations under a Contract
purchased by the Company from any Dealer, the Company may take such action as
the Company deems necessary and advisable, including but not limited to the
institution of a replevin action or similar proceeding, to take possession of
the Property subject to such Contract and/or to collect the indebtedness due
thereunder. If the Company fails to repossess an item of Property within one
hundred eighty (180) days of the due date of the earliest installment remaining
substantially in default under the Contract (such 180-day period, as it may be
extended pursuant to Section 5.13 hereof, being hereinafter referred to as the
"Repurchase Period"), Great Dane shall have no further obligation to the Company
for such Property under this Article II. The preceding sentence shall not apply
to any Contract in which Great Dane or the respective Affiliate Dealer has
breached any warranty or representation to the Company if a Loss arises from
such breach or if such breach in any way impairs the Company's ability to
repossess the Property within the Repurchase Period. In the event of such a
breach, Great Dane's obligations and liabilities hereunder with respect to such
Contract and the related Property shall remain in full force and effect without
regard to the Repurchase Period and any action by the Company to repossess or
foreclose upon such Property and/or pursue the Company's rights
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under such Contract shall not waive the Company's rights under Section 2.9;
provided however, Great Dane's obligations under such Section 2.9 shall continue
to be conditioned upon the existence of a Loss arising from such breach. For
the purposes of this Article II, an installment shall be substantially in
default when the portion of such installment which is unpaid exceeds fifty
percent (50%) of the scheduled installment provided for in the Contract. With
respect to only those Contracts with the same Great Dane Customer which (i) are
over sixty (60) days past due, and (ii) include an aggregate outstanding Unpaid
Time Balance in excess of $250,000.00, Great Dane shall have the option to
repurchase the related Documents from the Company for an amount equal to the
Document Repurchase Price. Any sale of Documents by the Company to Great Dane
under this Section 2.11 shall be without recourse or warranty of any kind except
that such assignment will convey the Documents free and clear of any rights of
persons claiming by, through, or under the Company. Such option to repurchase
Documents by Great Dane shall not affect in any manner the respective Repurchase
Period.
Section 2.12. REPOSSESSION. In the event the Company repossesses
any Property within the Repurchase Period or, if there is no default in payment,
at any time after the Company elects to repossess any Property following a
default by the Great Dane Customer in the performance of its other obligations
under the Contract, the Company shall then take such action as the Company deems
necessary and advisable to foreclose upon and sell such
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Property free and clear of the Great Dane Customer's interest therein. If the
Company forecloses its security interest in such Property at a public
foreclosure sale, the Company shall:
(i) Give Great Dane and the related Dealer the same prior written
notice of such foreclosure sale as is given to the Great Dane Customer.
(ii) Bid up to or, at the Company's option, in excess of the
appraised value of the Property, but in no event shall the Company be obligated
to bid in excess of the amount of the Net Unpaid Time Balance under the
Contract. Should the Company's bid be higher than any other bid entered, the
Company shall purchase such Property at its bid price. Should any other person
or persons enter a cash bid equal to or higher than the bid of the Company, the
Company shall sell the Property to the maker of the highest bid and such sale
shall be deemed to be a "Resale" under Section 2.13 and the net amount received
by the Company at such sale shall be deemed to be the "Resale Amount" under
Section 2.14. In the event Great Dane and the Company shall so agree, the
Property may be sold to a third party at a public or private foreclosure sale
for an amount less than the Net Unpaid Time Balance and such sale shall be
deemed to be a "Resale" under Section 2.13 and the net amount received by the
Company at such sale shall be deemed to be the "Resale Amount" under Section
2.14.
(iii) If the Company is the purchaser at a foreclosure sale
referenced in Section 2.12 (ii) above or otherwise becomes the owner of the
Property, the Company shall give Great Dane and the
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Dealer verbal notice of the impending delivery of such Property if such Property
is not then in the possession or control of Great Dane or the Dealer, as
appropriate.
(iv) With respect to Property subject to a Contract assigned to the
Company by an Affiliate Dealer and unless prevented from doing so because of the
occurrence of an Impediment described in Section 5.13, the Company shall deliver
such Property to the nearest Affiliate Dealer or at another location designated
by Great Dane which is not more than fifty (50) miles from such nearest
Affiliate Dealer. The Company may deliver the Property to a location not
described in the preceding sentence if the Company and Great Dane agree upon
such location and the manner in which the resulting transportation expenses are
to be paid. If the Company requests Great Dane to move the Property and Great
Dane is of the opinion that the Property requires repairs before it can be
moved, Great Dane shall obtain the prior approval of the Company for any such
repairs unless the cost thereof is $250 or less. Other than as provided herein
as a prerequisite to the exercise of the Company's rights, nothing herein shall
be construed as requiring the Company to deliver and/or to sell any Property to
Great Dane. Great Dane shall store and protect the Property in a manner
consistent with Great Dane's standard practice to store and protect its own
inventory and shall allow the Company to conduct a foreclosure sale of the
Property on the Affiliate Dealer's premises and to post signs concerning such
sale on such premises, all without charge to the Company. Any Property
voluntarily
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surrendered or abandoned to Great Dane or any Affiliate Dealer shall be deemed
to have been delivered to Great Dane pursuant to this Section 2.12 on the date
of such surrender or abandonment and Great Dane shall immediately thereafter
notify the Company of such surrender or abandonment. If space is available at
the Affiliate Dealer to which the Property is delivered, Great Dane shall at all
times provide such space to the Company for storage of the Property without
charge. If space is not available at the Affiliate Dealer, Great Dane shall
arrange to store the Property on space rented by Great Dane and shall charge to
the Company its pro rata portion of the rent for such space.
(v) Following the repossession by the Company of any Property
subject to a Contract assigned to the Company by an Independent Dealer, the
Company shall proceed to foreclose upon such Property as set forth in this
Section 2.12 and return such Property to the Independent Dealer which assigned
the related Contract to the Company.
Section 2.13. GREAT DANE RESALE RESPONSIBILITY. (a) Upon
delivery of any Property subject to a Contract assigned to the Company by an
Affiliate Dealer to Great Dane pursuant to Section 2.12, the responsibility for
selling such Property shall be upon Great Dane. Promptly after such delivery,
Great Dane shall furnish to the Company a written estimate of the cost of the
refurbishment and repairs recommended by Great Dane prior to resale of such
Property. The Company shall pay Great Dane for any reasonable refurbishment and
repairs necessary for resale within thirty (30)
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days of submission of Great Dane's invoice provided that (i) such expenses are
charged at the same rate for parts and labor as the appropriate Affiliate Dealer
charges its best fleet customers, and (ii) Great Dane shall have obtained the
prior approval of the Company for such expense. Except as otherwise provided
below, Great Dane shall resell such Property at a price acceptable to the
Company and Great Dane within ninety (90) days after the related foreclosure
sale and such resale shall be referred to hereinafter as "Resale". Great Dane
shall use its best efforts to effect the Resale of any Property in a manner
consistent with that used by Great Dane in the disposition of Great Dane's other
items of inventory which are similar in age and condition to such Property.
Great Dane and the Company may agree to extend the aforementioned ninety (90)
day period one (1) time for an additional sixty (60) days. If Great Dane has
not effected the Resale within the time period set forth herein, Great Dane and
the Company shall each obtain within thirty (30) days thereafter, at least one
(1) bona fide bid for the Property to submit to each other and the Property
shall be sold within thirty (30) days thereafter to the highest bidder and such
sale shall be deemed to be a Resale and the net amount received by Great Dane at
such sale shall be deemed to be the Resale Amount (as hereinafter defined).
Great Dane shall purchase such Property for cash from the Company immediately
prior to any Resale for an amount equal to the purchase price to be paid to
Great Dane at the Resale (referred to hereafter as the "Resale Amount"). Any
sale of foreclosed Property by the Company to Great
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Dane hereunder shall be on an "AS IS - WHERE IS" BASIS, WITHOUT REPRESENTATIONS
OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, AS TO QUALITY, WORKMANSHIP,
DESIGN, MERCHANTABILITY, SUITABILITY, OR FITNESS OF THE PROPERTY FOR A
PARTICULAR PURPOSE OR ANY PURPOSE OR ANY OTHER WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, OF ANY KIND.
(b) Upon delivery to an Independent Dealer of any Property subject
to a Contract assigned to the Company by such Independent Dealer, the
responsibility for selling such Property shall be upon such Independent Dealer;
provided however, the sale price for such Property shall be subject to the
concurrence of both Great Dane and the Company. Such sale shall be conducted
pursuant to the respective terms and conditions set forth in the Retail
Financing Agreement. The sale of the Property by the Independent Dealer and the
amount paid to such Independent Dealer at such sale shall be deemed to be a
Resale and the related Resale Amount, respectively.
Section 2.14. REPOSSESSION LOSSES. (a) For the purposes of this
Agreement, a "Repossession Loss" shall mean the Net Unpaid Time Balance owing
under a Contract with respect to Property which has been foreclosed upon by the
Company, plus all expenses incurred by the Company in the transportation, repair
and storage of the Property, plus all sales commissions payable by the Company
under Section 2.19(c), plus, in the case of only those Contracts assigned to the
Company by an Affiliate Dealer, interest on the Net Unpaid Time Balance computed
at the Formula Rate, as defined herein, from
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the date sixty (60) days after such Property is delivered and available to Great
Dane for Resale to the date Great Dane purchases such Property from the Company
as set forth in Section 2.14(a), less the Resale Amount.
(b) The "Formula Rate" shall consist of the lesser of (i) the
greater of the per annum lending rates publicly announced from time to time by
Morgan Guaranty Trust Company of New York, Citibank, N.A. or The Chase Manhattan
Bank, N.A. as its prime rate, base rate or reference rate for unsecured loans of
the shortest maturity to corporate borrowers (the "Prime Rate") plus 1.0% per
annum; PROVIDED, HOWEVER, that such rate shall not be changed unless at
least two of such banks have announced a change in such publicly announced
rates, or (ii) the highest rate that Great Dane can legally obligate itself to
pay and/or the Company can legally collect.
Section 2.15. GREAT DANE REPOSSESSION LOSS LIABILITY. Provided
that the AIC Account includes a like or greater amount, the Company shall be
paid from the AIC Account, as defined in Section 2.17, an amount equal to:
(i) one hundred percent (100%) of the Repossession Loss arising
under any Contract purchased by the Company from an Affiliate Dealer, and
(ii) the difference, if any, between (x) the Repossession Loss
arising under any Contract purchased by the Company from an Independent Dealer
for the sale of five (5) or more items of Property consisting of new trailers or
semi-trailers to
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the same Great Dane Customer which had been the subject of a single order to
Great Dane by such Independent Dealer, minus (y) ten percent (10.0%) of the Net
Unpaid Time Balance for such Property remaining under such Contract at the time
of repossession of such Property, and
(iii) the difference, if any, between (x) the Repossession Loss
arising under any other contract purchased by the Company from an Independent
Dealer which is not described in Section 2.15(ii) above, minus (y) fifteen
percent (15.0%) of the Net Unpaid Time Balance for such Property remaining under
such Contract at the time of repossession of such Property.
Great Dane agrees that the Company may so charge the AIC Account
those amounts referenced in the preceding sentence. In the event a Repossession
Loss arises which exceeds the amount, if any, remaining in the AIC Account
(after the return of any amounts by Great Dane pursuant to Section 2.17(c)),
Great Dane shall, subject to Section 2.16, pay the Company in cash immediately
upon demand an amount equal to fifty percent (50%) of the difference between
such Repossession Loss and such amount, if any, remaining in the AIC Account.
Section 2.16. GREAT DANE REPOSSESSION LOSS LIABILITY LIMITS.
Notwithstanding anything to the contrary in Section 2.15, during any single
Calendar Year, as defined herein, Great Dane shall have no further liability for
Repossession Losses if, during such Calendar Year, Great Dane has paid the
Company, pursuant to Section 2.15 from sources other than the AIC Account,
amounts in
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excess of the greater of (i) two-tenths of one percent (0.2%) of the aggregate
outstanding Unpaid Time Balance for all outstanding Contracts existing on
December 31st of the prior Calendar Year up to a maximum of $1,250,000, or (ii)
$360,000. "Calendar Year" shall mean the period from the Effective Date until
December 31st of that same year and each consecutive twelve-month period
thereafter (or portion thereof in the event this Agreement is terminated during
any such twelve-month period).
Section 2.17. AIC ACCOUNT. (a) The Company shall credit to a
reserve account to be created and maintained on the books and records of the
Company (referred to herein as the "AIC Account"), the sum of three-eighths of
one percent (.375%) of the original Unpaid Cash Price included in each Contract
subject to this Agreement regarding new Property and the sum of one-half of one
percent (.50%) of the original Unpaid Cash Price included in each Contract
purchased by the Company from an Affiliate Dealer subject to this Agreement
regarding used Property. If for any reason the Company rebates any Finance
Charges included in a Contract to the Great Dane Customer, then the Company
shall debit from the AIC Account an amount which, in relation to the original
amount credited to the AIC Account for such Contract, is in the same ratio as
the amount such rebate bears to the original Finance Charges included in such
Contract. Except as set forth in Section 2.15 and Section 2.17(b), the Company
shall hold all amounts in the AIC Account until such time as all Contracts
subject to this Agreement
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have been paid in full and at such time these amounts shall become the property
of and disbursed to Great Dane.
(b) Provided that a Default by Great Dane shall not have occurred
and be continuing, commencing on the fourth anniversary of the Effective Date,
the Company shall disburse to Great Dane from the AIC Account the difference, if
any, between the balance remaining in the AIC Account minus the greater of (i)
$2,500,000 or (ii) one-half of one percent (0.5%) of the aggregate outstanding
Unpaid Time Balances for all Contracts as of December 31st of the prior Calendar
Year.
(c) In the event the Company makes disbursements to Great Dane
pursuant to Section 2.17(b) and a Repossession Loss subsequently arises which
exceeds the balance then remaining in the AIC Account, Great Dane shall,
immediately upon demand by the Company, remit to the Company in cash an amount
(not to exceed the aggregate amount of all disbursements made by the Company to
Great Dane pursuant to Section 2.17(b)) equal to the difference between such
Repossession Loss minus the balance, if any, remaining in the AIC Account and
such amount shall be credited to the AIC Account by the Company and immediately
thereafter paid to the Company in accordance with Section 2.15. All amounts
remitted to the Company pursuant to the preceding sentence and so credited to
the AIC Account shall not, for the purposes of Section 2.16, constitute a
payment to the Company from a source other than the AIC Account. Immediately
following (i) the termination or expiration of this Agreement, or (ii) any
Default by Great Dane under this Agreement,
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Great Dane shall remit to the Company in cash the aggregate amount, if any,
disbursed to Great Dane by the Company from the AIC Account pursuant to Section
2.17(b), less any amount previously remitted by Great Dane to the Company
pursuant to this Section 2.17(c).
Section 2.18. DEFICIENCY COLLECTION. The Company shall use
reasonable efforts to collect the remaining Net Unpaid Time Balance due under
any Contract from which a Repossession Loss shall arise. Any net amounts so
collected shall be applied by the Company: (i) first, to reimburse the Company
for all other amounts which may be due and owing to the Company under such
Contract, including without limitation any unpaid expenses of collection,
repossession, transportation, storage, attorneys' fees, and court costs incurred
by the Company in the enforcement of the related Contract which had not
previously been taken into account in calculating the Repossession Loss with
respect to such Contract; (ii) second, to reimburse the Company for any portion
of the Repossession Losses suffered by the Company under all Contracts
previously foreclosed upon which were not shared by Great Dane pursuant to the
last sentence of Section 2.15; (iii) third, in equal amounts to Great Dane and
the Company for any portion of the Repossession Losses shared by Great Dane and
the Company pursuant to the last sentence of Section 2.15; (iv) fourth, to the
AIC Account; and (v) fifth, in the case of a Contract purchased by the Company
from an Independent Dealer, to reimburse such Independent Dealer for any loss
incurred by such Independent Dealer with respect to the related Contract. The
amount set forth in either
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subsection (i) or subsection (ii) of Section 2.16 shall be increased during any
Calendar Year by the amounts, if any, paid to Great Dane pursuant to subsection
(iii) of the preceding sentence.
Section 2.19. ORIGINATION FEES/COMMISSIONS/COMPANY - CONTRACT
RATE DIFFERENTIAL. (a) Until the establishment of the volume guidelines
described in Section 2.19(b) below and unless otherwise agreed by Great Dane and
the Company, with respect to each sales order placed with an Affiliate Dealer
which describes Property included within one or more Contracts purchased by the
Company from an Affiliate Dealer hereunder, the Company shall pay Great Dane an
origination fee equal to $25 multiplied by the number of trailers or
semi-trailers described in such sales order; PROVIDED, HOWEVER, that the
aggregate amount payable pursuant to this Section 2.19 with respect to any such
sales order shall not exceed $250.
(b) Within ten (10) Business Days after the Effective Date, Great
Dane shall provide the Company with information concerning the dollar volume of
sales for each Affiliate Dealer during 1986 and 1987. As promptly as
practicable following the delivery of such information, Great Dane and the
Company shall negotiate in good faith to establish for each Affiliate Dealer
volume guidelines for the percentage of finance sales which are to be generated
from the total sales by each Affiliate Dealer (based upon the historic levels of
such percentages, the mix of business at each Affiliate Dealer and other
relevant factors), and to establish a schedule for the payment or origination
fees based upon
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the performance of each Affiliate Dealer with regard to the respective volume
guidelines. The schedule of origination fees set forth on Exhibit C hereto is
expected to be representative of the fee structure for each Affiliate Dealer.
The origination fees set forth in Section 2.19(a) shall be in the alternative
and not in addition to the origination fees contemplated in Section 2.19(b), and
shall have no further force and effect after the quotas contemplated by this
Section 2.19(b) have been established and implemented.
(c) With respect to any Property sold by Great Dane or an
Affiliate Dealer to a person which is not an Affiliate of Great Dane pursuant to
Section 2.13(a) (other than pursuant to the seventh sentence of such Section),
the Company shall pay Great Dane a commission equal to ten percent (10%) of that
portion of the Cash Selling Price of such Property, less any sales taxes,
license fees, title fees and registration fees, which is not in excess of
$10,000, plus, if such Cash Selling Price, as so adjusted, exceeds $10,000, five
percent (5%) of such excess amount.
(d) In the event that the rate of Finance Charges included in (1)
any Contract assigned to the Company by an Affiliate Dealer, or (2) any Direct
Loan in which the seller of the Property is an Affiliate Dealer, exceeds the
Company Rate applicable thereto or which is in effect upon the date thereof for
like Property to a substantially similar Great Dane Customer over the same term,
each Affiliate Dealer or its designee shall be entitled to receive the following
amounts:
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(i) in the case of an outstanding Contract assigned to the
Company by such Affiliate Dealer relating to new Property, 100% of the first 1%
annual percentage rate of such excess and 50% of any excess over such 1% annual
percentage rate; and
(ii) in the case of an outstanding Contract assigned to the
Company by such Affiliate Dealer relating to used Property, 100% of the first 2%
annual percentage rate of such excess and 50% of any excess over such 2% annual
percentage rate.
Fifty percent (50%) of such amounts shall be payable quarterly by the Company to
Great Dane. The remaining portion of such amounts shall be held by the Company
until such time as the aggregate amount of such funds held by the Company
exceeds one percent (1.0%) of the aggregate outstanding Unpaid Time Balance for
all Contracts. On a monthly basis the excess, if any, of such amounts shall be
payable by the Company to Great Dane.
ARTICLE III
PRIOR AGREEMENT SUPERSEDED
Section 3.1. SUPERSEDE PRIOR AGREEMENT. This Agreement shall
supersede all the terms and conditions included in the Prior Agreement. Only
those Contracts purchased by the Company from a Dealer hereunder on or after the
Effective Date shall be subject to this Agreement. All Contracts purchased by
the Company from a Dealer prior to the Effective Date shall be subject to the
terms and provisions of the Stock Purchase Agreement.
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ARTICLE IV
TERM
Section 4.1. TERM. The term of this Agreement shall commence on
the Effective Date and shall continue for a period of eight (8) years
thereafter, unless earlier terminated pursuant to Section 4.2, Section 4.3, or
Section 5.5.
Section 4.2. TERMINATION UPON OCCURRENCE OF SPECIFIC EVENTS.
This Agreement may be terminated by either of the parties hereto by written
notice to the other party if any of the following events shall occur and each
such event shall constitute a "Default" hereunder:
(i) the other party shall default in the performance of any of its
obligations to pay money arising hereunder or under any of the Ancillary
Agreements (as defined in the Stock Purchase Agreement) other than this
Agreement ("Related Agreements") and such default shall continue for a period of
thirty (30) days after delivery of written notice of such default by the
non-defaulting party; or
(ii) the other party shall default in any material respect in the
performance of any of its obligations (other than the obligations referred to in
(i) above) arising under any provision of this Agreement or any of the Related
Agreements, and such default shall continue for a period of sixty (60) days
after delivery of written notice of such default by the non-defaulting party; or
(iii) the other party shall make a general assignment
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for the benefit of creditors; or any proceeding shall be instituted by or
against the other party seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar official for such party or for any substantial part of its property,
and, in the case of any such proceeding instituted against such party (but not
instituted by it), either such proceeding shall remain undismissed and unstayed
for a period of ninety (90) days or any actions sought in such proceeding
(including, without limitation. the entry of an order for relief against such
party or the appointment of a receiver, trustee, custodian or other similar
official for such party or for any substantial part of its property) shall
occur; or the other party shall take any corporate action to authorize any of
the actions set forth above in this subsection (iii).
Section 4.3. TERMINATION UPON FAILURE OF THE COMPANY TO
PERFORM. (a) Provided that Great Dane is not then in Default hereunder, in
the event that Great Dane is of the opinion, at any time subsequent to the
second anniversary of the Effective Date, that, based upon the Performance
Factors (as hereinafter defined), there has been a material failure by the
Company in the performance of its services as contemplated hereby, then Great
Dane shall deliver to the Company written notice of its opinion of such
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failure, specifying in reasonable detail the areas of such failure. If in Great
Dane's opinion such failure has not been corrected within sixty (60) days
following delivery to the Company of such notice of failure, Great Dane shall
deliver written notice (the "Second Notice") of its opinion of such continued
failure to the Company. If the Company disputes Great Dane's opinion of such
continued failure referred to in a Second Notice, then the Company shall deliver
to Great Dane written notice (the "Dispute Notice") of such dispute. If the
Company shall not deliver to Great Dane a Dispute Notice within fifteen (15)
Business Days after receipt of a Second Notice, then Great Dane shall be
entitled to terminate this Agreement.
(b) If the Company shall give a Dispute Notice as provided above,
then such dispute as to the performance by the Company shall be determined by
binding arbitration before a panel of three arbitrators in New York, New York in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association as then in effect. Such arbitration shall be conclusive upon the
parties as to all matters decided and shall be enforceable in any court of law
of competent jurisdiction. The parties further agree that no lawsuit shall be
filed by any party with respect to any matters subject to arbitration under
Section 4.3(a) either before or during any arbitration of such matter, except as
necessary to enforce the provisions of Section 4.3(a). Great Dane and the
Company will submit the dispute to the three-member arbitration panel within
thirty (30) days after Great Dane's
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receipt of the Company's Dispute Notice. Great Dane and the Company shall each
select one arbitrator within ten (10) days after the Dispute Notice is given to
serve on the panel and such arbitrators shall select a third arbitrator within
twenty (20) days after the Dispute Notice is given. If the two arbitrators
shall be unable to agree upon a third arbitrator within the time period set
forth above, then the third arbitrator shall be selected by the American
Arbitration Association no later than thirty (30) days after the Dispute Notice
is given.
In resolving the dispute, the arbitrators shall consider and give weight to all
of the Performance Factors, as hereinafter defined. The cost of arbitration
shall be paid by the party against whom the arbitration is decided, or as
otherwise determined by the arbitrators.
(c) For purposes of this Section 4.3, the "Performance Factors"
which will be used to determine whether there has been a material failure by the
Company to perform its services as contemplated hereby or whether external
factors beyond the control of the Company are the cause of Great Dane's
dissatisfaction shall be (i) the percentage of the aggregate sales volume of the
Property financed pursuant to this Agreement, taking into account, among other
things, then current economic and market conditions, acts or omissions of Great
Dane (including, without limitation, its performance of its obligations
hereunder and under Section 9.11 of the Stock Purchase Agreement), and the
composition of Great Dane's customer base (excluding therefrom those Great Dane
Customers who
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do not finance Property through independent finance companies), (ii) the level
of service provided to Great Dane and the Great Dane Customers pursuant to this
Agreement compared to the service provided by Affiliates of the Company and
other independent finance companies to other manufacturers of over-the-road
trailers and tractors and their comparable customers, and (iii) the financing
terms (considering the Company Rate and not the rate quoted by the Affiliate
Dealers to the Great Dane Customers) provided by the Company to Great Dane
Customers pursuant to this Agreement compared to the terms provided to
comparable customers by Affiliates of the Company and other independent finance
companies in connection with financings similar to those contemplated by this
Agreement.
(d) The sole question to be decided by the arbitration panel
shall be whether, based on the Performance Factors, there has been a material
failure by the Company in the performance of its obligations hereunder or
whether external factors beyond the control of the Company are the cause of
Great Dane's dissatisfaction. Great Dane shall have the burden of proving that
such a material failure by the Company did not result from external factors
beyond the control of the Company. If the arbitration panel shall determine by
a majority vote that there has been such a material failure by the Company which
was not caused by external factors beyond the control of the Company, then this
Agreement may be terminated at Great Dane's option upon not less than ten (10)
Business Days' notice to the Company delivered at any time within six (6) months
after such determination by the arbitration panel.
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Section 4.4. EFFECT OF EXPIRATION OR TERMINATION. Following the
expiration or termination of this Agreement, except with respect to any
outstanding commitment by the Company to make an Advance pursuant to Article I
or commitment by the Company to purchase a Contract pursuant to Article II, the
Company shall have no further obligation to make Advances under Article I or to
purchase Contracts under Article II; provided however, this Agreement shall
remain in full force and effect with respect to any outstanding Advances or
Contracts (or outstanding commitments by the Company to make an Advance or to
purchase a Contract) or related obligations of the parties hereto to each other
hereunder which have not been satisfied in full.
Section 4.5. RESERVATION OF REMEDIES. Termination of this
Agreement shall not constitute a waiver by either party of its rights to be
compensated for any damages arising from any breach of this Agreement by the
other party; PROVIDED, HOWEVER, except for the remedies set forth in Section
9.11(F) of the Stock Purchase Agreement with respect to the termination of this
Agreement, that in no event, whether prior to or after the termination of this
Agreement, shall either party be liable for consequential or incidental damages,
including, but not limited to, loss of production or profits.
ARTICLE V
MISCELLANEOUS
Section 5.1. GENERAL. No failure or delay on the part
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of either party in exercising any power, right or remedy under this Agreement
shall operate as a waiver thereof. nor shall any single or partial exercise of
any such power, right or remedy preclude any other or further exercise thereof
or the exercise of any other power, right or remedy. The repurchase by Great
Dane of any Contract from the Company pursuant to this Agreement shall not
constitute a default under Section 9.11 of the Stock Purchase Agreement. Each
party hereto shall have an express, contractual right of offset against the
other party for any amounts which are or may become due and owing to such party
under this Agreement or any other agreement. The party owed such amounts may
withhold a like amount or portion thereof from any payment otherwise due to the
other party under this Agreement in full or partial satisfaction of the amount
owed by such party to the other party.
Section 5.2. AMENDMENTS. This Agreement may be modified,
amended, supplemented, or waived only by a written instrument executed by each
of the parties.
Section 5.3. FURTHER ASSURANCES. Each party shall take such
further actions, including, without limitation, execution of documents, as is
necessary to ensure the proper performance by such party of the provisions of
this Agreement.
Section 5.4. SEVERABILITY. All provisions of this Agreement
shall be severable for purposes of enforcement. If any provision of this
Agreement is invalid, ruled illegal by any court of competent jurisdiction, or
unenforceable under present or future laws effective during the term hereof,
then, and in that event, it
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is the intention of the parties hereto that the remainder of this Agreement
shall not be affected thereby.
Section 5.5. SUCCESSORS AND ASSIGNS. All of the terms and
conditions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
assigns; PROVIDED, HOWEVER, that this Agreement may not be assigned by
either party without the prior written consent of the other. Notwithstanding
any terms to the contrary herein, the Company (which for the purposes of this
Section 5.5 shall include its successors and assigns) may assign this Agreement
without the prior written consent of Great Dane if (i) at the time of such
assignment one hundred percent (100%) of the common stock of the Company's
assignee is owned, directly or indirectly, by a corporation which is the direct
or indirect beneficial owner of one hundred percent (100%) of the common stock
of the Company, (ii) such assignment is pursuant to the sale of substantially
all the assets of the Transportation Division of Associates Commercial
Corporation ("Associates"), or (iii) such assignment is pursuant to a sale of
chattel paper by the Company in which the Company shall service such chattel
paper for the benefit of the purchaser thereof; PROVIDED, HOWEVER, the
rights of an assignee of this Agreement pursuant to subsection (iii) above may
be terminated, at the election of Great Dane if the Company does not continue to
service such chattel paper for such assignee. In the event of an assignment of
this Agreement by the Company pursuant to subsection (ii) of the preceding
sentence or the
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transfer of any of the shares of common stock of the Company to any person not
specified in subsection (i) of the immediately preceding sentence (other than as
a result of a merger of the Company into Associates or as a result of the
transfer of the shares of capital stock of Associates), Great Dane shall have
the right to terminate the Agreement upon thirty (30) days prior written notice
to the assignee hereof. In the event of an assignment of this Agreement by the
Company pursuant to subsection (iii) of this Section 5.5, the aggregate
outstanding Unpaid Time Balance for all Contracts assigned pursuant thereto plus
the aggregate outstanding Unpaid Time Balance for all Contracts covered hereby
and not so assigned shall be added together for the purposes of subsection (i)
of Section 2.16. In the event substantially all the assets of Great Dane are
sold with the consent of Associates Corporation of North America pursuant to
Section 10.1(B) of the Stock Purchase Agreement, Great Dane may assign its
rights and obligations under this Agreement to the party which purchases such
assets, provided that such party fully assumes all of Great Dane's existing and
hereafter arising obligations hereunder.
Section 5.6. NOTICES. Except as otherwise specifically provided
herein, any notices or other communications required under this Agreement shall
be in writing (including telecopy communications), and shall be sent by mail,
telecopier or courier as follows:
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(a) If to Great Dane, with respect to all notices and
communications pursuant Article IV or Section 5.5 of this Agreement, addressed
to:
International Controls Corp.
Two Executive Drive, 4th Floor
Somerset, New Jersey 08873
Attention: Arthur M. Goldberg
Telecopier: (201) 469-9151
with a copy to Frank L. Stifelman
Orloff, Lowenbach, Stifelman & Siegel
101 Eisenhower Parkway
Roseland, New Jersey 07068-1082
(b) If to Great Dane, with respect to all other notices and
communications pursuant to this Agreement, addressed to:
Great Dane Trailers, Inc.
East Lathrop Avenue
Savannah, Georgia 31402-0067
Attention: James C. Rossiter
Telecopier: (912) 236-0647
(c) If to the Company, addressed to:
Associates Commercial Corporation
150 North Michigan Avenue
Chicago, Illinois 60601
Attention: General Counsel, with a copy to
Controller
Telecopier: (312) 781-5974
and
Associates Corporation of North America
250 E. Carpenter Freeway
P. 0. Box 660237
Dallas, Texas 75266-0237
Attention: President
Telecopier: (214) 659-4004
Telex: 791566
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Either party hereto shall be entitled to specify a different address by giving
written notice as aforesaid to the other party. All notices shall be deemed to
have been duly given or made when delivered by courier or upon return of receipt
requested card and when telecopied, receipt acknowledged.
Section 5.7. CONFIDENTIALITY. (a) The Company and Associates
Corporation of North America shall adopt as policy the guidelines set forth in
Section 5.7(b) and will use its best efforts to ensure substantial compliance
with such policy; PROVIDED, HOWEVER, that Great Dane recognizes that there
can be no assurances that the Company's employees will in every case comply with
such policy. A failure by any of the Company's employees to substantially
comply with the policy set forth in Section 5.7(b) shall not constitute a
material default by the Company under this Agreement unless Great Dane shall
have delivered to the Company written notice specifying in reasonable detail the
circumstances of such non-compliance and such non-compliance by such employees
shall not cease within sixty (60) days after delivery of such notice by Great
Dane.
(b) The Company and Associates Corporation of North America shall
keep confidential information provided to the Company by Great Dane and the
Affiliate Dealers concerning the identity of each prospective Great Dane
Customer, the Property which may be purchased or leased by such Great Dane
Customer and the price and other sale terms which may be incorporated in any
prospective sale of Property by Great Dane to such Great Dane Customer (the
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"Customer Information"); PROVIDED, HOWEVER, after such prospective Great
Dane Customer purchases such Property from Great Dane or comparable equipment
from a person other than Great Dane, the Company may disclose (1) the terms of
any financing extended by the Company to such Great Dane Customer to any other
person who indicates to the Company that such information will be used in the
consideration of other financing for such Great Dane Customer, and (2) Customer
Information which does not identify the terms of transactions with any
particular Great Dane Customer or under any Contract. Customer Information
shall not include any information that is or becomes available to the Company
through sources other than Great Dane or that is or becomes in the public
domain.
Section 5.8. ENTIRE AGREEMENT. This Agreement and the exhibits
and other documents referred to herein set forth the entire understanding of the
parties with respect to the subject matter hereof, and all prior understandings,
written or oral, with respect to such subject matter are superseded by this
Agreement.
Section 5.9. HEADINGS. The Article and Section headings in this
Agreement are for reference purposes only and shall not otherwise affect the
meaning or interpretation of any provision hereof.
Section 5.10. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.
Section 5.11. COUNTERPARTS. This Agreement may be executed in
separate counterparts, each of which shall be deemed an
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original but both of which, taken together, shall constitute one and the same
instrument.
Section 5.12. REPORTS. (a) The Company agrees to furnish Great
Dane with the following written reports:
(i) a monthly report of the outstanding Unpaid Time Balance
and aging for each outstanding Contract computed as of the end of the previous
month.
(ii) a monthly report of each outstanding Contract,
identified by the originating Dealer which is over sixty (60) days past due as
of the end of the previous month.
(iii) a monthly report of Property repossessed and held by
the Company during the previous month which identifies the respective Contract,
originating Dealer and the reasonably current location of the Property.
(iv) a quarterly report on the activity and balances of the
AIC Account.
(b) Great Dane agrees to furnish the Company with the following
written reports:
(i) a monthly report setting forth the aggregate dollar
volume of sales and leases of Property and the number of new and used items of
Property sold and leased by each Affiliate Dealer during the preceding month.
(ii) a weekly report of all Property or Inventory purchase or
sale orders placed with Great Dane and the Affiliate Dealers during the
preceding week.
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(c) The Company shall use its best efforts to give Great Dane
prior notice of any legal action instituted by the Company against a Great Dane
Customer under any Contract for payment of more than $500,000.
(d) While the Company and Great Dane each will use its best
efforts to provide each other with the notices, reports and information set
forth in Section 5.12(a), (b), and (c), the Company and Great Dane agree that
the failure of either party to furnish the other with such notices, reports or
information in a timely manner will not constitute a Default by either the
Company or Great Dane under this Agreement for any purpose and shall not affect
the obligations or liabilities of either the Company or Great Dane under this
Agreement.
Section 5.13. IMPEDIMENTS. If the Company is prevented from
repossessing any Property within the period of time specified in Article II of
this Agreement or is prevented from foreclosing upon any Property or delivering
any Property or presenting good title thereto or from taking any other act
whatsoever due to any law, rule, regulation, court order, litigation (which
shall include but not be limited to the pendency of any replevin action or
similar proceeding instituted by the Company to recover possession of any
Property), bankruptcy proceeding, riot, labor dispute, natural disaster, Act of
God, action of any government agency, or if an item of Property must be kept for
a definite period to permit redemption (each of which events is herein called an
"Impediment"), then the period of time, if any, in which the Company shall be
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required to proceed hereunder shall stop running during such time as an
Impediment shall exist and shall begin running again forty-five (45) days after
such Impediment ceases to exist. Subject to the Company's reasonable business
and legal judgment, the Company shall use reasonable efforts to cause an
Impediment to cease to exist in those cases in which the cessation of such
Impediment is an appropriate course of action under all the facts and
circumstances existing at the time.
Section 5.14. SECURITY INTEREST. If Great Dane retains an
interest of any kind in any Inventory or Property or to the extent any court
deems Great Dane to have an interest of any kind in any Inventory or Property or
in any credits at any time appearing on the books of the Company or in any
monies from time to time in the possession and/or control of the Company, which
shall include but not be limited to the AIC Account, Great Dane hereby grants to
the Company a first priority, perfected security interest therein to secure all
obligations of Great Dane to the Company, whether realized or contingent, and
whether arising under this Agreement or any other agreement between Great Dane
and the Company and/or any Affiliate of the Company. Great Dane will execute
any appropriate financing statements and take any other actions reasonably
requested by the Company to ensure that the security interest granted herein is
and continues to be a first priority, perfected security interest in the related
property.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their respective officers as of the date and year first above
written.
GREAT DANE TRAILERS, INC.
BY:____________________________
TITLE:
GREAT DANE FINANCE COMPANY
BY:____________________________
TITLE:
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EXHIBIT A
THE
ASSOCIATES
A GULF + WESTERN
COMPANY
GREAT DANE DEALER
LIMITED LIABILITY AGREEMENT
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Dated:_________________________________
Associates Commercial Corporation
________________________________
________________________________
________________________________
(hereinafter called "Associates")
Gentlemen:
We desire from time to time to offer to sell to Associates, upon the
terms and conditions set forth in this Agreement, security agreements,
conditional sale contracts, retail installment sale contracts, leases, chattel
mortgages or other title retention or lien instruments (herein individually
referred to as a "Contract" and collectively referred to as "Contracts")
acceptable to Associates which evidence the time sale at retail or the lease of
the machinery, equipment, and/or vehicles described therein (the "Property") by
us in the ordinary course of our business to our commercial customers (herein
called "Debtors").
1. ASSIGNMENT. Upon the acceptance by Associates of any such
Contract, we will sell, transfer and assign to Associates all of our
right, title and interest in and to the Contract and in any notes,
guarantees and other documents executed in connection with the Contract
(herein, together with the Contract, called "Documents"), all amounts due
or to become due under the Documents, the Property, and all of our rights
and remedies under or in connection with the Documents. Such assignment
will not constitute an assignment of our obligations as seller or lessor
under any such Contract or under any purchase order executed in
conjunction with any such Contract.
2. PURCHASE PRICE. The purchase price which Associates will pay
us for each Contract shall be an amount equal to the then unpaid face
amount thereof less the charges of Associates (herein called the "Purchase
Price"). At the time of purchase of a Contract, Associates will pay us an
amount equal to the Purchase Price for such Contract less any amount
withheld by Associates pursuant to Paragraph 3 of this Agreement. Any
portion of the Purchase Price evidenced by a Dealer Certificate delivered
to us by Associates shall be payable as provided in such Certificate.
3. DEALER RESERVE. A. The excess, if any, of the charges
included by us in each Contract over the charges of
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Associates therefor, or any portion thereof, may at Associates' election
be withheld by Associates and credited to an account on the books of
Associates and designated as our Dealer Reserve or paid directly to us by
Associates. A portion of the Dealer Reserve shall be paid to us from time
to time to the extent that the balance in such Dealer Reserve exceeds
_____% of the then total unpaid balances of all Contracts acquired by
Associates from us. We understand and agree that although all or a
portion of the Dealer Reserve on Contracts sold to Associates is paid to
us by Associates from time to time, the portion of the Dealer Reserve
attributable to a Contract shall not be earned by or due us until such
Contract is paid in full by the Debtor. Therefore, we hereby agree:
(a) In the event of the repossession or retaking of any of
the Property which is the subject of a Contract sold to Associates
or if a loss is sustained by Associates on any such Contract, the
portion of the Dealer Reserve relating to such Contract will be
cancelled and the amount of such Dealer Reserve will be charged
against our reserve account on the books of Associates.
(b) If, in the event of prepayment by the Debtor, any part
of the difference between the cash price and the unpaid face amount
of the Contract is refunded to the Debtor, the same percentage of
the Dealer Reserve attributable to such Contract as the refund bears
to the amount on which it was computed will be cancelled and a like
amount will be charged against our reserve account on the books of
Associates.
(c) In the event the charges of Associates for the purchase
of a Contract are reduced because any insurance coverage included in
such Contract is cancelled prior to their maturity, the same
percentage of the Dealer Reserve relating to the Contract as the
reduction bears to the amount on which it was computed will be
cancelled and the amount thereof will be charged against our reserve
account on the books of Associates.
In the event our Dealer Reserve from the sale of Contracts to Associates
is insufficient to satisfy the charges enumerated above, we shall from
time to time promptly, upon demand, pay to Associates the amount of such
charges.
3.B. If, for any reason, Associates discontinues buying Contracts
from us or if we are indebted to Associates either hereunder or otherwise,
or if any of the events described in Paragraph 8 hereof has occurred which
obligates us to
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repurchase Documents assigned to us by Associates hereunder, or if we are
no longer doing business as a going concern, or if there is then any
existing breach of any representation, warranty or agreement on our part,
then notwithstanding any other provision herein. Associates may hold all
amounts in our Dealer Reserve until all Contracts purchased by Associates
from us and all of our outstanding obligations to Associates, whether
under this Agreement or otherwise, have been fully paid, and at the option
of Associates, Associates may charge any of our obligations against our
reserve account on the books of Associates. We hereby grant Associates a
security interest in the Dealer Reserve and any other credits at any time
appearing on the books of Associates as security for all of our realized
or contingent obligations to Associates, whether arising under this
Agreement or otherwise. Neither the transfer to us from time to time of
any portion of the Dealer Reserve, nor the institution of any bankruptcy,
insolvency, receivership or liquidation proceeding by or against us shall
affect the rights of Associates under this Agreement. Unless Associates
expressly agrees otherwise in writing, no amount held in our Dealer
Reserve, or otherwise, or evidenced by a Dealer Certificate, or any sum
due us from Associates, whether earned or unearned, shall bear interest or
otherwise accrue profits.
4. REPRESENTATIONS AND WARRANTIES. With respect to all
Documents purchased pursuant to this Agreement, we represent and warrant
that at the time of purchase and at all times thereafter: the Documents
will be genuine, enforceable, in all respects what they purport to be, and
the Contract will constitute the entire agreement between us and the
Debtor(s) relating to the Property; all signatures, names, addresses,
amounts and other statements and facts contained in the Documents will be
true and correct; if the Contract evidences a sale, the Property will have
been sold to the Debtor(s) in a bona fide time sale transaction; if the
Contract evidences a lease, it will represent a valid, lawful deferred
payment obligation of a bona fide lessee, will constitute the only lease
or rental agreement relating to the Property and we will not have given
any party any purchase or renewal options in or to the Contract or the
Property except as stated in the Contract, the Debtor(s) will have paid
the downpayment, advance rentals or deposit in cash or as otherwise stated
in the Contract and no part thereof will have been loaned directly or
indirectly by us; no rentals or other monies due under the Contract will
have been prepaid and no deposit will have been paid by the Debtor(s)
except as stated in the Contract; the Property will have been delivered in
satisfactory condition to the Debtor(s), will have been properly installed
if required, and will have been accepted by the Debtor(s); any notice of
insurance or certificate or
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policy thereof will be or will have been delivered to the Debtor(s) within
the time required by law; all parties to the Documents will have the
capacity to contract and none of such parties will be a minor; the
Debtor(s) will not then be in default under the Contract; the security
interest, lien or reservation of title evidenced by the Documents and/or
granted by us to Associates hereunder will be valid, first, prior to all
others and effective against all persons; we will have caused such actions
to be taken or initiated as are required or permitted by statute or
regulation to perfect and disclose the interest of Associates in the
Property; we will have full title and the right to sell and assign the
Documents and such assignment will convey the same free and clear of all
liens and encumbrances whatsoever; the Documents will be and will continue
to be free from defenses, counterclaims, cross-claims and set-offs; and
Associates shall have been designated as loss payee under an insurance
policy acceptable to Associates in the form of Fire Insurance with
Extended Coverage or Combined Additional Coverage and Collision, Theft
and/or Vandalism and Malicious Mischief Coverage, when appropriate,
insuring the Property for not less than its actual cash value and having a
deductible collision provision in an amount acceptable to Associates and
such other insurance as Associates may from time to time reasonably
require. We further represent and warrant that, from and after the date
of assignment of the Documents, we shall have no authority and will not,
without the written prior consent of Associates, accept collection,
repossess, substitute or consent to the return of the Property, or modify
the terms of the Documents. In purchasing any Contract under this
Agreement, Associates shall be relying upon our warranties as to such
Contract, and the knowledge of Associates of any breach of any such
warranties at the time of its purchase of any Contract shall not impair or
constitute any waiver of any such warranties or of any of our obligations
with respect to such Contract. Associates shall have no obligation to
notify us of any breach of any of such warranties which may come to its
attention or to undertake any cure or remedy of any defects in any
Documents.
5. NOTIFICATIONS, WAIVERS AND BOOKS AND RECORDS. We shall notify
the Debtors under all Contracts assigned to Associates to make all future
payments directly to Associates at such address as Associates shall
specify. We hereby agree that, with the exception of monies received by
us from the Debtor which are specified as having been received in the
Documents and installment payments received by us prior to our assignment
to Associates of the Documents which are applied by us as a reduction of
the unpaid face amount of the Contract, all monies and other forms of
payment received by us from any obligor under Documents assigned to
Associates will be held by
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us in trust for Associates. If any such payment is in the form of a
check, money order or other instrument made payable to us, we shall
immediately endorse and/or assign such instrument to Associates and any
such payment, regardless of its form, shall be promptly, without demand,
forwarded to Associates. If we fail, for any reason, to give the notice
referred to above or to complete the endorsement and/or assignment
specified above, Associates or its representative is hereby authorized and
empowered to do so in our name and as our agent. We give express
permission to Associates to release, on terms satisfactory to Associates
or by operation of law or otherwise, or to compromise or adjust any and
all rights against, and grant extensions of time of payment to, the
Debtor(s) or any other persons obligated on the Documents, or to agree to
a transfer of any Property or a substitution of a Debtor and to otherwise
handle the making of collections in accordance with the business judgment
of Associates, without notice to us and without affecting our obligations
to Associates under this Agreement. We shall make suitable and proper
entries on our books and records showing the absolute sale to Associates
of such Documents as may be purchased by Associates and Associates or its
authorized representative may examine our books and records relating to
such Documents at any time during regular business hours. If we retain an
interest of any kind in the Property, or to the extent that any Court
deems us to have an interest of any kind in the Property, we hereby grant
Associates a security interest in the Property to secure all obligations
under this Agreement and under the Documents. We will, upon request from
Associates, execute such other documentation as Associates may reasonably
require to evidence and/or give notification of the rights of Associates
in and to the Documents and/or the Property. If the rights or obligations
under any Document are modified by order of any court or other
governmental agency, such modification shall not relieve us of our
obligations to Associates hereunder.
6. INSURANCE. Any amounts advanced by Associates at any time
after its purchase of a related Document, plus the charges of Associates
thereon, relating to insurance on Property covered by the Documents, shall
be deemed added to the amount then remaining unpaid under the related
Documents for the purpose of computing our obligations to Associates under
this Agreement and any related assignment or endorsement.
7. WITHOUT RECOURSE ASSIGNMENT. A. Unless otherwise agreed, all
Documents shall be assigned to Associates without recourse as to the
financial ability of the Debtor to pay, but subject to the warranties and
representations contained in such assignment and in this Agreement, and
subject to the
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terms and conditions hereof. In the event of a default under the terms of
Documents so assigned, Associates shall take such action as Associates may
deem necessary and advisable to collect the unpaid balance due thereunder,
including but not limited to the retaking, repossessing or recapturing of
any or all of the Property covered by the Documents or the institution of
legal action to affect such retaking, repossession or recapturing.
7.B. In the event that Associates repossesses or recovers
possession of any Property subject to a Contract during the Repurchase
Period, as defined herein, Associates shall take such action as Associates
deems necessary and advisable to foreclose upon and sell such Property
free and clear of the Debtor's interest therein. If Associates takes
possession of any Property within the Repurchase Period and becomes the
purchaser of such Property at the aforementioned foreclosure sale (which
may be conducted following the close of the Repurchase Period), we will,
promptly upon demand by Associates and subject to the terms of this
Paragraph, purchase such Property from Associates. The "Repurchase
Period" shall begin upon the maturity date of the earliest installment due
under the Contract which is more than 50% unpaid and shall end 180 days
thereafter, provided however, such period: (a) shall not include any days
during which an Impediment, as defined herein, shall exist, and (b) shall
be extended by 45 additional days after any Impediment shall cease to
exist. Any law, rule, regulation, court order, litigation (which shall
include but not be limited to the pendency of any replevin action or
similar proceeding instituted by Associates to recover possession of any
Property), bankruptcy proceeding, riot, labor dispute, natural disaster,
Act of God, action of any governmental agency or statutory redemption
period which, in whole or in part, impairs Associates' ability to
repossess or recover possession of any Property during the Repurchase
Period or to otherwise perform as contemplated under this Agreement shall
constitute an "Impediment."
7.C. Following the purchase of the Property by Associates,
Associates shall give us notice of this fact and that Associates intends
to deliver the Property to us. Associates shall deliver the Property to
us at our place of business, or at such other location as we will
designate. If the point of delivery is more than 250 miles from the point
of repossession, we will pay all delivery charges incurred after the first
250 miles. Upon delivery of the Property, we will place the Property for
sale and will, with the approval of Associates, sell the Property within
90 days of delivery. With the consent of Associates, this approved sale
period may be extended for an additional 60 day period. If we have not
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sold the Property within the approved period of time we and Associates
shall, within 30 days thereafter, each obtain two bona fide bids and
thereafter the Property shall be sold to the highest bidder. Any Resale
of Property shall be a sale by us as the seller to the purchaser. A sale
under this Subparagraph 7.C., whether the purchaser is located by us or by
Associates, shall constitute a "Resale" for purposes of this Agreement.
7.D. We hereby acknowledge and agree that any Property delivered to
us by Associates pursuant to Paragraph hereof shall be held by us for the
benefit of Associates, that we shall merely be a bailee of the Property
for Associates until the Resale, and that Associates will be transferring
no rights to us in the Property by such delivery other than those
specified herein. We agree to safely store the Property without cost to
Associates; to redeliver the Property to Associates upon demand, and
authorize Associates to secure comprehensive insurance coverage upon the
Property for the term of our possession at our cost. We will mark our
books and records to designate the ownership rights of Associates and
shall, upon request from Associates, execute such other documentation as
Associates may reasonably require to evidence and/or give notification of
our relative rights in the Property. To the extent that any Court of Law
deems us to have an interest of any kind in the Property, we hereby grant
Associates a security interest in the Property to secure our obligations
under this Agreement.
7.E. We agree to purchase the Property from Associates immediately
prior to the Resale of the Property and Associates agrees to deliver good
unencumbered title to the Property to us (which title will be evidenced by
a properly endorsed certificate of title or repossession certificate of
title or by a bill of sale, whichever is applicable). The purchase price
for the Property shall be payable by us to Associates immediately upon the
Resale of the Property and shall be an amount equal to the proceeds
received by us from the Resale, plus interest upon the unpaid principal
balance due under the related Contract from the date of repossession of
the related Property to the date of our payment to Associates computed at
the lesser of the lawful maximum rate of interest which we may pay and
Associates may collect or Associates current published used wholesale
rate, and plus any sums payable to Associates by us under Subparagraph
7.F. The sale of the Property to us by Associates shall be on an "AS IS -
WHERE IS" BASIS WITHOUT REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS
OR IMPLIED, AS TO QUALITY, WORKMANSHIP, DESIGN, MERCHANTABILITY,
SUITABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED.
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7.F. If the proceeds of the Resale of the Property are insufficient
to fully reimburse Associates with respect to the related Contract, we
agree to immediately pay Associates the lesser of (a) the amount necessary
to reimburse Associates in full, or (b) (i) _____% of the unpaid time
balance remaining at the time of repossession of the related Property less
any customary refund by Associates of unearned finance charges. For
purposes of this Paragraph 7, Associates shall be considered fully
reimbursed when Associates has received the amount of the then unpaid face
amount of the related Contract, plus approved expenses of repossession,
less any customary refund by Associates of unearned finance charges, less
any insurance premium refund payable directly), to Associates, less any
insurance proceeds received by Associates which are not used by Associates
to restore or repair the Property, less any costs in excess of $1,000 of
restoring or repairing the Property incurred due to loss or damage that
would have been covered by physical damage insurance, less the amount of
all installments due under the related Contract which were at the time of
repossession, in default in excess of 120 days, except those installments
due under the related contract, which were at the time of repossession, in
default in excess of 120 days, except these installments becoming in
default during the existence of an Impediment, and less the proceeds of
the Resale of the Property. In all cases, the following expenses shall be
considered approved expenses of repossession: actual out-of-pocket
expenses incurred by Associates in repossessing, transporting and storing
the Property, including reasonable attorney's fees and court costs; the
payment of mechanic's and/or garageman's liens not in excess of $1,000;
the cost of emergency repairs not in excess of $500; and necessary
reconditioning expenses not in excess of $1,000. Our prior approval will
be required for any other expenses. We agree that any deficiency
remaining due from the Debtor and/or surplus due to the Debtor shall be
computed in accordance with applicable state and federal laws, regulations
and decisions and that any such surplus shall be payable in accordance
therewith.
8. WAIVER, REASSIGNMENT AND BREACH OF WARRANTY. We hereby waive
presentment, demand, notice and protest as to all Contracts. If any of
the representations and warranties contained in Paragraph 4 hereof or any
representation or warranty made by us to Associates in any other agreement
relating to Documents is untrue, we hereby unconditionally agree to
promptly repurchase the affected Documents on demand from Associates for
the remaining unpaid balance thereof, plus any expenses of collection,
repossession, transportation and storage, and reasonable attorney's fees
and court costs incurred by Associates in enforcing the rights of
Associates under the Documents against the Debtor or enforcing the rights
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of Associates hereunder against us, less any customary refund by
Associates of unearned finance charges. If we default in any of our
obligations to Associates, become insolvent, cease doing business as a
going concern, make an assignment for the benefit of creditors, or if a
petition for a receiver or in bankruptcy is filed by or against us, we
hereby unconditionally agree to promptly repurchase all Documents assigned
to Associates by us hereunder at the purchase price set out above. We
shall continue to be liable hereunder, notwithstanding a waiver of or
failure to enforce any of the terms, covenants or conditions contained in
the Documents on the part of Associates or any release of, or failure on
the part of Associates to realize upon or protect the Property or the lien
thereon. ANY REASSIGNMENT OF THE DOCUMENTS BY ASSOCIATES, WHETHER UNDER
THIS PARAGRAPH OR OTHERWISE, SHALL BE WITHOUT RECOURSE OR WARRANTY OF ANY
KIND.
9. ADDITIONAL REPRESENTATIONS AND WARRANTIES. We represent,
covenant and warrant to Associates that: (a) If we have represented
ourselves to be a corporation or execute this Agreement as a corporation,
we are duly organized, validly existing and in good standing under the
laws of the State of our Incorporation; we are duly qualified as a foreign
corporation to do business in each State in which the nature of our
business requires such qualification; the execution and delivery of this
Agreement and the performance thereof by us are not in violation of any of
the provisions of our Certificate of Incorporation or By-laws; we have
taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement; and, Associates is authorized to rely
upon any certificate or other writing executed and delivered to Associates
on our behalf by our Secretary or any Assistant Secretary with respect to
the persons authorized and designated to sell, assign and deliver
Contracts to Associates, and to execute any customary assignments and
other documents and endorsements in furtherance thereof; (b) If we have
represented ourselves as a partnership, whether general or limited, or
execute this Agreement as a partnership, either all general partners have
executed this Agreement or the signatory on this Agreement has the full
right and authority to execute this Agreement on behalf of and to bind the
partnership and, unless otherwise specified in writing, Associates is
authorized to accept the signature of any partner and of any person
authorized and designated by any partner as binding upon the partnership
with relation to the sale, assignment and delivery of Contracts under this
Agreement, and the execution of assignments and other documents and
endorsements in furtherance thereof; and (c) The execution, delivery and
performance of this Agreement is not in violation of any indenture,
mortgage, or other agreement to which we are a party or under which we may
be
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bound. We shall furnish to Associates (i) as soon as practicable after
the close of each fiscal year a copy of our audited financial statements
for each such fiscal year, and (ii) such other information respecting our
business, operation and financial condition as Associates may from time to
time reasonably request.
10. MODIFICATION, WAIVER AND ASSIGNMENT. No modification or
waiver of any provision of this Agreement shall be effective unless such
modification or waiver shall be in writing and signed by our duly
authorized officer or agent and by a duly authorized officer of Associates
and any such modification or waiver shall then be effective only for the
period, on the conditions, and for the specific instances and purposes in
such writing. Associates may from time to time at its sole discretion
sell certain Documents and continue to enforce such Documents for the
benefit of the purchasers thereof pursuant to a collection agreement or
other service arrangement with such purchasers. Following such a sale,
our obligations and liabilities hereunder with regard to such Documents
and the Property subject thereto shall remain in full force and effect and
shall inure to the benefit of such purchasers. In the event Associates
repurchases such Documents from the purchasers thereof, our obligations
and liabilities hereunder with regard to such Documents and the Property
subject thereto shall remain in full force and effect and shall inure to
the benefit of Associates as if such sale and repurchase of such Documents
by Associates had not transpired. Associates may assign its related
rights under this Agreement to the purchasers of such Documents and our
related obligations and liabilities hereunder shall inure to the benefit
of such purchasers. We may not assign any of our rights and obligations
hereunder without the prior written consent of Associates.
11. NOTICES. All notices, offers, demands or replies by either
party to this Agreement shall be in writing and shall be sent by first
class mail, postage prepaid, and addressed, if to Associates, to the
address of Associates shown above, marked "Attention: Branch Manager", and
if to us, to the following address, marked to the attention of the person
whose signature appears below, or to such other person or address as
either party shall from time to time designate to the other in
writing:_____________________________________________________
_____________________________________________________________.
Upon the acceptance of Associates, the terms and provisions hereof
shall constitute an agreement between us which shall inure to and bind us and
our respective assigns. Any such termination will not affect our respective
rights or obligations as the Documents which Associates has purchased or made a
binding
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commitment to purchase prior to the effective date of termination. This
Agreement may be referred to as the Great Dane Dealer Limited Liability
Agreement.
DEALER___________________________________
WITNESS: By:____________________________________
_____________________________ Title:_________________________________
Accepted and agreed to at __________________________________, on
_________________________
(Date)
ASSOCIATES COMMERCIAL CORPORATION
By:___________________________________
Title:_____________________________
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AMENDMENT
This Amendment is by and between Associates Commercial Corporation
("Associates") and _____________________ (the "Dealer") and shall become a part
of and specifically incorporated in that certain Great Dane Dealer Limited
Liability Agreement (the "Agreement") dated on the same date hereof between the
parties hereto.
Associates and the Dealer agree that the Agreement shall be amended as follows:
1. The first sentence in Paragraph 7.F. of the Agreement shall be deleted in
its entirety and the following sentence shall be added to the Agreement as a
substitute in the place thereof:
If the proceeds of the Resale of the Property are insufficient to fully
reimburse Associates with respect to the related Contract, we agree to
immediately pay Associates the lesser of (a) the amount necessary to
reimburse Associates in full, or (b)(i) 10% of the unpaid time balance
remaining at the time of repossession of the related Property less any
customary refund by Associates of unearned finance charges computed as of
such date regarding any Contract(s) which evidences the time sale to the
same Debtor of Property consisting of five (5) or more new trailers and/or
semi-trailers manufactured and/or distributed by Great Dane Trailers, Inc.
("Great Dane") which were purchased by us from Great Dane pursuant to a
single order, provided that we furnish Associates, at the time such
Contract(s) is tendered, documentation acceptable to Associates reflecting
the satisfaction of such condition, or (b)(ii) 15% of the unpaid time
balance remaining at the time of repossession of the related Property less
any customary refund by Associates of unearned finance charges computed as
of such date regarding any other Contract.
2. Except as expressly modified herein, all the terms and conditions included
in the Agreement shall remain in full force and effect.
Dated: ___________________________
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ASSOCIATES COMMERCIAL CORPORATION
By: ______________________________
Title: ___________________________
DEALER: __________________________
By: ______________________________
Title:
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EXHIBIT B
AFFILIATE DEALER AGREEMENT
This Agreement is by and between Great Dane Finance Company (the "Company") and
__________________________ ("the Affiliate Dealer").
WHEREAS, the Company has entered into that certain Amended and Restated
Operating Agreement dated as of August 31, 1988 with Great Dane Trailers, Inc.
("Great Dane"), referred to hereafter as the "Operating Agreement", and
WHEREAS, the Affiliate Dealer desires to sell the Company Documents arising from
the sale of Property, as such terms are defined in the Operating Agreement, by
the Affiliate Dealer to Great Dane Customers, as defined in the Operating
Agreement, pursuant to the terms and conditions set forth in the Operating
Agreement, and
WHEREAS, the Company desires to purchase such Documents from the Affiliate
Dealer pursuant to the terms and conditions set forth in the Operating
Agreement.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY
OF WHICH IS HEREBY ACKNOWLEDGED, the Company and the Affiliate Dealer agree as
follows:
1. With respect to any Documents assigned to the Company by the Affiliate
Dealer pursuant to the Operating Agreement, the Affiliate Dealer will assume and
perform in a timely manner each and every duty and obligation attributable to an
Affiliate Dealer, as such term is defined in the Operating Agreement, under
Article II of the Operating Agreement with respect to such Documents and the
Property, as defined in the Operating Agreement, subject thereto.
2. With respect to any Documents assigned to the Company by the Affiliate
Dealer subject to the Operating Agreement, the Affiliate Dealer represents and
warrants to the Company that each and every representation and warranty of Great
Dane under Section 2.9 of the Operating Agreement will be true and correct and,
for the purposes of this Agreement, such representations and warranties shall
also be deemed to have been made to the Company by the Affiliate Dealer.
3. The Affiliate Dealer additionally represents and warrants to the Company
that: it is duly qualified to do business in each state in which the nature of
its business requires such qualification; the execution and delivery of this
Agreement and the performance hereof by the Affiliate Dealer are not in
violation of any of the provisions of the Affiliate Dealer's Certificate of
Incorporation or By-laws; it has taken all necessary corporate action to
authorize the execution, delivery and performance of this
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PAGE 2
Agreement; the Company is authorized to rely upon any certificate or other
writing executed and delivered to the Company on behalf of the Affiliate Dealer
by its Secretary or any Assistant Secretary with respect to the persons
authorized and designated to sell, assign and deliver Documents to the Company
and to execute any assignments and other documents in furtherance of the
Operating Agreement: and that it has and will continue to hold all licenses and
other qualifications necessary to the conduct of its business which shall
include, without limitation, any license to enter into and assign retail
installment sale contracts regarding the sale of vehicles.
4. This Agreement shall remain in full force and effect during the term of
the Operating Agreement and may only be assigned by the Company or the Affiliate
Dealer consistent with the terms and conditions set forth in Section 5.6 of the
Operating Agreement with respect to an assignment thereof by the Company or
Great Dane, respectively.
Dated: ________________________
GREAT DANE FINANCE COMPANY
By: ___________________________
Title: ________________________
________________________________
AFFILIATE DEALER
By: ___________________________
Title: ________________________
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EXHIBIT C
SCHEDULE OF ORIGINATION FEES
To be agreed upon by the parties hereto prior to the Closing Date.
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EXHIBIT 10.44
AMENDMENT TO AMENDED AND RESTATED OPERATING AGREEMENT
This Amendment is by and between Great Dane Trailers, Inc. ("Great Dane") and
Associates Commercial Corporation ("Associates").
RECITALS
A. Great Dane and Great Dane Finance Company (the "Company") entered into an
Amended and Restated operating Agreement dated August 31, 1988 (the
"Agreement").
B. The Company's rights under the Agreement have been assigned to Associates.
C. Great Dane and Associates desire to amend the Agreement pursuant to the
terms and conditions herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. The last paragraph of Section 2.15 of the Agreement is hereby deleted and
replaced with the following language:
"Great Dane agrees that the Company may so charge the AIC Account
those amounts referenced in the preceding sentence. In the event
a Repossession Loss arises which exceeds the amount, if any,
remaining in the AIC Account (after the return of any amounts by
Great Dane pursuant to Section 2.17(c)), Great Dane shall,
subject to Section 2.16, pay the Company in cash immediately upon
demand the following amount:
(i) if an Affiliate Dealer is liable to the Company with respect
to the related Contract, the amount shall equal fifty
percent (50%) of the difference between (x) such
Repossession Loss minus (y) such amount, if any, remaining
under the AIC Account, and
(ii) if an Independent Dealer is liable to the Company with
respect to the related Contract, the amount shall equal
fifty percent (50%) of the difference between (x) such
Repossession Loss minus (y) such amount, if any, remaining
in the AIC Account minus (z) the amount of the Independent
Dealer's liability owed to the Company relating to the
Contract, and
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(iii) if an Independent Dealer is not liable to the Company
with respect to the related Contract, the amount shall
equal fifty percent (50%) of the difference between (x)
such Repossession Loss minus (y) such amount, if any,
remaining in the AIC Account minus (z) the amount the
Independent Dealer would have been liable to the
Company relating to the Contract had the Company not
assumed the Independent Dealer's liability."
2. All other terms and conditions of the Agreement shall remain unchanged and
in full force and effect.
Dated: 2-7-94
----------
GREAT DANE TRAILERS, INC. ASSOCIATES COMMERCIAL CORPORATION
By: /s/ T. W. Horan By: /s/ Arnold Strang
---------------------- -----------------------------
Title: S V P Finance Title: Vice President
------------------- -----------------------------
<PAGE>
EXHIBIT 10.45
AMENDMENT TO AMENDED AND RESTATED OPERATING AGREEMENT
This Amendment is by and between Great Dane Trailers, Inc. ("Great Dane") and
Associates Commercial Corporation ("Associates").
RECITALS
A. Great Dane and Great Dane Finance Company ("GDFC") entered into an Amended
and Restated Operating Agreement dated August 31, 1988 (the "Agreement").
B. GDFC's rights under the Agreement have been assigned to Associates. (As
used herein the term company shall refer to Associates as the successor to
GDFC).
C. Great Dane and Associates desire to amend the Agreement pursuant to the
terms and conditions herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Sections 2.15, 2.16 and 2.17(a) of the Agreement are hereby deleted and
replaced with the following language:
Section 2.15. GREAT DANE REPOSSESSION LOSS LIABILITY. Provided that the
AIC Account as defined in Section 2.17 or the AIC Account (the "Canadian
AIC Account") as defined in Section 2.13 of that certain Great
Dane/Associates Wholesale and Retail Financing Agreement dated September
28, 1992 (the "Canadian Operating Agreement") between Associates Commercial
Corporation of Canada Ltd. ("Associates Canada") and Great Dane includes a
like or greater amount, the Company shall debit the AIC Account, or may in
its discretion debit the Canadian AIC Account, an amount equal to:
(i) one hundred percent (100%) of the Repossession Loss
arising under any Contract purchased by the Company from an Affiliate
Dealer, and
(ii) the difference, if any, between (x) the Repossession
Loss arising under any Contract purchased by the Company from an
Independent Dealer for the sale of five (5) or more items of Property
consisting of new trailers or semi-trailers to the same Great Dane
Customer which had been the subject of a single order to Great Dane by
such Independent Dealer, minus (y) ten percent
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(10.0%) of the Net Unpaid Time Balance for such Property remaining
under such Contract at the time of repossession of such Property, and
(iii) the difference, if any, between (x) the Repossession
Loss arising under any other Contract purchased by the Company from an
Independent Dealer which is not described in Section 2.15(ii) above,
minus (y) fifteen percent (15.0%) of the Net Unpaid Time Balance for
such Property remaining under such Contract at the time of
repossession of such Property.
"Great Dane agrees that the Company may so charge the AIC Account
or Canadian AIC Account those amounts referenced in the preceding
sentence. In the event a Repossession Loss arises which exceeds
the amount, if any, remaining in the AIC Account (after the
return of any amounts by Great Dane pursuant to Section 2.17(c)),
Great Dane shall, subject to Section 2.16, pay the Company in
cash immediately upon demand the following amount:
(i) if an Affiliate Dealer is liable to the Company with
respect to the related Contract, the amount shall equal
fifty percent (50%) of the difference between (x) such
Repossession Loss minus (y) such amount, if any,
remaining under the AIC Account, and
(ii) if an Independent Dealer is liable to the Company with
respect to the related Contract, the amount shall equal
fifty percent (50%) of the difference between (x) such
Repossession Loss minus (y) such amount, if any,
remaining in the AIC Account minus (z) the amount of
the Independent Dealer's liability owed to the Company
relating to the Contract, and
(iii) if an Independent Dealer is not liable to the Company
with respect to the related Contract, the amount shall
equal fifty percent (50%) of the difference between (x)
such Repossession Loss minus (y) such amount, if any,
remaining in the AIC Account minus (z) the amount the
Independent Dealer would have been liable to the
Company relating to the Contract had the Company not
assumed the Independent Dealer's liability."
2
<PAGE>
2.16 GREAT DANE REPOSSESSION LOSS LIABILITY LIMITS. Notwithstanding
anything to the contrary in Section 2.15, during any single Calendar Year, as
defined herein, Great Dane shall have no further liability for Repossession
Losses if, during such Calendar Year, the sum of (a) the amounts paid by Great
Dane to the Company, pursuant to Section 2.15 from sources other than the AIC
Account or Canadian AIC Account, and (b) the amounts paid by Great Dane to
Associates Canada under Section 2.11 of the Canadian Operating Agreement, is in
excess of the greater of (i) two-tenths of one percent (0.2%) of the aggregate
outstanding Unpaid Time Balance for all outstanding Contracts existing under
this Agreement and the Canadian Operating Agreement on December 31st of the
prior Calendar year up to a maximum of $1,250,000 U.S. dollars, or (ii) $360,000
U.S. dollars. For the purpose of determining the application of the limitation
described in the preceding sentence, any amount paid by Great Dane to Associates
under Section 2.15 of this Agreement in a currency other than U.S. dollars shall
be converted into U.S. dollars at the noon spot buying rate in New York City for
cable transfers of such foreign currency as certified for customs purposes by
the Federal Reserve Bank of New York on the business Day such amount is actually
paid by Great Dane. All amounts payable by either party under this agreement
shall be paid in U.S. dollars. "Calendar Year" shall mean the period from the
Effective Date as defined in this Agreement and the Canadian Operating Agreement
until December 31st of that same year and each consecutive twelve-month period
thereafter (or portion thereof in the event this Agreement is terminated during
any such twelve-month period).
Section 2.17. AIC ACCOUNT. (a) The company shall credit to a reserve
account to be created and maintained on the books and records of the Company
(referred to herein as the "AIC Account"), the sum of three-eights of one
percent (.375%) of the original Unpaid Cash Price included in each contract
subject to this Agreement regarding new Property and the sum of one-half of one
percent (.50%) of the original Unpaid Cash Price included in each Contract
purchased by the Company from an Affiliate Dealer subject to this Agreement
regarding used Property. If for any reason the Company rebates any Finance
Charges included in a Contract to the Great Dane Customer, then the Company
shall debit from the AIC Account an amount which, in relation to the original
amount credited to the AIC Account for such Contract, is in the same ratio as
the amount such rebate bears to the original Finance Charges included in such
Contract. Except as set forth in Section 2.15 and Section 2.17(b), the Company
shall hold all amounts in the AIC Account until such time as all Contracts
subject to this Agreement and the Canadian Operating Agreement have been paid in
full and at such time these amounts shall become the property of and disbursed
to Great Dane.
3
<PAGE>
2. All other terms and conditions of the Agreement shall remain unchanged and
in full force and effect.
Dated: May 18, 1994
--------------------
GREAT DANE TRAILERS, INC. ASSOCIATES COMMERCIAL CORPORATION
By: /s/ T. W. Horan By: /s/ Arnold Strang
------------------------ -----------------------------
Title: Senior VP Finance Title: Vice President
--------------------- --------------------------
4
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF
GREAT DANE HOLDINGS INC.
(Active)
Jurisdiction of
Company Name1 Incorporation
------------- ---------------
Checker Motors Corporation New Jersey
Checker Motors Co., L.P. Delaware
American Country Insurance Company Illinois
American Country Financial Services Corp. Illinois
Parmelec Transportation Company Illinois
City Wide Towing, Inc. Illinois
Southern Charleston Stamping & Manufacturing West Virginia
Company
Checker Holding Corp. III Delaware
Great Dane Trailers, Inc. Georgia
Great Dane Trailers Nebraska, Inc. Nebraska
Great Dane Trailers Tennessee, Inc. Tennessee
Los Angeles Great Dane, Inc. Georgia
Trailer Rental Company, Inc. Georgia
1 The voting securities of each company whose name is indented are owned by
the company set forth immediately above whose name is not indented.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Summary
Consolidated Financial Information," "Selected Consolidated Financial Data" and
"Experts" and to the use of our unsigned reports on Great Dane Holdings Inc.
(formerly International Controls Corp.) and subsidiaries dated March 1, 1994,
except for Note Q as to which the date is November 16, 1994, in the
Registration Statement Form S-1 and related Prospectus of
Great Dane Holdings Inc. dated November 23, 1994.
ERNST & YOUNG LLP
Kalamazoo, Michigan
November 23, 1994
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000051200
<NAME> GREAT DANE HOLDINGS INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 33,771
<SECURITIES> 0
<RECEIVABLES> 101,508
<ALLOWANCES> 1,328
<INVENTORY> 100,669
<CURRENT-ASSETS> 246,860
<PP&E> 218,007
<DEPRECIATION> 99,733
<TOTAL-ASSETS> 531,120
<CURRENT-LIABILITIES> 210,687
<BONDS> 236,118
<COMMON> 1
0
0
<OTHER-SE> (134,085)
<TOTAL-LIABILITY-AND-EQUITY> 531,120
<SALES> 747,078
<TOTAL-REVENUES> 805,981
<CGS> 636,753
<TOTAL-COSTS> 680,672
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,414
<INCOME-PRETAX> 31,068
<INCOME-TAX> 13,981
<INCOME-CONTINUING> 17,087
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,087
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.02
</TABLE>
